EXHIBIT 10.1
CREDIT AGREEMENT
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This Agreement, dated as of May 17, 2002, is made between BioSphere
Medical, Inc., a Delaware corporation, with its chief executive office at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as borrower (the "Borrower"), and
▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co., a New York general partnership, with an office at
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as lender (the "Lender").
BACKGROUND
The Borrower wishes to establish with the Lender a $5,000,000 - two year
term credit facility (the "Credit Facility") for working capital and general
corporate purposes. The Credit Facility will be available on a revolving basis
through multiple draw borrowings. Amounts outstanding under the Credit Facility
are to be based at a percentage of Eligible Accounts, as defined below. The
Lender is willing to extend such credit to the Borrower upon the terms and
conditions hereinafter set forth.
DEFINITIONS
Certain terms are defined in the text of the Agreement and the meanings
assigned to such defined terms are referenced at Section IX below.
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 1 - THE FINANCING
1.1 Credit Facility - Credit Availability. Subject to the terms and
conditions hereof, Borrower may until the earlier to occur of May 17, 2004
("Maturity") or an Event of Default, as hereinafter defined, borrow, repay and
reborrow funds from the Lender, as set forth below; provided however that the
aggregate principal amount of all advances outstanding at any one time under the
Credit Facility, shall not in the aggregate exceed (a) the Borrowing Base, as
defined below, or (b) $5,000,000, whichever is less (the "Credit Availability");
and provided further, however, that notwithstanding anything contained herein to
the contrary, in no event shall Borrower have the right to borrow or shall
Lender have the obligation to make any advance under the Credit Facility at any
time that a condition which, with the giving of notice or the passage of time,
or both, would constitute an Event of Default hereunder, shall exist.
1.2 Advances. All advances by the Lender under the Credit Facility shall be
funded by the Lender to the Borrower by depositing the amount thereof in an
account of the Borrower designated by the Borrower and maintained with the
Lender.
1.3 The Note. Advances under the Credit Facility shall be evidenced by a
promissory note of the Borrower substantially in the form of Annex A hereto (the
"Note") payable to the order of the Lender. The Note shall bear interest as
provided below.
1.4 Interest on Advances.
(a) Interest Rate. Each advance under the Credit Facility shall bear
interest at a per annum rate that the Borrower may select equal to (i) a
variable rate (the "Floating Rate") equal to the Base Rate plus the Base
Rate Spread (herein a "Floating Rate Advance") or (ii) a rate (the
"Eurodollar Rate") equal to the LIBOR Rate plus the LIBOR Rate Spread for
Interest Periods of 30, 60, 90 or 180 days (herein a "Eurodollar Rate
Advance"). The Floating Rate shall change simultaneously and automatically,
without further notice, upon the Lender's determination and designation
from time to time of the Base Rate, and shall also change simultaneously
and automatically, without further notice, upon each change in the Base
Rate Spread. The Eurodollar Rate for an Interest Period shall change
simultaneously and automatically during such Interest Period, without
further notice, upon each change in the LIBOR Rate Spread and shall also
change simultaneously and automatically, without further notice, upon each
change in the Libor Rate Reserve Percentage.
(b) Interest Period. Each Interest Period shall commence on the date
on which such advance is made and shall end on the date as the Borrower may
elect as set forth in Paragraph 1.4(a) above; provided, however: (i) any
Interest Period that would otherwise end on a day which is not a Banking
Day shall be extended to the next Banking Day unless such extension would
carry such Interest Period into the next month, in which event such
Interest Period shall end on the preceding Banking Day; (ii) any Interest
Period that begins on the last Banking Day of a calendar month (or on a
date for which there is no numerically corresponding day in the calendar
month during which such Interest Period is to end), shall (subject to
clause (i) above) end on the last Banking Day of such calendar month; and
(iii) any Interest Period that would otherwise extend beyond Maturity shall
end at Maturity.
(c) Conversion. Provided that no Event of Default shall have occurred
and continued beyond the expiration of any applicable grace or cure period,
if any, and no condition which, with the passage of time or the giving of
notice, or both, would constitute an Event of Default shall exist, the
Borrower may convert any outstanding Floating Rate Advance to a Eurodollar
Rate Advance in the same aggregate principal amount on any Banking Day and
may convert a Eurodollar Rate Advance to a Floating Rate Advance only on
the last Banking Day of the then current Interest Period applicable to such
Eurodollar Rate Advance. If Borrower desires to convert an advance, it
shall give the Lender three (3) Banking Days written notice, specifying the
date of such conversion, the amount to be converted and if the conversion
is from a Floating Rate Advance to a Eurodollar Rate Advance, the duration
of the Interest Period therefor.
(d) Extension. Subject to all of the terms and conditions applicable
to a request that a new advance be a Eurodollar Rate Advance or a Floating
Rate Advance and provided that no Event of Default shall have occurred and
continued beyond the expiration of any applicable grace or cure period, if
any, and no condition which, with the passage of time or the giving of
notice, or both, would constitute an Event of Default shall exist, the
Borrower may extend a Eurodollar Rate Advance as of the last day of the
applicable Interest Period to a new Eurodollar Rate Advance. If the
Borrower fails to notify the Lender of the Interest Period for the
extension of a Eurodollar Rate Advance at least three (3) Banking Days
prior to the last day of the then current applicable Interest Period then,
at Lender's discretion, such outstanding Eurodollar Rate Advance shall
become a Floating Rate Advance at the end of the current Interest Period
for such outstanding Eurodollar Rate Advance and shall accrue interest in
accordance with the provisions regarding Floating Rate Advances described
above.
(e) Definitions. As used herein,
(i) "Banking Day" shall mean: any day which is neither a Saturday
or Sunday nor a legal holiday on which commercial banks are authorized
or required to close in Massachusetts and, if such day relates to a
determination of interest on an advance or a notice by the Borrower
with respect to any such borrowing, a day which is also a day on which
dealings in dollar deposits are carried out in the London interbank
market.
(ii) "Base Rate" shall mean: the variable per annum rate of
interest so designated from time to time by Lender as its Base Rate.
The Base Rate is a reference rate and does not necessarily represent
the lowest or best rate being charged to any customer.
