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EXHIBIT 10.15
$2,000,000.00
LOAN AND SECURITY AGREEMENT
by and among
ROCKWELL MEDICAL TECHNOLOGIES, INC.
AND
ROCKWELL TRANSPORTATION, INC.
(collectively, "Borrower")
and
▇▇▇▇▇▇ HEALTHCARE FINANCE, INC.
("Lender")
March 28 , 2001
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of March 28,
2001, by and among ROCKWELL MEDICAL TECHNOLOGIES, INC. a Michigan corporation,
and ROCKWELL TRANSPORTATION, INC., a ____________ Michigan corporation,
(collectively, "Borrower"), and ▇▇▇▇▇▇ HEALTHCARE FINANCE, INC., a Delaware
corporation ("Lender").
RECITALS
A. Borrower desires to establish certain financing arrangements with and
borrow funds from Lender, and Lender is willing to establish such arrangements
for and make loans and extensions of credit to Borrower, on the terms and
conditions set forth below.
B. The parties desire to define the terms and conditions of their
relationship and to reduce their agreements to writing.
NOW, THEREFORE, in consideration of the promises and covenants contained in
this Agreement, and for other consideration, the receipt and sufficiency of
which are acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, unless otherwise specified, all references to
"Sections" shall be deemed to refer to Sections of this Agreement, and the
following terms shall have the meanings set forth below:
SECTION 1.1. ACCOUNT. "Account" means any right to payment for goods sold
or leased or services rendered, whether or not evidenced by an instrument or
chattel paper, and whether or not earned by performance, including, without
limitation, the right to payment of management fees.
SECTION 1.2. ACCOUNT DEBTOR. "Account Debtor" means any Person obligated on
any Account of Borrower.
SECTION 1.3. AFFILIATE. "Affiliate" means, with respect to a specified
Person, any Person directly or indirectly controlling, controlled by, or under
common control with the specified Person, including without limitation their
controlling stockholders and any Affiliates thereof. A Person shall be deemed to
control a corporation or other entity if the Person
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possesses, directly or indirectly, the power to direct or cause the direction of
the management and business of the corporation or other entity, whether through
the ownership of voting securities, by contract, or otherwise.
SECTION 1.4. AGREEMENT. "Agreement" means this Loan and Security Agreement,
as it may be amended or supplemented from time to time.
SECTION 1.5. BASE RATE. "Base Rate" means a rate of interest equal to two
percent (2.0%) above the "Prime Rate of Interest".
SECTION 1.6. BORROWED MONEY. "Borrowed Money" means any obligation to repay
money, any indebtedness evidenced by notes, bonds, debentures or similar
obligations, any obligation under a conditional sale or other title retention
agreement and the net aggregate rentals under any lease which under GAAP would
be capitalized on the books of Borrower or which is the substantial equivalent
of the financing of the property so leased.
SECTION 1.7. BORROWER. "Borrower" has the meaning set forth in the
Preamble.
SECTION 1.8. BORROWING BASE. "Borrowing Base" has the meaning set forth in
Section 2.1(d).
SECTION 1.9. BUSINESS DAY. "Business Day" means any day on which financial
institutions are open for business in the State of Maryland, excluding Saturdays
and Sundays.
SECTION 1.10 CHANGE IN CONTROL. "Change of Control" means ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇
termination or resignation as an officer of Borrower or the sale of all or
substantially all of ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇' stock in the Borrower.
SECTION 1.11. CLOSING; CLOSING DATE. "Closing" and "Closing Date" have the
meanings set forth in Section 5.3.
SECTION 1.12. COLLATERAL. "Collateral" has the meaning set forth in Section
3.1.
SECTION 1.13. COMMITMENT FEE. "Commitment Fee" has the meaning set forth in
Section 2.4(a).
SECTION 1.14. CONCENTRATION ACCOUNT. "Concentration Account" has the
meaning set forth in Section 2.3.
SECTION 1.15. CONTROLLED GROUP. "Controlled Group" means all businesses
that would be treated as a single employer under Section 4001(b) of ERISA.
SECTION 1.16. DEFAULT RATE. "Default Rate" means a rate per annum equal to
five percent (5%) above the then applicable Base Rate, excluding any
non-compliance fee.
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SECTION 1.17. ERISA. "ERISA" has the meaning set forth in Section 4.12.
SECTION 1.18. EVENT OF DEFAULT. "Event of Default" and "Events of Default"
have the meanings set forth in Section 8.1.
SECTION 1.19. GAAP. "GAAP" means generally accepted accounting principles
applied in a consistent manner.
SECTION 1.20. GOVERNMENTAL AUTHORITY. "Governmental Authority" means and
includes any federal, state, District of Columbia, county, municipal, or other
government and any department, commission, board, bureau, agency or
instrumentality thereof, whether domestic or foreign.
SECTION 1.21. HAZARDOUS MATERIAL. "Hazardous Material" means any substances
defined or designated as hazardous or toxic waste, hazardous or toxic material,
hazardous or toxic substance, or similar term, by any environmental statute,
rule or regulation or any Governmental Authority applicable to Borrower or its
business, operations or assets.
SECTION 1.22. HIGHEST LAWFUL RATE. "Highest Lawful Rate" means the maximum
lawful rate of interest referred to in Section 2.7 that may accrue pursuant to
this Agreement.
SECTION 1.23. INTENTIONALLY DELETED.
SECTION 1.24. LENDER. "Lender" means ▇▇▇▇▇▇ Healthcare Finance, Inc., a
Delaware corporation.
SECTION 1.25. LOAN. "Loan" has the meaning set forth in Section 2.1(a).
SECTION 1.26. LOAN DOCUMENTS. "Loan Documents" means and includes this
Agreement, the Note, the Certificate of Validity, and each and every other
document now or hereafter delivered in connection with this Agreement, as any of
them may be amended, modified, or supplemented from time to time.
SECTION 1.27. LOAN MANAGEMENT FEE. "Loan Management Fee" has the meaning
set forth in Section 2.4(c).
SECTION 1.28. LOCKBOX. "Lockbox" has the meaning set forth in Section 2.3.
SECTION 1.28 a. LOCKBOX ACCOUNT. "Lockbox Account" means an account
maintained by Borrower at the Lockbox Bank into which all collections of
Accounts are paid directly.
SECTION 1.29. LOCKBOX BANK. "Lockbox Bank" has the meaning set forth in
Section 2.3.
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SECTION 1.29a. MATERIAL ADVERSE EFFECT. "Material Adverse Effect" shall
mean any event or condition which, alone or when taken with other events or
conditions occurring or existing concurrently with such event or condition (i)
has or is reasonably expected to have a material adverse effect on the business,
operations, condition (financial or otherwise), assets, liabilities, prospects,
or properties of Borrower; (ii) has or is reasonably expected to have any
material adverse effect on the validity or enforceability of this Agreement or
any Loan Document; (iii) materially impairs or is reasonably expected to
materially impair the ability of Borrower to pay and perform the Obligations;
(iv) materially impairs or is reasonably expected to materially impair the
ability of Lender to enforce its rights and remedies under this Agreement or any
of the Loan Documents; or (v) has or is reasonably expected to have any material
adverse effect on the Collateral, the liens of Lender in the Collateral or the
priority of such liens.
SECTION 1.31. MAXIMUM LOAN AMOUNT. "Maximum Loan Amount" has the meaning
set forth in Section 2.1(a).
SECTION 1.32. NOTE. "Note" has the meaning set forth in Section 2.1(c).
SECTION 1.33. OBLIGATIONS. "Obligations" has the meaning set forth in
Section 3.1.
SECTION 1.34. PERMITTED LIENS. "Permitted Liens" means: (i) deposits or
pledges to secure obligations under workmen's compensation, social security or
similar laws, or under unemployment insurance; (ii) deposits or pledges to
secure bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary course of business; (iii) mechanic's,
workmen's, materialmen's, tax or other like liens arising in the ordinary course
of business with respect to obligations which are not delinquent, or which are
being contested in good faith by appropriate proceedings which suspend the
collection thereof and in respect of which adequate reserves have been made
(provided that such proceedings do not, in Lender's sole and reasonable
discretion, involve any substantial risk of the sale, loss or forfeiture of such
property or assets or any interest therein); (iv) liens and encumbrances in
favor of Lender; (v) Liens granted in connection with the lease or purchase of
property or assets financed by borrowings permitted by Section 7.1(iv)
(provided, however, that no such borrowings permitted by Section 7.1(iv) may be
secured by Liens on any Accounts); and (vi) liens set forth on Schedule 1.34.
SECTION 1.35. PERSON. "Person" means an individual, partnership,
corporation, trust, joint venture, joint stock company, limited liability
company, association, unincorporated organization, Governmental Authority, or
any other entity.
SECTION 1.36. PLAN. "Plan" has the meaning set forth in Section 4.12.
SECTION 1.37. PREMISES. "Premises" has the meaning set forth in Section
4.14.
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SECTION 1.38. PRIME RATE OF INTEREST. "Prime Rate of Interest" means that
rate of interest designated as such by Citibank, N.A., or any successor thereto,
as the same may from time to time fluctuate.
SECTION 1.39. PROHIBITED TRANSACTION. "Prohibited Transaction" means a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Internal Revenue Code that is not exempt under Section 407 or
Section 408 of ERISA or Section 4975(c)(2) or (d) of the Internal Revenue Code
or under a class exemption granted by the U.S. Department of Labor.
SECTION 1.40. QUALIFIED ACCOUNT. "Qualified Account" means an Account of
Borrower generated in the ordinary course of Borrower's business from the sale
of goods, which Lender, in its sole and reasonable credit judgment, deems to be
a Qualified Account. Without limiting the generality of the foregoing, no
Account shall be a Qualified Account if: (a) the Account or any portion of the
Account is payable by an individual beneficiary, recipient or subscriber
individually and not directly to Borrower by a commercial entity; (b) the
Account remains unpaid more than ninety (90) days past the claim or invoice date
(but in no event more than one hundred twenty (120) days after the applicable
goods have been sold; (c) the Account is subject to any defense, set-off,
counterclaim, deduction, discount, credit, chargeback, freight claim, allowance,
or adjustment of any kind, but only to such extent; (d) any part of any goods
the sale of which has given rise to the Account has been returned, rejected,
lost, or damaged, but only to such extent; (e) if the Account arises from the
sale of goods by Borrower, the sale was not an absolute sale, or the sale was
made on consignment or on approval or on a sale-or-return basis, or the sale was
made subject to any other repurchase or return agreement, or the goods have not
been shipped to the Account Debtor or its designee; (f) the Account is subject
to a lien other than a Permitted Lien; (g) Borrower knows or should have known
of the bankruptcy, receivership, reorganization, or insolvency of the Account
Debtor; (h) the Account is evidenced by chattel paper or an instrument of any
kind which has not been delivered as security to Lender, or has been reduced to
judgment; (i) the Account is an Account of an Account Debtor having its
principal place of business or executive office outside the United States; (j)
the Account Debtor is an Affiliate or Subsidiary of Borrower; (k) more than ten
percent (10%) of the aggregate balance of all Accounts owing from the Account
Debtor obligated on the Account to Borrower are outstanding more than one
hundred twenty (120) days past their invoice date; (l) fifty percent (50%) or
more of the aggregate unpaid Accounts from any single Account Debtor are not
deemed Qualified Accounts under this Agreement; (m) the total unpaid Accounts of
the Account Debtor exceed twenty-five percent (25%) of the net amount of all
Qualified Accounts; provided, however, that if the Account Debtor is either (1)
a Governmental Authority, or (2) an entity who has a corporate debt rating of B+
or better as rated by Standard and Poor, then the limitation set forth in this
subsection (m) shall be increased to 40%; (n) any covenant, representation or
warranty contained in the Loan Documents with respect to such Account has been
breached; or (o) the Account fails to meet such other specifications and
requirements which may from time to time be reasonably established by Lender.
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SECTION 1.41. REPORTABLE EVENT. "Reportable Event" means a "reportable
event" as defined in Section 4043(c) of ERISA for which the notice requirements
of Section 4043(a) of ERISA are not waived.
SECTION 1.42. REVOLVING CREDIT LOAN. "Revolving Credit Loan" has the
meaning set forth in Section 2.1(b).
SECTION 1.43. TERM. "Term" has the meaning set forth in Section 2.8.
SECTION 1.44 TERMINATION FEE. "Termination Fee " shall mean a fee payable
upon termination of the Agreement, as yield maintenance for the loss of bargain
and not as a penalty, equal to the Yield Maintenance Amount.
SECTION 1.45 YIELD MAINTENANCE AMOUNT. "Yield Maintenance Amount" shall
mean the product obtained by multiplying (a) the difference between (i) the all
in effective yield (measured as a percentage per annum) earned by Lender under
this Agreement during the three (3) full calendar months immediately preceding
the Termination Date minus (ii) ▇▇▇▇▇▇ Financial Inc.'s weighted average cost of
capital (measured as a percentage per annum) for the most recent publicly
disclosed quarterly financial period; TIMES (b) the average principal amount of
outstanding Revolving Credit Loans for the three (3) calendar months immediately
preceding the Termination Date; TIMES (c) the quotient of (i) the number of
months (full or partial) then-remaining in the Term divided by (ii) twelve (12).
