LOAN AGREEMENT
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THIS LOAN AGREEMENT (this "AGREEMENT") is made this 18th day of September,
2002, by and between WORLDWIDE MEDICAL CORPORATION, a Delaware corporation
("BORROWER") and ▇▇▇▇▇▇▇ HEALTHCARE FUND I, L.P., a Delaware limited partnership
("LENDER").
R E C I T A L S:
Borrower has requested that Lender make a loan to Borrower in the principal
sum of $1,650,000. Lender has agreed to make such loan on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING PRINCIPLES, UCC TERMS.
1.1. DEFINITIONS. As used in this Agreement, the terms below shall
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have the following meanings, unless the context hereof shall otherwise indicate:
"APPLICABLE ENVIRONMENTAL LAW" shall mean any applicable federal, state or
local law, rule or regulation pertaining to health or the environment, or
petroleum products, or radon radiation, or oil or hazardous substances,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA") and the Federal
Emergency Planning and Community Right-To-Know Act of 1986, as amended. The
terms "hazardous substance" and "release" shall have the meanings specified in
CERCLA, and the terms "solid waste," "disposal," "dispose," and "disposed" shall
have the meanings specified in RCRA, except that if such acts are amended to
broaden the meanings thereof, the broader meaning shall apply herein
prospectively from and after the date of such amendments; notwithstanding the
foregoing, provided, to the extent that the laws of the state in which the
assets of Borrower are located establish a meaning for "hazardous substance" or
"release" which is broader than that specified in CERCLA, as CERCLA may be
amended from time to time, or a meaning for "solid waste," "disposal," and
"disposed" which is broader than specified in RCRA, as RCRA may be amended from
time to time, such broader meanings under said state law shall apply in all
matters relating to the laws of such state.
"ASSIGNMENT AND PLEDGE OF DEPOSIT ACCOUNT" shall have the meaning set forth
in Section 2.12.
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"BUSINESS DAY" shall mean a day, other than Saturday or Sunday and legal
holidays, when Lender is open for business.
"CHANGE IN CONTROL" shall mean: (a) a merger or consolidation of Borrower
where Borrower is not the surviving corporation, or if it is the surviving
corporation, such transaction resulted in a change in its Board of Directors,
such that a majority of the individuals who comprise the Board of Directors
immediately prior to such transaction (or series of related transactions) do not
constitute a majority of the Board of Directors after such transaction, (or if
such individuals continue to constitute a majority of the Board of Directors the
transaction vested in another Person(s) and/or entity(ies) any super-majority
voting rights); or (b) a sale of stock by Borrower or by any stockholder (or
group of stockholders) such that such transaction (or series of transactions)
results in a party or parties who had not previously owned a majority of the
outstanding voting shares of Borrower, owning such majority stake following such
transaction (or series of transactions).
"CLOSING DATE" shall mean the date on which all or any part of the Loan is
disbursed by Lender to or for the benefit of Borrower.
"COLLATERAL" shall mean, collectively, all assets of Borrower, including,
but not limited to, (i) the FDA approved 510(k) over the counter clearances,
patents, trademarks, and all other Trade Rights, (ii) accounts receivable, (iii)
inventory, (iv) owned equipment, (v) all rights arising under private label
contracts, distribution agreements and escrow accounts, (vi) the Key Man
Insurance Policies, (v) all tangible and intangible personal property interests,
and all proceeds of the foregoing, and all other property which is or hereafter
may become subject to a Lien in favor of Lender as security for any of the Loan
Obligations.
"COUPON PAYMENTS" has the meaning set forth in the Note.
"COUPON RATE" shall mean a per annum rate of fourteen percent (14%).
"DEFAULT" shall mean the occurrence or existence of any event which, but
for the giving of notice or expiration of time or both, would constitute an
Event of Default.
"DISTRIBUTION AGREEMENTS" shall mean each Distribution Agreement listed on
Exhibit 1.1(a).
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"EVENT OF DEFAULT" shall mean any "Event of Default" as defined in Section
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6.1.
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"EXHIBIT" shall mean an Exhibit to this Agreement, unless the context
refers to another document, and each such Exhibit shall be deemed a part of this
Agreement to the same extent as if it were set forth in its entirety wherever
reference is made thereto.
"FDA" shall mean the Food and Drug Administration of the United States
Department of Health and Human Services.
"FORBEARANCE AGREEMENTS" shall mean the agreements with the creditors
listed on Exhibit 1.1(b) which agreements contain terms and conditions that are
acceptable -------------- to Lender in its sole discretion.
"GAAP" shall mean, as in effect from time to time, generally accepted
accounting principles consistently applied as promulgated by the American
Institute of Certified Public Accountants.
"GOVERNMENTAL ENTITY" shall have the meaning set forth in Section 3.20.
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"INDEBTEDNESS" shall mean any (a) obligations for borrowed money, (b)
obligations representing the deferred purchase price of property other than
accounts payable arising in connection with the purchase of inventory customary
in the trade, (c) obligations, whether or not assumed, secured by Liens or
payable out of the proceeds or production from property now or hereafter owned
or acquired, and (d) the amount of any other obligation (including obligations
under financing leases) which would be shown as a liability on a balance sheet
prepared in accordance with GAAP.
"INSURANCE POLICIES" shall have the meaning set forth in Section 3.14.
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"KEY MAN INSURANCE POLICIES" shall have the meaning set forth in Section
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4.19.
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"LENDER'S APPROVAL" shall have the meaning set forth in Section 7.10.
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"LIEN" shall mean any voluntary or involuntary mortgage, security deed,
deed of trust, deed to secure debt, lien, pledge, assignment, security interest,
title retention agreement, financing lease, levy, execution, seizure, judgment,
attachment, garnishment, charge, lien or other encumbrance of any kind,
including those contemplated by or permitted in this Agreement and the other
Loan Documents.
"LOAN" shall mean the loan in the principal sum of $1,650,000 (the
"ORIGINAL LOAN AMOUNT") made by Lender to Borrower on or about the date hereof
as evidenced by the Note, plus any capitalized interest pursuant to the terms of
this Agreement or the Note (but nothing herein shall require that Lender advance
more than the Original Loan Amount).
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Warrant, the Security Agreement, the Rights Agreement, the Assignment and Pledge
of Deposit Account and the Forbearance Agreements, together with any and all
other documents executed by Borrower or others, evidencing, securing, or
otherwise relating to the Loan.
"LOAN OBLIGATIONS" shall mean the aggregate of all principal (including
capitalized interest) and interest owing from time to time under the Note and
all expenses, fees, premiums, charges and other amounts from time to time owing
under the Note, this Agreement, or the other Loan Documents and all covenants,
agreements and other obligations from time to time owing to, or for the benefit
of, Lender pursuant to the Loan Documents.
"LOAN YEAR" shall mean the period from the date of this Agreement to and
including September 20, 2003 and each twelve (12) month period thereafter.
"MATERIAL ADVERSE EFFECT" shall have the meaning set forth in Section 3.6.
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"MATURITY DATE" shall mean September 20, 2007.
"NOTE" shall mean the Promissory Note of even date herewith in the
principal amount of the Loan payable by Borrower to the order of Lender.
"PERMITS" shall mean all licenses, permits, certificates, approvals,
authorizations and registrations obtained from any Governmental Entity or
quasi-governmental authority and used or useful in connection with the
ownership, operation, use or occupancy of the business of Borrower or relating
to the Collateral.
"PERSON" shall mean any person, firm, corporation, partnership, limited
liability company, trust or other entity.
"PRO FORMA SCHEDULE" shall have the meaning set forth in Section 2.5(a)(3).
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"RIGHTS AGREEMENT" shall have the meaning set forth in Section 2.3.
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"SEC" shall mean the Securities and Exchange Commission.
"SECURITY AGREEMENT" shall have the meaning set forth in Section 2.4.
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"TRADE RIGHTS" shall have the meaning set forth in Section 3.24.
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"WARRANT" shall have the meaning set forth in Section 2.2.
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"▇▇▇▇▇▇▇ DEBT" shall mean any indebtedness now or hereafter owing to Lender
by Borrower, whether primary or secondary, fixed or contingent, individually or
jointly with others.
1.2. SINGULAR VS. PLURAL. Singular terms shall include the plural
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forms and vice versa, as applicable, relative to the terms defined.
1.3. UNIFORM COMMERCIAL CODE. Terms contained in this Agreement shall,
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unless otherwise defined herein or unless the context otherwise indicates, have
the meanings, if any, assigned to them by the Uniform Commercial Code in effect
in the state in which Collateral for the Loan Obligations is deemed located, as
such Uniform Commercial Code may be amended from time to time (provided no
amendment shall have the effect of releasing any security interest previously
granted).
1.4. GAAP. All accounting terms used in this Agreement shall be
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construed in accordance with GAAP, except as otherwise defined.
1.5. REFERENCES. All references to other documents or instruments shall
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be deemed to refer to such documents or instruments as they may hereafter be
extended, renewed, modified, or amended and all replacements and substitutions
therefor.
ARTICLE II
TERMS OF THE LOAN
2.1. THE LOAN. Borrower has agreed to borrow from Lender, and Lender
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has agreed to make the Loan to Borrower, subject to Borrower's compliance with
and observance of the terms, conditions, covenants, and provisions of this
Agreement and the other Loan Documents, and Borrower has made the covenants,
representations, and warranties herein and therein as a material inducement for
Lender to make the Loan.
2.2. WARRANTS. At the Closing, Borrower shall issue to Lender a
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warrant or warrants (the "WARRANT") for the purchase by Lender or Lender's
assignee, of 2,475,000 shares of Borrowers common stock, subject to certain
adjustments and upon the terms and conditions as set forth in the form of
Warrant attached hereto as Exhibit 2.2.