(iii) "Base Rate Spread" shall mean: (i) 100 basis points at all
times that Borrower shall have an aggregate amount of cash or cash
equivalents in the Pledged Account (as hereinafter defined),
determined by Lender in its sole discretion, of at least one and one
half (1 1/2) times the then outstanding principal balance of the Note,
but not more than $9,999,999; (ii) 50 basis points at all times that
Borrower shall have an aggregate amount of cash or cash equivalents in
the Pledged Account, determined by Lender in its sole discretion, of
at least $10,000,000, but not more than $12,499,000 and (iii) 0 basis
points at all times that Borrower shall have an aggregate amount of
cash or cash equivalents in the Pledged Account, determined by Lender
in its sole discretion, of at least $12,500,000.
(iv) "LIBOR Rate" shall mean: with respect to any Interest
Period, the quotient of (i) the per annum interest rate equal to the
simple average, rounded upwards, if necessary, to the next 1/32 of 1%,
of the rates shown on the display referred to as the "Telerate Page
3750," or any display substituted therefor, of the Dow ▇▇▇▇▇ Telerate
Service, or, if fewer than two such rates appear on such display on
the day of any determination thereof, the rates shown on the Reuters
Screen LIBOR Page, as being the respective rates at which deposits in
U.S. Dollars would be offered by the principal London offices of each
of the lenders named thereon to major lenders in the London interbank
market at approximately 11:00 A.M., London time, two Business Days
prior to the Business Day on which such Interest Period begins, in an
amount approximately equal to the principal amount of such Eurodollar
Rate Advance, for a period of time equal to such Interest Period, and
(ii) a number equal to the number one minus the Libor Rate Reserve
Percentage. In the event that such rate is not available at such time
for any reason, then the "LIBOR Rate" for such Interest Period shall
be quotient of (i) the per annum interest rate equal to the simple
average, rounded upwards, if necessary, to the next 1/32 of 1%, of the
rates at which deposits in U.S. Dollars are offered by the principal
London offices of any three major banks in the London interbank market
(as selected by the Lender) at approximately 11:00 A.M., London time,
two Business Days prior to the Business Day on which such Interest
Period begins, in an amount approximately equal to such Eurodollar
Rate Advance, for a period of time equal to such Interest Period, and
(ii) a number equal to the number one minus the Libor Rate Reserve
Percentage. The "Libor Rate Reserve Percentage" applicable to any
Interest Period means the maximum effective rate (expressed as a
decimal) of the statutory reserve requirements (without duplication,
but including, without limitation, basic, supplemental, marginal and
emergency reserves) applicable to the Lender during such Interest
Period under regulations of the Board of Governors of the Federal
Reserve System (or any successor), including without limitation
Regulation D or any other regulation dealing with maximum reserve
requirements which are applicable to the Lender with respect to its
"Eurocurrency Liabilities," as that term may be defined from time to
time by the Board of Governors of the Federal Reserve System (or any
successor) or which in any other respect relate to the funding of
loans bearing interest at a rate calculated with reference to a LIBOR
Rate.
(v) "LIBOR Rate Spread" shall mean: 350 basis points at all times
that Borrower shall have an aggregate amount of cash or cash
equivalents in the Pledged Account, determined by Lender in its sole
discretion, of at least one and one half (1 1/2) times the then
outstanding principal balance of the Note, but not more than
$9,999,999; (ii) 325 basis points at all times that Borrower shall
have an aggregate amount of cash or cash equivalents in the Pledged
Account, determined by Lender in its sole discretion, of at least
$10,000,000, but not more than $12,499,000 and (iii) 200 basis points
at all times that Borrower shall have an aggregate amount of cash or
cash equivalents in the Pledged Account, determined by Lender in its
sole discretion, of at least $12,500,000.
(vi) "Interest Period" shall mean, with respect to any Eurodollar
Rate Advance, the 30, 60, 90 or 180 days period selected by the
Borrower pursuant to Section 1.4 or Section 1.5 hereof.
1.5 Requests For Advances. Requests for advances under the Credit Facility
may be made to the Lender on any Banking Day in writing or by telephone and
confirmed in writing. Each request shall constitute a confirmation to the Lender
by the Borrower that all representations and warranties contained in Section III
remain materially true and correct as though made at the time of the proposed
borrowing (except to the extent such representation and warranty related
specifically to an earlier date) and the Lender may, at its option, require a
certificate to such effect signed by the chief financial officer or corporate
controller of Borrower or by a designee of the chief financial officer or
corporate controller. Each request for an advance shall be accompanied by a
certificate of the Borrower setting forth the use of such advance and such other
matters as the Lender may reasonably require. The Borrower agrees to indemnify
and hold the Lender harmless for any action, loss or expense taken or incurred
by the Lender in good faith in reliance upon any request for an advance by the
Borrower under this Agreement.
Each request shall be irrevocable and shall be made before 11:00 a.m. on
the day on which such advance is to be made if such advance is to be a Floating
Rate Advance, and shall be made before 11:00 a.m. (3) three Banking Days prior
to the date such advance is to be made if such advance is to be a Eurodollar
Rate Advance. Each request shall specify the aggregate amount of such advance,
the date such advance is to be made, the type of borrowing (i.e., whether such
advance is to be a Floating Rate Advance or a Eurodollar Rate Advance), and the
duration of the first Interest Period therefor. If the Lender does not receive
timely notice of a requested Eurodollar Rate Advance, the Borrower shall be
deemed to have selected a Floating Rate Advance. Eurodollar Rate Advances may
only be requested in multiples of $100,000, no more than three (3) Eurodollar
Rate Advances may be outstanding at any one time and no advance may be made,
continued or extended as a Eurodollar Rate Advance if an Event of Default shall
have occurred and continued beyond the expiration of any applicable grace or
cure period, if any or if any condition which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default shall exist. If
any advance is made, the Lender shall record on the books and records of the
Lender an appropriate notation evidencing such advance, each repayment on
account of the principal thereof and the amount of interest paid; and the
Borrower authorizes the Lender to maintain such records or make such notations
and agrees that the amount shown on the books and records as outstanding from
time to time of the Lender shall constitute the amount owing to the Lender in
connection with the Credit Facility, absent manifest error.
1.6 Payments on the Credit Facility. Interest on all Floating Rate Advances
shall be payable monthly beginning on the first Banking Day of each month
following the date hereof, and continuing thereafter on the first day of each
succeeding month until the principal balance shall be paid in full. Interest on
all Eurodollar Rate Advances shall be payable in arrears, on the first Banking
Day following the expiration of the applicable Interest Period. Subject to
approval of the Lender, amounts outstanding under the Credit Facility may be
prepaid in whole or in part prior to the end of an Interest Period, but any such
prepayment shall be subject to the indemnification provisions of Section 1.7.
