Exhibit 10.12
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of
the 27 of August, 1997, by and between CORESTATES BANK, N.A (formerly Meridian
Bank) ("Bank"), and IBAH, Inc., a Delaware corporation ("IBAH") and The Hardardt
Group, Inc. ("Hardardt", together with IBAH is referred to herein as "Debtor").
W I T N E S E T H:
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WHEREAS, on December 31, 1996, Bank and Debtor entered into an Amended
Loan and Security Agreement (the "Agreement") providing for (i) a revolving line
of credit loan in a maximum principal amount of $5,000,000.00 and (ii) an
amended and restated non-revolving equipment loan (the "Non-Revolving Equipment
Loan") in the original principal amount of $2,500,000.00; and
WHEREAS, the parties wish to further amend and restate the Agreement in
full, including the addition of three new term loans as defined herein
(collectively, the "Term Loans").
NOW, THEREFORE, in consideration of the benefits, conditions and covenants
contained or referred to herein, and for other good and valuable consideration
the receipt of which is hereby acknowledged, and INTENDING TO BE LEGALLY BOUND
HEREBY, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
1.01 Certain Defined Terms: As used in this Agreement, the following
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terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Accounts", "Chattel Paper", "Documents", "Equipment", "General
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Intangibles", "Goods", "Instruments", "Inventory" and "Money" have the same
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respective meanings as are given to those terms in the Pennsylvania Uniform
Commercial Code. "Accounts" shall include "contracts" and "contract rights"
without respect to the definition of the latter terms under applicable laws, and
shall also include any rights to receive payment which may also be evidenced by
Instruments, Documents or Chattel Paper.
"Advance" shall include any sums advanced by Bank or credited by
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Bank to the account of Debtor, or for the account of Debtor to third parties,
including without limitation, advances of principal or to pay interest or fees,
or the incurring of expenses reimbursable by Debtor.
"Affiliate" includes any corporation, partnership, association, joint
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venture, company, trust, individual or entity, which now or hereafter at any
time controls, is controlled by, or is under common control with, Debtor, and
each shareholder, officer and director of Debtor.
"Availability" shall mean, as to the Revolving Line of Credit Loan,
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an amount, varying from time to time, equal to the result of (1) $5,000,000 less
all amounts due Bank by Debtor under the Non-Revolving Equipment Loan minus (2)
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the sum of all Line of Credit Advances outstanding and unpaid, minus (3) the
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sum of all amounts committed under the Subline provided for in Section 2.07
hereof
"Bio-Pharm GmbH" means Euro Bio-Pharm Clinical Services GmbH, a
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corporation organized under the laws of Germany and a Subsidiary of Debtor, of
which Debtor owns, through a subsidiary of Debtor, one hundred percent (100%) of
the ownership interests.
"Bio-Pharm GmbH Note" means a revolving line of credit note, dated
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December 31, 1996, in the amount of Seven Million Dollars ($7,000,000.00) made
by Bio-Pharm GmbH in favor of Debtor.
"Capital Lease" means any lease of property (real, personal or mixed)
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which, in accordance with GAAP, should be capitalized on the lessee's balance
sheet or for which the amount of the asset and liability thereunder as if so
capitalized should be disclosed in a note to such balance sheet.
"Chief Executive Office" shall have the meaning ascribed to it under
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the Pennsylvania Uniform Commercial Code, 13 Pa. C.S. Section 9103(c)(4).
"Code" means the Internal Revenue Code of 1986, as the same may be
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amended or supplemented from time to time, and any successor statute of similar
import, and the rules and regulations thereunder, as from time to time in
effect.
"Collateral" shall mean all real and personal property in which
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Debtor grants Bank a lien or security interest to secure the Obligations,
pursuant to this Agreement or any security agreement or other undertaking or
instrument related to the Loans or this Agreement.
"Collateral Assignment and Security Agreements" means each of the
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two (2) Collateral Assignment and Security Agreements to be executed by and
between Debtor and Bank, pursuant to which Debtor shall assign its rights in and
to each of the Euro Bio-Pharm GmbH Note and the Euro Bio-Pharm, Ltd. Note.
"Controlled Group Member" means each trade or business (whether or
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not incorporated) which together with the Debtor is treated as a single employer
under Section 4001(b)(1) of ERISA or Sections 414(b) or 414(c) of the Code.
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"Credit" or "Credits" shall mean an irrevocable commercial or standby
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letter of credit or letters of credit to be issued by Bank, as provided in
Section 2.07 hereof, for the account of Debtor.
"Default Rate" means two percent (2.0%) (200 basis points) per annum
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in excess of the Loan Rate (calculated without references to any maximum or
minimum limitations on the Loan Rate) which would otherwise be in effect from
time to time for each Loan, but not in excess of the amount permitted under
applicable law. Each time the Loan Rate would change, the Default Rate shall
change contemporaneously without further notice to the Debtor. The Default Rate
shall also be payable upon any money judgment entered against the Debtor with
respect to any of the Loans, from and after the date of entry of the judgment
until satisfied in full.
"Designated Officer" means any person holding the office of
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President, Chief Financial Officer, Chief Operating Officer or Controller for
Debtor, or any officer of Debtor designated in writing by any one or more of
them. Debtor hereby authorizes any Designated Officer of Debtor to act on behalf
of Debtor.
"Effective Date" means, as to the Revolving Line of Credit Loan,
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December 31, 1996, as to the Non-Revolving Equipment Loan, July 8, 1994 and as
to the Term Loans, the later of the date on which this Agreement is signed or
the date this Agreement becomes effective after satisfaction of the conditions
set forth in Article 5 hereof. Unless otherwise agreed, the date of Bank's first
Advance shall be deemed the Effective Date.
"Environmental Laws" mean any Law relating to product safety,
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occupational and health or safety, environmental protection or hazardous waste
or toxic substances management, handling or disposal, including, without
limitation, any restrictions, specifications or requirements pertaining to
products Debtor manufactures, processes or sells or pertaining to the services
it performs, the conduct of business and the use, maintenance or operation of
the real and personal properties owned or possessed by it.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended, and the regulations thereunder as in effect from time to time.
"Euro Bio-Pharm, Ltd." means Euro Bio-Pharm, Ltd., a corporation
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organized under the laws of the United Kingdom and a wholly-owned Subsidiary of
Debtor.
"Euro Bio-Pharm, Ltd. Note" means a revolving line of credit note
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dated December 31, 1996, in the amount of Seven Million Dollars ($7,000,000.00)
made by Euro Bio-Pharm, Ltd. in favor of Debtor.
"Event of Default" means an event specified in Section 10 hereof
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following any required notice and/or expiration of any applicable grace or cure
period.
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"GAAP" shall mean generally accepted accounting principles as in
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effect from time to time consistently applied from period to period throughout
the term of this Agreement, both as to classification of items and amounts.
Opinions of the Financial Accounting Standards Board, or its predecessors or
successors, shall presumptively evidence generally accepted accounting
principles.
"Hazardous Materials" means (i) friable asbestos or asbestos-
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containing material, (ii) transformers or other equipment with contain dialectic
fluid containing levels of polychlorinated biphenyls in excess of 50 parts per
million, (ii) any flammable explosives, radioactive materials, hazardous
material, hazardous waste, hazardous or toxic substances or related materials,
(iv) any petroleum or petroleum byproducts, (v) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
Environmental Law, or similar substances now or hereafter subject to
environmental or occupational safety regulation.
"Indebtedness" means, as the context shall require, all items of
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indebtedness, obligation or liability, whether matured or unmatured, liquidated
or unliquidated, direct or contingent, joint or several, including, but without
limitation:
(1) All indebtedness guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary course
of business) or discounted with recourse;
(2) All indebtedness in effect guaranteed, directly or
indirectly, through agreements, contingent or otherwise: (i) to purchase such
indebtedness; or (ii) to purchase, sell or lease (as lessee or lessor) property,
products, materials or supplies or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such indebtedness or to
assure the owner of the indebtedness against loss; or (iii) to supply funds to
or in any manner invest in Debtor;
(3) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed (if Indebtedness is not assumed,
the liability is limited to the fair market value of the assets pledged; and
(4) All indebtedness incurred as the lessee of goods or services
under Capital Leases or operating leases.
"International Facilities Agreement" means the agreement
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substantially in the form of Exhibit A attached hereto which may be entered into
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between Debtor and Bank, in the event that Debtor desires to open one or more
Credits or enter into foreign exchange contracts pursuant to the Subline
provided for in Section 2.07 hereof.
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"Laws" means all ordinances, statutes, rules, regulations, orders,
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injunctions, writs or decrees of any government or political subdivision or
agency thereof, or any court or similar entity.
"Letter of Credit" means the Credit or Credits.
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"Letter of Credit Documents" means the documents between Bank and
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Debtor relating to a Letter of Credit, including without limitation, the
International Facilities Agreement attached hereto as Exhibit A and evidencing,
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inter alia, the agreement of Bank to issue such Letter of Credit and Debtor's
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reimbursement obligation with respect thereto, all of which Letter of Credit
Documents shall be in form and substance satisfactory to Bank.
"Lien" means any lien or encumbrance and includes, without
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limitation, all mortgages, security interests, liens, chattel mortgages, capital
leases, trusts, charges, pledges, claims or other interests in property, legal
or equitable, whether consensual or nonconsensual, fixed, or contingent, ▇▇▇▇▇▇
or inchoate, and whether given or implied by statute or common law or by
agreement or grant.
"Loans" means the Revolving Line of Credit Loan, the Non-Revolving
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Equipment Loan, the Term Loans, and the Advances made pursuant thereto.
"Loan Account" means the account or accounts on the books of Bank
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in which Bank may record Loans, Advances, payments made on the Loans, and other
appropriate debits and credits as provided by this Agreement.
"Loan Documents" means, individually and collectively, this
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Agreement, the Notes, the Pledge Agreements, the Collateral Assignment and
Security Agreements and all other existing and future agreements, instruments,
documents, assignments, guaranties and undertakings (including amendments to any
of the foregoing) delivered by the Debtor or any other person or entity in
connection with any of the Loans.
"Loan Rate" shall mean (1) for the Revolving Line of Credit Loan and
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the Non-Revolving Equipment Loan, the rates as specified in Articles 2 or 3, per
annum in excess of the Prime Rate in effect from time to time. Each time the
Prime Rate changes the Loan Rate shall change automatically and
contemporaneously without further notice to Debtor; and (2) for the Term Loans,
the rates for the respective Term Loans as specified in Article 4.
"Locations" means any one or more of the places defined as such in
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Section 9.03(q).
"Maturity Date" shall mean, for each Loan, the earliest of (i) the
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maturity dates for the respective Loans as specified in Articles 2, 3 or 4, or
elsewhere herein or in any Note, or (ii) the date of acceleration of such Loan
upon an Event of Default.
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"Non-Revolving Equipment Loan" means the Non-Revolving Equipment Loan
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provided for in Article 3 hereof.
"Non-Revolving Equipment Note" means the Non-Revolving Equipment Note
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dated July 8, 1994 in the face amount of Two Million Five Hundred Thousand
Dollars ($2,500,000.00), as amended and restated in full by that certain Amended
and Restated Non-Revolving Equipment Note dated as of December 31, 1996.
"Notes" means the Revolving Line of Credit Note, the Non-Revolving
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Equipment Note and the Term Loan Notes.
"Obligations" means the obligations (whether contingent or fixed, or
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otherwise) of Debtor:
(1) To pay the principal of and interest on and other fees,
charges and expenses accruing with respect to the Advances, the Loans or any of
the Loan Documents, and to satisfy all other Indebtedness to Bank, whether
hereunder or otherwise, whether now existing or hereafter incurred, including
any extensions, modifications, renewals thereof and substitutions therefor;
(2) To repay to Bank all amounts advanced by Bank in connection
herewith, to any person or entity whatever, including without limitation
interest, fees or other charges or expenses, payments to prior secured parties,
mortgagees, or lienors, or for taxes, levies, insurance, rent, repairs to or
maintenance of any of the Collateral; and
(3) To reimburse Bank, on demand, for all of Bank's expenses and
costs, before or after closing hereon, including the reasonable fees and
expenses of its counsel, in connection with the preparation, administration,
amendment, modification, or enforcement of this Agreement and the documents
required hereunder, including, without limitation, prosecution or defense of any
proceeding brought, contemplated or threatened with respect to the obligations
referred to in the foregoing paragraphs (1) and (2) or any of the transactions
relating thereto.
"Patents" means any patents, all applications, registrations and
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recordings related to such patents in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any state
thereof, any political subdivision thereof or in any other countries and all
reissues, continuations-in-part, extensions and renewals and licenses thereof.