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2.3. RIGHTS AGREEMENT. At the Closing, Borrower, Lender and certain
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stockholders of Borrower shall enter into a Rights Agreement in form attached
hereto as Exhibit 2.3 (the "RIGHTS AGREEMENT"), pursuant to which, among other
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things, Lender shall be granted full observation rights, in person or by
telephone conference call, for two representatives of Lender to attend all
meetings of the Board of Directors of Borrower, the Executive Committee of the
Board of Directors, the Audit Committee of the Board of Directors and the
Finance Committee of the Board of Directors.
2.4. SECURITY FOR THE LOAN. The Loan will be secured by the Collateral
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in accordance with the terms and condition of a Security Agreement in the form
attached hereto as Exhibit 2.4 (the "SECURITY AGREEMENT") to be entered into
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between Borrower and Lender at Closing.
2.5. ADDITIONAL CLOSING DELIVERABLES BY BORROWER. At Closing, Borrower
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shall deliver to Lender the following:
(a) Officers Certificate. A certificate executed by the Chief
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Executive Officer and Chief Financial Officer of Borrower certifying to Lender
that:
(1) Borrower has entered into employment agreements for a period of not
less than three years with each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as President and Chief
Executive Officer, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as Chief Financial Officer, and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Ph.D., as Chief Science Officer which employment agreements are on
commercially reasonable terms;
(2) Borrower has delivered to Lender the current financial statements
of Borrower, which consisted of Borrower's most recent periodic report with the
SEC on Form 10-Q and that such financial statements were accurate and complete;
(3) The base case pro forma schedule (the "PRO FORMA SCHEDULE")
attached as Schedule A to such Officers Certificate is true and correct in all
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material respects;
(4) Borrower has entered into Distribution Agreements set forth on
Schedule B
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to such Officers Certificate and such Distribution Agreements are sufficient to
meet the gross revenue projected in the Pro Forma Schedule;
(5) All manufacturing agreements and private label contracts for
products to be sold, as included in the Pro Forma Schedule, are in full force
and effect, without any default by Borrower or, to the knowledge of Borrower, by
any third party to such contracts.
(6) The amount of outstanding liabilities set forth opposite the
creditors names on Exhibit 1.1(b) that is not payable from the allocable portion
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of the proceeds of the Loan in accordance with Section 2.12 has been paid in
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full and that Borrower did not incur any additional Indebtedness (other than
bridge financing to be paid off by the proceeds of this Loan) to raise the
capital necessary to pay such amounts, nor did Borrower grant any security
interests or other rights in any of the assets of Borrower as a condition of
raising such additional funds.
(b) Legal Opinion. A legal opinion of Borrower's counsel, in form and
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content satisfactory to Lender and its counsel, which opinion shall include, but
shall not be limited to, the existence of Borrower, the authorization of the
borrowing, the due execution, enforceability, and delivery of the Loan Documents
and the perfection and priority of Lender's security interest in the Collateral
as described in the Security Agreement.
(c) Evidence of Gross Sales. Evidence, satisfactory to Lender, of a
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minimum of $600,000 in gross sales of goods for the months of July and August,
2002, on price and other terms consistent with past practices (which practices
have been previously disclosed to Lender.)
(d) Schedule of Outstanding Debts. A schedule of outstanding debts,
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settlements, payables and other obligations that are outstanding as of the
Closing Date, which schedule is acceptable, in substance, to Lender, in its sole
discretion.
2.6. INTEREST AND INTEREST RATE.
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(a) The outstanding principal balance of the Loan will bear interest as
provided in the Note and payments of principal and interest on the Loan shall be
made in accordance with the Note and the amortization schedule attached hereto
as Exhibit 2.6(a).
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(b) All interest on the outstanding principal balance of the Loan shall
be calculated on the basis of a 360-day year by multiplying the outstanding
principal amount by the applicable per annum rate, multiplying the product
thereof by the actual number of days elapsed, and dividing the product so
obtained by 360.
(c) Borrower acknowledges that the Loan may be funded in one or more
traunches after the Closing Date but that interest shall accrue on the full
amount of the Loan as of September 18, 2002.
2.7. REPAYMENT OF LOAN. Each payment of the Loan Obligations shall be
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paid directly to Lender in lawful money of the United States of America at the
following address:
▇▇▇▇▇▇▇ Healthcare Fund I, L.P.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇ ▇▇▇▇▇
or such other place as Lender shall designate in writing to Borrower. Each such
payment shall be paid in immediately available funds by 2:00 p.m. eastern time
on the date such payment is due, except if such date is not a Business Day such
payment shall then be due on the first Business Day after such date, but
interest shall continue to accrue until the date payment is received. Any
payment received after 2:00 p.m. Eastern time shall be deemed to have been
received on the immediately following Business Day for all purposes, including,
without limitation, the accrual of interest on principal.
2.8. PREPAYMENT.
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(a) The Loan may be prepaid, in whole or in part, provided partial
prepayments may only be made on a scheduled payment date and in increments of
$250,000, upon not less than thirty (30) days' prior written notice to Lender
specifying the scheduled payment date on which such prepayment will be made and
the amount of such prepayment, and provided further that all prepayments must
include all unpaid interest (including Additional Interest as defined in the
Note) on the part of the Original Loan Amount prepaid plus a premium upon the
Original Loan Amount prepaid equal to five percent (5%) in the first Loan Year,
four percent (4%) in the second Loan Year, three percent (3%) in the third Loan
Year, two percent (2%) in the fourth Loan Year and one percent (1%) in the fifth
Loan Year.
(b) Borrower shall not be entitled to reborrow any amounts so prepaid.
2.9. LATE CHARGES ON OVERDUE INSTALLMENTS; COLLECTION COSTS.
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(a) If any scheduled payment of principal or interest, or any other
agreed charge, is not made on or before the tenth (10th) day after the same
became due, Borrower agrees to pay to Lender a late charge equal to five percent
(5%) of the amount of the payment or charge which is in Default.
(b) Borrower will also pay to Lender, in addition to the amount due,
all reasonable costs of collecting, securing, or attempting to collect or secure
the Note, including, without limitation, court costs and reasonable attorneys'
fees, including, without limitation, reasonable attorneys' fees for preparation
of litigation and in any appellate and bankruptcy proceedings.
2.10. USURY PROVISIONS. In no event shall the amount of interest due
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or payable hereunder or pursuant to any of the Loan Documents exceed the maximum
rate of interest allowed by applicable law, and in the event any such payment is
inadvertently paid by Borrower or inadvertently received by Lender, then such
excess sum shall be credited as a payment of principal. It is the express
intent hereof that Borrower not pay and Lender not receive, directly or
indirectly, interest in excess of that which may be legally paid by Borrower
under applicable law.
2.11. FEES. Borrower shall pay to Lender the following fees: (a) a
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closing fee of four percent (4%) of the Loan due upon the Closing Date; and (b)
an application fee of one percent (1%) of the Loan (which has already been
received.) All fees are deemed fully earned on the date due.
2.12. USE OF LOAN. Borrower agrees to use the Loan for the following:
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(a) $416,666 of the Loan shall be deposited in an account of Borrower
with a financial institution acceptable to Lender, the withdrawals from which
may be made only with the joint signature (or other approval made directly to
the financial institution) of a representative of each of Borrower and Lender
all as more particularly set forth in the Assignment and Pledge of Deposit
Account (the "ASSIGNMENT AND PLEDGE OF DEPOSIT ACCOUNT") a form of which is
attached hereto as Exhibit 2.12(a) (and which shall be subject to Lender's
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security interest as set forth in the Security Agreement.) This amount shall be
used by Borrower solely for obtaining new distribution agreements for Borrower's
products on terms that are commercially reasonable and consistent with
Borrower's past practices, or as otherwise approved by Lender in its sole
discretion.
(b) $953,545.07 shall be used for repayment of the liabilities set
forth in Exhibit 1.1(b), and any other to which Lender and Borrower mutually
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agree, which repayments shall include appropriate releases or other standstill
agreement of the creditors (where repayment is for less than the full amount
then owing all as set forth in an individual Forbearance Agreement with each
such creditor.)
(c) The balance of the Loan shall be used for working capital in
accordance with the schedule of payments attached hereto as Exhibit 2.12(c) or
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as otherwise consented to by Lender, in Lender's sole discretion.
2.13. MISCELLANEOUS.
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(a) With respect to the amounts due under the Note, Borrower waives the
following to the fullest extent permitted by law:
(1) All rights of exemption of property from levy or sale under
execution or other process for the collection of debts under the Constitution or
laws of the United States or any state thereof; and
(2) Demand, presentment, protest, notice of dishonor, notice of
non-payment, diligence in collection, and all other requirements necessary to
enforce the Note; and
(3) Any further receipt by Lender or acknowledgment by Lender of any
Collateral now or hereafter deposited with Lender as security for the Loan.
2.14. SBA ACKNOWLEDGMENT. Borrower acknowledges that Lender is a
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Federal Licensee under the Small Business Investment Act of 1958, as amended.
ARTICLE III
BORROWER'S REPRESENTATIONS AND WARRANTIES.
To induce Lender to enter into this Agreement, and to make the Loan to
Borrower, Borrower represents and warrants to Lender as follows:
3.1. EXISTENCE, POWER AND QUALIFICATION. Borrower is a corporation
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duly organized, validly existing and in good standing under the laws of the
state of formation as set forth in the heading of this Agreement. Borrower has
the power to own its properties and to carry on its business as is now being
conducted, and is duly qualified to do business and is in good standing in every
jurisdiction in which the character of the properties owned by it or in which
the transaction of its business makes its qualification necessary.
3.2. POWER AND AUTHORITY. Borrower has full power and authority to
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borrow hereunder and to incur the obligations provided for herein and in each of
the other Loan Documents to which Borrower is a party, all of which have been
authorized by all proper and necessary corporate action.
