EXHIBIT 10.57.1
CREDIT AGREEMENT
BETWEEN
GENZYME TRANSGENICS CORPORATION
AND
FLEET NATIONAL BANK
DATED AS OF DECEMBER 28, 1998
TABLE OF CONTENTS
ARTICLE 1. - DEFINITIONS.......................................................1
1.1 DEFINED TERMS.............................................................1
1.2 ACCOUNTING TERMS..........................................................1
ARTICLE 2. - LOANS..............................................................1
2.1 REVOLVING CREDIT COMMITMENT...............................................1
2.2 PROCEDURE FOR REVOLVING CREDIT BORROWINGS.................................1
2.3 MANDATORY PREPAYMENT......................................................2
2.4 REVOLVING CREDIT NOTE AND RECORDS.........................................2
2.5 REVOLVING CREDIT LOAN PROCEEDS............................................2
2.6 TERMINATION OF REVOLVING CREDIT COMMITMENT................................2
2.7 INTENTIONALLY OMITTED.....................................................3
2.8 FACILITY FEE..............................................................3
2.9 UNUSED LINE FEE...........................................................3
2.10 LETTERS OF CREDIT.........................................................3
2.11 DEBIT OF ACCOUNTS.........................................................4
ARTICLE 3. - LOANS..............................................................4
3.1 TERM LOAN COMMITMENT......................................................4
3.2 TERM LOAN BORROWING REQUEST...............................................5
3.3 TERM LOAN BORROWING; PREPAYMENT...........................................5
3.4 TERM NOTE AND RECORDS.....................................................5
3.5 TERM LOAN PROCEED.........................................................5
3.6 REDUCTION OF TERMINATION OF CREDIT COMMITMENT.............................5
3.7 FACILITY FEE..............................................................6
ARTICLE 4. - REPRESENTATIONS AND WARRANTIES.....................................6
4.1 FINANCIAL CONDITION.......................................................6
4.2 ORGANIZATION, EXISTENCE, GOOD STANDING....................................6
4.3 SUBSIDIARIES; CAPITALIZATION..............................................6
4.4 POWER AND AUTHORITY.......................................................6
4.5 LEGAL, VALID, BINDING OBLIGATION..........................................7
4.6 CONSENTS..................................................................7
4.7 NO LEGAL BAR..............................................................7
4.8 NO LITIGATION.............................................................7
4.9 NO DEFAULT................................................................7
4.10 ASSETS, NO LIENS;.........................................................7
4.11 NO BURDENSOME RESTRICTIONS................................................8
4.12 TAXES.....................................................................8
4.13 REGULATION U, ETC.........................................................8
4.14 ERISA.....................................................................8
4.15 INVESTMENT COMPANY ACT, ETC...............................................9
4.16 INDEBTEDNESS..............................................................9
4.17 CONTINGENT LIABILITIES....................................................9
4.18 CHIEF PLACE OF BUSINESS; LOCATIONS OF COLLATERAL..........................9
4.19 LAWS INCLUDING ENVIRONMENTAL AND SAFETY MATTERS...........................9
4.20 INTELLECTUAL PROPERTY.....................................................9
4.21 NEGATIVE PLEDGES.........................................................10
4.22 FULL DISCLOSURE..........................................................10
ARTICLE 5. - AFFIRMATIVE COVENANTS.............................................10
5.1 FINANCIAL STATEMENTS AND OTHER DOCUMENTS.................................10
5.2 EXISTENCE; COMPLIANCE WITH LAWS; ETC.....................................12
5.3 MAINTAIN PROPERTY........................................................12
5.4 INSURANCE................................................................12
5.5 NOTICE OF MATERIAL EVENTS................................................13
5.6 DEPOSIT ACCOUNTS.........................................................13
ARTICLE 6. - NEGATIVE COVENANTS................................................13
6.1 INDEBTEDNESS.............................................................13
6.2 CONTINGENT LIABILITIES...................................................14
6.3 LIMITATION ON LIENS......................................................14
6.4 PROHIBITION OF FUNDAMENTAL CHANGES.......................................15
6.5 INVESTMENTS AND LOANS....................................................15
6.6 DIVIDENDS AND REDEMPTIONS................................................16
6.7 TRANSACTIONS WITH AFFILIATES.............................................16
6.8 NEGATIVE PLEDGE..........................................................16
ARTICLE 7. - CONDITIONS PRECEDENT..............................................16
7.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT................................16
7.2 CONDITIONS OF ALL LOANS..................................................18
ARTICLE 8. - EVENTS OF DEFAULT.................................................18
8.1 EVENTS OF DEFAULT........................................................18
8.2 LENDER'S REMEDIES........................................................20
8.3 CROSS DEFAULT............................................................21
8.4 SETOFF...................................................................21
ARTICLE 9. - MISCELLANEOUS.....................................................21
9.1 NOTICES..................................................................21
9.2 NO WAIVER OF RIGHTS......................................................23
9.3 OBLIGATIONS ABSOLUTE; CUMULATIVE REMEDIES................................23
9.4 SUCCESSORS...............................................................23
9.5 GOVERNING LAW............................................................24
9.6 SUBMISSION TO JURISDICTION; WAIVER OF TRIAL BY JURY......................24
9.7 COMPLETE AGREEMENT, AMENDMENTS...........................................24
9.8 EXPENSES.................................................................24
9.9 INDEMNIFICATION..........................................................25
9.10 SURVIVAL OF AGREEMENTS...................................................25
9.11 SEVERABILITY.............................................................25
9.12 DESCRIPTIVE HEADINGS.....................................................25
9.13 COUNTERPARTS.............................................................25
9.14 PLEDGE TO FEDERAL RESERVE................................................25
9.15 LOST NOTE................................................................26
SCHEDULES AND EXHIBITS
----------------------
SCHEDULE 1 (DEFINITIONS)
SCHEDULE 4.1 (FINANCIAL STATEMENTS OF BORROWER)
SCHEDULE 4.3 (SUBSIDIARIES AND INVESTMENTS/ +5% SHAREHOLDERS)
SCHEDULE 4.6 (CONSENTS AND APPROVALS)
SCHEDULE 4.8 (LITIGATION)
SCHEDULE 4.11 (BURDENSOME RESTRICTIONS)
SCHEDULE 4.20 (INTELLECTUAL PROPERTY DISCLOSURE)
SCHEDULE 4.21 (EXISTING NEGATIVE PLEDGES)
SCHEDULE 6.1 (DISCLOSED INDEBTEDNESS)
SCHEDULE 6.2 (DISCLOSED CONTINGENT LIABILITIES)
SCHEDULE 6.3 (DISCLOSED LIENS)
SCHEDULE 6.5 (INVESTMENT POLICY)
SCHEDULE 6.6 (SERIES A CONVERTIBLE PREFERRED STOCK)
EXHIBIT A - REVOLVING CREDIT NOTE
EXHIBIT B - TERM NOTE
EXHIBIT C - COMPLIANCE CERTIFICATE
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of December 28, 1998 between GENZYME TRANSGENICS
CORPORATION, a Massachusetts corporation ("Borrower"), and FLEET NATIONAL BANK,
a national banking association ("Lender").
WHEREAS, Borrower has requested that Lender provide it with revolving credit
and term loan facilities;
WHEREAS, Lender is willing, on the terms and subject to the conditions in
this Agreement, to make such of credit facilities available to Borrower;
NOW, THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, Lender and Borrower agree as follows.
ARTICLE 1. - DEFINITIONS
1.1 DEFINED TERMS. Unless otherwise defined herein, the capitalized terms,
as used in this Agreement, shall have the meanings as set forth on Schedule 1
hereto.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be interpreted and all financial statements and reports as to financial
matters required to be delivered to Lender hereunder, shall be prepared in
accordance with GAAP consistently applied with those used in the preparation of
the audit and quarterly financial statements furnished to Lender in connection
with the initial Loans and Letters of Credit issued on the Initial Borrowing
Date.
ARTICLE 2. - LOANS
2.1 REVOLVING CREDIT COMMITMENT. Subject to the terms and conditions
hereof, Lender agrees to make Revolving Credit Loans and issue Letters of Credit
(as described in Section 2.10 hereof) to Borrower from time to time during the
Revolving Credit Commitment Period, provided, however, that, except as provided
in the Revolving Credit Note, each Revolving Credit Loan request shall be in a
minimum amount of $100,000 or an integral multiple of $50,000 in excess thereof
and the aggregate principal amount of all outstanding Revolving Credit Loans
plus all Letter of Credit Outstandings shall not exceed the Revolving Credit
Limit. Except as provided in the Revolving Credit Note for prepayment of Libor
Advances (as defined therein), the Revolving Credit Loans may be repaid by
Borrower at any time, without penalty or premium and reborrowed only during the
Commitment Period, and shall be due and payable on the Termination Date.
2.2 PROCEDURE FOR REVOLVING CREDIT BORROWINGS. Subject to the terms and
conditions hereof and the Revolving Credit Note, Borrower may borrow under the
Revolving Credit Commitment during the Revolving Credit Commitment Period on any
Business Day. Borrower may request Revolving Credit Loans, from time to time, by
submitting irrevocable Loan requests in such form and manner as Lender may
require or permit (including, without limitation,
-1-
telephone requests), specifying the amount to be borrowed, the requested
Borrowing Date, and the manner in which Borrower would like the proceeds of such
Loan disbursed which request may include a Notice of Rate Selection, as
described in the Revolving Credit Note. A Revolving Credit Loan request must be
properly made and received by Lender prior to 12:00 noon (Eastern Time) on a
Business Day for Lender to make a Revolving Credit Loan on the same Business
Day. Lender may require telephone requests to be confirmed promptly in writing
and Borrower shall indemnify and hold Lender harmless for any action, including
the making of any Revolving Loan or any loss or expenses taken or incurred by
Lender in reliance upon any such telephone request. Except as otherwise agreed
by Lender, the proceeds of all Revolving Credit Loans will be made available to
Borrower by Lender by crediting Borrower's deposit account(s) with Lender.
2.3 MANDATORY PREPAYMENT. If at any time the aggregate unpaid principal
amount of the Revolving Credit Loans plus Letter of Credit Outstandings exceeds
the Revolving Credit Limit, Borrower shall immediately prepay an amount at least
equal to such excess, together with accrued interest on the amount prepaid to
the date of prepayment.