"Permitted Liens" means:
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(1) Liens for taxes, assessments, or similar charges incurred in
the ordinary course of business that are not yet due and payable;
(2) Pledges or segregated deposits made in the ordinary course
of business to secure payment of workmen's compensation, or to participate in
any fund in
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connection with workmen's compensation, unemployment insurance, old-age pension
or other social security programs;
(3) Liens in favor of Bank;
(4) Purchase money security interests and Capital Leases for
acquisition of equipment or vehicles in the ordinary course of business but only
if the equipment or vehicle in question is not financed in part with monies
loaned hereunder and is trade fixtures or is not affixed to the realty;
(5) The following, if incurred in the ordinary course of
business and the validity or amount thereof is being contested in good faith by
appropriate and lawful proceedings, to the extent (i) levy and execution thereon
have been stayed and continue to be stayed, (ii) adequate reserves are set aside
therefor, (iii) they do not, singly or in the aggregate, materially detract from
the value of any material property of Debtor or materially impair the operation
of its business and (iv) they do not exceed the respective amounts (if any)
defining Events of Default provided in Section 10.01:
(a) Claims or liens for taxes or assessments,
(b) Claims or liens of mechanics, materialmen,
warehousemen, carriers or other like liens, and
(c) Adverse judgments; and
(6) Any Lien existing on the date of this Agreement and
described on Exhibit B hereof.
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"Person" means, any individual, corporation, partnership,
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association, joint-stock company, trust, incorporated organization, joint
venture, court or government or political subdivision or agency thereof.
"Pharmaceutics" means Bio-Pharm Pharmaceutics Services, Inc., a
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Delaware corporation and wholly owned Subsidiary of Debtor.
"Plan" means any employee pension benefit plan, as such term is
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defined in Section 3(2) of ERISA to which Section 4021(a) of ERISA applies and
(i) which is maintained for employees of Debtor or any Controlled Group Member
with respect to the Debtor, or (ii) to which Debtor or Controlled Group Member
with respect to the Debtor made, or was required to make, contributions at any
time within the preceding five (5) years. "Multiemployer Plan" means any Plan
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which is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA.
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"Pledge Agreements" means (i) the Pledge Agreement to be executed and
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delivered by Debtor to Bank, pledging certain stock and ownership interests of
Debtor in Affinity, EuroBioPharm and EPIC, Ltd., including all schedules and
exhibits thereto, and (ii) the Pledge Agreement to be executed by and between
Debtor and Bank, pledging certain ownership interests of Debtor in BioPharm
GmbH, and authenticated by a German Notar.
"Potential Default" means an event, circumstance, act, omission or
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state of affairs which would (with the passing of time or of any grace period,
or the giving of notice by the Bank or any third party, or any combination of
the foregoing) become an Event of Default.
"Prime Rate" means the floating annual rate of interest that is
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designed from time to time by the Bank as the "Prime Rate." The Prime Rate is a
pricing index, and is not and should not be considered to represent the lowest
or the best interest rate available to a borrower at any given time. If the
Prime Rate is discontinued or no longer quoted, Bank shall have the right to
substitute a new method in determining a comparable rate, and such method shall
constitute the Prime Rate hereunder.
"Profit" means, at any time, net income as reported on any financial
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statements of Debtor prepared in accordance with GAAP, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
or any other public accounting firm with a national reputation.
"Rate" shall mean the Loan Rate or the Default Rate, as the case
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may be, applicable hereunder to any Loans.
"Records" means correspondence, memoranda, tapes, data processing
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cards, discs, papers, tabulating runs, programs, books and other documents, or
manually or electronically recorded information (whether or not transcribed) of
any type, whether expressed in ordinary or machine or other language.
"Revolving Line of Credit Loan" means the revolving line of credit
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provided for in Article 2 hereof (including the Subline provided thereunder),
and the Advances made pursuant thereto.
"Revolving Line of Credit Note" means the Revolving Line of Credit
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Note dated as of December 31, 1996, in the face amount of Five Million Dollars
($5,000,000.00), as referred to in Article 2 hereof.
"Subline" means the Letter of Credit and foreign exchange subline
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provided for in Section 2.07 hereof.
"Subsidiary" of any Person at any time shall mean (i) any corporation
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or trust of which fifty percent (50%) or more (by number of shares of number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute
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the voting rights) is at such time owned directly of indirectly by such Person
or one or more of such Person's Subsidiaries, or any partnership of which such
Person is a general partner or of which fifty percent (50%) or more of the
partnership interests is at the time directly or indirectly owned by such Person
or one or more of such Person's Subsidiaries, and (ii) any corporation, trust,
partnership or other entity which is controlled or capable of being controlled
by such Person or one or more of such Person's Subsidiaries.
"Term Loans" means the term loans provided for in Article 4 hereof.
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"Term Loan Notes" means the Term Loan Notes referred to in Section
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4.01 hereof.
"Trademarks" means all trademarks, trade names, trade styles and
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service marks, all prints and labels on which such trademarks, trade names,
trade styles and service marks appear, have appeared or will appear, and all
designs and general intangibles of a like nature, now existing or hereafter
adopted or acquired; all applications, registrations and recordings relating to
the foregoing in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state thereof, any political
subdivision thereof or in any other countries, and all reissues, extensions and
renewals and licenses thereof.
1.02 Accounting Terms: All accounting terms not specifically defined
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herein shall be construed, and all financial data submitted pursuant to this
Agreement shall be prepared, in accordance with GAAP.
ARTICLE 2 - THE REVOLVING LINE OF CREDIT LOAN
2.01 General Terms:
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(a) Subject to the terms hereof, on the Effective Date the Bank will
establish the Revolving Line of Credit Loan in favor of Debtor under which the
Bank may thereafter make Advances from time to time up to an aggregate principal
amount at any one time outstanding not to exceed Five Million Dollars
($5,000,000.00), all subject to the further terms and conditions referred to
herein, including without limitation the provisions of Section 2.07 hereof
providing for the Subline. Advances under the Revolving Line of Credit Loan
will be used only to fund short-term borrowings and working capital needs of the
Debtor, with a foreign exchange and Letter of Credit Subline as provided in
Section 2.07 hereof. Until the Maturity Date, and except as otherwise provided
herein, any principal amount previously advanced or committed hereunder, and
repaid or otherwise extinguished, may be made available again by the Bank on a
revolving basis. Notwithstanding anything to the contrary herein or in any Loan
Document, the entire outstanding balance of principal, and any accrued and
unpaid interest thereon, shall be due and payable, and the Bank's commitment and
obligation to make Advances hereunder shall terminate, on the earliest of (i)
May 31, 1998, or (ii) acceleration upon an Event of Default (the "Revolving Loan
Commitment Period").
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(b) All advances shall bear interest at a variable rate of one
quarter percent (.25%) per annum (25 basis points) in excess of the Prime Rate,
in effect from time to time (except that interest shall accrue at the Default
Rate, so long as an Event of Default shall have occurred and be continuing
uncured).
2.02 Borrowing Procedures:
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(a) As of December 31, 1996, Debtor executed and delivered to Bank a
Revolving Line of Credit Note in the face amount of Five Million Dollars
($5,000,000.00), on terms and in form and substance satisfactory to Bank, which
evidences the aggregate of all Advances outstanding from time to time pursuant
to the Revolving Line of Credit Loan. Debtor hereby agrees to pay to Bank the
full amount of all Advances (including without limitation overadvances), whether
made, accepted or issued for the benefit of Debtor, together with all interest,
fees and other charges which may accrue hereunder from time to time, as provided
in the Revolving Line of Credit Note. Debtor agrees and acknowledges that its
liability is a material and fundamental inducement to Bank's continuing
willingness to make Advances.
(b) Advances may be available, subject to the conditions of this
Agreement, up to the amount of the Availability and subject to the limitations
of Sections 2.01 and 2.06, upon the request of any Designated Officer of Debtor.
If a request (which otherwise satisfies the conditions hereof) is received by
Bank by 2:00 p.m. on any business day, Bank will make an Advance on the same
business day; otherwise, the Advance will be made on the next business day. Bank
may make each Advance by crediting the amount of the Advance to the Loan
Account, or by depositing the amount of the Advance to the demand deposit bank
account of Debtor held at Bank according to instructions given Bank by Debtor,
or by otherwise disbursing to a third party upon terms and conditions mutually
agreeable to Bank and Debtor. No matter how or when an Advance is made, or into
what account or to or for the benefit of Debtor, or at Debtor's request, Debtor
shall immediately and automatically thereupon be obligated to Bank on account of
such Advance. Debtor may not disavow its obligations hereunder, whether for
Advances previously made or for Advances which may be made after any request
therefor and attempted disavowal.
2.03 Interest and Payments; Charging Debtor's Accounts:
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(a) Interest shall be accrued, paid and calculated as follows:
(1) Interest will accrue and be payable on principal amounts
advanced by the Bank at the Loan Rate applicable to such Loan (except that
interest shall accrue at the Default Rate so long as an Event of Default shall
have occurred and be continuing uncured, and at all times after acceleration and
entry of any judgment), and shall be payable as accrued on the last day of each
calendar month, commencing immediately hereafter.
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(2) Interest shall be calculated on the basis of a 360-day
year, counting the actual number of days elapsed. All accrued and then unpaid
interest shall nevertheless be payable upon the Maturity Date.
(b) If, at any time, the Rate shall be deemed by any competent court
of law, governmental agency or tribunal to exceed the maximum rate of interest
permitted by any applicable Laws, then, for such periods as the Rate would be
deemed excessive, its application shall be suspended and there shall be charged
instead the maximum rate of interest permissible under such Laws. Any payments
received by Bank during any such periods shall be recalculated first as payments
of interest at the maximum rate, and the balance of each payment, if any, shall
be deemed a payment (i) of any fees, charges, reimbursements of expenses, or
other items not treated as interest for purposes of determining compliance with
the maximum rate, and then (ii) of principal.
(c) All sums payable to Bank hereunder including repayments of
Advances, and payments of interest, fees and other charges shall be paid
directly to Bank on or before the date due. Bank is authorized to charge the
Loan Account, or any deposit account of Debtor, for interest, fees or charges as
they come due, or at Bank's option make an Advance to pay any of the same,
provided Bank bills Debtor for interest, fees or charges, and such ▇▇▇▇ remains
unpaid five (5) business days after billing. In any case, Bank shall send to
Debtor statements of all amounts due hereunder.
(d) Bank is authorized to charge the Loan Account, or any deposit
account of Debtor, at any time, without prior notice but with subsequent advice,
for any or all principal, interest, fees, charges and expense reimbursements
payable hereunder which is not otherwise paid when due.
(e) The Revolving Line of Credit is subject to an unused commitment
fee in the amount of .25% of the unused portion of the line on a quarterly
basis, as determined by the Bank's ledgers. The Bank will automatically charge
Debtor's checking account within seven days of sending a ▇▇▇▇ to Debtor.
2.04 Prepayment; Facility Fees:
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(a) Debtor may, without penalty or premium, pay the principal of the
Revolving Line of Credit Loan in whole or in part at any time.
(b) So long as an Event of Default shall not have occurred and be
continuing uncured, Bank shall have the right to perform or have performed an
audit of Debtor once during any one (1) fiscal year period, and Debtor shall, on
demand, pay Bank for audits performed by Bank or its agents at a reasonable rate
(if performed by Bank's salaried personnel) to be determined, but in any event
not less than the actual fees charged to Bank therefor (if performed by others),
plus Bank's out-of-pocket expenses, such rates and fees subject to adjustment by
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Bank. After an Event of Default, Bank shall be permitted to perform such audits
at any time upon reasonable notice.
(c) Debtor shall be required to pay standard issuance charges for
any Letter of Credit and all other routine transaction charges in connection
therewith, including for amendments, if any, and reasonable fees and expenses
provided for in the International Facilities Agreement, all subject to periodic
adjustments by the Bank.
2.05 Loan Account: Bank may, in its discretion, establish a Loan Account
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and enter therein Advances, interest, fees, other charges, expenses and other
items properly chargeable to Debtor under this Agreement; all payments made by
Debtor on account of Indebtedness relating to any Loans; all proceeds of
collateral which are finally paid to Bank at its offices in cash or solvent
credits; and any other appropriate debits and credits. Notwithstanding the
foregoing, the Bank shall ▇▇▇▇ for the items referred to in the foregoing
sentence unless and until an Event of Default occurs. Subaccounts may be
established for each Loan established hereunder. The aggregate of the debit
balances in the Loan Account shall reflect Debtor's aggregate Indebtedness to
Bank from time to time by reason of the Loans or otherwise with respect hereto.
2.06 Limits on Obligation of Bank to Make Advances Under Line of Credit
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Loan: Notwithstanding any other provision hereof, the aggregate unpaid balance
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of Debtor's Obligations, including without limitation all letters of credit
outstanding and all principal, interest, fees and other charges, under the
Revolving Line of Credit Loan at any time shall not exceed Five Million Dollars
($5,000,000.00) without Bank's consent; but if Bank consents, such consent shall
not bind Bank to continue to make any overadvance available thereafter. Debtor
agrees that it shall, immediately upon Bank's demand, pay or cause to be paid to
Bank the amount of any such excess, or, at Bank's option, deposit with Bank
liquid investment securities or money market instruments satisfactory to Bank
which have at deposit, and continue thereafter to have, a forced liquidation
value at least equal to such excess.