3.3. DUE EXECUTION AND ENFORCEMENT. Each of the Loan Documents to
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which Borrower is a party constitutes a valid and legally binding obligation of
Borrower, enforceable against Borrower in accordance with its respective terms
and does not violate, conflict with, or constitute any default under any law,
government regulation, decree, judgment, Borrower's organizational documents (as
applicable) or any other agreement or instrument binding upon any Borrower.
3.4. CAPITALIZATION. Borrower's authorized capital stock is as set
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forth in Exhibit 3.4 hereto, and a copy of Borrower's stockholder list as of
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September 13, 2002, plus an addendum thereto is attached as Exhibit 3.4 hereto.
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All such issued and outstanding shares of capital stock of Borrower have been
duly and validly issued and are fully paid and non-assessable and were issued in
full compliance with all Federal and state securities laws. There are no
outstanding (a) options, warrants or other rights to purchase from Borrower any
capital stock of Borrower, (b) securities convertible into or exchangeable for
shares of such stock, or (c) other commitments of any kind for the issuance of
additional shares of capital stock or options, warrants or other securities of
Borrower except as set forth on Exhibit 3.4. No shares of capital stock of
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Borrower are held in the treasury of Borrower. Except as set forth in the
Warrant Agreement and as set forth on Exhibit 3.4, Borrower is not, pursuant to
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the terms of any other agreement currently in existence, under any obligation to
register under the Securities Act of 1933, as amended, any of its presently
outstanding securities or any of its securities which may be hereafter issued.
3.5. SUBSIDIARIES. Other than the common stock of Spectrum Analytics,
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Inc., a California corporation, which is a wholly-owned subsidiary of Borrower,
Borrower does not presently own or control, directly or indirectly, any interest
in any other corporation, association or other business entity. Borrower is not
a participant in any joint venture, partnership or similar arrangement.
3.6. NON-CONTRAVENTION. Neither the execution and delivery by Borrower
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of this Agreement or the other Loan Documents, nor the consummation by Borrower
of the transactions contemplated hereby and thereby, will (a) conflict with or
violate the provisions of any law, rule or regulation applicable to Borrower or
any of its properties or assets which conflict or violation , would have a
material adverse effect on the results of operations, condition (financial or
otherwise), assets, properties business or prospects of Borrower (a "MATERIAL
ADVERSE EFFECT"), (b) conflict with or violate the provisions of the Certificate
of Incorporation or Bylaws of Borrower, (c) require on the part of Borrower any
notice to or filing with, or any permit, authorization, consent or approval of,
any Governmental Entity other than the filing of notices pursuant to Regulation
D under the Securities Act of 1933, as amended, any filing required by
applicable state securities law required in connection with the issuance and
exercise of the Warrant, (d) violate any judgment, decree, order or award of any
Governmental Entity by which Borrower or its properties are bound, or (e)
conflict with, result in breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party any right to terminate, modify or cancel,
or require any notice, consent or waiver under, any contract or instrument to
which Borrower is a party (including, but not limited to, any Distribution
Agreement) or by which it is bound or to which any of its assets are subject.
3.7. ABSENCE OF UNDISCLOSED LIABILITIES. Borrower has no liability
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or obligation, secured or unsecured, whether accrued, absolute, contingent,
unasserted or otherwise, that is material to the condition (financial or
otherwise) of the assets, properties, business or prospects of Borrower, except
as and to the extent any such liability or obligation is reflected and reserved
against in the current balance sheet delivered to Lender prior to Closing.
3.8. PENDING MATTERS. No action or investigation is pending or, to the
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best of Borrower's knowledge, threatened before or by any state or federal court
or administrative agency which might result in any material adverse change in
the financial condition, operations or prospects of Borrower, including, but not
limited to, any enforcement action by the FDA or any other Governmental Entity
having jurisdiction over Borrower or its products other than the dispute with
the FDA which has been and will be settled in accordance with the Settlement
Agreement between the FDA and Borrower, dated April 8, 2002 and which involves
payment from Borrower to the FDA of an amount not to exceed $250,000. Borrower
is not in violation of any agreement, the violation of which might reasonably be
expected to have a material adverse effect on its business or assets, and
Borrower is not in violation of any order, judgment, or decree of any state or
federal court, or any statute or governmental regulation to which it is subject.
3.9. FINANCIAL STATEMENTS ACCURATE. All financial statements
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heretofore or hereafter provided with respect to Borrower are and will be true
and complete in all material respects as of their respective dates and fairly
and will fairly present the financial condition of such party, and there are no
liabilities, direct or indirect, fixed or contingent, as of the respective dates
of such statements which are not reflected therein or in the notes thereto or in
a written certificate delivered with such statements. The financial statements
of Borrower have been prepared in accordance with GAAP. There has been no
material adverse change in the financial condition, operations, or prospects of
Borrower since the dates of such statements except as fully disclosed in writing
with the delivery of such statements.
3.10. 510(K) APPROVAL. Borrower has received all necessary approvals
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for the sale or other distribution of its products, including, but not limited
to, approvals under Section 510(k) of the federal Food and Drug Cosmetic Act.
3.11. CERTAIN BUSINESS PRACTICES. Neither Borrower nor any
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directors, officers, agents or employees of Borrower has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iii) made any other payment prohibited by applicable law.
3.12. PAYMENT OF TAXES. Other than Borrower's federal and state tax
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returns for 2001 for which extensions were timely filed and are still in effect,
Borrower has filed all federal, state, and local tax returns which are required
to be filed and have paid, or made adequate provision for the payment of, all
taxes which have or may become due pursuant to such returns or to assessments
received. Borrower does not currently anticipate owing any taxes or incurring
any penalties in connection with its federal and state tax returns for 2001.
3.13. TITLE TO COLLATERAL/ASSETS. Borrower has good and marketable
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title to the Collateral. Borrower owns or leases all tangible assets sufficient
for the conduct of its business as presently conducted and as presently proposed
to be conducted. Each such tangible asset is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used. Each item of equipment and
other asset that Borrower has possession of pursuant to a lease agreement or
other contractual arrangement and relating to, or used in, its business is in
such condition that, upon its return to its lessor or owner under the applicable
lease or contract, the obligations of Borrower to such lessor owner will have
been discharged in full.
3.14. INSURANCE. Exhibit 3.14 sets forth a true, correct and complete
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list of all fire, theft, casualty, general liability, workers compensation,
business interruption, environmental impairment, product liability, automobile
and other insurance policies maintained by Borrower and of all life insurance
policies maintained on the lives of any of its employees (including, but not
limited to the Key Man Insurance Policies), specifying the type of coverage, the
amount of coverage, the premium, the insurer and the expiration date of each
such policy (collectively, the "INSURANCE POLICIES") and all claims made under
such Insurance Policies since December 31, 2001. Borrower has previously
delivered to Lender true, correct and complete copies of all Insurance Policies.
The Insurance Policies are in full force and effect and are in amounts of a
nature that are adequate and customary for Borrower's business. All premiums
due on the Insurance Policies or renewals thereof have been paid, and there is
no default by Borrower under the Insurance Policies. Borrower has not received
any notice or other communication from any issuer of the Insurance Policies
since December 31, 2001 canceling or materially amending any of the Insurance
Policies, materially increasing any deductibles or retained amounts thereunder,
or materially increasing the annual or other premiums payable thereunder, and,
to the knowledge of Borrower, no such cancellation, amendment or increase of
deductibles, retainages or premiums is threatened. Borrower has no outstanding
claims or disputes with any insurance carrier regarding claims, settlements or
premiums, and Borrower has not failed to give any notice or present any claim
under any Insurance Policy in due and timely fashion. There are no outstanding
requirements or recommendations by any issuer of the Insurance Policies or by
any Board of Fire Underwriters or other similar body exercising similar
functions or by any Governmental Entity exercising similar functions that
require or recommend any changes in the conduct of the business of, or any
repairs or other work to be done on or with respect to any of the properties or
assets of, Borrower.
3.15. PRIORITY OF SECURITY INTEREST; LIENS; OTHER OBLIGATIONS. Except
-------------------------------------------------------
as set forth on Exhibit 3.15, no Collateral is subject to any Lien except those
------------
Liens expressly permitted by this Agreement. Borrower is not liable, primarily
or secondarily, upon any Indebtedness other than as described in its financial
statements or has any fixed or contingent obligation to make any loan or
contribution of capital to any other entity that has not been fully paid.
Except as set forth on Exhibit 3.15 hereto, Borrower does not owe any debt to
------------
its stockholders, partners or affiliates.
3.16. LOCATION OF CHIEF EXECUTIVE OFFICES. The location of Borrower's
------------------------------------
principal place of business and chief executive office are as set forth on
Exhibit 3.16 hereto.
-------------
3.17. DISCLOSURE. All information furnished or to be furnished by
----------
Borrower to Lender in connection with the Loan or any of the Loan Documents, is,
or will be at the time the same is furnished, accurate and correct in all
material respects and complete insofar as completeness may be necessary to
provide Lender with true and accurate knowledge of the subject matter. Borrower
has, since the effective date of the Form 10 filed by Borrower on October 23,
2001 and other than the Borrower's Form 10-K for the period ended December 31,
2001 which was filed late, filed with the SEC all registration statements, proxy
statements, reports and other documents required to be filed under the rules of
the SEC and the regulations promulgated thereunder and all such filings were
timely made and were complete and correct in all material respects when made. No
stockholder has any right of recission arising under the sale of any securities
of Borrower.
3.18. TRADE NAMES. Borrower has not changed its name or been known by
------------
any other name within the last five (5) years.
