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TERM LOAN AGREEMENT
dated as of October 22, 1996
between
CYTOTHERAPEUTICS, INC.
and
THE FIRST NATIONAL BANK OF BOSTON
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TERM LOAN AGREEMENT
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This TERM LOAN AGREEMENT (this "Agreement") is made as of October 22, 1996,
by and between CYTOTHERAPEUTICS, INC. (the "Borrower"), a Delaware corporation
having its principal place of business at Two ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, and THE FIRST NATIONAL BANK OF BOSTON (the "Bank"), a national
banking association with its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇.
1. DEFINITIONS:
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Certain capitalized terms are defined below:
ADVANCE. See [section]2.
AGREEMENT: See preamble, which term shall include this Agreement and the
Schedules and Exhibits hereto, all as amended and in effect from time to time.
AUTHORIZED INVESTMENT VEHICLES: Those investments permitted by the Policy.
BANK: See preamble.
BASE RATE: The higher of (a) the annual rate of interest announced from
time to time by the Bank at its head office as the Bank's "base rate" or (b)
one-half of one percent (1/2%) above the Federal Funds Effective Rate.
BORROWER: See preamble.
BUSINESS DAY: Any day on which banks in Boston, Massachusetts and
Providence, Rhode Island, are open for business generally.
CAPITALIZED LEASES: Leases under which the Borrower is the Lessee or
obligor, the discounted, future rental payment obligations under which are
required to be capitalized on the balance sheet of the Borrower in accordance
with GAAP.
CASH COLLATERAL ACCOUNT. That certain interest bearing account with the
Bank in the name "CytoTherapeutics, Inc. Cash Collateral Account".
CASH COLLATERAL AGREEMENT. That certain cash collateral agreement of even
date herewith between the Borrower and the Bank, pursuant to which the Borrower
has granted to the Bank a first priority security interest in the Cash
Collateral Account and the amounts from time to time deposited therein, as the
same may be amended, restated, supplemented or modified from time to time.
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CASH EQUIVALENTS. (a) Negotiable certificates of deposit and bankers'
acceptances, maturing in one hundred eighty (180) days or less from the date of
issue, or demand deposit or money market accounts, with any commercial bank or
trust company which is organized under the laws of the United States or of any
state thereof and which has, or which is owned by a bank holding company which
has, total assets in excess of $1,000,000,000; (b) any securities (i) which are
commonly known as "commercial paper", (ii) which are due and payable within two
hundred seventy (270) days from the date of issue, (iii) which have been issued
by any corporation organized under the laws of the United States or of any state
thereof or issued by a foreign corporation if such securities are denominated in
United States dollars, and (iv) the ratings for which, at the time of the
acquisition thereof by the Borrower are not less than "P-1" if rated by ▇▇▇▇▇'▇
Investors Services, Inc., and not less than "A-1" if rated by Standard and
Poor's Corporation; (c) any marketable direct or unconditionally guaranteed
obligations of the United States of America or any agency thereof which mature
within one (1) year from the date of the acquisition thereof and (d) Authorized
Investment Vehicles.
CHARTER DOCUMENTS: In respect of any entity, the certificate or articles of
incorporation or organization and the by-laws of such entity, or other
constitutive documents of such entity.
COLLATERAL: All of the property, rights and assets of the Borrower that are
or are intended to be subject to the security interest created by the Security
Documents.
CONSENT: In respect of any person or entity, any permit, license or
exemption from, approval, consent of, registration or filing with any local,
state or federal governmental or regulatory agency or authority, required under
applicable law.
DEFAULT: An event or act which with the giving of notice and/or the lapse
of time, would become an Event of Default.
DRAWDOWN DATE: See [section]2.
DISBURSEMENT PERIOD. See [section]2.
ENVIRONMENTAL LAWS: All laws pertaining to environmental matters, including
without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, in each case
as amended, and all rules, regulations, judgments, decrees, orders and licenses
arising under all such laws.
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
all rules, regulations, judgments, decrees, and orders arising thereunder.
EVENT OF DEFAULT: Any of the events listed in [section]8 hereof.
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FEDERAL FUNDS EFFECTIVE RATE: For any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Bank from three
funds brokers of recognized standing selected by the Bank.
FINANCIALS: In respect of any period, the balance sheet of any person or
entity as at the end of such period, and the related statement of operations,
statement of cash flow and statement of stockholders equity for such period,
each setting forth in comparative form the figures for the previous comparable
fiscal period, all in reasonable detail and prepared in accordance with GAAP.
FLEET CREDIT AGREEMENT: The Loan Agreement dated as of May 15, 1996 between
the Borrower and Fleet National Bank.
GAAP: Generally accepted accounting principles consistent with those
adopted by the Financial Accounting Standards Board and its predecessor, (a)
generally, as in effect from time to time, and (b) for purposes of determining
compliance by the Borrower with its financial covenants set forth herein, as in
effect for the fiscal year therein reported in the most recent Financials
submitted to the Bank prior to execution of this Agreement.
HAZARDOUS MATERIALS: Any hazardous waste, as defined by 42 U.S.C.
[section]6903(5), any hazardous substances as defined by 42 U.S.C.
[section]9601(14), any pollutant or contaminant as defined by 42 U.S.C.