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2.07 Credits and Foreign Exchange Subline:
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(a) Subject to the terms and conditions of this Agreement, and
provided that no Default or Event of Default has occurred and is continuing,
Bank will, upon Debtor's request, open one or more Credits during the Revolving
Loan Commitment Period for the account of Debtor. During the Revolving Loan
Commitment Period, Debtor shall give Bank written notice executed on behalf of
Debtor by any Designated Officer of Debtor (the "Notice of Credit Issuance") of
any proposed issuance of a Credit. Each Notice of Credit Issuance, except with
respect to Credits to be opened on the Effective Date, shall be delivered to
Bank not less than five (5) business days before the requested issuance thereof.
Additionally, each Notice of Credit Issuance shall be accompanied by the Letter
of Credit Documents executed by Debtor relating to the subject Credit. Each
Credit shall be on substantially such terms as Debtor may specify in such Letter
of Credit Documents and must be in form and substance satisfactory to Bank and
shall have a fixed expiration date not later than the expiration of the
Revolving Loan Commitment Period.
(b) Subject to the terms and conditions of this Agreement, and
provided that no Default or Event of Default has occurred and is continuing,
Debtor may enter into foreign exchange contracts. The maximum amount of any
foreign exchange contract shall be equal to $1,000,000.00 minus any amounts
-----
committed under any Credits. Bank shall establish a reserve account equal to
twenty percent (20%) of the exposure in U.S. Dollars pursuant to such foreign
exchange contract so long as Debtor shall be indebted to Bank under such foreign
exchange contract. Bank shall not be required to deliver any foreign exchange
contract which has a delivery date exceeding twelve (12) months. Further, Bank
reserves the right in its sole discretion, not to honor certain foreign exchange
contract requests.
(c) In no event shall the aggregate maximum amount of the Letter of
Credit and foreign exchange Subline exceed the lesser of (i) $1,000,000.00 or
(ii) the Availability under the Revolving Line of Credit Loan.
(d) Debtor shall pay an annual commission, on or before June 30th of
each year, commencing June 30, 1996, in the amount of 1.25% per annum on all
outstanding Letters of Credit during the year ending on June 30th.
ARTICLE 3 - THE NON-REVOLVING EQUIPMENT LOAN
3.01 General Terms:
-------------
(a) Subject to the terms hereof, on and after the Effective Date,
until the close of business twelve (12) months after such date, but not
thereafter, Bank has advanced to Debtor the sum of up to Two Million Five
Hundred Thousand Dollars ($2,500,000.00), which shall be used to finance the
purchase price for certain items of equipment. During the period from the making
of each Advance of the Non-Revolving Equipment Loan, throughout the term of the
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Takedown Period (as defined in the Non-Revolving Equipment Note), Debtor will
pay interest as it accrues on the Non-Revolving Equipment Loan, on the first day
of each calendar month, but shall not be obligated to make principal repayments.
Commencing on the first day of the month immediately following the expiration of
the Takedown Period, and on the first day of each calendar month thereafter,
Debtor shall pay to Bank forty-eight (48) equal monthly installments of
principal together with all unpaid interest as it shall have accrued on the Non-
Revolving Equipment Loan amortized over such forty-eight (48) months. The entire
outstanding balance of principal, and any accrued and unpaid interest thereon,
shall be due and payable in any event on the earliest of (1) the sixtieth (60th)
month following the Effective Date (July 1, 1999) or (2) the date of
acceleration of the Non-Revolving Equipment Note upon an Event of Default.
(b) Advances under the Non-Revolving Equipment Loan shall be
advanced by Bank from time to time to pay bona fide expenses for acquiring and
installing equipment, net of costs for delivery, maintenance and taxes, not
exceeding amounts shown on invoices for such purchases which shall be submitted
to Bank along with a completed Request for Non-Revolving Equipment Loan, along
with such other information as the Bank may request, and approved by Bank, prior
to payment. The borrowings on account of the Non-Revolving Equipment Loan shall
be evidenced by the Non-Revolving Equipment Note.
(c) The outstanding principal balance under the Non-Revolving
Equipment Loan shall bear interest at a variable rate of three quarters percent
(0.75%) per annum (75 basis points) in excess of the Prime Rate in effect from
time to time.
(d) As of the date hereof, Debtor shall execute and deliver to Bank
an Amended and Restated Non-Revolving Equipment Note in the face amount of Two
Million Five Hundred Thousand Dollars ($2,500,000.00), amending and restating
that certain Non-Revolving Equipment Note dated July 8, 1994 in the face amount
of Two Million Five Hundred Thousand Dollars ($2,500,000.00), as amended and
restated on December 21, 1995, on terms and in form and substance satisfactory
to Bank, which shall evidence the indebtedness under the Non-Revolving Equipment
Loan.
3.02 Interest Rate and Payments, Etc.: The provisions of Section 2.03
--------------------------------
shall also apply to the Non-Revolving Equipment Loan.
3.03 Prepayment: Debtor may, without penalty or premium, pay the
----------
principal of the Term Loan in whole or in part at any time.
ARTICLE 4 - THE TERM LOANS
4.01 General Terms:
-------------
(a) First Term Loan. Subject to the terms hereof, on and after the
---------------
Effective Date until the close of business on September 26, 1997 (the "First
Takedown Period"), Bank will advance Debtor the sum of up to Three Million
Dollars ($3,000,000.00), which shall be used to
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finance the leasehold improvements made to that certain building located at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ leased to Pharmaceutics (the
"First Term Loan"). Commencing on October 1, 1997, and on the first day of each
calendar month thereafter, Debtor shall pay to Bank forty-eight (48) equal
monthly installments of principal together with all unpaid interest as it shall
have accrued on the First Term Loan amortized over such forty-eight (48) months,
all as more fully provided herein and in the First Term Loan Note to be executed
by Debtor at the signing hereof. The entire outstanding balance of principal,
and any accrued and unpaid interest thereon, shall be due and payable in any
event on the earliest of (1) forty-eighth (48th) month following the Effective
Date (September 1, 2001) or (2) the date of acceleration of the First Term Loan
Note upon an Event of Default. The outstanding principal balance under the First
Term Loan shall bear interest at a rate of eight percent (8%) per annum (except
that interest shall accrue at the Default Rate, so long as an Event of Default
shall have occurred and be continuing uncured).
(b) Second Term Loan. Subject to the terms hereof, on and after the
----------------
Effective Date Bank will advance Debtor the sum of up to Two Million Five
Hundred Thousand Dollars ($2,500,000.00), which shall be used to finance the
purchase of computers and software for the CRO Division, as follows: until the
First Takedown Period, in an amount up to One Million Five Hundred Thousand
Dollars ($1,500,000.00) and until December 29, 1997 in an amount up to One
Million Dollars ($1,000,000.00). Debtor shall pay Bank interest only, at the
rate specified below, on the entire principal amount outstanding under the
Second Term Loan, commencing on the first day of the month immediately following
the first advance by Bank to Debtor thereunder, and on the first day of each
month thereafter until the date the full principal amount of the Second Term
Loan is advanced to Debtor by Bank or December 27, 1997, whichever occurs first
(the "Fixed Amortization Date"). Commencing on the first day of the month
immediately following the Fixed Amortization Date, and on the first day of each
month thereafter, Debtor shall pay to Bank thirty-six (36) equal monthly
installments of principal together with accrued interest at the rate set forth
below on the Second Term Loan amortized over such thirty-six (36) months, all as
more fully provided herein and in the Second Term Loan Note to be executed by
Debtor at the signing hereof. The entire outstanding balance of principal, and
any accrued and unpaid interest thereon, shall be due and payable on the
earliest of (1) thirty-six (36th) month following the Fixed Amortization Date or
(2) the date of acceleration of the Second Term Loan Note upon an Event of
Default. The outstanding principal balance under the Second Term Loan shall
bear interest at a rate of seven and nine-tenths percent (7.90%) per annum up to
$1,500,000.00 and eight and three one-hundredths percent (8.03%) for the
remaining $1,000,000.00 (except that interest shall accrue at the Default Rate,
so long as an Event of Default shall have occurred and be continuing uncured).
(c) Third Term Loan. Subject to the terms hereof, on and after the
---------------
Effective Date until the First Takedown Period, Bank will advance Debtor the sum
of up to One Million Five Hundred Thousand Dollars ($1,500,000.00), which shall
be used to finance new equipment for Pharmaceutics. Commencing on October 1,
1997, and on the first day of each calendar month thereafter, Debtor shall pay
to Bank sixty (60) equal monthly installments of principal together with all
unpaid interest as it shall have accrued on the Third Term Loan amortized over
-15-
such sixty (60) months, all as more fully provided herein and in the Third Term
Loan Note to be executed by Debtor at the signing hereof. The entire outstanding
balance of principal, and any accrued and unpaid interest thereon, shall be due
and payable in any event on the earliest of (1) sixtieth (60th) month following
the Effective Date (September 1, 2002) or (2) the date of acceleration of the
Third Term Loan Note upon an Event of Default. The outstanding principal
balance under the Third Term Loan shall bear interest at a rate eight and five
one-hundredths percent (8.05%) per annum (except that interest shall accrue at
the Default Rate, so long as an Event of Default shall have occurred and be
continuing uncured).
4.02 Advances. Advances under the Term Loans shall be advanced by Bank
---------
from time to time to pay bona fide expenses not exceeding amount shown on
invoices for such purchases which shall be submitted to Bank along with such
other information as the Bank may request, and approved by Bank, prior to
payment. The borrowings on account of the Term Loans shall be evidenced by the
Term Loan Notes.
4.03 Interest Rate and Payments, Etc.: The provisions of Section 2.03
--------------------------------
shall also apply to the Term Loan.
4.04 Prepayment: Any prepayment of principal (including any principal
----------
repayment as a result of acceleration by Bank of any of the Term Loan Notes)
shall require immediate payment to Bank of a prepayment fee equal to the amount,
if any, by which the aggregate present value of scheduled principal and interest
payments eliminated by the prepayment exceeds the principal amount being
prepaid. Said present value shall be calculated by application of a discount
rate determined by Bank in its reasonable judgment to be the yield-to-maturity
at the time of prepayment on U.S. Treasury securities having a maturity which
most closely approximates the final maturity date of the principal balance then
outstanding. Whether or not a prepayment fee is required hereunder, prepayment
shall be applied to scheduled installments of principal in the inverse order of
their maturity, shall be accompanied by payment of accrued interest on the
principal amount being prepaid and, unless the Term Loan Notes have been
accelerated by Bank, shall not be permitted in an mount less than the scheduled
principal installment immediately prior to final maturity of the outstanding
principal balance.
ARTICLE 5 - CONDITIONS PRECEDENT AND SUBSEQUENT
The obligation of Bank to enter into this Agreement and to make any Advance
hereunder is subject to the following conditions:
5.01 Documents Required for the Closing: Debtor shall have delivered or
----------------------------------
caused to be delivered to Bank, at the signing hereof, the following, in form
and substance satisfactory to Bank, executed by the applicable parties and
otherwise subject as follows:
(a) The Notes;
-16-
(b) All necessary releases, satisfactions, assignments,
subordinations and termination statements to cause the security interests
granted therein to be first priority security interests in the Collateral
(subject only to Permitted Liens);
(c) The Pledge Agreement required by Section 8.08 hereof, pursuant
to which Debtor shall pledge (i) one hundred percent (100%) of the capital stock
of its wholly-owned Subsidiary, Affinity, (ii) one hundred percent (100%) of the
capital stock of its wholly-owned Subsidiary, EuroBioPharm, and (iii) sixty-six
percent (66%) of the capital stock of its wholly-owned Subsidiary, EPIC, Ltd.,
together with all appropriate stock powers and certificates required to be
delivered in connection therewith;
(d) The financing statements required by Section 6.07 hereof,
necessary to perfect the security interests in the Collateral;
(e) Copies of the resolutions of the board of directors and
shareholders of Debtor (certified as of the Effective Date by the corporate
secretary or assistant secretary of Debtor) authorizing the execution, delivery
and performance of this Agreement, the Notes and each other Loan Document to be
delivered to Bank pursuant hereto;
(f) Copies (certified by the Secretary of State of the state of
incorporation and by authorized officers of Debtor) of the articles of
incorporation or constituent documents, as amended as of the Effective Date, and
any fictitious name registrations, for Debtor, together with a copy (certified
by the secretary or assistant secretary of Debtor) of the by-laws for Debtor and
a certificate (dated as of the date of the Closing) of each of such officer to
the effect that the foregoing documents have not been amended since the date of
the aforesaid certifications;
(g) A certificate (dated the Effective Date) of the secretary or
assistant secretary of Debtor as to the incumbency and signatures of the
officers thereof who are executing this Agreement on the behalf of Debtor and as
to the Designated Officers of Debtor;
(h) Certificates of good standing and subsistence with respect to
Debtor as of the most recent date practicable prior to the Effective Date, from
each state in which it is organized or qualified (or to be qualified) to
transact business;
(i) Evidence of the insurance coverages required by this Agreement
together with evidence of payment of all premiums which are due and payable as
of the Effective Date;
(j) Uniform Commercial Code, Judgment, Suits and Tax Lien Searches
satisfactory to Bank regarding Debtor;
(k) Written opinions of Debtor's legal counsel dated the Effective
Date and addressed to Bank, in form and substance satisfactory to Bank regarding
such legal matters as Bank shall request relating to the subject matter hereof;
-17-
(l) The Collateral Assignment and Security Agreements, assigning the
rights of Debtor in and to the Bio-Pharm GmbH Note and Euro Bio-Pharm, Ltd.