ARTICLE II
LOAN
SECTION 2.1. TERMS.
(a) The maximum aggregate principal amount of credit extended by
Lender to Borrower under this Agreement (the "Loan") that will be outstanding at
any time is Two Million and No/100 Dollars ($2,000,000.00) (the "Maximum Loan
Amount"). Notwithstanding anything in this Loan Agreement to the contrary, the
Maximum Loan Amount will be subject to the sublimit of $1,000,000 unless and
until Borrower requests an increase. If an Event of Default exists at the time
Borrower requests funding above such increase, such increase shall be subject to
approval of Lender's Credit Committee exercising its sole credit judgment.
(b) The Loan shall be in the nature of a revolving line of credit, and
shall include sums advanced and other credit extended by Lender to or for the
benefit of Borrower from time to time under this Article II (each a "Revolving
Credit Loan") up to the Maximum Loan Amount depending upon the availability in
the Borrowing Base, the requests of Borrower pursuant to the terms and
conditions of Section 2.2, and on such other basis as Lender may reasonably
determine. The outstanding principal balance of the Loan may fluctuate from time
to time, to be reduced by repayments made by Borrower (which may be made without
penalty or
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premium), and to be increased by future Revolving Credit Loans, advances and
other extensions of credit to or for the benefit of Borrower, and shall be due
and payable in full upon the expiration of the Term. For purposes of this
Agreement, any determination as to whether there is availability within the
Borrowing Base for advances or extensions of credit shall be made by Lender in
its sole and reasonable discretion and is final and binding upon Borrower absent
manifest error.
(c) At Closing, Borrower shall execute and deliver to Lender a
promissory note evidencing Borrower's unconditional obligation to repay Lender
for Revolving Credit Loans, advances, and other extensions of credit made under
the Loan, in the form of Exhibit A to this Agreement (as amended, modified,
restated or replaced from time to time, the "Note"), dated the date of this
Agreement, payable to the order of Lender in accordance with the terms thereof.
The Note shall bear interest on the outstanding principal balance of the Note
from the date of the Note until repaid, with interest payable monthly in arrears
on the first Business Day of each month, at a rate per annum (on the basis of
the actual number of days elapsed over a year of 360 days) equal to the Base
Rate, provided that after the occurrence and during the continuance of an Event
of Default such rate shall be equal to the Default Rate. Upon Borrower's failure
to comply with the terms of this Agreement, Lender will be entitled, in addition
to exercising any other rights and remedies available to it, but in lieu of
charging the Default Rate, to assess a non-compliance fee which shall operate to
increase the Base Rate by two percent (2%) per annum during any period of
non-compliance. Lender shall be entitled to assess such fee whether or not an
Event of Default is declared or otherwise occurs. Each Revolving Credit Loan,
advance and other extension of credit shall be deemed evidenced by the Note,
which is deemed incorporated into and made a part of this Agreement by this
reference.
(d) Subject to the terms and conditions of this Agreement, advances
under the Loan shall be made against a borrowing base equal to eighty percent
(80%) of Qualified Accounts (the "Borrowing Base"). Lender, in its sole credit
judgment may further adjust the Borrowing Base by applying percentages (known as
"liquidity factors") to Qualified Accounts based upon Borrower's actual recent
collection history in a manner consistent with Lender's underwriting practices
and procedures. Such liquidity factors may be adjusted by Lender throughout the
Term as warranted by Lender's underwriting practices and procedures in its sole
credit judgment.
SECTION 2.2. LOAN ADMINISTRATION. Borrowings under the Loan shall be as
follows:
(a) A request for a Revolving Credit Loan shall be made, or shall be
deemed to be made, in the following manner: (i) Borrower may give Lender notice
of its intention to borrow, in which notice Borrower shall specify the amount of
the proposed borrowing and the proposed borrowing date, not later than 2:00 p.m.
Eastern time two (2) Business Days before the proposed borrowing date; provided,
however, that no such request may be made at a time when there exists an Event
of Default; and (ii) the becoming due of any amount required to be paid under
this Agreement, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the day following the
due date in the
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amount required to pay such interest or other Obligation if such was not paid by
Borrower on the due date.
(b) Borrower hereby irrevocably authorizes Lender, and Lender agrees,
subject to the terms and conditions of this Agreement, to disburse the proceeds
of each Revolving Credit Loan requested, or deemed to be requested, as follows:
(i) the proceeds of each Revolving Credit Loan requested under subsection
2.2(a)(i) shall be disbursed by Lender by wire transfer to such bank account as
may be agreed upon by Borrower and Lender from time to time or elsewhere if
pursuant to written direction from Borrower; and (ii) the proceeds of each
Revolving Credit Loan deemed to be requested under subsection 2.2(a)(ii) shall
be disbursed by Lender by way of direct payment of the relevant interest or
other Obligation.
(c) All Revolving Credit Loans, advances and other extensions of
credit to or for the benefit of Borrower shall constitute one general Obligation
of Borrower, and shall be secured by Lender's lien upon all of the Collateral.
(d) Lender shall enter all Revolving Credit Loans as debits to a loan
account in the name of Borrower and shall also record in said loan account all
payments made by Borrower on any Obligations and all proceeds of Collateral
which are indefeasibly paid to Lender, and may record therein, in accordance
with customary accounting practice, other debits and credits, including interest
and all charges and expenses properly chargeable to Borrower. All collections
into the Concentration Account pursuant to Section 2.3 shall be applied first to
fees, costs and expenses due and owing under the Loan Documents, then to
interest due and owing under the Loan Documents, and then to principal
outstanding with respect to Revolving Credit Loans.
(e) Lender will account to Borrower monthly with a statement of
Revolving Credit Loans, charges and payments made pursuant to this Agreement,
and such accounting rendered by Lender shall be deemed final, binding and
conclusive upon Borrower, absent manifest error, unless Lender is notified by
Borrower in writing to the contrary within thirty (30) days of the date each
accounting is mailed to Borrower. Such notice shall be deemed an objection to
those items specifically objected to in the notice.
SECTION 2.3. COLLECTIONS, DISBURSEMENTS, BORROWING AVAILABILITY, AND
LOCKBOX ACCOUNT. (a) Lender shall establish and maintain a lockbox and a lockbox
account (the "Lockbox" and the "Lockbox Account", respectively) with BANK ONE,
N.A. (the "Lockbox Bank"), and Borrower shall execute with Lender and the
Lockbox Bank a Provider Account Agreement in substantially the form attached
hereto as Exhibit B (the "Lockbox Agreement"), together with any other
agreements or documents necessary to effectuate the intent of the parties as set
forth in this Section 2.3 or in the Lockbox Agreement as Lender may require.
Borrower shall ensure that all collections of Accounts are paid directly from
Account Debtors to the Lockbox. Borrower hereby irrevocably makes, constitutes
and appoints the Lockbox Bank (and all persons designated by the Lockbox Bank
for such purpose) as Borrower's true and lawful attorney and agent-in-fact to
endorse Borrower's name on all checks, items of payment or other
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cash items that are acceptable for collection through the Federal Reserve System
(collectively, "Checks") payable to Rockwell Medical Technologies, Inc. and
Rockwell Transportation (or any reasonable variation of such names) with the
endorsement "CREDIT TO THE ACCOUNT OF ▇▇▇▇▇▇ HEALTHCARE FINANCE, INC.
XXXXXXXXXXXX"). Borrower agrees not to change the foregoing irrevocable
instructions to the Lockbox Bank prior to the termination of this Agreement
without the prior written consent of Lender. Notwithstanding anything in the
Lockbox Agreement to the contrary, Borrower agrees that it shall be liable for
any fees and charges in effect from time to time and charged by the Lockbox Bank
in connection with the Lockbox and the Lockbox Account, and that Lender shall
have no liability therefor. Borrower further acknowledges and agrees that, to
the extent such fees and charges are not paid by Borrower directly but are
satisfied using collections in the Lockbox Account, if applicable, such fees and
charges shall be deemed to be Revolving Credit Loans made by Lender hereunder
and, to the extent that the payment of such fees or charges by Borrower as
provided herein results in any overadvance under this Agreement, Borrower agrees
to immediately (upon notice) repay to Lender the amount of such overadvance. It
is understood that Lender's actions pursuant to this Section 2.3 are provided as
a convenience to Borrower and, in consideration thereof, Borrower agrees to
indemnify and hold Lender harmless from any and all liabilities, claims, losses
and demands whatsoever, including reasonable attorney's fees and expenses,
arising from or relating to Lender's or the Lockbox Bank's actions pursuant to
this Section 2.3.
(b) Borrower agrees that all collections paid to the Lockbox and
deposited by Lender into the Lockbox Account under the Lockbox Agreement will be
immediately transferred by Lender into a depository account maintained by Lender
at Bank One, N.A., or such other financial institution as determined by Lender
in its sole discretion, by written notice to Borrowers and the Lockbox Bank (the
"Concentration Account"). Lender shall apply, on a daily basis, all funds
transferred into the Concentration Account pursuant to this Section 2.3 to
reduce the outstanding indebtedness under the Loan (in accordance with Section
2.2(d)), and all future Revolving Credit Loans, advances and other extensions of
credit to be made by Lender under the conditions set forth in this Article II.
To the extent that any collections of Accounts or proceeds of other Collateral
are not sent directly to the Lockbox but are received by Borrower, such
collections shall be held in trust for the benefit of Lender and immediately
remitted, in the form received, to the Lockbox Bank for transfer to the
Concentration Account immediately upon receipt by Borrower.
(c) Borrower acknowledges and agrees that its compliance with the
terms of this Section 2.3 is essential, and that Lender will suffer immediate
and irreparable injury and have no adequate remedy at law, if Borrower, through
its acts or omissions, causes or permits Account Debtors to send payments other
than to the Lockbox, or if Borrower fails to immediately deposit collections of
Accounts or proceeds of other Collateral in the Lockbox Account as herein
required. Upon Borrower's failure to comply with the terms of this Section 2.3,
Lender will be entitled, in addition to exercising any other rights and remedies
available to it, to assess a non-compliance fee which shall operate to increase
the Base Rate by two percent (2%) per annum during any period of non-compliance.
Lender shall be entitled to assess such fee whether or not an Event of Default
is declared or otherwise occurs. All funds transferred from the
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Concentration Account for application to Borrower's indebtedness to Lender shall
be applied to reduce the Loan balance, but for purposes of calculating interest
shall be subject to a seven Business Day clearance period. If as the result of
collections of Accounts pursuant to the terms and conditions of this Section 2.3
a credit balance exists with respect to the Concentration Account, such credit
balance shall not accrue interest in favor of Borrower, but shall be available
to Borrower at any time or times for so long as no Event of Default, and no
event or circumstance which, with notice or the passage of time (or both), would
constitute an Event of Default, exists.
SECTION 2.4. FEES.
(a) Upon execution of this Agreement, Borrower shall unconditionally
pay to Lender a commitment fee equal to one percent (1.0%) of the Maximum Loan
Amount (the "Commitment Fee"), payable in installments if and when aggregate
outstanding Revolving Credit Loans exceed the following thresholds:
Outstanding Revolving Credit and Term Loans Portion of Commitment Fee Due
------------------------------------------- -----------------------------
$0 to $1,000,000 $10,000
$1,000,000 to $2,000,000 Additional $10,000
By way of clarification, the maximum aggregate Commitment Fee due under this
Agreement is $20,000.
(b) For so long as the Loan is available to Borrower, Borrower
unconditionally shall pay to Lender a monthly usage fee (the "Usage Fee") equal
to 0.0425% of the average amount by which the sublimit under the Maximum Loan
Amount exceeds the average amount of the outstanding principal balance of the
Revolving Credit Loans during the preceding month. The Usage Fee shall be
payable monthly in arrears on the first Business Day of each successive calendar
month.
(c) For so long as the Loan is available to Borrower, Borrower
unconditionally shall pay to Lender a monthly loan management fee (the "Loan
Management Fee") equal to one-quarter of one percent (0.25%) of the average
amount of the outstanding principal balance of the Revolving Credit Loans during
the preceding month. The Loan Management Fee shall be payable monthly in arrears
on the first day of each successive calendar month.
(d) Borrower shall pay to Lender all out-of-pocket audit and appraisal
fees in connection with audits and appraisals of Borrower's books and records
and such other matters as Lender shall deem reasonably appropriate, which shall
be due and payable on the first Business Day of the month following the date of
issuance by Lender of a request for payment thereof to Borrower, but not less
than ten (10) days after such request in the event that there is not
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sufficient availability in the Borrowing Base to pay such fees as of such first
Business Day of the month. Absent the existence of an Event of Default, Borrower
shall not be required to pay to Lender the costs of more than four (4) audit or
appraisals per year.
(e) Borrower shall pay to Lender, on demand, any and all reasonable
out-of pocket fees, costs or expenses which Lender or any participant pays to a
bank or other similar non-affiliated institution (including, without limitation,
any fees paid by Lender to any non-affiliated participant) arising out of or in
connection with (i) the forwarding to Borrower or any other Person on behalf of
Borrower, by Lender, of proceeds of Revolving Credit Loans made by Lender to
Borrower pursuant to this Agreement, and (ii) the depositing for collection, by
Lender or any participant, of any check or item of payment received or delivered
to Lender or any participant on account of Obligations up to a maximum of
$5,000.00 per year.