[section]9601(33) and any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws.
INDEBTEDNESS: In respect of any person or entity, all obligations,
contingent and otherwise, that in accordance with GAAP should be classified upon
the obligor's balance sheet as liabilities, or to which reference should be made
by footnotes thereto, including in any event and whether or not so classified:
(a) all debt and similar monetary obligations, whether direct or indirect; (b)
all liabilities secured by any mortgage, pledge, security interest, lien, charge
or other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; and (c)
all guarantees, endorsements and other contingent obligations whether direct or
indirect in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness, or to assure the owner of indebtedness against
loss, through an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the indebtedness held by such
owner or otherwise, and the obligations to reimburse the issuer in respect of
any letters of credit.
LIENS: Any encumbrance, mortgage, pledge, hypothecation, charge,
restriction or other security interest of any kind securing any obligation of
any entity or person.
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LOAN: The term loan made or to be made to the Borrower pursuant to
[section]2 hereof.
LOAN DOCUMENTS: This Agreement, the Note, and the Security Documents, in
each case as from time to time amended, restated, modified or supplemented.
MARGIN: One-half of one percent (1/2%) per annum.
MATERIALLY ADVERSE EFFECT: Any materially adverse effect on the financial
condition or business operations of the Borrower or material impairment of the
ability of the Borrower to perform its obligations hereunder or under any of the
other Loan Documents.
MATURITY DATE: The earliest to occur of (a) October 22, 2001 and (b) such
earlier date on which the Loan may become due and payable pursuant to the terms
hereof.
MORTGAGE: The mortgage dated as of the date hereof from the Borrower to the
Bank with respect to the fee interest of the Borrower in the Property and in
form and substance satisfactory to the Bank.
MORTGAGED PROPERTY: The Property.
NOTE. See [section]2.1.
OBLIGATIONS: All indebtedness, obligations and liabilities of the Borrower
to the Bank arising or incurred under this Agreement or any other Loan Document
or in respect of the Loan or the Note or other instruments at any time
evidencing any thereof, existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise.
OFFICE BUILDING: The building which is being constructed on the Property.
ORIGINAL TERM LOAN: The term loan made by the Bank to the Borrower in the
original principal amount of $1,500,000 pursuant to the Original Term Loan
Agreement and the Original Term Loan Documents.
ORIGINAL TERM LOAN AGREEMENT: The Term Loan Agreement dated as of September
30, 1994 between the Borrower and the Bank, as the same may be amended,
restated, modified or supplemented from time to time, pursuant to which the Bank
made the Original Term Loan to the Borrower.
ORIGINAL TERM LOAN DOCUMENTS: The "Loan Documents" as such term is defined
in the Original Term Loan Agreement.
PERMITTED LIENS: See [section]7.2(b).
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POLICY: The Borrower's Investment Policy, a copy of which is attached
hereto as Exhibit A.
PROJECT COSTS: The aggregate cost of acquiring the Property, developing and
constructing the Office Building to be located thereon and completing the
contemplated improvements and renovations thereon.
PROPERTY: The real property located at 701 Washington Highway, Lincoln,
Rhode Island, which real property is subject to the Mortgage.
REQUIREMENT OF LAW: In respect of any person or entity, any law, treaty,
rule, regulation or determination of an arbitrator, court, or other governmental
authority, in each case applicable to or binding upon such person or entity or
affecting any of its property.
SECURITY DOCUMENTS: Collectively, the Cash Collateral Agreement and the
Mortgage, and all instruments and documents required to be delivered pursuant
thereto.
SURVEY: In relation to the Mortgaged Property, an instrument survey of such
Mortgaged Property dated as of a date subsequent to August 1, 1996, which shall
show the location of all buildings, structures, easements and utility lines on
such Mortgaged Property, shall be sufficient to remove the survey exception from
the Title Policy, shall show that all buildings and structures are within the
lot lines of such Mortgaged Property, shall not show any encroachments by
others, shall show the zoning district or districts in which such Mortgaged
Property is located in a flood hazard district as established by the Federal
Emergency Management Agency or any successor agency or is located in any flood
plain, flood hazard or wetland protection district established under federal,
state or local law.
SURVEYOR CERTIFICATE: In relation to the Mortgaged Property for which a
Survey has been conducted, a certificate executed by the surveyor who prepared
such Survey dated as of a recent date and containing such information relating
to such Mortgaged Property as the Bank or the Title Insurance Company may
require, such certificate to be satisfactory to the Bank in form and substance.
TANGIBLE NET WORTH: The excess of (a) all assets of the Borrower determined
in accordance with GAAP, over (b) all liabilities of the Borrower determined in
accordance with GAAP, minus (c) the sum of (i) the book value all intangibles
determined in accordance with GAAP, including good will and intellectual
property, and (ii) any write-up in the book value of assets since the most
recent audited Financials in existence on the date hereof.
TITLE INSURANCE COMPANY: Commonwealth Title Insurance Co., Inc.
