EXHIBIT 10.33
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, as it may hereafter be amended
("Agreement"), among SUMMIT BANK having offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ("Lender"), OSTEOTECH, INC., a Delaware Corporation; OSTEOTECH
INVESTMENT CORPORATION, a New Jersey Corporation; CAM IMPLANTS, INC., a Colorado
Corporation; OSTEOTECH, B.V., H.C. IMPLANTS, B.V., CAM IMPLANTS, B.V.,
OSTEOTECH/CAM SERVICES, B.V., each a Company of The Netherlands; and OST
DEVELOPPEMENT, a Corporation of France (jointly and severally "Borrower") is
effective on June 10, 1999.
STATEMENTS
A. The Borrower has requested financial accommodation(s) from Lender.
B. Lender is willing to render the requested financial accommodation(s) to
the Borrower in connection with the Borrower's business and on certain terms and
conditions.
C. To secure the financial accommodation(s), the Borrower is willing, among
other things, to grant certain security interests to Lender in certain assets of
the Borrower.
NOW, THEREFORE, in consideration of the promises, covenants and
understandings set forth in this Agreement and the benefits to be received from
the performance of such promises, covenants and understandings, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
DEFINITIONS
"Accounts Receivable" - as defined in Exhibit "A"
"Actual Knowledge" - as defined in Section 5.1(b)
"Base Rate" - as defined in Section 1.4(g)
"Collateral" - as defined in Article 4
"Current Ratio" - as defined in Section 7.13
"Debt" - as defined in Article 3
"Default" - as defined in Section 9.1
"Delivered Financials" - as defined in Section 5.4(a)
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"EBITDA" - as defined in Section 7.15
"Environmental Laws" - as defined in Section 5.15(c)
"Equipment" - as defined in Exhibit "A"
"ERISA" - as defined in Section 5.10
"General Intangibles" - as defined in Exhibit "A"
"Inventory" - as defined in Exhibit "A"
"LIBOR Rate" - as defined in Section 1.4(a)
"Loan" - as defined in Section 1.4(e)
"Loan I" - as defined in Section 1.1
"Loan II" - as defined in Section 1.2
"Loan III" - as defined in Section 1.3
"Mortgage" - as defined in Exhibit "B"
"Note" - as defined in Section 1.4(e)
"Operating Documents" - as defined in Section 5.1(c)
"OSHA" - as defined in Section 5.11
"Plan" - as defined in Section 5.10
"Project" - as defined in Section 1.1(a)
"Property" - as defined in Section 1.1(a)
"Re-set Date" - as defined in Section 1.5(d)
"Subsidiary" - as defined in Section 5.16(d)
"Tangible Net Worth" - as defined in Section 7.14
"Working Capital" - as defined in Section 7.12
AGREEMENTS
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ARTICLE 1. THE LOAN
Section 1.1 The Revolving Loan (Loan I)
1.1(a) Lender agrees to provide, at one time or from time to time, at the
request of the Borrower, loans to Osteotech, Inc. in an aggregate amount up to
Five Million Dollars ($5,000,000.00) on a revolving loan basis ("Loan I") for
the purpose of working capital and capital expenditures and costs related to the
construction of an approximate 65,000 square foot addition (the "Project") to
real property and improvements located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ (the "Property"). Loan I is to be payable on the earlier of (i) May
31, 2001 or (ii) upon a Default.
1.1(b) In the absence of Default, the Borrower has the option to extend the
term of Loan I for an additional four (4) year term commencing on May 31, 2001,
exercisable by written notice to Lender, not less than thirty (30) days prior
thereto. If such option is so exercised, the outstanding balance of Loan I
becomes repayable in forty-eight (48) equal monthly installments of principal,
together with accrued interest.
Section 1.2 The Mortgage Loan (Loan II)
1.2(a) Lender agrees to lend to Borrower the principal sum of Four Million
Five Hundred Thousand ($4,500,000.00) Dollars on a term basis ("Loan II") to
provide permanent mortgage financing of the Project. The funding of Loan II will
take place following the date of receipt by the Borrower of an unconditional
certificate of occupancy for the Project in form and substance reasonably
satisfactory to Lender provided that such certificate of occupancy is obtained
within eighteen (18) months from the date hereof.
1.2(b) The principal of Loan II is to be repaid in one hundred twenty (120)
consecutive equal monthly installments of principal and interest, based upon a
20 year mortgage amortization, on the first day in each calendar month,
commencing on the first day of the second month following the funding of Loan II
and each subsequent payment is to be made on the same day of each successive
month. Upon the 120th installment, the full amount of unpaid principal, together
with unpaid accrued interest, will be due and payable.
Section 1.3 The Equipment Loan (Loan III)
1.3(a) Lender agrees to provide to Borrower loans in an aggregate amount up
to Seventeen Million ($17,000,000.00) Dollars during a period not to exceed
eighteen (18) months following the date hereof for the purpose of financing
equipment purchases, clean-rooms, other costs related to the Project and other
capital expenditures in the United States with advances of up to 80% of the cost
thereof based upon the submission by Borrower to Lender of invoices therefor in
form reasonably satisfactory to Lender ("Loan
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III"). Interest only will be paid on a monthly basis during the draw-down period
of eighteen (18) months from the date hereof.
1.3(b) Upon the expiration of the draw-down period provided in Section
1.3(a) hereof, the outstanding balance of Loan III is to be automatically
converted to a term loan to be repaid over a full seven (7) year amortizing
period in equal monthly installments of principal together with accrued
interest.
1.3(c) Lender will maintain a schedule of assets purchased with the
proceeds of Loan III, which schedule is to identify which of the assets is a
"fixture" and which of the assets is "equipment" within the meaning of the
Uniform Commercial Code and applicable real estate law. The form of such
schedule is attached hereto as Exhibit "C." Such schedule will be attached to
UCC-1 financing statements to be filed in such recording offices designated by
Lender and substantially in the form attached hereto as Exhibit "D" prior to or
simultaneously with the purchase of such assets. As principal payments are made,
the amortization will be equally apportioned to the scheduled fixtures and
equipment. Lender will release its security interest on a particular fixture or
equipment selected by the Borrower upon payment in full of that part of Loan III
allocated to such fixture or equipment pursuant to this amortized schedule upon
request of Borrower.
Section 1.4 Interest Rate and Other Provisions Relating to The Loan
1.4(a) Interest accrues on Loan I at Borrower's option, at either (i)
Lender's floating Base Rate minus three-quarters of one percent (3/4%) per annum
or (ii) the 30, 60 or 90 day Base LIBOR (London Interbank Offered Rate), plus
175 basis points (the "LIBOR Rate") as selected by the Borrower during the
initial monthly interest only payable period. Upon conversion, pursuant to
Section 1.1(b) above, interest accrues at a fixed annual rate based upon 175
basis points above the four (4) year United States Treasury Note Rate as
published in The Wall Street Journal three (3) days prior to such conversion.
1.4(b) Interest accrues on Loan II on a fixed rate based upon 190 basis
points above the ten (10) year United States Treasury Note Rate as published in
the Wall Street Journal three (3) days prior to the date of funding.
1.4(c) Interest accrues on Loan III at Borrower's option, at either (i)
Lender's floating Base Rate minus one-half of one percent (1/2%) per annum or
(ii) the LIBOR Rate, as selected by the Borrower during the initial monthly
interest only payable period. Upon conversion, pursuant to Section 1.3(b) above,
interest accrues at a fixed annual rate based upon 175 basis points above the
seven year United States Treasury Note Rate as published in The Wall Street
Journal three (3) days prior to the conversion date.
1.4(d) Each change in the floating interest rate is to take effect
simultaneously with a corresponding change in the Base Rate without notice to
Borrower. Interest is to be calculated on a daily basis with each day
representing 1/360th of a year in arrears.
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1.4(e) Loan I, Loan II and Loan III (collectively the "Loan") are to be
evidenced by promissory note(s) (the "Note") in the form required by Lender,
attached hereto as Exhibit "E."
1.4(f) In the event of Default, interest accrues on the Loan and the Debt
at a rate equal to two (2%) percent above the Base Rate as defined in this
Agreement. Borrower acknowledges that: (i) such additional rate is a material
inducement to Lender to make the Loan; (ii) Lender would not have made the Loan
in the absence of the agreement of the Borrower to pay such default rate; (iii)
such additional rate represents compensation for increased risk to Lender that
the Loan will not be repaid; and (iv) such rate is not a penalty and represents
a reasonable estimate of (a) the cost to Lender in allocating its resources
(both personnel and financial) to the ongoing review, monitoring, administration
and collection of the Loan and (b) compensation to Lender for losses that are
difficult to ascertain.
1.4(g) The Base Rate of Lender means the fluctuating Base Rate of interest
established by Lender from time to time whether or not such rate shall be
otherwise published. The Base Rate is established for the convenience of Lender.
It is not necessarily Lender's lowest rate. In the event that there should be a
change in the Base Rate of Lender, such change shall be effective on the date of
such change without notice to Borrower or any guarantor, endorser or surety. Any
such change will not effect or alter any other term or conditions of any
promissory note or this Agreement.
1.4(h) Interest (and principal) is payable by Borrower on the Loan pursuant
to the terms of the Note and the terms of this Agreement.
1.4(i) Borrower is to maintain its main operating accounts with Lender and
is to maintain sufficient balances therein to enable Lender to directly charge
all scheduled payments next due to Lender.
1.4(j) In no event is the interest rate or other charges of this Agreement
to exceed the highest rate permissible under law. If any provision of this
Agreement or any other instrument executed in connection thereto be construed or
held to permit the collection of or to require the payment of any amount of
interest in excess of that permitted by applicable law, the provisions of this
paragraph control and override any contrary or inconsistent provision of this
Agreement or instrument. The intention of the parties is to conform strictly to
the applicable laws relating to maximum rates of interest. This Agreement and
each other instrument evidencing or relating to the Debt are to be held subject
to reduction or rebate as to any amount paid by or on behalf of the Borrower in
violation of any such law.
Section 1.5 LIBOR Rate
1.5(a) At each and every Re-Set Date during the term of this Agreement,
Borrower is to have the right to select either the LIBOR Rates or variable rates
set forth in
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Sections 1.4(a) and 1.4(c) as applicable pursuant to the terms of this Agreement
to a designated principal balance unless such principal balance has been
previously designated as being repayable at a LIBOR Rate and is subject to an
Interest Period which has not yet expired. Each interest rate from time to time
so selected by Borrower is to take effect and is to end on a Re-Set Date. If
Borrower does not select an interest rate by written notice given to Lender at
least three (3) banking days prior to a particular Re-Set Date, the interest
rate applicable to the principal balance for such Re-Set Date is to be the
applicable alternate variable rate set forth in Sections 1.4(a) and 1.4(c) of
this Agreement. The LIBOR Rate or Rates selected by Borrower or otherwise
designated for a particular Re-Set Date in accordance with the foregoing
provisions of this paragraph, are to be in effect from and including the first
day of the Interest Period to which such LIBOR Rate pertains to, but not
including, the Roll Over Date applicable to such Interest Period, and will
(subject to the following provisions of this paragraph) be applicable to the
portion of the principal balance of the Loan with respect to which a LIBOR Rate
or Rates are due to be re-set on such Re-Set Date, as well as to any portion of
the principal balance bearing interest at a variable rate and any advance
scheduled to be made on such Re-Set Date.
1.5(b) The term "Interest Period" means the period of time during which a
particular LIBOR Rate will be applicable to all or any particular portion of the
principal balance in accordance with the provisions of this Section, it being
agreed that (a) each Interest Period is to commence and is to terminate on a
Re-Set Date, (b) each Interest Period is to be of a duration of either one
month, two months or three months, (c) no Interest Period is to extend beyond
the term of this Agreement and (d) the portion of the principal balance with
respect to which a particular Interest Period is applicable will bear interest
at the LIBOR Rate pertaining to such Interest Period from and including the
first day of such Interest Period to, but not including, the last day of such
Interest Period and cannot be prepaid prior thereto, notwithstanding anything in
this Agreement to the contrary.
1.5(c) The "Base LIBOR Rate" applicable to a particular Interest Period
means a rate per annum equal to the rate of interest at which U.S. dollar
deposits in an amount approximately equal to the portion of the principal
balance which will bear interest at a particular LIBOR Rate during such Interest
Period, and with maturities comparable to the last day of such Interest Period,
are offered in immediately available funds in the London Interbank Market by
leading banks in the Eurodollar market at 11:00 A.M. London time, two (2)
banking days prior to the commencement of such Interest Period. Each
determination of the LIBOR Rate and the Base LIBOR Rate applicable to a
particular Interest Period is to be made by Lender and is to be conclusive and
binding upon Borrower absent manifest error. Interest at the applicable LIBOR
Rate from time to time is to be calculated for the actual number of days elapsed
on the basis of a 360-day year, in arrears.
1.5(d) The term "Re-Set Date" means consecutive numerical corresponding
dates during the term of this Agreement, the first of which Re-Set Dates is the
effective date of this Agreement. Each subsequent Re-Set Date during the term of
this Agreement is to be the date in each subsequent calendar month during the
term of this Agreement which numerically corresponds to the first Re-Set Date
during the term of this Agreement,
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provided, however, that if the numerically corresponding date in any such
subsequent calendar month during the term of this Agreement is not a banking
day, the Re-Set Date for such calendar month is to be the next succeeding
banking day, unless the next such succeeding banking day would fall in the next
calendar month, in which event the Re-Set Date for such calendar month is to be
the next preceding banking day. For the purposes of this Agreement, the period
of time between any two consecutive Re-Set Dates during the term of this
Agreement is to be deemed to be a period of one month.
1.5(e) The "Roll Over Date" applicable to a particular Interest Period is
the last day of such Interest Period.
1.5(f) If Lender has determined in good faith (which determination is
conclusive and binding upon Borrower absent manifest error) that U.S. dollar
deposits in an amount approximately equal to the portion of the principal
balance which is to bear interest at a particular LIBOR Rate during such
particular Interest Period in accordance with the provisions of this Agreement
are not generally available at such time in the London Interbank Market, or
reasonable means do not exist for ascertaining a LIBOR Rate for such particular
Interest Period, Lender is to so notify Borrower and the interest rate
applicable to the portion of the principal balance with respect to which such
LIBOR Rate was to pertain is to automatically be converted to the applicable
variable rate set forth in this Agreement as of the next occurring Re-Set Date,
it being agreed that the applicable variable rate set forth in this Agreement is
to remain in effect thereafter with respect to such portion of the principal
balance until the next succeeding Re-Set Date in accordance with this Agreement.
1.5(g) If any change in any law or regulation or in the interpretation
thereof by any governmental authority charged with the administration or
interpretation thereof makes it unlawful for Lender to make or maintain LIBOR
Rates with respect to the principal balance of any portion thereof or to fund
the principal balance or any portion thereof at LIBOR Rates in the London
Interbank Market or to give effect to its obligations as contemplated by this
Agreement, then, upon notice by Lender to Borrower, the interest rate applicable
to the entire principal balance is to be automatically converted to the
applicable alternate variable rate set forth in this Agreement, it being agreed
that any notice given by Lender to Borrower pursuant to this sentence is to, if
lawful, be effective insofar as it pertains to any particular portion of the
principal balance bearing interest at a particular LIBOR Rate on the last day of
the then existing Interest Period pertaining to such particular portion of the
principal balance, or if not lawful, is to be effective immediately upon being
given by Lender to Borrower, and that the applicable variable rate is to remain
in effect thereafter with respect to such particular portion of the principal
balance unless and until Lender has determined in good faith (which
determinations are conclusive and binding upon Borrower absent manifest error)
that the aforesaid circumstances no longer exist; whereupon the interest rate
applicable to such portion of the principal balance may upon request of Borrower
be converted to a LIBOR Rate determined in the manner hereinabove set forth in
this Agreement effective as of the first Re-Set Date which occurs ten (10)
banking days or more after such good faith determination by Lender.
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1.5(h) Borrower recognizes that the cost to Lender of making or maintaining
LIBOR Rates with respect to the principal balance or any portion thereof imposed
upon Banks, generally, including Lender, may fluctuate and Borrower agrees to
pay Lender within ten (10) days after demand by Lender such additional amount or
amounts as Lender reasonably determines will compensate Lender for actual costs
incurred by Lender in maintaining LIBOR Rates on the principal balance or any
portion thereof.
Section 1.6 Monthly and Interim Statement
Once each month Lender is to render a statement of account to the Borrower
reflecting the current status of the Loan. Each statement of account is to be
considered correct, accepted by the Borrower and conclusively binding upon the
Borrower, unless the Borrower gives notice to Lender to the contrary in writing
within thirty (30) banking days after the sending of the statement by Lender. If
the Borrower disputes the accuracy of Lender's statement, the Borrower's notice
is to specify in detail the basis of the dispute.
Section 1.7 Method of Advances
Advances under Loan I may be made through written notification or facsimile
in form reasonably acceptable to Lender, by deposit of the amount requested
pursuant to this Agreement in the Borrower's operating account(s) which the
Borrower is to maintain at designated branches of Lender. All such written means
of notification and writings are to be deemed conclusively binding upon the
Borrower.