SECTION 2.5. PAYMENTS. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Borrower or Lender of any payments on or proceeds from any of
the Collateral, to the extent of such proceeds, (ii) the occurrence of an Event
of Default if the Loan and the maturity of the payment of the Obligations are
accelerated prior to cure of such Event of Default, or (iii) the termination of
this Agreement pursuant to Section 2.8 of this Agreement; provided, however,
that if any advance made by Lender in excess of the Borrowing Base shall exist
at any time, Borrower shall, immediately upon demand, repay such overadvance.
Interest accrued on the Revolving Credit Loans shall be due on the earliest of
(i) the first Business Day of each month (for the immediately preceding month),
computed on the last calendar day of the preceding month, (ii) the occurrence of
an Event of Default if the Loan and the maturity of the payment of the
Obligations are accelerated prior to cure of such Event of Default, or (iii) the
termination of this Agreement pursuant to Section 2.8. Except to the extent
otherwise set forth in this Agreement, all payments of principal and of interest
on the Loan, all other charges and any other obligations of Borrower under this
Agreement, shall be made to Lender to the Concentration Account, in immediately
available funds.
SECTION 2.6. USE OF PROCEEDS. The proceeds of Lender's advances under the
Loan shall be used solely for working capital and for other costs of Borrower
arising in the ordinary course of Borrower's business.
SECTION 2.7. INTEREST RATE LIMITATION. The parties intend to conform
strictly to the applicable usury laws in effect from time to time during the
term of the Loan. Accordingly, if any transaction contemplated by this Agreement
would be usurious under such laws, then notwithstanding any other provision of
this Agreement: (i) the aggregate of all interest that is contracted for,
charged, or received under this Agreement or under any other Loan Document shall
not exceed the maximum amount of interest allowed by applicable law (the
"Highest Lawful Rate"), and any excess shall be promptly credited to Borrower by
Lender (or, to the extent that such consideration shall have been paid, such
excess shall be promptly refunded to Borrower by Lender); (ii) neither Borrower
nor any other Person now or hereafter liable under this Agreement shall be
obligated to pay the amount of such interest to the extent that it is in
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excess of the Highest Lawful Rate; and (iii) the effective rate of interest
shall be reduced to the Highest Lawful Rate. All sums paid, or agreed to be
paid, to Lender for the use, forbearance, and detention of the debt of Borrower
to Lender shall, to the extent permitted by applicable law, be allocated
throughout the full term of the Note until payment is made in full so that the
actual rate of interest does not exceed the Highest Lawful Rate in effect at any
particular time during the full term thereof. If at any time the rate of
interest under the Note exceeds the Highest Lawful Rate, the rate of interest to
accrue pursuant to this Agreement shall be limited, notwithstanding anything to
the contrary in this Agreement, to the Highest Lawful Rate, but any subsequent
reductions in the Base Rate shall not reduce the interest to accrue pursuant to
this Agreement below the Highest Lawful Rate until the total amount of interest
accrued equals the amount of interest that would have accrued if a varying rate
per annum equal to the interest rate under the Note had at all times been in
effect. If the total amount of interest paid or accrued pursuant to this
Agreement under the foregoing provisions is less than the total amount of
interest that would have accrued if a varying rate per annum equal to the
interest rate under the Note had been in effect, then Borrower agrees to pay to
Lender an amount equal to the difference between (x) the lesser of (A) the
amount of interest that would have accrued if the Highest Lawful Rate had at all
times been in effect, or (B) the amount of interest that would have accrued if a
varying rate per annum equal to the interest rate under the Note had at all
times been in effect, and (y) the amount of interest accrued in accordance with
the other provisions of this Agreement.
SECTION 2.8. TERM.
(a) Subject to Lender's right to cease making Revolving Credit Loans
to Borrower upon or during the continuance of any Event of Default, this
Agreement shall be in effect for a period of two (2) years from the Closing
Date, unless terminated as provided in this Section 2.8 (the "Term"), and this
Agreement shall be renewed for one-year periods thereafter upon the mutual
written agreement of the parties.
(b) Notwithstanding anything in this Agreement to the contrary, Lender
may terminate this Agreement without notice upon and during the continuance of
an Event of Default.
(c) Upon at least thirty (30) days prior written notice to Lender (the
"Termination Notice Period"), Borrower may terminate this Agreement at any time,
provided however, at the effective date of any termination prior to the end of
the Term, Borrower shall pay to Lender (in addition to the then outstanding
principal, accrued interest and other Obligations owing under the terms of this
Agreement and any other Loan Documents) as yield maintenance for the loss of
bargain and not as a penalty, the Termination Fee. Notwithstanding the
foregoing, the Termination Fee will be waived in the event that Borrower
terminates this Agreement following a 20% reduction in the Borrowing Base
resulting from Lender's unreasonable (i.e. lacking reasonable factual and
economic basis) disqualification of Accounts as Qualified Accounts pursuant to
the discretionary authority granted to Lender under Section 1.40(o) above. The
Termination Fee will not be waived in the event that the 20% Borrowing Base
reduction results from the occurrence of any of the events set forth in Sections
1.40(a)
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through 1.40(n) or upon the Lender's reasonable disqualification of Accounts as
Qualified Accounts pursuant to Section 1.40(o) above.
(d) All of the Obligations shall be immediately due and payable upon
the termination date stated in any notice of termination of this Agreement (the
"Termination Date"). All undertakings, agreements, covenants, warranties, and
representations of Borrower contained in the Loan Documents shall survive any
such termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds and Lender shall retain its liens in the Collateral
and all of its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds.
(e) Notwithstanding any provision of this Agreement which makes
reference to the continuance of an Event of Default, nothing in this Agreement
shall be construed to permit Borrower to cure an Event of Default following the
lapse of the applicable cure period, and Borrower shall have no such right in
any instance unless specifically granted in writing by Lender.
SECTION 2.9. JOINT AND SEVERAL LIABILITY; BINDING OBLIGATIONS. Each entity
constituting Borrower shall be jointly and severally liable for all of the
obligations of Borrower under the Note and this Agreement. Each Borrower,
individually, expressly understands, agrees and acknowledges, that the loan
would not be made available on the terms herein in the absence of the collective
credit of all of the Borrowers, the joint and several liability of all
Borrowers, and the cross collateralization of the collateral of all Borrowers.
Accordingly, each Borrower, individually acknowledges that the benefit to each
of the participants in the facility as a whole constitutes reasonably equivalent
value, regardless of the amount of the loan actually borrowed by, advanced to,
or the amount of collateral provided by, any individual Borrower. In addition,
each entity comprising Borrower hereby acknowledges and agrees that all of the
representations, warranties, covenants, obligations, conditions, agreements and
other terms contained in this Agreement shall be applicable to and shall be
binding upon each entity comprising Borrower, and shall be binding upon all such
entities when taken together.
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ARTICLE III
COLLATERAL
SECTION 3.1. GENERALLY. As security for the payment of all liabilities of
Borrower to Lender, including without limitation: (i) indebtedness evidenced
under the Note, repayment of Revolving Credit Loans, advances and other
extensions of credit, all fees and charges owing by Borrower, (including without
limitation the Termination Fee) and all other liabilities and obligations of
every kind or nature whatsoever of Borrower to Lender, whether now existing or
hereafter incurred, joint or several, matured or unmatured, direct or indirect,
primary or secondary, related or unrelated, due or to become due, including but
not limited to any extensions, modifications, substitutions, increases and
renewals thereof, (ii) the payment of all amounts advanced by Lender to
preserve, protect, defend, and enforce its rights under this Agreement and in
the following property in accordance with the terms of this Agreement, and (iii)
the payment of all expenses incurred by Lender in connection therewith
(collectively, the "Obligations"), Borrower hereby assigns and grants to Lender
a continuing first priority lien on and security interest in, upon, and to the
following property (the "Collateral"):
(a) All of Borrower's now-owned and hereafter acquired or arising
Accounts, accounts receivable and rights to payment of every kind and
description, and all of Borrower's contract rights, chattel paper, documents and
instruments with respect thereto, and all of Borrower's rights, remedies,
security and liens, in, to and in respect of the Accounts, including, without
limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits or other security for the obligation of any Account Debtor, and credit
and other insurance;
(b) All Borrower's money, securities and other property and the
proceeds thereof, including but not limited to any money, securities or other
property from or for Borrower that are now or hereafter held or received by, in
transit to, in possession of, or under the control of Lender or a bailee or
Affiliate of Lender, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all of Borrower's deposits (general or special),
balances, sums and credits, whether or not with Lender in each case, at any time
existing;
(c) All of Borrower's right, title and interest in, to and in respect
of all goods relating to, or which by sale have resulted in, Accounts,
including, without limitation, all goods described in invoices or other
documents or instruments with respect to, or otherwise representing or
evidencing, any Account, and all returned, reclaimed or repossessed goods;
(d) All of Borrower's now owned or hereafter acquired deposit accounts
into which Accounts are deposited, including the Lockbox Account;
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(e) All of Borrower's now owned and hereafter acquired or arising
general intangibles and other property of every kind and description with
respect to, evidencing or relating to its Accounts, accounts receivable and
other rights to payment, including, but not limited to, all existing and future
customer lists, choses in action, claims, books, records, ledger cards,
contracts, licenses, formulae, tax and other types of refunds, returned and
unearned insurance premiums, rights and claims under insurance policies, and
computer programs, information, software, records, and data, as the same relates
to the Accounts;
(f) All of Borrower's other general intangibles (including, without
limitation, any proceeds from insurance policies after payment of prior
interests), patents, unpatented inventions, trade secrets, copyrights, contract
rights, goodwill, literary rights, rights to performance, rights under licenses,
choses-in-action, claims, information contained in computer media (such as data
bases, source and object codes, and information therein), things in action,
trademarks and trademarks applied for (together with the goodwill associated
therewith) and derivatives thereof, trade names, including the right to make,
use, and vend goods utilizing any of the foregoing, and permits, licenses,
certifications, authorizations and approvals, and the rights of Borrower
thereunder, issued by any governmental, regulatory, or private authority,
agency, or entity whether now owned or hereafter acquired, together with all
cash and non-cash proceeds and products thereof; provided, however, that nothing
herein shall restrict Borrower's right to license its intangible assets to third
parties pursuant to arm's length licensing transactions;
(g) All of Borrower's now owned or hereafter acquired inventory of
every description which is held by Borrower for sale or lease or is furnished by
Borrower under any contract of service or is held by Borrower as raw materials,
work in process or materials used or consumed in a business, wherever located,
and as the same may now and hereafter from time to time be constituted, together
with all cash and non-cash proceeds and products thereof;
(h) All of Borrower's now owned or hereafter acquired machinery,
equipment, computer equipment, tools, tooling, furniture, fixtures, goods,
supplies, materials, work in process, whether now owned or hereafter acquired,
together with all additions, parts, fittings, accessories, special tools,
attachments, and accessions now and hereafter affixed thereto and/or used in
connection therewith, all replacements thereof and substitutions therefor, and
all cash and non-cash proceeds and products thereof; and
(i) The proceeds (including, without limitation, insurance proceeds)
of all of the foregoing.
Notwithstanding the foregoing, upon (a) Borrower's sale in the ordinary
course of business of any assets set forth in subsection 3.1(h) above, or (b)
Borrower's sale of furniture, fixtures and equipment from its facility located
in Wixom, Michigan, Lender agrees to release its lien on such assets subject to
sale by executing any documents necessary to formally effectuate such release.
Moreover, upon Borrower's achieving positive EBTDA (i.e. earnings before taxes,
depreciation and amortization, as determined in accordance with GAAP,
consistently applied) for two consecutive fiscal quarters as reported by
Borrower in its quarterly reporting to the
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Securities and Exchange Commission (10 Qs), then Lender agrees to release its
lien on all assets set forth in subsections 3.1(f)(g) and (h) above.
SECTION 3.2. LIEN DOCUMENTS. At Closing and thereafter as Lender deems
necessary in its sole discretion, Borrower shall execute and deliver to Lender,
or have executed and delivered (all in form and substance satisfactory to Lender
in its sole discretion):
(a) UCC-1 Financing Statements pursuant to the Uniform Commercial Code
in effect in the jurisdiction(s) in which Borrower operates, which Lender may
file in any jurisdiction where any Collateral is or may be located and in any
other jurisdiction that Lender deems appropriate; provided that a carbon,
photographic, or other reproduction or other copy of this Agreement or of a
financing statement is sufficient as and may be filed in lieu of a financing
statement; and
(b) Any other agreements, documents, instruments, and writings deemed
necessary by Lender or as Lender may otherwise request from time to time in its
sole and reasonable discretion to evidence, perfect, or protect Lender's lien
and security interest in the Collateral required under this Agreement.
SECTION 3.3. COLLATERAL ADMINISTRATION.
(a) All Collateral (except deposit accounts) will at all times be kept
by Borrower at its principal office(s) as set forth on Schedule 4.15 and shall
not be moved from such locations without the prior written consent of Lender,
which consent shall not be unreasonably withheld.