2.4 REVOLVING CREDIT NOTE AND RECORDS. The Revolving Credit Loans shall be
evidenced by the Revolving Credit Note and shall bear interest and be payable as
set forth therein. Lender shall maintain records of each (i) Revolving Credit
Loan and (ii) payments of principal and interest and shall furnish periodic
reports to Borrower showing the outstanding principal balance of the Revolving
Credit Loans. The Lender's records shall constitute PRIMA FACIE evidence of the
accuracy of the information recorded therein and in the event that Borrower
fails to object, within thirty (30) days of receipt of Lender's periodic reports
to Borrower with respect to Revolving Credit Loans, the information in such
reports shall be conclusive and binding as against Borrower; PROVIDED, HOWEVER,
that any failure by Lender to maintain such records or furnish such reports
shall not affect the obligations of Borrower under the Notes, this Agreement or
the other Loan Documents.
2.5 REVOLVING CREDIT LOAN PROCEEDS. Borrower shall use the proceeds of the
Revolving Credit Loans for working capital, general corporate purposes, or to
redeem shares of its Series A Convertible Preferred Stock, face value $1,000 per
share.
2.6 REDUCTION AND TERMINATION OF REVOLVING CREDIT COMMITMENT.
(a) The Borrower or Guarantor may permanently reduce, from time to
time, the Revolving Credit Limit by giving Lender not less than ten (10)
Business Days prior notice and prior to the reduction date prepay the Revolving
Credit Loans to the extent the outstanding amount of the Revolving Credit Loans
and Letters of Credit exceed the reduced Revolving Credit Limit, provided,
however, that, (i) each such reduction shall be an amount that is at least
$500,000 or any greater multiple thereof, (ii) in no event shall the Borrower
reduce the Revolving Credit Limit under this Section 2.6(a) to less than
$5,000,000; and (iii) no reduction shall be effective if the amount of the
Revolving Credit Loans and Letters of Credit as of the proposed reduction date
exceeds the amount of the proposed reduced Revolving Credit Limit.
-2-
(b) To terminate the Revolving Credit Commitment, Borrower or Guarantor
shall give Lender not less than ten (10) Business Days prior notice and on the
termination date prepay in full all Loans together with accrued interest, fees,
and charges thereon to the date of prepayment, including, without limitation,
any Yield Maintenance Fees (as defined in the Notes). The Revolving Credit
Commitment shall not be terminated by Borrower or Guarantor unless the Term Loan
Commitment is terminated simultaneously therewith. In the event that the
Revolving Credit Commitment is terminated, on the termination date, Borrower or
Guarantor shall immediately provide the Lender with cash collateral in form
acceptable to Lender in the amount of all Letter of Credit Outstandings and all
anticipated fees and expenses as of such date. The Revolving Credit Commitment
may be terminated by Lender or shall terminate automatically as set forth in
Article 8.
2.7 Intentionally omitted.
2.8 FACILITY FEE. Borrower shall pay to Lender a facility fee in respect of
the Revolving Credit Commitment equal to $43,750, which facility fee shall be
fully earned and paid on the date hereof.
2.9 UNUSED LINE FEE. Borrower agrees to pay to Lender an unused line fee
equal one quarter of one percent (.25%) per annum calculated upon the amount by
which the Revolving Credit Limit exceeds the average daily principal balance of
the outstanding Revolving Credit Loans plus Letter of Credit Outstandings during
the immediately preceding calendar quarter (or part thereof), which shall be due
and payable and fully earned on the first Business Day of each calendar quarter
commencing on January 1, 1999 while this Agreement is in effect.
2.10 LETTERS OF CREDIT.
(a) Subject to the terms and conditions hereof, Lender agrees to issue
Letters of Credit for the account of Borrower during the Commitment Period;
PROVIDED, THAT (i) the aggregate face amount of all Letter of Credit
Outstandings plus all outstanding Revolving Credit Loans shall not exceed the
Revolving Credit Limit; (ii) each Letter of Credit shall have a stated
expiration of no later than one year from the date of issuance or the
Termination Date, whichever is earlier. Borrower may apply to Lender for the
issuance of Letters of Credit on any Business Day by completing Lender's
standard form of application and reimbursement agreement.
(b) Borrower agrees to pay to Lender in connection with the issuance of
any letter of Credit, Lender's standard opening, amendment, payment and transfer
fees. For Letters of Credit issued for the purpose of importing goods, Borrower
shall pay to Lender a fee calculated on the undrawn face amount of all such
Letters of Credit from time to time outstanding equal to three-eighths of one
percent (.375%) per annum, payable quarterly in arrears on the last Business Day
of each calendar quarter. For all other Letters of Credit, Borrower shall pay to
Lender a fee calculated on the undrawn face amount of all such Letters of Credit
from time to time outstanding equal to one and one-half percent (1.5%) per annum
payable quarterly in advance on the first business day of each calendar quarter.
-3-
(c) Immediately upon any drawing on a Letter of Credit, Borrower shall
reimburse Lender in an amount equal to the amount so drawn together with draw
fees and interest from the date of draw until reimbursement is made at the
interest rate applicable to Revolving Credit Loans. This reimbursement
obligation shall be absolute and unconditional and shall not be subject to set
off, recoupment or counterclaim. At Lender's option, it may make Revolving
Credit Loans hereunder to effect such reimbursement if Borrower fails to do so
timely.
(d) To induce Lender to issue the Letters of Credit, Borrower agrees
that Lender shall not be responsible or liable (except as provided in the
following sentence) for, and the unconditional drafts honored under the Letters
of Credit shall not be affected by, (a) the validity or genuineness of documents
which must be presented to Lender under the terms of any Letter of Credit, or of
any endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, sufficient, fraudulent or forged, (b) any breach of
contract or other dispute between Borrower and any third party, (c) failure of
any draft to bear any reference or adequate reference to the Letter of Credit,
(d) failure of any drawing to be used for the purpose set forth in the Letter of
Credit, (e) failure of any Person to note the amount of any draft on the reverse
side of the Letter of Credit or to surrender or take up the Letter of Credit
even if the Letter of Credit contains such requirement, (f) errors, omissions,
interruptions or delays in transmission or delivery of any messages by mail,
cable, telegraph, wireless or otherwise, whether or not in cipher (so long as
such party has acted in good faith) or (g) any error, neglect or default of any
of Lender's correspondents. Borrower agrees that any action taken or omitted to
be taken by Lender under or in connection with any Letter of Credit or any
related draft, documents or property, if done without willful misconduct on
Lender's part, shall be binding on Borrower and shall not put Lender under any
resulting liability to Borrower. Borrower hereby waives presentment for payment
(except the presentment required by the terms of any Letter of Credit) and
notice of dishonor, protest, and notice of protect with respect to drafts
honored under any Letter of Credit.
2.11 DEBIT OF ACCOUNTS. Lender may, at its election, without any obligation
on the part of the Lender, effect payment of all amounts due from Borrower under
this Agreement, the Notes or the other Loan Documents, by debiting from time to
time any of the Borrower's deposit or other accounts maintained at the Lender.
ARTICLE 3. - TERM LOANS
3.1 TERM LOAN COMMITMENT. Subject to the terms and conditions hereof,
Lender agrees to make the Term Loans to the Borrower from time to time during
the Term Loan Commitment Period, provided, however, that, except as provided in
the Term Loan Note, each Term Loan request shall be in a minimum amount of
$250,000 or an integral multiple of $50,000 in excess thereof, not more than one
such Term Loan request shall be made in each calendar quarter (except for any
Term Loan request that equals or exceeds $500,000), and the aggregate principal
amount of all Term Loans shall not exceed the Term Loan Limit. Term Loans made
for the purpose of purchasing equipment or fixtures shall not exceed 100% of the
purchase price thereof.
-4-
3.2 TERM LOAN BORROWING REQUEST. Subject to the terms and conditions hereof
and the Term Loan Note, Borrower may borrow under the Term Loan Commitment
during the Term Loan Commitment Period on any Business Day. Borrower may request
Term Loans, from time to time by submitting irrevocable Loan requests in such
form and manner as Lender may require or permit, specifying the amount to be
borrowed, the requested Borrowing Date, and if such Term Loan is to be made
after the Initial Borrowing Date, copies of invoices and such information Lender
may reasonably request concerning the fixtures and equipment purchased by
Borrower which invoices are being submitted for reimbursement with the proceeds
of such Term Loan. Except as otherwise agreed by Lender, the proceeds of all
Term Loans will be made available to Borrower by Lender by crediting Borrower's
deposit account(s) with Lender.
3.3 TERM LOAN PREPAYMENT. Amounts borrowed as Term Loans which are paid or
prepaid by the Borrower may not be reborrowed. Term Loans may be prepaid to the
extent and in the manner permitted under the Term Note.
3.4 TERM NOTE AND RECORDS. The Term Loans shall be evidenced by the Term
Note and shall bear interest and be payable as set forth therein. Lender shall
maintain records of each (i) Term Loan and (ii) payments of principal balance of
Term Loans. The Lender's records shall constitute PRIMA FACIE evidence of the
accuracy of the information recorded therein and in the event that Borrower
fails to object, within thirty (30) days of receipt of Lender's periodic reports
to Borrower with respect to Term Loans, the information in such reports shall be
conclusive and binding as against Borrower; PROVIDED, HOWEVER, that any failure
by Lender to maintain such records or furnish such reports shall not affect the
obligations of Borrower under the Notes or this Agreement.
3.5 TERM LOAN PROCEEDS. Borrower shall use the proceeds of the Term Loans
to repay its term loan from BankBoston, N.A. under the Term Loan Agreement dated
December 15, 1995, as amended, to repay expenditures made by Borrower to acquire
fixtures and equipment for, and to make capital improvements at its facilities.
3.6 REDUCTION OF TERMINATION OF TERM LOAN COMMITMENT.
(a) The Borrower or Guarantor may permanently reduce, from time to
time, the Term Loan Limit by giving Lender not less than ten (10) Business Days
prior notice and prior to the reduction date prepay the Term Loans to the extent
the outstanding amount of the Term Loans exceed the reduced Term Loan Limit,
provided, however, that, (i) each such reduction shall be an amount that is at
least $500,000 or any greater multiple thereof, and (ii) no reduction shall be
effective if the amount of the Term Loans as of the proposed reduction date
exceeds the amount of the proposed reduced Term Loan Limit.