Section 1.8 Reimbursement of Increased Cost to Lender
If any law, regulation or guideline, or change in any law, regulation or
guideline or in the interpretation thereof, or any order or ruling by any
regulatory body, court or other governmental authority, or compliance by the
Lender with any request or directive (whether or not having the force of law) of
any such regulatory body, court or authority, imposes, modifies, or deems
applicable any reserve, capital, special deposit or other requirement or
condition which results in an increased cost or reduced benefit to banks,
generally, including Lender (and as determined by reasonable allocation of the
aggregate of such increased costs or reduced benefits to Lender resulting from
such event), then Borrower is to pay to Lender from time to time upon demand
additional amounts sufficient to compensate Lender for such increased costs or
reduced benefits, together with interest on each such amount from a date ten
(10) days after the date of such demand until payment in full thereof at the
highest interest rate then applicable to any of the Debt. A certificate setting
forth in reasonable detail such increased cost incurred or reduced benefit
realized by Lender as a result of any such event is to be conclusive as to the
amount thereof, absent manifest error.
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Section 1.9 Conditions Precedent to the Loan
The obligation of Lender to make the Loan pursuant to this Agreement is
subject to the following conditions:
1.9(a) Such reasonable assurances (including certificates from
representatives of the Borrower) that Lender requires that the representations
and warranties of the Borrower set forth in this Agreement or relating to this
Agreement are true, accurate and complete;
1.9(b) Such reasonable assurances (including certificates from
representatives of the Borrower) that Lender requires that the proceeds of the
Loan are to be utilized by the Borrower for the purposes set forth in this
Agreement;
1.9(c) Such reasonable assurances (including certificates from
representatives of the Borrower) that Lender requires that no event of Default
defined in this Agreement or other documents relating to this Agreement exists,
continues to exist, or would exist but for the lapse of time or notice;
1.9(d) The financial condition, operating status and general business
affairs of Borrower are to be reasonably satisfactory to Lender;
1.9(e) There are to be no litigation (whether bankruptcy, insolvency, at
law or in equity) or other proceedings pending or threatened before any court,
agency or tribunal which may materially adversely affect the financial
condition, operations or affairs of Borrower other than as disclosed in the
Borrower's public filings;
1.9(f) Borrower is to provide satisfactory evidence of its existence and
good standing in every state in the United States where organized or required;
1.9(g) There will have been no material adverse change with respect to the
facts as set forth in financial statements dated December 31, 1998, disclosures
or other information submitted to Lender in connection with this Agreement;
1.9(h) Any and all disclosures, financial or otherwise, regarding Borrower,
are to be deemed accurate and complete and acceptable to Lender;
1.9(i) Borrower is to provide satisfactory evidence that all necessary
authorizations from applicable boards of directors have been obtained;
1.9(j) The consummation of the transactions evidenced by this Agreement
will not constitute a breach of any agreement between or among Borrower and/or
third parties, or violate any provision of an applicable operating agreement,
by-law, or provision of law;
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1.9(k) Opinions and certificates of Borrower's counsel, accountants or
other representatives are to be submitted as reasonably requested by Lender or
Lender counsel to the effect that all documents executed by Borrower or
submitted on behalf of Borrower at closing are legally binding and enforceable
in accordance with their terms under New Jersey law;
1.9(l) The transaction(s) evidenced by this Agreement will not violate law
or principles of equity, including but not limited to, the Uniform Fraudulent
Transfer Act;
1.9(m) There will not exist any Default or other event of default to Lender
on any obligation due Lender;
1.9(n) There will not exist any material default by Borrower with respect
to compliance with law;
1.9(o) The Borrower is to pay the fees payable to Lender pursuant to
Section 6.15 hereof;
1.9(p) The Borrower is to deliver to the Lender a prepaid certificate of
the title insurance company insuring both the ownership by the Borrower of the
Property subject to the Mortgage and the lien of the Mortgage in the amount of
Loan II and confirming that Loan II is secured by the Mortgage and that the
Mortgage constitutes a valid first and only lien on the Property without
exception; and
1.9(q) The Borrower is to provide to the Lender original prepaid insurance
policies issued pursuant to Section 6.12 hereof.
Section 1.10 Additional Conditions Precedent to Loan II
In addition to the conditions precedent set forth in Section 1.9 herein,
the obligation of Lender to close or make any advance of funds as to Loan II is
further subject to the following conditions:
1.10(a) Completion of an inspection of the Property and the Project by the
Lender and/or its construction consultant which is reasonably satisfactory to
the Lender;
1.10(b) Receipt by the Lender of a satisfactory and unconditional permanent
certificate of occupancy for the Project;
1.10(c) Receipt by the Lender of a reasonably acceptable "as-built" survey
prepared by a New Jersey licensed engineer or surveyor locating all property
lines, building setback lines, easements and the Project, such survey to be
certified to Lender, Lender's counsel and the title insurance company insuring
the Mortgage;
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1.10(d) Receipt by the Lender of such title insurance endorsements as it
may require, including, but not limited to, an endorsement specifically insuring
the "as-built" survey;
1.10(e) Receipt by the Lender of a reasonably acceptable property
inspection and appraisal report (at Borrower's expense) reflecting a value of
the Property of not less than $5,625,000.00 upon completion of the Project. This
provision is subject to a minimum projected loan to value of 80%; and
1.10(f) Receipt by the Lender of evidence that the Borrower has paid all
taxes, assessments, service charges, water and sewer as to the Property.
ARTICLE 2. ADDITIONAL OBLIGATIONS OF THE BORROWER
Section 2.1 Expenses in Preserving Interests of Lender
The Borrower agrees to pay on demand, such reasonable advances made by
Lender to or for the account of the Borrower, including advances for insurance,
repairs to any Collateral, taxes, and such costs incurred by Lender (in its
discretion and regardless as to whether any such advance increases the unpaid
balance of the Loan or the Debt) in the discharge of any lien, security
interest, encumbrance, lease, pledge or assignment.
Section 2.2 Expenses in Realizing Upon Security Interest
The Borrower agrees to pay, on demand, all reasonable costs and expenses,
including reasonable attorneys fees, incurred by Lender to preserve, collect,
protect, foreclose, sell, or otherwise realize upon its security interest in the
Collateral identified in this Agreement or in any other security agreement
executed by the Borrower which grants Lender a security interest in the
Collateral or in any other document reflecting any other obligation of the
Borrower to Lender.
Section 2.3 Expenses in Enforcing and Defending Rights
The Borrower agrees to pay, on demand, all reasonable costs and expenses,
including reasonable attorneys fees, incurred by Lender in the good faith
prosecution or defense of any action or proceeding relating to the subject
matter of this Agreement or other agreement or instrument executed by the
Borrower.
Section 2.4 Costs of Lender
The Borrower agrees to pay, on demand, to Lender all reasonable costs and
expenses incurred by Lender in the preparation, execution, administration and
modification of this Agreement or other related agreements including, but not
limited to, attorneys fees,
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filing fees, consultant, appraisal and other professional fees, search fees,
recording fees and other out-of-pocket expenses.
ARTICLE 3. THE DEBT
For purposes of this Agreement, the term "Debt" is defined as the Loan and those
additional obligations of the Borrower defined in Article 1 and Article 2 of
this Agreement.
ARTICLE 4. SECURITY INTEREST
(a) To secure the payment and performance by the Borrower of Loan I, and
except as otherwise provided by Section 7.3, Osteotech, Inc., Osteotech
Investment Corporation and CAM Implants, Inc. are not to pledge, set over,
collaterally assign or grant a security interest in any of the items set forth
on Exhibit "A" annexed hereto and incorporated herein.
(b) To secure the payment and performance by the Borrower of Loan II and
Loan III to Lender, the Borrower hereby pledges, sets over, assigns and grants a
first priority security interest to Lender in all collateral and pursuant to
such other agreements more particularly described on Exhibit "B" annexed hereto
and incorporated herein. The security interests pledged, set over, assigned and
granted by the Borrower to Lender are to be a first and only priority lien upon
all such collateral.
(c) The foregoing collateral described in Section 4(b) above is,
collectively, the "Collateral" and further secures payment and performance by
the Borrower of all of its obligations in this Agreement or in the other
documents delivered in connection with this Agreement. The provisions of Section
4(a) above are no longer applicable when Loan I has been paid in full and the
agreement of Lender to lend thereunder has been terminated pursuant to the terms
thereof unless there then exists a Default.
(d) Upon repayment of Loan III, and if either Loan I or Loan II remains
unpaid, Lender agrees, unless there then exists a Default, to discharge its
security interests in the Collateral described in subparagraphs (iii) and (iv)
of Exhibit "B" hereof.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES TO LENDER
In order to induce Lender to execute this Agreement, the Borrower makes the
following representations and warranties:
Section 5.1 Organization and Standing
5.1(a) The Borrower is duly licensed or qualified to do business in each
jurisdiction in which qualification is required by law, and it is in good
standing in all such
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jurisdictions, except where such failure to qualify will not have a material
adverse effect on its business or its ability to perform hereunder. The Borrower
has full power and authority to own its properties and to carry on business in
all jurisdictions where it is doing business. All leases relating to the use by
the Borrower of properties or assets are in full force and effect.
5.1(b) To Borrower's actual knowledge (defined as the actual knowledge of
either the Chief Financial Officer, Chief Executive Officer or the Vice
President-Finance of the Borrower after good faith inquiry in the ordinary
performance of their function), the Borrower possesses all licenses, permits,
franchises, patents, copyrights, trademarks, and trade names, or rights thereto,
to conduct its business substantially as now conducted and as presently proposed
to be conducted, and is not in violation of rights of others with respect to any
of the foregoing except as otherwise disclosed in Borrower's public filings.
5.1(c) Lender has been provided with a true copy of the filed Certificate
of Incorporation, Certificate of Limited Partnership or Certificate of
Formation, as the case may be, operating and shareholder agreements,
certificates, bylaws and any amendments thereto (collectively and where
applicable "Operating Documents") as the same are still in full force and
effect. Lender may rely on the accuracy and integrity of the Operating
Documents. Borrower has the authority to execute this Agreement and perform the
undertakings set forth herein.
5.1(d) There has been no Certificate of Cancellation or Certificate of
Dissolution filed on behalf of the Borrower nor has the Borrower been de facto
dissolved by any event such as the death, retirement, resignation, expulsion,
bankruptcy or dissolution of any shareholder, partner or member or any other
event which would cause the dissolution of Borrower pursuant to applicable law.
5.1(e) The individual(s) executing this Agreement on behalf of the Borrower
are authorized as officers, partners or members to do so and to bind and
obligate Borrower pursuant to the terms hereof.
Section 5.2 Power
5.2(a) The Borrower has the power to execute, deliver and carry out this
Agreement, and such other related documents and instruments executed by it. Its
board of directors or members, or all partners, as the case may be, have duly
authorized and approved the terms of this Agreement and all related actions by
it. No other action, whether by resolution, governmental entity, or otherwise,
is necessary for the consummation of the transactions contemplated by this
Agreement. The Borrower's performance hereunder does not and will not constitute
a breach or default of any material agreement or law to which it is subject.
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5.2(b) This Agreement and the documents relating thereto, upon execution
and delivery, will constitute the Borrower's legal, valid and binding agreements
enforceable in accordance with their terms.
Section 5.3 Litigation
Except as disclosed in its public filings, to Borrower's actual knowledge,
there are no lawsuits, judicial proceedings, investigations or complaints
pending or threatened against the Borrower relating to any aspect of its
business or properties, including but not limited to environmental protection,
which would, if decided adversely to Borrower, have a material adverse effect on
the Borrower. Borrower is not in default with respect to any judgment, order,
injunction or assessment issued by any court or any governmental agency relating
to any material aspect of its business or properties or relating to its ability
to consummate the transactions contemplated by this Agreement.
Section 5.4 Financial Statements and Solvency
5.4(a) Prior to the execution of this Agreement, the Borrower has delivered
to Lender the consolidated financial statements of Osteotech, Inc. and its
Subsidiaries dated December 31, 1998 (the "Delivered Financials") requested by
Lender. The Delivered Financials have been prepared in accordance with generally
accepted accounting principles consistently applied, and fairly present the
consolidated assets, liabilities, results of operations and capital as at the
dates thereof. The Delivered Financials reflect or provide for all fixed and
contingent claims and debts and liabilities as of the dates thereof. There has
not been any material adverse change of financial condition between the date of
the most recent of the Delivered Financials and the date of this Agreement. To
Borrower's actual knowledge, no fact or condition exists, is contemplated or
threatened which may cause any such change at any time in the future.
5.4(b) Except as shown on the Delivered Financials, to Borrower's actual
knowledge, the Borrower has no other liabilities as of the date hereof which
would materially and adversely affect its financial condition.
5.4(c) To Borrower's actual knowledge, all books and records of account are
materially accurate, complete and properly reflect all material transactions
purported to be documented thereby.
5.4(d) Borrower's assets, as valued on the December 31, 1998 balance sheet,
exceed Borrower's known liabilities (including, without limitation, contingent
liabilities). Borrower is paying its debts as they become due, and Borrower has
capital and assets sufficient to carry on its business.
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Section 5.5 Compliance with Law
5.5(a) To Borrower's actual knowledge, the Borrower is, and at all times
during the past has been, in compliance in all material respects with all laws,
governmental rules and regulations applicable to its business and properties,
including those relating to environmental protection.
5.5(b) To Borrower's actual knowledge, the Borrower is, and at all times
since Borrower acquired the Property has been, in compliance with all
requirements of the Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et
seq., including, but not limited to, those regulations promulgated by the
Architectural and Transportation Barrier Compliance Board at 36 CFR 1191 et
seq., and by the Department of Justice at 28 CFR 36 et seq., to the extent
applicable to the Property.
Section 5.6 No Adverse Restrictions
The Borrower is not subject to any provision in the Operating Documents,
any contract, mortgage, lease, judgment, court order, rule or regulation, or any
other restriction of any kind which could materially and adversely affect its
business and properties, the results of its operations or its ability to fulfill
any obligations in this Agreement or in any document relating thereto. No
material contract, instrument, understanding, judgment, statute, court order,
rule or regulation to which it is a party or by which it is bound has been or
will be violated or breached by the execution and performance of this Agreement.
Section 5.7 Taxes and Tax Returns
5.7(a) The Borrower has filed all tax returns which were required to be
filed as of the date of this Agreement.
5.7(b) The provisions for taxes shown in the Delivered Financials are
sufficient to satisfy all taxes due and all assessments received for all periods
ended on or prior to the dates thereof.
5.7(c) As of the date of this Agreement, no taxes are due from Borrower and
no tax liabilities have been assessed or proposed against Borrower which either
remain unpaid or are not otherwise provided for in the Delivered Financials.
5.7(d) The Borrower is not aware of any basis upon which any assessment for
a material amount of additional taxes can be made against it.
5.7(e) The Borrower has not signed any extension agreement with the
Internal Revenue Service or any governmental authority or given any waiver of a
statute of limitations with respect to the payment of taxes.
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5.7(f) The results of any governmental examination or audit of tax returns
are properly reflected in the Delivered Financials.
5.7(g) All taxes which Borrower is required by law to withhold or collect
(the "Withholding Taxes") have been duly withheld and collected. To the extent
required, the Borrower has paid over the Withholding Taxes to the proper
governmental authorities on a timely basis or has reflected them as a liability
in the Delivered Financials.
Section 5.8 Title to Collateral
The Borrower has good and marketable title to all of its tangible and
intangible assets subject only to those liens, encumbrances, security interests,
assignments, pledges, mortgages or leases set forth on the Delivered Financials.
The Borrower has good and marketable title to the Collateral except for the
security interest granted to Lender by the Borrower. None of the Collateral is
or is about to become subject to any assignment, mortgage, pledge, lien,
security interest, lease or encumbrance except as provided by virtue of the
execution or performance of this Agreement.
Section 5.9 Use of Proceeds of the Loan
5.9(a) The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System. The
proceeds of the Loan are not intended by the Borrower to be used to purchase or
carry any margin stock or to reduce or retire any indebtedness incurred for such
purpose. If requested by Lender, the Borrower has furnished to Lender statements
in conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U to the foregoing effect.
5.9(b) The Borrower does not intend to apply the proceeds of the Loan
directly or indirectly to the "acquisition" of "stock" of a "foreign issuer" or
"debt obligation" of a "foreign obligor", as such terms are defined in the
United States Interest Equalization Tax Act, or to take or permit any other
action which would subject Lender to the tax imposed by said Act.
5.9(c) The Borrower is not an "investment company", or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company", as such terms are defined in the Investment Company Act of 1940. The
application of the proceeds and repayment thereof of the Loan by the Borrower
and the performance of the transactions contemplated by this Agreement will not
violate any provision of said Act, or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder.