Unless payment is accelerated under Section 7.1 prior thereto, each Floating
Rate Advance, together with all accrued but unpaid interest thereon, shall be
due and payable at Maturity, and each Eurodollar Rate Advance, together with all
accrued but unpaid interest thereon, shall be due and payable on the last
Banking Day of the Interest Period applicable thereto. All payments of principal
and interest shall be paid in immediately available funds to the Lender.
1.7 Indemnification for Losses. The Borrower shall indemnify the Lender
against any actual losses, costs or expenses which the Lender may at any time
incur as a consequence of (a) the failure of the Borrower to borrow the amount
requested on the date specified in a request for an advance, (b) the failure of
the Borrower to pay, punctually on the due date thereof any amount payable under
the Credit Facility, (c) the accelerated payment of any obligations under the
Credit Facility of the Borrower as a result of an Event of Default that
continues beyond the expiration of any applicable grace or cure period, if any,
or (d) the repayment or prepayment of principal amounts under the Credit
Facility on a date other than the last date of an Interest Period. Such losses,
costs or expenses shall include but shall not be limited to (x) any costs
incurred by Lender in carrying funds which were to have been borrowed or in
carrying funds to cover the amount of any overdue principal or overdue interest
on amounts under the Credit Facility, (y) any interest payable by Lender to
lenders of the funds borrowed by Lender in order to carry the funds referred to
in the immediately preceding subclause, and (z) any losses incurred by Lender in
liquidating or re-employing funds acquired from third parties to effect or
maintain all or any part of the amounts outstanding under the Credit Facility or
portion thereof.
1.8 The Borrowing Base. The borrowing base ("Borrowing Base") shall equal
80% of Eligible Accounts. "Eligible Accounts" shall mean Accounts (as such term
is defined in the Uniform Commercial Code in force in the Commonwealth of
Massachusetts) which are acceptable to Lender in its sole discretion, but which
at least are continuously in compliance with all of the following:
(a) The Account is an account of Borrower which arose in the ordinary
course of the business of Borrower from or in connection with the bona fide
sale of goods or rendition of services, performed in accordance with an
order or contract, oral or written, wherein all obligations of Borrower
regarding the shipment or delivery of such goods to a customer have been
satisfied or the services have been performed for a customer;
(b) The Account did not arise from or in connection with a sale of
goods by Borrower on consignment or with a sale of goods by Borrower that
had been consigned to Borrower;
(c) The Account is not evidenced by a promissory note or chattel
paper;
(d) The rights of Borrower in and to the Account and the proceeds
thereof are not subject to any assignment, claim, lien, security
interest or other encumbrance except in favor of Lender;
(e) The financial condition of the customer is acceptable to Lender
in its sole discretion;
(f) The Account is not disputed nor subject to offset, credit
allowance, contra account or adjustment by a customer, except
discounts for prompt payment disclosed to Lender;
(g) The Account has remained unpaid for not more than ninety (90)
days past its invoice date;
(h) The Account is not owed by any creditor, employee, supplier or
affiliate of Borrower. The term "affiliate" means any person
which, directly or indirectly, controls or is controlled by
Borrower, or is under common control with Borrower as determined
by Lender;
(i) [Intentionally Omitted]; and
(j) The customer has its principal place of business in the United
States of America or, so long as such invoices are designated in
U.S. Dollars, in Canada;
provided, however, that no Account shall be considered to be an Eligible Account
if owed to Borrower by a person or entity at least twenty percent (20%) of whose
aggregate accounts receivable to Borrower have been outstanding for more than
ninety (90) days past their invoice dates.
1.9 Borrowing Base Reports. Borrower shall deliver to Lender not less
frequently than monthly from the date hereof through and including May 1, 2003
and quarterly thereafter, a report of Eligible Accounts as of a specified date
("Borrowing Base Report"), in form reasonably satisfactory to the Lender, signed
by the chief financial officer, chief executive officer or corporate controller
of Borrower:
1.10 Mandatory Prepayment. If at any time when the aggregate unpaid
principal amounts outstanding under the Credit Facility exceed the Borrowing
Base the Lender gives notice of a mandatory prepayment, the Borrower shall
promptly make a payment on the Note in an amount equal to such excess, and the
Lender may, without prior notice to the Borrower, charge accounts of the
Borrower with the Lender to effect such payment.
1.11 Interest Calculations. Interest shall be computed on the basis of the
actual number of days elapsed over a 360 day year.
1.12 Overdue Principal and Interest. Overdue principal and, to the extent
permitted by law, overdue interest on amounts outstanding under the Credit
Facility, shall bear interest at a rate which at all times shall be equal to the
lower of the Floating Rate plus 4% or the highest rate permitted by applicable
law and shall be payable on demand.
1.13 Yield Protection, Etc.
(a) Additional Costs. If any present or future applicable law
("Applicable Law"), which expression as used herein includes statutes,
rules and regulations thereunder and interpretations thereof by any
competent court or by any governmental or other regulatory body or official
charged with the administration or the interpretation thereof and requests,
directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to Lender by any central bank or
other fiscal, monetary or other authority (whether or not having the force
of law), including without limitation any change according to a prescribed
schedule of increasing requirements, whether or not known or in effect as
of the date hereof, shall with respect to any amounts outstanding under the
Credit Facility, or undertakings of the Lender under this Agreement
(i) subject the Lender to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this
Agreement or undertakings of the Lender hereunder or the payment to
the Lender of any amounts due to it hereunder, or
(ii) materially change the basis of taxation of payments to the
Lender of the principal of or interest on any amounts payable to the
Lender hereunder, or
(iii) impose or increase or render applicable any special or
supplemental deposit or reserve or similar requirements or assessment
against assets held by, or deposits in or for the account of, or any
liabilities of, or advances by the Lender in respect of the
transactions contemplated herein, or
(iv) impose on the Lender any other condition or requirement with
respect to this Agreement, the Credit Facility or advances thereunder,
and the result of any of the foregoing is
(A) to increase the cost to the Lender of making, funding or
maintaining all or any part of the Credit Facility or advances
thereunder, or
(B) to reduce the amount of principal, interest or other
amount payable to the Lender hereunder, or
(C) to require the Lender to make any payment or to forego
any interest or other sum payable hereunder, the amount of which
payment or foregone interest or other sum is calculated by
reference to the gross amount of any sum receivable or deemed
received by the Lender from the Borrower hereunder,
then, and in each such case not otherwise provided for hereunder,
the Borrower will upon demand promptly following Lender's notice to
the Borrower and the Lender pertaining to such matters accompanied by
calculations thereof in reasonable detail, pay to the Lender such
additional amounts as will be sufficient to compensate it for such
additional cost, reduction, payment or foregone interest or other sum;
provided that the foregoing provisions of this sentence shall not
apply in the case of any additional cost, reduction, payment or
foregone interest or other sum resulting from any taxes charged upon
or by reference to the overall net income, profits or gains of the
Lender.