3.19. ERISA. Borrower is in compliance with all applicable provisions
-----
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
3.20. COMPLIANCE WITH OTHER APPLICABLE LAWS. Borrower is not in
-----------------------------------------
violation of any federal law, rule, license, decree, regulation or ordinance
(including laws, rules, licenses, decrees, regulations or ordinances of any
applicable court, arbitrator, administrative agency or commission or other
governmental or regulatory authority, body, instrumentality or agency, domestic
or foreign (each, a "GOVERNMENTAL ENTITY")) relating to its business or the
properties relating to its business which violation would have a Material
Adverse Effect on Borrower. Borrower is not in violation of any state, local or
foreign law, rule, license, decree, regulation or ordinance (including laws,
rules, licenses, decrees, regulations or ordinances of applicable Governmental
Entities) relating to its business or the properties relating to its business
which violation could have a Material Adverse Effect on Borrower. The business
of Borrower as conducted since its inception has not violated, and on the date
hereof does not violate, in any material respect, any federal, state, local or
foreign laws, regulations or orders (including any of the foregoing relating to
insurance, employment discrimination, occupational safety, environmental
protection, hazardous waste, conservation, or corrupt practices, the enforcement
of which would have a Material Adverse Effect on Borrower. Borrower has not had
notice or communication from any federal, state or local governmental or
regulatory authority or otherwise since its inception of any such violation or
noncompliance.
3.21. ENVIRONMENTAL MATTERS. To the best of Borrower's knowledge, none
---------------------
of Borrower's assets are in violation of or subject to any existing, pending, or
threatened investigation or inquiry by any governmental authority or any
response costs or remedial obligations under any Applicable Environmental Law,
and this representation and warranty would continue to be true and correct
following disclosure to the applicable Governmental Entities of all relevant
facts, conditions and circumstances, if any, pertaining to the assets of
Borrower. Borrower hereby agrees to remedy promptly any violation of any
Applicable Environmental Law with respect to the assets of Borrower, and to pay
any fines, charges, fees, expenses, damages, losses, liabilities, and response
costs arising from or pertaining to the application of any such Applicable
Environmental Law to the assets of Borrower. Borrower agrees to permit Lender
to have access to the Collateral at all reasonable times in order to conduct any
investigation and testing which Lender deems necessary to assure Lender that the
Collateral is in compliance with all Applicable Environmental Laws, and Borrower
agrees to promptly reimburse Lender for all costs incurred in such investigation
and testing.
3.22. SOLVENCY. Borrower represents and warrants that it is solvent
--------
within the meaning of 11 U.S.C. Sec. 548 and GAAP, and neither the borrowing of
the Loan nor the payments to creditors contemplated herein, will render Borrower
insolvent within the meaning of 11 U.S.C. Sec. 548 and GAAP.
3.23. FORBEARANCE AGREEMENTS AND DISTRIBUTION AGREEMENTS. Borrower
------------------------------------------------------
has provided Lender with true, correct and complete copies of each Forbearance
Agreement, and each Distribution Agreement together with any and all amendments
thereto. Each Forbearance Agreement and each Distribution Agreement is in full
force and effect and there are no defaults thereunder by Borrower, or to the
best knowledge of Borrower, by any other parties thereto.
3.24. TRADEMARKS, PATENTS AND OTHER RIGHTS. Set forth in Exhibit 3.24
------------------------------------- ------------
is a list and brief description of all patents, patent rights, patent
applications, trademarks, trademark applications, service marks, service ▇▇▇▇
applications, trade names and copyrights, and all applications for such which
are in the process of being prepared, are owned by, or are registered in the
name of Borrower, or of which Borrower is a licensor or licensee, or in which
Borrower has any right, and in each case a brief description of the nature of
such right. Borrower owns or possesses adequate licenses or other rights to use
all patents, patent applications, trademarks, trademark applications, service
marks, service ▇▇▇▇ applications, trade names, copyrights, manufacturing
processes, formulae, trade secrets, and know how (collectively, "TRADE RIGHTS")
necessary or desirable to the conduct of its business as conducted and as
proposed to be conducted. No claim is pending or to the knowledge of Borrower,
threatened to the effect that the operations of Borrower infringe upon or
conflict with the asserted rights of any other Person under any Trade Rights,
and, to the knowledge of Borrower, there is no basis for any such claim (whether
or not pending or threatened). No claim is pending or to the knowledge of
Borrower, threatened to the effect that any such Trade Rights owned or licensed
by Borrower or which Borrower otherwise has the right to use, is invalid or
unenforceable by Borrower, and there is no known basis for any such claim
(whether or not pending or threatened). All technical information developed by
and belonging to Borrower has been patented or has been kept confidential or has
otherwise been established as a trade secret. Borrower has not granted or
assigned to any other Person or entity any right to sell or produce the products
or proposed products or provide the services or proposed services of Borrower.
No officer, director, stockholder, or employee of Borrower has an ownership
interest in any of the trademarks, patents, or other rights set forth in Exhibit
-------
3.24.
-----
3.25. PROPRIETARY INFORMATION OF THIRD PARTIES. To the knowledge of
-------------------------------------------
Borrower, no third party has claimed or has any reason to claim that any Person
employed by or affiliated with Borrower has: (i) violated or may be violating
any of the material terms or conditions of his or her employment,
non-competition, or non-disclosure agreement with such third party; (ii)
disclosed or may be disclosing or utilized or may be utilizing any trade secret
or proprietary information or documentation of such third party; or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its current or former employees. To the knowledge of
Borrower, no third party has requested information from Borrower that suggests
that such a claim might be contemplated. To the knowledge of Borrower, no
Person employed by or affiliated with Borrower has employed or proposes to
employ any trade secret or any information or documentation proprietary to any
former employer, and no Person employed by or affiliated with Borrower has
violated any confidential relationship which such Person may have had with any
third party in connection with the development or sale of any product or
proposed product or the development or sale of any service or proposed service
of Borrower, and Borrower has no reason to believe there will be any such
employment or violation. None of the execution, delivery or performance of this
Agreement, or the carrying on of the business of Borrower as officers,
employees, or agents by any officer, director, or key employee or affiliated
Person of Borrower or the conduct of the businesses of Borrower, will conflict
with or result in a material breach of the terms, conditions, or provisions of,
or constitute a default under any material contract, covenant, or instrument
under which any such Person is obligated.
3.26. CERTAIN FDA MATTERS. Borrower certifies that its products,
-------------------
operations and facilities, which are subject to regulation by the FDA, are in
compliance with all relevant FDA requirements. Specifically, with respect to
Borrower's products which require premarket notification (510(k)) clearance for
legal commercial distribution in the United States, Borrower certifies that it
holds its own 510(k) clearances for all of these products which it repackages,
relabels or otherwise modifies. For those products requiring 510(k) clearance
for which Borrower only acts as a distributor (private label or otherwise),
Borrower certifies that the device manufacturer holds the necessary 510(k)
clearances for the products and that Borrower does not engage in any activities
relative to products, including, but not limited to, repackaging, relabeling, or
other modification, that would cause it to need to hold its own 510(k)
clearances for the products. As used herein, "repackaging" means packaging
finished devices from bulk or repackaging an original manufacturer's devices
into different containers (excluding shipping containers). As used herein,
"relabeling" means changing the content of the labeling from that supplied by
the original manufacturer (excluding merely adding Borrower's name).
ARTICLE IV
AFFIRMATIVE COVENANTS OF BORROWER.
Borrower agrees with and covenants unto Lender that until the Loan
Obligations have been paid in full, Borrower shall (unless waived in writing by
Lender in Lender's sole discretion):
4.1. PAYMENT OF LOAN/PERFORMANCE OF LOAN OBLIGATIONS. Duly and
----------------------------------------------------
punctually pay or cause to be paid the principal and interest of the Note in
accordance with its terms and duly and punctually pay and perform or cause to be
paid or performed all Loan Obligations hereunder and under the other Loan
Documents.
4.2. MAINTENANCE OF EXISTENCE. Maintain its existence, and, in each
--------------------------
jurisdiction in which the character of the property owned by it or in which the
transaction of its business makes qualification necessary, maintain
qualification and good standing.
4.3. ACCRUAL AND PAYMENT OF TAXES. During each fiscal year, accrue all
----------------------------
current tax liabilities of all kinds (including, without limitation, federal and
state income taxes, franchise taxes, payroll taxes), all required withholding of
income taxes of employees, all required old age and unemployment contributions,
and all required payments to employee benefit plans, and pay the same when they
become due.
4.4. INSURANCE. At all times while Borrower is indebted to Lender, to
---------
maintain or cause to be maintained the following insurance:
(a) Liability insurance (including product liability) for the
Collateral in an amount equal to at least $1,000,000 per occurrence and
$2,000,000 aggregate, unless lesser amounts are approved by Lender in writing in
Lender's discretion. All such liability insurance shall be written on an
occurrence or claims made basis (and if a claims made basis, Borrower has
obtained and will obtain effective upon expiration appropriate tail coverage)
and name Lender as an additional insured; provided, however, Lender may require
-------- -------
increases in coverage based upon reasonable and prudent operating practices of
similar businesses;
(b) "All-risk" broad form coverage on the Collateral in an amount not
less than the full replacement cost thereof, with endorsements insuring against
such potential causes of loss as shall be required by Lender, including, but not
limited to, loss or damage from flood, unless evidence satisfactory to Lender is
provided that no Collateral is located in an area which is designated as not
being in a flood hazard area;
(c) Business income insurance (including rental value if any Collateral
is leased in whole or part) equal to not less than twelve (12) months' estimated
gross revenues less expenses not ordinarily incurred during the period of
business interruption.
(d) Workers' compensation insurance as required by the laws of the
state in which Borrower is located.
Each of the policies described in Section 4.4(b) and Section 4.4(c) shall
-------------- --------------
be written by an insurer having and maintaining a Best rating of A (or better),
and shall provide that Lender shall receive not less than thirty (30) days'
written notice prior to cancellation (or ten (10) days' written notice in the
case of nonpayment of premium). The proceeds of either of the policies
described in Section 4.4(b) and Section 4.4(c) shall be deposited with Lender or
-------------- --------------
a financial institution acceptable to Lender as an escrow holder, and such
proceeds (after deducting Lender's costs and expenses of obtaining such
proceeds) shall be applied by Lender, at Lender's sole option, either (i) to the
full or partial payment or prepayment of the Loan Obligations (without premium),
or (ii) to the repair and/or restoration of the Collateral damaged by such
casualty, or Lender may release the net proceeds to Borrower.