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Section 5.10 ERISA
To Borrower's actual knowledge, Borrower is in compliance in all material
respects with the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the related provisions of the Internal Revenue
Code, and with all regulations and published interpretations issued thereunder
by the United States Treasury Department, the United States Department of Labor
and the Pension Benefit Guaranty Corporation ("PBGC"). To Borrower's actual
knowledge, neither a reportable event as defined in Section 4043 of ERISA, nor a
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code, has occurred and is continuing with respect to any
employee benefit plan subject to ERISA established or maintained, or to which
contributions have been or may be made, by Borrower or by any trade or business
(whether or not incorporated) which together with Borrower would be treated as a
single employer under Section 4001 of ERISA (any such trade or business being
referred to as an "ERISA Affiliate," and any such employee benefit plan being
referred to as a "Plan"). No notice of intention to terminate a Plan has been
filed nor has any Plan been terminated; the PBGC has not instituted proceedings
to terminate, or to appoint a trustee to administer, any Plan nor, to Borrower's
actual knowledge, do circumstances exist that constitute grounds for any such
proceedings; and neither Borrower nor any ERISA Affiliate has completely or
partially withdrawn from any multi employer Plan described in Section 4001(a)
(3) of ERISA. To Borrower's actual knowledge, Borrower and each ERISA Affiliate
has met the minimum funding standards under ERISA with respect to each of its
Plans; no Plan of Borrower or of any ERISA Affiliate has an accumulated funding
deficiency or waived funding deficiency within the meaning of ERISA; and no
material liability to the PBGC under ERISA has been incurred by Borrower or any
ERISA Affiliate.
Section 5.11 OSHA
To Borrower's actual knowledge, Borrower has duly complied with, and its
facilities, business, leaseholds, equipment and other property are in compliance
in all material respects with, the provisions of the federal Occupational Safety
and Health Act ("OSHA") and all rules and regulations thereunder and all similar
state and local laws, rules and regulations; and there are no outstanding
citations, notices or orders of non-compliance issued to Borrower or relating to
its facilities, business, leaseholds, equipment or other property under any such
law, rule or regulation.
Section 5.12 Inventory
The value of Inventory reflected on the Delivered Financials is set at the
lower of cost or market in accordance with generally accepted accounting
principles consistently applied.
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Section 5.13 Accounts Receivable
To Borrower's actual knowledge, except for reserves as reflected in the
Delivered Financials, all of the Accounts Receivable reflected in the latest
Delivered Financials are collectible, are subject to no known counterclaims or
setoffs of any nature whatsoever, and require no further action to constitute
such accounts as due and owing by the account debtors. None of the Accounts
Receivable includes any conditional sales, consignments or sales on any basis
other than that of an absolute sale in the ordinary and usual course of
business, except as otherwise noted. No agreement has been made under which any
deductions or discounts may be claimed except regular discounts in the usual
course of business.
Section 5.14 No Consents or Approvals Needed
Under the state of the applicable law at the time of the signing of this
Agreement, no approval, consent, authorization, or notice by or to any party,
including a governmental entity, is required in connection with this Agreement
and the consummation of the transactions and matters covered by this Agreement.
Section 5.15 Environmental Compliance
5.15(a) To the Borrower's actual knowledge, to the extent that the
Collateral or real or personal property owned or occupied by the Borrower in the
State of New Jersey is or has been used to refine, produce, store, handle,
transfer, process or transport hazardous substances, hazardous wastes,
pollutants or other related substances as those terms are defined by New Jersey
or federal law, the Borrower has complied with all applicable Environmental
Laws.
5.15(b) No friable asbestos or any substance containing asbestos deemed
hazardous by federal or state regulations has been installed in the Collateral.
5.15(c) To Borrower's actual knowledge, neither the Borrower nor the
Collateral or real or personal property owned or occupied by the Borrower in the
State of New Jersey are in violation of or subject to any existing, pending, or
threatened investigation or inquiry or to any remedial obligations under any
federal or state laws pertaining to health or the environment, including, but
not limited to the Industrial Site Recovery Act f/k/a the Environmental Cleanup
Responsibility Act ("ISRA") (N.J.S.A.13:1K-6 et seq., as amended), the Spill
Compensation and Control Act (N.J.S.A.58:10 23.11 as amended), the Hazardous and
Solid Waste Amendments of 1984 Pub. L98-616 (42 U.S.C. 699 et. seq., as
amended); a certain statute adopted by New Jersey for registration of
underground storage tanks (N.J.S.A.58:10-21 et seq.,), the Resource Conservation
and Recovery Act (42 U.S.C. 6901 et. seq., as amended) and the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.,
as amended); (all such federal, state, county, municipal or other laws,
ordinances or regulations are hereinafter collectively referred to as the
"Environmental Laws"). To the actual knowledge of Borrower, there are no
underground storage tanks located on any property occupied by the Borrower in
the State of New Jersey.
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5.15(d) To the Borrower's actual knowledge, the Borrower has obtained all
permits, licenses or similar authorizations to construct, occupy, operate or use
any buildings, improvements, fixtures and equipment by reason of any
Environmental Laws.
5.15(e) To Borrower's actual knowledge, none of the Collateral or real or
personal property owned or occupied by the Borrower in the State of New Jersey
has, is now or is intended to be used as a major storage facility or for the
operation of a hazardous substance or waste disposal facility as those terms are
defined by any Environmental Laws.
5.15(f) No lien or, to Borrower's actual knowledge, claim has been attached
to or made against the Borrower, any revenues of the Borrower, the Collateral or
any real or personal property owned or occupied by the Borrower in the State of
New Jersey by the State of New Jersey or the federal government for damages or
cleanup and removal costs, as those terms are defined by any Environmental Laws
arising from an intentional or unintentional act or omission of it or any
previous owner or operator of its real or personal property resulting in the
releasing, spilling, pumping, pouring, emitting, emptying, discharging or
dumping of hazardous substances, hazardous wastes, pollutants or other related
substances as those terms are defined by any Environmental Laws.
5.15(g) To the Borrower's actual knowledge, the Borrower has not taken any
intentional or unintentional act or omission resulting in the releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging or dumping
of hazardous substances, hazardous wastes, pollutants or related substances as
those terms are defined by any Environmental Laws.
5.15(h) The Borrower has provided an environmental report to Lender which
is true, accurate and complete to the actual knowledge of Borrower.
5.15(i) The Borrower has required that the seller of any real property
located in the State of New Jersey acquired (either directly or indirectly, by
such means as a stock transaction, for example) by the Borrower on or after
January l, 1984 and all occupants of all real property owned by the Borrower
since January 1, 1984 comply with the provisions of ISRA and have provided
evidence of such compliance to Lender. To Borrower's actual knowledge, it has
otherwise complied with ISRA, will not take or fail to take such action which
would render its representations or covenants made in this Section to be untrue
or incapable of performance, and has and will provide evidence of such
compliance to Lender.
Section 5.16 Identification of the Borrower
5.16(a) Schedule 1 annexed hereto sets forth a complete and accurate list
of all names by which the Borrower is known or under which the Borrower is
conducting
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business, including, without limitation, its fictitious names, alternate names
and trade names.
5.16(b) Schedule 1 annexed hereto sets forth a complete and accurate list
of all offices and locations in the United States at which the Borrower conducts
any of its business or operations, the locations of all Collateral and records
relating to Collateral and the Borrower's chief executive office, if any.
5.16(c) The Borrower has not, within the six (6) year period immediately
preceding the effective date of this Agreement, changed its name, been the
survivor of a merger or consolidation, or acquired all or substantially all of
the assets of any person or entity except as otherwise set forth in Schedule 1.
5.16(d) Except in the case of Osteotech, Inc., which is a publicly traded
company, all of the issued and outstanding capital stock or other ownership
interests of the Borrower are owned and registered as otherwise disclosed in the
officers' certificates delivered contemporaneously herewith by or on behalf of
the Borrower. Osteotech Investment Corporation, CAM Implants, Inc., Osteotech
B.V., H.C. Implants, B.V., CAM Implants B.V., Osteotech/Cam Services B.V. and
OST Developpement are Subsidiaries of Osteotech, Inc. A Subsidiary is defined as
any entity of which the voting or ownership interests in an amount of 50% or
more is/are owned or controlled by any Borrower or any party which subsequently
executes a guaranty pursuant to this Agreement.
5.16(e) Schedule 1 annexed hereto sets forth the Standard Industrial
Classification Codes applicable to the properties and operations of Borrower.
Section 5.17 The Project
The Project is to be constructed strictly in accordance with all applicable
ordinances and statutes and in accordance with the requirements of all
regulatory authorities having jurisdiction and in conformity with the
requirements of the Board of Fire Underwriters or similar body. The Project is
to be constructed entirely on the Property and does not encroach upon or
overhang any easement or right-of-way nor upon the land of others, and the
Project, when erected, is to be wholly within the building restriction lines
however established and will not violate applicable use or other restrictions
contained in prior conveyances, laws, zoning ordinances, codes, rules or
regulations. The Project is intended to be made and completed using first-class
materials in a good, substantial and workmanlike manner and will be equipped
with first-class equipment.
Section 5.18 Duration and Effect of Representations and Warranties
5.18(a) The representations and warranties made to Lender in this Article 5
are to be true, accurate and complete for the duration of the term of this
Agreement.
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5.18(b) None of the representations, warranties or statements made to
Lender in this Agreement or in any other agreement executed in connection with
this Agreement or contemplated by this Agreement contain any untrue statement of
a material fact, or omit to state a material fact necessary in order to make the
statements made not misleading.
ARTICLE 6. COVENANTS TO LENDER
In order to induce Lender to execute this Agreement, the Borrower makes the
following affirmative covenants:
Section 6.1 Payment of Debt
The Borrower is to pay all of its obligations, including the Debt to
Lender, when due in accordance with such documents evidencing or documenting
such obligations including but not limited to, this Agreement.
Section 6.2 Change of Financial Conditions
Any and all future substantial and material adverse changes in the
Borrower's consolidated financial condition are to be promptly brought to the
attention of Lender.
Section 6.3 Litigation
The Borrower is to promptly notify Lender if any lawsuits, losses, claims,
judicial proceedings, investigations, complaints, notices, or citations
including but not limited to, those relating to occupational health, safety, or
environmental protection, are pending or threatened against the Borrower which
exceed applicable insurance coverage.
Section 6.4 Organization and Standing
The Borrower is to continue to be duly licensed or qualified to do business
in each jurisdiction in which qualification is required by law except where the
failure to do so would not have a material adverse effect on the Borrower, and
to continue to be in good standing and to preserve legal existence.
Section 6.5 Compliance with Law
The Borrower is to comply in all material respects with all laws,
governmental rules and regulations applicable to its business and properties,
including, but not limited to, ERISA, OSHA and Environmental Laws. At any time
while any amount is outstanding under Loan II or Loan III, Lender has the right
to enter, during normal business hours, onto the Property, upon 72 hours' prior
written notice, and cause such tests, inspections, and/or procedures to be
conducted by a professional engineering firm or others for the purpose
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of ensuring compliance with all Environmental Laws and rules, and having the
Property certified to the Lender as such. Without limitation of Lender's rights,
while any amount under Loan II or Loan III is outstanding, Lender has the right,
but not the obligation, to enter, during normal business hours, onto the
Property, upon 72 hours' prior written notice, to take such other actions as it
deems reasonably necessary or advisable to test, cleanup, remove, resolve, or
minimize the impact of, or otherwise deal with, any environmental condition
which, in the sole reasonable opinion of the Lender, could jeopardize or affect
its Collateral. All costs and expenses incurred by the Lender in the reasonable
exercise of any such rights is secured by the Collateral and is payable on
demand. In the event that asbestos exists in the Collateral or is found by the
Borrower or any other person or entity at any time to exist in the Collateral,
the Borrower is to (1) promptly notify Lender that the asbestos exists or has
been discovered, (2) obtain a written estimate and report from an environmental
firm acceptable to Lender of the cost of the removal of the asbestos and the
manner in which it should be removed, which removal procedure is to be
satisfactory to Lender, (3) deposit with Lender in escrow an amount equal to the
cost of such removal and (4) diligently pursue the removal of the asbestos. The
amount held in escrow will be released by Lender upon (a) delivery to Lender of
evidence satisfactory to Lender that the applicable laws, rules and regulations
have been complied with in connection with such removal and disposal, and (b)
inspection of the completed work by Lender's engineer (at Borrower's expense)
and a determination by said engineer that the removal has been handled in a
satisfactory manner. Lender acknowledges that Borrower produces medical products
and as such is part of a highly regulated industry and that access to Borrower's
clean rooms and other parts of the Property is restricted (the "Restricted
Locations") by Borrower's policies and procedures. Lender acknowledges that it
will not have access to such Restricted Locations. After a Default, and upon 72
hours' prior written notice, Lender will be allowed access to enter the
Restricted Locations provided that Lender complies with the Borrower's
established standard operating procedures (then in effect and then made known to
Lender by Borrower) with respect to access to such Restricted Locations. The
actions exercisable by Lender prior to Default pursuant to this Section will be
conducted in a manner reasonably designed to interfere as little as possible
with the operation of the Borrower's business. The actions exercisable by Lender
following Default pursuant to this Section will be conducted in a commercially
reasonable manner in all respects.
Section 6.6 Taxes
Borrower is to make due and timely payment of all Federal, State and local
taxes and assessments required by law and to execute and deliver to Lender, on
demand, appropriate certificates attesting to the payment or deposit of any such
taxes or assessments.
Section 6.7 Reports
Osteotech, Inc. is to provide to Lender, in form and substance reasonably
satisfactory to Lender:
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6.7(a) As soon as available, but in no event later than ninety (90) days
after the end of each fiscal year of Osteotech, Inc., a consolidated balance
sheet of Osteotech, Inc. and its Subsidiaries as of the end of such year and
statements of income, cash flows and changes in stockholders' equity for such
year (all in reasonable detail and with all notes and supporting schedules),
audited by a "Big Five" accounting firm or other independent certified public
accountant satisfactory to Lender, and attested to by the Chief Financial
Officer or Treasurer of Osteotech, Inc., as presenting fairly the financial
condition of Osteotech, Inc. and its Subsidiaries as of the dates and for the
periods indicated and as having been prepared in accordance with generally
accepted accounting principles consistently applied, except as may be otherwise
disclosed in such financial statements or the notes thereto; together with a
consolidating and consolidated balance sheet as of the end of such year and
statements of income, cash flows and changes in stockholders' equity for such
year (all in reasonable detail and with all notes and supporting schedules),
prepared by the Chief Financial Officer of Osteotech, Inc., and attested to by
the Chief Financial Officer or Treasurer of Osteotech, Inc.
6.7(b) As soon as available, but in no event later than forty-five (45)
days after the end of the first, second and third quarterly fiscal periods of
Osteotech, Inc., a consolidating and consolidated balance sheet of Osteotech,
Inc. and its Subsidiaries as of the end of such period and statements of income,
cash flows and changes in stockholders' equity for such period commencing at the
end of the previous fiscal year and ending with the end of such period (all in
reasonable detail and with all notes and supporting schedules), prepared by the
Chief Financial Officer of Osteotech, Inc. and attested to by the Chief
Financial Officer or Treasurer of Osteotech, Inc.
6.7(c) Upon submission of the financial statements and information provided
by Sections 6.7(a) and 6.7(b) hereof:
(A) Certificates of insurance for all policies of insurance to be
maintained pursuant to this Agreement at the times provided by Section
6.7(a);
(B) An estoppel certificate executed by an authorized representative of
Borrower indicating that there then exists no Default and no event which,
with the giving of notice or lapse of time, or both, would constitute an
event of default under any material agreement to which it is a party at the
times provided by Section 6.7(b);
(C) Lender's form of Compliance Certificate completed by Borrower at the
times provided by Section 6.7(b) in the form attached as Exhibit "F";
(D) An accountant's reliance letter confirming that the Lender may rely
upon the financial information submitted at the times provided by Section
6.7(a).
6.7(d) Promptly after preparation or receipt:
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(A) Copies of any statement or report furnished by Osteotech, Inc. to any
other party pursuant to the terms of any indenture, loan, or credit or
similar agreement and not otherwise required to be furnished to Lender
pursuant to this Agreement; and
(B) Copies of all proxy statements, financial statements, and reports which
Osteotech, Inc. sends to stockholders or owners, and copies of all regular,
periodic, and special reports, and all registration statements which
Borrower files with any national securities exchange or regulatory agency.
Section 6.8 Access to Records and Property
Not more than once per calendar year in the absence of a Default, upon 72
hours' prior written request by Lender (which request need not be given in the
event of a Default, but which request will include the identity of the auditor
selected by Lender), Borrower is to give any representatives of Lender or an
independent audit firm selected by Lender access during normal business hours to
examine, audit, copy or make extracts from, any and all books, records and
documents in its possession relating to its affairs and the Collateral. Lender
acknowledges that Borrower produces medical products and as such is part of a
highly regulated industry and that access to Borrower's clean rooms and other
parts of the Property is restricted (the "Restricted Locations") by Borrower's
policies and procedures. Lender acknowledges that it will not have access to
such Restricted Locations. After a Default, and upon 72 hours' prior written
notice, Lender will be allowed access to enter the Restricted Locations provided
that Lender complies with the Borrower's established standard operating
procedures (then in effect and then made known to Lender by Borrower) with
respect to access to such Restricted Locations. Lender and any such audit firm
must keep confidential any documents or information of a confidential nature
obtained pursuant to the provisions hereof. The actions exercisable by Lender
prior to Default pursuant to this Section will be conducted in a manner
reasonably designed to interfere as little as possible with the operation of the
Borrower's business. The actions exercisable by Lender following Default
pursuant to this Section will be conducted in a commercially reasonable manner
in all respects.