(b) Capital Adequacy. If, after the date hereof, Lender shall
have determined that any Applicable Law regarding capital requirements
for banks or bank holding companies generally, or any change therein
or in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender with
any of the foregoing, either imposes a requirement upon Lender to
allocate additional capital resources or increases Lender's
requirement to allocate capital resources or its undertaking to make,
or to its maintenance of, the Credit Facility or advances thereunder,
which has or would have the effect of reducing the return on Lender's
capital to a level below that which it could have achieved (taking
into consideration its then existing policies with respect to capital
adequacy and assuming full utilization of its capital) but for such
applicability, change, interpretation, administration or compliance,
by any amount deemed by Lender to be material, Lender shall promptly
after its determination of such occurrence give notice thereof to the
Borrower. In such event commencing on the date of such notice (but not
earlier than the effective date of any such applicability, change,
interpretation, administration or compliance), the fees payable
hereunder shall increase by an amount which will, in Lender's
reasonable determination, evidenced by calculations in reasonable
detail furnished to the Borrower, compensate the Lender for such
reduction, its determination of such amount to be conclusive and
binding upon the Borrower, absent manifest error. In determining such
amount, Lender may use any reasonable methods of averaging, allocating
or attributing such reduction among its customers.
1.14 Inability to Quote Eurodollar Rates; Illegality. If the Lender shall
for any reason beyond its reasonable control be unable to quote a Eurodollar
Rate with respect to a proposed Interest Period or if the Lender shall determine
that a change in Applicable Law makes it unlawful to fund advances in the London
interbank market, the Lender shall notify the Borrower and all amounts
outstanding under the Credit Facility shall at the end of the then current
Interest Period be converted to advances bearing interest at the Floating Rate,
such rate to be adjusted concurrent with each change in the Base Rate and the
Base Rate Spread.
1.15 Commitment Fee. The Borrower shall pay to the Lender, on or prior to
the date hereof, a non-refundable loan commitment fee in the amount of
$7,500.00.
1.16 Usury. All agreements between Borrower and Lender are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced by the Note or otherwise,
shall the amount paid or agreed to be paid to Lender for the use or the
forbearance of the indebtedness evidenced by the Note exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Agreement and the Note shall be governed by such new
law as of its effective date. In this regard, it is expressly agreed that it is
the intent of the Borrower and Lender in the execution, delivery and acceptance
of this Agreement and of the Note to contract in strict compliance with the laws
of the Commonwealth of Massachusetts from time to time in effect. If, under or
from any circumstances whatsoever, fulfillment of any provision hereof or of the
Note at the time of performance of such provision shall be due, shall involve
transcending the limit of such validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be reduced to the limits of such
validity, and if under or from any circumstances whatsoever Lender should ever
receive as interest an amount which would exceed the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced by the Note and not to the payment of interest.
This provision shall control every other provision of all agreements between the
Borrower and Lender.
SECTION II - SECURITY
The Note and all other obligations of the Borrower to the Lender whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising (collectively, the "Obligations") shall be secured by a
security interest in all of the Borrower's assets, now existing or hereafter
arising, other than as specifically set forth in that certain Security Agreement
by and between Borrower and Lender of even date herewith, as the same may be
amended and/or restated from time to time (the "Collateral").
SECTION III - REPRESENTATIONS AND WARRANTIES
The Borrower makes the following representations and warranties to the
Lender:
3.1 Organization and Qualification. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of Delaware. The
Borrower is duly qualified or licensed and in good standing as a foreign
corporation in each other jurisdiction where the ownership of property or the
conduct of its activities requires qualification and the failure to so qualify
would have a material adverse effect on Borrower. The Borrower has all necessary
power and authority to own its assets and to conduct its activities as now
conducted and as presently contemplated.
3.2 Corporate Authority; No Violation of Law or Default, Etc. The
execution, delivery and performance by the Borrower of this Agreement, the Note,
the Security Agreement and the transactions contemplated thereunder, are within
the corporate authority of the Borrower, have been duly authorized by all
necessary corporate action and will not contravene any provision of federal,
state or municipal law or regulation, the charter or by-laws of the Borrower or
create a default or result in the acceleration of indebtedness or the imposition
of a lien on assets of the Borrower under any material agreement, bond, note or
indenture to which the Borrower is a party or by which it is bound, other than
consents of certain parties whose consent has been obtained.
3.3 Governmental Approvals. The execution, delivery and performance of this
Agreement, the Note, and the Security Agreement and the transactions
contemplated thereby do not require any approval or consent of, or filing with,
any federal, state or municipal authority other than filings with the Uniform
Commercial Code records in connection with the Security Agreement.
3.4 Valid Obligations. This Agreement, the Note and the Security Agreement,
constitute, the legal, valid and binding obligations of the Borrower enforceable
in accordance with their respective terms.
3.5 Financial Statements. The Borrower has furnished to the Lender its
quarterly financial statements as of March 31, 2002 audited by Ernst & Young,
independent certified public accountants. The quarterly financial statements and
the notes thereto were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the period specified and
present fairly the financial position of the Borrower as of the date specified
and the results of operations and changes in financial position of the Borrower
for the fiscal year then ended.
3.6 Changes. Since March 31, 2002 there has been no change in the assets,
liabilities, financial condition or business of the Borrower other than changes
in the ordinary course of business, the effects of which individually, or taken
as a whole, have not been materially adverse to the financial condition or
business of the Borrower.
3.7 Title to Properties; Absence of Liens. The Borrower has good and
marketable title to all its properties, assets and rights of every nature now
owned by it, including all assets reflected on the latest financial statement
described above (except for assets disposed of for fair value in the ordinary
course of business since the date thereof), free from all security interests,
mortgages, capitalized leases, liens, charges and encumbrances whatsoever,
except for any of the same existing at the date hereof, all of which are listed
in Schedule I hereto. The Borrower enjoys quiet possession under all leases
under which it leases, any personal or real property, and all of such leases are
valid, subsisting and in full force and effect.