(b) To terminate the Term Loan Commitment, Borrower or Guarantor shall
give Lender not less than ten (10) Business Days prior notice and on the
termination date prepay in full all Term Loans together with accrued interest,
fees, and charges thereon to the date of prepayment, including, without
limitation, any Yield Maintenance Fees (as defined in the Notes). The Term Loan
Commitment shall not be terminated by Borrower or Guarantor unless the Revolving
Credit Commitment is simultaneously terminated therewith. The Term Loan
-5-
Commitment may be terminated by Lender or shall terminate automatically as set
forth in Article 8.
3.7 FACILITY FEE. Borrower shall pay to Lender a Term Loan facility fee
equal to $35,500, which facility fee shall be fully earned and paid on the date
hereof.
ARTICLE 4. - REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the Loans
and issue the Letters of Credit, Borrower represents and warrants to Lender,
except as otherwise set forth in a schedule attached hereto and made a part
hereof, that:
4.1 FINANCIAL CONDITION. The financial statements previously delivered to
Lender and attached hereto as Schedule 4.1 present fairly the Consolidated
financial position of Borrower and its Subsidiaries as of the dates thereof and
its and their results of operations, shareholders' equity and cash flows for the
periods then ended. All such financial statements and information, including any
related schedules and notes, and any other financial information or statements
furnished in accordance herewith, have been prepared in accordance with GAAP,
except as otherwise disclosed therein, subject only in the case of unaudited
interim financial statements to normal year-end audit adjustments and the
absence of footnotes. In the case of each Loan, the representations and
warranties in this Section shall be deemed to have been made in respect of the
then most recent financial statements of Borrower furnished to Lender pursuant
to Section 5.1.
4.2 ORGANIZATION, EXISTENCE, GOOD STANDING. Borrower (i) is duly organized,
validly existing and in good standing as a corporation under the laws of the
Commonwealth of Massachusetts, (ii) has obtained all licenses, permits,
approvals and consents and has filed all registrations necessary for the lawful
operation of its business, (iii) has the corporate power and authority and the
legal right to own, lease and operate its property and to conduct the business
in which it is currently engaged, and (iv) is duly qualified to do business and
is licensed and in good standing as a foreign corporation under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect. Borrower is not qualified or
authorized as a foreign corporation in any state.
4.3 SUBSIDIARIES; CAPITALIZATION. Except as set forth on Schedule 4.3,
Borrower has no Subsidiaries, Investments, Joint Ventures in or with any other
Person. As of the date hereof, the Guarantor owns, beneficially and of record
not less than forty percent (40%) of the issued and outstanding voting common
stock of the Borrowers and no other Person owns beneficially or of record more
than five percent (5%) of the issued and outstanding voting common stock of the
Borrower.
4.4 POWER AND AUTHORITY. Borrower has (i) full corporate power, authority
and legal right to execute, deliver and perform its obligations under the Loan
Documents to which it is a party and to borrow hereunder, (ii) taken all
necessary actions to authorize the execution, delivery and performance by it of
each Loan Document to which it is a party and to authorize its
-6-
borrowings hereunder, and (iii) caused to be duly executed and delivered on
behalf of the Borrower each of the Loan Documents to which Borrower is a party.
4.5 LEGAL, VALID, BINDING OBLIGATION. Each of the Loan Documents and each
agreement, certificate, document, instrument or other paper delivered pursuant
thereto, to which Borrower is a party, constitutes the legal, valid, and binding
obligation of Borrower enforceable against Borrower in accordance with its
terms.
4.6 CONSENTS. No consent, permit, license, approval, authorization or other
action of, or registration, declaration or filing with or notice to, any
governmental authority, bureau or agency or any other Person is required in
connection with the execution, delivery or performance by Borrower, or the
validity or enforceability against Borrower, of any Loan Document to which it is
a party, except for the consents and approvals set forth on Schedule 4.6 all of
which have been obtained.
4.7 NO LEGAL BAR. The execution, delivery and performance by Borrower of
the Loan Documents, and each agreement, certificate, document, instrument or
other paper delivered pursuant thereto, to which Borrower is a party, does not
and will not conflict with or cause a breach of any provision of any existing
law, rule or regulation, order, judgment, award or decree of any court,
arbitrator or governmental authority, bureau or agency, or of the charter
documents or Bylaws of, or any security issued by, Borrower or of any material
mortgage, deed of trust, indenture, lease, contract or other agreement or
undertaking to which Borrower is a party or by which any of its properties may
be bound, and will not result in the creation or imposition of any Lien on any
of its revenues or properties, except in favor of Lender.
4.8 NO LITIGATION. Except as set forth on Schedule 4.8, no litigation,
investigation or other proceeding of or before any court, arbitrator or
governmental authority is currently pending nor, to the knowledge of Borrower,
threatened against Borrower, any of its Subsidiaries or its properties which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.
4.9 NO DEFAULT. Neither Borrower nor any of its Subsidiaries is in default
in any respect in the payment or performance of any of its obligations for
monies borrowed or under any mortgage, deed of trust, indenture, lease, contract
or other agreement or undertaking to which it is a party or by which it or any
of its property may be bound or affected and no Default or Event of Default has
occurred and is continuing. Neither Borrower nor any of its subsidiaries is in
default under any order, award or decree of any court, arbitrator or
governmental authority binding upon or affecting it or by which any of its
property may be bound or affected, and no such order, award or decree has or
could reasonably be expected to have a Material Adverse Effect.
4.10 ASSETS, NO LIENS. Borrower and each of its Subsidiaries has good and
marketable title to, or valid leasehold interest in, all of its real property
and good title to all its personal property, including assets carried on its
books and reflected in the financial statements furnished to Lender herewith,
subject to no Liens except for (i) Liens permitted under Section 6.3 hereof, or
(ii) inventory sold or otherwise disposed of in the ordinary course of its
business.
-7-
4.11 NO BURDENSOME RESTRICTIONS. Except as set forth in Schedule 4.11,
neither Borrower nor any of its Subsidiaries is a party to or bound by any
contract, agreement or instrument or subject to any corporate restriction
(including any restriction set forth in its charter or Bylaws) or subject to any
legal requirement or restriction that would have a Material Adverse Effect.
4.12 TAXES. All federal, state, local and other tax reports and returns
which are required to be filed by Borrower and its Subsidiaries have been filed,
except where extensions have been properly obtained, and Borrower and its
Subsidiaries have paid or made adequate provision for all taxes, interest and
penalties shown to be due and payable on such returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any governmental authority, including,
without limitation, all payroll withholding taxes, have been paid and no tax
liens have been filed and no claims are being asserted with respect to any such
taxes, fees or other charges.
4.13 REGULATION U, ETC.. Neither Borrower nor any of its Subsidiaries is
engaged or will engage, principally or as one of its important activities, in
the business of extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" (within the respective meanings of each of the quoted terms
under Regulations U, T, or X of the Board of Governors of the Federal Reserve
System and any successors thereto as now and from time to time hereafter in
effect), and the proceeds of any Loan hereunder may be used for "purchasing" or
"carrying" any "margin stock" as so defined, but not for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation U of
the Federal Reserve Board.
4.14 ERISA. The Borrower, all Commonly Controlled Entities, and all their
Plans are and have been in substantial compliance with the provisions of, to the
extent applicable, ERISA, the qualification requirements of IRC Section 401(a),
and the published interpretations thereunder. No notice of intent to terminate a
Plan has been filed under Section 4041 of ERISA, nor has any Plan been
terminated under Section 4041(e) of ERISA which resulted in substantial
liability to Borrower or any of its Commonly Controlled Entities. The PBGC has
not instituted proceedings to terminate, or appoint a trustee to administer, a
Plan and no event has occurred or condition exists which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan. Neither Borrower nor any Commonly
Controlled Entities would be liable for any amount pursuant to Sections 4063 or
4064 of ERISA if all Plans terminated as of the most recent valuation dates of
such Plans. Neither Borrower nor any Commonly Controlled Entities have:
withdrawn from a Multiemployer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; or failed to
make a payment to a Plan required under Section 302(f)(1) of ERISA such that
security would have to be provided pursuant to Section 307 of ERISA. No lien
upon the assets of Borrower has arisen with respect to a Plan. To the best
knowledge of Borrower, no Prohibited Transaction or Reportable Event has
occurred with respect to a Plan. Borrower and each Commonly Controlled Entity
has each made all contributions required to be made by them to any Plan or
Multiemployer Plan when due. There is no accumulated funding deficiency in any
Plan, whether or not waived.
-8-
4.15 INVESTMENT COMPANY ACT, ETC. Neither Borrower nor any of its
Subsidiaries is an "investment company" registered or required to be registered
under the Investment Company Act of 1940, or a company "controlled" (within the
meaning of such Investment Company Act) by such an "investment company". Neither
Borrower nor any of its Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act or to any other federal or state statute or regulation limiting its
ability to incur indebtedness for money borrowed.
4.16 INDEBTEDNESS. Neither Borrower nor any of its Subsidiaries has any
Indebtedness of any type except Indebtedness incurred under this Agreement and
that which is permitted under Section 6.1 of this Agreement.
4.17 CONTINGENT LIABILITIES. Except as set forth in the notes to the
Financial Statements, neither Borrower nor any of its Subsidiaries has any
material Contingent Liabilities.
4.18 CHIEF PLACE OF BUSINESS; LOCATIONS OF COLLATERAL. The chief executive
office of Borrower is located at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and all
books and records of Borrower are located at that address.
4.19 LAWS INCLUDING ENVIRONMENTAL AND SAFETY MATTERS. Borrower and each of
its Subsidiaries is in compliance in all material respects with all laws,
statutes, rules, regulations ordinances, orders of court or other governmental
authorities, and other valid requirements of governmental authorities applicable
to it including, without limitation, all environmental, health and safety
statutes and regulations and specifically the Federal Resource Conservation and
Recovery Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Act, the Federal Clean Water Act, the Clean Air Act, the requirements
and regulations of the Nuclear Regulatory Commission, the Federal Occupational
Safety and Health Act and the Food, Drug and Cosmetic Act, and the regulations
promulgated thereunder. Neither Borrower nor any of its Subsidiaries is subject
to any judicial or administrative proceedings alleging the violation of any
applicable law or regulation which could reasonably be expected to have a
Material Adverse Effect. Neither Borrower nor any of its Subsidiaries is the
subject of any federal, state or local investigation regarding, among other
matters, the release of any Hazardous Material into the environment, the results
of which could reasonably be expected to have a Material Adverse Effect. Neither
Borrower nor any of its subsidiaries has filed any notice under any applicable
law indicating past or present treatment, storage, disposal, generation,
transportation or reporting a spill or release into the environment of any
Hazardous Material which could reasonably be expected to have a Material Adverse
Effect. Neither Borrower nor any of its Subsidiaries has placed or disposed of,
used, generated or transported any Hazardous Material in violation of any
applicable law or regulation, upon or over any real property owned or leased by
Borrower and any of its Subsidiaries and neither Borrower nor any of its
Subsidiaries has knowledge of such Hazardous Material on such real property.
