1
EXHIBIT 10(xxxv)
TERM LOAN AND SECURITY AGREEMENT
Dated as of August 29, 1997
by and among
CHRYSALIS INTERNATIONAL CORPORATION
CHRYSALIS INTERNATIONAL PRECLINICAL SERVICES CORPORATION
CHRYSALIS DNX TRANSGENIC SCIENCES CORPORATION
and
CHRYSALIS INTERNATIONAL CLINICAL SERVICES CORPORATION
and
CORESTATES BANK, N.A.
2
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS; CERTAIN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
SECTION 1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------
ARTICLE 2 THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1 Agreement to Loan; The Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
---------------------------
SECTION 2.2 Principal Payments; Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------------------
SECTION 2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------
2.3.1 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------
2.3.2 Conversion Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------------
2.3.3 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------
2.3.4 Special Provisions Applicable to LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------------------------
2.3.5 Usury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----
SECTION 2.4 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------
SECTION 2.5 Compensation for Certain Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------------------------
2.5.1 Taxes, Reserves and Expenses on Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-------------------------------------
2.5.2 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
----------------
SECTION 2.6 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------------
SECTION 2.7 Deduction of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------------------
SECTION 2.8 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------
SECTION 2.9 Structuring Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------------
ARTICLE 3 COLLATERAL SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------
SECTION 3.1 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------
SECTION 3.2 Collateral Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
ARTICLE 4 CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.1 Conditions Precedent to the Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------------------------
4.1.1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----
4.1.2 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------------
4.1.3 Deliveries to Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
4.1.4 No Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------------------------
4.1.5 Satisfactory Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------
ARTICLE 5 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.1 Representations and Warranties of the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------------------------------------
5.1.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------
5.1.2 Corporate Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------------------
5.1.3 Capitalization and Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------------------
5.1.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------
5.1.5 Authorizations and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------------------------
5.1.6 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------
5.1.7 Pending Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------
5.1.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------------------
3
5.1.9 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------
5.1.10 Margin Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----------------
5.1.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----
5.1.12 Compliance with Laws and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----------------------------------
5.1.13 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----
5.1.14 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------------
5.1.15 Restrictions on Borrowers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-------------------------
5.1.16 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------------------
5.1.17 The Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------------------
5.1.18 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----
5.1.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------
5.1.20 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------------------
5.1.21 License and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------
5.1.22 Customer and Trade Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------------------------
5.1.23 Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----
5.1.24 Survival of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----------------------
5.1.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----------
ARTICLE 6 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.1 Financial Covenants of Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
--------------------------------
6.1.1 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------
6.1.2 Consolidated Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------------------------------------
6.1.3 Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------------------------
6.1.4 Ratio of Consolidated Total Liabilities to Tangible Net Worth . . . . . . . . . . . . . . . . . 29
-------------------------------------------------------------
6.1.5 Minimum Cash and Marketable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------------------------------------
SECTION 6.2 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
----------------------
6.2.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------------------
6.2.2 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-----------------
SECTION 6.3 Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-------------------------
SECTION 6.4 Preservation of Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
------------------------------
SECTION 6.5 Obtaining of Permits, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-------------------------
SECTION 6.6 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
------------------------
SECTION 6.7 Maintenance of Properties, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------------------------------
SECTION 6.8 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-----------------
SECTION 6.9 Operating Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------------------
SECTION 6.10 Liens on Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------------------
SECTION 6.11 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
------------
SECTION 6.12 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------------------
SECTION 6.13 Merger, Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------------------
SECTION 6.14 Sale of Assets, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-------------------
SECTION 6.15 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------------
SECTION 6.16 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-------------
SECTION 6.17 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------------------
- ii -
4
SECTION 6.18 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-----------------------
SECTION 6.19 Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-----------
SECTION 6.20 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------
SECTION 6.21 Sale of Patent/License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------------------
ARTICLE 7 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------------
ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.1 Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------
SECTION 8.2 Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
---------------
SECTION 8.3 No Waiver; Remedies, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
------------------------
SECTION 8.4 Fees, Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-------------------------------
SECTION 8.5 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
---------
SECTION 8.6 Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------------
SECTION 8.7 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
--------------------------
SECTION 8.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
----------------------
SECTION 8.9 Assignment and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
----------------------------
SECTION 8.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
------------
SECTION 8.11 Waiver of Jury Trial; Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------------------------------------------
SECTION 8.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-------------
SECTION 8.13 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-----------
SECTION 8.14 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------------------------
SECTION 8.15 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
----------------
- iii -
5
TERM LOAN AND SECURITY AGREEMENT
THIS TERM LOAN AND SECURITY AGREEMENT (such agreement, as amended
or otherwise modified from time to time, being hereinafter referred to as the
"Agreement"), dated as of August 29, 1997, is made by and among CHRYSALIS
INTERNATIONAL CORPORATION, a Delaware corporation, CHRYSALIS INTERNATIONAL
PRECLINICAL SERVICES CORPORATION, a Pennsylvania corporation, CHRYSALIS DNX
TRANSGENIC SCIENCES CORPORATION, an Ohio corporation and CHRYSALIS
INTERNATIONAL CLINICAL SERVICES CORPORATION, a Delaware corporation (each a
"Borrower" and together, the "Borrowers"), and CORESTATES BANK, N.A. (the
"Bank").
Background
A. The Borrowers wish to refinance an outstanding term loan
due on December 31, 1997 made in the principal amount of $5,000,000.
B. In order to refinance this outstanding indebtedness, the
Borrowers have requested that the Bank lend to the Borrowers the principal
amount of FIVE MILLION DOLLARS ($5,000,000) (the "Term Loan").
C. The Term Loan which the Bank has agreed to make, subject to
the terms and conditions set forth in this Agreement, will be secured by the
Security Documents (as defined below).
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS; CERTAIN TERMS
SECTION 1.1 Definitions. As used in this Agreement, the
following terms shall have the respective meanings indicated below (such
meanings to be applicable equally to both the singular and plural forms of such
terms).
"Affiliate" of any Person means any Person or group of Persons
acting in concert which, directly or indirectly, controls or is controlled by
or is under common control with such Person including, without limitation (i)
any Person which, directly or indirectly, owns or holds a voting or equity
interest or 10% or more in such Person and (ii) any other Person of which such
6
Person, directly or indirectly, holds or owns a voting or equity interest of
10% or more. "Control" as used herein, means the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities or by contract or otherwise.
"Authorized Officer" means, with respect to any act to be performed
or duty to be discharged by any Person which is not an individual, any officer
or other representative thereof authorized to perform such act or discharge
such duty.
"Business Day" means a day when the Bank is open for the conduct of
banking business at its principal offices in Philadelphia, Pennsylvania other
than a Saturday, Sunday or a federal or state holiday.
"Capitalized Lease Obligations" means all lease obligations that,
in accordance with generally accepted accounting principles, have been or
should be capitalized on the books of the lessee and, for purposes hereof, the
amount of any such obligation shall be the capitalized amount thereof
determined in accordance with such principles.
"Cash Collateral" shall have the meaning set forth in Section 7.1.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendment
and Reauthorization Act of 1986 and other amendments made thereto, together
with the rules and regulations promulgated thereunder as in effect from time to
time.
"Clean Air Act" means the Federal Clean Air Act, 42 U.S.C. Section
7401 et. seq., as amended.
"Closing Date" means, the date of execution and delivery of this
Agreement and the other Loan Documents.
"Collateral" shall have the meaning set forth in
Section 3.1.
"Commitment" means the aggregate principal amount outstanding under
the Term Loan.
"Consolidated," when used with reference to Indebtedness or other
accounts of Borrowers means the sum of the Indebtedness
- 2 -
7
or such other accounts of Borrowers and their Consolidated Subsidiaries, as
consolidated in accordance with generally accepted accounting principles
consistent with those followed in the preparation of the Financial Statements,
after elimination of intercompany items.
"Consolidated Current Assets" means all assets that, as of the date
of determination thereof and in accordance with generally accepted accounting
principles should be classified as current assets on a consolidated balance
sheet of Borrowers and their Consolidated Subsidiaries, minus all receivables
from, and all loans or advances to, any shareholder or Affiliate of any
Borrower which was included in determining such current assets.
"Consolidated Current Liabilities" means all liabilities that, as
of the date of determination thereof and in accordance with generally accepted
accounting principles, should be classified as current liabilities on a
consolidated balance sheet of Borrowers and their Consolidated Subsidiaries,
plus all Indebtedness (including the Obligations) of the Borrowers and their
Consolidated Subsidiaries (to the extent not already included in such
liabilities) which would be classified as current liabilities if stated on a
consolidated balance sheet of the Borrowers and their Consolidated
Subsidiaries, including, without limitation, all such Indebtedness payable on
demand or within one year after such date.
"Consolidated Debt Service Coverage Ratio" means, for Borrowers and
their Consolidated Subsidiaries with respect to any period, (i) the sum of (A)
Consolidated Net Income for such period and (B) depreciation and amortization
expense deducted in determining such Consolidated Net Income ("Cash Flow")
divided by (ii) the sum of all principal payments of the Term Loan and all
other long-term debts, which are scheduled to be made within one year from the
date of calculation.
"Consolidated Net Income" means, for Borrowers and their
Consolidated Subsidiaries with respect to any period, net income of the
Borrowers and their Consolidated Subsidiaries, on a consolidated basis in
accordance with generally accepted accounting principles; provided, that there
shall be excluded therefrom (a) gains or losses from the sale of capital assets
not in the ordinary course, (b) the net income of any Person (other than a
Borrower) included in the calculation of such consolidated net income, except
to the extent it has been actually received by a Borrower in a cash
distribution, and (c) any gains or losses
- 3 -
8
arising from extraordinary items, as defined by generally accepted accounting
principles consistently applied.
"Consolidated Tangible Net Worth" means, with respect to Borrowers
and their Consolidated Subsidiaries, at any time (a) the net amount of
consolidated shareholders' equity (including capital stock, additional paid-in
capital, capital surplus and retained earnings, after deducting treasury stock)
which would appear on the consolidated balance sheet of Borrowers and their
Consolidated Subsidiaries at such time, prepared in accordance with generally
accepted accounting principles consistently applied minus (b) the sum of
unamortized debt discount and expense, goodwill, trademarks, trade names,
computerized software, patents, deferred charges and other intangible assets of
Borrowers and their Consolidated Subsidiaries determined on a consolidated
basis in accordance with generally accepted accounting principles consistently
applied.
"Consolidated Subsidiaries" means the Subsidiaries of Borrowers
whose accounts are, at the time of determination, required to be consolidated
with those of Borrowers in accordance with generally accepted accounting
principles consistently applied.
"Default" shall mean any event or occurrence which with the passing
of time, the giving of notice, or both, would become an Event of Default.
"Employee Plan" means an employee pension benefit plan covered by
Title IV of ERISA and maintained in whole or in part for employees of any
Borrower or any of its Affiliates.