Section 6.9 Preservation of Title to Collateral
The Borrower is to immediately notify Lender of any material loss or damage
to, or any occurrence which would adversely affect the security interest of
Lender in and to the Collateral. The Collateral is to be free and clear of all
assignments, mortgages, pledges, liens, security interests, leases, or
encumbrances except in favor of Lender and except as otherwise provided herein.
The security interest held by CryoLife, Inc. as to Patent #5,333,626 filed
December 31, 1991 is to be discharged and evidence thereof provided by the
Borrower to Lender within six (6) months of the effective date of this
Agreement. The Borrower is to continue to maintain good and marketable title to
the Collateral, at the sole expense of the Borrower.
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Section 6.10 Financial Records and Location of Collateral
The Borrower is to maintain true, materially accurate and complete books,
records, and accounts of its business affairs in accordance with generally
accepted accounting principles consistently applied in the Borrower's respective
country of organization. The Borrower is to keep accurate records of the
Collateral, which records are at all times to be physically located at the
address of the Borrower set forth on Schedule 1. All Collateral is to be
physically located at the chief executive office of the Borrower set forth on
Schedule 1, unless otherwise agreed by Lender and documented to the satisfaction
of Lender.
Section 6.11 Condition of Buildings and Collateral
All Collateral is to be used solely by the Borrower in connection with its
business. The Borrower is to maintain the Collateral and it is to maintain the
Property and all buildings, plants, improvements and structures thereon in good
condition and repair, ordinary wear and tear excepted, and in compliance with
all zoning laws, ordinances, and regulations of governmental authorities having
jurisdiction.
Section 6.12 Insurance
6.12(a) The Borrower is to maintain in full force and effect on the
Collateral (and on all of its other assets, if requested by Lender), the
following insurance:
(i) Comprehensive general public liability insurance (including, but not
limited to, product liability insurance) in an amount not less than
$10,000,000.00 in the aggregate and $3,000,000.00 per occurrence;
(ii) "All-Risk" coverage policy of fire, pilferage, theft, burglary, loss
in transit, title and extended coverage hazard insurance (together with
vandalism and malicious mischief endorsements) in an aggregate amount not
less than the outstanding principal amount of Loan II and Loan III in the
aggregate;
(iii) If the Collateral is required to be insured pursuant to the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Act of
1968, and the regulations promulgated thereunder, flood insurance in an
amount not less than the outstanding principal balance of the Loan or the
maximum limit of coverage available, whichever amount is less;
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(iv) Business interruption and/or loss of rental insurance sufficient to
pay, during the period of interruption or loss, normal operating expenses
in connection with the Collateral; and
(v) Boiler and machinery insurance covering vessels, air tanks, boilers,
machinery, pressure piping, heating, air conditioning and elevator
equipment in such amounts as Lender reasonably requires from time to time,
provided that such equipment is part of the Collateral.
6.12(b) Each insurance policy required under this Section is to be written
by insurance companies authorized or licensed to do business in New Jersey
having an ▇▇▇▇▇▇ ▇. Best Company, Inc. rating of A+ or higher and a financial
size category of not less than VII, and is to be on such forms and written by
such companies as reasonably approved by Lender.
6.12(c) Each insurance policy required under Sections 6.12(a)(i)(ii)(iii)
and (v) providing insurance against loss or damage to property is to be written
or endorsed so as to (i) contain a New Jersey standard mortgagee, secured party,
or loss payee endorsement, as the case may be, or its equivalent, and (ii) make
all losses payable directly to the Lender, without contribution.
6.12(d) Each insurance policy required under this Section providing public
liability coverage is to be written and endorsed so as to name the Lender as an
additional insured, as its interest may appear.
6.12(e) Each insurance policy required under this Section is to contain a
provision to the effect that such policy is not to be canceled, altered or in
any way limited in coverage or reduced in amount unless the Lender is notified
in writing at least thirty (30) days prior to such change. At least thirty (30)
days prior to the expiration of any such policy, the Borrower is to furnish
evidence satisfactory to the Lender that such policy has been renewed or
replaced or is no longer required by this Section.
6.12(f) Each insurance policy required under this Section (except flood
insurance written under the federal flood insurance program) is to contain an
endorsement by the insurer that any loss is to be payable to Lender, as its
interest may appear, in accordance with the terms of such policy notwithstanding
any act or negligence or breach of any warranty of or by the Borrower which
might otherwise result in forfeiture of said insurance and the further agreement
of the insurer waiving all rights of setoff, counterclaim, deduction or
subrogation against the Borrower (so as not to interfere with Lender's rights).
6.12(g) In the event of loss or damage to the Collateral, the proceeds of
any insurance provided hereunder is to be applied as set forth in this Section;
in the event
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of a public liability claim, the proceeds of any insurance provided hereunder is
to be applied toward extinguishing or satisfying the liability and expense
incurred in connection therewith.
6.12(h) The Borrower is not to take out any separate or additional
insurance with respect to the Collateral which is contributing in the event of
loss unless it is properly compatible with all of the requirements of this
Section.
6.12(i) The Borrower is to pay the premiums on the policies therefor as
they become payable, and is to deliver to Lender such policies, with standard
clauses in favor of Lender attached.
6.12(j) Each insurance policy required under this Section is to be written
and endorsed to provide that the intentional actions of Borrower are not to
affect the insurable interest of Lender or prevent payment of the proceeds of
the policy to Lender.
6.12(k) Lender is entitled to receive all insurance proceeds payable with
respect to the damage or loss of the Collateral up to the amount of any
outstanding Debt secured by such Collateral. In the absence of Default, Lender
is to use any such insurance proceeds in an amount up to $5,000,000.00 in the
aggregate to first reimburse Borrower for the cost of replacement or repair of
the Collateral. In the event Lender receives insurance proceeds in excess of
$5,000,000.00, Lender has the option to apply said excess proceeds to either the
cost of replacement or repair of the Collateral or on account of the Debt;
provided, however, Borrower shall not be subject to any prepayment penalty for
amounts of the Debt paid down pursuant to Lender's receipt of insurance
proceeds. Any such excess proceeds not used by Lender as herein provided are to
be paid promptly to Borrower.
6.12(l) In no event is Lender required either to (i) ascertain the
existence of or examine any insurance policy, or (ii) advise Borrower in the
event such insurance coverage does not comply with the requirements of this
Agreement.
Section 6.13 Payment of Proceeds
Upon receipt of any or all proceeds of the Collateral, the Borrower is to
pay such proceeds directly to Lender; whereupon Lender is to discharge its
security interests to the extent of the Collateral whose proceeds have been
received by Lender. Nothing in this Section is intended to prohibit the Borrower
from retiring any Collateral following the expiration of any applicable useful
life thereof.
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Section 6.14 Further Assurances
The Borrower is to execute such further instruments and documents,
including Uniform Commercial Code financing statements, as may be requested by
Lender in order to render effective the terms and conditions of this Agreement.
Any such Uniform Commercial Code financing statements are to be filed in such
locations as Lender may require, at Borrower's sole expense. If requested, the
Borrower is to provide Lender with satisfactory evidence of such filing(s) prior
to any advance under the Loan. The Borrower is to provide Lender with
satisfactory evidence that any common law or statutory liens affecting any of
the Collateral, including, but not limited to landlords lien, materialman's
lien, or liens under the New Jersey Construction Lien Law have been discharged
and removed of record prior to any advance under the Loan. The Borrower is to
cause each Subsidiary hereafter formed to execute Lender's form of unlimited
unconditional guaranty of payment of the Debt, as a guarantor, and to otherwise
agree in writing (a) that the terms and conditions of this Agreement apply to
such guarantor as if such guarantor were a "Borrower" and (b) that the guarantor
otherwise consents to the terms of this Agreement. The form of such unlimited
unconditional guaranty of payment is attached hereto as Exhibit "G."
Section 6.15 Fees
6.15(a) Unused Facility Fee. If, for any quarter during the term of this
Agreement, the average daily unpaid balance of the outstanding advances made
pursuant to Loan I for each day of such quarter does not equal the maximum
amount of Loan I, then Borrower is to pay to Lender a fee at a rate equal to
one-quarter of one percent (1/4%) per annum on the amount by which such maximum
exceeds such average daily unpaid balance. Such fee is payable to Lender in
arrears on the last day of each quarter.
6.15(b) Commitment Fee. The Borrower is to pay to Lender a fee of one-half
of one percent (1/2%) of the amount of Loan II and one-quarter of one percent
(1/4%) of the amount of Loan III due and payable as of the date hereof.
Section 6.16 Duration of Covenants
The covenants made in this Article 6 are to be true, accurate and complete
as of the effective date of this Agreement and are to be true, accurate and
complete for the duration of the term of this Agreement.
ARTICLE 7. COVENANTS TO LENDER
REGARDING PROHIBITED TRANSACTIONS
In order to induce Lender to execute this Agreement, the Borrower makes the
following negative covenants:
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Section 7.1 Merger or Consolidation
The Borrower is not to merge with, consolidate with, or be acquired by any
other unrelated corporation, partnership, or entity where the Borrower is not
the surviving entity, without the prior written consent of Lender; if the
Borrower intends to purchase all or substantially all of the assets or stock of
any other corporation, partnership, or entity, the
Borrower must first provide notice to Lender and execute such additional
documents as Lender may reasonably require, in accordance with Section 6.14 of
this Agreement, to maintain and apply the terms of this Agreement thereto.
Section 7.2 Sale of Assets
Except in the ordinary course of Borrower's business, Borrower is not to
sell, transfer or encumber any of its material property or assets necessary to
operate or conduct business, other than Collateral, unless the Borrower provides
prior written notice thereof to Lender.
Section 7.3 Other Liens
During such time as either (a) any amount remains outstanding on Loan I or
the agreement of Lender to lend thereunder has not been terminated pursuant to
the terms thereof or (b) there then exists a Default, Osteotech, Inc., Osteotech
Investment Corporation and CAM Implants, Inc. are not to incur, create or permit
to exist any mortgage, assignment, pledge, hypothecation, security interest,
lien or other encumbrance on any of their property or assets, including, but not
limited to, the items on Exhibit "A," whether now owned or hereafter acquired,
except (a) liens for taxes not delinquent; (b) those liens in favor of Lender
created by this Agreement and related documents; (c) those liens, such as
carrier, warehousemen, unemployment, worker's compensation, or retirement liens
arising by operation of law in the ordinary course of business; (d) easements,
rights-of-way, restrictions and other similar encumbrances which, in the
aggregate, do not materially interfere with the use or occupation of those
properties or assets; and (e) purchase money security interests in specific
assets of the Borrower acquired by the liabilities incurred and permitted in
Section 7.4(c); and (f) liens on property or assets of any entity existing at
the time such entity is merged with or into or consolidated with the Borrower
pursuant to Section 7.1 provided such liens were in existence prior to such
merger or consolidation. In the event that (a) Loan I has been paid in full and
the agreement of Lender to lend thereunder has been terminated pursuant to the
terms thereof and (b) in the absence of Default, the provisions of this Section
apply thereafter only to the Collateral.
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Section 7.4 Other Liabilities
During such time as either (a) any amount remains outstanding on Loan I or
the agreement of Lender to lend thereunder has not been terminated pursuant to
the terms thereof or (b) there then exists a Default, Osteotech, Inc., Osteotech
Investment Corporation and CAM Implants, Inc. are not to incur, create, assume
or permit to exist any indebtedness or liability to any financial institution on
account of either borrowed money, the deferred purchase price of property, or
the capital lease of assets or property for the conduct of business except (a)
the Debt to Lender; (b) indebtedness subordinated to payment of the Debt on
terms approved by Lender in writing; (c) those liabilities otherwise incurred to
financial institutions in an amount in the aggregate less than $500,000.00; or
(d) those leases already in effect as of the effective date of this Agreement as
disclosed in the Delivered Financials.
Section 7.5 Guaranties
The Borrower is not to assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable upon the obligation of any unrelated person,
firm or entity except (a) by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business; or (b) contingent obligations under letters of credit in the ordinary
course of business for the purchase of merchandise for resale.
Section 7.6 Loans or Investments
The Borrower is not to make any advances or loans in excess of $50,000.00
in the aggregate to any unrelated entity if there then exists a Default or any
amount outstanding on Loan I without the prior written consent of Lender.
Section 7.7 Sale of Collateral
The Borrower is not to sell, conditionally sell, sell on approval, consign,
lease, transfer, remove from its premises set forth on Schedule 1 or otherwise
dispose of any Collateral except Collateral identified on Exhibit "B"(iii) in
the ordinary course of business or due to ordinary wear and tear and unless the
Borrower promptly delivers the proceeds or other value (if any) received by the
Borrower to Lender to reduce the amount of the Debt.
Section 7.8 No Future Adverse Restrictions
The Borrower is not to change its Operating Documents or execute any
contract, mortgage, lease or other agreement which could be unduly burdensome or
materially and adversely affect its business and properties, the results of its
operations, or its ability to perform according to this Agreement or related
documents.
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Section 7.9 Change of Location or Name
The Borrower is not to change the place where its books and records are
maintained, change its name, change the nature of its business in any material
respect, or transact business under any other name unless it first executes such
documents reasonably requested by Lender to preserve Lender's interests
hereunder.
Section 7.10 Change of Accounting Practices
The Borrower is not to change its present accounting principles or
practices in any material respect, except as may be required by changes in
generally accepted accounting principles or as business circumstances, laws or
regulations may require.
Section 7.11 Inconsistent Agreement
The Borrower is not to enter into any agreement containing any provision
that would be violated by the performance of Borrower's obligations under this
Agreement or under any document delivered or to be delivered by it in connection
therewith.
Section 7.12 Working Capital
Osteotech, Inc. is not to cause or permit the Working Capital of Osteotech,
Inc. and its Subsidiaries to be less than $18,000,000.00, the term Working
Capital means, as of the time of any determination thereof, the amount
determined in accordance with generally accepted accounting principles, applied
on a consistent basis, by which the current assets of Osteotech, Inc. and its
Subsidiaries exceed the current liabilities. The term "current assets" is to be
determined in accordance with generally accepted accounting principles
consistently applied and includes cash and liquid investments on hand, prepaid
items, Accounts Receivable and Inventory at not in excess of cost or current
market value (whichever is lower); all after deduction of adequate and necessary
reserves. The term "current liabilities" is to be determined in accordance with
generally accepted accounting principles consistently applied and includes all
indebtedness payable within one year from the date of determination. The term
"indebtedness" is to be determined in accordance with generally accepted
accounting principles consistently applied and includes all items which should
be and are included on the balance sheet in determining total liabilities
whether demand, installment, contingent, secured, unsecured, guaranteed,
endorsed or assumed.
Section 7.13 Current Ratio
Osteotech, Inc. is not to cause or permit the ratio of the current assets
of Osteotech, Inc. and its Subsidiaries to the current liabilities to be less
than 2:1. The terms "current assets" and "current liabilities" have the meanings
set forth in Section 7.12.
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Section 7.14 Indebtedness to Tangible Net Worth Ratio
Osteotech, Inc. is not to cause or permit the ratio of the indebtedness of
Osteotech, Inc. and its Subsidiaries to the tangible net worth to be greater
than 1.25:1. The term "tangible net worth" meaning, as of the time of any
determination thereof, the difference between (a) the sum of (i) the par value
(or value stated on the books of Osteotech, Inc. and its Subsidiaries) of the
capital stock of all classes of Osteotech, Inc. and its Subsidiaries, plus (or
minus in the case of a deficit) (ii) the amount of a surplus, whether capital or
earned, less (b) the sum of treasury stock, unamortized debt discount and
expense, good will, trademarks, trade names, patents, deferred charges,
leasehold improvements and other intangible assets, and any write-up of the
value of any assets, all determined in accordance with generally accepted
accounting principles consistently applied.
Section 7.15 EBITDA Ratio
Osteotech, Inc. is not to cause or permit the ratio of earnings before
interest, taxes, depreciation and amortization ("EBITDA") of Osteotech, Inc. and
its Subsidiaries to scheduled principal payments, actual interest and dividends
paid during the prior fiscal year by Osteotech, Inc. and its Subsidiaries to be
less than 1.5:1 as of the time of any determination thereof in accordance with
generally accepted accounting principles consistently applied.
Section 7.16 No Violations of Environmental Statutes
The Borrower is not to cause or permit to exist a releasing, spilling,
leaking, pumping, emitting, pouring, emptying, discharging, or dumping of a
hazardous substance, hazardous waste, pollutant or related substance as those
terms are defined by any Environmental Laws, whether or not resulting in a lien
or claim being attached or made against them for damages or cleanup costs by the
State of New Jersey or the Federal government.
Section 7.17 Violation of Representations, Warranties and Covenants
The Borrower is not to take any action or omit to take any action which
could render any of its representations, warranties or covenants to be untrue or
incapable of performance.