4.20 INTELLECTUAL PROPERTY. Except as set forth on Schedule 4.20 hereto, (a)
the Borrower and its Subsidiaries own or license all material Intellectual
Property necessary for the conduct of their business as presently conducted; (b)
all material agreements pursuant to which
-9-
the Borrower and its Subsidiaries license the manufacture, marketing or sale of
products employing its Intellectual Property are in full force and effect; (c)
no claims, demands, suits, or proceedings are pending or, to the knowledge of
the Borrower and its Subsidiaries, threatened which impair their rights in any
material Intellectual Property used in the conduct of their business or any
material agreement relating thereto; and (d) the Borrower and its Subsidiaries
have not infringed (without any license therefor) any Intellectual Property of
any other Person, and the present conduct of the Borrower and its Subsidiaries'
business does not infringe any such rights in any way which would have a
Material Adverse Effect.
4.21 NEGATIVE PLEDGES. Neither Borrower nor any of its Subsidiaries is a
party to or bound by any agreement, indenture, or other instrument which
prohibits the creation, incurrence or allowance to exist of any mortgage, deed
of trust, pledge, lien, security interest or other encumbrance or conveyance
upon Borrower's or any Subsidiary's properties, except as disclosed on Schedule
4.21 hereto.
4.22 FULL DISCLOSURE. The financial statements referred to in Section 4.1,
the Schedules hereto, the Loan Documents and any list, certificate, written
statement, instrument, paper or other information furnished by Borrower to
Lender in connection with the Loan Documents do not contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements contained therein and herein, in light of the circumstances in which
they are made, not misleading.
ARTICLE 5. - AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as any Commitment remains in
effect, any Note remains outstanding and unpaid, in whole or in part, or any
other amount is owing to Lender hereunder:
5.1 FINANCIAL STATEMENTS AND OTHER DOCUMENTS. Borrower shall furnish or
cause to be furnished to Lender:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event
within 45 days after the end of the first three quarterly fiscal periods of each
fiscal year of the Borrower, Consolidated statements of earnings, shareholders'
equity and cash flows of the Borrower and its Subsidiaries for such period and
for the period from the beginning of the respective fiscal year to the end of
such period, and the related Consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such period, setting forth in each case in
comparative form, the corresponding Consolidated figures for the corresponding
periods in the preceding fiscal year accompanied by a certificate of a senior
financial officer of the Borrower, which certificate shall state that said
Consolidated financial statements present fairly in all material respects the
Consolidated financial position and results of operations of the Borrower and
its Subsidiaries, in accordance with GAAP, as at the end of, and for, such
period (subject to normal year-end audit adjustments);
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event
within 90 days after the end of each fiscal year of the Borrower, Consolidated
statements of earnings, shareholders' equity and cash flows of the Borrower and
its Subsidiaries for such fiscal year and
-10-
the related Consolidated balance sheets of the Borrower and its Subsidiaries as
at the end of such fiscal year, setting forth in each case in comparative form,
to the extent such figures appear therein, the corresponding Consolidated
figures for the preceding fiscal year, and accompanied by a report thereon of
independent certified public accountants of recognized national standing, which
report shall state that said Consolidated financial statements present fairly in
all material respects the Consolidated financial position and results of
operations of the Borrower and its Subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP, consistently applied;
(c) PERIODIC SEC REPORTS; COMPLIANCE CERTIFICATE. Simultaneously with the
delivery of the financial statements required under Section 5.1(a) and (b)
above, (i) a copy of the Borrower's Form 10-Q or 10-K filing made for the
periods covered by such financial statements or, if such filings are not
available, a brief narrative description of material businesses and financial
trends and developments and significant transactions that have occurred in the
period or periods covered thereby, together with (ii) a Compliance Certificate
as of the date of such financial statements, in the form attached as EXHIBIT C
hereto;
(d) OTHER SEC REPORTS. Promptly upon their becoming available, copies of
all (i) regular, periodic and special reports that the Borrower shall have filed
with the Securities and Exchange Commission (or any governmental agency
substituted therefor) pursuant to the Securities Exchange Act of 1934, as
amended, (ii) financial statements, reports, notices or proxy or other
statements sent to shareholders of the Borrower, and (iii) press releases and
other statements generally made available by the Borrower to the public
concerning material developments in the business of the Borrower;
(e) ERISA NOTICES. As soon as possible and in any event within five (5)
days after any officer of Borrower obtains knowledge thereof: (i) notice of
Borrower's failure to make any required payment to any Plan in sufficient amount
to comply with ERISA and the Code on or before the due date for such payment;
(ii) notice of the occurrence or expected occurrence of any "Reportable Event"
under ERISA, "Prohibited Transaction" or "Accumulated Funding Deficiency" with
respect to any Plan; and (iii) notice of receipt by Borrower of any notice (A)
from a Multiemployer Plan regarding the imposition of withdrawal liability; or
(B) of the institution, or expectancy of the institution, of any proceeding or
any other action which may result in the termination of any Plan, or Borrower's
withdrawal or partial withdrawal from any Plan;
(f) NOTICE OF DEFAULT. Promptly after the Borrower knows that any Default
has occurred, a notice of such Default describing the same in reasonable detail
and, together with such notice or as soon thereafter as possible, a description
of the action that the Borrower has taken or proposes to take with respect
thereto (a "Notice of Default");
(g) PROJECTIONS. With the delivery of the Borrower's 10-K annual report,
the Borrower's quarterly projections (income statements and balance sheets) for
the then current fiscal year of the Borrower, as approved by the Board of
Directors of the Borrower and a copy of any letter from the Borrower's auditors
to Borrower's management prepared in connection with the audited financial
statements of the Borrower; and
-11-
(h) OTHER INFORMATION. From time to time such other information regarding
the property, operations, business, financial condition or prospects of the
Borrower or any of its Subsidiaries as the Lender may reasonably request.
5.2 EXISTENCE; COMPLIANCE WITH LAWS; ETC.. Borrower shall and shall cause
each Subsidiary to:
(a) CORPORATE EXISTENCE. Preserve and keep in full force and effect its
corporate existence and all franchises, licenses and permits material to the
proper conduct of its business;
(b) COMPLIANCE WITH APPLICABLE LAWS. Comply with and duly observe all
applicable laws, statutes, regulations, rules, ordinances, orders of court or
governmental authorities, and requirements of governmental authorities the
breach of which could reasonably be expected to have a Material Adverse Effect,
except when contested with due diligence, in good faith and in proper
proceedings. Borrower shall also pay and cause all of its Subsidiaries to pay
all of their other Indebtedness and obligations promptly and in accordance with
normal terms and trade practices.
(c) PAYMENT OF TAXES. File or cause to be filed all tax returns and reports
which are required by law to be filed by it, and pay and discharge all taxes,
assessments and governmental charges or levies imposed on it or on its income or
profits or on any of its property prior to the date on which penalties attached
thereto, except for any such tax, assessment, charge or levy the payment of
which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained in accordance with GAAP and except
for any such tax, assessment, charge or levy the failure to pay which would not
have a Material Adverse Effect.
(d) RECORDS. Keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied; and
(e) ACCESS. Permit representatives of Lender, upon reasonable advance
notice to the Borrower and during normal business hours, to examine, copy and
make extracts from its books and records, to inspect any of its properties, and
to discuss its business and affairs with its officers, all to the extent
reasonably requested by Lender.
5.3 MAINTAIN PROPERTY. Borrower shall, and Borrower shall cause each of its
Subsidiaries to, keep and maintain all property useful and necessary in its
business in good operating condition and repair, ordinary wear and tear
excepted.
5.4 INSURANCE. Borrower shall keep adequately insured by financially sound
and responsible insurers (a) all property owned or leased by it and its
Subsidiaries and all property of an insurable nature, such insurance to be in at
least such amounts and covering loss or damage from at least such risks and
hazards (including, without limitation, business interruption insurance and use
and occupancy insurance) as are usually insured against in the same geographic
areas by companies engaged in similar businesses, and (b) all liabilities of
Borrower and its Subsidiaries for damage to property, death or bodily injury,
including without limitation
-12-
insurance required under all applicable workmen's compensation laws, and
insurance for such liabilities resulting from, caused by or arising out of any
product sold by any predecessor of Borrower or by Borrower or any Subsidiary,
all such insurance to be in at least such amounts as are usually insured against
by companies engaged in the same or similar businesses.
5.5 NOTICE OF MATERIAL EVENTS. Borrower will, promptly upon any officer of
Borrower obtaining knowledge thereof, give notice to Lender of (i) any material
casualty, loss or depreciation to any inventory or other property of Borrower or
any Subsidiary or any litigation, investigation or other proceeding against or
involving Borrower or any Subsidiary the result of any of which might have a
Material Adverse Effect; (ii) any litigation, investigation, other proceeding or
dispute affecting Borrower (A) which relates, in whole or in part, to any of the
transactions contemplated by any of the Loan Documents, (B) which involves an
amount in excess of $100,000, or (C) which may exist between Borrower or any
Subsidiary and any governmental body; or (iii) any release of any Hazardous
Materials at any location owned or leased by Borrower or any Subsidiary or any
investigation or proceeding by any governmental body alleging or relating to the
violation by Borrower or any Subsidiary of any law or regulation. Borrower will
furnish to Lender from time to time all information which Lender shall
reasonably request with respect to the status of any litigation, investigation,
other proceeding or dispute to which Borrower is a party.
5.6 DEPOSIT ACCOUNTS. Borrower shall maintain with Lender bank accounts to
be used as its principal depository and operating account(s).