"Environmental Laws" means all applicable Federal, state, and local
laws, statutes, ordinances, rules, regulations, permits and valid orders
relating to the use, possession, handling, generation, transportation,
treatment, storage, recycling, discharge, disposal, emission, presence, or
Release (as defined in Section 5.1.20(b)), or the threat of Release of
(collectively "Management"), or any remedial, removal or response action in
connection with, any hazardous, toxic and polluting substances or wastes,
including without limitation, petroleum products.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, together with the rules
- 4 -
9
and regulations promulgated thereunder as in effect from time to time.
"Event of Default" means any of the events set forth in Section 7.1
hereof.
"Financial Statements" means the financial statements required to
be delivered by the Borrowers to the Bank periodically pursuant to Section
6.2.1 hereof.
"Fiscal Year" means the twelve month accounting period of the
Borrowers commencing on January 1 and ending on December 31 of each year.
"GAAP" shall have the meaning set forth in Section 1.2.
"Hazardous Substances" has the meaning given to that term in
Section 5.1.20(b) hereof.
"Indebtedness" means, with respect to any Person, calculated
without duplication, (a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services (other than accounts
payable due in the ordinary course of business within 90 days of the date of
determination), (b) all indebtedness of any other Person for borrowed money or
for the deferred purchase price of property or services, the payment or
collection of which such Person has guaranteed (except by reason of endorsement
for collection in the ordinary course of business) or in respect of which such
Person is liable, contingently or otherwise, including, without limitation, by
way of agreement to purchase, to provide funds for payment, to supply funds to
or otherwise to invest in such other Person, or otherwise to assure a creditor
against loss, (c) all indebtedness of any other Person for borrowed money or
for the deferred purchase price of property or services secured by (or for
which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness, provided that such indebtedness shall be deemed to be
Indebtedness only to the extent of the book value of the property encumbered
thereby, (d) Capitalized Lease Obligations of such Person, (e) all
reimbursement obligations of such Person in respect of drafts drawn under
letters of credit
- 5 -
10
and bankers acceptances, (f) any equity or other interest in such Person which,
by its terms, is convertible into a debt instrument and (g) withdrawal
liability incurred under ERISA by any Borrower or any of its Affiliates to any
multiemployer plan (as defined in Section 4001(a)(3) of ERISA); provided,
however, that Indebtedness shall not include any deferred revenues of any
Borrower in respect of services to be performed in the future by such Borrower.
"Interest Period" means, with respect to any LIBOR Rate Loan, the
interest period applicable thereto, as selected pursuant to Section 2.3.3.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"LIBOR Rate" means, with respect to any LIBOR Rate Loan for any
Interest Period, the arithmetic average of the rates of interest per annum
(rounded upwards, if necessary, to the next 1/16th of 1%) which the Bank is
offered on deposits of United States Dollars on the London Interbank Market on
or about 9:00 a.m. (New York time) one or two Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the LIBOR Rate Loan requested with a maturity of comparable
duration to the Interest Period selected by the Borrowers.
"Loan" means the Term Loan.
"Loan Documents" means this Agreement, the Term Note and the
Security Documents.
"Maturity Date" means September 30, 2002.
"Note" means the Term Note.
"Obligations" means (a) the obligations of Borrowers to pay, as and
when due and payable (by scheduled maturity or otherwise), all amounts owing by
them in respect of the Loan Documents, whether for principal, interest, fees or
otherwise, and (b) the obligations of Borrowers to perform or observe all of
their other obligations from time to time existing under the Loan Documents.
- 6 -
11
"Permitted Liens" shall have the meaning set forth in Section 6.10.
"Person" means an individual, corporation, partnership, limited
liability company or partnership or other similar entity, association,
joint-stock company, trust, unincorporated organization or joint venture, or a
court or government or any agency or political subdivision thereof.
"PIDA and PNC Loans" shall have the meaning set forth in Section
6.10(h).
"Prime Rate" means the rate so designated and established by the
Bank (which is not necessarily the lowest rate charged by the Bank), as such
rate may change from time to time, all such changes to be effective
immediately.
"Prohibited Transaction" has the meaning specified in Title IV of
ERISA.
"Release" has the meaning given to that term in Section 5.1.20(b).
"Reportable Event" has the meaning specified therefor in Title IV
of ERISA.
"Security Agreement" means the Security Agreement delivered by the
Borrowers and attached hereto as Exhibit C.
"Security Documents" mean the Security Agreement, Stock Pledge
Agreement, Collateral Assignment of Contracts, and the other documents and
agreements listed in Article 3 hereof and such other documents and agreements
which may be entered into by any Person with the Bank to provide collateral or
other security for the obligations of the Borrowers to the Bank hereunder.
"Subsidiary" means each Person of which all of the outstanding
Voting Securities are, at the time of determination, owned directly, or
indirectly through one or more intermediaries, by a Person.
"Term Loan" shall have the meaning set forth in the Background
section of this Agreement.
"Term Note" shall have the meaning set forth in Section 2.1(b).
- 7 -
12
"Voting Securities" means, with respect to any corporation,
securities of all classes the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
SECTION 1.2 Accounting Terms. Except as otherwise expressly
provided herein, accounting terms not otherwise defined herein shall have the
meanings assigned to them in accordance with accounting principles and
practices generally accepted in the United States of America, as such
principles may change from time to time ("GAAP").
ARTICLE 2
THE LOAN
SECTION 2.1 Agreement to Loan; The Note.
(a) Subject to the terms and conditions set
forth in this Agreement, the Bank agrees to lend to the Borrowers on the
Closing Date Five Million Dollars ($5,000,000) with interest to accrue from the
date of the Term Note at the rate and payable in accordance with the terms and
provisions of this Agreement and the Term Note.
(b) The obligation of the Borrowers to repay
the Term Loan shall be evidenced by the Borrowers' promissory note of even date
herewith in the original principal amount of $5,000,000 (the "Term Note").
SECTION 2.2 Principal Payments; Maturity.
(a) Principal Payments. Principal payments on
the Term Loan shall be due and payable in sixteen (16) equal consecutive
quarterly installments of $312,500 commencing on September 30, 1998, and
thereafter on the last Business Day of each following December, March, June and
September, with the final quarterly installment due and payable on September
30, 2002 (the "Maturity Date").
(b) Maturity Date. The Term Loan shall mature
on the Maturity Date at which time the Borrower shall pay all outstanding
principal and accrued interest on the Term Loan and all other sums due
hereunder, and under any other Loan Document.
- 8 -
13
SECTION 2.3 Interest.
2.3.1 Interest Rate.
(a) Determination of Rate. The Term Loan and
all other Obligations shall bear interest from the date such Term Loan is made
or Obligation becomes due to the date paid at a rate per annum determined by
reference to the LIBOR Rate or the Prime Rate. The applicable basis for
determining the rate of interest shall be selected by Borrowers initially at
the time the Term Loan is made hereunder and thereafter in accordance with
Section 2.3.2 hereof. At Borrowers' option, the applicable rate of interest
shall be either (i) the LIBOR Rate plus 3.5% per annum or (ii) the Prime Rate
plus 0.75% per annum (collectively, the "Original Interest Rates"). If the
interest rate selected by Borrowers is determined by reference to the LIBOR
Rate, such Loan shall sometimes be referred to hereinafter as the "LIBOR Rate
Loan" and if the interest rate selected by Borrowers is determined by reference
to the Prime Rate, such Loan shall sometimes be referred to hereinafter as the
"Prime Rate Loan".
(b) Reduced Rate. Notwithstanding the
foregoing, commencing after December 31, 1997, upon the Bank's receipt of
Borrowers' quarterly or annual Financial Statements in accordance with Section
6.2.1 hereof, demonstrating that the Borrowers' Consolidated Debt Service
Coverage Ratio for the immediately preceding consecutive four (4) fiscal
quarters exceeded 1.5 to 1, and provided there is no existing Event of Default
hereunder, the interest rate for the LIBOR Rate Loan shall be reduced to the
LIBOR Rate plus 2.5% per annum and the interest rate for the Prime Rate Loan
shall be reduced to the Bank's Prime Rate (collectively, the "Reduced Interest
Rates"). The Reduced Interest Rates shall remain in effect only so long as
there is no Event of Default under this Agreement and only so long as the
Borrowers' Consolidated Debt Service Coverage Ratio for any subsequent period
of four (4) consecutive quarterly periods continues to exceed 1.5 to 1. If the
Borrowers' Consolidated Debt Service Coverage Ratio for any subsequent period
of four (4) consecutive quarterly periods fails to exceed 1.5 to 1, then the
Original Interest Rates shall be reinstated until the subsequent achievement of
the conditions for the application of the Reduced Interest Rates upon which the
Reduced Interest Rates shall be reinstated. Any change in the Original
Interest Rates or the Reduced Interest Rates under this Subsection shall become
effective on the first day of the calendar month immediately following the
Bank's receipt of
- 9 -
14
Financial Statements demonstrating the requisite change, provided, however,
that in the case of a LIBOR Rate Loan, the change in the rate shall become
effective on the first Business Day immediately following the expiration of the
Interest Period then in effect for the LIBOR Rate Loan.
(c) Payment. Interest on the Term Loan shall
be payable with respect to a Prime Rate Loan or a LIBOR Rate Loan, monthly in
arrears on the first Business Day of each month during the term of the Term
Loan.
(d) Computation. All computation of interest
hereunder shall be made on the actual number of days elapsed over a year of 360
days.
(e) Default Rate. If an Event of Default
shall have occurred and be continuing, interest shall be paid at the default
rate in accordance with Section 2.6 hereof.
2.3.2 Conversion Option. Subject to the
provisions of this Section, the Borrowers shall have the option to convert at
any time, all but not part of the Term Loan, from a Prime Rate Loan or LIBOR
Rate Loan into the other or upon expiration of any Interest Period applicable
to a LIBOR Rate Loan to continue such Loan as a LIBOR Rate Loan and the
Interest Period of such continued Loan shall commence on the last day of the
Interest Period of the Loan to be continued; provided that except as otherwise
provided in Section 2.3.4 a LIBOR Rate Loan may be converted into a Prime Rate
Loan or continued as a LIBOR Rate Loan only on the last day of an Interest
Period applicable thereto. Each such conversion (or continuation) shall be
effected by an Authorized Officer or Officers of the Borrowers giving the Bank
prior to noon (New York time) at least three (3) Business Days (or the same
Business Day in the case of a conversion to a Prime Rate Loan) prior written
notice (or telephonic notice promptly confirmed in writing) (each a "Notice of
Continuance/Conversion") substantially in the form of Exhibit B hereto,
specifying the type of Term Loan to be converted into and (after being
converted into or continued as a LIBOR Rate Loan), the Interest Period to be
initially applicable thereto. If no Notice of a Continuance/Conversion has been
delivered with respect to a LIBOR Rate Loan on or before the third Business Day
prior to the last day of the Interest Period applicable thereto, such LIBOR
Rate Loan shall be automatically converted to a Prime Rate Loan.