Section 7.18 Year 2000 Compatibility
To Borrower's actual knowledge, (i) the hardware and software utilized by
Borrower are designed to be used prior to, during and after calendar year 2000
A.D. and such hardware and software will operate during each such time period
without error relating to date data, specifically including any error relating
to, or the conduct of, date data which represents or references different
centuries or more than one century, (ii) the
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hardware and software utilized by Borrower will not abnormally end or provide
invalid or incorrect results as a result of date data, and (iii) the hardware
and software utilized by Borrower have been designed to ensure year 2000 A.D.
compatibility, including date data, century recognition, leap year, calculations
which accommodate same century and multi-century formulas and date values, and
date data interface values that reflect the century.
Section 7.19 Duration of Covenants Regarding Prohibited Transactions
The covenants made in this Article 7 are to remain in effect for the
duration of the term of this Agreement.
ARTICLE 8. MISCELLANEOUS RIGHTS AND DUTIES OF LENDER
Section 8.1 Charges Against Credit Balances
Lender, without notice, in its sole and absolute discretion following
Default, may charge and withdraw from any credit balance which Borrower may then
have with Lender or any affiliate of the Lender, any amount(s) which become due
to Lender or which are otherwise expended or advanced by Lender under this
Agreement.
Section 8.2 Collections; Modification of Terms
At any time following Default, Lender may, in its sole and absolute
discretion, demand, ▇▇▇ for, collect or receive any money or property at any
time payable or receivable on account of or in exchange for, or make any
compromises it deems desirable, or otherwise modify the terms or rights of the
Borrower with respect to any of the Collateral without notice and without
otherwise discharging or affecting the Debt.
Section 8.3 Uniform Commercial Code
At all times prior to and following Default, Lender is entitled to all the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in New Jersey and any other jurisdiction where Collateral is located.
Section 8.4 Preservation of Collateral
At all times prior to and following Default, Lender may take any and all
action which, in its sole and absolute discretion, is necessary and proper to
preserve the Collateral, or Lender's interests under this Agreement, including
without limitation, those duties of the Borrower imposed by this Agreement. Any
sums so expended by Lender are to be secured by the Collateral and added to the
Debt. Such sums are to be payable on demand with interest at the highest
interest rate set forth in this Agreement until repaid by Borrower. Lender may
also demand that escrow accounts be established to fund anticipated future
expenditures in the event of Default.
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Section 8.5 Power of Attorney
Lender is hereby irrevocably appointed by Borrower as its lawful attorney
and agent in fact to execute financing statements and other documents and
agreements as Lender may deem reasonably necessary for the purpose of perfecting
any security interests, mortgages or liens contemplated by this Agreement. All
acts by Lender or its designee are hereby ratified and approved, and neither
Lender, nor its designee, is to be liable for any acts of omission or
commission, or for any error of judgment or mistake. The powers of attorney
granted to Lender in this Agreement are coupled with an interest and are
irrevocable during the term of this Agreement. Whenever Lender deems it
desirable that any legal action be instituted with respect to any Collateral or
that any other extraordinary action be taken in an attempt to effectuate
collection of any Collateral, Lender may reassign the item in question to the
Borrower (without recourse to Lender) and require the Borrower to proceed with
such legal or other action, at the Borrower's sole liability, cost and expense,
in which event all amounts collected by the Borrower on such items are to,
nevertheless, be treated as proceeds of Collateral.
ARTICLE 9. DEFAULT
Section 9.1 Definition of Default
The Borrower is in default and the Debt becomes immediately due and
payable, without notice except as otherwise expressly herein provided, at the
option of Lender upon the occurrence of any or all of the following events,
circumstances or determinations ("Default"):
9.1(a) Upon the failure of the Borrower to pay, when due, all or any part
of Debt as set forth in any instrument, document, or agreement evidencing
the Debt executed between the Borrower and Lender within seven (7) days of
the sending by Lender of written notice of delinquency;
9.1(b) Upon the failure of the Borrower to observe or perform any covenant,
term or condition required by this Agreement or by any other instrument,
document or agreement related thereto executed by the Borrower and Lender
within seven (7) days of the sending by Lender of written notice of said
failure;
9.1(c) Upon the occurrence of any event of default as defined with
reference to any other indebtedness of the Borrower to any third parties so
that the holder of such indebtedness declares such indebtedness due prior
to its date of maturity;
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9.1(d) Upon any material breach of representation, warranty or disclosure
by the Borrower set forth in this Agreement or any other document executed
in connection with the Loan, or if any such representation, warranty or
covenant is no longer true or capable of performance;
9.1(e) Upon the submission to Lender of any materially false or fraudulent
statement by the Borrower in connection with the execution of this
Agreement;
9.1(f) Upon the liquidation of any Borrower; except that Osteotech, Inc.
may liquidate CAM Implants, Inc., a Colorado corporation, upon ten (10)
days' prior notice to Lender;
9.1(g) Upon the commencement by or as to the Borrower, of any insolvency
proceedings, bankruptcy proceedings, reorganization proceedings, assignment
for the benefit of creditors, or proceedings of like character, or the
appointment of a receiver, custodian or trustee as to any or all assets of
the Borrower; or if any of the foregoing is instituted against the
Borrower, and it is not dismissed within thirty (30) days following the
institution or initiation thereof;
9.1(h) Upon the occurrence of any event of default otherwise defined in any
separate instrument, document, or agreement existing now or in the future
executed by the Borrower and Lender;
9.1(i) Upon the entry of any judgment against the Borrower in excess of
$200,000.00, individually or in the aggregate, which remains unpaid,
undischarged, unsatisfied, unbonded, not made subject to an appeal and
bonded on terms reasonably acceptable to Lender, or undismissed following
thirty (30) days after entry;
9.1(j) Upon the event that any or all of the assets of the Borrower,
including, but not limited to the Collateral having a value in excess of
$200,000.00, is/are attached, distrained, levied upon or made subject to
any involuntary lien or involuntary security interest which are not
discharged or removed following forty-five (45) days after attachment,
distraint or levy, or otherwise contested in good faith on terms and
conditions reasonably satisfactory to Lender;
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9.1(k) Upon the event that any indorser or guarantor is determined, or
seeks to determine that it is to be no longer liable for its obligations as
contemplated by this Agreement or related documents;
9.1(l) Upon any indictment, charge or proceeding filed or commenced,
whether criminal or civil, pursuant to Federal or State law against
Borrower for which forfeiture of any of the property or assets of Borrower
is a penalty;
9.1(m) Upon the event that Borrower (a) becomes unable or fails to pay its
debts generally as they become due, (b) admits in writing its inability to
pay its debts, or (c) proposes or makes a composition agreement with
creditors, a general assignment for the benefit of creditors, or a bulk
sale;
9.1(n) In the event that, with respect to any Plan (as defined in Section
5.10 of this Agreement), there occurs or exists any of the events or
conditions described in the following clauses (a) through (h) and such
event or condition, together with all like events or conditions, could in
the opinion of Lender subject Borrower to any tax, penalty or other
liability that might, singly or in the aggregate, have a material adverse
effect on the financial condition or the properties or operations of
Borrower:(a) a reportable event as defined in Section 4043 of ERISA, (b) a
prohibited transaction as defined in Section 406 of ERISA or Section 4975
of the Internal Revenue Code, (c) termination of the Plan or filing of
notice of intention to terminate, (d) institution by the Pension Benefit
Guaranty Corporation of proceedings to terminate, or to appoint a trustee
to administer, the Plan, or circumstances that constitute grounds for any
such proceedings, (e) complete or partial withdrawal from a multi employer
Plan, or the reorganization, insolvency or termination of a multi employer
Plan, (f) an accumulated funding deficiency within the meaning of ERISA,
(g) violation of the reporting, disclosure or fiduciary responsibility
requirements of ERISA or the Internal Revenue Code, or (h) any act or
condition which could result in direct, indirect or contingent liability to
any Plan or the Pension Benefit Guaranty Corporation;
9.1(o) Upon the loss of any governmental license or permit which materially
adversely affects the operation of the business operated or to be operated
on the Property;
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9.1(p) Upon the submission hereafter of any written representation,
warranty or disclosure made to the Lender by the chief financial officer,
chief executive officer, or vice president-finance of the Borrower which
proves to be materially false or misleading as of the date when made,
whether or not such representation or disclosure appears in this Agreement
or in any other loan document executed in connection with the Loan; or
9.1(q) Upon the failure by the Borrower to complete the Project and to
obtain a permanent and unconditional certificate of occupancy for all
buildings to be constructed as part of the Project on or before eighteen
(18) months following the date hereof.
ARTICLE 10. REMEDIES OF LENDER UPON DEFAULT
Section 10.1 Rights of Lender
Upon the occurrence of any event constituting Default, Lender has the
right, without notice:
10.1(a) Collection - To institute legal proceedings for collection of the
Debt against the Borrower, all of which becomes immediately payable;
10.1(b) Completion of Project - To enter the Property and complete
construction of the Project and employ such persons in connection therewith
and take whatever other action which may be necessary or desirable, in the
opinion of Lender, to complete all or part of the Project. All sums so
expended by Lender are secured as part of the Debt. It is understood that
the Lender is under no obligation to complete the construction of the
Project. For this purpose, Borrower hereby constitutes and appoints Lender
as its true and lawful attorney-in-fact with full power of substitution in
the Property to complete the Project in the name of Borrower;
10.1(c) Accounts - To charge and withdraw from any credit balance which the
Borrower may then have with Lender or with any affiliate of Lender, such
amounts as may be necessary to satisfy the Debt;
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10.1(d) Existing Commitments - To terminate and cancel any existing
commitment to the Borrower for a line of credit, loan, or balance of the
Loan;
10.1(e) Assembly of Collateral - To seize the Collateral or to require the
Borrower to assemble the Collateral without need for Lender to post a bond
or security, and make it available at a Lender designated place for sale,
lease, or other disposition by Lender (and to Lender, if a public sale) to
satisfy the Debt without any right of Borrower to adjourn such sale;
10.1(f) Tax Notification - To sign the name of Borrower upon any local,
state or federal agency information release form including, but not limited
to, Tax Information Authorization Form 8821 of the Internal Revenue
Service; or
10.1(g) Cumulative Rights - To exercise all rights and remedies set forth
in this Agreement or otherwise provided by law or other agreement (whether
or not referred to in this Agreement) on a cumulative basis and in any
order selected by Lender.
Section 10.2 Application of Proceeds of Disposition of Collateral
The proceeds of any sale, lease, or disposition of the Collateral are to be
applied to satisfy the following items defined in this Agreement in the
following order:
10.2(a) First, toward expenses in preserving interests of Lender, expenses
in realizing upon security interest, and expenses of Lender in enforcing
and defending rights as defined in this Agreement in Article 2 or as
otherwise defined and applied in the Mortgage.
10.2(b) Second, on account of the Loan or any other Debt or obligations
secured pursuant to this Agreement.
Section 10.3 Redemption of Collateral
In the event that the Borrower may elect to redeem any or all of the
Collateral prior to the sale, lease, or other disposition by Lender, the
Borrower is to pay to Lender, in full, the Loan and that additional part of the
Debt that Lender requires in accordance with this Agreement.
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Section 10.4 Notice of Disposition of Collateral
Unless the Collateral is perishable, threatens to decline speedily in
value, or is of a type customarily sold on a recognized market (as defined in
Article 9 of the Uniform Commercial Code), Lender is to give reasonable notice
of the time and place of any public sale, lease, or other disposition of the
Collateral or of the time after which any private sale or other intended
disposition of the Collateral is to be made. Reasonable notice is to be deemed
three (3) days. The requirements of notice are to be met if such notice is sent
pursuant to this Agreement.
Section 10.5 Marshaling of Assets
Lender has no obligation whatsoever to proceed first against any of the
Collateral or any guarantor before proceeding against any other of the
Collateral. It is expressly understood and agreed that all of such Collateral
stands as equal security for the Debt and that Lender has the right to proceed
against or sell any/or all of the Collateral or other collateral in any order as
Lender, in its sole discretion, determines.
ARTICLE 11. MISCELLANEOUS PROVISIONS
Section 11.1 Binding Effect
This Agreement is binding upon, inures to the benefit of and is enforceable
by the heirs, personal representatives, successors and assigns of the parties.
This Agreement is not assignable by the Borrower without the prior written
consent of Lender. Lender may, without notice or consent of Borrower, transfer
or assign all or part of its rights or interests hereunder to any third party.
Section 11.2 Non Waiver
Neither a course of dealing, nor a failure or delay on the part of Lender,
successors and assigns, in the exercise of any right, power, or privilege is to
operate as a waiver. A partial exercise of any right, power, or privilege by
Lender is not to preclude any further right, power, or privilege, nor be deemed
a waiver. Any waiver or modification to this Agreement or any other document,
instrument, or agreement executed by the Borrower, is to be in a writing
executed by Lender. Any written modification signed by Lender and Borrower is to
be deemed part of this Agreement.
Section 11.3 Non Liability of Lender
Lender has no duty to preserve or protect the Collateral, to preserve the
rights of the Borrower against other parties, or to sell, lease, or otherwise
dispose of any or all of the Collateral, or its proceeds, or in any priority,
unless it elects to do so as provided in this Agreement. This Section is to be
deemed an express waiver of the defense of impairment of Collateral.
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Section 11.4 Right to Appraise
11.4(a) Lender has the right to appraise and re-appraise the Property in
any federally related transaction defined under Title XI of the Financial
Institutions, Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. 3310 et
seq. and Section V(b) of the Bank Holding Company Act, 12 U.S.C. 1844 et seq. or
upon:
(i) Lender having reasonably determined that the quality of the credit
shall have diminished;
(ii) there occurs a material adverse change in the condition of the real
estate market;
(iii) Lender having reasonably determined that the condition of the said
Collateral has deteriorated; and/or
(iv) such reappraisal is required by any regulatory authority having
jurisdiction over Lender.
11.4(b) Borrower is to reimburse Lender for any reasonable fees, costs,
expenses or charges incurred by Lender in engaging any such appraiser or
reviewing and documenting such appraisal or reappraisal and such fees are part
of the Debt, payable on demand.
11.4(c) Borrower is to (i) provide any information as reasonably requested
by Lender in order to perform the appraisal or reappraisal and (ii) permit any
appraiser designated by Lender to enter the Property or other location at any
reasonable time for the purpose of conducting the appraisal or reappraisal.
11.4(d) Borrower agrees that all appraisals, inspections and/or reports
prepared by Lender or commissioned by Lender are the exclusive property of
Lender. Nothing contained in any such appraisal or reports constitutes a
representation or warranty by Lender as to any matter or fact with respect to
the Loan. The Borrower agrees that it will not use or rely upon such reports in
any way, nor is the Borrower to provide the reports or any copies, summaries or
outlines of same to any third party.
Section 11.5 Disclaimer by Lender on Documents
Except for instruments or documents executed by Lender, Lender is not to be
deemed to assume any liability or responsibility to the Borrower or any other
party for the correctness, the validity, or the genuineness of any instruments
or documents that may be executed in connection with this Agreement, or for the
existence, character, quantity, quality, condition, value, or delivery of any
Collateral purporting to be represented by any such documents. Lender, by
accepting the security interest in the Collateral, or by releasing any
Collateral to the Borrower, is not to be deemed to have assumed any obligation
or liability to any supplier or debtor of the Borrower. The Borrower is to
indemnify and hold Lender harmless with respect to any claim or proceeding
arising out of such matters.
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Section 11.6 Notices and Banking Days
11.6(a) Each demand, notice or other communication by Lender to the
Borrower or by the Borrower to Lender is to be sent by certified mail, postage
prepaid, return receipt requested, or recognized delivery or courier service for
which a written receipt may be obtained.
11.6(b) Notices to Lender are to be directed to the following address:
SUMMIT BANK
Parkway 109 Office Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
11.6(c) Notices to the Borrower are to be directed to the following
address:
OSTEOTECH, INC.
▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President
11.6(d) A banking day is any day that Lender designates or otherwise
conducts business. A payment or duty which becomes due on a day not designated
by Lender as a banking day automatically becomes due on the next day that is
designated by Lender as a banking day.
Section 11.7 Captions
The captions and titles appearing in this Agreement are inserted solely for
the convenience of the parties and do not in any way define, limit or describe
the terms and conditions of this Agreement.
Section 11.8 Entire Agreement
There are no understandings, agreements, representations, warranties or
covenants, express or implied, which are not specified herein, or in the other
written instruments, documents, or agreements referred to in this Agreement. All
prior oral and written understandings, negotiations, or agreements are deemed to
be superseded by the terms of this Agreement and such other written instruments,
documents or agreements specifically referred to in this Agreement.
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Section 11.9 Severability
In the event that any portion of this Agreement is deemed unenforceable by
a Court of competent jurisdiction, such provision declared to be unenforceable
is to be deemed to have been omitted from this Agreement, and all such remaining
terms and conditions of this Agreement are to continue in full force and effect.