ARTICLE 6. - NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any Commitment is in effect,
any Note remains outstanding and unpaid, in whole or in part, or any other
amount is owing to Lender hereunder, Borrower will not, directly or indirectly,
and Borrower will not permit any of its Subsidiaries to:
6.1 INDEBTEDNESS. Create, incur, assume or allow to exist any Indebtedness,
except:
(a) LOAN DOCUMENT INDEBTEDNESS. Indebtedness evidenced by the Notes and any
other Indebtedness owing to or held by Lender arising under any of the Loan
Documents;
(b) DISCLOSED INDEBTEDNESS. Indebtedness of Borrower existing on the
Initial Borrowing Date and disclosed in Schedule 6.1 (including, without
limitation, all Capital Lease Obligations and purchase money financings existing
on the Initial Borrowing Date); PROVIDED, HOWEVER, that, without the prior
written consent of Lender, none of such Indebtedness shall be renewed, extended
or otherwise modified in any material respect and may be extended by Borrower
only on substantially the same terms and conditions as in effect on the date
hereof;
(c) UNSECURED CURRENT LIABILITIES. Unsecured current liabilities (not the
result of borrowing) incurred in the ordinary course of business which are not
evidenced by notes or instruments and which are not more than thirty (30) days
overdue from the original due dates thereof (unless and to the extent only that
any such liability is contested by Borrower in good
-13-
faith by appropriate proceedings and adequate reserves have been set aside with
respect thereto in accordance with GAAP);
(d) ADDITIONAL CAPITAL LEASES AND PURCHASE MONEY FINANCINGS. Capital Leases
and purchase money financings incurred in the ordinary course of business by
Borrower after the Initial Borrowing Date for the lease or purchase of Capital
Equipment provided that the aggregate outstanding amount of all such additional
Capital Leases and purchase money financings shall not exceed $5,000,000, the
amount of each such Capital Lease or purchase money financing does not exceed
100% of the lesser of the cost or fair market value of such Capital Equipment
(and Borrower agrees to furnish copies of the documentation for its outstanding
Capital Leases and purchase money financings to Lender upon request);
(e) INDEBTEDNESS AMONG SUBSIDIARIES. Indebtedness of (i) Subsidiaries of
the Borrower to the Borrower, (ii) the Borrower to any of its Subsidiaries,
(iii) of Subsidiaries to Subsidiaries, (iv) of the Borrower or any of its
Subsidiaries to the Guarantor; or (v) of the Guarantor to the Borrower or any of
its Subsidiaries, provided that any such Indebtedness is subordinated as to
payment of the Obligations in a manner satisfactory to Lender;
(f) RENEWALS OF INDEBTEDNESS. Indebtedness incurred to renew, extend,
refinance or refund any Indebtedness permitted herein on terms no less
beneficial to the Borrower than originally in effect; and
(g) APPROVED INDEBTEDNESS. Indebtedness for borrowed money incurred after
the Initial Borrowing Date with prior notice to and the written consent of
Lender.
6.2 CONTINGENT LIABILITIES. Except for Contingent Liabilities existing on
the Initial Borrowing Date and disclosed on Schedule 6.2, create, incur, assume
or allow to exist any Contingent Liabilities except for Contingent Liabilities
arising out of the endorsement of instruments for deposit or collection in the
ordinary course of business.
6.3 LIMITATION ON LIENS. Create, incur, assume or allow to exist, any Lien
upon any of its property, income or profits, whether now owned or held or
hereafter acquired, including attachment, levy, garnishment or other judicial
process relating to such property, except:
(a) Liens in existence on the date hereof and listed on Schedule 6.3
hereof;
(b) Liens imposed by any governmental authority for taxes, assessments or
charges not yet due or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Borrower, in accordance with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business that are not overdue
or that are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained or the books of the
Borrower, in accordance with GAAP;
-14-
(d) pledges or deposits under worker's compensation, unemployment insurance
and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts (other than
for Indebtedness), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business and Liens arising from a seller's title retention
provisions with respect to goods or services acquired in the ordinary course of
business;
(f) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, easements, licenses, restrictions on the use of Property or
imperfections in title thereto that, in the aggregate, are not material in
amount, and that do not in any case materially detract from the value of the
Property subject thereto or interfere with the ordinary conduct of the business
of the Borrower or any of its Subsidiaries;
(g) Liens upon Capital Equipment to secure purchase money Indebtedness or
Capital Lease of the Borrower or a Subsidiary; PROVIDED, THAT, (i) such Lien
does not extend to or cover any other property of the Borrower or such
Subsidiary and (ii) such Lien does not secure any Indebtedness other than the
Indebtedness so incurred;
(h) Liens arising from or upon any judgment or award, provided that such
judgment or award does not exceed $50,000 and is being contested in good faith
by proper appeal proceedings, such judgment or award is not secured by any Lien
which is not discharged within thirty (30) days, and only so long as execution
thereon shall be stayed; and
(i) Liens now or hereafter granted to the Lender under the Loan Documents.
6.4 PROHIBITION OF FUNDAMENTAL CHANGES. (a) Enter into any transaction of
merger or consolidation or amalgamation; (b) liquidate, wind-up or dissolve
itself; (c) convey, sell, issue, exchange, lease, assign, transfer or otherwise
dispose of all or any material portion of its business or property or the
business, property or stock of any Subsidiary (other than sales of inventory in
the ordinary course of business and obsolete equipment or equipment no longer
used or useful in the business of Borrower); or (d) without the prior written
consent of the Lender, make any Investment in or purchase, lease or otherwise
acquire all or any material portion of the business or property of any other
Person or enter into any Joint Venture or any exclusive licensing agreement for
any of its material Intellectual Property; provided, however, that
notwithstanding the foregoing so long as no Default or Event of Default exists,
the Borrower may enter into agreements, including Joint Ventures and licensing
agreements, relating to the development, marketing and sale of its products and
product lines in the ordinary course of its business and on reasonable and
appropriate terms and conditions including the payment of fair and reasonable
compensation to the Borrower.
6.5 INVESTMENTS AND LOANS. Except as permitted by Section 6.1(e) make any
Investment in or make any loan or other advances of money to any Person, except
for loans and advances to employees for salary, travel advances, advances
against commissions and similar
-15-
advances in the ordinary course of business or pursuant to the investment policy
attached hereto as Schedule 6.5.
6.6 DIVIDENDS AND REDEMPTIONS. Pay or set aside any amount to pay any
Dividends; provided, however, that, so long as no Default or Event of Default
has occurred and is continuing, Borrower may pay Dividends to holders of its
Series A Convertible Preferred Stock for the redemption of such stock and
accrued Dividends payable in connection with such stock, up to a maximum amount
of $11,500,000, in accordance with Schedule 6.6 which sets forth the payment
schedule for the redemption of such stock.
6.7 TRANSACTIONS WITH AFFILIATES. Except for agreements and transactions
with the Guarantor, enter into or be a party to any agreement or transaction
with any Affiliate, except in the ordinary course of Borrower's business and
pursuant to reasonable requirements of Borrower's business and upon fair and
reasonable terms and conditions which are fully disclosed to Lender and are no
less favorable to Borrower than would obtain in a comparable arm's length
transaction with a person not an Affiliate of Borrower.
6.8 NEGATIVE PLEDGE. Directly or indirectly, enter into any agreement,
indenture, or other instrument which prohibits the creation, incurrence or
allowance to exist of any mortgage, deed of trust, pledge, lien, security
interest or other encumbrance or conveyance upon any of Borrower's or its
Subsidiaries' property, except for (a) the existing negative pledge in favor of
the Guarantor as in effect on the date hereof and (b) negative pledges in
connection with Indebtedness incurred under Capital Leases and purchase money
financings permitted under Section 6.1(d) hereof, provided that such negative
pledges apply only to the Capital Equipment purchased or leased pursuant thereto
and not to any other property.
ARTICLE 7. - CONDITIONS PRECEDENT
7.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Lender to
make a Revolving Credit Loan and Term Loan on the Initial Borrowing Date is
subject to the satisfaction of the condition precedent that Lender shall have
received on or before such date, the following items in form and substance
satisfactory to Lender and its counsel executed where appropriate by a duly
authorized officer of Borrower.
LOAN DOCUMENTS
(a) CREDIT AGREEMENT. This Agreement;
(b) REVOLVING CREDIT NOTE. The Revolving Credit Note;
(c) TERM NOTE. The Term Note;
(d) GUARANTY. The Guaranty;
CORPORATE DOCUMENTS:
-16-
(e) CORPORATE RESOLUTIONS. Copies of resolutions of the Board of Directors
(and, if necessary, the Stockholders) of Borrower, authorizing the execution,
delivery and performance of the Loan Documents to which Borrower is a party, and
the transactions contemplated thereby, certified as of the Initial Borrowing
Date by the Secretary/Clerk or Assistant Secretary/Clerk of Borrower (which
certificate shall state that such resolutions have not been amended, modified,
revoked or rescinded as of such date);
(f) CORPORATE INCUMBENCY CERTIFICATE. Certificate of the Secretary/Clerk or
Assistant Secretary/Clerk of Borrower, dated as of the Initial Borrowing Date,
certifying the names and titles of the officers authorized to execute the Loan
Documents to which Borrower is a party and any other documents related to any
thereof, together with specimen signatures of such officers;
(g) CHARTER DOCUMENTS. Copies of (i) the charter documents and all
amendments thereto of Borrower, currently certified by the relevant governmental
filing authority, and (ii) the By-Laws of Borrower certified as of the Initial
Borrowing Date by the Secretary/Clerk or Assistant Secretary/Clerk of the
Borrower;
(h) LEGAL GOOD STANDING CERTIFICATES. For Borrower and Guarantor, a
certificate of legal existence and good standing issued by the Secretary of
State of the state of each such entity's incorporation, and a certificate of
foreign qualification and good standing issued by the Secretary of State of each
state of foreign qualification or authorization, all of which shall be dated
currently;
(i) TAX GOOD STANDING CERTIFICATES. For Borrower, a certificate of tax good
standing currently dated from each jurisdiction in which such party is obliged
to file tax returns and pay taxes (or, to the extent any such certificates are
unobtainable, because it is not the practice of the taxing authority to issue
such certificate, or because of time delays in the issuance of such certificate
attributable to such taxing authority, a letter from Borrower's chief financial
officer setting forth the nature of the tax obligation and the relevant
jurisdiction, and certifying that all required returns have been duly filed and
all required taxes shown thereon paid;
(j) GUARANTOR AUTHORIZATION. For Guarantor, an Officer's Certificate of
incumbency together with resolutions of its board of directors authorizing the
execution and delivery of the Guarantee.