Notwithstanding the foregoing, Lender agrees that Lender shall make the net
proceeds of insurance (after payment of Lender's costs and expenses) available
for repair, restoration and replacement of the Collateral damaged by such
casualty on the following terms and subject to such party's satisfaction of the
following conditions:
(a) At the time of such loss or damage and at all times thereafter
while Lender is holding any portion of such proceeds, there shall exist no
Default or Event of Default;
(b) The Collateral to which damage has occurred shall be capable of
being restored to its pre-existing condition and utility in all material
respects with a value equal to or greater than the value of such Collateral
prior to the loss or damage occasioning such receipt of proceeds and shall be
capable of being completed prior to the Maturity Date;
(c) Within thirty (30) days from the date of such loss or damage
Borrower shall have given Lender written notice electing to have the proceeds
applied for such purpose;
(d) In the event and to the extent such proceeds are not required or
used for the repair and restoration of the Collateral damaged, or in the event
the applicable Person fails to timely make such election or having made such
election fails to timely comply with the terms and conditions set forth herein,
Lender shall be entitled without notice to or consent from Borrower or other
Person to apply such proceeds, or the balance thereof, at Lender's option either
(i) to the full or partial payment or prepayment of the Loan Obligations in the
manner aforesaid, or (ii) to the repair, restoration and/or replacement of all
or any part of such Collateral to which damage has occurred, or Lender may
release the balance of such proceeds to Borrower.
Borrower appoints Lender as Borrower's attorney-in-fact to cause the
issuance of or an endorsement of any policy to bring any policy of insurance
into compliance herewith and, as limited above, at Lender's sole option, to make
any claim for, receive payment for, and execute and endorse any documents,
checks or other instruments in payment for loss, theft, or damage covered under
any such insurance policy; however, in no event will Lender be liable for
failure to collect any amounts payable under any insurance policy.
Notwithstanding the foregoing, all of the insurance policies described in
this Section 4.4 shall be on terms and conditions as acceptable to Lender in its
-----------
sole discretion.
4.5. FINANCIAL AND OTHER INFORMATION. Provide Lender with the
----------------------------------
following financial statements and information on a continuing basis:
(a) Within one hundred twenty (120) days after the end of each calendar
year, audited financial statements of Borrower prepared in accordance with GAAP
by Borrower's existing auditor at the time of Closing, a nationally recognized
certified public accounting firm or other independent certified public
accounting firm acceptable to Lender, and including a balance sheet and a
statement of income and expenses for the year then ended.
(b) Within forty-five (45) days after the end of each calendar month,
unaudited financial statements of Borrower certified to be true and correct by
the Chief Financial Officer and the Chief Executive Officer of Borrower and in
the form attached hereto as Exhibit 4.5(b).
---------------
(c) Within forty-five (45) days of the end of each calendar
quarter, a certificate in form acceptable to Lender that no Event of Default as
defined in the Loan Documents then exists and no event has occurred (that has
not been cured) and Default currently exists that would, but for the giving of
any applicable cure period, constitute and Event of Default.
(d) Within thirty (30) days of the end of each calendar month, an
accounts payable report and an aged accounts receivable report in sufficient
detail to show amounts due by the account age classifications of thirty (30)
days, sixty (60) days, ninety (90) days one hundred twenty (120) days and over
one hundred twenty (120) days.
(e) Within five (5) days of receipt, any and all notices (regardless
of form) from any and all third parties that the Trade Rights of Borrower,
including, but not limited to, the Trade Rights and other rights related to its
over the counter screening device infringes on any patent or other right of such
party.
(f) Upon Lender's request, evidence of payment of any applicable taxes
with respect to the Collateral, which taxes Borrower agrees to pay or cause to
be paid.
(g) A copy of any filing by Borrower with the SEC, at such time as
such filing is made with the SEC.
(h) A copy of all press releases at such time as the press release
is issued.
(i) A copy of any new Distribution Agreement or other agreement and
notice of any cancellation of any existing agreement, each within three (3)
Business Days after its effective date.
(j) Within thirty (30) days after the end of each month, a list of
Borrower's inventory as of the end of such previous month;
(k) Within five (5) Business Days of Borrower's knowledge thereof,
notice of any pending or threatened lawsuits, judgements or other claims
against, involving or otherwise relating to Borrower.
Lender reserves the right to require such other financial information
(including tax returns, detailed cash flow information and contingent liability
information) of Borrower, all at such times as Lender shall deem necessary, and
Borrower agrees promptly to provide such information to Lender. All financial
statements must be in the form and detail as Lender shall, from time to time,
request.
Lender may place the Loan in a pooling of Loans for syndication and sale of
interests therein to investors. In such event, Borrower consents to Lender's
disclosure and distribution of financial and other information of Borrower and
others that has been provided by Borrower to Lender pursuant to this Agreement
to prospective participants, purchasers, investors, rating agencies and others
involved in any participation, sale, pooling or syndication. Borrower further
agrees to use its reasonable efforts in cooperating with Lender in obtaining and
preparing such information that may be reasonably requested by Lender in order
to provide accurate disclosure of the nature, status, and prospects of the Loan.
Lender may also disclose financial information to the United States Small
Business Administration.
4.6. COMPLIANCE CERTIFICATE. Within forty-five (45) days of the end of
----------------------
each calendar quarter furnish to Lender a compliance certificate in the form
attached hereto as Exhibit 4.6 with all information completed and certified by
-----------
the Chief Financial Officer and the Chief Executive Officer of Borrower as true
and correct.
4.7. BOOKS AND RECORDS. Permit Persons designated by Lender to inspect
------------------
the Collateral and books and records of Borrower and such Persons and the
Collateral and to discuss the affairs of Borrower and the Collateral with
officers of Borrower as designated by Lender, all at such times as Lender shall
request. Without limitation upon the foregoing, Borrower specifically agrees
that the United States Small Business Administration shall also have the same
rights or inspection as set forth in this Section 4.7, and Borrower agrees to
-----------
cooperate with any such inspections.
4.8. PAYMENT OF INDEBTEDNESS. Duly and punctually pay or cause to be
-------------------------
paid all other Indebtedness now owing or hereafter incurred by Borrower in
accordance with the terms of such Indebtedness, except such Indebtedness owing
to those other than Lender which is being contested in good faith and with
respect to which any execution against the Collateral and any other property of
Borrower has been effectively stayed and for which reserves adequate for payment
have been established.
4.9. RECORDS OF ACCOUNTS. Maintain all records, including records
---------------------
pertaining to the accounts receivable of the Collateral, at the chief executive
office of Borrower as set forth in this Agreement.
4.10. NOTICE OF LOSS. Immediately notify Lender of any event causing a
--------------
loss or depreciation in value of Borrower's assets in excess of $100,000 and the
amount of such loss or depreciation, except Borrower shall not be required to
notify Lender of depreciation in equipment resulting from ordinary use thereof.
4.11. CONDUCT OF BUSINESS. Cause the operation of the business of
--------------------
Borrower to be conducted at all times in a manner consistent with the level of
operation of such business as of the date hereof. Without limiting the
foregoing, Borrower shall:
(a) operate the business of Borrower or cause the business of Borrower
to be operated in a prudent manner in compliance, in all material respects, with
applicable laws and regulations relating thereto and all licenses, Permits, and
any agreements necessary for the use and operation of such business;
(b) maintain sufficient inventory and equipment of types and quantities
to enable Borrower to perform normal operation of the business of Borrower in
compliance, in all material respects, applicable law of the Governmental
Entities having jurisdiction over Borrower;
(c) keep all inventory and equipment used or useful in connection with
the business of Borrower in good repair, working order and condition, reasonable
wear and tear excepted, and from time to time make all needed and proper
repairs, renewals, replacements, additions, and improvements thereto to keep the
same in good operating condition.
4.12. COMPLY WITH COVENANTS AND LAWS. Comply or cause the compliance
--------------------------------
in all material respects with all applicable covenants and restrictions of
record and all laws, ordinances, rules and regulations relating to the business
of Borrower and keep the business of Borrower in compliance with all applicable
laws, ordinances, rules and regulations.
4.13. TAXES AND OTHER CHARGES. Pay or cause to be paid all taxes,
--------------------------
assessments, charges, claims for labor, supplies, rent, and other obligations
which, if unpaid, might give rise to a Lien against any Collateral, except Liens
to the extent permitted by this Agreement.
4.14. FINANCIAL COVENANTS. Maintain compliance with each of the
--------------------
following financial covenants:
(a) Minimum Liquidity. Borrower shall have a minimum liquidity of
------------------
$50,000 as of Closing, which shall increase by the end of the first Loan Year to
$100,000, and which shall increase to $150,000 by the end of the second Loan
Year and which shall thereafter be maintained during the term of the Loan.
Liquidity may include cash, cash equivalents or net availability under a working
capital line of credit (which is not secured by any assets of Borrower other
than cash). For purposes of this Section 4.14(a), the measurement periods shall
---------------
be the quarter ending December 31, 2002, the quarter ending March 31, 2003 (and
trailing six month period), the quarter ending June 30, 2003 (and trailing nine
month period), and the quarter ending September 30, 2003 (and trailing twelve
month period); and thereafter on a calendar quarter and trailing twelve month
period.
(b) Current Assets to Current Liabilities Ratio. Borrower shall have
---------------------------------------------
and maintain a current assets to current liabilities ratio of 1.4 to 1.0 for the
first two years following the Closing, and a current assets to current
liabilities ratio of 1.75 to 1.0 for the remaining term of the Loan.