TITLE POLICY: In relation to the Mortgaged Property, an ALTA standard form
title insurance policy issued by the Title Insurance Company (with such
reinsurance or co-insurance as the Bank may require, any such reinsurance to be
with direct access endorsements) in such amount as may be
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determined by the Bank insuring the priority of the Mortgage or such Mortgaged
Property and that the Borrower holds marketable fee simple title to such
Mortgaged Property, subject only to the encumbrances permitted by such Mortgage
and which shall not contain exceptions for mechanics liens, persons in occupancy
or matters which would be shown by a survey (except as may be permitted by such
Mortgage), shall not insure over any matter except to the extent that any such
affirmative insurance is acceptable to the Bank in its sole discretion, and
shall contain such endorsements and affirmative insurance as the Bank in its
discretion may require, including but not limited to (a) comprehensive
endorsement and (b) variable rate of interest endorsement.
TOTAL LIABILITIES: All liabilities of the Borrower that in accordance with
GAAP are properly classified as liabilities.
UNENCUMBERED CASH: The sum of (a) the Borrower's cash held in demand
deposit accounts or interest bearing accounts at any financial institution, plus
(b) the Borrower's Cash Equivalents.
2. TERM LOAN CREDIT FACILITY.
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2.1. THE TERM LOAN.
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(a) Subject to the terms and conditions of this Agreement (including, but
not limited to those requirements set forth in paragraph (b) below), the Bank
agrees during the Disbursement Period (as hereinafter defined), upon the request
of the Borrower, to make up to a maximum of five (5) Advances (as hereinafter
defined) of the Loan to the Borrower. The aggregate amount of all Advances of
the Loan shall be in the maximum principal amount of $5,500,000 or so much
thereof as shall have been disbursed during the Disbursement Period. The Loan
shall be evidenced by a promissory note of the Borrower, in form and substance
satisfactory to the Bank (the "Note"), dated as of the date hereof and payable
to the order of the Bank.
(b) Advances of principal may be requested by the Borrower during the
period running from the date of this Agreement through and including October 31,
1997 (the "Disbursement Period") on the following terms and conditions (each
portion of the Loan so advanced being an "Advance"), PROVIDED, HOWEVER, the
Borrower shall not make more than five (5) separate requests for Advances during
the Disbursement Period. The Borrower shall notify the Bank in writing not later
than 11:00 a.m. (Boston time) on the day prior to the date on which the Advance
is to be made (both of which days must be Business Days (the "Drawdown Date") of
the proposed Drawdown Date of such Advance and of the principal amount of the
Advance. Each such request for an Advance shall be irrevocable and binding on
the Borrower and shall obligate the Borrower to accept the Advance requested
from the Bank on the proposed Drawdown Date. Each request for an Advance shall
be in a minimum amount of $750,000 and shall be accompanied by a written
certification from the Borrower that the proceeds of such Advance are being used
solely to finance the Project Costs (which Project Costs to date shall not be
less than the amount of the Advance requested). Subject to the foregoing, and
subject to the conditions set forth in [section]6, so long as no Default or
Event of Default shall have occurred and is continuing and all the applicable
conditions set forth in this
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Agreement have been met, including, but not limited to, the Borrower taking all
action necessary to perfect the Bank's security interest in the Property and the
Office Building, the Bank shall advance the amount requested to a bank account
designated by the Borrower in writing in immediately available funds not later
than the close of business on such Drawdown Date.
2.2. INTEREST.
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So long as no Event of Default is continuing, the Borrower shall pay
interest on the principal amount of the Loan (or that portion which has been
advanced to the Borrower pursuant to [section]2.1) at a rate per annum which is
equal to the sum of (a) the Base Rate, and (b) the Margin, such interest to be
payable in arrears on the first day of each calendar month for the immediately
preceding calendar month, commencing with the first such day following the date
hereof. While an Event of Default with respect to [section]8(a) or (b) or
[section]7.3 is continuing, amounts payable under any of the Loan Documents
shall bear interest (compounded monthly and payable on demand in respect of
overdue amounts) at a rate per annum which is equal to the sum of (a) the Base
Rate, and (b) two percent (2%) above the rate of interest otherwise applicable
to the Loan until such amount is paid in full or (as the case may be) such Event
of Default has been cured or waived in writing by the Bank (after as well as
before judgment).
2.3. REPAYMENTS AND PREPAYMENTS.
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The Borrower hereby promises to pay to the Bank the principal amount of the
Loan in sixteen (16) consecutive equal quarterly installments of 1/40th of the
total amount of the Loan, with each such installment due on the last Business
Day of each calendar quarter, commencing September 30, 1997, and with a final
payment of the full amount of the remaining balance of the Loan on the Maturity
Date. The Borrower may elect to prepay the outstanding principal of all or any
part of the Loan, without premium or penalty, in a minimum amount of $100,000 or
an integral multiple thereof, upon written notice to the Bank given by 10:00
a.m. Boston time on the date of such prepayment, of the amount to be prepaid.
Each repayment or prepayment of principal of the Loan shall be accompanied by
payment of the unpaid interest accrued to such date on the principal being
repaid or prepaid and shall be applied against the scheduled installments of
principal due on the Loan in the inverse order of maturity. No amount repaid
with respect to the Loan may be reborrowed.