(b) Borrower shall keep accurate and complete records of its Accounts
and all payments and collections thereon and shall submit to Lender on such
periodic basis as Lender shall request, but not more often than monthly, a sales
and collections report for the preceding period, in form satisfactory to Lender.
In addition, if Accounts in an aggregate face amount in excess of $50,000.00
become ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Qualified Accounts or otherwise,
Borrower shall notify Lender of such occurrence on the first Business Day
following the date it became aware of such occurrence and the Borrowing Base
shall thereupon be adjusted to reflect such occurrence. If requested by Lender,
Borrower shall execute and deliver to Lender formal written assignments of all
of its Accounts monthly (or more frequently upon and during the continuance of
an Event of Default), which shall include all Accounts that have been created
since the date of the last assignment, together with copies of claims, invoices
or other information related thereto.
(c) Whether or not an Event of Default has occurred, any of Lender's
officers, employees or agents shall have the right, at any time or times
hereafter, in the name of Lender or any designee of Lender or Borrower, to
verify the validity, amount or any other matter relating to any Accounts by
mail, telephone, telegraph or otherwise. Borrower shall cooperate fully with
Lender in an effort to facilitate and promptly conclude such verification
process.
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(d) To expedite collection, Borrower shall endeavor in the first
instance to make collection of its Accounts for Lender. Lender retains the right
at all times after the occurrence and during the continuance of an Event of
Default, to notify Account Debtors that Accounts have been assigned to Lender
and to collect Accounts directly in its own name and to charge reasonable
collection costs and expenses, including attorneys' fees, to Borrower.
SECTION 3.4. OTHER ACTIONS. In addition to the foregoing, Borrower (i)
shall provide prompt written notice to each entity that is currently an Account
Debtor or who becomes an Account Debtor at any time following the date of this
Agreement that Lender has been granted a first priority lien and security
interest in, upon and to all Accounts applicable to such Account Debtor and
directs each Account Debtor to make payments into the Lockbox, and hereby
authorizes Lender, upon Borrower's failure to send such notices within fifteen
(15) days after the date of this Agreement (or fifteen (15) days after the
entity becomes an Account Debtor), to send any and all similar notices to such
Account Debtors, and (ii) shall do anything further that may be lawfully
required by Lender to secure Lender and effectuate the intentions and objects of
this Agreement, including but not limited to the execution and delivery of
lockbox agreements, continuation statements, amendments to financing statements,
and any other documents required under this Agreement. At Lender's request,
Borrower shall also immediately deliver to Lender all items for which Lender
must receive possession to obtain a perfected security interest. Borrower shall,
on Lender's demand, deliver to Lender all notes, certificates, and documents of
title, chattel paper, warehouse receipts, instruments, and any other similar
instruments constituting Collateral.
SECTION 3.5. SEARCHES. Before Closing, and thereafter (as and when
determined by Lender in its sole discretion, but not more often than quarterly
absent the existence of an Event of Default or an event reasonably giving rise
to an Event of Default following the expiration of any applicable cure periods),
Lender will perform the searches described in clauses (a) and (b) below against
Borrower (the results of which are to be consistent with Borrower's
representations and warranties under this Agreement), all at Borrower's expense:
(a) Uniform Commercial Code searches with the Secretary of State and
local filing offices of each jurisdiction where Borrower maintains its executive
offices, a place of business, or assets;
(b) Judgment, federal tax lien and corporate and partnership tax lien
searches, in each jurisdiction searched under clause (a) above; and
In addition, prior to Closing, at Borrower's expense, Borrower shall obtain
and deliver to Lender good standing certificates showing Borrower to be in good
standing in its state of formation and in each other state in which it is doing
and currently intends to do business for which qualification is required.
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SECTION 3.6. POWER OF ATTORNEY. Each of the officers of Lender is hereby
irrevocably made, constituted and appointed the true and lawful attorney for
Borrower (without requiring any of them to act as such) with full power of
substitution, during an Event of Default or following an event which, through
the passage of time, would become an Event of Default, to do the following: (i)
endorse the name of Borrower upon any and all checks, drafts, money orders, and
other instruments for the payment of money that are payable to Borrower and
constitute collections on Borrower's Accounts; (ii) execute in the name of
Borrower any financing statements, schedules, assignments, instruments,
documents, and statements that Borrower is obligated to give Lender under this
Agreement; and (iii) do such other and further acts and deeds in the name of
Borrower that Lender may deem necessary or desirable to enforce any Account or
other Collateral or perfect Lender's security interest or lien in any
Collateral. In addition, if Borrower breaches its obligation to direct payments
of the proceeds of the Collateral to the Lockbox Account, Lender, as the
irrevocably made, constituted and appointed true and lawful attorney for
Borrower pursuant to this paragraph, may, by the signature or other act of any
of Lender's officers (without requiring any of them to do so), direct any
federal, state or private payor or fiscal intermediary to pay proceeds of the
Collateral to Borrower by directing payment to the Lockbox Account.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Except as specifically disclosed to Lender in writing to the contrary, each
entity comprising Borrower represents and warrants to Lender, and shall be
deemed to represent and warrant on each day on which any Obligations shall be
outstanding under this Agreement, that:
SECTION 4.1. SUBSIDIARIES. Except as set forth in Schedule 4.1, Borrower
has no subsidiaries.
SECTION 4.2. ORGANIZATION AND GOOD STANDING. Borrower is a corporation duly
organized, validly existing, and in good standing under the laws of its state of
formation, is in good standing as a foreign corporation in each jurisdiction in
which the character of the properties owned or leased by it therein or the
nature of its business makes such qualification necessary except where the
failure to be so qualified would not have a Material Adverse Effect, has the
corporate power and authority to own its assets and transact the business in
which it is engaged, and has obtained all material certificates, licenses and
qualifications required under all laws, regulations, ordinances, or orders of
public authorities necessary for the ownership and operation of all of its
properties and transaction of all of its business, except for certificates,
licenses and qualifications which the failure to obtain would not have a
Material Adverse Effect.
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SECTION 4.3. AUTHORITY. Borrower has full corporate power and authority to
enter into, execute, and deliver this Agreement and to perform its obligations
under this Agreement, to borrow the Loan, to execute and deliver the Note, and
to incur and perform the obligations provided for in the Loan Documents, all of
which have been duly authorized by all necessary corporate action. No consent or
approval of shareholders of, or lenders to, Borrower and no consent, approval,
filing or registration with any Governmental Authority is required as a
condition to the validity of the Loan Documents or the performance by Borrower
of its obligations under the Loan Documents.
SECTION 4.4. BINDING AGREEMENT. This Agreement and all other Loan Documents
constitute, and the Note, when issued and delivered pursuant to this Agreement
for value received, will constitute, the valid and legally binding obligations
of Borrower, enforceable against Borrower in accordance with their respective
terms.
SECTION 4.5. LITIGATION. Except as disclosed in Schedule 4.5, there are no
actions, suits, proceedings or investigations pending or threatened against
Borrower before any court or arbitrator or before or by any Governmental
Authority which, in any one case or in the aggregate, if determined adversely to
the interests of Borrower, could have a Material Adverse Effect. Borrower is not
in default with respect to any order of any court, arbitrator, or Governmental
Authority applicable to Borrower or its properties.
SECTION 4.6. NO CONFLICTS. The execution and delivery by Borrower of this
Agreement and the other Loan Documents do not, and the performance of its
obligations under the Loan Documents will not, violate, conflict with,
constitute a material default under, or result in the creation of a lien or
encumbrance upon the property of Borrower (other than for the benefit of Lender)
under: (i) any provision of Borrower's articles of incorporation, (ii) any
provision of any law, rule, or regulation applicable to Borrower, or (iii) any
of the following: (A) any indenture or other agreement or instrument to which
Borrower is a party or by which Borrower or its property is bound; or (B) any
judgment, order or decree of any court, arbitration tribunal, or Governmental
Authority having jurisdiction over Borrower which is applicable to Borrower.
SECTION 4.7. FINANCIAL CONDITION. The annual financial statements of
Borrower as of and for the period ending December 31, 2000 audited by ▇▇▇▇▇▇ &
▇▇▇▇▇ and the unaudited financial statements of Borrower as of and for the
period ending February 28, 2001, certified by the chief financial officer of
Borrower on behalf of Borrower, which have been delivered to Lender, fairly
present the financial condition of Borrower and the results of its operations
and changes in financial condition as of the dates and for the periods referred
to, and have been prepared in accordance with GAAP. There are no material
unrealized or anticipated liabilities, direct or indirect, fixed or contingent,
of Borrower as of the dates of such financial statements which are not reflected
in such financial statements or in the notes to such financial statements. There
has been no material adverse change in the business, properties, or operations
of Borrower since December 31, 2000. Borrower's fiscal year ends on December 31.
The federal tax identification number of each entity comprising Borrower is as
described on Schedule 4.7.
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SECTION 4.8. NO DEFAULT. Except as set forth in Schedule 4.8, Borrower is
not in default under or with respect to any obligation in any respect which has
had a Material Adverse Effect, or which would reasonably be expected to
materially adversely affect the ability of Borrower to perform its obligations
under the Loan Documents. No Event of Default or event which, with the giving of
notice or lapse of time, or both, would become an Event of Default, has occurred
and is continuing.
SECTION 4.9. TITLE TO PROPERTIES. Borrower has good and marketable title to
its properties and assets, including the Collateral and the properties and
assets reflected in the financial statements described in Section 4.7, subject
to no lien, mortgage, pledge, encumbrance or charge of any kind, other than
Permitted Liens. Borrower has not agreed or consented to cause any of its
properties or assets whether owned now or hereafter acquired to be subject in
the future (upon the happening of a contingency or otherwise) to any lien,
mortgage, pledge, encumbrance or charge of any kind other than Permitted Liens.
SECTION 4.10. TAXES. Borrower has filed, or has obtained extensions for the
filing of, all federal, state and other tax returns which are required to be
filed, and has paid all taxes shown as due on those returns and all assessments,
fees and other amounts due as of the date of this Agreement. To the best of
Borrower's knowledge, all tax liabilities of Borrower were, as of December 31,
2000 and are now, adequately provided for on Borrower's books. No tax liability
has been asserted by the Internal Revenue Service or other taxing authority
against Borrower for taxes in excess of those already paid.
SECTION 4.11. SECURITIES AND BANKING LAWS AND REGULATIONS.
(a) The use of the proceeds of the Loan and Borrower's issuance of the
Note will not directly or indirectly violate or result in a violation of the
Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, or
any regulations issued pursuant thereto, including without limitation
Regulations U, T or X of the Board of Governors of the Federal Reserve System.
Borrower is not engaged in the business of extending credit for the purpose of
the purchasing or carrying "margin stock" within the meaning of those
regulations. No part of the proceeds of the Loan under this Agreement will be
used to purchase or carry any margin stock or to extend credit to others for
such purpose.
(b) Borrower is not an investment company within the meaning of the
Investment Company Act of 1940, as amended, nor is it, directly or indirectly,
controlled by or acting on behalf of any Person which is an investment company
within the meaning of that Act.
SECTION 4.12. ERISA. No employee benefit plan (a "Plan") subject to the
Employee Retirement Income Security Act of 1974 ("ERISA") and regulations issued
pursuant to ERISA that is maintained by Borrower or under which Borrower could
have any material liability under ERISA (i) has failed to meet minimum funding
standards established in Section 302 of ERISA, (ii) has failed to substantially
comply with all applicable requirements of ERISA and of the Internal Revenue
Code, including all applicable rulings and regulations thereunder, or (iii) has
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engaged in or been involved in a prohibited transaction (as defined in ERISA)
under ERISA or under the Internal Revenue Code. Neither Borrower nor any member
of a Controlled Group that includes Borrower has assumed, or received notice of
a claim asserted against Borrower or another member of the Controlled Group for,
withdrawal liability (as defined in the Multi-Employer Pension Plan Amendments
Act of 1980, as amended) with respect to any multi-employer pension plan.
Borrower has timely made when due all contributions with respect to any
multi-employer pension plan in which it participates and no event has occurred
triggering a material claim against Borrower for withdrawal liability with
respect to any multi-employer pension plan in which Borrower participates.
SECTION 4.13. COMPLIANCE WITH LAW. Except as described in Schedule 4.13,
Borrower is not in violation of any statute, rule or regulation of any
Governmental Authority (including, without limitation, any statute, rule or
regulation relating to employment practices or to environmental, occupational
and health standards and controls) the failure to comply with which has had a
Material Adverse Effect. Borrower has obtained all licenses, permits,
franchises, and other governmental authorizations necessary for the ownership of
its properties and the conduct of its business. Borrower is current with all
reports and documents required to be filed with any state or federal securities
commission or similar Governmental Authority and is in full compliance with all
applicable rules and regulations of such commissions.
SECTION 4.14. ENVIRONMENTAL MATTERS. No use, exposure, release, generation,
manufacture, storage, treatment, transportation or disposal of Hazardous
Material has occurred or is occurring on or from any real property on which the
Collateral is located or which is owned, leased or otherwise occupied by
Borrower (the "Premises"), or off the Premises as a result of any action of
Borrower, except as described in Schedule 4.14. All Hazardous Material used,
treated, stored, transported to or from, generated or handled on the Premises,
or off the Premises by Borrower, has been disposed of on or off the Premises by
or on behalf of Borrower in a lawful manner. To Borrower's knowledge, there are
no underground storage tanks present on or under the Premises owned or leased by
Borrower. To Borrower's knowledge, no other environmental, public health or
safety hazards exist with respect to the Premises.