(c) Ratio of Earnings. Borrower shall have and maintain a ratio of
-----------------
earnings before interest, taxes, depreciation and amortization (adjusted to add
back non-cash expenses such as the grant of stock and stock options or warrants
for services) to interest of not less than 1.75 to 1.0 during the first twelve
months following the Closing and shall thereafter have and maintain a ratio of
earnings before interest, taxes, depreciation and amortization to interest of
not less than 1.4 to 1.0 during the remaining term of the Loan.
(d) Additional Indebtedness. Borrower shall not incur or permit to
------------------------
exist any Indebtedness in excess of $25,000 per transaction, $75,000 in the
aggregate, or an excess of $2,000 monthly expense relating to such Indebtedness,
until the end of the first year after Closing, without the prior written
approval of the Lender, in its sole discretion. If Borrower is in compliance
with all aspects of the Loan, then these levels will be increased to $50,000 per
transaction, $150,000 in the aggregate, or an excess of $5,000 monthly expense
relating to such Indebtedness. Indebtedness for purposes of this
Section 4.14(d) shall include unsecured debt and secured debt (that is secured
---------------
only on a leased basis, such as equipment), but shall not include ordinary
course trade payables.
(e) Tangible Assets to Liabilities. Commencing on the second
------------------------------
anniversary of the Closing, Borrower shall have and maintain a ratio of tangible
assets to liabilities of 1.0 to 1.0, and, commencing on the third anniversary of
the Closing, shall thereafter have and maintain a ratio of tangible assets to
liabilities of 1.25 to 1.0 for the remaining term of the Loan.
In the event any such covenant is violated, Borrower may provide additional
Collateral satisfactory to Lender as a cure of such Event of Default on terms
acceptable to Lender in its discretion.
4.15. USE OF CASH FLOW. Borrower shall use all cash flow after payment
----------------
of normal operating expenses and then after payment of any Loan amount then due
(including any amount in default), and income taxes then due in the following
order: (i) to maintain all covenant levels; (ii) next to pay down current
liabilities until all payables are paid within thirty (30) days of invoice; and
(iii) for new business activities, unless otherwise consented to by Lender.
4.16. FORBEARANCE AGREEMENTS. Borrower shall obtain and maintain
-----------------------
without default from all the creditors set forth on Exhibit 1.1(b) a
--------------
Forbearance Agreement to provide reasonable assurance to Lender, as of Closing
and thereafter during the term of the Loan, as to the inability for Borrower to
be the subject of an involuntary petition under the federal Bankruptcy Code, or
a petition for appointment of a receiver under any state law relating to
insolvency protection.
4.17. REQUIRED PAYMENT. At any time upon (i) a sale (in a single
-----------------
transaction or a series of transactions), not in the ordinary course of
business, of twenty-five percent (25%) or more of the assets of Borrower, or
(ii) a Change in Control of Borrower, the Loan and all outstanding Loan
Obligations shall be prepaid in full with accrued interest and the appropriate
prepayment premium as described in Section 2.8(a).
---------------
4.18. OTHER DEBT AGREEMENTS. Maintain compliance with the terms,
----------------------
covenants and conditions of the loan agreements, notes, mortgages, deeds of
trust, security agreements, assignments and/or other documents and instruments
evidencing or securing Indebtedness upon which such Person is obligated or which
encumbers any property of such Person, including, without limitation, all other
▇▇▇▇▇▇▇ Debt.
4.19. KEY MAN INSURANCE POLICIES. Within sixty (60) days after the
-----------------------------
Closing Date, obtain and provide evidence to Lender of, key man life insurance,
in the amount of $1,650,000 million on the life of ▇▇. ▇▇▇▇▇▇▇ and $1 million
each on the life of ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ (the "KEY MAN INSURANCE
POLICIES.")
4.20. PATENT ATTORNEY AND PATENT APPLICATION. Within ninety (90) days
---------------------------------------
after the Closing Date, engage and provide evidence to Lender of such
engagement, a patent attorney acceptable to Lender to review Borrower's products
for patentability and in the event such patent attorney's review confirms that
the Borrower's products can be patented, within ninety (90) days after such
confirmation, file a patent application with the United States Patent and
Trademark Office relating to such product's patent.
4.21. CERTIFICATE. Upon Lender's written request during the term of
-----------
the Loan, furnish Lender with a certificate stating that Borrower has complied
with and is in compliance with all terms, covenants and conditions of the Loan
Documents to which Borrower is a party and that there exists no Default or Event
of Default or, if such is not the case, that one or more specified events have
occurred, and that the representations and warranties contained herein are true
with the same effect as though made on the date of such certificate.
4.22. REMOVAL OF LIENS. Within ten (10) Business Days after the
------------------
Closing, Borrower shall cause all liens and other encumbrances set forth on
Exhibit 3.15 to be removed such that Lender shall have a first priority,
---------
perfected security interest in and to the Collateral.
---
4.23. COUNTERPART SIGNATURES TO RIGHTS AGREEMENT. Within five (5)
----------------------------------------------
Business Days after the Closing, Borrower shall collect and deliver to Lender
each of the counterpart signature pages to the Rights Agreement for each Holder
listed on Exhibit A to such Rights Agreement.
----------
ARTICLE V
NEGATIVE COVENANTS OF BORROWER.
Until the Loan Obligations have been paid in full, Borrower shall not:
5.1. ASSIGNMENT OF LICENSES AND PERMITS. Assign or transfer, or permit
----------------------------------
the assignment or transfer of, any interest in any Permits, or assign, transfer,
or remove or permit any other Person to assign, transfer, or remove any records
pertaining to the Collateral including, without limitation, as more particularly
set forth in the Security Agreement, without Lender's prior written consent,
which consent may be granted or refused in Lender's sole discretion.
5.2. NO LIENS; EXCEPTIONS. Create, incur, assume or suffer to exist
----------------------
any Lien upon or with respect to the Collateral, whether now owned or hereafter
acquired, other than the following permitted Liens:
(a) Liens at any time existing in favor of Lender;
(b) Inchoate Liens arising by operation of law for the purchase of
labor, services, materials, equipment or supplies, provided payment shall not be
delinquent;
(c) Liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of statutory
obligations (provided such Person complies with all obligations with respect to
such insurance, benefits and statutory obligations);
(d) Liens for current year's taxes, assessments or governmental charges
or levies provided payment thereof shall not be delinquent; and
(e) Liens relating to Indebtedness permitted under Section 4.14(d)
---------------
and Section 5.3 of this Agreement.
------------
5.3. INDEBTEDNESS AND OTHER OBLIGATIONS. Incur or become obligated
--------------------------------------
upon any other Indebtedness, secured or unsecured, or become obligated to make
any capital contribution or loan to any other entity other than (a) during the
first Loan Year, Indebtedness in an amount less than $25,000 per transaction,
less than $75,000 in the aggregate, or and excess $2,000 in monthly expense
relating to such Indebtedness, (b) during the second Loan Year and thereafter,
and provided that Borrower is compliance with this Agreement and the other Loan
Documents, Indebtedness in an amount less than $50,000 per transaction, less
than $150,000 in the aggregate, or an excess of $5,000 in monthly expense
relating to such Indebtedness. In addition, any Indebtedness permitted under
this Section 5.3 may be secured or unsecured provided that any secured
------------
Indebtedness is on a leased basis, but does not include ordinary course trade
----
payables.
5.4. MERGER, CONSOLIDATION, ETC. Enter into any merger, consolidation
----------------------------
or similar transaction, or sell, assign, lease or otherwise dispose of (whether
in one transaction or in a series of transactions), all or substantially all of
its assets (whether now or hereafter acquired), without the prior written
consent of Lender, which may be granted or refused by Lender in Lender's sole
discretion. Notwithstanding the foregoing, in the event, as part of such
transaction, the Loan and all Loan Obligation will be satisfied in full in
accordance with the terms of this Agreement, no prior written consent of Lender
is required.
5.5. DISPOSITION OF A MATERIAL PORTION OF ITS ASSETS. Sell, lease,
-----------------------------------------------
transfer or otherwise dispose of any material portion of its assets.
5.6. DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Except as
-------------------------------------------
hereinafter provided or as otherwise consented to by Lender in writing, declare
or pay any dividends, or purchase, redeem, retire, or otherwise acquire for
value, any of its capital stock now or hereafter outstanding, return any capital
to its stockholders as such, or make any distribution of assets to its
stockholders.
5.7. CHANGE IN BUSINESS. Allow any material change in the nature of
--------------------
its business as it is being conducted as of the date hereof.
5.8. CHANGES IN ACCOUNTING. Change its methods of accounting, unless
-----------------------
such change is permitted by GAAP, and provided such change does not have the
effect of curing or preventing what would otherwise be an Event of Default or
Default had such change not taken place.
5.9. ERISA FUNDING AND TERMINATION. Permit (a) the funding
------------------------------
requirements of ERISA with respect to any employee plan to be less than the
minimum required by ERISA at any time, or (b) any employee plan to be subject to
involuntary termination proceedings at any time.
5.10. TRANSACTIONS WITH AFFILIATES. Enter into any transaction with
------------------------------
any affiliated Person other than in the ordinary course of its business and on
fair and reasonable terms no less favorable than those they would obtain in a
comparable arms-length transaction with a Person not an affiliate and, in the
event any such transaction with an affiliated Person includes or relates to
Indebtedness of Borrower, such Indebtedness shall be subordinated to repayment
of the Loan Obligations.
5.11. TRANSFER OF OWNERSHIP. Permit the transfer of any of the
-----------------------
ownership interests of Borrower resulting in (a) a change in management or (b) a
Change in Control.
5.12. CHANGE OF USE. Alter or change the use of the Collateral or
-------------
permit to exist any management agreement or lease for the Collateral, unless
Lender's written consent has been first obtained, which consent shall be in
Lender's sole discretion.