Note;
(m) The originally executed Bio-Pharm GmbH Note and Euro Bio-Pharm
Ltd. Note; and
(n) Such other undertakings, instruments and documents as Bank shall
require.
5.02 Other Conditions Precedent: The following additional conditions
--------------------------
shall have been satisfied:
(a) Payment of all expenses and legal fees and disbursements of Bank
and its counsel relating hereto (including without limitation lien search fees,
filings fees and appraisal costs), and other items provided in the Commitment,
shall have occurred no later than the Effective Date. If any such expenses and
fees are incurred post-closing, Debtor shall pay or reimburse them promptly upon
Bank's submission of a statement to Debtor.
(b) There shall have occurred no changes in the financial condition
or business of Debtor which are, in Lender's sole judgment, singly or
collectively materially adverse when compared with the financial condition and
business of Debtor since the date of its financial statements dated June 30,
1997.
(c) Debtor shall have opened an account or accounts with the Bank to
facilitate disbursement of Advances.
5.03 Condition Subsequent to Signing and Effective Date: The "Post-
--------------------------------------------------
Closing Items", if any, described on Exhibit C attached hereto and made part
---------
hereof, shall be delivered or completed within fifteen (15) days after the
execution of this Agreement, or else Bank shall not be obligated to make any
further Advances, and Bank shall have the option, at any time thereafter, to
declare that an Event of Default has occurred.
ARTICLE 6 - COLLATERAL SECURITY
6.01 The Collateral: The Collateral, together with all of the Debtor's
--------------
other property of any kind held by Bank or any of Bank's corporate affiliates
from time to time, in any capacity whatsoever, shall stand as one general,
continuing collateral security for the Obligations of Debtor.
6.02 Rights in Property Held by Bank: As security for the prompt
-------------------------------
satisfaction of all Obligations, including payment of the Indebtedness evidenced
by the Notes, Debtor hereby assigns, transfers, and sets over to Bank all of its
right, title, and interest in and to, and grants Bank a lien upon and security
interest in, all amounts that may be owing from time to time to Debtor by Bank
or any of Bank's corporate affiliates from time to time in any capacity,
-18-
including, but without limitation, any balance or share belonging to it of any
deposit or other account with Bank, which lien and security interest shall be
independent of any right of set-off which Bank may have.
6.03 Rights in Property Held by Debtor: As further security for the
---------------------------------
prompt satisfaction of all Obligations, including without limitation payment of
the Indebtedness evidenced by the Notes and any future Advances by Bank, Debtor
hereby assigns, transfers, and sets over to Bank all of its right, title, and
interest in and to, and grants Bank a lien upon and continuing security interest
in, all of the following owned by Debtor now or hereafter, wherever located,
whether now owned or existing or hereafter acquired, together with all
replacements therefor and additions and accessions thereto, and all proceeds
(including, but without limitation, insurance proceeds) and products thereof:
(a) All Inventory including existing Inventory and all Inventory
hereafter coming into existence;
(b) All Accounts, both existing and hereafter coming into existence,
together with all documents, contracts, lien and security instruments and
guarantees relating thereto;
(c) All Goods, including Debtor's interests as lessee or lessor in
any leased Equipment;
(d) All Equipment, including without limitation vehicles, furniture,
tools and supplies, now owned or hereafter acquired, wherever located, including
Debtor's interests as lessee or lessor in any leased Equipment;
(e) All General Intangibles now existing or hereafter in existence;
(f) All notes, drafts, acceptances, Chattel Paper, Documents,
Instruments, policies and certificates of insurance (including, without
limitation, credit insurance), guaranties and securities (domestic and foreign)
now or hereafter received by Debtor or in which Debtor now or hereafter has or
acquires an interest;
(g) All other rights to the payment of money, including without
limitation, shareholder assessments, partner capital contributions and tax
refunds;
(h) All cash and non-cash proceeds, products and insurance proceeds
of the foregoing;
(i) All Records pertaining to the foregoing; and
(j) All other assets of Debtor.
-19-
6.04 Security for Intercompany Loans. As security for any intercompany
-------------------------------
loan or advance by Debtor to any Subsidiary of Debtor, Debtor shall be required
to do each of the following:
(a) Execute, deliver and perform the Pledge Agreements and do any
and all other actions required to be performed or have performed by Debtor in
order to record and perfect the lien of Bank upon such collateral pledged
therein;
(b) Execute and deliver to Bank each of the Collateral Assignment
and Security Agreements; and
(c) Deliver to Bank the originally executed Euro Bio-Pharm GmbH Note
and Euro Bio-Pharm, Ltd. Note.
6.05 Additional Security: To further secure the Loans made hereunder and
-------------------
all other Obligations of Debtor to Bank, whether now in existence or hereinafter
incurred, Debtor shall cause to be delivered at or after closing hereon such
additional undertakings, collateral, instruments and documents as Bank may
reasonably request consistent with the general intent of this Agreement.
6.06 Priority of Liens: The foregoing liens shall be first priority
-----------------
perfected liens, subject only to Permitted Liens or as specified in Paragraph
6.10.
6.07 Financing Statements:
--------------------
(a) Debtor on Bank's request will:
(1) Execute and deliver to the Bank such financing statements
(including amendments thereto and continuation statements thereof), assignments,
certificates of title and applications and powers of attorney for transfer
thereof, conveyances, notices, instruments and other documents in form
satisfactory to Bank as Bank may specify to perfect or continue the perfection
of any security interest granted to Bank hereunder;
(2) Pay or reimburse Bank for all costs of filing or recording
the same in such public offices as Bank may designate; and
(3) Take such other steps as Bank may direct, to perfect Bank's
interest in the Collateral.
(b) In addition to the foregoing, and not in limitation thereof:
(1) A carbon, photographic, or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof, and Bank is authorized to add such
information to the filing copy of this Agreement to
-20-
qualify it for filing as a financing statement under applicable law, and to sign
Debtor's name hereto to the extent original signatures are required for filing;
and
(2) To the extent lawful, Debtor hereby appoints Bank and
Bank's attorneys and agents as its attorney-in-fact (without requiring Bank or
any of them to act as such) with full power of substitution, to execute and file
any financing statement (including amendments and continuation statements
thereto), and assignments and confirmatory mortgages, deeds of trust or other
conveyances for security purposes relating to real estate, in the name of
Debtor, or its successors or assigns, and to perform all other acts that Bank
deems appropriate to perfect and continue its security interest in, and to
protect and preserve, the Collateral. This power of attorney is irrevocable as
coupled with an interest.
6.08 Collecting on Accounts:
----------------------
(a) Upon the occurrence of an Event of Default, Bank shall have the
right to notify any and all obligors to make payment on Accounts or General
Intangibles directly to Bank, and to take control of the cash and non-cash
proceeds thereof, with full power to settle or compromise disputed claims
thereon. All such proceeds shall be applied in satisfaction of the Obligations,
including payment of the Indebtedness evidenced by the Notes, in such order as
Bank shall determine.
(b) Unless and until such time as Bank elects to notify obligors
pursuant to Section 6.08(a), Debtor is authorized to collect and enforce
Accounts in the ordinary course of business. The cost of such collection and
enforcement, including attorney's fees and out-of-pocket expenses, shall be
borne solely by Debtor whether the same is incurred by Bank or Debtor.
(c) The following provisions shall apply upon the occurrence of an
Event of Default. Debtor shall turn over to Bank all checks, drafts, cash and
other remittances in payment or on account of payment of the Accounts, and
whenever expressly required by Bank, the cash proceeds of any returned goods
from the sale of which any Account arose. Debtor shall deposit such collections
and cash proceeds with Bank within two (2) banking days of the receipt thereof,
and in precisely the form received, except for the appropriate endorsements
where necessary to permit the collection of the items, which endorsement Debtor
hereby agrees to make. If Debtor receives any such cash or collections
directly, it will not commingle any such checks, drafts, cash and other
remittances (including repayments) with any of its other funds or property, but
will hold them separate and apart therefrom expressly in trust for Bank. Debtor
will forward to Bank such statements and reports of collection and adjustments
as Bank may from time to time specify. Bank will apply the whole or any part of
the collected funds received by it against the then outstanding Loans and any
other of Debtor's Obligations, the order and method of such application to be in
the discretion of Bank or Bank may, if it so elects, release the whole or any
part of such funds to Debtor for use in the operation of such Debtor's business.
In the event that Bank elects to give Debtor immediate credit for such funds as
are yet uncollected, Debtor agrees that Bank may make a charge for the float
equal to two (2) days' collection time at the Rate,
-21-
payable monthly at the end of each month. Debtor hereby authorizes Bank to
charge to any deposit account of Debtor any item of payment credited against any
Obligations which is dishonored by the drawee or maker thereof or, if funds are
not available in a deposit account, then to make an Advance therefor and charge
the Loan Account accordingly.
(d) In addition to the foregoing, upon the occurrence of an Event of
Default, Bank may, in its sole discretion, require Debtor, at its own expense
and in the manner requested by Bank, to direct that remittances and all other
proceeds of Accounts and other Collateral shall be (i) sent to the post office
box designated by and/or in the name of Bank, or in the name of Debtor, but as
to which access is limited to Bank, (ii) deposited into a locked box at Bank,
and/or (iii) deposited into a bank account maintained in the name of Bank and/or
a blocked bank account under arrangements with the depository bank under which
all funds deposited to such blocked bank account are required to be transferred
solely to Bank. In connection therewith, Debtor shall execute such post office
box, locked box and/or blocked bank account agreements as Bank shall specify.
6.09 Verification of Accounts: Bank shall at all times have the right to
------------------------
confirm orders, and to verify all Accounts or Accounts Receivable or other
Collateral in which it has a security interest and to do so in any fictitious
accounting firm name used by Bank for verifications or through any public
accountants.
6.10 Collateral Sharing. Upon at least thirty (30) days prior written
------------------
notice by Debtor to Bank of a request by a new lender to Debtor ("new lender")
for a security interest in the Collateral, and provided that there has been no
Event of Default hereunder and further provided that, in the reasonable opinion
of Bank, Debtor has not experienced an adverse material change in its financial
condition, Bank shall enter into an agreement, on terms and in form acceptable
to Bank, with such new lender whereby Bank shall share with such new lender, in
pari pasu, its security interest in the Collateral in excess of the amount of
all Loans and any other amounts due Bank by Debtor.
ARTICLE 7 - DEBTOR'S AFFIRMATIVE COVENANTS
Debtor covenants and agrees that, from and after the date of this Agreement
and so long as Debtor shall be indebted to Bank hereunder or under any of the
Notes, unless Bank shall otherwise consent in writing, Debtor will comply with
the following covenants:
7.01 Reports: As long as no Event of Default has occurred and is
-------
continuing uncured, Bank shall have the right to request from Debtor once during
any one (1) fiscal year period, and Debtor will make available to Bank a copy of
the invoice for each Account and a copy of any written contract or order from
which an Account arose. After an Event of Default, Bank shall have the right to
request at any time and Debtor shall make available the foregoing information.
7.02 Equipment Reports and Landlord's Waivers: At execution of this
----------------------------------------
Agreement and, thereafter, at the request of Bank, Debtor will provide Bank with
a listing of the types, and
-22-
respective values of Equipment for each type, of all Equipment, indicating to
the extent applicable, and according to the Debtor's method of accounting, the
nature and type of the Equipment together with documentation showing the
location of the Equipment, whether the premises where the Equipment is located
is owned or leased by Debtor, or is owned by a third party and if so, the name
and address of the third party and, if owned by a third party, will promptly
furnish Bank with landlords' and mortgagees' waivers of lien in form and content
satisfactory to Bank; and in the case of Equipment located at third party
locations, take such steps as Bank may require to protect Inventory against
claims of third parties.
7.03 Customer Disputes: Debtor will promptly advise Bank of any dispute
-----------------
with a customer in any case where the dispute involves (i) an account or
accounts receivable aggregating $500,000.00 or more, or (ii) one of Debtor's ten
(10) largest customers by average monthly revenue and the customer has
threatened to terminate Debtor's services.
7.04 Service Agreements: Debtor will (without need of a prior request by
------------------
Bank) identify for Bank, and if requested provide copies to the Bank of, any
service contract or agreement for services provided to any Debtor's customer
which is not entered into, or the terms of which do not reflect terms granted,
in the ordinary course of business.
7.05 Account Receivables and Payable Agings: At anytime there are
--------------------------------------
Advances outstanding and unpaid under the Revolving Line of Credit Loan Debtor
will furnish quarterly within forty-five days after the end of each quarter (and
more frequently, at the Bank's prior request, or as required by the Bank when a
Potential Default or an Event of Default has occurred and is continuing)
listings and agings of its Accounts Receivable and its Accounts Payable.