- 10 -
15
2.3.3 Interest Periods. At the time the
Borrowers give a Notice of Continuance/Conversion in respect of the making of,
continuance of, or conversion into, a LIBOR Rate Loan, it shall have the right
to elect, by giving the Bank written notice (or telephonic notice promptly
confirmed in writing), the Interest Period, which Interest Period shall, at the
option of Borrower, be a one, two or three month period. Notwithstanding
anything to the contrary contained herein:
(a) If any Interest Period relating to a LIBOR
Rate Loan begins on a date for which there is no numerically corresponding date
in the calendar month in which such Interest Period ends, such Interest Period
shall end on the last Business Day of such calendar month;
(b) If any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day; provided, that if any Interest Period in
respect of a LIBOR Rate Loan would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day; and
(c) No Interest Period shall extend beyond the
Maturity Date.
2.3.4 Special Provisions Applicable to LIBOR Rate.
(a) The LIBOR Rate may be automatically
adjusted by the Bank on a retroactive basis to take into account (but only to
the extent necessary to recover such additional or increased costs) the
additional or increased cost of maintaining any necessary reserves for
Eurodollar deposits or increased cost due to any change in applicable law or
regulation or the interpretation thereof by any governmental authority charged
with the administration thereof or the introduction of any law or regulation
occurring subsequent to the commencement of the then applicable Interest
Period, including but not limited to changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System
(or any successor), that increases the cost to the Bank of funding a LIBOR Rate
Loan. The Bank shall give the Borrowers notice of such a determination and
adjustment and the Borrowers may, by
- 11 -
16
notice to the Bank: (x) require the Bank to furnish to the Borrowers a
statement setting forth the basis for adjusting such LIBOR Rate and the method
for determining the amount of such adjustment; and/or (y) may either (i) if a
Notice of Continuance/Conversion has been given with respect to the affected
LIBOR Rate Loan, cancel said notice by giving Bank telephonic notice (confirmed
promptly in writing) thereof on the same date Borrowers was notified pursuant
to this subsection, or (ii) if the affected LIBOR Rate Loan is still
outstanding, upon at least three Business Days' notice to the Bank, require the
Bank to convert each such LIBOR Rate Loan into a Prime Rate Loan, or prepay
such LIBOR Rate Loan; provided, that the Borrower shall compensate the Bank as
set forth in Section 2.3.4(d) hereof.
(b) In the event that the Bank shall have
reasonably determined that Eurodollar deposits equal to the amount of the LIBOR
Rate Loan requested, for the Interest Period specified, are unavailable or that
a LIBOR Rate will not adequately and fairly reflect the cost of making or
maintaining such LIBOR Rate Loan during the Interest Period specified or, that
by reason of circumstances affecting Eurodollar markets, adequate and
reasonable means do not exist for ascertaining a LIBOR Rate applicable to the
specified Interest Period, the Bank shall promptly give notice of such
determination to the Borrowers that a LIBOR Rate Loan is not available, and any
Notice of Continuance/Conversion given by the Borrowers with respect to
borrowing, conversion or continuance of a LIBOR Rate Loan which have not been
incurred shall be deemed rescinded by the Borrowers. A determination by the
Bank pursuant to this subsection shall be conclusive.
(c) In the event that it becomes unlawful for
the Bank to maintain Eurodollar liabilities sufficient to fund a LIBOR Rate
Loan, then the Bank shall notify the Borrowers and the Bank's obligation
hereunder to advance or maintain a LIBOR Rate Loan shall be suspended until
such time as the Bank may again offer a LIBOR Rate Loan. If the affected LIBOR
Rate Loan is still outstanding, the Bank shall require, as promptly as
practicable, that the Borrower either: (i) convert each such LIBOR Rate Loan
into a Prime Rate Loan, or (ii) prepay such LIBOR Rate Loan; provided, that the
Borrower shall compensate the Bank as set forth in Section 2.3.4(d) hereof.
(d) The Borrowers shall compensate the Bank,
upon written request by the Bank, for reasonable losses, expenses and
liabilities (including, without limitation, such
- 12 -
17
factors as any interest paid by the Bank to lenders of funds borrowed by it to
make or carry a LIBOR Rate Loan and any loss sustained by the Bank in
connection with re-employment of such funds based upon the difference between
the amount earned in connection with re-employment of such funds and the amount
payable by Borrowers if such funds had been borrowed or remained outstanding)
which the Bank may sustain with respect to the Borrowers' LIBOR Rate Loan: (i)
if for any reason (other than a default or error by the Bank) a LIBOR Rate Loan
does not occur on a date specified therefor in a Notice of
Continuance/Conversion or in a telephonic request for conversion, or a
successive Interest Period in respect of any such LIBOR Rate Loan does not
commence after notice thereof is given pursuant to Section 2.3.2, (ii) if any
prepayment (under Section 2.4) or conversion of any LIBOR Rate Loan to the
Borrowers occurs on a date which is not the last day of the Interest Period
applicable to the Term Loan, (iii) if any prepayment of any such LIBOR Rate
Loan to the Borrowers is not made on any date specified in a notice of
prepayment given by the Borrowers, and (iv) any other failure by the Borrowers
to repay a LIBOR Rate Loan when required by the terms of this Agreement,
including an election by Borrowers made pursuant to this subsection; provided,
however, that the Borrowers shall not be required to compensate the Bank to the
extent such losses, expenses and liabilities have already been recovered by the
Bank pursuant to Section 2.3.4(a).
2.3.5 Usury. If at any time the interest rate
being charged to the Borrowers under this Agreement or the Term Note shall be
deemed by any governmental authority to exceed the maximum rate of interest
permitted by applicable law, then, without affecting the validity or
enforceability of this Agreement or any part hereof or the Term Note, such rate
shall be reduced to the maximum rate permissible under such applicable law. If
the Bank has received any payment of interest which exceeded the maximum legal
rate, then such amount shall, at the option of the Bank, be applied to the
reduction of the unpaid principal balance (and not to the payment of interest)
or returned to the Borrowers.
SECTION 2.4 Prepayment. (a) The Borrowers shall have the
right to prepay the Term Loan in whole, or in part (in increments equal to
quarterly installments), at any time and from time to time upon not less than
ten (10) days prior written notice to the Bank of Borrowers' intention to
prepay. If the Term Loan is a Prime Rate Loan at the time of prepayment, the
prepayment shall include all accrued and unpaid interest on the
- 13 -
18
principal amount of the Term Loan so paid through the prepayment date, but
shall not include any premium or penalty. If the Term Loan is a LIBOR Rate
Loan at the time of prepayment, any prepayment of the Term Loan shall include
the payment of all accrued and unpaid interest on the principal amount so paid,
plus a premium equal to the amount, if any, by which (i) the installments of
principal being prepaid plus the installments of interest which would have been
payable thereon when discounted to a present value at a rate per annum equal to
the yield to maturity of the Applicable Treasury Bond Obligation exceeds (ii)
the principal amount being prepaid. As used herein, "Applicable Treasury Bond
Obligation" means the debt obligation of the United States Treasury having a
maturity date nearest in time to the last day of an Interest Period applicable
thereto. The maturity date and yield to maturity of such Applicable Treasury
Bond Obligation shall be determined by the Bank in its sole discretion on the
basis of quotations published in the Wall Street Journal on the date of
prepayment. The Bank shall notify the Borrowers in a timely manner of the
amount of such premium owed to the Bank and the basis of its calculation.
SECTION 2.5 Compensation for Certain Contingencies.
2.5.1 Taxes, Reserves and Expenses on Loans. If any
law, regulation, treaty or official directive, or the interpretation or
application thereof by any court or by any governmental authority charged with
the administration thereof, or the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having
the force of law) (a) subjects the Bank to any tax or changes the basis of
taxation with respect to payments of principal, interest or other amounts due
from Borrowers (except for taxes, fees or other charges based on, or measured
by, the income or profits of the Bank (or the relevant lending office or
offices) or any franchise taxes or similar taxes imposed in lieu thereof); (b)
imposes, modifies or deems applicable any reserve, special deposit, premium, or
similar requirement against assets held by, or deposits in or for the account
of, or loans or commitments by, the Bank; or (c) imposes upon the Bank any
other condition with respect to this Agreement; and the result of any of the
foregoing is to increase the cost to the Bank, reduce the income receivable by
the Bank or impose any expense upon the Bank with respect to the Term Loan by
an amount which has not resulted or been reflected in an increase in the
interest rate(s) applicable to the Term Loan or otherwise recovered pursuant to
Section 2.3.4 and the Bank deems to be material, the Bank shall from time to
- 14 -
19
time notify Borrowers; and Borrowers shall pay to the Bank, within thirty (30)
Business Days after receipt of such notice, that amount which shall compensate
the Bank (on an after-tax basis) for such increase in cost, reduction in income
or additional expense. The Bank's computation of the amount necessary to
compensate it shall be (i) set forth in reasonable detail, along with the basis
therefor, in a certificate which shall accompany the Bank's notice to Borrowers
of any such amount, (ii) made in good faith with a reasonable basis, and (iii)
conclusive in the absence of manifest error.
2.5.2 Capital Adequacy. If (a) the introduction of, or
any change in, or in the interpretation of, any United States law, rule or
regulation or (b) compliance with any directive, guidelines or request from any
central bank or other United States or foreign governmental authority (whether
or not having the force of law) promulgated or made after the date hereof
affects or would affect the amount of capital required or expected to be
maintained by the Bank or any corporation directly or indirectly owning or
controlling the Bank, and the Bank shall have determined that such
introduction, change or compliance has or would have the effect of reducing the
rate of return on the Bank's capital or on the capital of such owning or
controlling corporation as a consequence of its obligations hereunder to a
level below that which the Bank or such owning or controlling corporation could
have achieved but for such introduction, change or compliance (after taking
into account the Bank's policies or the policies of such owning or controlling
corporation, as the case may be, regarding capital adequacy) by an amount
deemed by the Bank (in its sole discretion) to be material, which has not been
reflected in the interest rate(s) applicable to the Loans or otherwise
recovered pursuant to Section 2.3.4, then, from time to time Borrowers shall
pay to the Bank within thirty (30) Business Days after receipt of notice from
the Bank of any change described in this Section such amount as shall
compensate the Bank for any such change. The Bank's computation of the amount
necessary to compensate it shall be (i) set forth in reasonable detail, along
with the basis therefor, in a certificate which shall accompany the Bank's
notice to Borrowers of any such amount, (ii) made in good faith with a
reasonable basis, and (iii) conclusive absent manifest error.
SECTION 2.6 Default Interest. Following any Event of Default
hereunder and while such Event of Default is continuing, Borrowers shall pay
interest on (a) the outstanding principal balance of the Term Loan and (b) to
the extent permitted by law,
- 15 -
20
on all overdue portions of interest on the Term Loan and all such other overdue
amounts owing to the Bank outstanding up to the date of actual payment (after
as well as before judgment) at a rate equal to 3% per annum above the Original
Interest Rate for the LIBOR Rate Loan or Prime Rate Loan, then in effect.