SECTION 4.15. PLACES OF BUSINESS. As of the Closing Date, the only places
of business of Borrower, and the places where it keeps and intends to keep the
Collateral and records concerning the Collateral, are at the addresses set forth
in Schedule 4.15. Schedule 4.15 also lists the owner of record of each such
property.
SECTION 4.16. INTELLECTUAL PROPERTY. Borrower exclusively owns or possesses
all the patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, franchises, licenses, and rights with
respect to the foregoing necessary for the current and planned future conduct of
its business, without any conflict with the rights of others. A list of all such
intellectual property (indicating the nature of Borrower's interest), as well as
all outstanding franchises and licenses given by or held by Borrower, is
attached as Schedule 4.16. Borrower is not in default of any obligation or
undertaking with respect to such intellectual property or rights. Borrower is
not infringing on any patents, patent applications, trademarks,
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trademark applications, service marks, trade names, copyrights, franchises,
licenses, any rights with respect to the foregoing, or any other intellectual
property rights of others and the Borrower is not aware of any infringement by
others of any such rights owned by Borrower.
SECTION 4.17. INTENTIONALLY DELETED
SECTION 4.18. MATERIAL FACTS. To Borrower's knowledge, neither this
Agreement nor any other Loan Document nor any other agreement, document,
certificate, or statement furnished to Lender by or on behalf of Borrower in
connection with the transactions contemplated by this Agreement contains any
untrue statement of material fact or omits to state a material fact necessary to
make the statements contained in this Agreement or other Loan Document not
misleading. There is no fact known to Borrower that would have a Material
Adverse Effect on the financial condition or business prospects of Borrower.
SECTION 4.19. INVESTMENTS, GUARANTEES, AND CERTAIN CONTRACTS. Borrower does
not own or hold any equity or long-term debt investments in, have any
outstanding advances to, have any outstanding guarantees for the obligations of,
or have any outstanding borrowings from, any Person, except as described on
Schedule 4.19. Borrower is not a party to any contract or agreement, or subject
to any corporate restriction, which materially adversely affects its business.
SECTION 4.20. BUSINESS INTERRUPTIONS. Within five years before the date of
this Agreement, neither the business, property or assets, or operations of
Borrower has been adversely affected in any way by any casualty, strike,
lockout, combination of workers, or order of the United States of America or
other Governmental Authority, directed against Borrower. There are no pending or
threatened labor disputes, strikes, lockouts, or similar occurrences or
grievances against Borrower or its business.
SECTION 4.21. NAMES. Within five years before the date of this Agreement,
Borrower has not conducted business under or used any other name (whether
corporate, partnership or assumed) other than as shown on Schedule 4.21.
Borrower is the sole owner of all names listed on that Schedule and any and all
business done and invoices issued in such names are Borrower's sales, business,
and invoices. Each trade name of Borrower represents a division or trading style
of Borrower and not a separate Person or independent Affiliate.
SECTION 4.22 JOINT VENTURES. Borrower is not engaged in any joint venture
or partnership with any other Person, except as set forth on Schedule 4.22.
SECTION 4.23 ACCOUNTS. Lender may rely, in determining which Accounts are
Qualified Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Lender, with respect to each Qualified Account, Borrower represents that:
(a) The Account is genuine and in all respects what it purports to be,
and is not evidenced by a judgment;
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(b) The Account arises out of a completed, bona fide sale and delivery
of goods by Borrower in the ordinary course of its business and in accordance
with the terms and conditions of all purchase orders, contracts, certification,
participation, certificate of need, or other documents relating thereto and
forming a part of the contract between Borrower and the Account Debtor;
(c) The Account is for a liquidated amount maturing as stated in a
duplicate claim or invoice covering such sale of goods, a copy of which has been
furnished or is available to Lender;
(d) The Account, and Lender's security interest in such Account, is
not, and will not (by voluntary act or omission by Borrower), be in the future,
subject to any offset, lien, deduction, defense, dispute, counterclaim or any
other adverse condition, and each such Account is absolutely owing to Borrower
and is not contingent in any respect or for any reason;
(e) To the best of Borrower's knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforceability of any
Accounts or tend to reduce the amount payable thereunder from the face amount of
the claim or invoice and statements delivered to Lender with respect thereto;
(f) To the best of Borrower's knowledge, (i) the Account Debtor under
the Account had the capacity to contract at the time any contract or other
document giving rise to the Account was executed and (ii) such Account Debtor is
solvent;
(g) To the best of Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor under the
Account which might result in any material adverse change in such Account
Debtor's financial condition or the collectibility of such Account;
(h) The Account has been billed and forwarded to the Account Debtor
for payment in accordance with applicable laws and compliance and conformance
with any and requisite procedures, requirements and regulations governing
payment by such Account Debtor with respect to such Account, and such Account is
properly payable directly to Borrower; and
(i) Borrower has obtained and currently has all licenses, permits and
authorizations that are necessary in the generation of such Accounts.
SECTION 4.24. SOLVENCY. Both before and after giving effect to the
transactions contemplated by the terms and provisions of this Agreement,
Borrower (taken as a whole) (i) owns property whose fair saleable value is
greater than the amount required to pay all of Borrower's Indebtedness
(including contingent debts), (ii) was and is able to pay all of its
Indebtedness as such Indebtedness matures, and (iii) had and has capital
sufficient to carry on its business and transactions and all business and
transactions in which it about to engage. For
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purposes of this Agreement, the term "Indebtedness" means, without duplication
(x) all items which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Borrower as of the date on which Indebtedness is to be determined, (y) all
obligations of any other person or entity which such Borrower has guaranteed,
and (z) the Obligations.
ARTICLE V
CLOSING AND CONDITIONS OF LENDING
SECTION 5.1. CONDITIONS PRECEDENT TO AGREEMENT. The obligation of Lender to
enter into and perform this Agreement and to make Revolving Credit Loans is
subject to the following conditions precedent:
(a) Lender shall have received two (2) originals of this Agreement,
the Certificate of Validity, and all other Loan Documents required to be
executed and delivered at or before Closing (other than the Note, as to which
Lender shall receive only one original), executed by Borrower and any other
required Persons, as applicable.
(b) Lender shall have received all searches and good standing
certificates required by Section 3.5.
(c) Borrower shall have complied in all material respects and shall
then be in compliance in all material respects with all the terms, covenants and
conditions of the Loan Documents.
(d) There shall have occurred and be continuing no Event of Default
and no event which, with the giving of notice or the lapse of time, or both,
would constitute such an Event of Default.
(e) The representations and warranties contained in Article IV shall
be true and correct in all material respects.
(f) Lender shall have received copies of all board of directors
resolutions of Borrower, and other action taken by Borrower to authorize the
execution, delivery and performance of the Loan Documents and the borrowing of
the Loan under the Loan Documents, as well as the names and signatures of the
officers of Borrower authorized to execute documents on its behalf in connection
with the Loan, all as also certified as of the date of this Agreement by
Borrower's chief financial officer, or equivalent, and such other papers as
Lender may require.
(g) Lender shall have received copies, certified as true, correct and
complete by a corporate officer of each Borrower, of the certificate of
incorporation of each Borrower, with any amendments to any of the foregoing, and
all other documents necessary for
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performance of the obligations of Borrower under this Agreement and the other
Loan Documents.
(h) Lender shall have received a written opinion of counsel for
Borrower, dated the date of this Agreement, substantially in the form of Exhibit
C.
(i) Lender shall have received such financial statements, reports,
certifications, and other operational information required to be delivered under
this Agreement, including without limitation an initial borrowing base
certificate calculating the Borrowing Base.
(j) Lender shall have received the Commitment Fee.
(k) The Lockbox, Lockbox Account and the Concentration Account shall
have been established.
(l) Lender shall have received a copy of the lease agreements with
respect to Borrower's current facility located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇
facility, as well as the new facility currently under construction in Dallas,
Texas.
(m) Lender shall have received a certificate of Borrower's chief
financial officer on behalf of Borrower, dated the Closing Date, certifying that
all of the conditions specified in this Section have been fulfilled.
SECTION 5.2. CONDITIONS PRECEDENT TO ADVANCES. Notwithstanding any other
provision of this Agreement, no Loan proceeds, Revolving Credit Loans, advances
or other extensions of credit under the Loan shall be disbursed under this
Agreement unless the following conditions have been satisfied or waived
immediately before such disbursement:
(a) The representations and warranties on the part of Borrower
contained in Article IV of this Agreement shall be true and correct in all
material respects at and as of the date of disbursement or advance, as though
made on and as of such date (except to the extent that such representations and
warranties expressly relate solely to an earlier date and except that the
references in Section 4.7 to financial statements shall be deemed to be a
reference to the then most recent annual and interim financial statements of
Borrower furnished to Lender pursuant to Section 6.1).
(b) No Event of Default or event which, with the giving of notice of
the lapse of time, or both, would become an Event of Default shall have occurred
and be continuing or would result from the making of the disbursement or
advance.
(c) No adverse change in the condition (financial or otherwise),
properties, business, or operations of Borrower shall have occurred and be
continuing with respect to Borrower since the date of this Agreement.
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SECTION 5.3. CLOSING. Subject to the conditions of this Article V, the Loan
shall be made available on the date of execution of this Agreement (the "Closing
Date") at such time at such place as may be requested by Lender (the "Closing").
SECTION 5.4. WAIVER OF RIGHTS. By completing the Closing under this
Agreement, or by making advances under the Loan, Lender does not waive a breach
of any representation or warranty of Borrower under this Agreement or under any
other Loan Document, and all of Lender's claims and rights resulting from any
breach or misrepresentation by Borrower are specifically reserved by Lender.
ARTICLE VI
AFFIRMATIVE COVENANTS
Each entity comprising Borrower covenants and agrees that for so long as
Borrower may borrow under this Agreement and until payment in full of the Note
and performance of all other obligations of Borrower under the Loan Documents:
SECTION 6.1. FINANCIAL STATEMENTS AND COLLATERAL REPORTS. Borrower will
furnish to Lender (i) a sales and collections report and accounts receivable
aging schedule on a form acceptable to Lender within fifteen (15) days after the
end of each calendar month, which shall include, but not be limited to, a report
of sales, credits issued, and collections received; (ii) payables aging
schedules within fifteen (15) days after the end of each calendar month; (iii)
internally prepared monthly financial statements for Borrower, certified by the
chief financial officer of Borrower, within forty-five (45) days of the end of
each calendar month, accompanied quarterly by management analysis and actual vs.
budget variance reports; (iv) to the extent prepared by Borrower, annual
projections, profit and loss statements, balance sheets, and cash flow reports
(prepared on a monthly basis) for the succeeding fiscal year within thirty (30)
days before the end of each of Borrower's fiscal years; (v) internally prepared
annual financial statements for Borrower within sixty (60) days after the end of
each of Borrower's fiscal years; (vi) annual audited financial statements for
Borrower prepared by ▇▇▇▇▇▇ & ▇▇▇▇▇, or another firm of independent public
accountants reasonably satisfactory to Lender, within one hundred thirty-five
(135) days after the end of each of Borrower's fiscal years; (vii) promptly upon
receipt thereof, copies of any reports submitted to Borrower by the independent
accountants in connection with any interim audit of the books of Borrower and
copies of each management control letter provided to Borrower by independent
accountants; (viii) as soon as available, copies of all financial statements and
notices provided by Borrower to all of its stockholders; (ix) on the last
business day of every month, evidence satisfactory to Lender that all federal
and state taxes, including, without limitation payroll taxes, that are due have
been paid in full; and (x)such additional information, reports or statements as
Lender may from time to time request. Annual financial statements shall set
forth in comparative form figures for the corresponding periods in the prior
fiscal year. All financial statements shall include a balance sheet and
statement of earnings and shall be prepared in accordance with GAAP.
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SECTION 6.2. PAYMENTS UNDER THIS AGREEMENT. Borrower will make all payments
of principal, interest, fees, and all other payments required under this
Agreement and under the Loan, and under any other agreements with Lender to
which Borrower is a party, as and when due.
SECTION 6.3. EXISTENCE, GOOD STANDING, AND COMPLIANCE WITH LAWS. Borrower
will do or cause to be done all things necessary (i) to obtain and keep in full
force and effect all corporate existence, rights, licenses, privileges, and
franchises of Borrower necessary to the ownership of its property or the conduct
of its business, and comply with all applicable current and future laws,
ordinances, rules, regulations, orders and decrees of any Governmental Authority
having or claiming jurisdiction over Borrower; and (ii) to maintain and protect
the properties used or useful in the conduct of the operations of Borrower, in a
prudent manner, including without limitation the maintenance at all times of
such insurance upon its insurable property and operations as required by law or
by Section 6.7.
SECTION 6.4. LEGALITY. The making of the Loan and each disbursement or
advance under the Loan shall not be subject to any penalty or special tax, shall
not be prohibited by any governmental order or regulation applicable to
Borrower, and shall not violate any rule or regulation of any Governmental
Authority, and necessary consents, approvals and authorizations of any
Governmental Authority to or of any such disbursement or advance shall have been
obtained.
