LOAN AGREEMENT
$2,000,000
between
THE FEMALE HEALTH COMPANY
as Borrower
and
HEARTLAND BANK
as Lender
Dated as of May 18, 2001
TABLE OF CONTENTS
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Page
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ARTICLE 1 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Provisions. . . . . . . . . . . . . . . . . . . . . . 6
Section 1.3 Exhibits and Schedules. . . . . . . . . . . . . . . . . . . 7
ARTICLE 2 - CREDIT FACILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Revolving Credit Loans. . . . . . . . . . . . . . . . . . . 7
Section 2.2 Repayment of Revolving Credit Loan. . . . . . . . . . . . . 7
Section 2.3 Revolving Credit Note . . . . . . . . . . . . . . . . . . . 7
Section 2.4 Prepayment of Credit Loan . . . . . . . . . . . . . . . . . 8
ARTICLE 3 - GENERAL LOAN PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 8
Section 3.1 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3 Increased Costs and Reduced Returns . . . . . . . . . . . . 8
Section 3.4 Manner of Payment . . . . . . . . . . . . . . . . . . . . . 9
Section 3A.1 Payments . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 4 - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.1 Conditions Precedent to All Loans. . . . . . . . . . . . . . 10
Section 4.3 Conditions Precedent to Subsequent Term Loan A
Advances and Revolving Loan Advances. . . . . . . . . . . . 11
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BORROWER . . . . . . . . . . . . 12
Section 5.1 Representations and Warranties . . . . . . . . . . . . . . . 12
Section 5.2 Survival of Representations and Warranties, Etc. . . . . . . 14
ARTICLE 6 - AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.1 Preservation of Corporate Existence and Similar Matters. . . 15
Section 6.2 Compliance with Applicable Law . . . . . . . . . . . . . . . 15
Section 6.3 Payment of Taxes and Claims. . . . . . . . . . . . . . . . . 15
Section 6.4 Accounting Methods and Financial Records . . . . . . . . . . 15
Section 6.5 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.6 Hazardous Waste and Substances; Environmental Requirements . 15
Section 6.7 Accuracy of Information. . . . . . . . . . . . . . . . . . . 15
Section 6.8 Revisions or Updates to Schedules. . . . . . . . . . . . . . 16
Section 6.10 Conduct of Business . . . . . . . . . . . . . . . . . . . . 16
Section 6.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.11. Issuance of Shares . . . . . . . . . . . . . . . . . . . . 16
Section 6.12 Reservation of Shares Upon Conversion. . . . . . . . . . . 16
ARTICLE 7 - INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . 16
Section 7.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7.3 Copies of Other Reports. . . . . . . . . . . . . . . . . . . 17
Section 7.4 Notice of Litigation and Other Matters . . . . . . . . . . . 17
Section 7.5 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 8 - NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.1 Merger, Consolidation and Sale of Assets . . . . . . . . . . 18
Section 8.2 Transactions with Affiliates . . . . . . . . . . . . . . . . 18
Section 8.3. Protection of Lender's Rights . . . . . . . . . . . . . . . 18
Section 8.4 Dividends/Distributions . . . . . . . . . . . . . . . . . . 18
Section 8.5 Reclassification, Merger, Sale of Assets, etc. . . . . . . . 18
Section 8.6 Split, Subdivision or Combination of Shares. . . . . . . . . 19
Section 8.7 No Impairment. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.8 Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 9 - DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . 19
Section 9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.3 Application of Proceeds. . . . . . . . . . . . . . . . . . . 21
Section 9.4 Miscellaneous Provisions Concerning Remedies . . . . . . . . 21
ARTICLE 10 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 10.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 10.3 Stamp and Other Taxes . . . . . . . . . . . . . . . . . . . 23
Section 10.4 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 10.5 Dispute Resolution. . . . . . . . . . . . . . . . . . . . . 23
Section 10.7 Reversal of Payments. . . . . . . . . . . . . . . . . . . . 24
Section 10.8 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . 24
Section 10.9 Accounting Matters. . . . . . . . . . . . . . . . . . . . . 24
Section 10.10 Assignment; Participation. . . . . . . . . . . . . . . . . 24
Section 10.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 10.12 Performance of Borrowers' Duties . . . . . . . . . . . . . 24
Section 10.13 Indemnification. . . . . . . . . . . . . . . . . . . . . . 25
Section 10.14 All Powers Coupled with Interest . . . . . . . . . . . . . 25
Section 10.15 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.16 Severability of Provisions . . . . . . . . . . . . . . . . 25
Section 10.17 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.18 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.19 Final Agreement. . . . . . . . . . . . . . . . . . . . . . 25
Section 10.20 Purchase of Insurance. . . . . . . . . . . . . . . . . . . 25
Section 10.21 Oral Agreements. . . . . . . . . . . . . . . . . . . . . . 26
EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF LOAN NOTE
SCHEDULE 5.1(m) Borrower locations
SCHEDULE 5.1(p) ERISA
SCHEDULE 5.1(r) Capital Structure
LOAN AGREEMENT
This Loan Agreement is entered into as of this 18th day of May, 2001 by and
between THE FEMALE HEALTH COMPANY, a Wisconsin corporation ("Borrower") and
HEARTLAND BANK, a federal savings bank (the "Lender");
WITNESSETH:
WHEREAS, the Borrower desires to establish a credit facility with Lender
for the purpose of redeeming some of the outstanding corporate securities issued
by the Borrower; and
WHEREAS, upon and subject to the terms and conditions set forth herein, the
Lender is willing to make loans and advances to the Borrower.
NOW, THEREFORE, the Borrower and the Lender hereby agree as follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 Definitions. For the purposes of this Agreement:
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"Affiliate" means, with respect to a Person, (a) any officer, director,
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employee, member or managing agent of such Person, (b) any spouse, parents,
brothers, sisters, children and grandchildren of such Person, (c) any
association, partnership, trust, entity or enterprise in which such Person is a
director, officer or general partner, (d) any other Person that, (i) directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 5% or more of any class of voting stock or
partnership, membership or other interest of such Person or any Subsidiary of
such Person, or (iii) 5% or more of the voting stock or partnership, membership
or other interest of which is directly or indirectly beneficially owned or held
by such Person or a Subsidiary of such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or partnership or other interests, by contract or
otherwise.
"Agreement" means this Agreement, including the Exhibits and Schedules
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hereto, and all amendments, modifications and supplements hereto and thereto and
restatements hereof and thereof.
"Agreement Date" means the date as of which this Agreement is dated.
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"Benefit Plan" means an employee benefit plan as defined in Section 3(35)
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of ERISA (other than a Multiemployer Plan) in respect of which a Person or any
Related Company is, or within the immediately preceding 6 years was, an
"employer" as defined in Section 3(5) of ERISA, including such plans as may be
established after the Agreement Date.
"Borrower" means The Female Health Company, a Wisconsin corporation and its
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successors and assigns.
"Borrowing Officer" means each individual of Borrower who is duly
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authorized by Borrower to submit a request for a Loan Advance.
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"Business Day" means any day other than a Saturday, Sunday or other day on
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which banks in St. Louis, Missouri are authorized to close.
"Code" means the Internal Revenue Code of 1986, as amended from time to
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time.
"Credit Loan" means the loan made to Borrower pursuant to SECTION 2.1.
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"Credit Note" means the Promissory Note made by Borrower payable to the
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order of the Lender evidencing the obligation of Borrower to pay the aggregate
unpaid principal amount of the Credit Loan made to it by the Lender (and any
promissory note or notes that may be issued from time to time in substitution,
renewal, extension, replacement or exchange therefor).
"Default" means any of the events specified in SECTION 9.1 that, with the
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passage of time or giving of notice or both, would constitute an Event of
Default.
"Default Rate" means the annual rate described in SECTION 3.1(B).
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"Dollar" and "$" means freely transferable United States dollars.
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"Effective Date" means the later of (a) the Agreement Date, and (b) the
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first date on which all of the conditions set forth in SECTION 4.1 shall have
been fulfilled or waived by the Lender.
"Effective Interest Rate" means the rate of interest per annum on the Loans
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in effect from time to time pursuant to the provisions of Section 3.1.
"Environmental Laws" means all federal, state, local and foreign laws now
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or hereafter in effect relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder.
"ERISA" mean the Employee Retirement Income Security Act of 1974, as in
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effect from time to time, and any successor statute.
"Event of Default" means any of the events specified in SECTION 9.1.
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"Financing Statements" means the Uniform Commercial Code financing
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statements executed and delivered by Guarantors to the Lender, naming the Lender
as secured party and Guarantor as debtor, in connection with the perfection of
the security interests granted by this Agreement or the other Guaranty Security
Documents.
"GAAP" means generally accepted accounting principles in the United States
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consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of the Person referred to.
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"Governmental Approvals" means all authorizations, consents, approvals,
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licenses and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local, foreign national or
provincial, and all agencies thereof.
"Governmental Authority" means any government or political subdivision or
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any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Guarantors" means, collectively, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
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▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1996 Living Trust and such other Persons who
may in the future Guarantee any of the Obligations.