7.06 Account Assignments: Debtor will give Bank upon request specific
-------------------
assignments of Accounts after they come into existence, and schedules of
Accounts, the form and content of such assignments and schedules to be
satisfactory to Bank, and will execute and deliver to Bank any instrument,
document, financing statement, assignment or other writing to carry out the
terms of this Agreement, to perfect Bank's security interest in the Accounts and
any other Collateral, or to enable Bank to enforce conveniently its security
interest in any of the foregoing.
7.07 Maintenance of Books and Records: Debtor will maintain, in
--------------------------------
accordance with GAAP, accurate records and books of account showing, among other
things, all Equipment and Accounts, the proceeds of the sale or other
disposition thereof and the collections therefrom; and hereby grants Bank the
right to call at Debtor's places of business during regular business hours, at
intervals to be determined by Bank, and, without hindrance or delay, to inspect,
audit, check and make extracts and copies from the books, records, journals,
orders, receipts, correspondence and other data relating to Equipment, Accounts,
or any other Collateral.
7.08 Notation of Security Interest: If requested by Bank, Debtor will
-----------------------------
▇▇▇▇ its records concerning Equipment, Accounts, General Intangibles and other
Collateral in a manner satisfactory to Bank to show the latter's security
interest therein; and, if a Potential Default or an Event of Default shall have
occurred and be continuing uncured and unwaived, shall, at Bank's
-23-
request notify all purchasers, warehouses, warehousemen, agents, landlords,
processors, or others in possession of Equipment, of Bank's security interest in
the Collateral, and instruct them to hold Collateral for Bank's account and
subject to Bank's instructions.
7.09 Financial Statements, Reports:
-----------------------------
(a) Debtor will furnish Bank, within ninety (90) days after the
close of its fiscal year, annual consolidating financial statements, and the 10-
K report of Debtor. The financial statements will be audited by a certified
public accountant acceptable to the Bank and shall be prepared in accordance
with GAAP.
(b) Debtor will deliver to Bank copies of all reports, returns and
other documents filed with any federal, state or local regulatory agencies,
including without limitation quarterly 10-Q reports as filed with the Securities
and Exchange Commission, together with management prepared consolidating balance
sheet and income statements, within forty-five (45) days after the end of each
quarter. Debtor shall also provide such further information regarding the
operations, business, affairs, financial condition, commitments and
contingencies of Debtor as Bank may reasonably request, including without
limitation, contract status reports and backlog reports. In addition, together
with such quarterly reports, a Designated Officer of Debtor, on behalf of Debtor
shall deliver to Bank a Covenant Compliance Certificate substantially in the
form of Exhibit D attached hereto.
---------
(c) Debtor will furnish Bank, within thirty (30) days after the
close of its fiscal year, an annual budget and projected cash flow for the
succeeding year.
(d) Debtor shall each provide Bank, from time to time upon Bank's
request, such additional financial information as Bank may request from time to
time.
7.10 Existence, Properties, Etc.: Debtor will do or cause to be done all
---------------------------
things necessary to obtain, preserve, renew and keep in full force and effect
its existence and its qualification to do business and good standing in each
jurisdiction in which such qualification is necessary for the proper conduct of
its business, and conduct and operate its business in substantially the manner
in which same is presently conducted and operated; at all times maintain,
preserve and protect all material Patents, franchises, Trademarks, copyrights
and other General Intangibles; preserve the condition of all property useful in
the conduct of its business and keep the same in good repair, working order and
condition (reasonable wear and tear excepted) and from time to time make, or
cause to be made, all repairs, renewals, replacements, betterments and
improvements thereto, to the extent that the same are necessary for the proper
and advantageous conduct of its business; and comply with all present and future
regulatory and other Laws applicable to it in the operation of its businesses,
and with all material agreements to which it is subject.
7.11 Insurance: Debtor will keep its insurable properties adequately
---------
insured at all times, by financially sound and reputable insurers, with Bank
named as first lienholder and as a
-24-
loss payee on all such policies, and maintain such other insurance, to such
extent and against such risks, including fire, theft, vandalism, earthquake,
storm and flood, and other risks insured against by extended coverage, as is
acceptable to Bank from time to time (the amount of such insurance shall not be
less than the greater of (1) eighty percent (80%) of the insurable value of
Debtor's assets or (2) the lesser of one hundred percent (100%) of the insurable
value of Debtor's assets or the outstanding principal balance of the Loans), and
maintain in full force and effect public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any Location or other real or personal property
belonging to it, and contractual liability insurance, in such amounts as are
satisfactory to Bank, and maintain workers compensation insurance, employers
liability insurance and such other insurance as may be required by law. Debtor
authorizes Bank to pay for Debtor's account any of the foregoing which Debtor
fails to pay, and any such payment by Bank shall constitute an item of Debtor's
Obligations. Debtor agrees to notify Bank in writing prior to any change in
insurance coverage which would cause such insurance to not meet the requirements
of this Agreement; to provide Bank upon demand copies of all insurance policies;
to assign to Bank all right to receive proceeds of any property casualty
insurance as to property owned by Debtor; to direct all property casualty
insurers to pay all proceeds directly to Bank; and Debtor hereby authorizes Bank
to endorse any draft for such proceeds. Notwithstanding the foregoing, the
property casualty insurance policies of Debtor shall contain a provision which
requires the insured to give Bank thirty (30) days prior written notice of
cancellation of any such policy.
7.12 Taxes and Assessments: Debtor will pay or cause to be paid, when
---------------------
due, all taxes, assessments and charges or levies imposed upon any of its
property, or which it is required to withhold and pay over, except where
contested in good faith by appropriate proceedings, promptly commenced and
diligently conducted, with adequate reserves therefor having been set aside on
its books (but it shall, in any event, pay or cause to be paid all such taxes,
assessments, charges or levies forthwith whenever a Lien against the property of
Debtor would arise, or when foreclosure on any Lien that attaches appears
imminent).
7.13 Financial Covenants: Debtor shall comply with the following at the
-------------------
respective times indicated:
(a) Debtor shall maintain a minimum debt coverage ratio of 1.35 x
(rolling four quarters) for the terms of all of the Loans, which covenant shall
be tested quarterly. As used herein, the term "debt coverage ratio" shall mean
-------------------
net income less dividends plus depreciation and amortization divided by the
current portion of long term debt and current portion of capital leases. For
the period ending September 30, 1997, December 31, 1997 and March 31, 1998, the
net income portion of the calculation will be annualized for the quarter or
quarters elapsed. From June 30, 1998, forward, the calculation will be on a
rolling four quarter basis.
(b) Debtor shall maintain a minimum funded debt coverage ratio of
1.25 x for the terms of all of the Loans, which covenant shall be tested
quarterly. As used herein, the term "funded debt ratio" shall mean cash and cash
-----------------
equivalents plus short-term investments plus billed accounts receivable divided
by short and long term debt.
-25-
7.14 Collection and Records of Accounts: Debtor will collect its Accounts
----------------------------------
only in the ordinary course of business, and will keep accurate and complete
Records of its Accounts, consistent with sound business practices.
7.15 Notice of Material Proceedings or Litigation: Debtor will give Bank
--------------------------------------------
immediate written notice of the commencement, existence or threat of any action,
suit or proceeding at law or in equity or by or before any governmental
instrumentality or other agency against or affecting Debtor or any Affiliate
which, if adversely determined, would impair either the Debtor's right or
ability to carry on its business substantially as now conducted or would
materially affect its business, operations, properties, assets or condition
(financial or otherwise) or would materially affect its ability to perform its
Obligations to the Bank under this Agreement or any of the Loan Documents, and,
if requested by Bank, deliver copies of all non-privileged documents relating
thereto. In addition, Debtor will give Bank prompt written notice of any
judgment obtained against it and will advise Bank of Debtor's action with
respect to responding to such judgment.
7.16 Notice of Default: If the chief executive officer, chief operating
-----------------
officer or chief financial officer of Debtor knows of any Potential Default or
Event of Default which shall have occurred, or knows of the occurrence of any
event which is an event of default or, upon notice or lapse of time or both,
would constitute an event of default under any other material agreement,
instrument or document, order, or decree, to which Debtor is a party or under
which it is bound, breach of which would have a material adverse effect on the
business, operations, properties or financial condition of Debtor or the ability
of Debtor to perform its Obligations under the Loan Documents, Debtor will
promptly furnish to Bank a written statement as to such event or occurrence,
specifying the nature and extent thereof.
7.17 Changes: Debtor will promptly notify Bank of any and all proposed
-------
material changes in its business practices or properties and of any changes in
the Designated Officers of Debtor.
7.18 Further Assurances: From time to time, upon the written reasonable
------------------
request of Bank, Debtor will do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged, and delivered, all such further acts, deeds,
instruments, transfers, powers of attorney or assurances as may be required in
connection with the transactions contemplated by this Agreement or any other
Loan Documents.
7.19 Authorization To Accountants: Debtor hereby irrevocably authorizes
----------------------------
all accountants and auditors employed by Debtor at any time while there are any
sums owed to Bank during the term of this Agreement, and until all of the
Obligations have been fully paid and discharged, to cooperate with Bank and to
exhibit and deliver to Bank copies of Debtor's financial statements, tax
returns, trial balances, or other accounting or tax records or other information
of any sort which may be in their possession, all at Debtor's expense.
-26-
7.20 Depreciation of Equipment: Debtor will promptly notify Bank of any
-------------------------
event causing material loss or depreciation in the value of any Equipment and
the amount of such loss or depreciation.
7.21 Computer Reports: Debtor hereby irrevocably authorizes all of
----------------
Debtor's computer service bureaus or companies (if any) to give Bank full access
to and to deliver to Bank, at Debtor's expense, printouts and all information
respecting any and all financial records now or hereafter maintained by the same
for Debtor.
7.22 Places of Business; Location of Collateral and Records: Debtor will
------------------------------------------------------
notify Bank in writing thirty (30) days in advance of each change in its Chief
Executive Office, and of each change in any Location at which Inventory,
Equipment, any Records of Accounts, General Intangibles or other Collateral, is
or will be kept. However, at Bank's request from time to time, Debtor shall
provide Bank with a complete schedule of all Locations.
7.23 Visitation: Debtor shall permit such person as the Bank may
----------
designate to visit and inspect any of the properties of the Debtor and any
Subsidiaries, to examine their respective books and records and take copies and
extracts therefrom and to discuss their respective affairs with their respective
officers, at such times and as often as the Bank may reasonably request. Debtor
hereby authorizes such officers to discuss with the Bank the affairs of Debtor
and any Subsidiaries.
7.24 Notice of Pension-Related Events. Promptly after any Debtor, or any
--------------------------------
Controlled Group Member with respect to any Debtor, or any administrator of a
Plan:
(a) receives any notification referred to in subsections (i), (iv)
or (vii) of Section 10.01(m) hereof;
(b) has knowledge of (1) the occurrence of a Reportable Event as
defined in Section 4043 of ERISA with respect to a Plan; (2) any event which has
occurred or any action which has been taken to amend or terminate a Plan as
referred to in subsections (ii) and (vi) of Section 10.01(m) hereof; (3) any
event which has occurred or any action which has been taken which could result
in complete withdrawal, partial withdrawal, or secondary liability for
withdrawal liability payments with respect to a Multiemployer Plan as referred
to in subsection (vii) of Section 10.01(m) hereof; or (4) any action which has
been taken in furtherance of, any agreement which has been entered into for, or
any petition which has been filed with a United States district court for, the
appointment of a trustee for a Plan as referred to in subsection (iii) of
Section 10.01(m) hereof; or
(c) files a notice of intent to terminate a Plan with the Internal
Revenue Service or the PBGC; or files with the Internal Revenue Service a
request pursuant to Section 412(d) of the Code for a variance from the minimum
funding standard for a Plan; or files a return with the Internal Revenue Service
with respect to the tax imposed under Section 4971 of the Code for failure to
meet the minimum funding standards established under Section 412 of the
-27-
Code for a Plan; then, Debtor will furnish to the Bank a copy of any notice
received, request or petition filed, and agreement entered into; the most recent
Annual Report (Form 5500 Series) and attachments thereto for the Plan; the most
recent actuarial report for the Plan; any notice, return, or materials required
to be filed with the Internal Revenue Service in connection with the event,
action, or filing; and a written statement of the Chairman, President, or chief
financial officer of Debtor, as the case may be, describing the event or the
action taken and the reasons therefor.
7.25 Debtor will maintain Bank as its primary bank of account and
CoreStates Asset Management as its primary investment manager for the term of
the Agreement.
7.26 Compliance with Environmental and Other Laws:
--------------------------------------------
(d) Debtor shall comply in all material respects with all
Environmental Laws applicable to it.