SECTION 2.7 Deduction of Payment. Any principal, interest,
fees or other Obligations payable by Borrowers hereunder shall be deducted by
the Bank and paid from the Borrowers' operating accounts described in Section
6.9 hereof as and when due from time to time; provided, however, that the Bank
shall give Borrowers reasonable prior notice of its intent to so deduct funds
other than interest (including default interest), principal and any fees
related to the Bank's duties pursuant to Section 2.9 below.
SECTION 2.8 Closing. The Term Loan will be closed at the
offices of Dechert, Price & ▇▇▇▇▇▇, Princeton Pike Corporate Center, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, or any other location
agreed upon by the Borrowers and the Bank. Closing of the Term Loan shall occur
no later than August 29, 1997.
SECTION 2.9 Structuring Fee. A loan structuring fee of
$40,000 shall be paid by the Borrowers to the Bank on the Closing Date (the
"Structuring Fee"). If Chrysalis International Corporation ("Chrysalis"),
however, engages CoreStates Investment Advisors on the Closing Date, to act as
its sole cash investment advisor and primary depository for the investment
business of its excess corporate funds and the excess corporate funds of the
other Borrowers for the term of the Term Loan on mutually satisfactory terms,
the Bank shall refund the Structuring Fee to Chrysalis. If Chrysalis forgoes
any right to the refund of the Structuring Fee and engages another cash
investment advisor and primary depository for such excess corporate funds and
the excess corporate funds of the other Borrowers, provided such other entity
must be based in the United States and be reasonably satisfactory to the Bank,
the Bank shall be entitled to a first lien in all such corporate funds of the
Borrowers, and such other entity shall enter into such security arrangements
with the Bank as the Bank may deem necessary or appropriate, including, without
limitation, the following:
(a) An acknowledgment and confirmation of the
Bank's first priority lien in all such corporate funds of the Borrowers;
- 16 -
21
(b) Arrangements for the delivery to the Bank
of detailed reports no less often than monthly, dated as of a recent date,
setting forth a complete description of the following:
(i) account and investment balances,
(ii) the types and amounts of investment
securities,
(iii) name of depositary, location and
account numbers for all accounts containing funds of investment of Borrowers,
and any foreign or domestic Subsidiaries, and
(iv) all loan balances and short-term
borrowings, including all intercompany advances or investments (whether foreign
or domestic); and
(c) Upon the occurrence of an Event of Default
under this Agreement, provision for the immediate delivery to the Bank (through
wire transfer or other means acceptable to the Bank) of corporate funds of the
Borrowers in an amount equal to the Cash Collateral.
ARTICLE 3
COLLATERAL SECURITY
SECTION 3.1 Collateral. As security for the performance of
this Agreement and for the prompt and complete payment of the Term Note when
due (whether at the Maturity Date, by acceleration or otherwise), and as
security for all other existing and future indebtedness of the Borrowers to the
Bank, the Borrower hereby grants to the Bank a first priority lien on and
security interest in all of the assets of the Borrowers located in the United
States (excluding the Permitted Liens) including, without limitation, the
following, whether now owned or after-acquired (the "Collateral"):
(a) all of Borrowers' existing and future
accounts receivable, chattel paper, instruments, contract rights, investment
accounts (including, without limitation, the investment accounts described in
Section 2.5 herein), documents, rights to the payment of money (including
patent and other license fees and royalties), inventory, goods, machinery and
equipment, fixtures and all other personal property and all proceeds, including
insurance proceeds, of the foregoing;
- 17 -
22
(b) all of Borrowers' general intangibles,
including, without limitation, all right, title and interest of the Borrowers
in and to all patents (including, without limitation, the exclusive license to
the microinjection patent), copyrights, licenses, royalty fees, service marks,
tradenames and trademarks, rights to file and prosecute applications for
patents, copyrights and trademarks, and similar intellectual property anywhere
in the world and the good will of the business connected with the use of and
symbolized by any patents, licenses, copyrights, service marks, trade names and
trademarks, together with all assets which reflect the good will of the
business of the Borrowers, including, but not limited to, the Borrowers' trade
names, customer lists, trade secrets, corporate and other business records,
advertising materials, operating, sales and programming manuals, methods,
processes, and know-how, sales literature, drawings, specifications,
descriptions, inventions, catalogues, copyrights, confidential information; and
(c) a pledge to the Bank of all outstanding
stock of all direct and indirect subsidiaries, both foreign and domestic, of
Chrysalis.
SECTION 3.2 Collateral Reports. The Borrowers shall provide to
the Bank detailed quarterly reports regarding accounts receivable from domestic
operations and licensing operations in form and substance satisfactory to the
Bank. In addition, the Borrowers shall provide to the Bank within ten (10)
days of the end of each calendar month a report disclosing the Borrowers' and
Subsidiaries' cash balances and borrowings under lines of credit or other
credit facilities for such month, both domestic and foreign, in form and
substance satisfactory to the Bank. The Borrowers' obligation to provide the
monthly reports described in the preceding sentence shall be suspended upon
delivery to the Bank of Financial Statements of the Borrowers' demonstrating
that the Borrowers' and Subsidiaries' Consolidated Net Income for the four (4)
immediately preceding consecutive fiscal quarters exceeds $1,000,000 and
provided the Borrowers are not in default under this Agreement. The Borrowers'
obligation to deliver such monthly reports shall be reinstated immediately upon
the Borrowers' failure to demonstrate Consolidated Net Income in excess of
$1,000,000 for any such four (4) quarter period.
- 18 -
23
ARTICLE 4
CONDITIONS OF LENDING
SECTION 4.1 Conditions Precedent to the Term Loan. The
obligation of the Bank to fund the Term Loan shall be subject to the prior or
concurrent fulfillment of each of the following conditions precedent.
4.1.1 Fees. Borrowers shall have paid, or made
arrangements satisfactory to the Bank for the payment of, all fees, costs,
expenses, taxes and indemnities required hereunder and under any other Loan
Document including, without limitation, the Structuring Fee and a Loan
Commitment fee of $15,000 (which shall be used to pay counsel to the Bank
pursuant to Section 8.4).
4.1.2 Representations. The following statements
shall be true and the making of the Term Loan hereunder shall be deemed to be a
representation and warranty of the Borrowers to the effect that (a) the
representations and warranties contained in Article 5 of this Agreement and in
each other Loan Document and certificate or other writing delivered to the Bank
pursuant hereto on or prior to the Closing Date are correct in all material
respects on and as of the Closing Date as though made on and as of such date;
and (b) no Default or Event of Default has occurred and is continuing or would
result from the making of the Term Loan on the Closing Date.
4.1.3 Deliveries to Bank. The Bank shall have
received on or before the Closing Date the following, each in form and
substance reasonably satisfactory to the Bank:
(a) This Agreement and the Term Note, both
duly executed and delivered by the Borrowers;
(b) the Security Documents duly executed and
delivered by the Borrowers;
(c) appropriate financing statements on Form
UCC-1, duly executed by the Borrowers in proper form for filing in such offices
as may be necessary or, in the opinion of the Bank, desirable to perfect the
security interests purported to be created by the Security Documents;
(d) certified copies of requests for copies
listing all effective financing statements which name as
- 19 -
24
debtor, any Borrower or any predecessor of any Borrower, which are filed in the
offices reasonably specified by the Bank, together with copies of such
financing statements, none of which, except as otherwise agreed to in writing
by the Bank, shall cover any of the Collateral;
(e) evidence that the Borrowers have obtained
the insurance coverage required by the terms of this Agreement or any other
Loan Document.
(f) a copy of the resolutions adopted by the
Boards of Directors of each Borrower, certified as of the Closing Date relating
to the Term Loan by an Authorized Officer thereof, authorizing (i) the
transactions contemplated by the Loan Documents to which such Borrower is a
party and (ii) the execution, delivery and performance by such Borrower of such
Loan Documents and the execution and delivery of the other documents to be
delivered by it in connection herewith;
(g) a certificate executed by an Authorized
Officer of each Borrower, each dated the Closing Date and certifying the names
and true signatures of the officers of each Borrower authorized to sign each
Loan Document to which such Borrower is a party and the other documents to be
executed and delivered by such Borrower in connection herewith, together with
evidence of the incumbency of such Authorized Officer;
(h) a certificate, dated as of a date not more
than 20 Business Days prior to the Closing Date of the appropriate official(s)
of the state of incorporation and each state of foreign qualification of each
Borrower, if any, certifying as to the subsistence in good standing of such
Borrower in such state;
(i) a copy of the certificate of incorporation
or other charter document and all amendments thereto of each Borrower,
certified as of a date not more than 20 Business Days prior to the Closing Date
by the appropriate official of the state of incorporation of such Borrower and
as of the Closing Date by an Authorized Officer of such Borrower;
(j) a copy of the bylaws of each Borrower,
certified as of the Closing Date by an Authorized Officer thereof;
- 20 -
25
(k) a written opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, counsel to Borrowers, dated the Closing Date, in substantially the form
of Exhibit A;
(l) a certificate of the President or a Vice
President of each Borrower, each certifying as to the matters set forth in
Section 4.1.2. and
(m) a copy of any agreement between Borrowers
and the entity selected prior to the Closing Date, if any, to be the cash
investment advisor and primary depository pursuant to Section 2.9 hereof.
4.1.4 No Material Adverse Changes. For the
period from the date of the most recent financial statements submitted to the
Bank through the Closing Date, there shall have been (i) no material adverse
change in, and there shall have occurred no development likely to have a
material adverse effect on, the business, operations, assets or conditions
(financial or otherwise) of the Borrowers taken as a whole and considered as
one enterprise and (ii) no occurrence or event which shall have a material
adverse effect on the rights and remedies of the Bank or on the ability of the
Borrowers to perform their respective obligations to the Bank hereunder
("Material Adverse Effect").
4.1.5 Satisfactory Proceedings. All proceedings
in connection with the making of the Term Loan and the other transactions
contemplated by this Agreement, and all documents incidental thereto, shall be
reasonably satisfactory to the Bank and its counsel, and the Bank and such
counsel shall have received all such information and such counterpart originals
or certified or other copies of such documents as the Bank, or such counsel,
may reasonably request.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of the Borrowers.
Each Borrower hereby jointly and severally represents and warrants as follows:
5.1.1 Existence. Each Borrower is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation in the jurisdictions set forth in the first paragraph on
Page 1 hereof.
- 21 -
26
5.1.2 Corporate Authorizations. Each Borrower
(a) has all requisite corporate power and authority to conduct its business as
now conducted and as presently contemplated to be conducted, and to consummate
the transactions contemplated hereby and by any Loan Document to which it is or
will be a party and (b) is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business makes such
qualification necessary.
5.1.3 Capitalization and Indebtedness.
(a) The authorized and issued stock of
Chrysalis International Corporation ("Chrysalis") is as set forth in its
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. All of the
issued stock of each other Borrower is owned beneficially and of record by
Chrysalis. All of such issued and outstanding shares of capital stock of each
Borrower have been duly authorized, validly issued and are fully paid and
non-assessable. Except as disclosed in the Definitive Proxy Statement of
Chrysalis dated April 30, 1997, no Borrower has outstanding any rights,
options, warrants, conversion rights or agreements for the purchase or
acquisition from such Borrower of any shares of their capital stock.