"Guaranty", "Guaranteed" or to "Guarantee," as applied to any obligation of
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another Person shall mean and include:
(a) a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), directly or indirectly, in any
manner, of any part or all of such obligation of such other Person, and
(b) an agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation of such other Person
whether by (i) the purchase of securities or obligations, (ii) the purchase,
sale or lease (as lessee or lessor) of property or the purchase or sale of
services primarily for the purpose of enabling the obligor with respect to such
obligation to make any payment or performance (or payment of damages in the
event of nonperformance) of or on account of any part or all of such obligation
or to assure the owner of such obligation against loss, (iii) the supplying of
funds to, or in any other manner investing in, the obligor with respect to such
obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of
credit, or (v) the supplying of funds to or investing in a Person on account of
all or any part of such Person's obligation under a guaranty of any obligation
or indemnifying or holding harmless, in any way, such Person against any part or
all of such obligation.
"Guaranty Security Documents" means each (a) Financing Statement, (b)
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Pledge Agreement, and (c) other writing executed and delivered by any Person
guaranteeing the Obligations.
"Guaranty Sublimits" shall equal the aggregate amount of Obligations
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guaranteed by the Guarantors pursuant to the Limited Guaranties.
"Indebtedness" of any Person means, without duplication (a) all obligations
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for money borrowed or for the deferred purchase price of property or services or
in respect of reimbursement obligations under letters of credit, (b) all
obligations represented by bonds, debentures, notes and accepted drafts that
represent extensions of credit, (c) all obligations (including, during the
noncancellable term of any lease in the nature of a title retention agreement,
all future payment obligations under such lease discounted to their present
value in accordance with GAAP) secured by any Lien to which any property or
asset owned or held by such Person is subject, whether or not the obligation
secured thereby shall have been assumed by such Person, (d) all obligations of
other Persons which such Person has Guaranteed, including, but not limited to,
all obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person, (e) the sum of
all undrawn amounts and all drawings under any letters of credit for which the
Person has reimbursement obligations, and (f) in the case of Borrower (without
duplication), the Loans.
"Lender" means Heartland Bank, a federal savings bank, and its successors
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and assigns.
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"Lender's Office" means the office of the Lender specified in or determined
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in accordance with the provisions of SECTION 10.1(C).
"Liabilities" means all liabilities of a Person determined in accordance
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with GAAP and includable on a balance sheet of such Person prepared in
accordance with GAAP.
"Lien" as applied to the property of any Person means: (a) any mortgage,
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deed to secure debt, deed of trust, lien, pledge, charge, lease constituting a
capitalized lease obligation, conditional sale or other title retention
agreement, or other security interest, security title or encumbrance of any kind
in respect of any property of such Person or upon the income or profits
therefrom, (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person, (c) any Indebtedness which is unpaid more than 30 days after the
same shall have become due and payable and which if unpaid might by law
(including, but not limited to, bankruptcy and insolvency laws) or otherwise be
given any priority whatsoever over general unsecured creditors of such Person,
and (d) the filing of, or any agreement to give, any financing statement under
the UCC or its equivalent in any jurisdiction.
"Limited Guaranties" means those certain Continuing Secured Limited
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Guaranties issued in favor of the Lender by each of the Guarantors dated as of
the date hereof.
"Loans" means any loan made to Borrower pursuant to SECTIONS 2.1 and all
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extensions, renewals and modifications thereto, as well as all such Loans
collectively.
"Loan Documents" means, collectively, this Agreement, the Note, the
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Registration Rights Agreement, the Warrant, the Guaranty Security Documents, the
Limited Guaranties and each other instrument, agreement and document executed
and delivered by Borrower in connection with this Agreement and each other
instrument, agreement or document referred to herein or contemplated hereby.
"Loan Maturity Date" means May 18, 2004.
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"Material Adverse Effect" means any act, omission, event or undertaking
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which would, singly or in the aggregate, have a material adverse effect upon (a)
the business, assets, properties, liabilities, condition (financial or
otherwise), results of operations or business prospects of Borrower, (b) upon
the ability of Borrower to perform any obligations under this Agreement or any
other Loan Document to which it is a party, or (c) the legality, validity,
binding effect, enforceability or admissibility into evidence of any Loan
Document or the ability of Lender to enforce any rights or remedies under or in
connection with any Loan Document; in any case, whether resulting from any
single act, omission, situation, status, event, or undertaking, together with
other such acts, omissions, situations, statuses, events, or undertakings.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
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4001(a)(3) of ERISA to which Borrower or a Related Company is required to
contribute or has contributed within the immediately preceding 6 years.
"Note" means the Credit Note, the form of which is attached hereto as
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EXHIBIT A, and any amendments, modifications, restatements, replacements,
renewals or refinancings thereof.
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"Obligations" means, in each case whether now in existence or hereafter
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arising, (a) the principal of and interest and premium, if any, on, and expenses
related to, the Loans and (b) all indebtedness, liabilities, obligations,
overdrafts, covenants and duties of Borrower to the Lender of every kind, nature
and description, direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note and whether or not for the payment of money under or in
respect of the Loans, this Agreement, any Note or any of the other Loan
Documents.
"Obligors" means Borrower, Guarantors, each party to the Guaranty Security
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Documents (other than the Lender), and each other party at any time primarily or
secondarily, directly or indirectly, liable on any of the Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
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agency.
"Person" means an individual, corporation, partnership, association, trust
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or unincorporated organization or a government or any agency or political
subdivision thereof.
"Pledge Agreements" means those certain pledge agreements entered into by
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and between Lender and each Guarantor, dated as of even date herewith, whereby
each Guarantor pledged, to Lender, its interest in certain warrants for the
purchase of stock in Borrower, and the corresponding shares of stock issuable
upon exercise of the warrants.
"Registration Rights Agreement" means that certain Registration Rights
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Agreement entered into by and between Borrower and Lender, dated as of even date
herewith, whereby Borrower agreed to provide to Lender certain registration
rights under the Securities Act of 1933, as amended, with respect to the Shares.
"Related Company" means, as to any Person, any (a) corporation which is a
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member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as such Person, (b) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person, or (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person or any corporation described in CLAUSE (A) above or any partnership,
trade or business described in CLAUSE (B) above.
"Restricted Distribution" by any Person means (a) its retirement,
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redemption, purchase, or other acquisition for value of any capital stock or
other equity securities or partnership interests issued by such Person, (b) the
declaration or payment of any dividend or distribution on or with respect to any
such securities or partnership interests, (c) any loan or advance by such Person
to, or other investment by such Person in, the holder of any of such securities
or partnership interests, and (d) any other payment by such Person in respect of
such securities or partnership interests.
"Restricted Payment" means (a) any redemption, repurchase or prepayment or
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other retirement, prior to the stated maturity thereof or prior to the due date
of any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness of a Person (other than the Obligations and trade
debt), and (b) the payment by any Person of the principal amount of or interest
on any Indebtedness (other than trade debt) owing to an Affiliate of such
Person.
"Security Interest" means the Liens of the Lender on and in any collateral
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effected by any of the Guaranty Security Documents or pursuant to the terms
hereof or thereof.
"Shares" means shares of common stock of the Borrower issuable upon
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exercise of the Warrant.
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"Subsidiary" means a Person of which an aggregate of 50% or more of the
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stock of any class or classes or 50% or more of membership or other ownership
interests is owned of record or beneficially by such other Person or by one or
more Subsidiaries of such other Person or by such other Person and one or more
Subsidiaries of such Person, (i) if the holders of such stock or other ownership
interests (A) are ordinarily, in the absence of contingencies, entitled to vote
for the election of a majority of the directors (or other individuals performing
similar functions) of such Person, even though the right so to vote has been
suspended by the happening of such a contingency, or (B) are entitled, as such
holders, to vote for the election of a majority of the directors (or individuals
performing similar functions) of such Person, whether or not the right so to
vote exists by reason of the happening of a contingency, or (ii) in the case of
such other ownership interests, if such ownership interests constitute a
majority voting interest.
"Termination Event" means (a) a "Reportable Event" as defined in Section
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4043(b) of ERISA, but excluding any such event as to which the provision for 30
days' notice to the PBGC is waived under applicable regulations, (b) the filing
of a notice of intent to terminate a Benefit Plan or the treatment of a Benefit
Plan amendment as a termination under Section 4041 of ERISA, or (c) the
institution of proceedings to terminate a Benefit Plan by the PBGC under Section
4042 of ERISA or the appointment of a trustee to administer any Benefit Plan.
"UCC" means the Uniform Commercial Code as in effect from time to time in
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the State of Missouri.
"Unfunded Vested Accrued Benefits" means, with respect to any Benefit Plan
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at any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Benefit Plan exceeds (b) the fair market
value of all Benefit Plan assets allocable to such benefits, as determined using
such reasonable actuarial assumptions and methods as are specified in the
Schedule B (Actuarial Information) to the most recent Annual Report (Form 5500)
filed with respect to such Benefit Plan.
"Warrant" means that certain Warrant, dated as of even date herewith
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executed by the Borrower in favor Lender whereby Lender is entitled to subscribe
for and purchase Shares from Borrower.
Section 1.2 Other Provisions.
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(a) All terms in this Agreement, the Exhibits and Schedules hereto
shall have the same defined meanings when used in any other Loan Documents,
unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting terms
not specifically defined or specified herein shall have the meanings generally
attributed to such terms under GAAP including, without limitation, applicable
statements and interpretations issued by the Financial Accounting Standards
Board and bulletins, opinions, interpretations and statements issued by the
American Institute of Certified Public Accountants or its committees.
(c) All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provisions of this Agreement.
(e) Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and neither limit nor
amplify the provisions of this Agreement, and all references in this Agreement
to Articles, Sections, Subsections, paragraphs, clauses, subclauses, Schedules
or Exhibits shall refer to the corresponding Article, Section, Subsection,
paragraph, clause or subclause of, or Schedule or Exhibit attached to, this
Agreement, unless specific reference is made to the articles, sections or other
subdivisions or divisions of, or to schedules or exhibits to, another document
or instrument.