(e) Debtor shall furnish to Bank, immediately upon receipt or
dispatch, a copy of any notice, summons, citation, directive, letter or other
written communication from or to any federal, state or local environmental
agency or department, which may evidence or result in a liability under any
Environmental Law such that the costs of correcting, or of paying penalties
assessed in connection with, such liability would have a material adverse effect
upon the business of Debtor as now conducted or upon Debtor's business,
operations, properties or condition, financial or otherwise. In such event,
Debtor shall use diligent efforts to complete all remediation which may be
required by such communication from any federal, state, county, municipal or
other administrative, investigative, prosecutorial or enforcement agency or
environmental or occupational safety regulatory agency ("Environmental
Regulator") and to obtain from all such Environmental Regulators having
jurisdiction thereof, and deliver to Bank as received, such approvals and
certifications as can be obtained from such agencies from time to time to
confirm the Debtor's completion of all remediation and Debtor's compliance with
all governmental requirements applicable thereto.
7.27 Information Regarding Environmental Matters: Debtor will provide
-------------------------------------------
Bank the following:
(a) Immediately upon receipt, with complete copies of all notices
from any Environmental Regulator notifying Debtor, or alleging, that there
exists or may exist a material violation or potential material violation by
Debtor of any federal or state law, now or hereafter in force, regulating the
handling labeling, custody, storing, transportation, discharge, disposal,
release, treatment, processing or other disposition of any Hazardous Material;
and
(b) Upon Bank's request from time to time, with complete copies of
(i) any or all documents required to be filed or in fact filed, by Debtor with
any Environmental Regulator, (ii) any or all material safety data sheets or
other documents or data which applicable law or any Environmental Regulator now
or hereafter requires Debtor to prepare, compile or maintain, and (iii) any and
all documents and other information which applicable law or any Environmental
-28-
Regulator requires to be made available to employees, contractors, transferees,
the local community, local government agencies or the public; (iv) any reports
of Debtor's employees, consultants, advisors, engineers or others relating to
Debtor's compliance with applicable environmental or occupational safety laws,
or to the status or manner of disposal, discharge or release of any petroleum
product or hazardous substance.
7.28 Maintenance of Patents, Etc. and Information Regarding Patents:
--------------------------------------------------------------
Debtor shall maintain in full force and effect all Patents, franchises,
licenses, permits and qualification necessary to own, lease and/or operate its
properties and business. Debtor will provide Bank immediately upon its receipt
complete copies of all notices from the United States Patent and Trademark
Office ("PTO") awarding any Patents to Debtor or the discontinuance of any
Patent filing or any communication or information in connection therewith.
Further, Debtor shall provide Bank copies of all correspondence and other
documentation delivered by Debtor to the PTO. In the event that Debtor is
awarded a Patent after the date hereof which is material to the operations and
business of Debtor, Debtor shall execute a patent assignment and any and all
other documents necessary to preserve and protect Bank's security interest in
such Patent.
ARTICLE 8 - NEGATIVE COVENANTS OF DEBTOR
Debtor hereby covenants and agrees that, from the date of this Agreement
and so long as Debtor shall be indebted to Bank hereunder or under any of the
Notes, it will comply with the following covenants, unless Bank shall consent
otherwise in writing, which consent shall not be unreasonably withheld:
8.01 Amendments, Mergers, etc.: Debtor shall not change its name, enter
-------------------------
into any merger, consolidation, reorganization or recapitalization or reclassify
its capital stock.
8.02 Sale of Assets: Debtor shall not sell, transfer, lease or otherwise
--------------
dispose of all or (except in the ordinary course of business) any material part
of its assets.
8.03 Liens: Except pursuant to ▇▇▇▇▇▇▇▇▇ ▇.▇▇, ▇▇▇▇▇▇ shall not mortgage,
-----
pledge, grant or permit to exist any Lien or Liens upon, any of its assets, of
any kind, now owned or hereafter acquired, except for Permitted Liens, nor
hypothecate or ▇▇▇▇▇ ▇ ▇▇▇▇ on its capital, net worth, equity accounts, or any
capital stock, as the case may be. Debtor shall not mortgage, pledge, grant or
permit to exist any Lien or Liens upon any of the remaining thirty-four percent
(34%) of the capital stock or ownership interests of Debtor in any of Euro Bio-
Pharm, Ltd. or Bio-Pharm Clinical Service, GmbH which has not been pledged to
Bank pursuant to the Pledge Agreements, unless prior consent has been received
from the Bank.
8.04 Disposition of Right to Income: Debtor shall not mortgage or grant
------------------------------
or permit to exist any Lien or Liens in, any of the Collateral, (including,
without limitation, the Accounts), other than to Bank, except for Permitted
Liens. Further, Debtor shall not sell, discount, transfer, assign, factor or
otherwise dispose of its Collateral except in the ordinary course of business.
-29-
8.05 Guarantor: Debtor shall not become liable, directly or indirectly,
---------
as guarantor or otherwise, for any obligation of any other Person, except for
the endorsement of negotiable instruments, including company checks of Debtor,
for deposit or collection in the ordinary course of business, or pursuant
hereto.
8.06 Indebtedness: Debtor shall not incur, create, or assume any
------------
Indebtedness, except: (1) the Loans; (2) Indebtedness secured only by Permitted
Liens; (3) trade Indebtedness or operating lease indebtedness (to the extent
approved) incurred in the ordinary course of business; (4) unsecured purchase
money Indebtedness for equipment acquired hereafter in the ordinary course of
business, and (5) any other Indebtedness existing as the date hereof and set
forth on Exhibit I.
---------
8.07 Dividends and Distributions: Debtor shall not declare or pay any
---------------------------
dividends, or make any capital or equity distributions to any shareholder which
would result in the occurrence of a Potential Default or Event of Default. Any
dividend or distribution made in violation of this covenant shall be deemed
subject to a resulting or constructive trust in favor of Bank.
8.08 Loans: Debtor shall not make any loan or advance to any officer,
-----
shareholder, director, partner, or other affiliated Person or Persons, or any
Person related to or affiliated with such Persons in excess of an aggregate
amount outstanding at any time of Two Hundred Fifty Thousand Dollars
($250,000.00). In addition, Debtor shall not make any intercompany loan or
advance to the Subsidiaries of Debtor in excess of an aggregate amount
outstanding at any time of Seven Million Dollars ($7,000,000.00). As security
for any intercompany loan, Debtor shall be required to do any and all actions
set forth in Section 6.04 hereof.
8.09 Statements Not Misleading, etc.: Debtor shall not knowingly, after
-------------------------------
reasonable inquiry, furnish Bank any certificate or other document that will
contain any untrue statement of material fact or that will omit to state a
material fact necessary to make it not misleading in light of the circumstances
under which it is furnished.
8.10 No Release of Hazardous Materials: Debtor shall not cause or permit
---------------------------------
to exist, as a result of an intentional or unintentional action or omission on
its part, or on the part of any third party, any disposal, releasing, spilling,
leaking, pumping, emitting, pouring, emptying or dumping of any Hazardous
Material in or onto any of the Locations except in compliance with Environmental
Laws.
8.11 Transactions with Affiliates, Etc.: Debtor shall not permit any
----------------------------------
transfers of property or payments to any present or former Affiliate,
shareholder, officer or employee of Debtor, or the successors, assigns or
transferees of such individuals or entities, except for: (i) normal salary and
compensation reasonable in amount under the circumstances in accordance with
past practices; (ii) purchases or sales of Inventory in the ordinary course of
business and on terms not less favorable to Debtor than arms-length market
terms; and (iii) payments required under bona fide written rental, franchise or
other operating agreements entered into in the ordinary course of business on
arms-length terms.
-30-
8.12 Regulation U: Debtor shall not use the proceeds of any Loans
------------
hereunder directly or indirectly to purchase or carry any "margin stock" (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying,
directly or indirectly, any such margin stock.
8.13 Acquisitions. Debtor will not acquire all or any portion of another
-------------
business, including but not limited to a Subsidiary, for a purchase price in
excess of $4,000,000 or a cash payment of over $2,000,000, unless Debtor shall
have cash and cash equivalents of at least $4,000,000 after consummation of the
acquisition and shall have obtained the prior written consent of the Bank, which
consent shall not be unreasonably withheld.
ARTICLE 9 - REPRESENTATIONS AND WARRANTIES
To induce Bank to enter into this Agreement, Debtor makes the following
continuing representations and warranties to Bank, which representations and
warranties shall be deemed renewed as of the date of each request for an Advance
and deemed incorporated in each such request:
9.01 Representations and Warranties as to Accounts Receivable: As to each
--------------------------------------------- ----------
Account Receivable carried on Debtor's financial statements or otherwise
reported to Bank as an Account: (a) the Account arose from a bona fide
outright sale of goods by Debtor or for services performed by Debtor and such
services have been performed for the respective obligors or their designees; (b)
the Account is based on an enforceable order or contract for services performed
and that the same were performed in accordance with such order or contract; (c)
the title of Debtor to the Account is absolute and is not subject to any prior
assignment, claim, lien or security interest, except a Permitted Lien; (d) the
amount shown on Debtor's books and on any invoice or statement delivered to Bank
is owing to Debtor and no partial payment has been made thereon by anyone; (e)
the Account, in the amount reported, is not subject to any contra, credit, claim
of reduction, counterclaim, set-off, recoupment, or any claim for credit,
allowances or adjustments by the obligor known to Debtor because of returned,
inferior or unsatisfactory services, or for any other reason, except for
customary discounts allowed for prompt payment; (f) the Account does not
represent progress or contract ▇▇▇▇▇▇▇▇ except for services actually performed;
(g) to the best knowledge of Debtor, the obligor is not bankrupt or insolvent
or the subject of receivership proceedings, nor has made an assignment for
benefit of creditors or a composition with creditors; and (h) at least 75% of
the account balances for all Accounts for the same obligor comply with these
representations and warranties.
9.02 Representations and Warranties as to Equipment: As to each item of
----------------------------------------------
Equipment shown on Debtor's financial statements:
(a) Such Equipment has been purchased and received by the Debtor, and
is held by the Debtor free and clear of all Liens and claims whatever except a
Permitted Lien;
-31-
(b) Such Equipment is in merchantable condition, not obsolete, not
defective, usable for the purposes for which purchased, held and processed;
(c) The value at which the Equipment is carried is the cost of such
Equipment on an item by item basis.
9.03 Other Representations and Warranties:
------------------------------------
(a) Debtor is a business corporation, duly organized, validly
existing and in good standing under the state of its respective organization
first recited above, and in each other jurisdiction that requires such
qualification wherein it owns or leases any property or conducts any business,
except where the failure to qualify would have a material adverse effect on the
business, operations, properties and financial condition of Debtor;
(b) The making, delivery and performance of this Agreement, the
Notes, the Pledge Agreements, the Collateral Assignment and Security Agreements
and the other Loan Documents will not immediately, or with the passage of time,
the giving of notice, or both:
(1) Violate the charter or by-law provisions of Debtor or violate
any Laws or result in a default under any material contract, agreement, or
instrument to which Debtor is a party or by which it or its property is bound;
or
(2) Terminate or give any party the right to terminate any
material contract, agreement or instrument to which Debtor is a party or by
which its properties may be bound or affected; or
(3) Result in the creation or imposition of any Lien upon, any of
the assets of Debtor except in favor of the Bank;
(c) Debtor has the corporate power and authority to enter into and
perform this Agreement, the Notes, the Pledge Agreements, the Collateral
Assignment and Security Agreements and the other Loan Documents, and to incur
the Obligations herein and therein provided for, and has taken all action
necessary to authorize the execution, delivery, and performance of the same;
(d) This Agreement, the Notes, the Pledge Agreements, the Collateral
Assignment and Security Agreements and the other Loan Documents are and continue
to be valid, binding, and enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency and reorganization laws and general
equitable principles;
(e) Except as described on Exhibit E attached hereto, Debtor is not a
party to or, to its best knowledge, threatened with, any litigation, suit,
action, investigation, proceedings or controversy before any Court,
administrative agency or other governmental authority which, if adversely
determined, would result in any material adverse change in its business
operations,
-32-
properties or assets or in its condition, financial or otherwise, or in any way
affect this Agreement or the transactions contemplated hereby, and Debtor is not
in violation of or in default with respect to any judgment, order, writ,
injunction, decree or rule of any court, administrative agency or governmental
instrumentality or in any material respect under any regulation of any
administrative agency or governmental instrumentality.