MISCELLANEOUS DOCUMENTS:
(k) UCC AND OTHER SEARCHES. Copies of UCC, tax lien, judgment, bankruptcy
and other searches reasonably requested by Lender of all appropriate filing
offices relating to the Borrower and its Subsidiaries;
(l) TERMINATIONS AND DISCHARGES. Termination Statements, mortgage
discharges and other discharges of all Liens other than those permitted under
Section 6.3 hereof;
-17-
(m) PAYOFF LETTER. A payoff letter from BankBoston, N.A. in form and
substance satisfactory to Lender;
(n) LEGAL OPINIONS. Written opinions of counsel for Borrower and Guarantor
in form and content satisfactory to Lender, dated the Initial Borrowing Date,
addressed to Lender and covering such matters related to the Borrower, the
Guarantor and the transactions contemplated hereby as Lender may request;
(o) CONSENTS. Copies of all consents or approvals of any Person that may be
required in connection with the transactions contemplated by the Loan Documents;
(p) FEES. Payment of the facility fees under Sections 2.8 and 3.7 hereof,
together with the estimated fees and disbursements of Lender's counsel in
connection with the Loan Documents and the transactions contemplated hereby;
(q) ADDITIONAL CLOSING AGENDA ITEMS. Fulfillment, to Lender's satisfaction,
of each of the additional items set forth on the closing Agenda for this
transaction.
7.2 CONDITIONS OF ALL LOANS. The Lender's obligation to make any Loan is
subject to the fulfillment of the following additional conditions precedent:
(a) REPRESENTATIONS. The representations and warranties made by any party
to any Loan Document (other than Lender) in any Loan Document or in any
certificate, document or financial or other statement furnished at any time
under or in connection therewith shall be true and correct on and as of the
Borrowing Date for such Loan as if made on and as of such date, provided that,
if any such representation or warranty is expressly required herein or therein
to be made only as of a specific date, such representation or warranty shall be
true or correct as of such date;
(b) NO DEFAULT. No Default or Event of Default shall have occurred and be
continuing on the Borrowing Date for such Loan either before or after giving
effect to the Loan made on such date; and
(c) NO MATERIAL ADVERSE EFFECT. There shall have occurred no event or
change in circumstances having a Material Adverse Effect since the date of the
most recent financial statements delivered by Borrower to Lender.
Each request for a Loan by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of such request or
application that the conditions contained in paragraphs (a) through (c) of this
Section 7.2 have been satisfied.
ARTICLE 8. - EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default:
-18-
(a) FAILURE OF PAYMENT. If Borrower fails to pay any principal,
interest or other amount due, under this Agreement or with respect to any Loan
on the date due (whether on a scheduled payment date or otherwise) and in the
manner provided herein;
(b) MISSTATEMENTS. If any representation, warranty or other statement
made herein or in any other Loan Document or otherwise in writing by or on
behalf of Borrower or Guarantor or any Subsidiary in connection herewith proves
to be or to have been incorrect or misleading in any material respect as of the
date at which it is made or deemed to be made;
(c) PERFORMANCE OF OTHER COVENANTS. If Borrower defaults in the due
performance or observance of:
(i) any covenant contained in Sections 5.1, 5.2(a) or 5.4 or Article 6
or
(ii) any other covenant, condition or provision to be performed or
observed by it hereunder or under any of the Loan Documents (other
than a payment or covenant default the performance or observance
of which is dealt with specifically elsewhere in this Section 8.1)
and the breach of such other provision is not cured to Lender's
satisfaction within twenty (20) days after the sooner to occur of
Borrower's receipt of notice of such breach from Lender or the
date on which such failure or neglect first becomes known to any
officer of Borrower.
(d) OTHER INDEBTEDNESS. If Borrower or any Subsidiary defaults, which
default continues after any applicable grace or cure period, in any payment of
principal of or interest on any Indebtedness for borrowed money in excess of
$150,000, including, without limitation, on any Capital Lease or any other
default occurs with respect to any Indebtedness for borrowed money giving the
holder thereof the right to accelerate the payment thereof or require such
Indebtedness to be paid before its stated maturity or before any regularly
scheduled date of prepayment;
(e) MATERIAL CONTRACTS. Any default occurs under any material contract of
Borrower or any Subsidiary which default gives any other party to such contract
the right to terminate such contract or exercise remedies and such termination
or remedies are reasonably likely to have a Material Adverse Effect;
(f) JUDGMENTS. If Borrower or any Subsidiary permits any judgment against
it in excess of $50,000 to remain undischarged for a period of more than thirty
(30) days unless during such period such judgment is effectively stayed or
bonded, on appeal or otherwise;
(g) LEVY, ATTACHMENTS. If any levy, seizure, attachment, execution or
similar process shall be issued on any of the Borrower's or its Subsidiaries'
cash, accounts or any material property;
(h) VOLUNTARY BANKRUPTCY. If Borrower or Guarantor or any Subsidiary (i)
commences a voluntary case under the Bankruptcy Code (as now or hereafter in
effect); or (ii)
-19-
files a petition or commences any case, proceeding, or action in bankruptcy or
seeking reorganization, liquidation, dissolution, winding-up, arrangement,
composition, readjustment of its debts or any other relief under any other
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or similar act or law of any jurisdiction, now
or hereafter existing; or (iii) takes any action indicating its consent to,
approval of, or acquiescence in, any such case, proceeding or other action; or
(iv) applies for a receiver, trustee or custodian of it or for all or a
substantial part of its property; or (v) makes an assignment for the benefit of
creditors; or (vi) is unable to pay its debts as they mature or admits in
writing such inability; or (vii) is adjudicated insolvent or bankrupt;
(i) INVOLUNTARY BANKRUPTCY. (i) If there is commenced against Borrower,
Guarantor or any Subsidiary (1) an involuntary case under the Bankruptcy Code
(as now or hereafter in effect); or (2) any case or proceeding or any other
action in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition, readjustment of its debts or any other
relief under any other bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment of debt or similar act or
law of any jurisdiction, now or hereafter existing, or seeking appointment of a
receiver, trustee or custodian of Borrower, Guarantor or any Subsidiary or for
all or a substantial part of the property of either of them, and any of the
foregoing cases, proceedings, or actions is not dismissed within sixty (60)
days; or (ii) if an order, judgment or decree approving any of the foregoing is
entered or a warrant of attachment, execution or similar process against any
substantial part of the property of Borrower, Guarantor or any Subsidiary is
issued, and such order, judgment, decree, warrant, execution or similar process
is not vacated or stayed within sixty (60) days; or (iii) if an order for relief
under the Bankruptcy Code (as now or hereafter in effect) is entered against
Borrower, Guarantor or any Subsidiary; or
(j) CHANGE IN CONTROL OF BORROWER. A Change in Control shall occur; or
(k) GUARANTOR DEFAULTS. If there occurs any default by Guarantor of its
obligations under the Guaranty including, without limitation, under Section 4
thereof; or if Guarantor revokes or purports to revoke its obligations under the
Guaranty; or if Guarantor claims that its obligations thereunder are invalid or
unenforceable; or
(l) GENZYME CREDIT AGREEMENT DEFAULT. If an Event of Default (as defined in
that certain Credit Agreement dated November 14, 1996 among Guarantor, the
subsidiary guarantors thereto, the Lenders thereto, the Lender as administrative
agent and The First National Bank of Boston (the "Genzyme Credit Agreement"))
exists or has occurred and is continuing.
8.2 LENDER'S REMEDIES. Upon the occurrence of any such Event of Default,
Lender may, at Lender's option, immediately exercise one or more of the
following rights: (a) declare all obligations of Borrower to Lender, including,
without limitation, the Commitments to be terminated, whereupon such obligations
shall immediately terminate; and (b) declare all obligations of Borrower to
Lender, including, without limitation, the Loans and all other amounts owing
under this Agreement, the Notes to be immediately due and payable, whereupon
they shall immediately become due and payable without presentment, demand,
protest or notice of any
-20-
kind, all of which are hereby expressly waived; and (c) require that Borrower
pay to Lender cash collateral in an amount equal to the Letter of Credit
Outstandings; PROVIDED, however, that upon the occurrence of any such Event of
Default specified in Sections 8.1(h) or 8.1(i), the Commitments shall
immediately terminate and all obligations of Borrower to Lender, including,
without limitation, Loans and all other amounts owing under this Agreement, the
Notes shall immediately become due and payable without presentment, further
demand, protest or notice of any kind, all of which are hereby expressly waived;
and Borrower shall immediately pay to Lender cash collateral in an amount equal
to the Letter of Credit Outstandings.
8.3 CROSS DEFAULT It is agreed by Borrower that any Event of Default under
this Agreement will constitute an event of default under all Loans and all of
the Loan Documents and all other agreements and evidences of Indebtedness
between Borrower and Lender, whether now existing or hereafter executed and
whether or not such is an event of default therein.
8.4 SETOFF. In addition to any rights and remedies of Lender provided by
law, Lender shall have the right, (a) upon and during the continuance of an
Event of Default or (b) at any time, whether or not an Event of Default has
occurred and is continuing, in the event of any attachment, trustee process,
garnishment, or other levy or lien is, or is sought to be imposed, on any cash,
accounts or any material property of Borrower, and without prior notice to
Borrower, any such notice being expressly waived by Borrower to the extent
permitted by applicable law, and regardless of the adequacy of any collateral,
to set off and apply against any indebtedness, whether matured or unmatured, of
Borrower to Lender, any amount owing or otherwise available under any applicable
agreement or contract (including without limitation all deposits maintained at
Lender, whether general or special, time or demand, provisional or final, joint
or otherwise) from Lender to Borrower, and such right of setoff may be exercised
by Lender against Borrower or against any bankruptcy trustee,
debtor-in-possession, assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor of Borrower, or against anyone else
claiming through or against Borrower or such Person.