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(f) Each definition of a document in this Agreement shall include such
document as amended, modified, supplemented or restated from time to time in
accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party to a
Loan Document includes that party and its successors and assigns permitted
hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is referred
to in this Agreement or in any other Loan Document, such time shall be the local
time in St. Louis, Missouri.
(i) Whenever the phrases "to the knowledge of Borrower," or "known to,"
or words of similar import relating to the knowledge of Borrower are used
herein, such phrase shall mean and refer to (i) the actual knowledge of the
President, the chief financial officer or any officer or manager of the
Borrower, or (ii) the knowledge that such Persons would have obtained if they
had engaged in good faith in the diligent performance of their duties, including
the making of such reasonable specific inquiries (excepting those situations and
circumstances wherein a reasonably prudent person would not consider it
appropriate to make any such inquiry) as may be necessary of the appropriate
persons in a good faith attempt to ascertain the accuracy of the matter to which
such phrase relates.
(j) The terms accounts, chattel paper, documents, equipment,
instruments, general intangibles and inventory, as and when used (without being
capitalized) in this Agreement or the Guaranty Security Documents, shall have
the meanings given those terms in the UCC.
Section 1.3 Exhibits and Schedules. All Exhibits and Schedules
------------------------
attached hereto are by reference made a part hereof.
ARTICLE 2 - CREDIT FACILITY
Section 2.1 Credit Loans. Upon the terms and subject to the conditions
------------
of, and in reliance upon the representations and warranties made under, this
Agreement, the Lender shall make Credit Loans to Borrower from time to time from
the date hereof to the Loan Maturity Date (each, a "Loan Advance"), as requested
by Borrower in accordance with the terms of SECTION 2.1.2, in an aggregate
principal amount outstanding not to exceed at any time $2,000,000.
2.1.1 Limitation on Loan Advances. Notwithstanding anything to the
------------------------------
contrary contained herein, no Loan Advance will be made if such advance would
result in the aggregate amount of all Credit Loans to exceed the lesser of the
(a) $2,000,000.00 (the "Loan Commitment"), or (b) the Maximum Available Amount.
No Loan Advance will be made on or after the Loan Maturity Date. The "Maximum
Available Amount" on any date shall be a Dollar amount equal to the Guaranty
Sublimits divided by one and twenty five one hundredths (1.25).
2.1.2 Loan Advance Borrowing Procedure. Subject to the Loan Commitment
---------------------------------
and the limitations set forth herein, Borrower may request a Loan Advance by
submitting a Loan Advance Request to Lender via mail or facsimile in the form of
EXHIBIT A attached to the Note. Every such advance request shall be
irrevocable. Only a request from a Borrowing Officer to Lender that specifies
(i) the amount of the Loan Advance, to be made and (ii) the date the proceeds of
such Loan Advance is requested to be made available to Borrower (the "Loan
Advance Date") shall be treated as a "Loan Advance Request". Each Loan Advance
Request shall be written. Provided that all conditions precedent thereto
hereunder have been met, Lender will make the amount of each such requested
advance available to Borrower in immediately available funds in Dollars at the
Lender's Office.
7
Section 2.2 Repayment of Credit Loan. The Credit Loan is due and
---------------------------
payable and shall be repaid in full by the Borrower on the Loan Maturity Date in
the amount of the then unpaid balance of the Credit Loan and all accrued and
unpaid interest thereon.
Section 2.3 Credit Note. The Credit Loan and the obligation of
------------
Borrower to repay such Credit Loan shall be evidenced by a single Credit Note
payable to the order of the Lender. Such Credit Note shall be dated the
Effective Date and be duly and validly executed and delivered by Borrower.
Section 2.4 Prepayment of Credit Loan.
----------------------------
(a) Voluntary Prepayments. Borrower shall have the right at
----------------------
any time and from time to time, to wholly or partially repay the Credit Loan at
any time without premium or penalty. Any amount prepaid many not be
re-borrowed.
(b) Mandatory Prepayments. If at any time the Credit Loans
----------------------
exceed the Maximum Available Amount, Borrower shall on demand make a payment to
Lender in the amount of the excess. Each such prepayment shall be applied to
reduce the Credit Loan.
ARTICLE 3 - GENERAL LOAN PROVISIONS
Section 3.1 Interest.
--------
(a) Interest Rate of Credit Loans. The Credit Loan shall bear interest
-----------------------------
at a per annum rate equal to ten percent (10%) ("Loan Rate") on the unpaid
principal amount of the Credit Loans for each day from the day a Credit Loan was
made until the Credit Loans are paid in full (whether at maturity, by reason of
acceleration or otherwise).
(b) Default Rate. From and after the occurrence of an Event of
-------------
Default, the unpaid principal amount of each Obligation shall bear interest
until paid in full (or, if earlier, until such Event of Default is cured or
waived in writing by the Lender) at a rate per annum equal to four percent (4%)
plus the rate otherwise in effect under SECTION 3.1, payable on demand. The
interest rate provided for in this SECTION 3.1(B) shall to the extent permitted
by applicable law apply to and accrue on the amount of any judgment entered with
respect to any Obligation and shall continue to accrue at such rate during any
proceeding described in SECTION 9.1(G) or (H).
(c) The interest rates provided for in SECTIONS 3.1(A) and (B) shall be
computed on the basis of a year of 360 days and the actual number of days
elapsed.
(d) It is not intended by the Lender, and nothing contained in this
Agreement, any Note or any other Loan Document shall be deemed, to establish or
require the payment of a rate of interest in excess of the maximum rate
permitted by applicable law (the "Maximum Rate"). If, in any month, the
Effective Interest Rate, absent such limitation, would have exceeded the Maximum
Rate, then the Effective Interest Rate for that month shall be the Maximum Rate,
and if, in future months, the Effective Interest Rate would otherwise be less
than the Maximum Rate, then the Effective Interest Rate shall remain at the
Maximum Rate until such time as the amount of interest paid hereunder equals the
amount of interest which would have been paid if the same had not been limited
by the Maximum Rate. In the event the Lender receives, collects or applies as
interest any sum in excess of the Maximum Rate, such excess amount shall be
applied to the reduction of the principal balance of the applicable Obligation,
and, if no such principal is then outstanding, such excess or part thereof
remaining shall be paid to Borrower.
8
Section 3.2 Increased Costs and Reduced Returns. Borrower agrees that if
-------------------------------------
any law now or hereafter in effect and whether or not presently applicable to
the Lender or any request, guideline or directive of any Governmental Authority
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) or the interpretation or administration thereof by
any Governmental Authority, shall either (a)(i) impose, affect, modify or deem
applicable any reserve, special deposit, capital maintenance or similar
requirement against any Loan, (ii) impose on the Lender any other condition
regarding any Loan, this Agreement, the Note or the facilities provided
hereunder, or (iii) result in any requirement regarding capital adequacy
(including any risk-based capital guidelines) affecting the Lender being imposed
or modified or deemed applicable to the Lender, or (b) subject the Lender to any
taxes, not including taxes on the income of Lender, on the recording,
registration, notarization or other formalization of the Loans or the Note, and
the result of any event referred to in CLAUSE (A) or (B) above shall be to
increase the cost to the Lender of making, funding or maintaining any Loan or to
reduce the amount of any sum receivable by the Lender or the Lender's rate of
return on capital with respect to any Loan to a level below that which the
Lender could have achieved but for such imposition, modification or deemed
applicability (taking into consideration the Lender's policies with respect to
capital adequacy) by an amount deemed by Lender (in the exercise of its
discretion) to be material, then, upon demand by the Lender, Borrower shall
immediately pay to the Lender additional amounts which shall be sufficient to
compensate the Lender for such increased cost, tax or reduced rate of return,
and which amount shall be reimbursed to Borrower if Lender receives a refund or
credit therefor. A certificate of the Lender to Borrower claiming compensation
under this SECTION 3.2 shall be final, conclusive and binding on all parties for
all purposes in the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such compensation, the additional
amount or amounts to be paid to it hereunder, and the method by which such
amounts were determined. In determining such amount, the Lender may use any
reasonable averaging and attribution methods.
Section 3.3 Manner of Payment. Each payment (including prepayments) by
-----------------
Borrower on account of the principal of or interest on the Loans or of any fee
or other amounts payable to the Lender under this Agreement or any Note shall be
made not later than 2:00 p.m. on the date specified for payment under this
Agreement (or if such day is not a Business Day, the next succeeding Business
Day) to the Lender at the Lender's Office, in Dollars, in immediately available
funds and shall be made without any setoff, counterclaim or deduction
whatsoever. Borrower hereby irrevocably authorize the Lender and each Affiliate
of the Lender to charge any account of Borrower maintained with the Lender or
such Affiliate with such amounts as may be necessary from time to time to pay
any Obligations when due.
Section 3.4 Payments.
--------
(a) Scheduled Payments on Credit Loan. Borrower shall make payments of
---------------------------------
interest accrued on the Credit Loans monthly, in arrears, beginning on the first
day of the second full calendar month following the Effective Date and
continuing on the first day of each calendar month thereafter and on the Loan
Maturity Date. Borrower shall pay interest accrued on the Credit Loan after the
Loan Maturity Date, on demand.
(b) Final Payment. On the Loan Maturity Date, Borrower shall pay to the
-------------
Lender, in same day funds, an amount equal to the aggregate amount of the
respective Loans outstanding and due on such date, together with accrued
interest thereon, all fees payable to the Lender pursuant to the provisions of
this Agreement, any and all other Obligations then outstanding.