2.4. CASH COLLATERAL ACCOUNT.
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(a) Prior to the date hereof, the Borrower has established with the Bank
the Cash Collateral Account. Pursuant to the terms of the Cash Collateral
Agreement, the Borrower is granting to the Lender a first priority security
interest in the Cash Collateral Account and the amounts from time to time
deposited therein.
(b) In the event that the Borrower's Unencumbered Cash at any time is equal
to or less than $25,000,000 but greater than $20,000,000, the Borrower shall, on
the date such amount equals or falls below $25,000,000, cause to be deposited in
the Cash Collateral Account as cash collateral
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for the Obligations an amount which is necessary to make the total amount in the
Cash Collateral Account equal to or greater than twenty-five percent (25%) of
the Obligations.
(c) In the event that the Borrower's Unencumbered Cash at any time is equal
to or less than $20,000,000 but greater than $15,000,000, the Borrower shall, on
the date such amount equals or falls below $20,000,000, cause to be deposited in
the Cash Collateral Account as cash collateral for the Obligations an amount
which is necessary to make the total amount in the Cash Collateral Account equal
to or greater than fifty percent (50%) of the amount of the Obligations.
(d) If at any time the amount of the Borrower's Unencumbered Cash is equal
to or less than $15,000,000, the Borrower shall on the date such amount equals
or falls below $15,000,000 cause to be deposited in the Cash Collateral Account
as cash collateral for the Obligations an amount which is necessary to make the
total amount in the Cash Collateral Account equal to or greater than one hundred
percent (100%) of the amount of the Obligations.
(e) Notwithstanding anything to the contrary contained herein, in the event
that the Borrower is required to deposit in the Cash Collateral Account an
amount which is necessary to make the total amount in the Cash Collateral
Account (i) equal to or greater than one hundred percent (100%) of the amount of
the Obligations, and does in fact make such a deposit, and subsequent to making
such deposit demonstrates to the satisfaction of the Bank that the amount of the
Borrower's Unencumbered Cash is greater than $30,000,000 and has been greater
than $30,000,000 for thirty (30) consecutive days, the Bank shall release all
amounts in the Cash Collateral Account, PROVIDED, HOWEVER, the Borrower shall
remain subject to the provisions of this [section]2; and (ii) equal to or
greater than twenty five percent of the amount of the Obligations but less than
100% of the amount of the Obligations, and does in fact make such a deposit or
deposits, and subsequent thereto demonstrates to the satisfaction of the Bank
that the amount of the Borrower's Unencumbered Cash is greater than $40,000,000
and has been greater than $40,000,000 for thirty (30) consecutive days, the Bank
hall release all amounts in the Cash Collateral Account, PROVIDED, HOWEVER, the
Borrower shall remain subject to the provisions of this [section]2.
3. CHANGES IN CIRCUMSTANCES.
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If after the date hereof the Bank determines that (a) the adoption of or
any change in any banking law, rule, regulation or guideline or the
administration thereof (whether or not having the force of law), or (b)
compliance by the Bank or its parent bank holding company with any guideline,
request or directive (whether or not having the force of law), has the effect of
reducing the return on the Bank's or such holding company's capital as a
consequence of the Loan to a level below that which the Bank or such holding
company could have achieved but for such adoption, change or compliance by any
amount deemed by the Bank to be material, the Bank may notify the Borrower
thereof. The Borrower agrees to pay the Bank the amount of the Borrower's
allocable share of the amount of such reduction in the return on capital as and
when such reduction is determined, upon presentation by the Bank of a statement
in the amount and setting forth the Bank's calculation thereof, which statement
shall be deemed true and correct absent manifest error. The Bank agrees
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to allocate shares of such reduction among the Borrower and the Bank's other
customers similarly situated on a fair and non-discriminatory basis.
4. FEES AND PAYMENTS.
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The Borrower agrees to pay to the Bank a commitment fee calculated at the
rate per annum which is equal to one-half of one percent (1/2%) on the average
daily amount during each calendar quarter or portion thereof from the date of
this Agreement to October 22, 1997 on the difference between $5,500,000 and the
total amount of funds advanced by the Bank through such calendar quarter
(including any advance which has been repaid). The commitment fee shall be
payable quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on October 22, 1997 or any
earlier date on which the Bank's commitment to make any Advances to the Borrower
shall terminate. All payments to be made by the Borrower hereunder or under any
of the other Loan Documents shall be made in U.S. dollars in immediately
available funds at the Bank's head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, without set-off or counterclaim and without any withholding or
deduction whatsoever. The Bank shall be entitled to charge any account of the
Borrower with the Bank for any sum due and payable by the Borrower to the Bank
hereunder or under any of the other Loan Documents. If any payment hereunder is
required to be made on a day which is not a Business Day, it shall be paid on
the immediately succeeding Business Day, with interest and any applicable fees
adjusted accordingly. All computations of interest or of the commitment fee
payable hereunder shall be made by the Bank on the basis of actual days elapsed
and on a 360-day year.