3.8 Absence of Undisclosed Liabilities. Except as disclosed on the latest
financial statement described above, in the note thereto, the Borrower has no
liabilities of a material nature individually or in the aggregate, whether
accrued, absolute, contingent or otherwise except liabilities stated or
adequately reserved against in such financial statement or liabilities arising
in the ordinary course of business since the date of such balance sheet.
3.9 Litigation. Except as disclosed on Schedule II, there is not now
pending against the Borrower, nor is there overtly threatened against the
Borrower, any litigation, investigation or any proceeding by or before any
tribunal or governmental agency, the outcome of which, individually or in the
aggregate, if adversely determined, would have a material adverse effect on the
financial condition, business or continued operations of the Borrower.
3.10 Taxes. The Borrower has filed all tax returns which are required to
have been filed (whether informational returns or not) and has paid all taxes,
if any, as shown on said returns and all assessments to the extent that such
taxes have become due. Neither the Internal Revenue Service nor any other taxing
authority is now asserting or, to the knowledge of the Borrower, threatening to
assert against the Borrower any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith.
3.11 Compliance with Laws; Permits. The Borrower is in full compliance with
all laws and regulations which apply to its activities and the conduct of its
business, the breach or violation of which, individually or in the aggregate,
could have a material adverse effect on the Borrower's operations or financial
condition, including, without limitation, all laws and regulations relating to
environmental protection, release or disposition of hazardous substances and
occupational health and safety. The Borrower holds all material licenses,
permits and franchises which are required to permit it to conduct its activities
and businesses as presently conducted or contemplated, and all such licenses,
permits and franchises are in full force and effect.
3.12 Pension Plans. No event which is a reportable event under Section 4043
of the Employee Retirement Income Security Act of 1974 ("ERISA") has occurred
with respect to any pension plan maintained for employees of the Borrower (or
for the employees of any person who is under "common control" with the Borrower
as that term is defined in Section 4001(a)(14) of ERISA (an "ERISA Affiliate"))
and covered by Title IV of ERISA ("Pension Plan"). The market value of the
assets of each Pension Plan as of the last valuation date for such Pension Plan
equals or exceeds the present value of benefit liabilities as of the latest
actuarial valuation date for such Pension Plan, determined in accordance with
the actuarial assumptions used by the Pension Benefit Guaranty Corporation
("PBGC") in single-employer plan terminations. All required contributions due to
each Pension Plan have been made by the Borrower or an ERISA Affiliate, as the
case may be; and, with respect to each Pension Plan, there is no accumulated
funding deficiency within the meaning of ERISA and the Borrower and any ERISA
Affiliates are in full compliance with Section 412 of the Internal Revenue Code
of 1986, as amended. Neither the Borrower nor any ERISA Affiliate has issued a
notice of intent to terminate any Pension Plan or received a notice from the
PBGC of its intent to initiate proceedings to terminate, or appoint a trustee
with respect to, any Pension Plan; and neither the Borrower nor any ERISA
Affiliate has incurred any liability to the Pension Benefit Guaranty Corporation
or to any Pension Plan in connection with the termination of any Pension Plan.
No event or condition has occurred or exists that could result in the imposition
of liability under Sections 4063, 4069 or, to the best knowledge of the
Borrower, 4201 of ERISA, the imposition of a lien under Section 412 of the Code
or Section 302 of ERISA, or the requirement to provide security under Section
401(a)(29) of the Code.
3.13 Regulation U. None of the proceeds of the Credit Facility will be used
to purchase or carry margin securities within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System.
3.14 Subsidiaries. The Borrower does not own, directly or indirectly, more
than 5% of any other corporation, business trust, partnership or other business
entity except as set forth in Schedule III hereto. Each of the Borrower's
subsidiaries has been duly organized and is validly existing and in good
standing in its jurisdiction of organization and is duly qualified and licensed
and in good standing as a foreign entity in each other jurisdiction where the
ownership of property or the conduct of its activities requires qualification
and the failure to so qualify would have a material adverse effect on it.
3.15 No Default. No event has occurred and is continuing which, with notice
or lapse of time or both, would constitute an Event of Default hereunder.
3.16 Investment Company. The Borrower is not an "investment company", or a
company "controlled" by an "investment company", as such terms are defined in
the Investment Company act of 1940, as amended.
SECTION IV - CLOSING CONDITIONS
The following conditions shall be met prior to the making of any advance
under the Credit Facility: all representations and warranties contained in
Section III shall be true and accurate on and as of the time of such advance
(except to the extent such representation and warranty related specifically to
an earlier date), no Event of Default shall have occurred hereunder and no
condition which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default shall exist, and no change shall have
occurred in any Applicable Law which in the opinion of counsel for the Lender
would make it illegal for the Lender to make the advances hereunder. In
addition, the Lender shall have received:
(a) Certificates of the Secretaries of State of Delaware and
Massachusetts as to the legal existence and good standing of the Borrower;
(b) a certificate of the Secretary of the Borrower as to (i) a copy of
charter documents and amendments of the Borrower, (ii) a copy of the
by-laws of the Borrower; (iii) a copy of the action taken to authorize this
Agreement and the transactions contemplated by the Agreement; and (iv) a
list of the incumbent officers of the Borrower;
(c) the executed Note;
(d) the executed Security Agreement;
(e) confirmation that all Collateral consisting of investment property
has been delivered to the Lender or is held by the Lender as securities
intermediary for the Borrower;
(f) a Federal Reserve Form U-1;
(g) a current Borrowing Base Report;
(h) an opinion, satisfactory in scope, form and substance to the
Lender, as to the matters referred to in Section 3.1 through 3.3 and such
other matters as the Lender may reasonably request from counsel to the
Borrower.
All closing documents shall be satisfactory in scope, form and substance to
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, special counsel to the Lender.
SECTION V - AFFIRMATIVE COVENANTS
5.1 Financial Statements and Reports. Borrower will furnish to the Lender
the following, all to be in form and substance satisfactory to Lender in its
sole discretion:
(a) Annual Reports. As soon as practicable and in any event within 90
days after the end of each fiscal year, an annual financial statement of
Borrower as at the end of such year, audited and certified without
qualification by independent certified public accountants engaged by the
Borrower and acceptable to the Lender.
(b) Quarterly Reports. As soon as practicable and in any event within
45 days after the end of each fiscal quarter, a quarterly financial
statement of Borrower as at the end of such quarter, including a
consolidated balance sheet of Borrower, an income statement and cash flow
information certified by the chief financial officer or corporate
controller of Borrower.