9
(c) Interest Calculation. For purposes of interest calculation only,
---------------------
(i) a payment by check, draft or other instrument received on a Business Day
shall be deemed to have been applied to the relevant Obligation on the second
following Business Day, (ii) a payment in cash or by wire transfer received at
or before 2:00 p.m., St. Louis, Missouri time, on a Business Day shall be deemed
to have been applied to the relevant Obligation on the Business Day when it is
received, and (iii) a payment in cash or by wire transfer received on a day that
is not a Business Day or after 2:00 p.m., St. Louis, Missouri time, on a
Business Day shall be deemed to have been applied to the relevant Obligation on
the next Business Day.
(d) Returned Instruments. If a payment is made by check, draft or
---------------------
other instrument and the check, draft or other instrument is returned to Lender
unpaid, the application of the payment to the Obligation will be reversed and
will be treated as never having been made.
(e) Compelled Return of Payments or Proceeds. If Lender is for any
--------------------------------------------
reason compelled to surrender any payment or any proceeds of any collateral
under the Guaranty Security Documents because such payment or the application of
such proceeds is for any reason invalidated, declared fraudulent, set aside, or
determined to be void or voidable as a preference, an impermissible setoff, or a
diversion of trust funds, then this Agreement and the Obligations to which such
payment or proceeds was applied or intended to be applied shall be revived as if
such application was never made; and Borrower shall be liable to pay to Lender,
and shall indemnify Lender for and hold Lender harmless from any loss with
respect to, the amount of such payment or proceeds surrendered. This Section
shall be effective notwithstanding any contrary action that Lender may take in
reliance upon its receipt of any such payment or proceeds. Any such contrary
action so taken by Lender shall be without prejudice to Lender's rights under
this Agreement and shall be deemed to have been conditioned upon the application
of such payment or proceeds having become final and irrevocable. The provisions
of this Section shall survive the payment and satisfaction of all of the
Obligations.
(f) Due Dates Not on Business Days. If any payment required hereunder
-------------------------------
becomes due on a date that is not a Business Day, then such due date shall be
deemed automatically extended to the next Business Day.
ARTICLE 4 - CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to All Loans. Notwithstanding any
------------------------------------
other provision of this Agreement, the Lender's obligation to make all Loans is
subject to the fulfillment of each of the following conditions prior to or
contemporaneously with the making of each such Loans:
(a) Closing Documents. The Lender shall have received each of the
------------------
following documents, or otherwise shall confirm the continuing effectiveness of
any such documents, all of which shall be satisfactory in form and substance to
the Lender and its counsel:
(1) this Agreement, duly executed and delivered by Borrower;
(2) certified copies of the Articles of Incorporation and by-laws of
Borrower and any Subsidiary of Borrower as in effect on the Effective Date;
10
(3) certified copies of all corporate action, including shareholder
approval, if necessary, taken by Borrower to authorize the execution, delivery
and performance of this Agreement and the other Loan Documents and the
borrowings under this Agreement;
(4) certificates of incumbency and specimen signatures with respect to
each of the officers of Borrower who are authorized to execute and deliver this
Agreement or any other Loan Document on behalf of the Borrower or any document,
certificate or instrument to be delivered in connection with this Agreement or
the other Loan Documents and to request borrowings under this Agreement;
(5) a certificate evidencing the good standing of Borrower in the
jurisdiction of its incorporation and in each other jurisdiction in which it is
qualified as a foreign corporation to transact business;
(6) the Financing Statements duly executed and delivered by each
Guarantor, and evidence satisfactory to the Lender that the Financing Statements
have been filed in each jurisdiction where such filing may be necessary or
appropriate to perfect the Security Interest;
(7) copies of all the financial statements referred to in SECTION 5.1
and meeting the requirements thereof;
(8) a certificate of the President of Borrower stating that (a) all of
the representations and warranties made or deemed to be made under this
Agreement are true and correct as of the Effective Date, both with and without
giving effect to the Loans to be made at such time and the application of the
proceeds thereof, (b) no Default or Event of Default exists, and (c) states the
Guaranty Sublimits;
(9) copies of each of the other Loan Documents, duly executed by the
parties thereto with evidence satisfactory to the Lender and its counsel of the
due authorization, binding effect and enforceability of each such Loan Document
on each such party and such other documents and instruments as the Lender may
reasonably request; and
(10) opinion of Borrower's counsel opining to such matters as Lender
and/or its legal counsel may require.
(c) No Injunctions, Etc. Except as disclosed in Borrower's most recent
-------------------
10Q furnished to Lender for the quarter ended December 31, 2000, no action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency or legislative body
to enjoin, restrain or prohibit or to obtain substantial damages in respect of
or which is related to or arises out of this Agreement or the consummation of
the transactions contemplated hereby or which, in the Lender's sole discretion,
would make it inadvisable to consummate the transactions contemplated by this
Agreement.
(d) Material Adverse Change. As of the Effective Date, there shall not
-----------------------
have occurred any change which, in the Lender's sole discretion, has had or may
have a Material Adverse Effect as compared to the condition of Borrower and
Guarantors presented by the most recent financial statements of Borrower and
Guarantors.
11
(e) Solvency. The Lender shall have received evidence satisfactory to
--------
it that, after giving effect to any such Loan (i) Borrower has assets having
value, both at fair value and at present fair saleable value, greater than the
amount of its liabilities, and (ii) Borrower's assets are sufficient in value to
provide Borrower with sufficient working capital to enable it profitably to
operate its businesses and to meet its obligations as they become due, and (iii)
Borrower has adequate capital to conduct the business in which they are and
propose to be engaged.
(f) No Default or Event of Default. There shall be no Default or Event
------------------------------
of Default and all of the representations and warranties made or deemed to be
made under this Agreement shall be true and correct at such time both with and
without giving effect to the Loans to be made at such time and the application
of the proceeds thereof, except that representations and warranties which, by
their terms, are applicable only to the Agreement Date shall be true and correct
only as of that date.
Section 4.2 Conditions Precedent to Subsequent Loan Advances.
-----------------------------------------------------
Notwithstanding any other provision of this Agreement, the Lender's obligation
to make any subsequent advance under the Credit Loans is subject to the
fulfillment of each of the following conditions prior to or contemporaneously
with the making of each such future Credit Loan:
(a) All of the conditions in Section 4.1 have been and remain
------------
satisfied;
(b) The representations and warranties contained in the Loan Documents
shall be true and correct in all material respects as of the time of any such
advance and with the same force and effect as if made at such time, with such
exceptions as have been disclosed to Lender in writing by Borrower as addenda to
the Schedules and are reasonably satisfactory to Lender, such representations
and warranties shall be deemed made with respect to the most recent Financial
Statements and other financial data delivered by Borrower to Lender;
(c) There shall be no Existing Default and no Default or Event of
Default will occur as a result of the making of the Loan Advance, as the case
may be, or Borrower's use of the proceeds thereof;
(d) Since the date of the most recent prior Loan Advance, as
applicable, there shall not have been any change which has had or is reasonably
likely to have a Material Adverse Effect on Borrower; and
(e) Certificate of Borrowing Officer certifying (a) the proceeds of the
Loan will be used for the purpose authorized pursuant to SECTION 6.5 of this
Agreement, and (b) the Guaranty Sublimits.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1 Representations and Warranties. Borrower represents and
--------------------------------
warrants to the Lender as follows:
(a) Organization; Power; Qualification. Borrower is a corporation,
------------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the power and authority to own properties
and to carry on business as now being and hereafter proposed to be conducted and
is duly qualified and authorized to do business in each jurisdiction in which
failure to be so qualified and authorized would have a Material Adverse Effect.
12
(b) Subsidiaries and Ownership of Borrower. Borrower has one
------------------------------------------
wholly-owned Subsidiary: The Female Health Company U.K.
(c) Authorization of Agreement, Note, Loan Documents and Borrowing.
------------------------------------------------------------------
Borrower has the right and power and has taken all necessary action to authorize
it to execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party in accordance with their respective terms and
to borrow hereunder. This Agreement and each of the other Loan Documents to
which it is a party have been duly executed and delivered by the duly authorized
officers of Borrower and each is, or when executed and delivered in accordance
with this Agreement will be, a legal, valid and binding obligation of Borrower
enforceable in accordance with its terms.
(d) Compliance of Agreement, Note, Loan Documents and Borrowing with
-------------------------------------------------------------------
Laws, Etc. The execution, delivery and performance of this Agreement and each
----------
of the other Loan Documents to which Borrower is a party in accordance with
their respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any Governmental
Approval or violate any applicable law relating to Borrower or Guarantors or any
of their Affiliates, (ii) conflict with, result in a breach of or constitute a
default under (A) the articles of incorporation or by-laws of Borrower, (B) any
indenture, agreement or other instrument to which Borrower or Guarantors is a
party or by which any of its, his or their property may be bound or (C) any
Governmental Approval relating to Borrower or Guarantor, or, (iii) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by Borrower.
(e) Compliance with Law; Governmental Approvals. Borrower (i) has all
--------------------------------------------
Governmental Approvals, including permits relating to federal, state and local
Environmental Laws, ordinances and regulations required by any applicable law
for it to conduct its business, each of which is in full force and effect, is
final and not subject to review on appeal and is not the subject of any pending
attack by direct or collateral proceeding, and (ii) is in compliance with each
Governmental Approval applicable to it and in compliance with all other
applicable laws relating to it, including, without being limited to, all
Environmental Laws and all occupational health and safety laws applicable to
Borrower or its properties, except in the case of both (i) and (ii) above for
instances of noncompliance which would not, singly or in the aggregate, cause a
Default or Event of Default or have a Material Adverse Effect and in respect of
which adequate reserves have been established on the books of Borrower.