Section 11.10 Joint and Several Liability
The terms and conditions of this Agreement are jointly and severally
binding upon all parties identified as the Borrower. Each Borrower is jointly
and severally liable without regard to which entity receives or has received the
proceeds of the loans and advances made hereunder. Each such entity hereby
acknowledges that it expects to derive economic advantage from each loan or
advance made.
Section 11.11 Applicable Law and Consent to Jurisdiction
This Agreement is to be interpreted and enforced in accordance with the
laws of the State of New Jersey (without regard to the conflicts of law rules of
New Jersey). Borrower hereby irrevocably consents to the jurisdiction of the
Courts of the State of New Jersey and to the jurisdiction of the United States
District Court for the District of New Jersey, for the purpose of any suit,
action or other proceeding arising out of or relating to this Agreement or the
Debt, or the subject matter hereof or thereof. Borrower hereby waives and agrees
not to assert in any such suit, action or proceeding any claim that it is not
personally subject to such jurisdiction, or any right to remove an action
brought in State to Federal Court, or any claim that such suit, action or
proceeding is in an inconvenient forum or that the venue thereof is improper.
Borrower hereby consents that it may be served with process by the notification
procedure set forth in this Agreement.
Section 11.12 Consents
The Borrower consents:
11.12(a) To any extension, postponement of time of payment, indulgence or
to any substitution, exchange or release of Collateral;
11.12(b) To any addition to or release of any party or persons primarily or
secondarily liable.
Section 11.13 Waiver of Liability
Lender is not liable due to any action or failure to act by Lender relating
to this Agreement or the Debt except as a result of Lender's gross negligence or
willful misconduct. This provision shall survive the termination or expiration
of this Agreement or payment of the Debt.
E-44
SECTION 11.14 WAIVE JURY TRIAL
THE BORROWER, FOR ITSELF, AND LENDER HEREBY WAIVE ALL RIGHTS TO A TRIAL BY
JURY IN ANY LITIGATION RELATING TO THIS AGREEMENT OR THE DEBT AS AN INDUCEMENT
TO THE EXECUTION OF THIS AGREEMENT.
Section 11.15 Execution in Counterparts
This Agreement may be executed in any number of counterparts, each of which
when so executed is deemed to be an original and all of which taken together
constitute but one and the same agreement.
ARTICLE 12. INDEMNIFICATION
As part of the Debt, Borrower agrees to and hereby indemnifies and holds
Lender harmless from and against, and to reimburse Lender with respect to any
and all claims, demands, causes of action, losses, damages, liabilities, costs
and expenses (including consequential damages, reasonable attorneys' fees and
court costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lender at any time and from time to
time by reason of or arising out of:
(a) the material breach of any representation, warranty or covenant of
Borrower set forth in this Agreement;
(b) the failure of Borrower to perform any obligation herein required to be
performed by Borrower; or
E-45
(c) the ownership, construction, occupancy, operation, use and maintenance
of the Collateral.
This covenant survives the date on which the Debt is paid and performed in full
and notwithstanding whether Borrower has been released and discharged or whether
Lender becomes the owner of the Collateral.
ARTICLE 13. TERM
This Agreement is to remain in effect for so long as the Debt remains unpaid.
ARTICLE 14. PREPAYMENTS OF THE LOAN
(a) Borrower may prepay all or part of the Loan, in the absence of a
Default, upon:
(i) giving sixty (60) days' prior notice to Lender of the intended payment
date; and
(ii) paying to Lender, as liquidated damages, the applicable amount stated
below as to that portion of the Loan prepaid to the extent that the
principal amount prepaid bears interest at a then applicable fixed annual
interest rate:
(a) Multiply the outstanding principal balance which is being prepaid
by the difference between the interest rate on the Loan being
repaid and the Reference Rate (as hereinafter defined), on a
monthly basis, to arrive at a "Monthly Payment Differential";
then
(b) Determining a present value which reflects the number of
scheduled monthly payments foregone as a result of the
prepayment, the size of the Monthly Payment Differential and the
Reference Rate by discounting an annuity equal to the Monthly
Payment Differential for the number of months remaining to and
including the Maturity Date of the Loan being repaid at an
interest rate equal to the Reference Rate. The standard formula
for the present value of an annuity will be used for this
calculation.
E-46
The Reference Rate is to be equal to the current yield to maturity, on the date
five (5) days prior to prepayment, of the U.S. Treasury security closest in
maturity to the remaining term of the Loan being repaid. If there is more than
one U.S. Treasury security with such a maturity date, the selection is to be at
the average rate of such Treasury securities. There will be no discount if the
Reference Rate exceeds the interest rate otherwise payable to Lender.
(b) Notwithstanding the foregoing prepayment premiums, prepayments may be
made without premium, in the absence of a Default, (i) in amounts up to ten
(10%) percent of the original principal amount of the Loan in any given year or
(ii) if the prepayment follows a refusal by the Lender to afford future
financing requested in writing by the Borrower, which is subsequently provided
by a financial institution under substantially similar terms as those requested
of the Lender by the Borrower, and as evidenced by a written commitment received
by the Borrower from an institutional lender, and such prepayment(s) are made to
retire all Debt in full simultaneously to enable Borrower to accept such
otherwise committed financing. Lender's receipt of insurance proceeds shall not
be deemed a prepayment subject to prepayment penalties for the purposes of this
Section 14(b).
ARTICLE 15. CROSS DEFAULT/CROSS COLLATERAL
All other existing and future agreements between or among Lender, Borrower,
any guarantor and/or any Subsidiary are hereby amended so that a Default under
this Agreement is a default under such other agreements and a default under such
agreements is a Default under this Agreement. Any collateral pledged under such
other agreements among Lender, Borrower, any guarantor and/or any Subsidiary
secures the Debt under this Agreement; the Collateral under this Agreement also
secures all other existing and future obligations of the Borrower, any guarantor
and/or any Subsidiary to Lender or its affiliates.
ARTICLE 16. FURTHER ACKNOWLEDGMENTS OF BORROWER AND LENDER
Section 16.1 Representation by Counsel
Borrower and Lender acknowledge and agree that they (i) have independently
reviewed and approved each and every provision of this Agreement, including the
Exhibits and schedules attached hereto and any and all other documents and items
as they or their counsel have deemed appropriate, and (ii) have entered into
this Agreement and have executed the closing documents voluntarily, without
duress or coercion, and have done all of the above with the advice of their
legal counsel.
E-47
Section 16.2 Waiver of Objection
Borrower and Lender acknowledge and agree that, to the extent deemed
necessary by them or their counsel, they and their counsel have independently
reviewed, investigated and/or have full knowledge of all aspects of the
transaction and the basis for the transaction contemplated by this Agreement
and/or have chosen not to so review and investigate (in which case, Borrower
acknowledges and agrees that it has knowingly and upon the advice of counsel
waived any claim or defense based on any fact or any aspect of the transaction
that any investigation would have disclosed), including without limitation:
(i) the risks and benefits of the various waivers of rights contained in
this Agreement, including but not limited to, the waiver of the right to a
jury trial; and
(ii) the adequacy of the consideration being transferred under this
Agreement.
Section 16.3 No Reliance Upon Lender
Borrower acknowledges and agrees that it has made its own investigation or
elected not to make such investigation as to all matters deemed material to this
transaction and has not relied on any statement of fact or opinion, disclosure
or non-disclosure of the Lender, and has not been induced by the Lender in any
way, except for the consideration recited herein, in entering into this
Agreement and executing the closing documents contemplated hereby, and further
acknowledges that the Lender has not made any warranties or representations of
any kind in connection with this transaction except as specifically set forth
herein or in the documents executed in conjunction with this Agreement, and
Borrower is not relying on any such representations or warranties.
Section 16.4 All Material Matters Reviewed
Borrower acknowledges and agrees that, after careful consideration, it does
not deem any matter not reviewed or investigated by it to be material to this
Agreement and the transactions contemplated hereby.
E-48
IN WITNESS WHEREOF, the Borrower and Lender have executed this Agreement.
Witness: OSTEOTECH, INC.
A Delaware Corporation
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Witness: OSTEOTECH INVESTMENT
CORPORATION
A New Jersey Corporation
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Witness: CAM IMPLANTS, INC.
A Colorado Corporation
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Financial Officer
Witness: OSTEOTECH, B.V.
A Company of The Netherlands
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: H.C. IMPLANTS, B.V.
A Company of The Netherlands
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Signatures continued ...
E-49
... continuation of signatures to Loan and Security Agreement
Witness: CAM IMPLANTS, B.V.
A Company of The Netherlands
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
Witness: OSTEOTECH/CAM SERVICES, B.V.
A Company of The Netherlands
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: OST DEVELOPMENT
A Corporation of France
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: SUMMIT BANK
/s/ ▇▇▇▇ ▇. ▇▇▇▇, Esq. By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- -------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
E-50
SCHEDULE 1
A. LOCATIONS OF COLLATERAL AND NAME OF OWNER
OSTEOTECH, INC.
▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
OSTEOTECH INVESTMENT CORPORATION
▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
B. NAMES; LOCATION OF CHIEF EXECUTIVE OFFICE
1. Names under which Borrower conducts business:
a. Osteotech, Inc., a Delaware Corporation
b. Osteotech Investment Corporation, a New Jersey Corporation
c. Osteotech BV, a Company of the Netherlands
d. Osteotech/CAM Services BV, a Company of the Netherlands
E-51
e. H.C. Implants, BV, a Company of the Netherlands
f. CAM Implants, BV, a Company of the Netherlands
g. CAM Implants, Inc., a Colorado Corporation
h. OST Developpement, a Corporation of France
2. Chief executive office of Borrower - ▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
C. SIC CODE OF BORROWER - 8090
D. ANY TRANSACTIONS
1. In 1998, Osteotech, Inc. purchased a five (5%) percent equity interest
in OST Developpement, a corporation of France, and in 1999 Osteotech, Inc.
purchased an additional eighty-five (85%) percent equity interest.
2. Osteotech Investment Corporation acquired all patents from Osteotech,
Inc. and licensed them back to Osteotech, Inc. in 1997.
E-52
EXHIBIT "A"
E-53
EXHIBIT A
(i) "Accounts Receivable," which means, all accounts (in addition to the
definition contained in the Uniform Commercial Code) and any and all obligations
of any kind at any time due and/or owing to the Borrower and all rights of the
Borrower to receive payment or any other consideration including without
limitation, invoices, contract rights, accounts receivable, notes, drafts,
acceptances, instruments and all other debts, obligations and liabilities in
whatever form owing to Borrower from any person, firm, governmental authority,
corporation or any other entity, all security therefor, and all of the
Borrower's rights to goods sold (whether delivered, undelivered, in transit or
returned) which may be represented thereby, whether or not earned by
performance, including without limitation, refunds, tax refunds, all of the
Borrower's rights in, to and under all purchase orders now or hereafter received
for goods or services, and all of Borrower's rights as an unpaid vendor or
lienor, including stoppage in transit, replevin and reclamation, all of which
whether now existing or hereafter arising, together with all proceeds, products
and insurance as to any and all of the foregoing.
(ii) "General Intangibles," which means, all general intangibles (in addition to
the definition contained in the Uniform Commercial Code) and any and all
personal property, choses-in-action, and things in action, leases, income tax
refunds, copyrights, licenses, rights, patents, patent rights, franchise rights,
distributorship rights, trademarks, trade names, service marks, trademark
rights, formulae, customer lists and goodwill of the Borrower, all of which
whether now existing or hereafter arising, together with all proceeds, products
and insurance as to any and all of the foregoing.
(iii) "Inventory," which means, all inventory (in addition to the definition
contained in the Uniform Commercial Code) and all goods, merchandise or other
personal property held by the Borrower for sale or lease or to be furnished
under labels and other devices, names or marks affixed thereto for purposes of
selling or identification, and all right, title and interest of the Borrower
therein and thereto, all raw materials, work or goods in process or materials
and supplies of every nature used, consumed or to be consumed in the Borrower's
business, all packaging and shipping materials, all of which now owned or
hereafter acquired by the Borrower, and wherever located, and all proceeds,
products and insurance as to any or all of the foregoing.
(iv) All moneys, securities, drafts, notes, documents, instruments (including,
without limitation, negotiable instruments and non-negotiable instruments),
chattel paper, items, and documents of title, (including, without limitation,
bills of lading, dock warrants, dock receipts and warehouse receipts), of the
Borrower, whether now owned or existing or hereafter arising or acquired.
(v) All claims of the Borrower against third parties for loss or damage to, or
destruction of, any and all of the foregoing, all guarantees, security and liens
for payment of any Accounts Receivable and documents of title, policies,
certificates of insurance, insurance proceeds, securities, chattel paper, and
other documents and instruments evidencing or pertaining thereto, and all files,
correspondence, computer programs, tapes, discs and related data processing
software owned or used by the Borrower or in which Borrower has
E-54
an interest which contains information identifying any one or more of the items
referred to in (i) through (iv) above.
(vi) As to all of the foregoing (i) through (v) inclusive, cash proceeds,
non-cash proceeds and products thereof, additions and accessions thereto,
replacements and substitutions therefor.
E-55
EXHIBIT "B"
E-56
EXHIBIT B
(i) "Mortgage," which means the Mortgage and Security Agreement of even date, or
as it may be subsequently amended, executed by the Borrower as to the Property,
and the Premises defined therein, together with all proceeds, products and
insurance as to any and all of the foregoing.
(ii) "Assignment of Leases," which means the Assignment of Leases of even date,
or as it may be subsequently amended, executed by the Borrower, and the Leases
defined therein, together with all proceeds, products and insurance as to any
and all of the foregoing.
(iii) "Loan III Equipment," which means, all equipment (in addition to the
definition contained in the Uniform Commercial Code) and all, machinery,
furniture, fixtures, motor vehicles and all other tangible assets, and all
replacements, repairs, modifications, alterations, additions, controls and
operating accessories therefor, all substitutions and replacements therefor, all
accessions and additions thereto, as acquired by the Borrower utilizing the
proceeds of Loan III, and all proceeds, products and insurance as to the
foregoing.
(iv) All moneys, securities, drafts, notes, documents, instruments (including,
without limitation, negotiable instruments and non-negotiable instruments),
chattel paper, items, and documents of title, (including, without limitation,
bills of lading, dock warrants, dock receipts and warehouse receipts), of the
Borrower relating to any one or more of the items referred to in (i) through
(iii) above.
(v) All claims of the Borrower against third parties for loss or damage to, or
destruction of, any one or more of the items referred to in (i) through (iii)
above, and documents of title, policies, certificates of insurance, insurance
proceeds, securities, chattel paper, and other documents and instruments
evidencing or pertaining thereto, and all files, correspondence, computer
programs, tapes, discs and related data processing software owned or used by the
Borrower or in which Borrower has an interest which contains information
identifying any one or more of the items referred to in (i) through (iv) above.
(vi) As to all of the foregoing (i) through (v) inclusive, cash proceeds,
non-cash proceeds and products thereof, additions and accessions thereto,
replacements and substitutions therefor.
E-57
EXHIBIT "C"
E-58
EXHIBIT C
Name of Serial # Date of Cost 80% Fixture or
Owner Description Purchase Discounted Equipment
Cost
E-59
EXHIBIT "D"
E-60
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT - FORM UCC-1
INSTRUCTIONS:
1. PLEASE TYPE all the information required on this form. Leave "File NO." and
"Date & Hour" blank.
2. Remove Secured Party and Debtor copies and send other 2 copies with
interleaved carbon paper to the filing Officer. ENCLOSE FILING FEE. Check
or money order for fee should be made payable to "N.J. Secretary of State."
3. If the space provided for any item(s) on the form is inadequate the item(s)
should be continued on additional sheets 8 1/2" x 11". Only one copy of
such additional sheets need be presented to the Filing Officer with a set
of 2 copies of the Financial Statement. Long schedules of collateral,
indentures, etc. should be submitted on sheets which are 8 1/2" x 11".
4. If collateral is crops or goods which are or are to become fixtures,
describe the real estate and give name and address of record owner.
5. At the time of filing, Filing Officer will return second copy as an
acknowledgement. At a later time, secured party may date and sign
Termination Legend and a second copy as a Termination Statement.
---------------------------------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer for filing pursuant to
the Uniform Commercial Code
---------------------------------------------------------------------------------------------------------
FOR OFFICE USE ONLY Debtor(s) Name (Last Name, First) Complete Address Maturity date (if any)
----------------------
----------------------
FOR OFFICE USE ONLY
----------------------------------------------------------
Secured Party(ies) and Complete Address
SUMMIT BANK
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------
Assignee(s) of Secured Party and Complete Address
---------------------------------------------------------------------------------------------------------
This financing statement covers the following types (or items) of property:
SUCH EQUIPMENT OR FIXTURES MORE PARTICULARLY DESCRIBED ON EXHIBIT
"C" ATTACHED HERETO.
---------------------------------------------------------------------------------------------------------
When collateral is crops or fixtures complete this portion of form.
a. Description of real estate (Sufficient to identify the property).
b. Name and complete address of record owner.
---------------------------------------------------------------------------------------------------------
a. (X) Proceeds of Collateral are also covered. b. (X) Products of Collateral are also covered.