(b) Schedule 5.1.3 correctly lists all
outstanding Indebtedness for which each Borrower is liable or to which each
Borrower is a party, whether or not indebtedness is outstanding thereunder, and
the maximum amounts of indebtedness which may be incurred thereunder, and there
have heretofore been delivered to the Bank complete and correct copies of all
agreements and other instruments relating to such Indebtedness.
5.1.4 No Violation. The execution, delivery and
performance by each Borrower of each Loan Document to which it is or will be a
party, (a) are within its corporate powers, (b) have been duly authorized by
all necessary corporate action, (c) do not and will not contravene its charter
or by-laws, any law or governmental regulation or any contractual restriction
(other than a restriction with respect to which the Borrowers have secured a
valid waiver or consent) binding on or affecting it or any of its properties,
and (d) do not and will not result in or require the creation of any lien,
security interest or other charge or encumbrance (other than pursuant to any
such Loan Document) upon or with respect to any of its properties, whether now
owned or hereafter acquired.
- 22 -
27
5.1.5 Authorizations and Approvals. Except for
the waivers and consents obtained by the Borrowers with respect for the PIDA
and PNC Loans, no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or other regulatory body is
required for the due execution, delivery and performance by any Borrower of any
Loan Document to which it is or will be a party.
5.1.6 Validity. This Agreement is, and each other Loan
Document to which each Borrower is or will be a party, when delivered
hereunder, will be, a legal, valid and binding obligation of such Borrower,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium and
other laws affecting creditors rights generally and except as may be limited by
equitable principles.
5.1.7 Pending Litigation. There is no action, suit or
proceeding pending or to the knowledge of the Borrowers threatened against or
otherwise affecting any Borrower before any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality, which would
have a Material Adverse Effect.
5.1.8 Financial Statements. The audited annual
consolidated and consolidating financial statements of Chrysalis and its
Consolidated Subsidiaries, dated as of December 31, 1996, and the unaudited
quarterly financial statements of Chrysalis and its Consolidated Subsidiaries,
dated March 31, 1997 fairly present the financial condition of the Borrowers,
as at the respective dates thereof and the results of operations of the
Borrowers described therein for the fiscal periods ended on such respective
dates, all in accordance with generally accepted accounting principles
consistently applied (subject to normal year-end audit adjustments in the case
of interim financial statements).
5.1.9 Solvency. The Borrowers taken as a whole (both
before and after giving effect to the transactions contemplated hereby) are
solvent, have assets (including goodwill) having a fair saleable value in
excess of the amount required to pay their consolidated probable liabilities on
existing debts as they become absolute and matured, and have, and will have,
access to adequate capital for the conduct of their business and the ability to
pay their debts from time to time incurred in connection therewith as such
debts mature.
- 23 -
28
5.1.10 Margin Securities. No Borrower is or will be
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board
of Governors of the Federal Reserve System), and no proceeds of the Term Loan
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock.
5.1.11 Taxes. All Federal, state and local tax returns
and other reports required by applicable law to be filed have been filed, and
all taxes, assessments and other governmental charges imposed upon each
Borrower and which have become due and payable on or prior to the date hereof
have been paid except (a) insofar as extensions have been obtained and are
currently in effect and (b) to the extent contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or lien resulting
from the non-payment thereof and with respect to which adequate reserves have
been set aside for the payment thereof or (c) except as to income taxes,
withholding taxes or sales taxes, where the failure to file such returns or
reports or pay such taxes would not have a Material Adverse Effect.
5.1.12 Compliance with Laws and Agreements. No Borrower
is in violation of (a) its charter or by-laws, (b) any law, governmental
regulation, order or judgment or (c) any term of any agreement or instrument
(other than with respect to which the Borrowers have secured a valid waiver or
consent) binding on or affecting it or any of its properties except insofar as
such violation would not, in the case of clauses (b) and (c), have a Material
Adverse Effect.
5.1.13 Liens. Each Borrower has good and marketable
title to all of its properties and assets and such properties and assets are
free and clear of all liens, security interests and other charges and
encumbrances and other types of preferential arrangements except for Permitted
Liens.
5.1.14 Patents and Trademarks. Each Borrower owns or has
sufficient rights to use all the patents, trademarks, copyrights, licenses and
rights necessary for the present and planned future conduct of their respective
businesses, without any known conflict with the rights of others.
5.1.15 Restrictions on Borrowers. No Borrower is a party
to any contract or agreement, or subject to any charter or
- 24 -
29
other corporate restriction, which would have a Material Adverse Effect. No
Borrower has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of the property of any such
corporation, whether now owned or hereafter acquired, to be subject to a lien,
other than Permitted Liens.
5.1.16 Investment Company Act. No Borrower is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is it controlled by an
"investment company".
5.1.17 The Security Documents. The provisions of the
Security Documents are effective to create in favor of the Bank, a legal, valid
and enforceable security interest in all right, title and interest of each
Borrower in the Collateral except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium and other laws affecting creditors rights
generally and except as may be limited by equitable principles; upon the proper
filing of financing statements as required by the applicable Uniform Commercial
Code the Security Documents shall constitute a fully perfected first lien on,
and security interest in all right, title and interest of such Borrower in the
Collateral described therein to the extent the filing of financing statements
under the Uniform Commercial Code are permissible methods of perfection of
security interests in the Collateral described therein in each such
jurisdiction, subject to no prior liens, except Permitted Liens.
5.1.18 ERISA. Each Pension Plan has complied and has
been administered in all material respects, in accordance with applicable
provisions of ERISA and the Internal Revenue Code. Neither the Borrowers nor
any Commonly Controlled Entity has, as of the date hereof, or during the
immediately preceding six-year period, has had any obligation to contribute to
any Multiemployer Plan. For purposes of the Section, "Pension Plan" means any
"employee pension plan" as defined in Title 3 of ERISA, maintained by
Borrowers; "Multiemployer Plan" means a Pension Plan which is a multiemployee
plan as defined in Section 4001(a)(3) of ERISA; and "Commonly Controlled
Entity" means an entity, whether or not incorporated, which is or was during
the period set forth above under common control with the Borrowers within the
meaning of Section 4001 of ERISA.
- 25 -
30
5.1.19 Insurance. All insurance policies to which the
Borrowers are a party or that provide coverage to the Borrowers or any director
or officer of the Borrowers: (a) are valid, outstanding, and enforceable; (b)
are issued by an insurer that is financially sound and reputable; (c) taken
together, provide adequate insurance coverage for the assets and the operations
of the Borrowers for all risks to which the Borrowers are normally exposed; (d)
are sufficient for compliance in all material respects with all legal
requirements that are applicable to the Borrowers or to the conduct or
operation of their business or the ownership or use of any of their properties
or assets taken as whole; and (e) will continue in full force and effect
following the consummation of the transactions contemplated hereby.
5.1.20 Environmental Compliance.
(a) Each Borrower (including for the purposes
of this Section, any former or current Affiliate or Subsidiary of each
Borrower) is now and has been in compliance with all Environmental Laws, except
where the failure to be in compliance would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) No toxic, hazardous or polluting
substances or wastes ("Hazardous Substances") have been released, discharged or
disposed of, spilled, leaked, pumped, poured, emitted, emptied, injected,
leached, dumped or allowed to escape ("Release") other than as allowed by the
Environmental Laws, at, on, or under any property now owned or occupied by any
Borrower, or during such time as any Borrower formerly owned or occupied any
property, by any Borrower, or to any Borrower's knowledge, by any third party.
(c) No Borrower has received from any federal,
state or local environmental regulatory entity any requests for information,
notices of claim, demand letters, or other notification that in connection with
the ownership or use of any real estate or the conduct of such Borrower's
business, it is or may be potentially responsible with respect to any
investigation or clean-up of Hazardous Substances at any sites.
(d) No Hazardous Substance has come to be
located at any site which is listed or proposed for listing under CERCLA,
Comprehensive Environmental Response, Compensation Liability Information System
(CERCLIS) or on any similar state
- 26 -
31
list, or which is the subject of federal, state or local enforcement actions or
other investigations which may lead to claims against any Borrower or the Banks
for clean-up costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA.
(e) There have been no environmental
inspections, investigations, studies, audits, tests, reviews or other analyses
prepared by or on behalf of any Borrower ("Reports") conducted in relation to
either (i) any property or business now owned, operated, or leased by any
Borrower or (ii) any property previously owned, operated or leased by any
Borrower.
5.1.21 License and Permits. Each Borrower is current and
in good standing with respect to all governmental approvals, permits,
certificates, licenses, inspections, consents and franchises necessary to
continue to conduct its business and to own or lease and operate its properties
as heretofore conducted, owned, leased or operated and as presently
contemplated to be conducted, owned, leased or operated, except where the
failure to be so current or in good standing would not have a Material Adverse
Effect.
5.1.22 Customer and Trade Relations. As of the date
hereof, giving effect to the consummation of the transactions contemplated by
the Loan Documents, there exists no actual or, to Borrowers' knowledge,
threatened termination, cancellation or material limitation of, or any material
modification or material change in:
(a) the business relationship of any Borrower
with any customer or group of customers of such Borrower whose purchases
individually or in the aggregate are material to the operations of the
Borrowers taken as a whole, or
(b) the business relationship of any Borrower
with any material supplier to such Borrower or such Borrower's predecessors,
and, to such Borrower's knowledge, no material customers or suppliers have
notified the Borrowers that they will not continue a business relationship with
such Borrower after the consummation of the transactions contemplated by the
Loan Documents on a basis no less favorable to such Borrower than that
conducted prior to the Closing Date (except where the failure would not have a
Material Adverse Effect);
- 27 -
32
and there exists no other condition or state of facts or circumstance which
would have a Material Adverse Effect or prevent Borrowers from conducting their
respective businesses after the consummation of the transactions contemplated
by the Loan Documents on a basis no less favorable in any material respect to
Borrowers than that in which they have been conducted by Borrowers prior to the
Closing Date.
5.1.23 Labor. There are no strikes, work stoppages or
controversies pending or, to Borrowers' knowledge, threatened, between any
Borrower and any of its employees which would have a Material Adverse Effect.
5.1.24 Survival of Warranties. All representations and
warranties contained in the Loan Documents shall survive the execution and
delivery of the Loan Documents and the termination hereof.
5.1.25 Disclosure. No Loan Document, no schedule or
exhibit thereto and no other document, certificate, report, statement or other
information furnished to the Bank in connection herewith or with the
consummation of the transactions contemplated hereby contains any material
misstatement of fact with respect to Borrowers or omits to state a material
fact with respect to Borrowers necessary to make the statements contained
herein or therein not misleading.