(f) Litigation. Except as disclosed in Borrower's most recent 10Q
----------
furnished to Lender for the quarter ended December 31, 2000, there are no
actions, suits or proceedings pending against or in any other way relating
adversely to or affecting Borrower or any Guarantor or any of its, his, her or
their property in any court or before any arbitrator of any kind or before or by
any governmental body.
(g) Tax Returns and Payments. All United States federal, state and
---------------------------
local and foreign national, provincial and local and all other tax returns of
Borrower and Guarantors required by applicable law to be filed have been duly
filed, and all United States federal, state and local and foreign national,
provincial and local and all other taxes, assessments and other governmental
charges or levies upon such entities and their properties, income, profits and
assets which are due and payable have been paid, except any such nonpayment
which is at the time permitted under SECTION 8.3. The charges, accruals and
reserves on the books of Borrower in respect of United States federal, state and
local taxes and foreign national, provincial and local taxes for all fiscal
years and portions thereof since the organization of such entities are in the
judgment of Borrower adequate.
13
(h) Burdensome Provisions. Neither Borrower nor any of the Guarantors
----------------------
is a party to any indenture, agreement, lease or other instrument, or subject to
any charter or corporate restriction, Governmental Approval or applicable law,
compliance with the terms of which might have a Material Adverse Effect.
(i) Financial Statements. Borrower has furnished to the Lender a copy
---------------------
of (i) its certified audited financial statement as of September 30, 2000, and
the related statements of income, cash flow and retained earnings for the
twelve-month period then ended and a summary of adjustments to such statements
to comply with GAAP, and (ii) the balance sheet as of March 31, 2001 and the
related statement of income for the 12 (and 6) month period, respectively, then
ended. Such financial statements are complete and correct in all material
respects and present fairly and in all material respects the financial position
of Borrower as at the dates thereof and the results of operations of Borrower
for the periods then ended, subject to normal year-end adjustments. Except as
disclosed or reflected in such financial statements or the notes thereto,
Borrower did not have any material liabilities, contingent or otherwise, and
there were no material unrealized or anticipated losses of Borrower.
(j) Adverse Change. Since the date of the financial statements
---------------
described in CLAUSE (I) of SECTION 5.1(I), (i) no change in the business,
assets, liabilities, condition (financial or otherwise), results of operations
or business prospects of Borrower has occurred that has had, or may have, a
Material Adverse Effect, and (ii) no event has occurred or failed to occur which
has had, or may have, a Material Adverse Effect.
(k) Absence of Defaults. Borrower is not in default under its articles
-------------------
of incorporation or by-laws and no event has occurred which has not been
remedied, cured or waived (i) that constitutes a Default or an Event of Default
or (ii) that constitutes or that, with the passage of time or giving of notice,
or both, would constitute a default or event of default by Borrower under any
material agreement (other than this Agreement) or judgment, decree or order to
which Borrower is a party or by which Borrower or any of its properties may be
bound or which would require Borrower to make any payment thereunder prior to
the scheduled maturity date therefor.
(l) Accuracy and Completeness of Information. All written information,
----------------------------------------
reports and other papers and data produced by or on behalf of Borrower and
furnished to the Lender were, at the time the same were so furnished, complete
and correct in all material respects to the extent necessary to give the
recipient a true and accurate knowledge of the subject matter, no fact is known
to Borrower which has had, or may in the future have, a Material Adverse Effect
which has not been set forth in the financial statements or disclosure delivered
prior to the Effective Date, in each case referred to in SECTION 5.1(I), or in
such written information, reports or other papers or data or otherwise disclosed
in writing to the Lender prior to the Effective Date. The documents furnished
or written statements, taken as a whole, made to the Lender by Borrower in
connection with the negotiation, preparation or execution of this Agreement or
any of the Loan Documents do not contain any untrue statement of a fact material
to the creditworthiness of Borrower and do not omit to state a material fact
necessary in order to make the statements contained therein not misleading.
(m) Place of Business. The chief executive office and business
-------------------
locations of Borrower is set forth in SCHEDULE 5.1(M).
(n) Federal Regulations. Borrower is not engaged, principally or as
--------------------
one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" (as each of the quoted
terms is defined or used in Regulations G and U of the Board of Governors of the
Federal Reserve System).
14
(o) Investment Company Act. Borrower is not an "investment company" or
----------------------
a company "controlled" by an "investment company" (as each of the quoted terms
is defined or used in the Investment Company Act of 1940, as amended).
(p) ERISA. Neither Borrower nor any Related Company maintains or
-----
contributes to any Benefit Plan other than those listed on SCHEDULE 5.1(P).
Each Benefit Plan is in substantial compliance with ERISA, and neither Borrower
nor any Related Company has received any notice asserting that a Benefit Plan is
not in compliance with ERISA. No material liability to the PBGC or to a
Multiemployer Plan has been, or is expected by Borrower to be, incurred by
Borrower or any Related Company.
(q) Employee Relations. Borrower is not party to any collective
-------------------
bargaining agreement. Borrower knows of no pending, threatened or contemplated
strikes, work stoppage or other labor disputes involving its employees or those
of its Subsidiaries.
(r) Shares; Warrants. A description of the capital structure of
-----------------
Borrower, including, the total number and classes of shares authorized, issued
and outstanding in each such class, a description of any and all stock options,
and a description of any and all warrants convertible into common stock of
Borrower are set forth on SCHEDULE 5.1(R) attached hereto, which schedule
contains the names of the parties to which stock options and warrants have been
issued, as well as the amount of any and all such options and warrants. There
are no claims, liens or encumbrances presently existing or outstanding with
respect to the Shares.
Section 5.2 Survival of Representations and Warranties, Etc. All
----------------------------------------------------
representations and warranties set forth in this ARTICLE 5 and in other Loan
Documents (including, but not limited to, any such representation, warranty or
statement made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Agreement Date, at and as of the Effective Date and at and as of
the date of each Loan, including, but not limited to, each Loan Advance, except
that representations and warranties which, by their terms are applicable only to
one such date shall be deemed to be made only at and as of such date. All
representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Lender or any borrowing hereunder.
ARTICLE 6 - AFFIRMATIVE COVENANTS
Until all of the Obligations have been indefeasibly paid in full, Borrower
and Subsidiaries will:
Section 6.1 Preservation of Corporate Existence and Similar Matters.
---------------------------------------------------------
Preserve and maintain its corporate existence, rights, franchises, licenses and
privileges in the jurisdiction of its incorporation and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except to the extent the
failure to do so would not have a Material Adverse Effect.
Section 6.2 Compliance with Applicable Law. Comply with all applicable
------------------------------
laws relating to Borrower.
15
Section 6.3 Payment of Taxes and Claims. Pay or discharge when due (a)
---------------------------
all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or upon any properties belonging to it, and (b) all
lawful claims of materialmen, mechanics, carriers, warehousemen and landlords
for labor, materials, supplies and rentals which, if unpaid, would become a Lien
on any properties of Borrower.
Section 6.4 Accounting Methods and Financial Records. Maintain a
--------------------------------------------
system of accounting, and keep such books, records and accounts (which shall be
true and complete), as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP consistently
applied.
Section 6.5 Restrictions on Use of Proceeds. Borrower will use the
----------------------------------
proceeds of the Credit Loan only (i) to redeem some of the outstanding corporate
securities issued by the Borrower, (ii) any excess proceeds remaining after
redemption of the outstanding corporate securities may be used to repay the
twelve percent (12%) promissory notes owed by Borrower to members of the
Borrower's board of directors, and (iii) pay costs, expenses and fees related to
the transaction contemplated by this Agreement up to a maximum amount of eighty
five thousand dollars ($85,000).
Section 6.6 Hazardous Waste and Substances; Environmental Requirements.
----------------------------------------------------------
In addition to, and not in derogation of, the requirements of SECTION 6.2 and of
the Guaranty Security Documents, governmental standards and regulations
applicable to Borrower or to any of its assets in respect of occupational health
and safety laws, rules and regulations and Environmental Laws, promptly notify
the Lender of its receipt of any notice of a violation of any such law, rule,
standard or regulation and indemnify and hold the Lender harmless from all loss,
cost, damage, liability, claim and expense incurred by or imposed upon the
Lender on account of Borrower's failure to perform its obligations under this
SECTION 6.6.
Section 6.7 Accuracy of Information. All written information, reports,
-----------------------
statements and other papers and data furnished to the Lender, whether pursuant
to ARTICLE 7 or any other provision of this Agreement or any of the other Loan
Documents, shall be, at the time the same is so furnished, complete and correct
in all material respects to the extent necessary to give the Lender true and
accurate knowledge of the subject matter.
Section 6.8 Revisions or Updates to Schedules. Should any of the
-------------------------------------
information or disclosures provided on any of the Schedules originally attached
hereto become incorrect in any material respect, Borrower shall provide as soon
as possible (but by no later than the end of the then current fiscal quarter of
Borrower) to the Lender such revisions or updates to such Schedule(s) as may be
necessary or appropriate to update or correct such Schedule(s); PROVIDED that no
such revisions or updates to any Schedule(s) shall be deemed to have cured any
breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule(s) unless and until the Lender, in its sole
discretion, shall have accepted in writing such revisions or updates to such
Schedule(s).