No. of additional sheets presented. ( )
---------------------------------------------------------------------------------------------------------
( ) Filed with Register of Deeds and Mortgages of ___________ County. ( ) Secretary of State
( ) Filed with the County Clerk of County.
---------------------------------------------------------------------------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies) or Assignee(s)
____________________________________________ ___________________________________________________
____________________________________________ ___________________________________________________
FILING OFFICER COPY - This form of statement is approved by
E-61
EXHIBIT "E"
E-62
EQUIPMENT LOAN NOTE
$17,000,000.00 _______________, 1999
Hackensack, New
Jersey
FOR VALUE RECEIVED, the undersigned promises to pay to the order of SUMMIT
BANK (the "Lender"), at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, the
principal sum of Seventeen Million Dollars ($17,000,000.00) or the amount
actually advanced pursuant to a certain Loan and Security Agreement of even date
herewith, or as it may be subsequently amended, signed by the undersigned as
"Borrower" ("Loan Agreement"), together with interest as herein provided.
During each calendar month from the date hereof until the Conversion Date,
this Note bears interest and is repayable in monthly installments of interest
only at a fluctuating interest rate per annum equal at all times either to (a)
the Lender's Base Rate (as hereinafter defined) of interest in effect from time
to time minus one-half of one percent (1/2%), each change in such fluctuating
rate to take effect simultaneously with the corresponding change in such Base
Rate, without notice to undersigned or (b) the applicable Base LIBOR Rate, as
defined in the Loan Agreement, plus 175 basis points, at the option of the
Borrower pursuant to the Loan Agreement. The first payment is to be made on the
first day of the month following the date of this Note and each subsequent
payment is to be made on the same day of each successive month. In no event is
the interest rate to be higher than the maximum lawful rate. The Base Rate of
Lender means the fluctuating Base Rate of interest established by Lender from
time to time whether or not such rate shall be otherwise published. The Base
Rate is established for the convenience of Lender. It is not necessarily
Lender's lowest rate. In the event that there should be a change in the Base
Rate of Lender, such change is effective on the date of such change without
notice to Borrower or any Guarantor, endorser or surety. Any such change will
not effect or alter any other term or conditions of this Note. The term
"Conversion Date" is defined as a date which is no more than eighteen months
from the date hereof.
In the absence of Default (as defined in the Loan Agreement), the term of
this Note is automatically extended for an additional seven (7) year term
commencing on the Conversion Date. Thereupon, this Note becomes repayable in
eighty-four (84) equal monthly installments of principal, together with accrued
interest at a fixed annual rate based upon 175 basis points above the seven (7)
year United States Treasury Note Rate as published in The Wall Street Journal
three (3) days prior to the Conversion Date. The first payment is to be made on
the first day of the second month following the Conversion Date and each
subsequent payment is to be made on the same day of each successive month. Upon
the eighty-fourth (84th) such installment payment (the "Maturity Date"), the
full amount of unpaid principal, together with unpaid accrued interest is due
and payable.
E-63
Interest is calculated in arrears on a daily basis upon the unpaid balance
with each date representing 1/360th of a year in arrears.
All payments on this Note are to be made in immediately available lawful
money of the United States by direct charge to Borrower's or Guarantor's (as
defined in the Loan Agreement) deposit accounts with Lender. In addition to the
provision above for direct charge of payments due, Lender is hereby authorized,
at its sole discretion, to debit any other of the Borrower's or Guarantor's
accounts for payments due pursuant to the Loan Agreement. This authorization
shall not affect the Borrower's or Guarantor's obligations to pay when due all
amounts payable under this Note, whether or not there are sufficient funds
therefor in such accounts. The foregoing authorization is in addition to, and
not in limitation of, any rights of setoff.
In the event of Default (as defined in the Loan Agreement), interest
accrues on all amounts payable hereunder at a rate equal to two (2%) percent
above the Base Rate. Borrower acknowledges that: (i) such additional rate is a
material inducement to Lender to make the loans evidenced by this Note; (ii)
Lender would not have made the loans evidenced by this Note in the absence of
the agreement of the Borrower to pay such default rate; (iii) such additional
rate represents compensation for increased risk to Lender that the loans
evidenced by this Note will not be repaid; and (iv) such rate is not a penalty
and represents a reasonable estimate of (a) the cost to Lender in allocating its
resources (both personnel and financial) to the ongoing review, monitoring,
administration and collection of the loans evidenced by this Note and (b)
compensation to Lender for losses that are difficult to ascertain.
In the event any payment is received by Lender more than ten (10) days
after the date due, the undersigned Borrower is to pay, to the extent permitted
by law, Lender a late charge of five (5%) percent of the overdue payment (but in
no event to be less than $25.00 nor more than $2,500.00). Any such late charge
assessed is immediately due and payable. Any payment received after 3:00 P.M. on
a banking day is deemed received on the next succeeding banking day.
Except as otherwise specified herein, each payment made under this Note is
to be applied first to the payment of any expenses or charges payable pursuant
to the Loan Agreement and accrued interest, and the balance only applied to
principal amounts due under this Note.
This Note is secured by such Collateral defined in and pursuant to the Loan
Agreement. All terms of the Loan Agreement are incorporated herein by reference.
In the event of ambiguity or inconsistency between the terms of the Loan
Agreement and the terms hereof, the terms of the Loan Agreement prevail.
In the event that this Note is prepaid following the Conversion Date and
prior to the Maturity Date, a prepayment premium will be payable by Borrower
equal to a sum which is calculated by a formula as follows:
E-64
(a) Multiply the outstanding principal balance which is being prepaid by
the difference between the interest rate on this Note and the Reference
Rate (as hereinafter defined), on a monthly basis, to arrive at a "Monthly
Payment Differential"; then
(b) Determining a present value which reflects the number of scheduled
monthly payments foregone as a result of the prepayment, the size of the
Monthly Payment Differential and the Reference Rate by discounting an
annuity equal to the Monthly Payment Differential for the number of months
remaining to and including the Maturity Date at an interest rate equal to
the Reference Rate. The standard formula for the present value of an
annuity will be used for this calculation.
The Reference Rate is to be equal to the current yield to maturity, on the date
five (5) days prior to prepayment, of the United States Treasury security
closest in maturity to the remaining term of this Note. If there is more than
one United States Treasury security with such a maturity date, the selection is
to be at the average rate of such Treasury securities. There will be no discount
if the Reference Rate exceeds the interest rate otherwise payable pursuant to
this Note.
Notwithstanding the foregoing prepayment premiums, prepayments may be made
without premium, in the absence of a Default (as defined in the Loan Agreement),
(i) in amounts up to ten (10%) percent of the original principal amount of this
Note in any given year or (ii) if the prepayment follows a refusal by the Lender
to afford future financing requested in writing by the Borrower, which is
subsequently provided by a financial institution under substantially similar
terms as that requested of the Lender by the Borrower, and as evidenced by a
written commitment received by the Borrower from an institutional lender, and
such prepayment(s) are made to retire all Debt (as defined in the Loan
Agreement) in full simultaneously to enable Borrower to accept such otherwise
committed financing.
The undersigned Borrower hereby waives demand, notice of non-payment,
protest, and all other notices or demands whatsoever.
Lender's books and records are prima facie evidence of the amount of the
obligations evidenced in this Note and are binding upon Borrower.
Lender is hereby authorized to fill in any blank spaces in this Note and to
date this Note as of the applicable date and to correct patent errors herein.
This Note has been executed and delivered in New Jersey and is deemed a
contract made under New Jersey law.
E-65
BORROWER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION RELATING
TO THIS NOTE OR RELATED DOCUMENTS AS AN INDUCEMENT TO THE ACCEPTANCE BY LENDER
OF THIS NOTE.
Witness: OSTEOTECH, INC.
A Delaware Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Witness: OSTEOTECH INVESTMENT
CORPORATION
A New Jersey Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Witness: CAM IMPLANTS, INC.
A Colorado Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Financial Officer
Witness: OSTEOTECH, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: H.C. IMPLANTS, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Signatures continued ...
........................... continuation of signatures to Equipment Loan Note
Witness: CAM IMPLANTS, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
Witness: OSTEOTECH/CAM SERVICES, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: OST DEVELOPEMENT
A Corporation of France
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
E-67
CONVERTIBLE REVOLVING NOTE
$5,000,000.00 _______________, 1999
Hackensack, New
Jersey
Upon the earlier of (a) Default or (b) the Conversion Date and in
accordance with a certain Loan and Security Agreement of even date herewith, or
as it may be subsequently amended, signed by the undersigned as "Borrower"
("Loan Agreement") For Value Received, the undersigned promises to pay to the
order of SUMMIT BANK (the "Lender"), at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, the principal sum of Five Million Dollars ($5,000,000.00) or the amount
actually advanced pursuant to Loan I as defined in the Loan Agreement, together
with interest as herein provided. The term "Default" is as defined in the Loan
Agreement. The term "Conversion Date" is defined as May 31, 2001.
During each calendar month from the date hereof until the Conversion Date,
this Note bears interest and is repayable in monthly installments of interest
only at a fluctuating interest rate per annum equal at all times to either (a)
the Lender's Base Rate (as hereinafter defined) of interest in effect from time
to time minus three-quarters of one percent (3/4%), each change in such
fluctuating rate to take effect simultaneously with the corresponding change in
such Base Rate, without notice to undersigned or (b) the applicable Base LIBOR
Rate as defined in the Loan Agreement plus 175 basis points, at the option of
the Borrower pursuant to the Loan Agreement. The first payment is to be made on
the first day of the month following the date of this Note and each subsequent
payment is to be made on the same day of each successive month. In no event is
the interest rate to be higher than the maximum lawful rate. The Base Rate of
Lender means the fluctuating Base Rate of interest established by Lender from
time to time whether or not such rate shall be otherwise published. The Base
Rate is established for the convenience of Lender. It is not necessarily
Lender's lowest rate. In the event that there should be a change in the Base
Rate of Lender, such change is effective on the date of such change without
notice to Borrower or any Guarantor, endorser or surety. Any such change will
not effect or alter any other term or conditions of this Note.
In the absence of Default, the Borrower has the option to extend the term
of this Note for an additional four (4) year term commencing on the Conversion
Date exercisable by written notice to Lender in the form and manner prescribed
by the Loan Agreement, not less than thirty (30) days prior to the Conversion
Date. If such option is so exercised, this Note becomes repayable in forty-eight
(48) equal monthly installments of principal, together with accrued interest at
a fixed annual rate based upon 175 basis points above the four year United
States Treasury Note Rate as published in The Wall Street Journal three (3) days
prior to the Conversion Date. The first payment is to be made on the first day
of the second month following the Conversion Date and each subsequent payment is
to be made on the same day of each successive month. Upon the forty-eighth
(48th) such installment payment (the "Maturity Date"), the full amount of unpaid
principal, together with unpaid accrued interest is due and payable.
E-68
Interest is calculated on a daily basis upon the unpaid balance with each
date representing 1/360th of a year in arrears.
All payments on this Note are to be made in immediately available lawful
money of the United States by direct charge to Borrower's or Guarantor's (as
defined in the Loan Agreement) deposit accounts with Lender. In addition to the
provision above for direct charge of payments due, Lender is hereby authorized,
at its sole discretion, to debit any other of the Borrower's or Guarantor's
accounts for payments due pursuant to the Loan Agreement. This authorization
shall not affect the Borrower's or Guarantor's obligations to pay when due all
amounts payable under this Note, whether or not there are sufficient funds
therefor in such accounts. The foregoing authorization is in addition to, and
not in limitation of, any rights of setoff.
In the event of Default, interest accrues on all amounts payable hereunder
at a rate equal to two (2%) percent above the Base Rate. Borrower acknowledges
that: (i) such additional rate is a material inducement to Lender to make the
loans evidenced by this Note; (ii) Lender would not have made the loans
evidenced by this Note in the absence of the agreement of the Borrower to pay
such default rate; (iii) such additional rate represents compensation for
increased risk to Lender that the loans evidenced by this Note will not be
repaid; and (iv) such rate is not a penalty and represents a reasonable estimate
of (a) the cost to Lender in allocating its resources (both personnel and
financial) to the ongoing review, monitoring, administration and collection of
the loans evidenced by this Note and (b) compensation to Lender for losses that
are difficult to ascertain.
In the event any payment is received by Lender more than ten (10) days
after the date due, the undersigned Borrower is to pay, to the extent permitted
by law, Lender a late charge of five (5%) percent of the overdue payment (but in
no event to be less than $25.00 nor more than $2,500.00). Any such late charge
assessed is immediately due and payable. Any payment received after 3:00 P.M. on
a banking day is deemed received on the next succeeding banking day.
Except as otherwise specified herein, each payment made under this Note is
to be applied first to the payment of any expenses or charges payable pursuant
to the Loan Agreement and accrued interest, and the balance only applied to
principal amounts due under this Note.
This Note is secured by such Collateral defined in and pursuant to the Loan
Agreement. All terms of the Loan Agreement are incorporated herein by reference.
In the event of ambiguity or inconsistency between the terms of the Loan
Agreement and the terms hereof, the terms of the Loan Agreement prevail.
In the event that this Note is prepaid following the Conversion Date and
prior to the
E-69
Maturity Date, a prepayment premium will be payable by Borrower equal to a sum
which is calculated by a formula as follows:
(a) Multiply the outstanding principal balance which is being prepaid by
the difference between the interest rate on this Note and the Reference
Rate (as hereinafter defined), on a monthly basis, to arrive at a "Monthly
Payment Differential"; then
(b) Determining a present value which reflects the number of scheduled
monthly payments foregone as a result of the prepayment, the size of the
Monthly Payment Differential and the Reference Rate by discounting an
annuity equal to the Monthly Payment Differential for the number of months
remaining to and including the Maturity Date at an interest rate equal to
the Reference Rate. The standard formula for the present value of an
annuity will be used for this calculation.
The Reference Rate is to be equal to the current yield to maturity, on the date
five (5) days prior to prepayment, of the United States Treasury security
closest in maturity to the remaining term of this Note. If there is more than
one United States Treasury security with such a maturity date, the selection is
to be at the average rate of such Treasury securities. There will be no discount
if the Reference Rate exceeds the interest rate otherwise payable pursuant to
this Note.
Notwithstanding the foregoing prepayment premiums, prepayments may be made
without premium, in the absence of a Default (as defined in the Loan Agreement),
(i) in amounts up to ten (10%) percent of the original principal amount of this
Note in any given year or (ii) if the prepayment follows a refusal by the Lender
to afford future financing requested in writing by the Borrower, which is
subsequently provided by a financial institution under substantially similar
terms as that requested of the Lender by the Borrower, and as evidenced by a
written commitment received by the Borrower from an institutional lender, and
such prepayment(s) are made to retire all Debt (as defined in the Loan
Agreement) in full simultaneously to enable Borrower to accept such otherwise
committed financing.
The undersigned Borrower hereby waives demand, notice of non-payment,
protest, and all other notices or demands whatsoever.
Lender's books and records are prima facie evidence of the amount of the
obligations evidenced in this Note and are binding upon Borrower.
Lender is hereby authorized to fill in any blank spaces in this Note and to
date this Note as of the applicable date and to correct patent errors herein.
E-70
This Note has been executed and delivered in New Jersey and is deemed a
contract made under New Jersey law.
BORROWER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION RELATING
TO THIS NOTE OR RELATED DOCUMENTS AS AN INDUCEMENT TO THE ACCEPTANCE BY LENDER
OF THIS NOTE.
Witness: OSTEOTECH, INC.
A Delaware Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Witness: OSTEOTECH INVESTMENT
CORPORATION
A New Jersey Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Witness: CAM IMPLANTS, INC.
A Colorado Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Financial Officer
Witness: OSTEOTECH, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: H.C. IMPLANTS, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Signatures continued ......
E-71
....................... continuation of signatures to Convertible Revolving Note
Witness: CAM IMPLANTS, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
Witness: OSTEOTECH/CAM SERVICES, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: OST DEVELOPMENT
A Corporation of France
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
E-72
MORTGAGE TERM NOTE
$4,500,000.00 _______________, 1999
Hackensack, New Jersey
FOR VALUE RECEIVED, the undersigned promises to pay to the order of SUMMIT
BANK (the "Lender"), at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, the
principal sum of Four Million Five Hundred Thousand Dollars ($4,500,000)
together with interest as herein provided and in accordance with a certain Loan
and Security Agreement dated ______________, 1999, or as it may be subsequently
amended, signed by the undersigned as "Borrower" ("Loan Agreement").
This note bears interest during each calendar month from the date hereof at
a fixed rate of ________ ( %) percent per annum. Principal and interest is to be
paid during and throughout the period of one hundred twenty (120) months in
equal payments of principal and interest (calculated on a twenty year mortgage
amortization basis) in the amount of ________________ ($ ) Dollars by the
Borrower to Lender on the first day of each month commencing on the second month
following the date hereof and on the same day of each successive month
thereafter. Upon the one hundred twentieth (120th) such installment payment (the
"Maturity Date") the full amount of unpaid principal, together with unpaid
accrued interest is due and payable.
Interest is calculated on a daily basis upon the unpaid balance with each
date representing 1/360th of a year in arrears.