5. REPRESENTATIONS AND WARRANTIES.
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The Borrower represents and warrants to the Bank on the date hereof and on
each Drawdown Date that:
(a) the Borrower is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation and is duly
qualified and in good standing in every other jurisdiction where it is
doing business and where such qualification is necessary except where a
failure to be so qualified would not have a Materially Adverse Effect, and
the execution, delivery and performance by the Borrower of the Loan
Documents to which it is a party (i) are within its corporate authority,
(ii) have been duly authorized, (iii) do not conflict with or contravene
its Charter Documents;
(b) upon execution and delivery thereof, each Loan Document shall
constitute the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms; except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent the availability of the remedy of specific performance
or injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought;
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(c) the Borrower has good and marketable title to all its material
properties, subject only to Permitted Liens, and possesses all assets,
including intellectual properties, franchises and Consents, adequate for
the conduct of its business as now conducted, without known conflict with
any rights of others. The Borrower maintains insurance with financially
responsible insurers, copies of the policies for which have been previously
delivered to the Bank, covering such risks and in such amounts and with
such deductibles as are customary in the Borrower's business and are
adequate;
(d) the Borrower has provided to the Bank its audited Financials as at
December 31, 1995 and its unaudited Financials for the fiscal quarter ended
June 30, 1996, and such Financials are complete and correct and fairly
present the position of the Borrower as at such date and for such period in
accordance with GAAP consistently applied. The Borrower has also provided
to the Bank its forecast of the operations of the Borrower for the period
from fiscal year 1997 through fiscal year 2000, and such forecast has been
prepared in good faith based upon reasonable assumptions;
(e) since December 31, 1995 there has been no materially adverse
change of any kind in the Borrower which would have a Materially Adverse
Effect;
(f) there are no legal or other proceedings or investigations pending
or, to the best of the Borrower's knowledge, threatened against the
Borrower before any court, tribunal or regulatory authority which would, if
adversely determined, alone or together, have a Materially Adverse Effect;
(g) the execution, delivery, performance of its obligations, and
exercise of its rights under the Loan Documents by the Borrower, including
borrowing under this Agreement (i) do not require any Consents; and (ii)
are not and will not be in conflict with or prohibited or prevented by (A)
any Requirement of Law as now in effect, or (B) any Charter Document,
corporate minute or resolution, instrument, agreement or provision thereof,
in each case binding on it or affecting its property;
(h) the Borrower is not in violation of (i) any Charter Document,
corporate minute or resolution, (ii) any instrument or agreement, in each
case binding on it or affecting its property, or (iii) any Requirement of
Law, in a manner which could have a Materially Adverse Effect, including,
without limitation, all applicable federal and state tax laws, ERISA and
Environmental Laws;
(i) upon execution and delivery of the Security Documents and the
filing of documents thereby required, the Bank shall have first-priority
perfected Liens on the Collateral, subject only to Liens permitted
hereunder and entitled to priority under applicable law, with no financing
statements, chattel mortgages, real estate mortgages or similar filings on
record anywhere which conflict with such first-priority Liens of the Bank;
and
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(j) the Borrower has no subsidiaries and, except as set forth on
SCHEDULE 5(j) hereto, is not a party to any partnership or joint venture.
6. CONDITIONS PRECEDENT.
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In addition to the making of the foregoing representations and warranties
and the delivery of the Loan Documents and such other documents and the taking
of such actions as the Bank may reasonably require at or prior to the time of
executing this Agreement, the obligation of the Bank to make the Loan (or any
Advance) to the Borrower hereunder is subject to the satisfaction of the
following further conditions precedent:
(a) each of the representations and warranties of the Borrower to the
Bank herein, in any of the other Loan Documents or any documents,
certificate or other paper or notice in connection herewith shall be true
and correct in all material respects as of the time made or claimed to have
been made;
(b) no Default or Event of Default shall be continuing;
(c) all proceedings in connection with the transactions contemplated
hereby shall be in form and substance reasonably satisfactory to the Bank,
and the Bank shall have received all information and documents as it may
have reasonably requested;
(d) no change shall have occurred in any law or regulation or in the
interpretation thereof that in the reasonable opinion of the Bank would
make it unlawful for the Bank to make the Loan or any Advance;
(e) the Borrower shall have delivered to the Bank by not later than
October 22, 1996 (i) certified copies of the Charter Documents; (ii)
evidence that all corporate action necessary for the valid execution,
delivery and performance by the Borrower of the Loan Documents has been
duly and effectively taken; (iii) an incumbency certificate signed by a
duly authorized officer of the Borrower, and giving the name and bearing a
specimen signature of each individual who shall be authorized to sign, in
the name and on behalf of the Borrower, each of the Loan Documents and to
give notices and to take action on the Borrower's behalf under the Loan
Documents; (iv) favorable legal opinions addressed to the Bank in form and
substance satisfactory to the Bank from counsel to the Borrower; (v) an
updated Survey for the Mortgaged Property together with a Surveyor
Certificate relating thereto and evidence of payment of real estate taxes
and municipal charges on all the Property not delinquent on or before
October 22, 1996; (vi) a Title Policy covering the Mortgaged Property (or
commitments to issue such policies, with all conditions to issuance of the
Title Policy deleted by an authorized agent of the Title Insurance Company)
together with proof of payment of all fees and premiums for such policies,
from the Title Insurance Company and in amounts satisfactory to the Bank,
insuring the interests of the Bank as
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mortgagee under the Mortgage; and (vii) a hazardous waste site assessment
from environmental engineers and in form and substance satisfactory to the
Bank, covering the Mortgaged Property; and
(f) the Borrower shall have deposited in the Cash Collateral Account
all amounts as are then required, if any, pursuant to [section]2.4.