ARTICLE 9. - MISCELLANEOUS
9.1 NOTICES. Except as otherwise specified herein, all notices to or upon
the parties hereto shall be in writing (including teletransmissions), shall be
given or made to the party to which such notice is required or permitted to be
given or made under this Agreement at the address or telex or telecopier number
set forth below or at such other address or telex or telecopier number as any
party hereto may hereafter specify to the others in writing, and (unless
otherwise specified herein) shall be deemed delivered on receipt, if
teletransmitted or delivered by hand, or three (3) Business Days after mailing,
and all mailed notices shall be by registered or certified mail, postage
prepaid:
If to Borrower to:
Genzyme Transgenics Corporation
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-21-
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & Dodge, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to Guarantor at:
Genzyme Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Treasurer
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & Dodge, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender to:
Fleet National Bank
High Technology Division
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Brown, Rudnick, Freed & Gesmer, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
-22-
9.2 NO WAIVER OF RIGHTS. No failure to exercise nor any delay in
exercising, on the part of Lender, any right, remedy, power or privilege under
the Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power, or privilege operate as a waiver
of any further or complete exercise thereof. No waiver shall be effective unless
in writing. No waiver or condonation of any breach on one occasion shall be
deemed a waiver or condonation on any other occasion.
9.3 OBLIGATIONS ABSOLUTE; CUMULATIVE REMEDIES. All payments to be made by
the Borrower hereunder and under the Notes and other Loan Documents shall be
made in immediately available funds and shall be absolute and unconditional and
shall not be subject to set off, recoupment or counterclaim of any kind. Each of
the Loan Documents and the obligations of Borrower thereunder are in addition to
and not in substitution for any other obligations or security interests now or
hereafter held by Lender and shall not operate as a merger of any contract or
debt or suspend the fulfillment of or affect the rights, remedies, powers, or
privileges of Lender in respect of any obligation or other security interest
held by it for the fulfillment thereof. The rights and remedies provided in the
Loan Documents are cumulative and not exclusive of any other rights or remedies
provided by law.
9.4 SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of Borrower, Lender and all future holders of the Notes, and their
respective successors and assigns, except that Borrower may not assign or
transfer its rights or obligations hereunder without the prior written consent
of Lender. Lender shall have the unrestricted right at any time or from time to
time, and without Borrower's or Guarantor's consent, to assign all or any
portion of its rights and obligations hereunder to one or more banks or other
financial institutions (each, an "Assignee"), and Borrower and Guarantor agree
that they shall execute, or cause to be executed, such documents, including
without limitation, amendments to this Agreement and to any other documents,
instruments and agreements executed in connection herewith as Lender shall deem
necessary to effect the foregoing. In addition, at the request of Lender and any
such Assignee, Borrower shall issue one or more new promissory notes, as
applicable, to any such Assignee and, if Lender has retained any of its rights
and obligations hereunder following such assignment, to Lender, which new
promissory notes shall be issued in replacement of, but not in discharge of, the
liability evidenced by the Notes held by Lender prior to such assignment and
shall reflect the amount of the respective Commitments and Loans held by such
Assignee and Lender after giving effect to such assignment. Upon the execution
and delivery of appropriate assignment documentation, amendments and any other
documentation required by Lender in connection with such assignment, and the
payment by Assignee of the purchase price agreed to by Lender, and such
Assignee, such Assignee shall be a party to this Agreement and shall have all of
the rights and obligations of Lender hereunder (and under any and all other
guaranties, documents, instruments and agreements executed in connection
herewith) to the extent that such rights and obligations have been assigned by
Lender pursuant to the assignment documentation between Lender and such
Assignee, and Lender shall be released from its obligations hereunder and
thereunder to a corresponding extent. Lender may furnish any information
concerning Borrower in its possession from time to time to prospective Assignees
and participants, provided that Lender shall require any such prospective
Assignee or participant to agree in writing to maintain the confidentiality of
such information.
-23-
9.5 GOVERNING LAW. This Agreement, the Notes and other Loan Documents shall
be governed by, and construed and interpreted in accordance with, the laws of
the Commonwealth of Massachusetts.
9.6 SUBMISSION TO JURISDICTION; WAIVER OF TRIAL BY JURY.
(a) For purposes of any action or proceeding involving the Loan
Documents or any other agreement or document referred to therein, Borrower
hereby submits to the jurisdiction of all federal and state courts located in
the Commonwealth of Massachusetts and consents that any order, process, notice
of motion or other application to or by any of said courts or a judge thereof
may be served within or without such court's jurisdiction by registered mail or
by Personal service, PROVIDED a reasonable time for appearance is allowed (but
not less than the time otherwise afforded by any law or rule).
(b) THE BORROWER AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW) (i) ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT OR ANY OTHER AGREEMENT OR DOCUMENT
REFERRED TO HEREIN OR THEREIN AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY; AND (ii) ANY RIGHT TO CONTEST THE
APPROPRIATENESS OF ANY ACTION BROUGHT WITHIN THE JURISDICTION MENTIONED IN
PARAGRAPH (a) OF THIS SECTION BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE, OR FORUM NON CONVENIENS.
9.7 COMPLETE AGREEMENT, AMENDMENTS. This Agreement, together with the Notes
and other Loan Documents contains the entire agreement between the parties with
respect to the transactions contemplated hereby, and supersedes all
negotiations, presentations, warranties, commitments, offers, contracts and
writings prior to the date hereof relating to the subject matter. This Agreement
may only be amended, modified, waived, discharged or terminated by a writing
signed by the party to be charged with such amendment, modification, waiver,
discharge or termination.
9.8 EXPENSES. The Borrower shall pay on demand, regardless of whether any
Default or Event of Default has occurred or whether any proceeding to enforce
any Loan Document has been commenced, all out-of-pocket expenses (including,
without limitation, the reasonable fees and disbursements of counsel to Lender)
incurred by Lender in connection with (a) the negotiation, preparation, filing
or recording of the Loan Documents, and any future requests for amendments or
waivers of the Loan Documents (whether or not the transactions contemplated
thereby shall be consummated), (b) the collection of the Loans and any and all
other obligations of Borrower to Lender whether now existing or hereafter
arising, or with the preservation, exercise or enforcement of Lender's rights
and remedies under or in connection with the Loan Documents, including, without
limitation, any and all expenses incurred by Lender in or in connection with any
case commenced by or against Borrower under the Bankruptcy Code, and
-24-
(c) any claim or liability for any stamp, excise or other similar taxes and any
penalties or interest with respect thereto that may be levied, collected,
withheld or assessed by any jurisdiction in connection with the execution and
delivery of the Loan Documents or any modification thereof. This covenant shall
survive payment of the Loans and termination of this Agreement. Borrower hereby
authorizes Lender to make Loans to pay any amount owed by Borrower under this
Section or to debit Borrower's deposit accounts if Borrower fails to pay such
amount promptly after demand.
9.9 INDEMNIFICATION. Borrower agrees to indemnify and hold Lender harmless
from and against any and all loss, liability, obligations, damages, penalties,
judgments, actions, investigations, claims, costs and expenses (including,
without limitation, reasonable attorneys' fees and disbursements) now or in the
future incurred by or asserted against Lender by any Person arising out of or in
connection with any past, present, or future action or inaction by Lender or
Borrower in connection with any Loan Document, or any transaction contemplated
thereby, except any action or inaction arising out of Lender's gross negligence
or willful misconduct as determined by a court of competent jurisdiction in an
order binding on Lender and not subject to appeal.
9.10 SURVIVAL OF AGREEMENTS. All covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making of Loans and the execution and delivery to Lender of the
Notes and shall continue in full force and effect so long as any Note is
outstanding and unpaid or this Agreement remains in effect. All agreements,
obligations and liabilities of Borrower under this Agreement concerning the
payment of money to Lender, other than the obligation to pay principal of and
interest on Loans, shall survive the payment in full of Loans and termination of
this Agreement.
9.11 SEVERABILITY. Any provision hereof that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. 9.12 DESCRIPTIVE HEADINGS. The Table of Contents and the
captions in this Agreement are for convenience of reference only and shall not
define or limit the provisions hereof.
9.13 COUNTERPARTS. This Agreement may be executed by one or more of the
parties on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
9.14 PLEDGE TO FEDERAL RESERVE Lender may at any time pledge all or any
portion of its rights under the Loan Documents including any portion of the Note
to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement
thereof shall release Lender from its obligations under any of the Loan
Documents.
-25-
9.15 LOST NOTE Upon receipt of an affidavit of an officer of Lender as to
the loss, theft, destruction or mutilation of the Note or any other Loan
Documents which is not of public record, and, in the case of any such loss,
theft, destruction or mutilation, upon receipt of an affidavit of surrender and
cancellation of such Note or other Loan Document, Borrower will issue, in lieu
thereof, a replacement Note or other Loan Document in the same principal amount
thereof and otherwise of like tenor.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-26-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as an instrument under seal by their respective duly authorized
officers as of the date first written above.
GENZYME TRANSGENICS CORPORATION
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
FLEET NATIONAL BANK
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
ACKNOWLEDGED BY GUARANTOR,
GENZYME CORPORATION
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Treasurer
-27-
SCHEDULE 1
DEFINITIONS
"Accumulated Funding Deficiency" - the amount referred to by such term as
defined in Section 302(a)(2) of ERISA.
"AFFILIATE" - as to any Person (a) any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any other Person who is an officer or director of such
Person, or (c) any Person described in clause (a) above (other than any
Subsidiary all of the capital stock of which is owned by Borrower).
"BANKRUPTCY CODE" - The Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, and codified as 11 U.S.C. ss.ss.101, ET SEQ.
"BORROWING DATE" - the Business Day on which any Loan is made.
"BUSINESS DAY" - any day on which commercial banks are open for business in
Boston, Massachusetts.
"CAPITAL EQUIPMENT" - equipment that in accordance with GAAP is required or
permitted to be depreciated or amortized on Borrower's balance sheet.
"CAPITAL EXPENDITURES" - for any period, the sum of (i) all expenditures
that, in accordance with GAAP, are required to be included in land, property,
plant or equipment or similar fixed asset account (whether involving real or
personal property) and (ii) Capital Lease Obligations incurred during such
period (excluding renewals of Capital Leases).
"CAPITAL LEASE" - any capital lease, conditional sales contract or other
title retention agreement relating to the acquisition of Capital Equipment.
"CAPITAL LEASE OBLIGATIONS" - the aggregate capitalized amount of the
obligations of Borrower under all Capital Leases.