ARTICLE 6
COVENANTS
So long as any Obligation remains outstanding or unsatisfied,
unless the Bank shall otherwise consent in writing, Borrowers jointly and
severally agree to the following:
SECTION 6.1 Financial Covenants of Borrowers.
6.1.1 Current Ratio. Borrowers shall maintain a
ratio of Consolidated Current Assets to Consolidated Current Liabilities of at
least 1.0 to 1.0 as of the end of each calendar quarter throughout the term of
the Term Loan.
- 28 -
33
6.1.2 Consolidated Debt Service Coverage Ratio.
Borrowers and their Consolidated Subsidiaries shall maintain a Consolidated
Debt Service Coverage Ratio at the end of each calendar quarter during the Term
Loan (calculated with respect to the four full consecutive calendar quarters
ending on or immediately after the calculation date) of not less than 1.25 to
1.00 on December 31, 1997 and on March 31, 1998, and a Consolidated Debt
Service Coverage Ratio of 1.50 to 1.00 on June 30, 1998 and thereafter.
6.1.3 Consolidated Tangible Net Worth. Borrowers shall
maintain Consolidated Tangible Net Worth as at the end of each calendar quarter
during the term of the Term Loan through the date set forth below of not less
than the following amounts:
(i) September 30, 1998 - $10,000,000; and
(ii) December 31, 1998 and thereafter -
$11,500,000.
6.1.4 Ratio of Consolidated Total Liabilities to
Tangible Net Worth. Borrowers shall maintain a ratio of Consolidated total
liabilities of Borrowers to Consolidated Tangible Net Worth as of the end of
each calendar quarter during the term of the Term Loan in accordance with the
periods and amounts set forth below:
(i) Until March 31, 1998 - 2.75 to 1.00; and
(ii) June 30, 1998 and thereafter - 2.50 to
1.00
6.1.5 Minimum Cash and Marketable Securities.
At all times during the term of the Term Loan, Borrowers shall maintain (i)
cash and marketable securities on deposit with CoreStates Investment Advisors
(or with another entity selected pursuant to Section 2.9 hereof) of not less
than $3,500,000 and (ii) Consolidated cash and marketable securities of not
less than $3,500,000 (after deduction of all outstanding Consolidated
short-term borrowings). Borrowers shall deliver or cause to be delivered to
the Bank on a monthly basis detailed reports dated as of a recent date in form
reasonably satisfactory to the Bank setting forth a complete description of the
following information with respect to the corporate funds of each of the
Borrowers and their Subsidiaries (i) account and investment business, (ii) the
- 29 -
34
types and amounts of various investment securities, (iii) name of depositary,
location and account number for all accounts containing funds or investments of
Borrowers and their Subsidiaries (both domestic and foreign) and (iv) all loan
balances and short-term borrowings, including all intercompany advances or
investments (whether foreign or domestic).
SECTION 6.2 Reporting Requirements. Borrowers will furnish to
the Bank:
6.2.1 Financial Statements.
(a) As soon as available, and, in no event
later than 90 days after the end of each fiscal year of Chrysalis, its
consolidated and consolidating balance sheet as at the end of such fiscal year
and its related statement of income, retained earnings and cash flows for such
fiscal year, setting forth in comparative form the corresponding figures for
the previous fiscal year, all in reasonable detail and accompanied by a report
and opinion of independent certified public accountants reasonably satisfactory
to the Bank. The Borrower shall deliver to the Bank together with such audited
annual financial statements a certificate in the form of Exhibit D attached
hereto signed by the Chief Financial Officer of Chrysalis, certifying that (1)
he has reviewed the provisions of this Agreement and that no Event of Default
has occurred hereunder, or if an Event of Default has occurred, setting forth
the details thereof, and (2) setting forth in reasonable detail calculations
demonstrating compliance by the Borrowers with the financial covenants
contained in Section 6.1 hereof.
(b) As soon as available, and in any event
within forty-five (45) days after the end of the first three fiscal quarters of
Chrysalis, and within ninety (90) days after the end of the fourth fiscal
quarter of Chrysalis, its consolidated and consolidating balance sheet at the
end of such quarterly period prepared by Chrysalis and the related statements
of income and cash flow and retained earnings of Chrysalis for such quarterly
periods, and in each case setting forth comparative figures for the related
periods in the prior Fiscal Year, subject to normal adjustments. The quarterly
financial statements shall be in reasonable detail and certified by the Chief
Financial Officer of the Borrower as having been prepared in accordance with
GAAP. The Borrower shall deliver to the Bank together with such financial
statements, a certificate, in the form of Exhibit D attached hereto, dated as
of a date within
- 30 -
35
five (5) days of delivery and signed by the Chief Financial Officer of
Chrysalis.
(c) Promptly following request by the Bank,
such other information concerning the Borrower as the Bank may from time to
time reasonably request.
6.2.2 Other Information.
(a) As soon as practicable and in any event
within five (5) Business Days after any Borrower obtains knowledge of the
occurrence of a Default or an Event of Default, any material default in the
fulfillment of or compliance with any of the terms, covenants, provisions or
conditions of any agreement the termination of which would have a Material
Adverse Effect, the written statement of the Chief Financial Officer of such
Borrower setting forth the details of such Event of Default, event or material
adverse change and the statement of such officer setting forth the action which
Borrowers propose to take with respect thereto;
(b) Promptly after the sending thereof, copies
of all statements, reports and other material information which each Borrower
has delivered to any holders of its Indebtedness or its securities or filed
with the Securities and Exchange Commission or any national securities
exchange;
(c) Promptly after receipt thereof, copies of
any report or notice that Borrowers or any of their Affiliates receive from the
Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor, or from any plan sponsor (as defined in Section 3(16)(B)
of ERISA), in respect of any Employee Plan that evidence the Pension Benefit
Guaranty Corporation's intention to terminate any Employee Plan or to have a
trustee appointed to administer any Employee Plan or which concerns the
imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA;
(d) Promptly after the commencement thereof
but in any event not later than ten (10) Business Days after service of process
with respect thereto on, or the obtaining of knowledge thereof by, any
Borrower, notice of each action, suit or proceeding before any court,
arbitrator or governmental department, commission, board, bureau, agency or
instrumentality which, would be reasonably likely to have a Material Adverse
Effect; and
- 31 -
36
(e) Promptly upon request, such other
information concerning the condition or operations, financial or otherwise, of
Borrowers as the Bank, may from time to time reasonably request.
SECTION 6.3 Compliance with Laws, Etc. Each Borrower will
comply with all applicable laws, rules, regulations and orders, such compliance
to include, without limitation, compliance with ERISA with respect to any
Employee Plan, compliance with Environmental Laws, paying before the same
become delinquent all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or its properties, and paying all
lawful claims which if unpaid might become a lien or charge upon any of its
properties, with which the failure to so comply would have a Material Adverse
Effect except to the extent contested in good faith by proper proceedings which
stay the imposition of any penalty, fine or lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof and such contest will not in the reasonable judgment of the
Bank endanger its interest in any Collateral.
SECTION 6.4 Preservation of Existence, Etc. Each Borrower
will maintain and preserve its existence, rights and privileges, except that
any Borrower may merge with another Borrower, and become or remain duly
qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified will not have a Material Adverse Effect.
SECTION 6.5 Obtaining of Permits, Etc. Each Borrower will
obtain, maintain and preserve all permits, licenses, authorizations, approvals
and accreditations necessary or useful in the proper conduct of its business,
except where the failure to so obtain, maintain and preserve will not have a
Material Adverse Effect.
SECTION 6.6 Maintenance of Insurance. The Borrowers shall
maintain in effect insurance (including, without limitation, casualty and fire
insurance, business interruption risk policy, worker's compensation and public
liability insurance) with companies reasonably satisfactory to the Bank and in
such amounts and covering such risks as are customarily carried by companies
engaged in the same or similar business as
- 32 -
37
the Borrowers. The Borrowers agree to pay the cost and periodic premiums of
all such insurance and, upon the Bank's written request, deliver certificates
evidencing such insurance to the Bank. The Borrowers will notify the Bank and
will cause the insurance companies to notify the Bank in writing at least
thirty (30) days prior to lapse, cancellation or termination or any other
change in coverage. Except for worker's compensation, all such insurance
policies shall name the Bank as loss payee pursuant to appropriate endorsements
in form and substance reasonably satisfactory to the Bank.
SECTION 6.7 Maintenance of Properties, Etc. Each Borrower
will (a) maintain and preserve all of its properties necessary in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and (b) comply at all times with the provisions of all leases to
which it is a party as lessee or under which it occupies property, so as to
prevent any material loss or forfeiture thereof or thereunder except where the
failure to so maintain, preserve or comply would not have a Material Adverse
Effect.
SECTION 6.8 Inspection Rights. Each Borrower will permit the
Bank or any agent or representative thereof at any reasonable time and from
time to time and with reasonable prior notice to examine and make copies of and
abstracts from its records and books of account, to visit and inspect its
properties and to discuss its affairs, finances and accounts with any of the
officers thereof. Without limiting the foregoing, the Bank shall have the
right (at its own cost) to perform an annual audit of the Company's books and
records and to verify the Collateral pledged to secure the Obligations. The
costs of such audit, including all out-of-pocket expenses relating thereto,
shall be paid by the Borrowers following any Event of Default.
SECTION 6.9 Operating Accounts. The Borrowers shall transfer
its primary operating accounts to the Bank within 180 days of the Closing Date
and maintain such operating accounts with the Bank throughout the term of the
Term Loan. If Borrowers do not transfer all such operating accounts to the
Bank within 180 days of the Closing Date, Borrowers shall pay the Bank a fee of
$20,000 payable on the 181st day after the Closing Date.
- 33 -
38
SECTION 6.10 Liens on Collateral. No Borrower will create or
suffer to exist, any lien, security interest or other charge or encumbrance, or
any other type of preferential arrangement, upon or with respect to any of its
properties, rights or other assets, whether now owned or hereafter acquired,
which are included in the Collateral, other than the following: (referred to
collectively as "Permitted Liens"):
(a) liens or security interests created
pursuant to the Loan Documents and the notation of such liens or security
interests on the records of such Borrower;
(b) liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken in accordance with generally accepted accounting principles;
(c) deposits or pledges to secure obligations
under worker's compensation, social security or similar laws, or under
unemployment insurance;
(d) deposits or pledges to secure (or deposits
or pledges to secure letters of credit to secure) bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in the
ordinary course of business in an aggregate amount not to exceed $250,000;
(e) judgment liens that have been stayed or
bonded and which are subordinate to the Bank's liens on the Borrowers'
property;
(f) liens on deposits of property or funds
delivered to stay litigation in aggregate amounts not exceeding $250,000;
(g) purchase money security interests not
perfected by possession or filing;
(h) certain existing real estate of the
Borrowers located in Pennsylvania for which mortgages have been granted to the
Pennsylvania Industrial Development Authority and PNC Bank) (the "PIDA and PNC
Loans"); and
- 34 -
39
(i) liens on certain property in connection
with a loan from the Pennsylvania Department of Commerce and liens on phone
systems secured by AT&T Credit Corporation and Master Lease, Division of Tokai
Financial Services, Inc.