SECTION 6.5. LENDER'S SATISFACTION. All instruments and legal documents and
proceedings in connection with the transactions contemplated by this Agreement
shall be satisfactory in form and substance to Lender and its counsel, and
Lender shall have received all documents, including records of corporate
proceedings and opinions of counsel, which Lender may have requested in
connection therewith.
SECTION 6.6. TAXES AND CHARGES. Borrower will timely file all tax reports
and pay and discharge all taxes, assessments and governmental charges or levies
imposed upon Borrower, or its income or profits or upon its properties or any
part thereof, before the same shall be in default and before the date on which
penalties attach thereto, as well as all lawful claims for labor, material,
supplies or otherwise which, if unpaid, might become a lien or charge upon the
properties or any part thereof of Borrower; provided, however, that Borrower
shall not be required to pay and discharge or cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith and by appropriate proceedings
by Borrower, and Borrower shall have set aside on their books adequate reserve
therefor; and provided further, that such deferment of payment is permissible
only so long as Borrower's title to, and its right to use, the Collateral is not
adversely affected thereby and Lender's lien and priority on the Collateral are
not adversely affected, altered or impaired thereby.
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SECTION 6.7. INSURANCE. Borrower will carry adequate public liability and
professional liability insurance with responsible companies reasonably
satisfactory to Lender in such amounts and against such risks as is customarily
maintained by similar businesses and by owners of similar property in the same
general area.
SECTION 6.8. GENERAL INFORMATION. Borrower will furnish to Lender such
information as Lender may, from time to time, reasonably request with respect to
the business or financial affairs of Borrower, and permit any officer, employee
or agent of Lender to visit and inspect any of the properties, to examine the
minute books, books of account and other records, including management letters
prepared by Borrower's auditors, of Borrower, and make copies thereof or
extracts therefrom, and to discuss its and their business affairs, finances and
accounts with, and be advised as to the same by, the accountants and officers of
Borrower, all at such times and as often as Lender may reasonably require.
SECTION 6.9. MAINTENANCE OF PROPERTY. Borrower will maintain, keep and
preserve all of its properties in good repair, working order and condition and
from time to time make all necessary repairs, renewals, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 6.10. NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE DEVELOPMENTS.
Borrower promptly will notify Lender upon the occurrence of: (i) any Event of
Default; (ii) any event which, with the giving of notice or lapse of time, or
both, could constitute an Event of Default; (iii) any event, development or
circumstance whereby the financial statements previously furnished to Lender
fail in any material respect to present fairly, in accordance with GAAP, the
financial condition and operational results of Borrower; (iv) any judicial,
administrative or arbitration proceeding pending against Borrower, and any
judicial or administrative proceeding known by Borrower to be threatened against
it which, if adversely decided, could adversely affect its condition (financial
or otherwise) or operations (current or prospective) or which may expose
Borrower to uninsured liability of $50,000.00 or more; (v) any default claimed
by any other creditor for Borrowed Money of Borrower other than Lender; and (vi)
any other development in the business or affairs of Borrower which would have a
Material Adverse Effect; in each case describing the nature of the event or
development. In the case of notification under clauses (i) and (ii)), Borrower
should set forth the action Borrower proposes to take with respect to such
event.
SECTION 6.11. EMPLOYEE BENEFIT PLANS. Borrower will (i) comply with the
funding requirements of ERISA with respect to the Plans for its employees, or
will promptly satisfy any accumulated funding deficiency that arises under
Section 302 of ERISA; (ii) furnish Lender, promptly after filing the same, with
copies of all reports or other statements filed with the United States
Department of Labor, the Pension Benefit Guaranty Corporation, or the Internal
Revenue Service with respect to all Plans, or which Borrower, or any member of a
Controlled Group, may receive from such Governmental Authority with respect to
any such Plans, and (iii) promptly advise Lender of the occurrence of any
Reportable Event or Prohibited Transaction with respect to any such Plan and the
action which Borrower proposes to take with respect thereto. Borrower
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will make all contributions when due with respect to any multi-employer pension
plan in which it participates and will promptly advise Lender: (x) upon its
receipt of notice of the assertion against Borrower of a claim for withdrawal
liability; (y) upon the occurrence of any event which could trigger the
assertion of a claim for withdrawal liability against Borrower; and (z) upon the
occurrence of any event which would place Borrower in a Controlled Group as a
result of which any member (including Borrower) thereof may be subject to a
claim for withdrawal liability, whether liquidated or contingent.
SECTION 6.12. FINANCING STATEMENTS. Borrower shall provide to Lender
evidence satisfactory to Lender as to the due recording of termination
statements, releases of collateral, and Forms UCC-3, and shall cause to be
recorded financing statements on Form UCC-1, duly executed by Borrower and
Lender, in all places necessary to release all existing security interests and
other liens in the Collateral (other than as permitted by this Agreement) and to
perfect and protect Lender's first priority lien and security interest in the
Collateral, as Lender may request.
SECTION 6.13. FINANCIAL RECORDS. Borrower shall keep current and accurate
books of records and accounts in which full and correct entries will be made of
all of its business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP
subject to ordinary audit adjustments.
SECTION 6.14. COLLECTION OF ACCOUNTS. Borrower shall continue to collect
its Accounts in the ordinary course of business.
SECTION 6.15. PLACES OF BUSINESS. Borrower shall give thirty (30) days'
prior written notice to Lender of any change in the location of any of its
places of business, of the places where its records concerning its Accounts are
kept, of the places where the Collateral is kept, or of the establishment of any
new, or the discontinuance of any existing, places of business.
SECTION 6.16. BUSINESS CONDUCTED. Borrower shall continue in the business
currently conducted by it using its best efforts to maintain its customers and
goodwill. Borrower shall not engage, directly or indirectly, in any line of
business substantially different from the business conducted by it immediately
before the Closing Date, or engage in business or lines of business which are
not reasonably related thereto.
SECTION 6.17. LITIGATION AND OTHER PROCEEDINGS. Borrower shall give prompt
notice to Lender of any litigation, arbitration, or other proceeding before any
Governmental Authority against or affecting Borrower if the amount claimed is
more than $50,000.00.
SECTION 6.18. BANK ACCOUNTS. Borrower shall assign to Lender all of its
depository and disbursement accounts into which collections of Accounts are
deposited.
SECTION 6.19. SUBMISSION OF COLLATERAL DOCUMENTS. Borrower will, on demand
of Lender, make available to Lender copies of shipping and delivery receipts
evidencing the shipment of goods that gave rise to an Account, medical records,
insurance verification forms,
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assignment of benefits, in-take forms or other proof of the satisfactory
performance of services that gave rise to an Account, a copy of the claim or
invoice for each Account and copies of any written contract or order from which
the Account arose. Borrower shall promptly notify Lender if an Account becomes
evidenced or secured by an instrument or chattel paper and upon request of
Lender, will promptly deliver any such instrument or chattel paper to Lender.
SECTION 6.20. LICENSURE. Borrower will maintain all material licenses
necessary to conduct its business as currently conducted, and/or take any steps
required to comply with any such new or additional requirements that may be
imposed on providers of similar goods and services.
SECTION 6.21. OFFICER'S CERTIFICATES. Together with the monthly financial
statements delivered pursuant to clause (iii) of Section 6.1, and together with
the audited annual financial statements delivered pursuant to clause (vi) of
that Section, Borrower shall deliver to Lender a certificate of its chief
financial officer on behalf of Borrower, in form and substance reasonably
satisfactory to Lender:
(a) Setting forth the information (including detailed calculations)
required to establish whether Borrower is in compliance with the requirements of
Articles VI and VII as of the end of the period covered by the financial
statements then being furnished; and
(b) Stating that the signer has reviewed the relevant terms of this
Agreement, and has made (or caused to be made under his supervision) a review of
the transactions and conditions of Borrower from the beginning of the accounting
period covered by the income statements being delivered to the date of the
certificate, and that such review has not disclosed the existence during such
period of any condition or event which constitutes an Event of Default or which
is then, or with the passage of time or giving of notice or both, could become
an Event of Default, and if any such condition or event existed during such
period or now exists, specifying the nature and period of existence thereof and
what action Borrower has taken or proposes to take with respect thereto.
SECTION 6.22. VISITS AND INSPECTIONS. Borrower agrees to permit
representatives of Lender, from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and inspect the
properties of Borrower, and to inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, Borrower's business, assets, liabilities, financial condition,
business prospects and results of operations.
SECTION 6.23. NET WORTH. Borrower will not at any time allow its net worth,
as computed in accordance with GAAP, to fall below $500,000.
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ARTICLE VII
NEGATIVE COVENANTS
Each entity comprising Borrower covenants and agrees that so long as
Borrower may borrow under this Agreement and until payment in full of the Note
and performance of all other obligations of Borrower under the Loan Documents:
SECTION 7.1. BORROWING. Borrower will not create, incur, assume or suffer
to exist any liability for Borrowed Money except: (i) indebtedness to Lender;
(ii) indebtedness of Borrower secured by mortgages, encumbrances or liens
expressly permitted by Section 7.3; (iii) accounts payable to trade creditors
and current operating expenses (other than for borrowed money) which are not
aged more than one hundred twenty (120) days from the billing date or more than
thirty (30) days from the due date, in each case incurred in the ordinary course
of business and paid within such time period, unless the same are being
contested in good faith and by appropriate and lawful proceedings, and Borrower
shall have set aside such reserves, if any, with respect thereto as are required
by GAAP and deemed adequate by Borrower and its independent accountants; (iv)
equipment leases and/or purchase money indebtedness not to exceed $1,000,000 per
facility; (v) subordinated borrowing not to exceed $5,000,000 in the aggregate;
(vi) subordinated convertible debt instruments not to exceed $5,000,000, subject
to the prior written consent of Lender and to the execution of a Subordination
Agreement satisfactory to Lender in its sole discretion; and (vii) borrowings
incurred in the ordinary course of its business and not exceeding $50,000.00 in
the aggregate outstanding at any one time. Borrower will not make prepayments on
any existing or future indebtedness for Borrowed Money to any Person (other than
Lender, to the extent permitted by this Agreement or any subsequent agreement
between Borrower and Lender).
SECTION 7.2. JOINT VENTURES. Borrower will not invest directly or
indirectly in any joint venture for any purpose without the prior written notice
to, and the prior written consent of, Lender, which consent shall not be
unreasonably withheld or delayed.
SECTION 7.3. LIENS AND ENCUMBRANCES. Borrower will not create, incur,
assume or suffer to exist any mortgage, pledge, lien or other encumbrance of any
kind (including the charge upon property purchased under a conditional sale or
other title retention agreement) upon, or any security interest in, any of its
Collateral, whether now owned or hereafter acquired, except for Permitted Liens.
SECTION 7.4. RESTRICTION ON FUNDAMENTAL CHANGES. Borrower will not: (i)
enter into any transaction of merger or consolidation without the prior written
consent of Lender, which consent shall not be unreasonably withheld or delayed
and if not given or withheld in writing within 30 days, shall be deemed given;
(ii) liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); (iii) convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or a series of transactions, any of its assets other than
inventory in the ordinary course of business and old, obsolete or replaced
equipment, or the capital stock of any subsidiary
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of Borrower, whether now owned or hereafter acquired; or (iv) acquire by
purchase or otherwise all or any substantial part of the business or assets of,
or stock or other evidence of beneficial ownership of, any Person without the
prior written consent of Lender, which consent shall not be unreasonably
withheld or delayed and if not given or withheld in writing within 20 days,
shall be deemed given. Borrower agrees that compliance with this Section 7.4 is
a material inducement to Lender's advancing credit under this Agreement.
Borrower further agrees that in addition to all other remedies available to
Lender, Lender shall be entitled to specific enforcement of the covenants in
this Section 7.4, including injunctive relief.
SECTION 7.5. SALE AND LEASEBACK. Borrower will not, directly or indirectly,
enter into any arrangement whereby Borrower sells or transfers all or any part
of its assets and thereupon and within one year thereafter rents or leases the
assets so sold or transferred without prior written notice to and the prior
written consent of Lender, which consent shall not be unreasonably withheld or
delayed.
SECTION 7.6. DIVIDENDS, DISTRIBUTIONS AND MANAGEMENT FEES. Upon notice from
Lender to Borrower of the existence of an Event of Default under this Agreement,
Borrower will not declare or pay any dividends or other distributions with
respect to, purchase, redeem or otherwise acquire for value any of its
outstanding stock now or hereafter outstanding, or return any capital of its
stockholders, nor shall Borrower pay management fees or fees of a similar nature
to any Person.
SECTION 7.7. LOANS. Borrower will not make loans or advances to any Person,
other than (i) trade credit extended in the ordinary course of its business, and
(ii) advances for business travel and similar temporary advances made in the
ordinary course of business to officers, stockholders, directors, and employees.
SECTION 7.8. CONTINGENT LIABILITIES. Borrower will not assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any Person, except by the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business.
SECTION 7.9. SUBSIDIARIES. Borrower will not form any subsidiary, or make
any investment in or any loan in the nature of an investment to, any other
Person without the prior written consent of Lender which consent will not be
unreasonably withheld or delayed.