"CASH EQUIVALENTS" - (a) securities with maturities of 180 days or less from
the date of acquisition issued or fully guaranteed or insured as to payment of
principal and interest by the United States or any agency thereof, (b)
certificates of deposit with maturities of 365 days or less from the date of
acquisition issued by Lender or any domestic commercial bank having capital and
surplus reasonably acceptable to Lender and (c) commercial paper of a domestic
issuer rated at least either A-2 by Standard & Poor's or B-2 by ▇▇▇▇▇'▇
Investors Service with maturities of 180 days or less from the date of
acquisition.
"CHANGE IN CONTROL" - at any time that any Person (other than Guarantor),
together with the affiliates and associates of such Person within the meaning of
Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shall acquire beneficial ownership within the meaning of Rule 13d of the
Exchange Act of ten (10%) percent or more of the voting stock or total equity of
the Borrower, or if the Guarantor shall cease to have beneficial ownership
-28-
within the meaning of Rule 13d of the Exchange Act of at least thirty (30%)
percent or more of such voting stock or total equity of Borrower, or if a change
in the Board of Directors of Borrower in which the individuals who constituted
the Board of Directors at the beginning of the two (2) year period immediately
preceding such change (together with any other director whose election by the
Board of Directors was approved by at least two-thirds of the directors then in
office at the beginning of such period) cease for any reason to constitute a
majority of the directors of the Borrower then in office.
"COMMITMENTS" - each of the Revolving Credit Commitment and the Term Loan
Commitment.
"COMMONLY CONTROLLED ENTITY" - an entity, whether or not incorporated, which
is under common control with Borrower within the meaning of Section 414(b) or
(c) of the IRC.
"CONSOLIDATED" - when used with reference to any term, that term as applied
to the accounts of the Borrower and all of its Subsidiaries, consolidated in
accordance with GAAP.
"CONTINGENT LIABILITY" - any obligation of Borrower guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly.
"DEFAULT" - any event specified in Article 8, whether or not any requirement
for the giving of notice or lapse of time or any other condition has been
satisfied.
"DIVIDENDS" means, for any applicable period, the aggregate of all amounts
paid or payable (without duplication) as dividends (exclusive of dividends
payable solely in capital stock of Borrower), distributions or owner withdrawals
with respect to Borrower's shares of capital stock, whether now or hereafter
outstanding and includes any purchase, redemption or other retirement of any
shares of the Borrower's stock, directly or indirectly.
"DOLLARS" and "$" - lawful money of the United States. Any reference to
payment means payment in immediately available Dollar funds.
"ERISA" - the Employee Retirement Income Security Act of 1974, as amended
from time to time, including all regulations promulgated under such Act.
"EVENT OF DEFAULT" - any event specified in Article 8, PROVIDED that any
requirement for the giving of notice or lapse of time or any other condition has
been satisfied.
"GAAP" - those generally accepted accounting principles set forth in
Statements of the Financial Accounting Standards Board and in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants or which have other substantial authoritative support in the United
States and are applicable in the circumstances, as applied on a consistent
basis. As used in the preceding sentence "consistent basis" shall mean that the
-29-
accounting principles observed in the current period are comparable in all
material respects to those applied in the preceding period.
"GUARANTY" - that certain Guaranty from Genzyme Corporation, a Massachusetts
corporation for the benefit of Lender with respect to the Obligations, date as
of the date hereof.
"GUARANTOR" - Genzyme Corporation, a corporation organized under the laws of
the Commonwealth of Massachusetts.
"HAZARDOUS MATERIAL" - any hazardous waste, toxic substance hazardous
chemical, radioactive material, hazardous material, oil or gasoline, under any
applicable federal or state statute, county or municipal law or ordinance,
including (without limitation) any substance defined as a "hazardous substance"
or "toxic substance" (or comparable term) in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (42 U.S.C. 9601, ET SEQ.),
the Hazardous Materials Transportation Act (49 U.S.C. 1802), or the Resource
Conservation and Recovery Act (42 U.S.C. 6901, ET SEQ.).
"INDEBTEDNESS" - with respect to any Person, any item that would properly be
included as a liability on the liability side of a balance sheet of such Person
as of any date as of which Indebtedness is to be determined and includes (but is
not limited to) (a) all obligations for borrowed money including all Loans, (b)
all obligations evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations to pay the deferred purchase price of property
or services, (d) all Capital Lease Obligations and (e) all obligations in
respect of advances made or to be made under letters of credit issued for such
Person's account and in respect of acceptances of drafts drawn by such Person.
"INITIAL BORROWING DATE" - the date of this Agreement.
"INTELLECTUAL PROPERTY" - shall mean "Intellectual Property," as defined in
Section 101(35A) of the Bankruptcy Code, now or hereafter owned by Borrower or
any of its Subsidiaries, together with all of the following property now or
hereafter owned by Borrower or any of its Subsidiaries: all domestic and foreign
patents and patent applications; inventions, discoveries and improvements,
whether or not patentable; trademarks, trademark applications and registrations;
service marks, service ▇▇▇▇ applications and registrations; copyrights,
copyright applications and registrations; all licenses therefor; trade secrets
and all other proprietary information.
"INVESTMENT" - any transfers of property to, contribution to capital of,
acquisition of stock, other securities or evidences of indebtedness of,
acquisition of businesses of, or acquisition of property of, any Person, other
than in the ordinary course of business.
"IRC" - the Internal Revenue Code of 1986, as amended from time to time and
including all regulations promulgated thereunder.
"JOINT VENTURE" - a single-purpose corporation, partnership, limited
liability company, joint venture or other similar legal arrangement (whether
created by contract or conducted
-30-
through a separate legal entity) now or hereafter formed by Borrower or any of
its Subsidiaries with another Person in order to conduct a common venture or
enterprise with such Person.
"LETTER OF CREDIT" - an irrevocable stand-by letter of credit or documentary
letter of credit issued by Fleet National Bank for the account of Borrower.
"LETTER OF CREDIT OUTSTANDINGS" - at any time, the aggregate amount
available to be drawn under all Letters of Credit then outstanding, plus the
outstanding amount, if any, of all amounts previously drawn under Letters of
Credit which have not been reimbursed to Lender by Borrower plus all fees and
expenses accrued and that may accrue thereon until expiration thereof.
"LIEN" - any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, encumbrance (including, without limitation, any easement,
right-of-way, zoning or similar restriction or title defect), lien (statutory or
other) or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC or comparable law of any jurisdiction).
"LOAN" or "LOANS" - any Revolving Credit Loan and Term Loan.
"LOAN DOCUMENTS" - this Agreement, the Revolving Credit Note, Term Note, the
Guaranty, and all other instruments and documents executed in connection with
the Indebtedness covered hereby and thereby.
"MATERIAL ADVERSE CHANGE" means a material adverse change, as reasonably
determined by the Lender, in the property, business , operations, financial
conditions, liabilities or capitalization of Borrower and its Subsidiaries
(taken as a whole).
"MATERIAL ADVERSE EFFECT" - means a material adverse effect, as reasonably
determined by the Lender, on (a) the property, business , operations, financial
conditions, liabilities or capitalization of Borrower and its Subsidiaries
(taken as a whole); or (b) the validity or enforceability of any of the Loan
Documents.
"MULTIEMPLOYER PLAN" - a Plan which is a multiemployer plan as defined in
Section 3(37)(A) of ERISA or Section 414(f) of the IRC.
"NOTES" - the Revolving Credit Note and Term Note.
"OBLIGATIONS" means all loans, advances, interest, fees, debts, guaranties,
liabilities, obligations (including without limitation the Loans, Letters of
Credit and contingent obligations under guarantees), agreements, undertakings,
covenants and duties owing or to be performed or observed by Borrower to or in
favor of Lender, of every kind and description (whether or not evidenced by any
note or other instrument; for the payment of money; arising out of the Loans,
this Agreement or any other agreement between Lender and Borrower or any other
instrument of Borrower in favor of Lender; arising out of or relating or similar
to transactions described herein;
-31-
or contemplated as of the Closing Date), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, including
without limitation all interest, fees, charges, and amounts chargeable to
Borrower under this Agreement.
"PBGC" - the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.
"PERSON" - an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
"PLAN" - any pension plan, as defined in Section 3(2) of ERISA and any
welfare plan, as defined in Section 3(1) of ERISA, which is sponsored,
maintained or contributed to by Borrower or any Commonly Controlled Entity, or
in respect of which Borrower or a Commonly Controlled Entity is an "employer" as
defined in Section 3(5) of ERISA.
"Prohibited Transaction" - any of the transactions set forth in Section 406
of ERISA to the extent not exempt under Section 408 of ERISA.
"REPORTABLE EVENT" - any of the events set forth in Section 4043(b) of
ERISA.
"REVOLVING CREDIT COMMITMENT" - the commitment by the Lender to make
Revolving Credit Loans pursuant to Section 2.1.
"REVOLVING CREDIT COMMITMENT PERIOD" - the period from and including the
Initial Borrowing Date to and including the Termination Date.
"REVOLVING CREDIT LIMIT" - $17,500,000.00, as such amount may be reduced
pursuant to Section 2.6.
"REVOLVING CREDIT LOAN" - any loan made pursuant to Section 2.1.
"REVOLVING CREDIT NOTE" - a promissory note of Borrower made to evidence the
Revolving Credit Loans, in the form of EXHIBIT A, as it may be amended,
supplemented or otherwise modified, from time to time.
"SUBSIDIARY" - with respect to any Person, any corporation, partnership,
trust or other organization, whether or not incorporated, the majority of the
voting stock or voting rights of which is owned or controlled, directly or
indirectly, by such Person.
"TERM LOAN" - any loan made pursuant to Section 3.1.
"TERM LOAN COMMITMENT" - the commitment by the Lender to make Term Loans
pursuant to Section 3.1.
"TERM LOAN COMMITMENT PERIOD" - the period from and including the Initial
Borrowing Date to and including the second anniversary of the Initial Borrowing
Date.
-32-
"TERM LOAN LIMIT" - $7,100,000.
"TERM NOTE" - a promissory note of Borrower made to evidence the Term Loans
in the form of EXHIBIT B, as it may be amended, supplemented or otherwise
modified, from time to time.
"TERMINATION DATE" - the earlier of (a) December 28, 2001, and (b) the date
the Lender's commitment to make Loans is terminated pursuant to Section 8.2 of
Article 8.
-33-