(c) Borrowing Base. At the times specified in Section 1.9, the reports
specified therein for the period certified by the chief financial officer
or corporate controller of Borrower.
(d) Projections. As soon as practicable and in any event within thirty
(30) days prior to Borrower's fiscal year end, one (1) year of projections,
including balance sheets, income statements and assumptions.
(e) Additional Information. From time to time such other financial
data and information as the Lender may reasonably request.
5.2 Notice of Certain Events.
(a) Defaults. The Borrower will, promptly after obtaining knowledge
thereof, give written notice to the Lender of any matter which constitutes
or which, with the giving of notice or the passage of time, or both, would
constitute, an Event of Default under this Agreement, specifying the nature
of the same, the period it has existed and what action the Borrower has
taken or proposes to take with respect thereto, and any matter which, in
the judgment of the chief financial officer of the Borrower, has resulted
in or is likely to result in a material adverse change in the financial
condition or operations of the Borrower.
(b) Judicial and Administrative Proceedings. The Borrower shall
promptly notify the Lender of the threat or commencement of any judicial,
administrative or other proceeding looking toward the limitation,
qualification or revocation of any permit or license required to permit the
Borrower to conduct its activities and businesses as presently conducted or
contemplated, including licenses and permits relating to environmental
protection, release or disposition of hazardous substances and occupational
health and safety or alleging any violation by the Borrower of any laws or
regulations relating to environmental protection, release or disposition of
hazardous substances or occupational health and safety or the demand or
request for the obtaining of any additional licenses or permits of such
nature.
5.3 Corporate Existence, Etc. The Borrower will take all action necessary
to preserve and maintain its corporate existence and will maintain and preserve
in full force and effect all material rights, licenses, patents, trademarks,
copyrights and franchises and will comply with all applicable laws and
regulations in all jurisdictions necessary for the conduct of its activities and
business.
5.4 Maintenance of Properties. The Borrower will keep all of the properties
which it deems useful or necessary in its activities and business in good
working order and condition reasonable wear and tear excepted.
5.5 Taxes. The Borrower shall promptly pay and discharge or make adequate
provision for the payment or discharge of any taxes, assessments or governmental
charges or levies that may be imposed upon its income or profits or upon any of
its property prior to the date on which penalties (excluding interest) attach
thereto, and all lawful claims which, if unpaid, might become a lien or charge
upon its property; provided, however, that this provision shall not be deemed to
require payment of any taxes, assessments, governmental charges, levies or
claims, the validity of which is being contested in good faith by appropriate
proceedings and for which adequate reserves have been maintained.
5.6 Insurance. The Borrower will maintain insurance with responsible
companies, in such amounts and against such risks as is deemed prudent by the
Borrower, consistent with prevailing practice in Borrower's field.
5.7 ERISA. The Borrower shall:
(a) make all required contributions in a timely manner to each Pension
Plan and fund each Pension Plan as required by the provisions of Section
412 of the Internal Revenue Code of 1986, as amended;
(b) promptly furnish to the Lender a copy of any notice of a Pension
Plan termination or of a reportable event with respect to a Pension Plan
sent to the Pension Benefit Guaranty Corporation under Sections 4041(a) or
4043 of ERISA:
(c) furnish to the Lender a copy of any request for waiver from the
funding standards or extension of the amortization periods required by
Section 412 of the Internal Revenue Code no later than the date on which
the request is submitted to the Department of Labor or the Internal Revenue
Service, as the case may be;
(d) promptly furnish the Lender any notice of plan termination by the
Pension Benefit Guaranty Corporation received by the Borrower;
(e) promptly furnish the Lender any notice of plan disqualification
received from the Internal Revenue Service;
(f) promptly furnish the Lender any notice received by the Borrower
with respect to any potential withdrawal liability with respect to a
Pension Plan or any reorganization or proposed termination of a Pension
Plan.
5.8 Operating Account; Custodial Accounts; Liquidity Manager. The Borrower
shall maintain its primary depository relationship for its main operating
account with the Lender, shall maintain all custody accounts for its investment
portfolio with the Lender as custodian and, so long as Lender is offering
services competitive in the marketplace, shall use Lender as its liquidity
manager.
5.9 Further Assurances; Inspection. The Borrower will, at any time and from
time to time, execute and deliver such further instruments and take such further
action as may be reasonably requested by the Lender in each case to further and
more perfectly carry out the purposes of this Agreement. The Borrower will
permit officers, employees or representatives of the Lender to visit and inspect
any of the properties and examine the books and discuss the affairs, finances
and accounts of the Borrower with its officers; all at such reasonable times and
upon reasonable notice and as often as the Lender may reasonably request.
5.10 Cash or Cash Equivalents. Borrower shall maintain at all times in its
account with Lender entitled BioSphere Medical, Inc., account number ▇▇▇▇▇▇▇
(the "Pledged Account"), an aggregate amount of cash or cash equivalents of at
least one and one-half (1 1/2) times the then outstanding principal balance of
the Note. Lender shall determine, in its sole discretion, which financial assets
in the Pledged Account are "cash or cash equivalents" and the value of such
financial assets.
SECTION VI - NEGATIVE COVENANTS
During the term of this Agreement, and so long as the Note is outstanding,
the Borrower agrees as follows:
6.1 Consolidation, Mergers, Disposition of Assets, Acquisitions, Etc.
Without the prior written consent of the Lender (which consent shall not be
unreasonably withheld), Borrower shall not become a party to a merger or
consolidation with any other person, corporation, business trust, partnership or
entity ("Person") unless the Borrower is the survivor of such merger or
consolidation (provided that immediately after the effectiveness of such merger
or consolidation, no Event of Default shall have occurred and be continuing and
no condition which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default, shall exist), nor will the Borrower sell,
lease or otherwise dispose of any of the Collateral (except as permitted in the
Security Agreement) or all or a substantial part of its assets, nor will the
Borrower without the prior written consent of Lender (which consent shall not be
unreasonably withheld), acquire the stock or substantially all of the assets of
any other Person. Notwithstanding any provision of this Section 6.1 to the
contrary Lender's consent shall not be required for the Borrower to enter into
any transaction, which would otherwise be prohibited by this Section 6.1,
including, but not limited to, partnerships, joint ventures, strategic
alliances, exclusive licenses and similar arrangements (collectively,
"Restricted Transactions"), so long as the aggregate amount of Borrower's
monetary obligations (both paid and to be paid) in connection with such
Restricted Transactions (giving effect to the Restricted Transaction in
question) shall not exceed Two Million ($2,000,000) Dollars during the term of
this Agreement and so long as, immediately after the effectiveness of such
Restricted Transaction, no Event of Default shall have occurred and be
continuing and no condition which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default, shall exist.