SECTION 7.10. COMPLIANCE WITH ERISA. Borrower will not permit with respect
to any Plan covered by Title IV of ERISA any Prohibited Transaction or any
Reportable Event.
SECTION 7.11. TRANSACTIONS WITH AFFILIATES. Borrower will not enter into
any transaction, including without limitation the purchase, sale, or exchange of
property, or the loaning or giving of funds to any Affiliate or subsidiary,
except in the ordinary course of business and pursuant to the reasonable
requirements of Borrower's business and upon terms substantially the same and no
less favorable to Borrower as it would obtain in a comparable
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arm's length transaction with any Person not an Affiliate or subsidiary, and so
long as the transaction is not otherwise prohibited under this Agreement. For
purposes of the foregoing, Lender consents to the transactions described on
Schedule 7.12.
SECTION 7.12. USE OF LENDER'S NAME. Borrower will not use Lender's name (or
the name of any of Lender's affiliates) in connection with any of its business
operations. Borrower may disclose to third parties that Borrower has a borrowing
relationship with Lender. Nothing contained in this Agreement is intended to
permit or authorize Borrower to make any contract on behalf of Lender.
SECTION 7.13. CHANGE IN CONTROL. There shall occur no Change in Control.
SECTION 7.14. CONTRACTS AND AGREEMENTS. Borrower will not become or be a
party to any contract or agreement which would breach this Agreement, or breach
any other instrument, agreement, or document to which Borrower is a party or by
which it is or may be bound.
SECTION 7.15. MARGIN STOCK. Borrower will not carry or purchase any "margin
security" within the meaning of Regulations U, T or X of the Board of Governors
of the Federal Reserve System.
SECTION 7.16. TRUTH OF STATEMENTS AND CERTIFICATES. Borrower will not
furnish to Lender any certificate or other document that contains any known
untrue statement of a material fact or knowingly omits to state a material fact
necessary to make it not misleading in light of the circumstances under which it
was furnished.
SECTION 7.17. DISCLOSURE OF AGREEMENT. Borrower will not disclose the
contents of this Loan Agreement and the other Loan Documents to any third party
(including, without limitation, any financial institution or intermediary)
without Lender's prior written consent.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. Each of the following (individually, an
"Event of Default" and collectively, the "Events of Default") shall constitute
an event of default under this Agreement:
(a) A default in the payment of any installment of principal of, or
interest upon, the Note when due and payable, whether at maturity or otherwise,
or any breach of Section 2.3, which default or breach, as applicable, shall have
continued unremedied for a period of five (5) days after written notice of the
default or breach from Lender to Borrower;
(b) A default in the payment of any other charges, fees, or other
monetary obligations owing to Lender arising out of or incurred in connection
with this Agreement when
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such payment is due and payable, which default shall have continued unremedied
for a period of five (5) days after written notice of the default from Lender to
Borrower;
(c) A default in the due observance or performance by Borrower or any
guarantor of the Obligations of any other term, covenant or agreement contained
in any of the Loan Documents, which default shall have continued unremedied for
a period of twenty (20) days after written notice of the default from Lender to
Borrower;
(d) Any representation or warranty made by Borrower in this Agreement
or in any of the other Loan Documents, any financial statement, or any statement
or representation made in any other certificate, report or opinion delivered in
connection with this Agreement or the other Loan Documents proves to have been
incorrect or misleading in any material respect when made, which default shall
have continued unremedied for a period of twenty (20) days after written notice
of the default from Lender to Borrower;
(e) Any obligation of Borrower (other than its Obligations under this
Agreement) for the payment of Borrowed Money is not paid when due or within any
applicable grace period, or such obligation becomes or is declared to be due and
payable before the expressed maturity of the obligation, or there shall have
occurred an event which, with the giving of notice or lapse of time, or both,
would cause any such obligation to become, or allow any such obligation to be
declared to be, due and payable;
(f) Borrower makes an assignment for the benefit of creditors, offers
a composition or extension to creditors, or makes or sends notice of an intended
bulk sale of any business or assets now or hereafter conducted by Borrower;
(g) (i) Borrower files a petition in bankruptcy, (ii) Borrower is
adjudicated insolvent or bankrupt, petitions or applies to any tribunal for any
receiver of or any trustee for itself or any substantial part of its property,
(iii) Borrower commences any proceeding relating to itself under any
reorganization, arrangement, readjustment or debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect, (iv) any
such proceeding is commenced against Borrower and such proceeding remains
undismissed for a period of sixty (60) days, (v) Borrower by any act indicates
its consent to, approval of, or acquiescence in, any such proceeding or the
appointment of any receiver of or any trustee for a Borrower or any substantial
part of its property, or suffers any such receivership or trusteeship to
continue undischarged for a period of sixty (60) days;
(h) One or more (i) final judgments against Borrower or attachments
against its property shall be rendered by a court, arbitrator, arbitration
panel, mediator or any individual(s) or entity with the authority to issue
binding judgments against Borrower or (ii) final settlements by or on behalf of
Borrower of any pending litigation, arbitration or other claim or otherwise
disputed matter, in any event not fully and unconditionally covered by
insurance, shall remain unpaid, unstayed on appeal, undischarged, unbonded and
undismissed for a period of ten (10) days;
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(i) A Reportable Event which might constitute grounds for termination
of any Plan covered by Title IV of ERISA or for the appointment by the
appropriate United States District Court of a trustee to administer any such
Plan or for the entry of a lien or encumbrance to secure any deficiency, has
occurred and is continuing thirty (30) days after its occurrence, or any such
Plan is terminated, or a trustee is appointed by an appropriate United States
District Court to administer any such Plan, or the Pension Benefit Guaranty
Corporation institutes proceedings to terminate any such Plan or to appoint a
trustee to administer any such Plan, or a lien or encumbrance is entered to
secure any deficiency or claim;
(j) There shall occur a Change of Control without the consent of
Lender;
(k) There shall occur any uninsured damage to or loss, theft or
destruction of any portion of the Collateral that exceeds $75,000 in the
aggregate;
(l) INTENTIONALLY DELETED
(m) Upon the issuance of any execution or distraint process against
Borrower or a material portion of its property and assets;
(n) Borrower ceases any material portion of its business operations as
currently conducted;
(o) Any indication or evidence is received by Lender that Borrower may
have directly or indirectly been engaged in any type of activity which, in
Lender's discretion, may result in the forfeiture of any property of Borrower to
any Governmental Authority, which default shall have continued unremedied for a
period of ten (10) days after written notice from Lender;
(p) Borrower or any Affiliate of Borrower, shall challenge or contest,
in any action, suit or proceeding, the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or the
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Lender;
(q) Borrower shall be criminally indicted or convicted under any law
that could lead to a forfeiture of any Collateral;
(r) There shall occur a change having a Material Adverse Effect on the
financial condition or business prospects of Borrower, which default shall have
continued unremedied for a period of forty-five (45) days after written notice
from Lender; or
(s) A default or event of default occurs under any other note,
instrument, deed of trust, mortgage, loan agreement, security agreement, letter
agreement or other document
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executed and delivered by Borrower, or any Affiliate of Borrower, in connection
with any financing provided by Lender or Lender's Affiliate to any such parties;
SECTION 8.2. ACCELERATION. Upon the occurrence and during the continuance
of any of the foregoing Events of Default, the Obligations under the Note shall
become and be immediately due and payable upon declaration to that effect
delivered by Lender to Borrower during the continuance of an Event of Default;
provided that, upon the happening of any event specified in Section 8.1(g),all
Obligations including, without limitation the Termination Fee, shall be
immediately due and payable without declaration or other notice to Borrower.
SECTION 8.3. REMEDIES.
(a) Upon the occurrence of and during the continuance of an Event of
Default under this Agreement or the other Loan Documents, Lender, in addition to
all other rights, options, and remedies granted to Lender under this Agreement
or at law or in equity, may take any of the following steps (which list is given
by way of example and is not intended to be an exhaustive list of all such
rights and remedies):
(i) Terminate the Loan, whereupon all outstanding Obligations
(including without limitation the Termination Fee) shall be immediately due and
payable;
(ii) Exercise all other rights granted to it under this Agreement
and all rights under the UCC in effect in the applicable jurisdiction(s) and
under any other applicable law; and
(iii) Exercise all rights and remedies under all Loan Documents
now or hereafter in effect, including but not limited to:
(A) The right to take possession of, send notices regarding,
and collect directly the Collateral, with or without judicial process;
(B) The right to (by its own means or with judicial
assistance) enter any of Borrower's premises and take possession of the
Collateral or dispose of the Collateral on such premises in compliance with
subsection (C) below, without any liability for rent, storage, utilities, or
other sums, and Borrower shall not resist or interfere with such action; and
(C) The right to require Borrower at Borrower's expense to
assemble all or any part of the Collateral and make it available to Lender at
any place designated by Lender; and
(D) The right to reduce the Maximum Loan Amount or to use
the Collateral and/or funds in the Concentration Account in amounts up to the
Maximum Loan Amount for any reason.
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(b) Borrower agrees that a notice received by it at least fifteen (15)
days before the time of any intended public sale, or the time after which any
private sale or other disposition of the Collateral is to be made, shall be
deemed to be reasonable notice of such sale or other disposition. If permitted
by applicable law, any perishable Collateral which threatens to speedily decline
in value or which is sold on a recognized market may be sold immediately by
Lender without prior notice to Borrower. At any sale or disposition of
Collateral, Lender may (to the extent permitted by applicable law) purchase all
or any part of the Collateral, free from any right of redemption by Borrower,
which right is hereby waived and released. Borrower covenants and agrees not to
interfere with or impose any obstacle to Lender's exercise of its rights and
remedies with respect to the Collateral.
SECTION 8.4. NATURE OF REMEDIES. Lender shall have the right to proceed
against all or any portion of the Collateral to satisfy the liabilities and
Obligations of Borrower to Lender in any order. All rights and remedies granted
Lender under this Agreement and under any agreement referred to in this
Agreement, or otherwise available at law or in equity, shall be deemed
concurrent and cumulative, and not alternative remedies, and Lender may proceed
with any number of remedies at the same time until the Loans, and all other
existing and future liabilities and obligations of Borrower to Lender, are
satisfied in full. The exercise of any one right or remedy shall not be deemed a
waiver or release of any other right or remedy, and Lender, upon the occurrence
of an Event of Default, may proceed against Borrower, and/or the Collateral, at
any time, under any agreement, with any available remedy and in any order.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. EXPENSES AND TAXES.
(a) Borrower agrees to pay, whether or not the Closing occurs, a
reasonable documentation preparation fee, together with actual audit and
appraisal fees and all other out-of-pocket charges and expenses incurred by
Lender in connection with the negotiation, preparation, legal review and
execution of each of the Loan Documents, including but not limited to UCC and
judgment lien searches and UCC filings and fees for post-Closing UCC and
judgment lien searches. In addition, Borrower shall pay all such fees associated
with any amendments to the Loan Documents following Closing.
(b) Borrower also agrees to pay all reasonable out-of-pocket charges
and expenses incurred by Lender (including the fees and expenses of Lender's
counsel) in connection with the enforcement, protection or preservation of any
right or claim of Lender, the termination of this Agreement, the termination of
any liens of Lender on the Collateral, or the collection of any amounts due
under the Loan Documents. If Lender uses in-house counsel for any of these
purposes (i.e., for any task in connection with the enforcement, protection or
preservation of any
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right or claim of Lender and the collection of any amounts due under its Loan
Documents), Borrower further agrees that its Obligations under the Loan
Documents include reasonable charges for such work commensurate with the fees
that would otherwise be charged by outside legal counsel selected by Lender for
the work performed.
(c) Borrower shall pay all taxes (other than taxes based upon or
measured by Lender's income or revenues or any personal property tax), if any,
in connection with the issuance of the Note and the recording of the security
documents therefor. The obligations of Borrower under this clause (c) shall
survive the payment of Borrower's indebtedness under this Agreement and the
termination of this Agreement.
SECTION 9.2. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other
Loan Documents constitute the full and entire understanding and agreement among
the parties with regard to their subject matter and supersede all prior written
or oral agreements, understandings, representations and warranties made with
respect thereto. No amendment, supplement or modification of this Agreement nor
any waiver of any provision thereof shall be made except in writing executed by
the party against whom enforcement is sought.
SECTION 9.3. NO WAIVER; CUMULATIVE RIGHTS. No waiver by any party to this
Agreement of any one or more defaults by the other party in the performance of
any of the provisions of this Agreement shall operate or be construed as a
waiver of any future default or defaults, whether of a like or different nature.
No failure or delay on the part of any party in exercising any right, power or
remedy under this Agreement shall operate as a waiver of such right, power or
remedy nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise of such right, power or remedy or
the exercise of any other right, power or remedy. The remedies provided for in
this Agreement are cumulative and are not exclusive of any remedies that may be
available to any party to this Agreement at law, in equity or otherwise.