(j) other liens incidental to the conduct of
Borrowers' business or the ownership of their real property and assets which
were not incurred in connection with the borrowing of money or the obtaining of
advances or credit, and which do not in the aggregate materially detract from
the value of their real property or materially impair the use thereof in the
operation of the business of the Borrowers taken as a whole and considered as
one enterprise (including but not limited to easements, rights of way, and
similar restrictions or encumbrances not interfering with the ordinary conduct
of business of any Borrower).
SECTION 6.11 Indebtedness. Chrysalis and its Subsidiaries will
not incur any Indebtedness in excess of an aggregate amount of $500,000, except
for amounts outstanding under the PIDA and PNC Loans, other Indebtedness
outstanding as of the Closing Date as identified on Schedule 5.1.3 and amounts
available under credit facilities existing on the Closing Date.
SECTION 6.12 Loans and Investments. Except as specifically
agreed to by the Bank, no Borrower will make any loan or advance (other than
advances in the ordinary course of business with regard to valid business
expenses) or extend credit to any Person, or make any investment in such
Person, or its securities, except (a) investments in United States Treasury
obligations, (b) certificates of deposit, bankers acceptances and other "money
market instruments" issued by the Bank or any other bank or trust company
organized under the laws of the United States or any state thereof and having
capital and surplus not less than $100,000,000, (c) open market commercial
paper bearing Standard & Poor's Corp. highest credit rating or by another
similar nationally recognized firm, and repurchase agreements with any bank or
trust company organized under the laws of the United States or any state
thereof and having capital and surplus not less than $100,000,000 relating to
United States government obligations, in each case maturing in less than one
year, and (d) investments by a Borrower in any other Borrower.
SECTION 6.13 Merger, Consolidation. No Borrower will merge or
consolidate with, purchase, lease or otherwise acquire all or substantially all
of the assets or properties of, or
- 35 -
40
acquire any capital stock, equity interests, debt or other securities of, any
Person; provided, however, that any corporation may be merged into a Borrower
in order to effect any acquisition approved in writing by the Bank (which
approval shall not unreasonably be withheld) and any Borrower may merge with
another Borrower.
SECTION 6.14 Sale of Assets, Etc. Unless consented to by the
Bank in writing, no Borrower will sell, assign, lease or otherwise dispose of
any of its properties or assets (whether now owned or hereafter acquired)
included in the Collateral to any Person, including sale-leaseback
transactions, other than sales of inventory and used equipment in the ordinary
course of business or other sales not in excess of $100,000 in the aggregate in
any Fiscal Year.
SECTION 6.15 Change in Business. None of the Borrowers will
change the fundamental nature of the business it conducts on the Closing Date
during the term of the Term Loan.
SECTION 6.16 Pension Plans. Each Borrower will (a) keep in
full force and effect any and all Employee Plans which are presently in
existence or may, from time to time, come into existence under ERISA, unless
such Employee Plans can be terminated without material liability to such
Borrower in connection with such termination (as distinguished from any
continuing funding obligation); (b) make contributions to all Employee Plans of
such Borrower in a timely manner and in a sufficient amount to comply in all
material respects with all material requirements of ERISA; (c) comply in all
material respects with all material requirements of ERISA which relate to such
Employee Plans so as to preclude the occurrence of any Reportable Event,
Prohibited Transaction or material "accumulated funding deficiency" as such
term is defined in ERISA; and (d) notify the Bank immediately upon receipt by
such Borrower of any notice of the institution of any proceeding or other
action which may result in the termination of any Employee Plan, unless such
Employee Plan can be terminated without material liability to such Borrower in
connection with such termination, and deliver to the Bank, promptly after the
filing or receipt thereof, copies of all reports or notices which such Borrower
files or receives under ERISA with or from the Internal Revenue Service, the
Pension Benefit Guaranty Corporation, or the U.S. Department of Labor. In
addition, none of the Borrowers will incur any obligation to contribute to any
Multiemployer Plan without the prior written consent of the Bank, unless such
obligation to
- 36 -
41
contribute can be terminated without material liability to such Borrower. In
addition, none of the Borrowers will offer any benefits to any of their
respective retirees or dependents or beneficiaries of such retirees under any
welfare benefit plan (as defined in Section 3(1) of ERISA) except (1) benefits
required pursuant to COBRA.
SECTION 6.17 Environmental Compliance. Each Borrower will:
(a) be in compliance with all Environmental
Laws, except where the failure to so comply would not, individually or in the
aggregate, have a Material Adverse Effect;
(b) not Release or cause the Release of any
Hazardous Substances on property owned or occupied by any Borrower (any such
event being hereinafter referred to as a "Hazardous Discharge");
(c) notify the Bank within five (5) Business
Days of any Hazardous Discharge, any oral or written notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the property owned or
occupied by any Borrower, demand letter or complaint, order, claim, penalty
assessment, citation or any other notice, any suit or other proceeding,
administrative, civil or criminal, at law or in equity, pending or threatened
against any Borrower (collectively referred to as "Environmental Complaint")
received from or filed by any person or entity, including any federal, state or
local governmental authority, with respect to any alleged violation of any
Environmental Law or with respect to management of Hazardous Substances or any
other environmental matter in connection with any Borrower's ownership or use
of any real estate or the conduct of its business, and forward a copy of same
to the Bank.
SECTION 6.18 Inconsistent Agreements. No Borrower will enter
into any agreement containing any provision which would be violated or breached
by the Term Loan hereunder or by the performance by Borrowers of their
respective obligations hereunder or under any Loan Document.
SECTION 6.19 Derivatives. No Borrower will make any investment
in or take any position in any derivative securities, including, but not
limited to, foreign exchange contracts,
- 37 -
42
interest rate contracts, interest rate swap agreements, options relating to
debt or equity investments, short sales or similar investments, other than in
the ordinary course of business and not primarily for speculative purposes.
SECTION 6.20 Dividends. None of the Borrowers or any of their
Subsidiaries shall declare or pay any dividends, redeem or repurchase, or make
or pay any other distributions on account of or with respect to any of their
outstanding capital stock, or any warrants or options therefor, other than the
payment of any dividend or distribution to any Borrower by another Borrower or
Subsidiary.
SECTION 6.21 Sale of Patent/License. Notwithstanding the
foregoing, if the Bank consents pursuant to Section 6.14 (such consent not to
be unreasonably withheld) to the sale or other disposition of any of the
Borrowers' patent rights, licenses or royalty fee rights, such sale or other
disposition shall be made for fair market value, and the proceeds will be used
to repay the Term Loan. The Bank shall release its lien with respect to any
assets which are sold pursuant to the Bank's consent.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.1 Events of Default. If any of the following Events
of Default shall occur and be continuing:
7.1.1 Borrowers shall fail to pay any principal
of the Term Note when due (whether by scheduled maturity, acceleration, demand
or otherwise); or
7.1.2 Borrowers shall fail to pay any interest
on the Term Note or any other amount (other than any amount specified in
Section 7.1.1 above) payable hereunder within five (5) Business Days following
the date such payment is due or declared due; or
7.1.3 Any representation or warranty made by any
Borrower or any officer of any Borrower in any Loan Document or certificate or
writing delivered pursuant to any Loan Document shall have been incorrect in
any material respect when made; or
- 38 -
43
7.1.4 Any Borrower shall fail to perform or observe the
covenants set forth in Sections 6.1, 6.10 through 6.15, and 6.19; or
7.1.5 Any Borrower shall fail to perform or observe any
term, covenant, condition or agreement contained in any Loan Document (other
than a term, covenant, condition or agreement a default in the performance of
which is elsewhere in this Section specifically dealt with) to be performed or
observed by Borrowers and such failure shall remain unremedied for ten (10)
days in the case of a failure under Section 6.2 hereof or 20 days after an
executive officer of any Borrower shall have knowledge of such failure or any
Borrower shall have received written notice of such failure in the case of any
other such failure; or
7.1.6 Any Borrower shall (a) fail to pay any of
its Indebtedness (excluding Indebtedness evidenced by the Term Note) exceeding
$250,000 in the aggregate or any interest or premium thereon, when due (whether
by scheduled maturity, 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 Indebtedness unless such failure is
waived prior to the expiration of such grace period, or (b) fail to perform or
observe any term, covenant or condition to be performed or observed by it under
any agreement or instrument relating to any such Indebtedness when required to
be performed or observed, and such failure shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such failure to perform or observe is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness exceeding $250,000, or any
such Indebtedness 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
7.1.7 Borrower shall be unable or fail, or admit in
writing, its inability to pay its debts as they become due, or shall make a
general assignment for the benefit of creditors; or any petition shall be filed
by or against any such Person under the Federal bankruptcy laws, or any other
proceeding shall be instituted by or against any such Person seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or
- 39 -
44
the appointment of a receiver, trustee, custodian or other similar official for
such Person or for any substantial part of its property; or such Borrower shall
take any action to authorize or effect any of the actions set forth above in
this subsection; or
7.1.8 Any material provision of any Loan Document shall
at any time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Borrower, or a proceeding
shall be commenced by Borrowers, or by any governmental agency or authority
having jurisdiction over any Borrower, seeking to establish the invalidity or
unenforceability thereof, or any Borrower shall deny that it has any liability
or obligation purported to be created under any Loan Document; or
7.1.9 The Security Agreement, or any other Security
Document, after delivery thereof, shall for any reason, fail or cease to create
a valid and perfected, and except to the extent permitted by the terms hereof
or thereof, first priority lien on or security interest in any of the
Collateral purported to be covered thereby, unless such failure is cured within
ten (10) days after an executive officer of any Borrower has knowledge hereof
or any Borrower receives written notice thereof; or
7.1.10 A judgment or order for the payment of money
exceeding any applicable insurance coverage by more than $500,000 shall be
rendered against any Borrower which remains unsatisfied and (a) either
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (b) there shall be any period of 20 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
7.1.11 If (a) any Reportable Event creates a possibility
of the termination of any Employee Plan or of the appointment by the
appropriate United States District Court of a trustee to administer any such
Plan, shall have occurred and be continuing 30 days after written notice to
such effect shall have been given the Bank, or (b) any Borrower withdraws from
any Multiemployer Plan, or (c) the plan administrator of any Employee Plan
files with the Pension Benefit Guaranty Corporation a notice of intention to
terminate such Plan, or (d) the Pension Benefit Guaranty Corporation institutes
proceedings to terminate any such Plan or to appoint a trustee to administer
any such Plan, and if,
- 40 -
45
in any of the cases described in the foregoing clauses (a) through (d), the
Bank further reasonably determines that the "amount of unfunded guaranteed
benefits" (as defined by Section 4001(a)(17) of ERISA) resulting upon
termination of such Employee Plan or the amount of liability resulting from the
withdrawal from any such Multiemployer Plan would have a Material Adverse
Effect; or
7.1.12 If any Borrower becomes a party to any litigation
which will cause such Borrower to be obligated for damages in excess of
$2,000,000 or any other material litigation which the Bank reasonably believes
may have a Material Adverse Effect on the Borrower; or
7.1.13 Any other event shall have occurred that would
have a Material Adverse Effect; or
7.1.14 An "Event of Default" (as defined in any Loan
Document) shall occur and be continuing;
then, the Bank at its option and at any time by notice to Borrowers, may do one
or more of the following: (a) declare the Term Note, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Term Note, all such interest and all such amounts shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrowers; (b) exercise any and all of its other rights under applicable law,
hereunder and under the other Loan Documents; and (c) require the Borrowers to
deposit with the Bank cash collateral ("Cash Collateral") consisting of cash
and marketable securities in an amount at least equal to (a) the outstanding
balance of all Obligations due under the Term Loan minus (b) the sum of (i) 50%
of Borrowers' Eligible Accounts Receivable as of a recent date, plus (ii) the
aggregate amount of cash received by Borrowers in the immediately preceding
Fiscal Year from microinjection revenues, license fees and royalty fees,
provided, however, that all one-time, non-recurring and other lump sum payments
made during such Fiscal Year shall be excluded from the calculation of the cash
received by Borrowers from such revenues and fees. For purposes hereof,
"Eligible Accounts Receivable" shall mean Borrowers' rights to payment for
goods sold or services rendered in the ordinary course of business to
non-Affiliated parties, but excluding receivables which are more than ninety
(90) days past due, chargebacks, ineligible account debtors (as reasonably
determined by the Bank), accounts of any
- 41 -
46
debtor where 50% of more of such debtor's accounts are past due, foreign
accounts, government accounts, accounts subject to setoff or offset, accounts
or debtors which have filed for bankruptcy and other accounts reasonably deemed
ineligible by the Bank; provided, that no notice need be given to any Borrower
upon the occurrence of any Event of Default described in Section 7.1.7 and the
Obligations shall be automatically accelerated.