6.2 Liens. The Borrower shall not permit to exist any lien upon, pledge of
or security interest in any of its assets, nor will it acquire any personal
property under a capitalized lease, conditional sales agreement or other title
retention contract or sell any account, except:
(a) liens for taxes, assessments or governmental charges or levies the
payment of which is not at the time required or which are being contested
in good faith by appropriate proceedings provided adequate reserves are
established and provided enforcement of such liens have been stayed;
(b) liens of carriers, warehousemen, mechanics and materialmen and
other similar inchoate liens incurred in the ordinary course of business
for sums not yet due or being contested in good faith by appropriate
proceedings;
(c) liens incurred or deposits made in the ordinary course of business
in connection with workmen's compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, performance and return of
money bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(d) any attachment or judgment lien, unless such attachment or
judgment shall not, within 60 days after the issue or entry thereof, have
been released or discharged or execution thereof stayed pending appeal, or
shall not have been discharged within 60 days after the expiration of any
such stay;
(e) liens in favor of the Lender;
(f) liens securing permitted indebtedness outstanding on the date of
this Agreement as described on Schedule I;
(g) liens securing indebtedness incurred solely for the purpose of
acquiring any real or personal property, other than inventory; provided no
such purchase money security interest shall extend to any property other
than the particular property so acquired and provided further that the
amount of any such purchase money indebtedness shall not exceed the fair
value of such property at the time of acquisition.
6.3 Indebtedness. The Borrower shall not incur, assume, guaranty or have
outstanding any indebtedness whatsoever (including without limitation,
indebtedness under capitalized and non-capitalized leases), except for:
(a) indebtedness under the Note;
(b) indebtedness to which the Lender has given its prior written
consent;
(c) trade payables incurred in the ordinary course of business;
(d) indebtedness described on Schedule IV existing as of the date
hereof;
(e) indebtedness and capitalized lease obligations secured by liens
permitted under Section 6.2(g), not to exceed $500,000 in the aggregate
outstanding at any one time; -
(f) unsecured indebtedness not to exceed $2,000,000 in the aggregate,
which amount may include, but not be limited to, letters of credit, foreign
exchange contracts and security deposits.
SECTION VII - DEFAULTS
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal or interest on the
Note within three (3) days after the due date thereof;
(b) any representation or warranty of the Borrower herein, in the
Security Agreement, or in any certificate delivered hereunder shall prove
to have been false in any material respect as of the time made or
furnished;
(c) the Borrower shall suffer a receiver or trustee for all or
substantially all of its property to be appointed; or institute or suffer
to be instituted against it any proceedings under any law relating to
bankruptcy, insolvency, arrangement, reorganization or relief of debtors;
provided, however, that Borrower may cure an Event of Default resulting
from the appointment of a receiver or trustee for Borrower or the
institution of any proceedings under any law against Borrower relating to
bankruptcy, insolvency, arrangement, reorganization or relief of debtors,
commenced by an unrelated third party without the consent or acquiescence
of Borrower, if such receiver or trustee shall be discharged or such
proceeding shall be terminated, as appropriate, within sixty (60) days of
the appointment or filing thereof;
(d) the Borrower shall fail to perform any other term, covenant or
agreement contained herein, in the Security Agreement or in any other
agreement with Lender; provided, however, that:
(i) Borrower's failure to perform the covenant contained in
Section 5.10 hereof shall not be an Event of Default hereunder unless
such failure shall continue for at least two days after Lender sends
Borrower written notice of such failure; and
(ii) Borrower's failure to perform the covenant contained in
Section 6.2 hereof by permitting certain liens to exist upon its
assets, shall not be an Event of Default hereunder unless such failure
shall continue for at least thirty days after Lender sends Borrower
written notice of such failure or unless such lien is a consensual
lien or unless such lien covers the Pledged Account or any of the
assets held therein or unless the lienor has taken action to enforce
such lien or unless Borrower's failure to perform such covenant is not
otherwise susceptible to a cure.
(e) the Borrower shall fail to pay at maturity, or within any
applicable period of grace, any obligation in excess of $100,000 for
borrowed monies or advances or any capitalized lease obligations or fail to
observe or perform any term, covenant or agreement contained in any
agreement, by which it is bound, evidencing or securing borrowed monies or
advances, for such period of time as would, or would have permitted
(assuming the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to accelerate the
maturity thereof;
(f) substantial loss, theft, damage, destruction or diminution in
market value of the Collateral taken as a whole that is not fully covered
by insurance;
(g) the occurrence of any material adverse change in the condition of
Borrower, financial or otherwise.
then, and in every such event, the Lender may terminate this Agreement,
declare all amounts owing hereunder or under the Note and all other
obligations to be, and they shall forthwith become, immediately due and
payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, provided, however, that upon the
occurrence of an Event of Default under subsection (c) above all such
amounts due under the Note shall automatically become immediately due and
payable without demand or any action on the part of Lender.
SECTION VIII - SET-OFF
Any deposits or other sums at any time credited by or due from the Lender
to the Borrower and any securities or other property of the Borrower in the
possession of the Lender may at all times be held and treated as collateral
security for the payment of the Obligations. Regardless of the adequacy of any
Collateral, any deposits or other sums credited by or due from the Lender to the
Borrower may be applied to or set off against the Obligations at any time.
SECTION IX - DEFINITIONS
The following terms shall have the meanings set forth below or the meanings as
used or assigned to them in the provisions of this Agreement referred to below:
Applicable Law see sec.1.13
Banking Day see sec.1.4
Base Rate see sec.1.4(c)
Base Rate Spread see sec.1.4(c)
Borrower see Preface
Borrowing Base see sec.1.8
Borrowing Base Report see sec.1.9
Collateral see sec.2.1
Credit Availability see sec.1.1
Credit Facility see Background
Eligible Accounts see sec.1.8
ERISA see sec.3.12
ERISA Affiliate see sec.3.12
Eurodollar Rate Advance see sec.1.4(a)
Events of Default see sec.7.1
Floating Rate see sec.1.4(a)
Floating Rate Advance see sec.1.4(a)
Interest Period see sec.1.4(c)
Lender See Preface
LIBOR Rate see sec.1.4(c)
LIBOR Rate Spread see sec.1.4(c)
Maturity see sec.1.1
Note see sec.1.3
Obligations see sec.2.1
PBGC see sec.3.12
Pension Plan see sec.3.12
Person see sec.6.1
Pledged Account see sec.5.10
Restricted Transactions see sec.6.1
Security Agreement see sec.2.1
Any term of an accounting nature not otherwise defined shall have the meaning
usually assigned to it under generally accepted accounting principles applied on
a consistent basis.