Section 6.9 Conduct of Business. Engage only in businesses in
---------------------
substantially the same fields as the businesses conducted on the Effective Date.
Section 6.10 Insurance. Borrower shall at all times maintain, in
---------
addition to the insurance required by any of the Guaranty Security Documents,
insurance with responsible insurance companies against such risks, in such
amounts as in amounts and under policies issued by insurers acceptable to the
Lender, including such theft, hazard, public liability, products liability,
third party property damage and business interruption insurance as is consistent
with reasonable business practices. All premiums on such insurance shall be
paid by Borrower and copies of the policies delivered to the Lender.
16
Section 6.11. Issuance of Shares. In the event of Lender's exercise of
------------------
the Warrant, the Borrower covenants that the Shares shall be duly and validly
issued, fully-paid and non-assessable.
Section 6.12 Reservation of Shares Upon Conversion. The Borrower shall
-------------------------------------
at all times reserve and keep available out of its authorized but unissued or
treasury shares of common stock, solely for the purpose of effecting the
exercise of the Warrant, such number of its shares of common stock as shall from
time to time be sufficient to effect the exercise of the Warrant; and if at any
time the number of authorized but unissued shares of common stock shall not be
sufficient to effect the exercise of the Warrant, in addition to such other
remedies as shall be available to the Lender under any of the Loan Documents,
the Borrower will either take such corporate action as may be necessary to
increase its authorized but unissued shares of common stock to such number of
shares as shall be sufficient for such purposes, or the Borrower will take any
and all action necessary to reduce the amount of common stock held by other
shareholders of the Borrower in order to make a sufficient amount of common
stock available for the Lender fully exercise the Warrant.
ARTICLE 7 - INFORMATION
Until all of the Obligations have been indefeasibly paid in full, Borrower
will furnish to the Lender at the Lender's Office:
Section 7.1 Financial Statements.
---------------------
(a) Certified Year-End Statements. As soon as available, but in any
-------------------------------
event within 120 days after the end of each fiscal year of Borrower, copies of
the balance sheet of Borrower, as at the end of such fiscal year and the related
statements of income, shareholders' equity and cash flow for such fiscal year,
in each case setting forth in comparative form the figures for the previous
year-end and reported on, without qualification, certified by independent
certified public accountants selected by Borrower, and acceptable to the Lender.
(b) Quarterly Financial Statements. As soon as available, but in any
--------------------------------
event within 45 days after the end of each fiscal quarter of Borrower copies of
the unaudited balance sheet of Borrower as at the end of such fiscal quarter and
the related unaudited income statement for such fiscal quarter and for the
portion of the fiscal year of Borrower through such quarter, and, with respect
to such quarterly financial statements delivered at the end of each fiscal year
of Borrower, such financial statement shall be certified by the chief financial
officer of Borrower to the best of his or her knowledge as presenting fairly the
financial condition and results of operations of Borrower as at the date thereof
and for the periods ended on such date, subject to normal year end adjustments.
(c) Guarantor Financial Statements. As soon as available, but in any
--------------------------------
event within 30 days after the filings of annual federal income tax returns, the
financial statements of each Guarantor and the most recent filed federal income
tax return, including without limitation, a balance sheet and income statement
as of the end of such fiscal year. Any and all such guarantor financial
statements shall be in a form that is acceptable to Lender, in its sole
reasonable discretion.
All such financial statements shall be complete and correct in all
material respects and, commencing with annual financial statements for the
fiscal year ending September 30, 2000, all such financial statements shall be
prepared in accordance with GAAP (except, with respect to interim financial
statements, for the omission of footnotes) applied consistently throughout the
periods reflected therein.
17
Section 7.2 Authorization. Borrower authorizes the Lender to discuss
-------------
the financial condition of Borrower with Borrower's independent certified public
accountants and agrees that such discussion or communication shall be without
liability to either the Lender or Borrower's independent certified public
accountants.
Section 7.3 Copies of Other Reports.
--------------------------
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to Borrower by its independent public accountants, including, without
limitation, all management reports.
(b) Promptly upon preparation and filing of the same, copies of any and
all filings with the Securities and Exchange Commission ("SEC"), including, but
not limited to, Forms 10-K, 10-Q and any other material reports filed with the
SEC.
(c) From time to time and promptly upon each request, such forecasts,
data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the business, assets, liabilities, financial
condition, results of operations or business prospects of Guarantors and
Borrower as the Lender may reasonably request. The rights of the Lender under
this SECTION 7.4(C) are in addition to and not in derogation of its rights under
any other provision of this Agreement or any Loan Document.
Section 7.4 Notice of Litigation and Other Matters.
-------------------------------------------
Notice of: (a) the commencement of all proceedings and investigations
by or before any governmental or nongovernmental body and all actions and
proceedings in any court or before any arbitrator against or in any other way
relating adversely to, or adversely affecting, a Guarantor, Borrower, any
Subsidiary of Borrower or any of their respective property, assets or
businesses, (b) any amendment of the articles of incorporation and/or by-laws of
Borrower, (c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of a Guarantor, Borrower,
any Subsidiary of Borrower and any change in the executive officers of Borrower
which would reasonably be expected to have a Material Adverse Effect, and (d)
any (i) Default or Event of Default, or (ii) event that constitutes or that,
with the passage of time or giving of notice or both, would constitute a default
or event of default by Borrower or Guarantors under any material agreement
(other than this Agreement) to which Borrower or Guarantors are a party or by
which Borrower or Guarantors or any of its or their property may be bound if the
exercise of remedies thereunder by the other party to such agreement would have,
either individually or in the aggregate, a Material Adverse Effect.
Section 7.5 ERISA. As soon as possible and in any event within 30 days
-----
after Borrower knows, or has reason to know, that: (a) any Termination Event
with respect to a Benefit Plan has occurred or will occur, (b) the aggregate
present value of the Unfunded Vested Accrued Benefits under all Plans has
increased to an amount in excess of $0, or (c) Borrower are in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan required by reason of its complete or partial withdrawal (as
described in Section 4203 or 4205 of ERISA) from such Multiemployer Plan, (d) a
certificate of the President or the chief financial officer of Borrower setting
forth the details of such of the events described in CLAUSES (A) through (C) as
applicable and the action which is proposed to be taken with respect thereto
and, simultaneously with the filing thereof, copies of any notice or filing
which may be required by the PBGC or other agency of the United States
government with respect to such of the events described in CLAUSES (A) through
(C) as applicable.
18
ARTICLE 8 - NEGATIVE COVENANTS
Until all of the Obligations have been indefeasibly paid in full, Borrower
will not directly or indirectly, and will not permit any Subsidiary directly or
indirectly:
Section 8.1 Merger, Consolidation and Sale of Assets. Merge or
---------------------------------------------
consolidate with any other Person or sell, lease or transfer or otherwise
dispose of all or a substantial portion of its assets to any Person.
Section 8.2 Transactions with Affiliates. Effect any transaction with
----------------------------
any Affiliate on a basis less favorable to Borrower than would be the case if
such transaction had been effected with a Person not an Affiliate.
Section 8.3. Protection of Lender's Rights. By any amendment of the
-------------------------------
Borrower's Articles of Incorporation or By-laws, or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, seek to avoid the observance or
performance hereof, but will at all times take such actions as are necessary or
appropriate in order to protect the rights of, Lender under the Loan Documents,
including, but not limited to, this Agreement, the Warrant and the Registration
Rights Agreement.
Section 8.4 Dividends/Distributions. Declare, pay or set apart for
-----------------------
payment any cash dividend or other distribution (or take any action which would
have an equivalent effect) to the shareholders of the Borrower, until the
Obligations have been paid in full.
Section 8.5 Reclassification, Merger, Sale of Assets, etc Reorganize,
---------------------------------------------
change its capital structure, change the outstanding amount of Shares (other
than, upon prior notice to the Lender, the issuance of shares to raise capital)
or change any of the shareholders rights under the Borrower's Articles of
Incorporation or any shareholder agreement, or merge with, sale or convey to or
with another corporation, limited liability company, or other business
organization, any of the property of the Borrower, as an entirety or
substantially as an entirety, at any time before the payment in full of the
Obligations, absent the Lender's express prior written consent.
Section 8.6 Split, Subdivision or Combination of Shares. At any time
---------------------------------------------
before payment of the Obligations in full, subdivide its outstanding Shares, by
split-up or otherwise, or combine its outstanding Shares, or issue additional
shares of its capital stock in payment of a stock dividend in respect of its
Shares, without proportionately increasing the number of shares issuable upon
the exercise of the Warrant, or proportionately decreasing the same in the case
of a combination.
Section 8.7 No Impairment By amendment of its Articles of
--------------
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of the terms to be
observed or performed hereunder by the Borrower, but will at all times in good
faith assist in the carrying out of all the provisions of the Loan Documents and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Lender against impairment.
19
Section 8.8 Warrants. Authorize or issue any warrant for the
--------
subscription an purchase of shares of common stock of Borrower, without the
express prior written consent of Lender.
ARTICLE 9 - DEFAULT
Section 9.1 Events of Default. Each of the following shall constitute
-----------------
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body:
(a) Default in Payment of Loans. Borrower shall default in any payment
---------------------------
of principal of, or interest on, any of the Loans or the Note on the due date
(whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Borrower shall default in the payment, as
-----------------------
and when due, of principal of or interest on, any other Obligation, and such
default shall continue for five (5) days after demand.