7.1.15 Non-Waiver. The remedies provided herein, and in
any other Loan Document or otherwise available to the Bank at law or in equity,
and any warrants of attorney therein contained, shall be cumulative and
concurrent, and may be pursued singly, successively or together at the sole
discretion of Bank, and may be exercised as often as occasion therefor shall
occur; and the failure to exercise any such right or remedy shall in no event
be construed as a waiver or release of the same.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Notices, Etc. All notices and other
communications provided for hereunder shall be in writing and shall be mailed,
telecopied or delivered, if to Borrowers, to each of them c/o Chrysalis
International Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chief Financial Officer, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇, Day,
▇▇▇▇▇▇ & ▇▇▇▇▇, North Point, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, if to
the Bank at its address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Middle Market Manager or, as to each party, at such other address as
shall be designated by such party in a written notice to the other parties
complying as to delivery with the terms of this Section 8.1. All such notices
and other communications shall be effective (a) if mailed, when received or
three Business Days after mailing, whichever is earlier; (b) if telecopied,
when received; or (c) if delivered, when delivered, except that notices to the
Bank pursuant to Article 2 shall not be effective until received by the Bank.
SECTION 8.2 Amendments, Etc. No amendment of any provision of
this Agreement or the Term Note shall be effective unless it is in writing and
signed by Borrowers and the Bank, and no waiver of any provision of this
Agreement or the Term Note, nor consent to any departure by either Borrower
therefrom, shall be effective unless it is in writing and signed by the Bank,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
- 42 -
47
SECTION 8.3 No Waiver; Remedies, Etc. No failure on the part
of the Bank to exercise, and no delay in exercising, any right hereunder or
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right. The
rights and remedies of the Bank provided herein and in the other Loan Documents
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law. The rights of the Bank under any Loan Document
against any party thereto are not conditional or contingent on any attempt by
the Bank to exercise any of its rights under any other Loan Document against
such party or against any other Person.
SECTION 8.4 Fees, Costs, Expenses and Taxes. Whether or not
the Term Loan is made hereunder or the transactions contemplated hereby are
consummated, Borrowers will pay on demand all fees, costs and expenses in
connection with the preparation, execution, delivery, filing, and recording of
the Loan Documents and the other documents to be delivered under the Loan
Documents, including, without limitation, the reasonable fees, out-of-pocket
expenses and other reasonable disbursements of Dechert Price & ▇▇▇▇▇▇, counsel
to the Bank, and of any other counsel retained by the Bank with respect thereto
and with respect to advising the Bank as to its rights and responsibilities
under the Loan Documents (provided that such legal fees are not to exceed
$15,000 and shall be paid from the Committment Fee previously paid by Borrowers
pursuant to Section 4.1.1), and all costs and expenses, if any, in connection
with any waiver or amendment of any Loan Document or in connection with the
enforcement of the Loan Documents and the other documents to be delivered under
the Loan Documents and in connection with any inspection conducted by the Bank.
In addition, Borrowers will pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording of the Loan Documents and the other documents to be
delivered under the Loan Documents, and will save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
SECTION 8.5 Indemnity. Each Borrower agrees to indemnify the
Bank and its Affiliates, directors, officers, employees, agents and controlling
persons against, and to hold the Bank and each such Person harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted
- 43 -
48
against the Bank or any such Persons arising out of, in any way in connection
with, or as a result of (i) this Agreement, any of the Loan Documents and the
other documents contemplated hereby or thereby, the performance by the parties
hereto and thereto of their respective obligations hereunder and thereunder and
consummation of the transactions contemplated hereby and thereby, or (ii) any
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not the Bank or any such Person is a party thereto, or
(iii) breach of any representation, warranty or covenant hereof, or (iv)
environmental conditions, including without limitation, the presence of
Hazardous Substances at, on, under or within any property owned or occupied by
Borrowers, the Release or threat of Release of Hazardous Substances at such
property whether into the air, soil, ground or surface waters, or any
Environmental Complaint (as defined in Section 6.17); provided, however, any
such indemnity provided for in clause (i) through (iv) above shall not as to
the Bank, apply to any such losses, claims, damages, liabilities or related
expenses arising from its bad faith, gross negligence or wilful misconduct.
Borrowers agree to respond on the Bank's behalf to any matter subject to
subsections (iii) and (iv) above or, at the Bank's election, to pay the costs
of the Bank's response. Borrowers hereby waive and release the Bank from any
and all losses, claims, damages, and liabilities, known or unknown, foreseen or
unforeseen, which exist or which may arise in the future under common or
statutory law, including CERCLA or any other Environmental Laws now or
hereafter in effect. The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement or any other of the Loan Documents, the repayment of the Term Loan,
the invalidity or unenforceability of any term or provision of this Agreement,
the Term Note or any other Loan Document, or any investigation made by or on
behalf of the Bank. All amounts due under this Section shall be payable on
written demand therefor.
SECTION 8.6 Right of Set-off. Upon occurrence and during the
continuance of any Event of Default and the declaration by the Bank that the
Term Note is due and payable, the Bank may, and is hereby authorized at any
time and from time to time, without notice to Borrowers (any such notice being
expressly waived by Borrowers) and to the fullest extent permitted by law, to,
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of Borrowers against any and
all
- 44 -
49
obligations of Borrowers now or hereafter existing under this Agreement and the
Term Note held by the Bank, irrespective of whether or not the Bank shall have
made any demand under this Agreement or the Term Note and although such
obligations may be contingent or unmatured. The Bank agrees promptly to notify
Borrowers after any such set-off and application made by the Bank, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Bank under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Bank may have.
SECTION 8.7 Severability of Provisions. Any provision of this
Agreement, or of any other Loan Document, which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or invalidity without invalidating the remaining
portions hereof or thereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 8.8 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of each Borrower, and the Bank and their
respective successors and assigns, except that neither Borrower shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Bank.
SECTION 8.9 Assignment and Participation.
(a) The Bank shall have the right from time to
time to assign to one or more assignees all or any portion of its commitment to
make loans to in its interest in the Obligations of the Borrowers hereunder and
correspondingly delegate its duties thereunder; provided, however, that such
consent of Borrowers shall not be required if an Event of Default has occurred
and is continuing.
(b) The Bank may sell participations to one or
more banks or other financial institutions in all or a portion of its rights
and obligations under this Agreement (including, without limitation all or a
portion of its Commitment, the advances owing to it and the Obligations held by
it); provided, however, that (a) the Bank's obligations under the Loan
Documents remain unchanged, (b) the Bank shall remain solely responsible to the
other parties for performance of such
- 45 -
50
obligations, (c) the Bank shall remain the holder of any Note for all purposes
of this Agreement, (d) the Borrower shall continue to deal solely and directly
with the Bank in connection with the Bank's rights and obligations under this
Agreement and (e) the Bank shall not grant participants any voting rights
except as such rights relate to changes in interest rates, fees, amounts of
payments or terms of payments.
SECTION 8.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 8.11 Waiver of Jury Trial; Consent to Jurisdiction.
(a) EXCEPT AS PROHIBITED BY LAW, EACH PARTY
HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
(b) EACH BORROWER IRREVOCABLY SUBMITS AND
CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF A STATE OR FEDERAL COURT SITTING
IN PENNSYLVANIA OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE
LOAN DOCUMENTS, AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
PENNSYLVANIA STATE OR FEDERAL COURT. EACH BORROWER AGREES THAT SERVICE OF
COPIES OF ANY SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED
IN ANY SUCH ACTION MAY BE MADE BY MAILING BY REGISTERED MAIL OR DELIVERING A
COPY OF SUCH PROCESS TO EACH BORROWER AT THE ADDRESS SPECIFIED IN SECTION 8.1.
SECTION 8.12 Governing Law. This Agreement and the Term Note
shall be governed by, and construed in accordance with, the law of
Pennsylvania.
SECTION 8.13 Termination. Upon the payment and satisfaction of
all principal, interest, fees and other sums due and owing under this Agreement
and termination of the Commitments hereunder or release of the Obligations,
this Agreement, except for the provisions of Section 8.5 hereof, shall
terminate and the Bank's liens on the Collateral will be released.
- 46 -
51
SECTION 8.14 Joint and Several Liability. Each Borrower agrees
that the obligations of the Borrowers hereunder are joint and several. Each
Borrower acknowledges that it is substantially dependent upon the other
Borrowers, and that a loan to any Borrower directly benefits the other
Borrowers in providing sufficient inventory and capital for all Borrowers.
SECTION 8.15 Entire Agreement. This Agreement and the
agreements referred to herein contain the entire agreement and understanding of
the parties hereto respecting the subject matter hereof, and supersede and
replace all prior agreements and understandings with respect thereto, whether
written or oral.
- 47 -
52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
CHRYSALIS INTERNATIONAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇ ▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
CHRYSALIS INTERNATIONAL PRECLINICAL
SERVICES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
CHRYSALIS DNX TRANSGENIC SCIENCES
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
CHRYSALIS INTERNATIONAL CLINICAL
SERVICES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
CORESTATES BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
- 48 -