7. COVENANTS.
---------
7.1. AFFIRMATIVE COVENANTS.
---------------------
The Borrower agrees that until the obligation of the Bank, if any, to make
Advances pursuant to [section]2 shall terminate and the payment and satisfaction
in full of all the Obligations, the Borrower will comply with its obligations as
set forth throughout this Agreement and to:
(a) furnish the Bank: (i) as soon as available but in any event within
ninety (90) days after the close of each fiscal year, its audited
Financials for such fiscal year, certified by the Borrower's accountants;
(ii) as soon as available but in any event within forty-five (45) days
after the end of each fiscal quarter its unaudited Financials for such
quarter, certified by its chief financial officer; (iii) as soon as
available but in any event within thirty (30) days after the end of each
month in each fiscal year, its unaudited monthly Financials for such month,
certified by its chief financial officer; (iv) as soon as available but in
any event within ten (10) days of receipt thereof a copy of the
accountant's management letter; and (v) together with the quarterly,
monthly and annual audited Financials referred to in (i), (ii) and (iii)
above, a certificate of the Borrower setting forth computations
demonstrating compliance with the Borrower's financial covenants set forth
herein, and certifying that no Default or Event of Default has occurred, or
if it has, the actions taken by the Borrower with respect thereto;
(b) keep true and accurate books of account in accordance with GAAP,
maintain its current fiscal year and permit the Bank or its designated
representatives to inspect the Borrower's premises during normal business
hours, to examine and be advised as to such or other business records upon
the request of the Bank, and to permit the Bank's commercial finance
examiners to conduct periodic commercial finance examinations;
(c) (i) maintain its corporate existence, business and assets, (ii)
keep its business and assets adequately insured, (iii) maintain its chief
executive office in the United States, (iv) continue to engage in the same
lines of business, and (v) comply with all Requirements of Law, including
ERISA and Environmental Laws the noncompliance with which would have a
Material Adverse Effect;
(d) notify the Bank promptly in writing of (i) the occurrence of any
Default or Event of Default, (ii) any noncompliance with ERISA or any
Environmental Law or
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proceeding in respect thereof which could have a Materially Adverse Effect,
(iii) any change of address, (iv) any threatened or pending litigation or
similar proceeding affecting the Borrower or any material change in any
such litigation or proceeding previously reported that would have a
Materially Adverse Effect and (v) claims against any assets or properties
of the Borrower encumbered in favor of the Bank;
(e) use the proceeds of the Loan solely to finance the acquisition of
the Mortgaged Property and the Project Costs, and not for the carrying of
"margin security" or "margin stock" within the meaning of Regulations U and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
221 and 224;
(f) provide the Bank with evidence that upon the completion of the
Office Building and the contemplated improvements and renovations thereto
and to the Mortgaged Property, the Borrower has contributed to the payment
of the Project Costs (which contribution shall not be funded with the
proceeds of any Advance) the greater of (i) $2,000,000 in cash and (ii) an
amount in cash equal to twenty seven percent (27%) of the aggregate amount
of the Project Costs and, in the event the amount of the Loan exceeds
seventy three percent (73%) of the Project Costs, the Borrower shall
immediately pay the amount of such excess to the Bank for application to
the outstanding principal amount of the Loan, to be applied in the inverse
order of maturity; and
(g) cooperate with the Bank, take such action, execute such documents,
and provide such information as the Bank may from time to time reasonably
request in order further to effect the transactions contemplated by and the
purposes of the Loan Documents, including without limitation, where
required by [section]2.13 of the Mortgage, assisting the Bank in obtaining
one or more environmental assessments or audits of the Mortgaged Property
prepared by a hydrogeologist, an independent engineer or other qualified
consultant or expert approved by the Bank to evaluate or confirm whether
any Hazardous Materials are present in the soil or water at such Mortgaged
Property and whether the use and operation of such Mortgaged Property
complies with all Environmental Laws. Environmental assessments may include
without limitation detailed visual inspections of such Mortgaged Property
including any and all storage areas, storage tanks, drains, dry ▇▇▇▇▇ and
leaching areas, and the taking of soil samples, surface water samples and
ground water samples, as well as such other investigations or analysis as
the Bank deems appropriate. Subject to the foregoing, all such
environmental assessments shall be conducted and made at the expense of the
Borrower.