5.13. DOMICILE AND PLACE OF BUSINESS. Change its state of domicile
-------------------------------
without Lender's prior written consent or change its chief executive office or
its principal place of business without first giving Lender at least thirty (30)
days' prior written notice thereof and promptly providing Lender such
information as Lender may request in connection therewith.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES.
6.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
-------------------
following shall constitute an "EVENT OF DEFAULT" hereunder:
(a) The failure by Borrower to pay any installment of principal,
interest, or other charges required under the Note, as and when the same becomes
due; or
(b) The violation of any covenant set forth in Section 4.14 or Article
------------ -------
V; or
(c) The failure of Borrower properly and timely to perform or observe
any covenant or condition set forth in this Agreement (other than those
specified in (a) and (b) of this Section) or any other Loan Documents which is
not cured within any applicable cure period as set forth herein or, if no cure
period is specified therefor, is not cured within thirty (30) days of Lender's
notice to Borrower of such Default; or
(d) The occurrence of any Event of Default (other than those specified
in (a), (b) or (c) of this Section) under any other Loan Documents; or
(e) The filing by Borrower of a voluntary petition in bankruptcy or
the adjudication of Borrower as a bankrupt or insolvent, or the filing by
Borrower of any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, or if Borrower should seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator for itself or of all or any
substantial part its property or of any or all of the rents, revenues, issues,
earnings, profits or income thereof, or the making of any general assignment for
the benefit of creditors or the admission in writing by Borrower of its
inability to pay its debts generally as they become due; or
(f) The entry by a court of competent jurisdiction of an order,
judgment, or decree approving a petition filed against Borrower, which such
petition seeks any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency, or
other relief for debtors, which order, judgment or decree remains unvacated and
unstayed for an aggregate of sixty (60) days (whether or not consecutive) from
the date of entry thereof, or the appointment of any trustee, receiver or
liquidator of any of the aforesaid Persons or of all or any substantial part of
its properties or of any or all of the rents, revenues, issues, earnings,
profits or income thereof which appointment shall remain unvacated and unstayed
for an aggregate of sixty (60) days (whether or not consecutive); or
(g) The sale or other transfer by Borrower of any portion of the
Collateral, (other than in the ordinary course of business with respect to
Inventory (as defined in the Security Agreement)) unless the written consent of
Lender is first obtained, which consent may be granted or refused by Lender in
its sole discretion; or
(h) Any certificate, statement, representation, warranty or audit
heretofore or hereafter furnished by or on behalf of Borrower pursuant to or in
connection with this Agreement or otherwise (including, without limitation,
representations and warranties contained herein or in any Loan Documents) or as
an inducement to Lender to extend any credit to or to enter into this or any
other agreement with such Person in connection with this Loan or other loans now
existing or hereafter created, proves to have been false in any material respect
at the time when the facts therein set forth were stated or certified, or proves
to have omitted any substantial contingent or unliquidated liability or claim
against such Person or on the date of execution of this Agreement there shall
have been any materially adverse change in any of the facts previously disclosed
by any such certificate, statement, representation, warranty or audit, which
change shall not have been disclosed to Lender in writing at or prior to the
time of such execution; or
(i) The failure of Borrower to timely cure or cause to be cured any
deficiency required to be corrected pursuant to Section 4.8 of this Agreement;
-----------
or
(j) A final judgment shall be rendered by a court of law or equity
against Borrower and the same shall remain undischarged for a period of thirty
(30) days, unless such judgment is either (i) fully covered by collectible
insurance and such insurer has within such period acknowledged such coverage in
writing, or (ii) although not fully covered by insurance, enforcement of such
judgment has been effectively stayed, such judgment is being contested or
appealed by appropriate proceedings and such Person, as the case may be, has
established reserves adequate for payment in the event such Person is ultimately
unsuccessful in such contest or appeal and evidence thereof is provided to
Lender; or
(k) The occurrence of any materially adverse change in the financial
condition or prospects of Borrower, or the existence of any other condition
which, in Lender's reasonable determination, constitutes an impairment of
Borrower's ability to perform its obligations under its Loan Documents; or
(l) Any default pursuant to any other Indebtedness of Borrower or
pursuant to any other ▇▇▇▇▇▇▇ Debt, or pursuant to any document, instrument or
agreement evidencing or securing any other such Indebtedness, or any part
thereof, other than Indebtedness being contested in accordance with the
requirements of Section 4.8.
-----------
Notwithstanding anything in this Section 6.1, all requirements of notice
-----------
shall be deemed eliminated if Lender is prevented from giving such notice by
bankruptcy or other applicable law. The cure period, if any, shall then run
from the occurrence of the event or condition of Default rather than from the
date of notice.
6.2. REMEDIES. Upon the occurrence of any one or more of the foregoing
--------
Events of Default, Lender may, at its option:
(a) Declare the entire unpaid principal of the Loan Obligations to be,
and the same shall thereupon become, immediately due and payable, without
presentment, protest or further demand or notice of any kind, all of which are
hereby expressly waived.
(b) Proceed to protect and enforce its rights by action at law
(including, without limitation, bringing suit to reduce any claim to judgment),
suit in equity and other appropriate proceedings including, without limitation,
for specific performance of any covenant or condition contained in this
Agreement.
(c) Exercise any and all rights and remedies afforded by the laws of
the United States, the state or states in which the Collateral is located or any
other appropriate jurisdiction as may be available for the collection of debts
and enforcement of covenants and conditions such as those contained in this
Agreement and the Loan Documents.
(d) Exercise the rights and remedies of setoff and/or banker's lien
against the interest of Borrower in and to every account and other property of
Borrower which is in the possession or control of Lender or any person who then
owns a participating interest in the Loan, to the extent of the full amount of
the Loan Obligations.
(e) Exercise any other rights and remedies pursuant to this
Agreement, applicable law and any other Loan Documents, including, but not
limited to, the right to immediately appoint and cause to be elected a majority
of the Board of Directors of Borrower and to continue to appoint and cause to be
elected a majority of the Board of Directors until such time as such Event of
Default is cured or all amounts then outstanding under the Loan have been paid
in full, all as more particularly set forth in the Rights Agreement.
(f) All rights and remedies of Lender under the terms of this
Agreement, the Note, any of the other Loan Documents, and any applicable
statutes or rules of law shall be cumulative and may be exercised successively
or concurrently.
6.3. INCREASES IN COUPON RATE AND OTHER PENALTIES UPON EVENT OF
------------------------------------------------------------------
DEFAULT.
(a) Upon the first Event of Default the Coupon Rate shall be increased
by two hundred fifty (250) basis points, computed from the date of the notice
from Lender of the Event of Default, subject to Borrower's cure of such Event of
Default within thirty (30) days following notice from Lender of such Event of
Default. If such Event of Default is not cured within such thirty (30) day
period, or upon any subsequent Event of Default, the Coupon Rate shall be
increased by five hundred (500) basis points above the Coupon Rate computed from
the date of the notice from Lender of such Event of Default. In the event (i)
Borrower cures such Event of Default to the satisfaction of Lender in its sole
discretion and Borrower delivers written notice to Lender that setting forth the
manner in which such Event of Default has been cured, and (ii) during the time
when such Event of Default is occurring, Lender has not elected to exercise any
of its other remedies set forth in Section 6.2(a), Section 6.2(b), Section 6.2
-------------- -------------- -----------
(c), or Section 6.2(d), interest on the Loan shall return to the Coupon Rate as
-- --------------
of next day after the date of Lender's receipt of the notice from Borrower, as
set forth in subsection (i) above.
(b) In addition to and not in substitution for the Coupon Rate
increases described in subsection (a) above, if an Event of Default occurs and
the Loan is declared to be immediately due and payable, there shall be added to
the principal balance of the Loan then due an amount equal to the prepayment
premium which would then be applicable to any voluntary prepayment as set forth
in Section 2.8(a).
---------------
ARTICLE VII
MISCELLANEOUS.
7.1. WAIVER. No remedy conferred upon, or reserved to, Lender in this
------
Agreement or any of the other Loan Documents is intended to be exclusive of any
other remedy or remedies, and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity. Exercise or omission to exercise any right of
Lender shall not affect any subsequent right of Lender to exercise the same. No
course of dealing between Borrower and Lender or any delay on Lender's part in
exercising any rights shall operate as a waiver of any of Lender's rights. No
waiver of any Default under this Agreement or any of the other Loan Documents
shall extend to or shall affect any subsequent or other then existing Default or
shall impair any rights, remedies or powers of Lender.
7.2. COSTS AND EXPENSES.
--------------------
(a) Borrower will bear all taxes, fees and expenses (including fees and
expenses of counsel for Lender) in connection with the Loan, the Note, the
preparation of this Agreement and the other Loan Documents (including any
amendments hereafter made), and in connection with any modifications thereto and
the recording of any of the Loan Documents.
(b) Borrower will bear the cost and expense of UCC lien and judgement
searches relating to the Borrower and such other expenses related thereto as
performed by Lender in Lender's sole discretion throughout the term of the Loan;
provided, however, Lender shall not perform such lien and judgement searches at
-------- -------
Borrower's expense more than once during any one Loan Year.
(c) Borrower will bear the cost and expense of engaging the patent
attorney described in Section 4.20 which expense shall not exceed $5,000.
-------------
(d) Borrower will bear the cost and expense of any patent applications
filed in accordance with Section 4.20.
-------------
(e) Borrower shall reimburse Lender for all expenses, including, but
not limited to travel expenses, incurred in connection with Lender's designees'
attendance at the meetings of the Board of Directors of Borrower and the
Committees of the Board of Directors of Borrower, all as more particularly set
forth in the Rights Agreement.