(f) Debtor has good and marketable title to all of its assets,
subject to no Lien or other claim of any third person except for Permitted
Liens;
(g) The financial statements, including any schedules and notes
pertaining thereto, of Debtor which have been provided to Bank prior to or on
the Effective Date have been prepared in accordance with GAAP, and fully and
fairly present the financial condition of Debtor at the dates thereof and the
results of operations for the periods covered thereby. There have been no
material adverse changes in the financial condition of Debtor since the date of
its financial statements dated December 31, 1993 which were delivered to Bank
prior to the date of the Commitment;
(h) Except as may be disclosed on Exhibit E or Exhibit F, Debtor has
--------- ---------
filed all federal, state, and local tax returns, and other reports which it is
required by Law to file prior to the date hereof and which are material to the
conduct of its business, has paid or caused to be paid all taxes, assessments
and other governmental charges that are due and payable prior to the date
hereof, has complied with all applicable Federal and State tax laws, and has
made adequate provision for the payment of such taxes, assessments or other
charges accruing but not yet payable, and Debtor has no knowledge of any
deficiency or additional assessment in a materially important amount in
connection with any taxes, assessments or charges not provided for on its books;
(i) Except as described on Exhibit L, Debtor is in compliance in all
---------
material respects with ERISA, Debtor does not sponsor, maintain or contribute to
or plan to sponsor, maintain or contribute to, or has not sponsored, maintained
or contributed to at any previous date, any "Defined Benefit Plans", as defined
in Section 3(35) of ERISA, and no Reportable Event, as defined in Section 4043
of ERISA, or Prohibited Transaction, as defined in Section 406 of ERISA, has
occurred with respect to any Plan; and
(j) Debtor is not in material violation of or subject to any
contingent liability on account of any Law (including but not limited to any
Environmental Law). No Lien arising under or in connection with any
Environmental Law has attached to any revenues or any real or personal property
owned, leased, occupied or operated by Debtor, nor does Debtor have any reason
to believe that any governmental agency has incurred any costs which may give
rise to any such lien hereafter.
(k) To the best of Debtor's knowledge, after reasonable inquiry, no
representation or warranty furnished pursuant hereto contains any untrue
statement of material
-33-
fact or omits to state a material fact necessary to make such representation or
warranty not misleading in light of the circumstances under which it was made.
(l) Each consent, approval or authorization of, or filing,
registration or qualification with, any Person which is required to be obtained
or effected by Debtor in connection with the execution and delivery of this
Agreement, the Notes, the Pledge Agreements, the Collateral Assignment and
Security Agreements and the other Loan Documents, or the undertaking or
performance of any obligation hereunder or thereunder, has been duly obtained or
effected;
(m) Except as specifically disclosed in Exhibit F attached hereto,
---------
Debtor has no other material real property leases, employment agreements,
insurance and welfare agreements. Except for commitments to purchase equipment
to be financed by the Non-Revolving Equipment Loan and except as otherwise
disclosed on the financial statements for the period ended June 30, 1997, which
are attached as an annex to Exhibit K, Debtor has no other contingent or
---------
noncontingent liability, which is or are material in amount. To the best of
Debtor's knowledge, all parties to all such leases, contracts and other
commitments to which Debtor is or was party have complied with the provisions of
such leases, contracts and other commitments, no party is in default under any
thereof and no event has occurred which, but for the giving of notice or the
passage of time, or both, would constitute a default with respect thereto;
(n) Debtor has not made any agreement or has taken any action which
may cause anyone to become entitled to a commission or finder's fee as a result
of the making of the Loans;
(o) Debtor will take all necessary steps to preserve Debtor's
corporate existence, and all of its franchises and licenses, and will comply
with all present and future regulatory and other Laws applicable to it in the
operation of its business, and with all material agreements to which it is
subject;
(p) Debtor shall not make any borrowing hereunder for the purpose of
buying or carrying any "margin stock," as such term is used in Regulation U of
the Board of Governors of the Federal Reserve System, as amended from time to
time. Neither Debtor nor any Subsidiary owns any "margin stock". Debtor is not
engaged in the business of extending credit to others for such purpose, and no
part of the proceeds of any borrowing hereunder will be used to purchase or
carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock".
(q) For purposes of this Agreement, each of the following shall be
defined as a "Location": (i) Debtor's Chief Executive Office, (ii) the
locations of all Equipment and other Collateral, and (iii) the locations of each
office at which Debtor maintains Records concerning Accounts, General
Intangibles and other financial matters. All of Debtor's Locations are
identified on Exhibit G hereto.
---------
-34-
(r) Attached hereto as Exhibit H is a schedule setting forth all
---------
Indebtedness of Debtor (other than outstanding and unfilled orders to purchase
property, products, materials or supplies) where the principal amount of the
Indebtedness (in the case of Indebtedness classifiable as liabilities under
GAAP) or the present value of all future payments with respect to the
Indebtedness (in the case of all other Indebtedness) exceeds $100,000.00.
(s) No Debtor has Indebtedness to any Affiliate, or is owed anything
on account of indebtedness of an Affiliate to it, except subordinated
indebtedness and such Indebtedness (if any) shown on Exhibit I
---------
(t) The only Subsidiaries of Debtor are outlined on Exhibit J
attached hereto.
(u) The authorized and issued capital stock or ownership interests of
each Subsidiary of Debtor is as indicated on Exhibit J attached hereto. Exhibit
--------- -------
J attached hereto also sets forth the ownership of the issued and outstanding
-
shares of capital stock or ownership interests of each Subsidiary of Debtor.
All of the issued and outstanding shares of capital stock or ownership interests
of each Subsidiary of Debtor have been validly issued and are fully paid and
nonassessable. There are no options, warrants or other rights outstanding to
purchase any such shares or ownership interests except as indicated on Exhibit J
---------
attached hereto. Debtor has good and marketable title to all of the issued and
outstanding shares of capital stock or ownership interests of each Subsidiary of
Debtor that it purports to own, free and clear in each case of any Lien except
for Liens created under the Pledge Agreements.
ARTICLE 10 - DEFAULT
10.01 Events of Default: The occurrence of any one or more of the
-----------------
following shall constitute an Event of Default hereunder:
(a) Debtor shall fail to pay, when due, any installment of principal
or any installment of interest payable hereunder or under any of the Notes or
other Loan Documents; or Debtor shall fail to pay any fee, charge or expense,
payable hereunder or under any of the Notes or other Loan Documents within ten
(10) days after notice from Bank; or
(b) Debtor shall fail to pay any Indebtedness (other than
Indebtedness under the Loan Documents) exceeding in the aggregate amount
outstanding at any one time the sum of One Hundred Thousand Dollars
($100,000.00), when due, to any Person and such failure shall continue beyond
any applicable grace period, or any other event of default shall arise under any
agreement evidencing any Indebtedness; and with respect to any defaults as are
not reasonably capable of cure within the applicable grace period, no Event of
Default shall be deemed to have occurred so long as Debtor shall have, in good
faith, commenced said cure within said initial grace period and thereafter shall
diligently pursue said cure to completion within such additional period of time
as shall be reasonably required, not to exceed thirty (30) days in any event.
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(c) Any financial statement, representation or warranty made or
furnished by Debtor or its agents to Bank in connection with this Agreement, or
as an inducement to Bank to enter into this Agreement, or in any separate
statement or document to be delivered hereunder to Bank, shall be false,
incorrect, or incomplete when made as to any material fact or facts;
(d) Debtor shall generally not or shall be unable to or shall admit
or have admitted its inability to pay, or shall fail to pay, its debts as they
mature, or shall make an assignment for the benefit of its creditors;
(e) Proceedings in bankruptcy, or for reorganization of Debtor or for
the readjustment of debts, under the Bankruptcy Code, as amended, or any part
thereof, or under any other Laws, whether state or federal, for the relief of
debtors, now or hereafter existing, shall be commenced or shall have been
commenced by or against Debtor and if commenced against Debtor shall not be
stayed or discharged within sixty (60) days of commencement;
(f) A receiver or trustee shall be appointed or shall have been
appointed for Debtor or any substantial part of its assets, or any proceedings
shall be instituted for the dissolution or the full or partial liquidation of
Debtor and such receiver or trustee shall not be discharged within sixty (60)
days of initial appointment, or such proceedings shall not be stayed or
discharged within thirty (30) days of their commencement, or Debtor shall
discontinue business or materially change the nature of its business;
(g) Debtor shall suffer a final judgment for the payment of money
(other than Indebtedness under the Loan Documents) in excess of One Hundred
Thousand Dollars ($100,000.00), and shall not discharge the same within a period
of thirty (30) days unless execution thereon is effectively stayed or bonded
pending further proceedings;
(h) A judgment creditor of Debtor shall obtain possession of or any
attachment or other judicial process shall issue against, any of the Collateral
by any means, including, but without limitation, levy, distraint, replevin or
self-help or on a consensual basis, if such possession, attachment, process,
levy or distraint is, in Bank's reasonable opinion, material or if such
possession, attachment, process, levy or distraint shall not have been finally
stayed, enjoined or terminated within thirty (30) days after it was first
obtained;
(i) The validity or enforceability of this Agreement, the Notes, the
Pledge Agreements, the Collateral Assignment and Security Agreements or any of
the other Loan Documents shall be contested in any judicial forum by Debtor or
any Affiliate, or Debtor shall deny that it has any liability or obligation
hereunder or thereunder;
(j) Any default by Debtor with respect to any other Obligation to
Bank as to which any required notice has been given, any applicable grace period
has expired, and such default remains uncured and unwaived;
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(k) Any event of default (or any event or condition which, with
notice or lapse of time or both, would become an event of default) shall arise
under any document relating to the Letter of Credit, including, without
limitation, the failure of Debtor to pay its obligations to Bank thereunder;
(l) Any financial statement, representation or warranty made or
furnished by Debtor under any of the Letter of Credit Documents to Bank in
connection with the Letter of Credit, or as an inducement to Bank to enter into
the Letter of Credit, or in any separate statement or document to be delivered
thereunder to Bank, shall be false, incorrect, or incomplete when made as to any
material fact or facts;
(m) Any one or more of the following events occurs which, in Bank's
reasonable opinion, when taken individually or collectively, have, or is or are
likely to have, a material, adverse effect on the financial condition or
business operations of Debtor and such event or circumstance continues for a
period of sixty (60) days after written notice to cure is given by Bank:
(i) The PBGC notifies a Plan pursuant to Section 4042 of ERISA
by service of a complaint, threat of filing a lawsuit, or otherwise of its
determination that an event described in Section 4042(a) of ERISA has occurred,
a Plan should be terminated, or a trustee should be appointed for a Plan; or
(ii) Any action is taken to terminate a Plan pursuant to its
provisions or the Plan administrator files with the PBGC a notice of intent to
terminate a Plan in accordance with Section 4041 of ERISA; or
(iii) Any action is taken by a plan administrator to have a
trustee appointed for a Plan pursuant to Section 4042 of ERISA; or
(iv) A return is filed with the Internal Revenue Service, or a
Plan is notified by the Secretary of the Treasury that a notice of deficiency
has been mailed, with respect to the tax imposed under Section 4971(a) of the
Code for failure to meet the minimum funding standards established under Section
412 of the Code; or
(v) A Reportable Event occurs with respect to a Plan; or
(vi) Any action is taken to amend a Plan to become an employee
benefit plan described in Section 4021(b)(1) of ERISA, causing a Plan
termination under Section 4041(e) of ERISA; or
(vii) Either Debtor or any member of the same controlled
group receives a notice of liability or demand for payment on account of
complete withdrawal under Section 4203 of ERISA, partial withdrawal under
Section 4205 of ERISA or on account of becoming
-37-
secondarily liable for withdrawal liability payments under Section 4204 of ERISA
(sale of assets);
(n) A material adverse change shall occur in the financial
condition, business or prospects of Debtor;
(o) Debtor shall fail to observe or perform any other obligation to
be observed or performed by it hereunder or under any of the Notes, Pledge
Agreements, Collateral Assignment and Security Agreements or the other Loan
Documents, which is not specifically enumerated in subsections (a)-(n) above,
and such failure shall continue uncured for a period of thirty (30) consecutive
days.
10.02 Acceleration: Immediately and without notice upon the occurrence of
------------
an Event of Default specified in subsection 10.01(e) or subsection 10.01(f), or
in other cases, at the option of Bank, upon notice by Bank or its agent or
attorney to Debtor of the occurrence of an Event of Default, all Obligations,
whether hereunder or otherwise, including without limitation those evidenced by
the Notes, shall immediately become due and payable, without further action or
notice of any kind.
10.03 Remedies: Upon the occurrence of an Event of Default, Bank shall
--------
have, in addition to the rights and remedies given it by this Agreement, the
Notes, the Pledge Agreements, the Collateral Assignment and Security Agreements
or any of the other Loan Documents and the remaining documents delivered
pursuant hereto, all those allowed by all applicable Laws, including, without
limitation, the Uniform Commercial Code.