(c) Misrepresentation. Any representation or warranty made or deemed
-----------------
to be made by any of the Borrower under this Agreement or any other Loan
Document or any amendment hereto or thereto shall at any time prove to have been
incorrect or misleading in any material respect when made.
(d) Default in Performance. (i) Borrower shall default in the
------------------------
performance or observance of a term, covenant, condition or agreement contained
in ARTICLES 6, 7 OR 8; (ii) Borrower shall default in the performance or
observance of any other term, covenant, condition or agreement contained in this
Agreement and the default is not cured to the satisfaction of Lender within ten
(10) days after the sooner to occur of Borrower' receipt of notice of such
default from Lender or the date on which such default first became known to any
officer of Borrower; or (iii) Borrower shall default in the performance or
observance of any non-payment term, covenant, condition or agreement related to
the Loans and the passage without cure of the applicable cure period, if any.
(e) Indebtedness Cross-Default. (i) Borrower or any Subsidiary shall
---------------------------
fail to pay when due and payable the principal of or interest on any
Indebtedness (other than the Loans or Note), which Indebtedness is in an amount
equal to or greater than $100,000.00 or (ii) the maturity of any Indebtedness
shall have been accelerated as a result of such default or event of default in
accordance with the provisions of any indenture, contract or instrument
providing for the creation of or concerning such Indebtedness, where such
Indebtedness is in an amount equal to or greater than $100,000.00 or (iii) any
event shall have occurred and be continuing which, with or without the passage
of time or the giving of notice, or both, would permit any holder or holders of
such Indebtedness, any trustee or agent acting on behalf of such holder or
holders or any other Person, to accelerate such maturity where such Indebtedness
is in an amount equal to or greater than $100,000.00.
(f) Other Cross-Defaults. Borrower shall default in the payment when
---------------------
due or in the performance or observance of any obligation or condition of any
material agreement, contract, security or lease.
(g) Voluntary Bankruptcy Proceeding. Any Obligor shall (i) commence a
--------------------------------
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (ii) commence a proceeding seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts, (iii) consent to or fail to contest
in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for or
20
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become due,
(vi) make a general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other proceeding
-----------------------------------
shall be commenced against any Obligor in any court of competent jurisdiction
seeking (i) relief under the federal bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of debts, or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of any
Obligor or of all or any substantial part of the assets, domestic or foreign, of
any Obligor, and such case or proceeding shall continue undismissed or unstayed
for a period of 60 consecutive calendar days, or an order granting the relief
requested in such case or proceeding against any Obligor (including, but not
limited to, an order for relief under such federal bankruptcy laws) shall be
entered.
(i) Loan Documents. Any event of default or Event of Default under any
--------------
other Loan Document shall occur or any Obligor shall default in the performance
or observance of any material term, covenant, condition or agreement contained
in, or the payment of any other sum covenanted to be paid by any Obligor under,
any such Loan Document; or any provision of this Agreement, or of any other Loan
Document after delivery thereof hereunder, shall for any reason cease to be
valid and binding, or any Obligor or other party thereto (other than the Lender)
shall so state in writing; or this Agreement or any other Loan Document, after
delivery thereof hereunder, shall for any reason cease to create a valid,
perfected and, first priority Lien on, or security interest in, any of the
collateral purported to be covered thereby.
(j) Judgment. A judgment or judgments in an amount, individually or in
--------
the aggregate, in excess of $50,000.00 shall be entered against any Obligor by
any court and such judgment or order shall continue undischarged or unstayed for
30 days.
(k) Attachment. A warrant or writ of attachment or execution or
----------
similar process shall be issued against any property of any Obligor and such
warrant or process shall continue undischarged or unstayed for 60 days.
(l) Material Adverse Change. There occurs any act, omission, event,
-------------------------
undertaking or circumstance or series of acts, omissions, events, undertakings
or circumstances which have, or in the sole judgment of the Lender would have,
either individually or in the aggregate, a Material Adverse Effect.
(m) ERISA. (i) Any Termination Event with respect to a Benefit Plan
-----
shall occur that, after taking into account the excess, if any, of (A) the fair
market value of the assets of any other Benefit Plan with respect to which a
Termination Event occurs on the same day (but only to the extent that such
excess is the property of Borrower) over (B) the present value on such day of
all vested nonforfeitable benefits under such other Benefit Plan, results in an
Unfunded Vested Accrued Benefit in excess of $___, (ii) any Benefit Plan shall
incur an "accumulated funding deficiency" (as defined in Section 412 of the Code
or Section 302 of ERISA) for which a waiver has not been obtained in accordance
with the applicable provisions of the Code and ERISA, or (iii) Borrower are in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan resulting from Borrower' complete or partial withdrawal
(as described in Section 4203 or 4205 of ERISA) from such Multiemployer Plan.
(n) Change of Management. Any change, without the prior written
----------------------
consent of Lender on each occasion, in the following executive officers of
Borrower: Chief Executive Officer.
21
Section 9.2 Remedies.
--------
(a) Automatic Acceleration and Termination of Facilities. Upon the
--------------------------------------------------------
occurrence of an Event of Default specified in SECTION 9.1(G) or (H), (i) the
principal of and the interest on the Loans and the Note at the time outstanding,
and all other amounts owed to the Lender under this Agreement or any of the Loan
Documents and all other Obligations, shall thereupon become due and payable
without presentment, demand, protest or other notice of any kind, all of which
are expressly waived, anything in this Agreement or any of the Loan Documents to
the contrary notwithstanding, and (ii) the commitment of the Lender to make
advances under this Agreement shall immediately terminate.
(b) Other Remedies. If any Event of Default (other than as specified
---------------
in SECTION 9.1(G) or (H)) shall have occurred and be continuing, the Lender, in
its sole and absolute discretion, may do any of the following: (i) declare the
principal of and interest on the Loans and the Note at the time outstanding, and
all other amounts owed to the Lender under this Agreement or any of the Loan
Documents and all other Obligations, to be forthwith due and payable, whereupon
the same shall immediately become due and payable without presentment, demand,
protest or other notice of any kind, all of which are expressly waived, anything
in this Agreement or the Loan Documents to the contrary notwithstanding,
together with interest on such amounts at the Default Rate; and (ii) terminate
the Loan and any commitment of the Lender to make advances hereunder.
(c) Further Remedies. If any Event of Default shall have occurred and
-----------------
be continuing, the Lender, in its sole and absolute discretion, may exercise any
and all of its rights under any and all of the Guaranty Security Documents.
Section 9.3 Application of Proceeds. All proceeds from each sale of,
------------------------
or other realization upon, all or any part of any collateral under the Guaranty
Security Documents following an Event of Default shall be applied or paid over
as follows: (a) First: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including reasonable attorneys'
fees, (b) Second: to the payment of the Obligations (with Borrower remaining
liable for any deficiency) in any order which the Lender may elect, and (c)
Third: the balance (if any) of such proceeds shall be paid to Borrower or,
subject to any duty imposed by law or otherwise, to whomsoever is entitled
thereto.
Section 9.4 Miscellaneous Provisions Concerning Remedies.
-----------------------------------------------
(a) Rights Cumulative. The rights and remedies of the Lender under
------------------
this Agreement, the Note and each of the Loan Documents shall be cumulative and
not exclusive of any rights or remedies which it would otherwise have. In
exercising such rights and remedies, the Lender may be selective and no failure
or delay by the Lender in exercising any right shall operate as a waiver of such
right nor shall any single or partial exercise of any power or right preclude
its other or further exercise or the exercise of any other power or right.
(b) Limitation of Liability. Nothing contained in this ARTICLE 9 or
-------------------------
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Lender or any agent or designee of the Lender to
make any demand or to make any inquiry as to the nature or sufficiency of any
payment received by it or to present or file any claim or notice, and neither
the Lender nor any of its agents or designees shall have any liability to
Borrower for actions taken pursuant to this ARTICLE 9, any other provision of
this Agreement or any of the Loan Documents, so long as the Lender or such agent
or designee shall act reasonably and in good faith.
22
(c) Appointment of Receiver. In any action under this ARTICLE 9, the
-------------------------
Lender shall be entitled to the appointment of a receiver, without notice of any
kind whatsoever, to exercise such power as the court shall confer upon such
receiver.
ARTICLE 10 - MISCELLANEOUS
Section 10.1 Notices.
-------
(a) Method of Communication. All notices and the communications
-------------------------
hereunder and thereunder shall be in writing. Notices in writing shall be
delivered personally or sent by overnight courier service, by certified or
registered mail, postage pre-paid, or by facsimile transmission and shall be
deemed received, in the case of personal delivery, when delivered, in the case
of overnight courier service, on the next Business Day after delivery to such
service, in the case of mailing, on the third day after mailing (or, if such day
is a day on which deliveries of mail are not made, on the next succeeding day on
which deliveries of mail are made) and, in the case of facsimile transmission,
upon transmittal.
(b) Addresses for Notices. Notices to any party shall be sent to it at
---------------------
the following addresses, or any other address of which all the other parties are
notified in writing.
If to Borrower: The Female Health Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇
Facsimile No.: 312/280-9360
If to the Lender: Heartland Bank
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. Love
Facsimile No.: 314/512-8501
(c) Lender's Office. The Lender hereby designates its office
----------------
designated above or any subsequent office which shall have been specified for
such purpose by written notice to Borrower, as the office to which payments due
are to be made and at which Loans will be disbursed.