7.2. NEGATIVE COVENANTS.
------------------
The Borrower agrees that until the obligation of the Bank, if any, to make
Advances pursuant to [section]2 shall terminate and the payment and satisfaction
in full of all the Obligations, the Borrower will not:
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(a) create, incur or assume any Indebtedness other than (i)
Indebtedness to the Bank (including, without limitation, Indebtedness to
the Bank incurred under the Original Term Loan Agreement), (ii)
Indebtedness in respect of the acquisition of property which does not
exceed $2,000,000 in the aggregate, (iii) current liabilities of the
Borrower not incurred through the borrowing of money or the obtaining of
credit except credit on an open account customarily extended, (iv)
Indebtedness in respect of taxes or other governmental charges contested in
good faith and by appropriate proceedings and for which adequate reserves
have been taken; and (v) Indebtedness not included above and listed on
SCHEDULE 7.2(a) hereto;
(b) create or incur any Liens on any of the property or assets of the
Borrower except (i) Liens securing the Obligations; (ii) Liens securing
taxes or other governmental charges not yet due; (iii) deposits or pledges
made in connection with social security obligations; (iv) Liens of
carriers, warehousemen, mechanics and materialmen, less than 120 days old
as to obligations not yet due; (v) easements, rights-of-way, zoning
restrictions and similar minor Liens which individually and in the
aggregate do not have a Materially Adverse Effect; (vi) purchase money
security interests in or purchase money mortgages on real or personal
property other than the Mortgaged Property securing purchase money
Indebtedness permitted by [section]7.2(a)(ii) and [section]7.2(a)(v),
covering only the property so acquired; (viii) liens and encumbrances on
the Mortgaged Property as and to the extent permitted by the Mortgage; and
(viii) other Liens existing on the date hereof and listed on SCHEDULE
7.2(b) hereto (collectively, the "Permitted Liens");
(c) make any investments other than (i) investments in (1) marketable
obligations of the United States maturing within one (1) year, (2)
certificates of deposit, bankers' acceptances and time and demand deposits
of United States banks having total assets in excess of $1,000,000,000, or
(3) such other investments as the Bank may from time to time approve in
writing; (ii) investments made by the Borrower pursuant to the terms and
conditions of the Policy; and (iii) other Investments existing on the date
hereof and listed on SCHEDULE 7.2(c) hereto;
(d) make any distributions on or in respect of its capital of any
nature whatsoever, other than dividends payable solely in shares of common
stock other than as contemplated and described on Schedule 7.2(d) hereto;
or
(e) become party to a merger or party to any sale-leaseback
transaction in excess of $10,000,000 during the term of this Agreement, or
to effect any disposition of assets other than in the ordinary course, or
to purchase, lease or otherwise acquire assets other than in the ordinary
course.
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7.3. FINANCIAL COVENANTS.
-------------------
The Borrower agrees that until the obligation of the Bank, if any, to
make Advances pursuant to [section]2 shall terminate and the payment and
satisfaction in full of all the Obligations, the Borrower will not permit
the ratio of Total Liabilities to Tangible Net Worth to exceed .50 to 1 at
any time.
8. EVENTS OF DEFAULT; ACCELERATION.
-------------------------------
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay when due and payable any principal
of the Loan when the same becomes due;
(b) the Borrower shall fail to pay interest on the Loan or any other
sum due under any of the Loan Documents within two (2) Business Days after
notice from the Bank as to the amount(s) due and payable;
(c) the Borrower shall fail to perform any term, covenant or agreement
contained in [sections]7.1(a), 7.1(d) through (f), 7.2, 7.3 or in the
Mortgage;
(d) the Borrower shall fail to perform any other term, covenant or
agreement contained in the Loan Documents within fifteen (15) days after
the Bank has given written notice of such failure to the Borrower;
(e) any representation or warranty of the Borrower in the Loan
Documents or in any certificate or notice given in connection therewith
shall have been false or misleading in any material respect at the time
made or deemed to have been made;
(f) the Borrower shall be in default (after any applicable period of
grace or cure period) under the Original Term Loan Agreement, the Fleet
Credit Agreement or any agreement or agreements evidencing Indebtedness
owing to a person or entity other than the Bank or any affiliates of the
Bank or in excess of $500,000 in aggregate principal amount, or shall fail
to pay such Indebtedness when due, or within any applicable period of
grace;
(g) any of the Loan Documents shall cease to be in full force and
effect,
(h) the Borrower (i) shall make an assignment for the benefit of
creditors, (ii) shall be adjudicated bankrupt or insolvent, (iii) shall
seek the appointment of, or be the subject of an order appointing, a
trustee, liquidator or receiver as to all or part of its assets, (iv) shall
commence, approve or consent to, any case or proceeding under any
bankruptcy, reorganization or similar law and, in the case of an
involuntary case or proceeding, such case or proceeding is not dismissed
within forty-five (45) days following the commencement
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thereof, or (v) shall be the subject of an order for relief in an
involuntary case under federal bankruptcy law;
(i) the Borrower shall be unable to pay its debts as they mature;
(j) there shall remain undischarged for more than thirty (30) days any
final judgment or execution action against the Borrower that, together with
other outstanding claims and execution actions against the Borrower exceeds
$500,000 in the aggregate;
THEN, or at any time thereafter:
(1) In the case of any Event of Default under clause (h) or (i), the
obligation of the Bank, if any, to make any Advances pursuant to [section]2
shall terminate, and the entire unpaid principal amount of the Loan, all
interest accrued and unpaid thereon, and all other amounts payable
thereunder and under the other Loan Documents shall automatically become
forthwith due and payable, without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived by the Borrower; and
(2) In the case of any Event of Default other than (h) and (i), the
Bank may, by written notice to the Borrower, terminate the obligation of
the Bank, if any, to make Advances pursuant to [section]2 hereof and/or
declare the unpaid principal amount of the Loan, all interest accrued and
unpaid thereon, and all other amounts payable hereunder and under the other
Loan Documents to be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrower.