(f) If, at any time, a Default occurs or Lender becomes a party to any
suit or proceeding in order to protect its interests or priority in any
Collateral for any of the Loan Obligations or its rights under this Agreement or
any of the Loan Documents, or if Lender is made a party to any suit or
proceeding by virtue of the Loan, this Agreement or any Collateral for any Loan
Obligations and as a result of any of the foregoing, Lender employs counsel to
advise or provide other representation with respect to this Agreement, or to
collect the balance of the Loan Obligations, or to take any action in or with
respect to any suit or proceeding relating to this Agreement, any of the other
Loan Documents, any Collateral for any of the Loan Obligations, Borrower, or to
protect, collect, or liquidate any of the Collateral for the Loan Obligations,
or attempt to enforce any security interest or lien granted to Lender by any of
the Loan Documents, then in any such events, all of the reasonable attorney's
fees arising from such services, including fees on appeal and in any bankruptcy
proceedings, and any expenses, costs and charges relating thereto shall
constitute additional obligations of Borrower to Lender payable on demand of
Lender.
(g) Without limiting the foregoing, Borrower has undertaken the
obligation for payment of, and shall pay, all recording and filing fees, revenue
or documentary stamps or taxes, intangibles taxes, transfer taxes, recording
taxes and other taxes, expenses and charges payable in connection with this
Agreement, any of the Loan Documents, the Loan Obligations, or the filing of any
financing statements or other instruments required to effectuate the purposes of
this Agreement and the other Loan Documents, and should Borrower fail to do so,
Borrower agrees to reimburse Lender for the amounts paid by Lender, together
with penalties or interest, if any, incurred by Lender as a result of
underpayment or nonpayment.
This Section 7.2 shall survive repayment of the remaining Loan Obligations.
------------
7.3. PERFORMANCE OF LENDER. At its option, upon Borrower's failure to
----------------------
do so, Lender may make any payment or do any act on Borrower's behalf that
Borrower or others are required to do to remain in compliance with this
Agreement or any of the other Loan Documents, and Borrower agrees to reimburse
Lender, on demand, for any payment made or expense incurred by Lender pursuant
to the foregoing authorization, including, without limitation, attorneys' fees,
and until so repaid any sums advanced by Lender shall bear interest at the
default rates in accordance with Section 6.3(a) from the date advanced until
--------------
repaid.
7.4. HEADINGS. The headings of the Sections of this Agreement are for
--------
convenience of reference only, are not to be considered a part hereof, and shall
not limit or otherwise affect any of the terms hereof.
7.5. SURVIVAL OF COVENANTS. All covenants, agreements, representations
---------------------
and warranties made herein and in certificates or reports delivered pursuant
hereto and all other information heretofore or hereafter supplied to Lender in
connection with the Loan and Borrower, whether written or unwritten, shall be
deemed to have been material and relied on by Lender, notwithstanding any
investigation made by or on behalf of Lender, and shall survive the execution
and delivery to Lender of the Note and this Agreement.
7.6. NOTICES, ETC. Any notice or other communication required or
--------------
permitted to be given by this Agreement or the other Loan Documents or by
applicable law shall be in writing and shall be deemed received (a) on the date
delivered, if sent by hand delivery (to the person or department if one is
specified below), or (b) one (1) day following the date deposited with FedEx or
other national overnight carrier, and in each case addressed as follows:
If to Borrower:
Worldwide Medical Corporation
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ________________
with a copy to:
The Lebrecht Group, APLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender:
▇▇▇▇▇▇▇ Healthcare Fund I, L.P.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇
Either party may change its address to another single address by notice given as
herein provided, except any change of address notice must be actually received
in order to be effective.
7.7. BENEFITS. All of the terms and provisions of this Agreement shall
--------
bind and inure to the benefit of the parties hereto and their respective
successors and assigns. No Person other than Borrower or Lender shall be
entitled to rely upon this Agreement or be entitled to the benefits of this
Agreement.
7.8. PARTICIPATION. Borrower acknowledges that Lender may, at its
-------------
option, sell participation interests in, or assign all of its interest in, the
Loan. Borrower agrees with each present and future participant or owner of the
Loan that if an Event of Default should occur, each present and future
participant or owner shall have all of the rights and remedies of Lender with
respect to any deposit due from any participant to Borrower. The execution by a
participant of a participation agreement with Lender, and the execution by
Borrower of this Agreement, regardless of the order of execution, shall evidence
an agreement between Borrower and said participant in accordance with the terms
of this Section 7.8.
------------
7.9. SUPERSEDES PRIOR AGREEMENTS; COUNTERPARTS. This Agreement and the
-----------------------------------------
Loan Documents referred to herein supersede and incorporate all representations,
promises, and statements, oral or written, made by Lender in connection with the
Loan. This Agreement may not be varied, altered, or amended except by a written
instrument executed by an authorized officer of each of Lender and Borrower.
This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be an original, but such counterparts shall
together constitute one and the same instrument.
7.10. CONSTRUCTION OF PROVISIONS OF THIS AGREEMENT. Lender has not
----------------------------------------------
agreed to make any loan other than that specifically described herein. All
requirements herein shall be deemed material to Lender. Except as specified
herein, all conditions and requirements must be satisfied by Borrower prior to
the Closing Date. Whenever this Agreement refers to a matter being
"satisfactory" to Lender, subject to Lender's "approval" or "consent," at
Lender's "option," at Lender's "determination," "required" by Lender, at
Lender's "request," as Lender shall "deem necessary," or similar terminology, it
is deemed that each of the aforesaid shall be in the sole discretion of Lender,
and if any term or condition requires Lender's approval, consent, or
satisfaction (the "LENDER'S APPROVAL"), Lender's Approval shall not be implied,
but shall be evidenced only by a written notice from Lender specifically
addressed to the particular requirement or condition and expressing Lender's
Approval.
7.11. MARKETING. Lender agrees to refrain from using any proprietary
---------
information relating to Borrower in any of Lender's marketing materials without
the prior consent of Borrower. Notwithstanding the foregoing, Borrower grants
to Lender the right to use Borrower's name and to disclose the material terms
and conditions of the Loan in Lender's marketing materials.
7.12. CONTROLLING LAW. THE VALIDITY, INTERPRETATION, ENFORCEMENT AND
----------------
EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW JERSEY. LENDER'S PRINCIPAL PLACE OF BUSINESS IS
LOCATED IN THE STATE OF NEW JERSEY, AND BORROWER AGREES THAT THIS AGREEMENT
SHALL BE HELD BY LENDER AT SUCH PRINCIPAL PLACE OF BUSINESS, AND THE HOLDING OF
THIS AGREEMENT BY LENDER THEREAT SHALL CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF
BORROWER WITH THE STATE OF NEW JERSEY FOR THE PURPOSE OF CONFERRING JURISDICTION
UPON THE FEDERAL AND STATE COURTS PRESIDING IN SUCH STATE AND THE COUNTY OF
LENDER'S PRINCIPAL PLACE OF BUSINESS. BORROWER CONSENTS THAT ANY LEGAL ACTION
OR PROCEEDING ARISING HEREUNDER MAY BE BROUGHT IN THE FEDERAL AND STATE COURTS
PRESIDING IN SUCH COUNTY AND STATE AND ASSENTS AND SUBMITS TO THE PERSONAL
JURISDICTION OF ANY SUCH COURT IN ANY ACTION OR PROCEEDING INVOLVING THIS
AGREEMENT. NOTHING HEREIN SHALL LIMIT THE JURISDICTION OF ANY OTHER COURT.
7.13. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
-----------------------
BORROWER HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY ON ANY
CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT
OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE LOAN DOCUMENTS OR THE LOAN, OR
(B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY
DEALINGS OF LENDER AND/OR BORROWER WITH RESPECT TO THE LOAN DOCUMENTS OR IN
CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF EITHER PARTY'S RIGHTS AND
REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP
OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWER
AGREES THAT LENDER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT OF BORROWER
IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT OF LENDER TO
MAKE THE LOAN, AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE
OR CONTROVERSY WHATSOEVER BETWEEN BORROWER AND LENDER SHALL INSTEAD BE TRIED IN
A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
* * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
BORROWER:
--------
WORLDWIDE MEDICAL CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_______________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
LENDER:
------
▇▇▇▇▇▇▇ HEALTHCARE FUND I, L.P.,
a Delaware limited partnership
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Member
EXHIBIT 1.1(A)
--------------
DISTRIBUTION AGREEMENTS
-----------------------
EXHIBIT 1.1(B)
--------------
LIST OF CREDITORS OF BORROWER AS OF CLOSING DATE
------------------------------------------------
EXHIBIT 2.2
-----------
FORM OF WARRANT
----------------
[See Attached Form of Warrant Agreement]
EXHIBIT 2.3
------------
FORM OF RIGHTS AGREEMENT
------------------------
[See Attached Form of Rights Agreement]
EXHIBIT 2.4
-------------
FORM OF SECURITY AGREEMENT
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[See Attached Form of Security Agreement]
EXHIBIT 2.6(A)
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AMORTIZATION SCHEDULE
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EXHIBIT 2.12(A)
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FORM OF ASSIGNMENT AND PLEDGE OF DEPOSIT ACCOUNT
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[See Attached Form of Assignment and Pledge of Deposit Account]
EXHIBIT 2.12(C)
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SCHEDULE OF PAYMENTS
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EXHIBIT 3.4
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CAPITALIZATION OF BORROWER
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EXHIBIT 3.14
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INSURANCE POLICIES
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EXHIBIT 3.15
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LIENS ON COLLATERAL AND
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DEBT TO STOCKHOLDERS, PARTNERS OR AFFILIATES
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EXHIBIT 3.16
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PRINCIPAL PLACE OF BUSINESS AND CHIEF EXECUTIVE OFFICE
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OF BORROWER
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EXHIBIT 3.24
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TRADE RIGHTS
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EXHIBIT 4.5(B)
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Unaudited Financial Statements
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