SECTION X - MISCELLANEOUS
10.1 Expenses, Taxes. Whether or not the transactions contemplated in this
Agreement are consummated, the Borrower will pay the reasonable out-of-pocket
expenses of the Lender (including reasonable fees and disbursements of special
counsel, if any, retained by the Lender) in connection with the preparation,
administration and enforcement of this Agreement, the Note, the Security
Agreement, and the advances made hereunder. The Borrower agrees to indemnify and
hold the Lender harmless against any taxes, assessments or charges assessed by
any governmental authority, and costs of any litigation or proceedings and any
losses, claims, damages or expenses whatsoever, arising by reason of the
execution and delivery of this Agreement, the Note, and the Security Agreement,
any recordings with respect to the Security Agreement or any use of the proceeds
of the Credit Facility, other than losses, claims, damages or expenses resulting
solely from Lender's gross negligence or willful misconduct.
10.2 Payment Dates. If the due date for any payment of principal is
extended by operation of law, interest shall be payable for such extended time.
If any payment required by this Agreement becomes due on a day which is not a
Banking Day, such payment may be made on the next succeeding Banking Day and
such extension shall be included in computing interest or fees, as the case may
be, in connection with such payment.
10.3 Notices. Except as otherwise provided, all notices hereunder shall be
in writing and shall be deemed adequately given if sent as provided in Section
18 of the Security Agreement.
10.4 Changes, Waiver, Etc. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated or any consent thereunder
granted orally, but only by a statement in writing. Any waiver or amendment of
any provision hereof may be granted or effected, with the consent of the
Borrower, by a written instrument signed by the Lender. No failure or delay by
the Lender in exercising any right, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law.
10.5 Participations. The Borrower understands and agrees that Lender may
grant to other banks or financial institutions participations in the loans made
hereunder, the Note and this Agreement provided that in the event of such a
participation, such Lender shall at all times act as lead participant. All costs
of any such participation shall be borne by Lender, and Borrower may continue to
deal with Lender as if Lender were the sole lender hereunder.
10.6 Binding Effect of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Lender and their respective successors
and assigns, provided, however, that the Borrower may not assign or transfer the
rights hereunder without the prior written consent of the Lender.
10.7 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE NOTE, THE SECURITY AGREEMENT OR ANY OTHER AGREEMENTS
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING,
WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR
ACTIONS OF THE LENDER RELATING TO THE ADMINISTRATION OF THE CREDIT FACILITY OR
ENFORCEMENT OF THIS AGREEMENT, THE NOTE OR THE SECURITY AGREEMENT, AND AGREE
THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
10.8 Massachusetts Law. This Agreement shall be construed in accordance
with and governed by the laws of the Commonwealth of Massachusetts.
10.9 Counterparts. This Agreement may be signed in counterparts with the
same effect as if the signatures hereto and thereto were upon the same
instrument.
10.10 Confidentiality. In handling any confidential or proprietary
information received pursuant to this Agreement or the transactions contemplated
hereby, Lender, and all employees and agents of Lender, including, but not
limited to, accountants, shall exercise the same degree of care that they
exercise with respect to Lender's own confidential or proprietary information.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed,
under seal, by their respective officers, as of the date first set forth above.
BioSphere Medical, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Vice President / CFO
▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
Senior Vice President
Schedule I
Security Interests, Mortgages, Liens,
Capitalized Leases and Encumbrances
Financing Statements on File on Date Hereof
Filing Secured File Collateral
Office Party No. Date Description
------ ----- --- ---- -----------
Delaware Waters 20268742 1/3/02 Specified
Secretary Financial Equipment
of State Services
Capitalized Leases
------------------
o BioSphere Medical, Inc. ("the company") Leases (10) IBM Thinkpads and (1)
340 Microdrive Thinkpad through ▇▇▇▇▇▇ Financial Group. As of March 31,
2002, the company had $19,244.37 outstanding on a five year lease agreement
that began in April 2001.
o The company also leases (1) Dell Firewall Server through Dell Equipment
Leasing. As of March 31, 2002, the company had $933 outstanding on a three
year lease agreement.
o The company has leased (1) High Performance Liquid Chromaotography Machine
for Research and Development purposes through Waters Financial. As of March
31, 2002 the company has $20,707 outstanding on a three year lease.
Schedule II
Litigation, Investigations and Proceedings
None.
Schedule III
Subsidiaries
Company Jurisdiction Percentage Owned
------- ------------ ----------------
BioSphere Medical, S.A. France 100%
BioSphere Medical Japan, Inc. Delaware 100%
BSMD Ventures, Inc. Delaware 100%
Schedule IV
Existing Indebtedness
None other than capitalized leases described on Schedule I.
ANNEX A
PROMISSORY NOTE
$5,000,000 May 17, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
For value received the undersigned, promises to pay to the order of ▇▇▇▇▇
Brothers ▇▇▇▇▇▇▇▇ & Co., a New York general partnership (the "Lender"), on or
before May 17, 2004 the principal sum of $5,000,000 or, if less, the aggregate
unpaid principal amount of all advances made by the Lender under the Credit
Agreement referred to below, and outstanding at maturity, together with interest
thereon or on such portion thereof as may be from time to time outstanding, at
such rate or rates, and payable at such times and manner, as are provided in the
said Credit Agreement. Payments of principal and interest shall be made to
Lender at its offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
This Note is issued under the Credit Agreement dated as of May 17, 2002,
between the undersigned, as borrower and the Lender, as lender, and is subject
to the terms and conditions of the Credit Agreement. Upon the occurrence of
certain events, as specified in the Credit Agreement, the principal of this Note
may be declared due and payable in the manner and with the effect provided in
the Credit Agreement.
The undersigned hereby agrees to pay on demand all costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
paid or incurred by the holder in enforcing this Note on default or in
connection with any bankruptcy, reorganization, receivership or other insolvency
proceeding involving the undersigned.
THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR
ENFORCEMENT OF THIS NOTE AND AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED.
This Note shall take effect as a sealed instrument and be governed by the
laws of the Commonwealth of Massachusetts.
BioSphere Medical, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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