No remedy herein conferred upon the Bank is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and in addition to
every other remedy hereunder, now or hereafter existing at law or in equity or
otherwise.
9. SETOFF.
------
Regardless of the adequacy of any collateral for the Obligations, any
deposits or other sums credited by or due from the Bank to the Borrower may be
applied to or set off against any principal, interest and any other amounts due
from the Borrower to the Bank at any time without notice to the Borrower, or
compliance with any other procedure imposed by statute or otherwise, all of
which are hereby expressly waived by the Borrower; PROVIDED, HOWEVER, that funds
held in the Cash Collateral Account may not be applied by the Bank for
obligations owing to the Bank under the Original Term Loan Agreement.
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10. MISCELLANEOUS.
-------------
The Borrower agrees to indemnify and hold harmless the Bank and its
officers, employees, affiliates, agents, and controlling persons from and
against all claims, damages, liabilities and losses of every kind arising out of
the Loan Documents, including without limitation, against those in respect of
the application of Environmental Laws to the Borrower, other than those claims,
damages, liabilities and losses arising solely from the Bank's gross negligence
or willful misconduct. The Borrower shall pay to the Bank promptly on demand all
reasonable costs and out-of-pocket expenses (including any taxes and reasonable
legal and other professional fees and fees of its commercial finance examiner)
incurred by the Bank in connection with the preparation, negotiation, execution,
amendment, administration or enforcement of any of the Loan Documents. Any
communication to be made hereunder shall (a) be made in writing, but unless
otherwise stated, may be made by telex, facsimile transmission, courier or
letter, and (b) be made or delivered to the address of the party receiving
notice which is identified with its signature below (unless such party has by
five (5) days written notice specified another address), and shall be deemed
made or delivered, when dispatched, left at that address, or five (5) days after
being mailed, postage prepaid, to such address. This Agreement shall be binding
upon and inure to the benefit of each party hereto and its successors and
assigns, but the Borrower may not assign its rights or obligations hereunder.
The Bank shall be permitted to assign its rights and obligations hereunder (with
the consent of the Borrower provided that no Event of Default shall have
occurred and be continuing, which consent shall not be unreasonably withheld).
This Agreement may not be amended or waived except by a written instrument
signed by the Borrower and the Bank, and any such amendment or waiver shall be
effective only for the specific purpose given. The Bank agrees to exercise
reasonable efforts to keep any information delivered or made available by the
Borrower to it confidential from anyone other than persons employed or retained
by the Bank, including legal counsel, who are or are expected to become engaged
in evaluating, approving, structuring or administering the Loan; provided,
however, that nothing herein shall prevent the Bank from disclosing such
information (a) upon the order of any court or administrative agency, (b) upon
the request or demand of any regulatory agency or authority having jurisdiction
over the Bank, (c) which has been publicly disclosed by or on behalf of the
Borrower, (d) to the extent reasonably required in connection with any
litigation to which the Bank or its affiliates may be a party, (e) to the extent
reasonably required in connection with any audits or accountings and (f) to any
actual or proposed participant, assignee or other transferee of all or part of
its rights hereunder which has agreed in writing to be bound by the provisions
of the [section]10. The Bank agrees to provide the Borrower of notice of any
required disclosure of information hereunder, unless the Bank is prohibited from
noticing the Borrower or the Bank determines in its sole discretion that such a
notice would have a material adverse effect on the Bank. No failure or delay by
the Bank to exercise any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege preclude
any other right, power or privilege. The provisions of this Agreement are
severable and if any one provision hereof shall be held invalid or unenforceable
in whole or in part in any jurisdiction, such invalidity or unenforceability
shall affect only such provision in such jurisdiction. This Agreement, together
with all Schedules hereto, expresses the entire understanding of the parties
with respect to the transactions contemplated hereby. This Agreement and any
amendment hereby may be executed in several counterparts, each
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of which shall be an original, and all of which shall constitute one agreement.
In proving this Agreement, it shall not be necessary to produce more than one
such counterpart executed by the party to be charged. THIS AGREEMENT AND THE
NOTE ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL
BE CONSTRUED IN ACCORDANCE THEREWITH AND GOVERNED THEREBY. THE BORROWER AGREES
THAT ANY SUIT FOR THE ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN
THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING
THEREIN. The Borrower, as an inducement to the Bank to enter into this
Agreement, hereby waives its right to a jury trial with respect to any action
arising in connection with any Loan Document.
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IN WITNESS WHEREOF, the undersigned have duly executed this Term Loan
Agreement as a sealed instrument as of the date first above written.
CYTOTHERAPEUTICS, INC.
By:
--------------------------------
Name:
Title:
Address:
Two ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
THE FIRST NATIONAL BANK OF
BOSTON
By:
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
High Technology Division
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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SCHEDULE 5(j)
-------------
Joint Ventures
22
SCHEDULE 7.2(a)
---------------
Indebtedness
23
SCHEDULE 7.2(b)
---------------
Liens
24
SCHEDULE 7.2(c)
---------------
Investments
25
SCHEDULE 7.2(d)
Distributions