SECTION 9.4. NOTICES. Any notice or other communication required or
permitted under this Agreement shall be in writing and personally delivered,
mailed by registered or certified mail (return receipt requested and postage
prepaid), sent by telecopier (with a confirming copy sent by regular mail), or
sent by prepaid overnight courier service, and addressed to the relevant party
at its address set forth below, or at such other address as such party may, by
written notice, designate as its address for purposes of notice under this
Agreement:
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(a) If to Lender, at:
▇▇▇▇▇▇ Healthcare Finance, Inc.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq., Chief Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Borrower, at:
Rockwell Medical Technologies, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If mailed, notice shall be deemed to be given five (5) days after being sent,
and if sent by personal delivery, telecopier or prepaid courier, notice shall be
deemed to be given when delivered.
SECTION 9.5. SEVERABILITY. If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law. Upon determination that any
such term is invalid, illegal or unenforceable, Lender may, but is not obligated
to, advance funds to Borrower under this Agreement until the parties to this
Agreement amend this Agreement so as to effect the original intent of the
parties as closely as possible in a valid and enforceable manner.
SECTION 9.6. SUCCESSORS AND ASSIGNS. This Agreement, the Note, and the
other Loan Documents shall be binding upon and inure to the benefit of Borrower
and Lender and their respective successors and assigns. Notwithstanding the
foregoing, Borrower may not assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of Lender,
which may be withheld in its sole discretion. Lender may sell, assign, transfer,
or participate any or all of its rights or obligations under this Agreement
without notice to or consent of Borrower.
SECTION 9.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.
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SECTION 9.8. INTERPRETATION. No provision of this Agreement or any other
Loan Document shall be interpreted or construed against any party because that
party or its legal representative drafted that provision. The titles of the
paragraphs of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement. Any pronoun used in this
Agreement shall be deemed to include singular and plural and masculine, feminine
and neuter gender as the case may be. The words "herein," "hereof," and
"hereunder" shall be deemed to refer to this entire Agreement, except as the
context otherwise requires.
SECTION 9.9. SURVIVAL OF TERMS. All covenants, agreements, representations
and warranties made in this Agreement, any other Loan Document, and in any
certificates and other instruments delivered in connection with this Agreement
shall be considered to have been relied upon by Lender and shall survive the
making by Lender of the Loans contemplated by this Agreement and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
until all liabilities and obligations of Borrower to Lender are satisfied in
full.
SECTION 9.10. RELEASE OF LENDER. For and in consideration of the Loan,
Borrower, voluntarily, knowingly, unconditionally, and irrevocably, with
specific and express intent, for and on behalf of itself and its agents,
attorneys, heirs, successors, and assigns (collectively the "Releasing Parties")
does hereby fully and completely release, acquit and forever discharge Lender,
and its successors, assigns, heirs, affiliates, subsidiaries, parent companies,
principals, directors, officers, employees, shareholders and agents (hereinafter
called the "Lender Parties"); and any other person, firm, business, corporation,
insurer, or association which may be responsible or liable for the acts or
omissions of the Lender Parties, or who may be liable for the injury or damage
resulting therefrom (collectively the "Released Parties"), of and from any and
all actions, causes of action, suits, debts, disputes, damages, claims,
obligations, liabilities, costs, expenses and demands of any kind whatsoever, at
law or in equity, whether matured or unmatured, liquidated or unliquidated,
vested or contingent, ▇▇▇▇▇▇ or inchoate, known or unknown that the Releasing
Parties (or any of them) have, whether now or in the future, (whether directly
or indirectly) against the Released Parties or any of them except those arising
out of gross negligence or willful misconduct. The Borrower acknowledges that
the foregoing release is a material inducement ot Lender's decision to extend to
Borrower the financial accommodations hereunder and has been relied upon by
Lender in agreeing to make the Loan.
SECTION 9.11. TIME. Whenever Borrower is required to make any payment or
perform any act on a Saturday, Sunday, or a legal holiday under the laws of the
State of Maryland (or other jurisdiction where Borrower is required to make the
payment or perform the act), the payment may be made or the act performed on the
next Business Day. Time is of the essence in Borrower's performance under this
Agreement and all other Loan Documents.
SECTION 9.12. COMMISSIONS. The transaction contemplated by this Agreement
was brought about by Lender and Borrower acting as principals and without any
brokers, agents, or finders being the effective procuring cause. Borrower
represents that it has not committed Lender to the payment of any brokerage fee,
commission, or charge in connection with this
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transaction. If any such claim is made on Lender by any broker, finder, or agent
or other person, Borrower will indemnify, defend, and hold Lender harmless from
and against the claim and will defend any action to recover on that claim, at
Borrower's cost and expense, including Lender's counsel fees. Borrower further
agrees that until any such claim or demand is adjudicated in Lender's favor, the
amount demanded will be deemed a liability of Borrower under this Agreement,
secured by the Collateral.
SECTION 9.13. THIRD PARTIES. No rights are intended to be created under
this Agreement or under any other Loan Document for the benefit of any third
party donee, creditor, or incidental beneficiary of Borrower. Nothing contained
in this Agreement shall be construed as a delegation to Lender of Borrower's
duty of performance, including without limitation Borrower's duties under any
account or contract in which Lender has a security interest.
SECTION 9.14. DISCHARGE OF BORROWER'S OBLIGATIONS. Lender, in its sole
discretion, shall have the right at any time, and from time to time, without
prior notice to Borrower if Borrower fails to do so, to: (i) obtain insurance
covering any of the Collateral as required under this Agreement; (ii) pay for
the performance of any of Borrower's obligations under this Agreement; (iii)
discharge taxes, liens, security interests, or other encumbrances at any time
levied or placed on any of the Collateral in violation of this Agreement unless
Borrower is in good faith with due diligence by appropriate proceedings
contesting those items; and (iv) pay for the maintenance and preservation of any
of the Collateral, provided Lender provides Borrower with written notice
promptly after doing so. Expenses and advances shall be added to the Loan, until
reimbursed to Lender and shall be secured by the Collateral. Any such payments
and advances by Lender shall not be construed as a waiver by Lender of an Event
of Default.
SECTION 9.15. INFORMATION TO PARTICIPANTS. Lender may divulge to any
participant it may obtain in the Loan, or any portion of the Loan, all
information, and furnish to such participant copies of reports, financial
statements, certificates, and documents obtained under any provision of this
Agreement or any other Loan Document, provided such participant enters into an
agreement reasonably satisfactory to Borrower to keep such information
confidential.
SECTION 9.16. INDEMNITY. Borrower hereby agrees to indemnify and hold
harmless Lender, its partners, officers, agents and employees (collectively,
"Indemnitee") from and against any liability, loss, cost, expense, claim,
damage, suit, action or proceeding ever suffered or incurred by Lender
(including reasonable attorneys' fees and expenses) arising from Borrower's
failure to observe, perform or discharge any of its covenants, obligations,
agreements or duties under this Agreement, or from the breach of any of the
representations or warranties contained in Article IV of this Agreement. In
addition, Borrower shall defend Indemnitee against and save it harmless from all
claims of any Person with respect to the Collateral. Notwithstanding any
contrary provision in this Agreement, the obligation of Borrower under this
Section 9.16 shall survive the payment in full of the Obligations and the
termination of this Agreement.
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SECTION 9.17. APPOINTMENT OF AGENT UNDER THIS AGREEMENT.
(a) Each of the entities comprising Borrower hereby irrevocably
appoints and constitutes ▇▇▇▇▇▇ ▇▇▇▇▇ as its agent to request and receive
Revolving Credit Loans (and to otherwise act on behalf of each such entity
pursuant to this Agreement and the other Loan Documents) from Lender in the name
or on behalf of each such entity. Lender may disburse the Revolving Credit Loans
to the bank account of any one or more of such entities without notice to any of
the other entities comprising Borrower or any other Person at any time obligated
on or in respect of the Obligations.
(b) Each of the entities comprising Borrower hereby irrevocably
appoints and constitutes ▇▇▇▇▇▇ ▇▇▇▇▇ as its agent to receive statements of
account and all other notices from Lender with respect to the Obligations or
otherwise under or in connection with this Agreement and the other Loan
Documents.
(c) No purported termination of the appointment of ▇▇▇▇▇▇ ▇▇▇▇▇ as
agent shall be effective without the prior written consent of Lender.
SECTION 9.18. LENDER APPROVALS. Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of Lender with respect
to any matter that is the subject of this Agreement, the other Loan Documents
may be granted or withheld by Lender in its sole and absolute discretion.
SECTION 9.19. CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND
THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF MARYLAND, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS. IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR THE NOTE IS
COMMENCED BY LENDER IN THE STATE COURTS OF THE STATE OF MARYLAND OR IN THE U.S.
DISTRICT COURT FOR THE DISTRICT OF MARYLAND, BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN
THE STATE OF MARYLAND. ANY PROCESS IN ANY SUCH ACTION SHALL BE DULY SERVED IF
MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS DESCRIBED
IN SECTION 9.4. OR IF SERVED BY ANY OTHER MEANS PERMITTED BY APPLICABLE LAW.
SECTION 9.20. INTENTIONALLY DELETED
SECTION 9.21. WAIVER OF TRIAL BY JURY. BORROWER HEREBY (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND
(B) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT
SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN,
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KNOWINGLY AND VOLUNTARILY, BY BORROWER, AND THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL
WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS
AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES TO THIS AGREEMENT, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF BORROWER'S
WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, BORROWER HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF LENDER (INCLUDING LENDER'S COUNSEL) HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL NOT SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION.
SECTION 9.22. CONFESSION OF JUDGMENT. UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, BORROWER AUTHORIZES ANY ATTORNEY ADMITTED TO
PRACTICE BEFORE ANY COURT OF RECORD IN THE UNITED STATES OR THE CLERK OF SUCH
COURT TO APPEAR ON BEHALF OF BORROWER IN ANY COURT IN ONE OR MORE PROCEEDINGS,
OR BEFORE ANY CLERK THEREOF OF PROTHONOTARY OR OTHER COURT OFFICIAL, AND TO
CONFESS JUDGMENT AGAINST BORROWER IN FAVOR OF LENDER IN THE FULL AMOUNT DUE ON
THIS AGREEMENT (INCLUDING PRINCIPAL, ACCRUED INTEREST AND ANY AND ALL CHARGES,
FEES AND COSTS) PLUS REASONABLE ATTORNEYS' FEES NOT TO EXCEED FIFTEEN PERCENT
(15%) OF THE AMOUNT DUE, PLUS COURT COSTS, ALL WITHOUT PRIOR NOTICE OR
OPPORTUNITY OF BORROWER FOR PRIOR HEARING. BORROWER AGREES AND CONSENTS THAT
VENUE AND JURISDICTION SHALL BE PROPER IN THE CIRCUIT COURT OF ANY COUNTY OF THE
STATE OF MARYLAND OR OF BALTIMORE CITY, MARYLAND, OR IN THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MARYLAND. BORROWER WAIVES THE BENEFIT OF ANY
AND EVERY STATUTE, ORDINANCE, OR RULE OF COURT WHICH MAY BE LAWFULLY WAIVED
CONFERRING UPON BORROWER ANY RIGHT OR PRIVILEGE OF EXEMPTION, HOMESTEAD RIGHTS,
STAY OF EXECUTION, OR SUPPLEMENTARY PROCEEDINGS, OR OTHER RELIEF FROM THE
ENFORCEMENT OR IMMEDIATE ENFORCEMENT OF A JUDGMENT OR RELATED PROCEEDINGS ON A
JUDGMENT. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST
BORROWER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, OR BY ANY
IMPERFECT EXERCISE THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT
ENTERED PURSUANT THERETO; SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR
MORE OCCASIONS FROM TIME TO TIME, IN THE SAME OR DIFFERENT JURISDICTIONS, AS
OFTEN AS LENDER SHALL DEEM NECESSARY, CONVENIENT, OR PROPER.
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SECTION 9.23. CONFIDENTIALITY. Lender agrees to keep all information
provided to it by Borrower strictly confidential and not to disclose any of such
information to any third party, except as provided by Section 9.15.
SECTION 9.24. TERMINATION. Promptly following the Termination of the Loan
and the payment by Borrower of all Obligations, Lender will terminate all Liens
and take such other actions as reasonably requested by Borrower to reflect the
termination of this Agreement and the Loans.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, intending to be legally bound, and intending that this
Agreement constitutes an instrument executed under seal, the parties have caused
this Agreement to be executed under seal as of the date first written above.
LENDER:
▇▇▇▇▇▇ HEALTHCARE FINANCE, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
BORROWER:
ROCKWELL MEDICAL TECHNOLOGIES,
INC. , A Michigan corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Secretary and CFO
ROCKWELL TRANSPORTATION, INC.
A Michigan corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Secretary & CFO
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LIST OF EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Lockbox Agreement
Exhibit C - Form of Legal Opinion
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LIST OF SCHEDULES
Schedule 1.36 - Permitted Liens
Schedule 4.1 - Subsidiaries
Schedule 4.5 - Litigation
Schedule 4.7 - Tax Identification Numbers
Schedule 4.13 - Non-Compliance with Law
Schedule 4.14 - Environmental Matters
Schedule 4.15 - Places of Business
Schedule 4.16 - Licenses
Schedule 4.17 - Stock Ownership
Schedule 4.19 - Borrowings and Guarantees
Schedule 4.21 - Trade Names
Schedule 4.22 - Joint Ventures
Schedule 7.12 - Transactions with Affiliates
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