Section 10.2 Expenses. Borrower agree to pay or reimburse on demand
--------
all costs and expenses incurred by the Lender, including, without limitation,
the reasonable fees and disbursements of counsel, in connection with the
preparation, due diligence, administration, enforcement and termination of this
Agreement and each of the other Loan Documents including. The foregoing shall
not be construed to limit any other provisions of the Loan Documents regarding
costs and expenses to be paid by Borrower.
Section 10.3 Stamp and Other Taxes. Borrower will pay any and all
------------------------
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Lender against any and all liabilities with respect to or
resulting from any delay in the payment or omission to pay any such taxes, fees
or charges, which may be payable or determined to be payable in connection with
the execution, delivery, performance or enforcement of this Agreement and any of
the Loan Documents or the perfection of any rights or security interest
thereunder.
23
Section 10.4 Setoff. In addition to any rights now or hereafter
------
granted under applicable law, and not by way of limitation of any such rights,
upon and after the occurrence of any Default or Event of Default, the Lender is
hereby authorized by Borrower at any time or from time to time, without notice
to Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, time or demand, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by the Lender to or for the credit
or the account of Borrower against and on account of the Obligations
irrespective of whether or not (a) the Lender shall have made any demand under
this Agreement or any of the Loan Documents, or (b) the Lender shall have
declared any or all of the Obligations to be due and payable as permitted by
SECTION 9.2 and although such Obligations shall be contingent or unmatured.
SECTION 10.5 Dispute Resolution.
-------------------
(a) Consent to Jurisdiction; Waiver of Venue Objection; Service of
-------------------------------------------------------------------
Process. WITHOUT LIMITING THE RIGHT OF THE LENDER TO BRING ANY ACTION OR
-------
PROCEEDING AGAINST THE BORROWER OR AGAINST PROPERTY OF THE BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT (AN "ACTION") IN THE COURTS OF OTHER
JURISDICTIONS, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO AND ACCEPTS THE
NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT OR ANY FEDERAL COURT
SITTING IN ST. LOUIS CITY OR COUNTY, AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ANY ACTION MAY BE HEARD AND DETERMINED IN SUCH MISSOURI STATE COURT OR IN
SUCH FEDERAL COURT. THE BORROWER HEREBY IRREVOCABLY WAIVES AND DISCLAIMS, TO
THE FULLEST EXTENT THAT THE BORROWER MAY EFFECTIVELY DO SO, ANY DEFENSE OR
OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY DEFENSE OR OBJECTION TO VENUE
BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE TO THE MAINTENANCE OF ANY ACTION IN ANY JURISDICTION. THE
BORROWER HEREBY IRREVOCABLY AGREES THAT THE SUMMONS AND COMPLAINT OR ANY OTHER
PROCESS IN ANY ACTION IN ANY JURISDICTION MAY BE SERVED BY MAILING (USING
CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID) TO THE BORROWER'S ADDRESS. SUCH
SERVICE WILL BE COMPLETE ON THE DATE SUCH PROCESS IS SO DELIVERED, AND THE
BORROWER WILL HAVE THIRTY DAYS FROM SUCH COMPLETION OF SERVICE IN WHICH TO
RESPOND IN THE MANNER PROVIDED BY LAW. THE BORROWER MAY ALSO BE SERVED IN ANY
OTHER MANNER PERMITTED BY LAW, IN WHICH EVENT THE BORROWER'S TIME TO RESPOND
SHALL BE THE TIME PROVIDED BY LAW.
(b) Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
---------------------
BORROWER HEREBY WAIVES AND DISCLAIMS ANY RIGHT TO TRIAL BY JURY (WHICH THE
LENDER ALSO WAIVES AND DISCLAIMS) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS NOTE.
Section 10.7 Reversal of Payments. To the extent Borrower makes a
----------------------
payment or payments to the Lender or the Lender receives any payment or proceeds
of any collateral for the Guaranty Security Documents for Borrower's benefit,
which payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, the Lender shall have the
continuing and exclusive right to apply, reverse and re-apply any and all
payments to any
24
portion of the Obligations, and, to the extent of such payment or proceeds
received, the Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect, as if such payment or proceeds
had not been received by the Lender.
Section 10.8 Injunctive Relief. Borrower recognizes that, in the event
-----------------
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Lender; therefore, Borrower agrees that the Lender, at the
Lender's option, shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
Section 10.9 Accounting Matters. All financial and accounting
-------------------
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, unless there is an express written direction or consent by the
Lender to the contrary, be performed in accordance with GAAP.
Section 10.10 Assignment; Participation. All the provisions of this
--------------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that Borrower may not assign
or transfer any of its rights under this Agreement. The Lender may assign or
participate to one or more Persons, all or a portion of its rights and
obligations hereunder and under the Note and, in connection with any such
assignment, may assign its rights and obligations under the Guaranty Security
Documents. The Lender may, in connection with any assignment or participation,
disclose to the assignee or participant any information relating to Borrower
furnished to the Lender by or on behalf of Borrower.
Section 10.11 Amendments. Any term, covenant, agreement or condition
----------
of this Agreement or any of the other Loan Documents may be amended or waived
and any departure therefrom may be consented to if, but only if, such amendment,
waiver or consent is in writing signed by the Lender and, in the case of an
amendment, by Borrower. Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
Section 10.12 Performance of Borrower' Duties. Borrower's obligations
-------------------------------
under this Agreement and each of the Loan Documents shall be performed by
Borrower at its sole cost and expense. If Borrower shall fail to do any act or
thing which it has covenanted to do under this Agreement or any of the Loan
Documents, the Lender may (but shall not be obligated to) do the same or cause
it to be done either in the name of the Lender or in the name and on behalf of
Borrower, and Borrower hereby irrevocably authorizes the Lender so to act.
Section 10.13 Indemnification. Borrower agrees to reimburse the Lender
---------------
for all reasonable costs and expenses, including counsel fees and disbursements,
incurred and to indemnify and hold the Lender harmless from and against all
losses suffered by the Lender, other than losses resulting from the Lender's
gross negligence or willful misconduct, in connection with (a) the exercise by
the Lender of any right or remedy granted to it under this Agreement or any of
the Loan Documents, (b) any claim, and the prosecution or defense thereof,
arising out of or in any way connected with this Agreement or any of the Loan
Documents.
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Section 10.14 All Powers Coupled with Interest. All powers of attorney
--------------------------------
and other authorizations granted to the Lender and any Persons designated by the
Lender pursuant to any provisions of this Agreement or any of the Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid or unsatisfied or the Loans have not been
terminated.
Section 10.15 Survival. Notwithstanding any termination of this
--------
Agreement, (a) until all Obligations have been paid in full and the Credit
Facility terminated, the Lender shall retain its Security Interest and shall
retain all rights under this Agreement and each of the Guaranty Security
Documents with as fully as though this Agreement had not been terminated, and
(b) the indemnities to which the Lender is entitled under the provisions of this
ARTICLE 10 and any other provision of this Agreement and the Loan Documents
shall continue in full force and effect and shall protect the Lender against
events arising after such termination as well as before.
Section 10.16 Severability of Provisions. Any provision of this
----------------------------
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 10.17 Governing Law. This Agreement and the Note and the other
-------------
Loan Documents shall be construed in accordance with and governed by the law of
the State of Missouri.
Section 10.18 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
Section 10.19 Final Agreement. This Agreement and the other Loan
----------------
Documents are intended by the parties hereto as the final, complete and
exclusive expression of the agreement among them with respect to the subject
matter hereof and thereof. This Agreement and the other Loan Documents
supersede any and all prior oral or written agreements between the parties
hereto relating to the subject matter hereof and thereof.
SECTION 10.20 PURCHASE OF INSURANCE. UNLESS YOU, BORROWER, PROVIDE
-----------------------
EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY YOUR AGREEMENT WITH US, THE
LENDER, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTERESTS UNDER
THIS AGREEMENT. THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS. THE
COVERAGE THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT
IS MADE AGAINST YOU. YOU MAY LATER CANCEL ANY INSURANCE PURCHASED BY US, BUT
ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE OBTAINED INSURANCE AS REQUIRED BY
THIS AGREEMENT. IF WE PURCHASE INSURANCE, YOU WILL BE RESPONSIBLE FOR THE COSTS
OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER
CHARGES WE MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL
THE EFFECTIVE DATE OF THE CANCELLATION OF EXPIRATION OF THE INSURANCE. THE
COSTS OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING BALANCE OR
OBLIGATION. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE
YOU MAY BE ABLE TO OBTAIN ON YOUR OWN.
26
SECTION 10.21 ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN
---------------
MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH
IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS
WE MAY LATER AGREE IN WRITING TO MODIFY IT. THE LOAN DOCUMENTS, AS AMENDED,
MODIFIED AND SUPPLEMENTED HEREBY, ARE INCORPORATED HEREIN BY THIS REFERENCE AND
SHALL BE DEEMED TO CONSTITUTE A PART OF THIS WRITING.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in St. Louis, Missouri by their duly authorized officers in several
counterparts all as of the day and year first written above.
THIS AGREEMENT CONTAINS A BINDING JURY WAIVER
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
BORROWER:
THE FEMALE HEALTH COMPANY
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
LENDER:
HEARTLAND BANK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
28
STATE OF _________________ )
) ss.
________ OF _______________ )
On this ___ day of May, 2001, before me appeared
_______________________, to me known to be the person described in and who
executed the foregoing instrument, as the _____________ of The Female Health
Company, a Wisconsin corporation, and acknowledged that he executed the same as
the free act and deed of said corporation and is acting for and on behalf of and
as an officer of the said corporation.
____________________________________
Notary Public
My Commission Expires:
____________________________
29