All payments on this Note are to be made in immediately available lawful
money of the United States by direct charge to Borrower's deposit accounts with
Lender. In addition to the provision above for direct charge of payments due,
Lender is hereby authorized, in its sole discretion, to debit any other of the
Borrower's accounts for payments due pursuant to the Loan Agreement. This
authorization shall not affect the Borrower's obligations to pay when due all
amounts payable under this Note, whether or not there are sufficient funds
therefor in such accounts. The foregoing authorization is in addition to, and
not in limitation of, any rights of setoff.
In the event of Default (as defined in the Loan Agreement) interest accrues
on all amounts payable hereunder at a rate equal to two (2%) percent above the
fixed rate of interest provided in this Note. Borrower acknowledges that: (i)
such additional rate is a material inducement to Lender to make the loans
evidenced by this Note; (ii) Lender would not have made the loans evidenced by
this Note in the absence of the agreement of the Borrower to pay such default
rate; (iii) such additional rate represents compensation for increased risk to
Lender that the loans evidenced by this Note will not be repaid; and (iv) such
rate is not a penalty and represents a reasonable estimate of (a) the cost to
Lender in allocating its resources (both personnel and financial) to the ongoing
review, monitoring, administration and collection of the loans evidenced by this
Note and (b) compensation to Lender for losses that are difficult to ascertain.
E-73
In the event any payment is received by Lender more that ten (10) days
after the date due, the undersigned Borrower is to pay, to the extent permitted
by law, Lender a late charge of five (5%) percent of the overdue payment (but in
no event to be less than $25.00 nor more that $2,500.00). Any such late charge
assessed is immediately due and payable. Any payment received after 3:00 P.M. on
a banking day is deemed received on the next succeeding banking day.
Except as otherwise specified herein, each payment made under this Note is
to be applied first to the payment of any expenses or charges payable pursuant
to the Loan Agreement and accrued interest, and the balance only applied to
principal amounts due under this Note.
This Note is secured by such Collateral defined in and pursuant to the Loan
agreement. All terms of the Loan Agreement are incorporated herein by reference.
In the event of ambiguity or inconsistency between the terms of the Loan
Agreement and the terms hereof, the terms of the Loan Agreement prevail.
In the event that this Note is prepaid prior to the Maturity Date, a
prepayment premium will be payable by Borrower equal to a sum which is
calculated by a formula as follows:
(a) Multiply the outstanding principal balance which is being prepaid
by the difference between the interest rate on this Note and the
Reference Rate (as hereinafter defined), on a monthly basis, to arrive
at a "Monthly Payment Differential"; then
(b) Determining a present value which reflects the number of scheduled
monthly payments foregone as a result of the prepayment, the size of
the Monthly Payment Differential and the Reference Rate by discounting
an annuity equal to the Monthly Payment Differential for the number of
months remaining to and including the Maturity Date at an interest
rate equal to the Reference Rate. The standard formula for the present
value of an annuity will be used for this calculation.
The Reference Rate is to be equal to the current yield to maturity, on the date
five (5) days prior to prepayment, of the United States Treasury security
closest in maturity to the remaining term of this Note. If there is more than
one United States Treasury security with such a maturity date, the selection is
to be at the average rate of such Treasury securities. There will be no discount
if the Reference Rate exceeds the interest rate otherwise payable pursuant to
this Note.
E-74
Notwithstanding the foregoing prepayment premiums, prepayments may be made
without premium, in the absence of a Default (as defined in the Loan Agreement),
(i) in amounts up to ten (10%) percent of the original principal amount of this
Note in any given year or (ii) if the prepayment follows a refusal by the Lender
to afford future financing requested in writing by the Borrower, which is
subsequently provided by a financial institution under substantially similar
terms as that requested of the Lender by the Borrower, and as evidenced by a
written commitment received by the Borrower from an institutional lender, and
such prepayment(s) are made to retire all Debt (as defined in the Loan
Agreement) in full simultaneously to enable Borrower to accept such otherwise
committed financing.
The undersigned Borrower hereby waives demand, notice of non-payment,
protest, and all other notices or demands whatsoever.
Lender's books and records are prima facie evidence of the amount of the
obligations evidenced in this Note and are binding upon Borrower.
Lender is hereby authorized to fill in any blank spaces in this Note and to
date this Note as of the applicable date and to correct patent errors herein.
This Note has been executed and delivered in New Jersey and is deemed a
contract made under New Jersey law.
BORROWER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION RELATING
TO THIS NOTE OR RELATED DOCUMENTS AS AN INDUCEMENT TO THE ACCEPTANCE BY LENDER
OF THIS NOTE.
Witness: OSTEOTECH, INC.
A Delaware Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Signatures continued ......
E-75
........................... continuation of signatures to Mortgage Term Note
Witness: OSTEOTECH INVESTMENT
CORPORATION
A New Jersey Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Witness: CAM IMPLANTS, INC.
A Colorado Corporation
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Financial Officer
Witness: OSTEOTECH, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: H.C. IMPLANTS, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: CAM IMPLANTS, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
Signatures continued ...
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........................... continuation of signatures to Mortgage Term Note
Witness: OSTEOTECH/CAM SERVICES, B.V.
A Company of The Netherlands
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Witness: OST DEVELOPMENT
A Corporation of France
_________________________ By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
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EXHIBIT "F"
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COMPLIANCE CERTIFICATE
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, hereby certify that I am the duly elected and qualified
Vice President of Finance and Treasurer of Osteotech, Inc. (the "Company"), a
corporation organized pursuant to the laws of the State of Delaware, and do
further hereby certify, on behalf of the Company in connection with a Loan and
Security Agreement between the Company, as the borrower, and Summit Bank
(formerly United Jersey Bank/Central, N.A.) (the "Bank"), a national banking
association, as the lender, dated as of May 27, 1993, as amended, (the "Loan
Agreements") and all other agreements and transactions to be entered into or
consummated pursuant to the Loan Agreement (collectively the "Loan Documents")
and the waiver letter dated September 23, 1998 that from October 14, 1998, the
last date on which the Bank was provided with a Compliance Certificate, through
the date hereof:
1. I have reviewed the Loan Documents and I am generally familiar with
all aspects of the business of the Company as it is now being
conducted.
2. Based upon a review of the Company's activities and financial
statements during the period covered hereby, the Company has to date
complied with all of the covenants and agreements contained in and as
required by the Loan Agreement and the Loan Documents, no Event of
Default (as that term is defined in the Loan Agreement) has occurred
and no event which, with the giving of notice or the lapse of time, or
both, would constitute an Event of Default.
3. All prior advances, if any, under the Loan Agreement have been
utilized for purposes permitted thereunder.
4. The Company has not used any advances under the Loan Agreement to
transfer funds or property to any Affiliate of the Company during the
period covered hereby.
Dated: Nov. 13, 1998 /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------- ----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President of Finance &
Treasurer
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EXHIBIT "G"
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UNLIMITED CONTINUING GUARANTY
STATEMENTS
A. OSTEOTECH, INC., a Delaware Corporation; OSTEOTECH INVESTMENT
CORPORATION, a New Jersey Corporation; CAM IMPLANTS, INC., a Colorado
Corporation; OSTEOTECH, B.V., H.C. IMPLANTS, B.V., CAM IMPLANTS, B.V.,
OSTEOTECH/CAM SERVICES, B.V., each a Company of The Netherlands; and OST
DEVELOPPEMENT, a Corporation of France (jointly and severally "Borrower") has or
is about to receive a loan and may desire in the future to obtain financial
accommodations from SUMMIT BANK ("Lender").
B. ___________________________________("Guarantor"), having an address of
____________________________________, has agreed to guaranty in writing the
performance of all debts, liabilities and duties of the Borrower to Lender in
order to induce Lender to render or to continue to render financial
accommodations to the Borrower.
NOW, THEREFORE, in consideration of the promises, covenants and
understandings set forth in this Agreement and the benefits to be received from
the performance of such promises, covenants and understandings and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Guarantor agrees as follows:
GUARANTY
ARTICLE 1. GUARANTY OF THE OBLIGATIONS OF THE BORROWER
Section 1.1 Existing Obligations
The Guarantor agrees to unconditionally pay and perform, when due, all
debts, liabilities and duties of every kind and character now existing of the
Borrower to Lender regardless of whether such debts, liabilities and duties may
be the result of loans, advances, depository accounts, funds transfers, direct
or indirect, primary or secondary, joint or several, fixed or contingent
(regardless of form, the enforceability of any underlying instrument(s),
existence of collateral therefor, whether guaranteed, or subject to a
participation agreements).
Section 1.2 Future Advances
The Guarantor agrees to unconditionally pay and perform, when due, future
advances, loans, debts, liabilities and duties of the Borrower to Lender whether
the result of loans, advances, depository accounts, funds transfers, direct or
indirect, primary or secondary, joint or several, fixed or contingent
(regardless of form, the enforceability of any underlying instrument(s),
existence of collateral therefor, whether guaranteed, or subject to a
participation agreement).
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Section 1.3 Expenses in Preserving Interests of Lender
The Guarantor agrees to unconditionally pay, on demand, advances made by
Lender to or for the account of the Borrower, including advances for insurance,
repairs to any collateral, taxes, and such costs incurred by Lender in the
discharge of any lien, security interest, encumbrance, lease, pledge or
assignment.
Section 1.4 Obligations to Lender Affiliates
The Guarantor agrees to unconditionally pay and perform, when due, all
other debts, liabilities and duties of every kind, and character of the Borrower
to any affiliate(s) or participant of Lender, whether such debts, liabilities
and duties exist now or may exist in the future, and regardless of whether such
debts, liabilities and duties may be the result of loans, advances, depository
accounts, funds transfers, direct or indirect, primary or secondary, joint or
several, fixed or contingent (regardless of form, the enforceability of any
underlying instrument(s), existence of collateral therefor, whether guaranteed,
or subject to a participation agreement).
Section 1.5 Expenses in Realizing Upon Security Interest
The Guarantor agrees to unconditionally pay, on demand, all costs and
expenses, including reasonable attorneys fees, incurred by Lender to preserve,
collect, protect, foreclose, sell, or otherwise realize upon its security
interest in any security agreement executed by the Borrower which grants Lender
a security interest or in any other document reflecting any other obligation of
the Borrower or any indorser or guarantor in favor of the Lender.
Section 1.6 Expenses in Enforcing and Defending Rights
The Guarantor agrees to unconditionally pay, on demand, all costs and
expenses, including reasonable attorneys fees, incurred by Lender in the
prosecution or defense of any action or proceeding relating to the subject
matter of any agreement or instrument executed by the Borrower or any indorser
or guarantor of the obligations of the Borrower to Lender.
ARTICLE 2. COLLATERAL SECURITY
The Guarantor acknowledged and agrees that the validity and enforceability
of this Guaranty is not affected by the existence, value or condition of any
collateral security for any of the provisions of Article 1.
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ARTICLE 3. VARIATIONS OF THE TERMS OF
THE OBLIGATIONS OF THE BORROWER
The Guarantor acknowledges and agrees that, without notice, the performance
or payment by the Borrower of any of its debts, liabilities, duties,
representations, covenants and warranties may be waived, modified, accelerated,
extended, compromised, renewed or subordinated (in whole or in part), or any
collateral of either the Guarantor or the Borrower may be exchanged,
surrendered, ignored or disposed of, and any liens or security interests may be
abandoned, extended, modified or discharged, by Lender without affecting the
liability of the Guarantor in this Guaranty. The Guarantor expressly waives any
defense that Lender, by its action or inaction, has impaired any such collateral
or any rights of subrogation. The Guarantor waives (1) the option to demand that
any collateral for this Guaranty or any obligation of the Borrower to Lender be
marshaled and (2) any right of subrogation as long as any obligation(s)
described in this Guaranty remain outstanding or unsatisfied.
ARTICLE 4. GUARANTOR OBLIGATED TO BE INFORMED
The Guarantor has established adequate means of obtaining, on a continuing
basis, all facts pertaining to the risks of this Guaranty. The Guarantor assumes
the responsibility for being and keeping itself informed of all the facts
pertaining to such risks and agrees that Lender has no duty to disclose any such
facts to the Guarantor. The Guarantor recognizes that this Guaranty imposes
certain risks upon the Guarantor and that these risks may increase in the future
due to changing circumstances. Any such risks, increases in such risks, or
future risks do not and will not alter the liability of the Guarantor in this
Guaranty.
ARTICLE 5. COLLATERAL FOR UNLIMITED CONTINUING GUARANTY
To secure this Guaranty, the Guarantor hereby pledges, sets over, assigns
and grants a security interest and right of set-off to Lender in every account
of the Guarantor with Lender or its affiliates, in any other property, rights
and instruments of the Guarantor which may be delivered or come into the
possession, custody or control of Lender, and such additional security interests
which may be granted by the Guarantor to Lender in any separate agreement
executed between the Guarantor and Lender.
ARTICLE 6. CONTINUING NATURE OF GUARANTY
This Guaranty is a continuing guaranty. The borrower or any co-guarantor
may be released or discharged by Lender without affecting the liability or
obligations of the Guarantor.
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ARTICLE 7. CONSENT TO LOAN AND SECURITY AGREEMENT
The Guarantor agrees to, consents to the terms of, and otherwise agrees to
be bound to the terms of a certain Loan and Security Agreement executed by the
Borrower, as amended from time to time ("Loan Agreement"), as if the Guarantor
had executed same as a Borrower.
ARTICLE 8. NO CONDITIONS
The Guarantor agrees that this Guaranty is effective irrespective of and
hereby waives notice of default, notice of dishonor, notice of protest, notice
of presentment, or acceptance of this Guaranty. This is a guaranty of payment,
not collection.
ARTICLE 9. RECOVERY OF PREFERENCE
The Guarantor agrees that if, at any time, all or any part of any payment
previously applied by Lender on account of this Guaranty or obligation of the
Borrower must be returned by Lender for any reason, whether by court order,
administrative order, or settlement, the Guarantor remains liable for the full
amount returned as if such payment had never been received by Lender, and
notwithstanding any termination by Lender of this Guaranty or the cancellation
of any instrument(s) evidencing the obligations of the Borrower.
ARTICLE 10. NO ADVERSE ACTIONS
The Guarantor agrees that it is not to take any action, or fail to take any
action, which would render any representation, warranty, covenant or obligation
of itself or of the Borrower to Lender to be untrue or incapable of performance.
ARTICLE 11. BINDING EFFECT
This Guaranty inures to the benefit of and is enforceable by the heirs,
personal representatives, successors and assigns of Lender and the Guarantor.
This Guaranty is not assignable by the Guarantor without the prior written
consent of Lender.
ARTICLE 12. NON WAIVER
The Guarantor agrees that no failure or delay on the part of Lender, or its
successors and assigns, in the exercise of any right, power or privilege is to
operate as a waiver. A partial exercise of any right, power, or privilege by
Lender is not to preclude any further right, power, or privilege, nor be deemed
a waiver. Any waiver or modification to this Guaranty or any other document,
instrument or agreement executed by the Guarantor is to be in a writing
consented to by Lender.
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ARTICLE 13. NOTICES
Each demand, notice, or other communication by Lender to the Guarantor or
by the Guarantor to Lender is to be sent in accordance with the Loan Agreement.
ARTICLE 14. CAPTIONS
The captions and titles appearing in this Guaranty are inserted for the
convenience of the parties hereto and are intended to refer to specified
representations, warranties, covenants and other terms and conditions of this
Guaranty.
ARTICLE 15. ENTIRE AGREEMENT
There are no understandings, agreements, representations, warranties or
covenants, express or implied, which are not specified herein, or in the other
written instruments, documents, or agreements referred to in this Guaranty. All
prior oral understandings, negotiations, or agreements are deemed to be
superseded by the terms of this Guaranty and such other written instruments,
documents or agreements referred to in this Guaranty.
ARTICLE 16. SEVERABILITY
In the event that any portion of this Guaranty is deemed unenforceable by a
Court of competent jurisdiction, such provision declared to be unenforceable is
to be deemed to have been omitted from this Guaranty, and all such remaining
terms and conditions of this Guaranty are to continue in full force and effect.
ARTICLE 17. APPLICABLE LAW
This Guaranty is to be interpreted and enforced in accordance with the laws
of the State of New Jersey (without regard to the conflicts of law rules of New
Jersey). All disputes arising under the terms of this Guaranty are to be
resolved in accordance with the terms of the Loan Agreement.
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ARTICLE 18. REPRESENTATION BY COUNSEL
The Guarantor acknowledges the opportunity to consult independent counsel
of its own choice, and that it has relied upon such counsel's advice concerning
this Guaranty, the enforceability and interpretation of the terms contained in
this Guaranty and the consummation of the transactions and matters covered by
this Guaranty. Guarantor acknowledges that it has not executed this Guaranty
under duress.
ARTICLE 19. WAIVE JURY TRIAL
THE GUARANTOR HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION
RELATING TO THIS GUARANTY OR RELATED DOCUMENTS AS AN INDUCEMENT TO THE
ACCEPTANCE OF THIS GUARANTY.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty effective
______________________.
Attest/Witness:
______________________ By: ____________________
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