Without limiting the generality of the foregoing, Bank may
immediately, without demand for performance and without other notice or demand
whatsoever to Debtor (except as specifically required by this Agreement or the
documents delivered pursuant hereto or as required by applicable laws), sell at
public or private sale or otherwise realize upon, at any place designated by
Bank in its sole discretion, including any place of business of Bank or any of
its affiliates, the whole or, from time to time, any part of the Collateral, or
any interest which Debtor may have therein. After deducting from the proceeds
of sale or other disposition of the Collateral all expenses (including all
expenses for legal services), Bank shall apply such proceeds toward the
satisfaction of the Obligations, in such order as it shall determine. Any
remainder of the proceeds after satisfaction in full of the Obligations shall be
distributed as required by applicable Laws. At any such sale or other
disposition, Bank may, to the extent permissible under applicable Laws, purchase
the whole or any part of the Collateral, free from any right of redemption on
the part of Debtor, which right is hereby waived and released. Notice of any
sale or other disposition shall be given to Debtor at the address hereinafter
set forth or such other address as may from time to time be shown on Bank's
records at least ten (10) days before the time of any intended public sale or of
the time after which any intended private sale or other disposition of the
Collateral is to be made, which Debtor hereby agree shall be reasonable notice
of such sale or other disposition. Debtor agrees to assemble, or to cause to be
assembled, at Debtor's own expense, the Collateral at such place or places as
Bank shall designate. Without
-38-
limiting the generality of any of the rights and remedies conferred upon Bank
under this Section, Bank may, to the full extent permitted by applicable Laws do
any or all of the following:
(a) Enter upon any premises of Debtor, exclude Debtor therefrom,
and take immediate possession of the Collateral, either personally or by means
of a receiver appointed by a court of competent jurisdiction, or by other lawful
means;
(b) At Bank's option, use, operate, manage and control the
Collateral in any lawful manner;
(c) Collect and receive any or all rents, income, revenue,
earnings, issues, and profits (including the Accounts), and proceeds therefrom;
and
(d) Maintain, repair, renovate, alter or remove the Collateral as
Bank may determine in its discretion.
10.04 Application of Proceeds. Upon the occurrence of an Event of Default,
-----------------------
and so long as the Event of Default continues uncured or unwaived, Debtor
irrevocably waives the right to direct the application of all payments,
including proceeds of Collateral, that may be received by Bank or for the
benefit of Debtor. The proceeds of any sale or other disposition of all or any
part of the Collateral, or any interest which Debtor may have therein, shall be
applied by Bank in the following order:
(a) First, to payment of all costs and expenses incurred by Bank
under any of the Loan Documents including without limitation all costs and
expenses relating to disposition of Collateral or enforcement of the Debtor's
Obligations, and reasonable attorneys' fees,
(b) Second, to the payment in full of the unpaid principal balance
of, and all accrued and unpaid interest on, the Loans, the Notes, and other
Obligations all in accordance with the terms of the Notes, this Agreement, the
Pledge Agreements, the Collateral Assignment and Security Agreements and the
other Loan Documents, and
(c) Third, to the payment in full of all other Obligations of
Debtor to Bank, and
(d) Fourth, to the Debtor to the extent of any surplus. Debtor
shall remain liable to Bank for any deficiency in payment of the Obligations to
Bank after application of the proceeds in accordance with this Section 10.04.
10.05 Enforcement and Waiver by the Bank: Bank shall have the right at all
----------------------------------
times to enforce the provisions of this Agreement and the documents delivered
pursuant hereto in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on the part of Bank in refraining from so
doing at any time or times. The failure of Bank at any time or times to enforce
its rights under such provisions, strictly in accordance with the same, shall
not
-39-
be construed as having created a custom in any way or manner contrary to
specific provisions of this Agreement or as having in any way or manner modified
or waived the same. All rights and remedies of Bank are cumulative and
concurrent and the exercise of one right or remedy shall not be deemed a waiver
or release of any other right or remedy.
ARTICLE 11 - MISCELLANEOUS
11.01 Interpretation: The provisions of this Agreement shall be in
--------------
addition to those of any Letter of Credit Documents, security agreement, note or
other evidence of liability now or hereafter at any time held by Bank, all of
which shall be construed as complementary and supplementary to each other to the
extent possible. Nothing herein contained shall prevent Bank from enforcing any
or all other agreements in accordance with their respective terms.
11.02 Further Assurances: From time to time, Debtor will execute and
------------------
deliver to Bank such additional documents and will provide such additional
information as Bank may reasonably require, to carry out the terms of this
Agreement and be informed of the Debtor's status and affairs.
11.03 Power to Execute Documents: Upon and during the occurrence of an
--------------------------
Event of Default, and so long as any Obligations remain outstanding, Debtor
hereby irrevocably (this power being coupled with an interest) appoints,
constitutes and names Bank, or any of its attorneys or agents, the true and
lawful attorney for Debtor, with full power of substitution, to do any or all of
the following at any time (but this grant of authority shall not negate any
other grant of authority under this Agreement which may authorize other actions,
or similar actions under other circumstances, and Debtor shall not take any
actions to contest or reverse or negate Bank's actions hereunder):
(a) to receive mail at Bank's designated address and open the same,
endorse, sign and deliver, in the name of Debtor, or in Bank's name, all checks,
drafts, money orders and other instruments, for the payment of moneys which are
payable to Debtor;
(b) to sign the name of Debtor, and to receive for Debtor, on any
schedules, assignments, instruments, documents and Uniform Commercial Code
financing, amending or continuation statements which Debtor is obligated to give
Bank hereunder or any invoice, warehouse receipt, ▇▇▇▇ of lading or other
Document, Instrument or Chattel Paper, or any Accounts, statements therefor,
drafts against obligors or drawn or to be drawn under any letters of credit,
notices to obligors, certificates or other documents to be delivered or
presented under letters of credit or schedules or assignments of Accounts; and
(c) to take or bring at the Debtor's expense, in the name of
Debtor, or Bank, all steps, actions and suits that Bank considers necessary or
desirable to effect collections of Accounts, to enforce payment of any Account,
to settle, compromise, sell, assign, discharge or release, in whole or in part,
any amounts owing on Accounts, to extend the time of payment of any and all
Accounts and to make allowances and adjustments with regard to Accounts; and
-40-
(d) to do such other and further acts and deeds in the name of
Debtor that Bank may deem necessary or desirable to enforce the rights of Debtor
against third parties with respect to any Collateral.
11.04 Cost, Expenses, and Fees Paid and Payable to Bank:
-------------------------------------------------
(a) All reasonable attorneys fees and other expenses incurred by
Bank as part of this transaction shall be a part of the Obligations hereunder
and shall be paid at the signing hereof or at such later time as the Bank may
specify.
(b) Debtor agrees that all costs, expenses, and reasonable
attorneys' fees of, or incidental to the custody, care, management, sale or
collection of, or realization upon, any of the Collateral or in any way relating
to the care, enforcement or protection of the Collateral or in the enforcement
of any and all rights of Bank either hereunder or under any applicable law or
custom, shall become part of the Obligations and entitled to the benefits of
this Agreement as if an Advance made hereunder upon the application of Debtor,
and Bank may at any time apply to the payment of all such costs and expenses all
moneys of Debtor or other proceeds arising from the possession or disposition of
all or any portion of the Collateral.
11.05 Notices: Any notices or consents required or permitted by this
-------
Agreement shall be in writing and shall be deemed delivered if personally
delivered or if sent by certified mail, postage prepaid, return receipt
requested or overnight courier service, as follows, unless such address is
changed by written notice hereunder:
If to Debtor: IBAH, Inc.
Four Valley Square
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Vice President and CFO
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, Esquire
IBAH, Inc.
Four Valley Square
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Bank: with a copy to: CoreStates Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
-41-
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, Esquire
Stradley, Ronon, ▇▇▇▇▇▇▇ & Young, LLP
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any notice hereunder shall be deemed to have been given three (3) days
after mailing thereof, or upon actual delivery to an agent of the recipient
party, to the other party at such party's then effective address hereunder.
Notices by Bank may be given on its behalf by its agent or attorney.
11.06 Waiver and Release by Debtor: To the maximum extent permitted by
----------------------------
applicable Laws, Debtor:
(a) Waives demand, protest, presentment, and notice of dishonor of
all commercial paper at any time held by Bank on which Debtor is in any way
liable;
(b) Releases Bank and its officers, attorneys, agents and employees
from all claims for loss or damage caused by any act or omission on the part of
any of them except negligence.
11.07 JURISDICTION: DEBTOR CONSENTS TO THE PERSONAL JURISDICTION OF THE
------------
FEDERAL OR STATE COURTS LOCATED IN THE COMMONWEALTH OF PENNSYLVANIA AND AGREES
THAT VENUE SHALL BE PROPER AND THE FORUM SHALL BE CONVENIENT IN THE CITY OF
PHILADELPHIA OR IN ▇▇▇▇▇▇▇ COUNTY, PENNSYLVANIA, IF SUIT IS FILED BY ANY PARTY
TO ENFORCE, INTERPRET OR CONSTRUE THIS AGREEMENT. DEBTOR AND BANK HEREBY
MUTUALLY AND RECIPROCALLY WAIVE ALL RIGHT TO JURY TRIAL.
11.08 Applicable Law: The internal substantive laws of the Commonwealth of
--------------
Pennsylvania shall govern the construction of this Agreement and the rights and
remedies of the parties hereto without regard to any laws relating to conflict
of laws or choice of law.
11.09 Indemnity: To the maximum extent permitted by applicable law,
---------
Debtor, for itself and its successors (herein, "Indemnifying Parties"), shall
jointly and severally indemnify, hold harmless, and upon request defend Bank and
its shareholders, officers, directors, employees, attorneys and agents, and
their respective successors and assigns (collectively, the "Indemnified
Parties") from and against any and all claims and liabilities asserted against
any Indemnified Party by any Indemnifying Party or any third party (including
without limitation for negligence or gross negligence) (herein, "Claims"), and
will pay and reimburse to the Indemnified Parties all losses, payments,
reasonable costs and expenses associated therewith, or with the defense of all
Indemnified Parties (including without limitation reasonable attorneys' fees)
which any Indemnified Party may suffer, incur or be exposed to by reason of or
in connection with or rising out of the transport, release, treatment,
processing, manufacture, deposit, storage, disposal, burial, dumping, injecting,
spilling, leaking or placement at any time heretofore or hereafter, by
-42-
any person or entity, of any Hazardous Material (except in compliance with all
Environmental Laws), including but not limited to any of the following whether
incurred by an Indemnified Party, an Indemnifying Party or any third party: (1)
costs of or liability for investigation, monitoring, boring, testing and
evaluation; (2) costs or liabilities for abatement, correction, response,
cleanup, removal or remediation; (3) fines, damages, penalties and other
liabilities; (4) liability for personal injury or property damage.
11.10 Investigation and Cure of Environmental Matters: In the event of
-----------------------------------------------
failure of Debtor to comply with any provision of this Agreement or any other
Loan Document relating to Hazardous Materials, Environmental Laws or
Environmental Regulators, or if Bank shall have reason to believe that any
Hazardous Material has been or is likely to be released on, in or under any
Location (except in compliance with all Environmental Laws), Bank may do any or
all of the following: (i) Bank shall have the right to investigate, or to demand
that Debtor investigate and report to Bank on (in which case Debtor shall
investigate and report to Bank on) investigation of such Location, and if Bank
requests through an independent reputable environmental consulting or
engineering firm acceptable to Bank; (ii) without obligation to do so, to cure
such default or to comply or cause compliance, or to demand that Debtor cure
such default or comply or cause compliance, with any or all Environmental Laws.
All of the foregoing shall be at the expense of Debtor, and any expense incurred
by Bank in connection with any of the foregoing (including without limitation
its expenses relating to attorneys fees and any environmental consultants or
engineers) shall be additional obligation of Debtor hereunder which shall be
payable to Bank upon demand, with interest computed at the Default Rate from the
date(s) upon which said costs and expenses were incurred by Bank.
11.11 Merger of CoreStates Bank, N.A. and Meridian Bank: Debtor
-------------------------------------------------
acknowledges and understands that CoreStates Bank, N.A., is the successor by
merger to Meridian Bank. Debtor acknowledges and agrees that any of the Loan
Documents executed and delivered to Meridian Bank shall inure to the benefit of
and shall be enforceable by CoreStates Bank, N.A., as successor by merger.
Effective as of the date of the merger of Meridian Bank into CoreStates Bank,
N.A., all references in the Loan Documents to Meridian Bank shall be deemed to
refer to CoreStates Bank, N.A., and all references in the Loan Documents to the
National Commercial Rate shall be deemed to refer to the "Prime Rate", as
defined in this Second Amended and Restated Loan and Security Agreement.
11.12 Binding Effect, Assignment and Entire Agreement: This Agreement
-----------------------------------------------
shall become effective upon delivery of the Notes, and acceptance of this
Agreement by execution in, to Bank's main office in Malvern, Pennsylvania and
shall inure to the benefit of, and shall be binding upon, the respective heirs,
executors, administrators, successors and permitted assigns of the parties
hereto. Debtor has no right to assign any of its rights or obligations
hereunder without the prior written consent of Bank. This Agreement, and the
documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties, and may be amended only by a writing signed on
behalf of each party.
-43-
11.13 Severability: If any provision of this Agreement shall be held
------------
invalid under any applicable Laws, such invalidity shall not affect any other
provision of this Agreement which can be given effect without the invalid
provision. To this end, the provisions hereof are severable.
11.14 Counterparts: This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
under seal, as of the day and year first above written.
IBAH, INC.
Attest: \s\ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ By: \s\ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------ --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary Title: CEO
CORESTATES BANK, N.A.
Attest: \s\ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ By: \s\ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------ --------------------------------
Name: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Title: Vice President
THE HARDARDT GROUP, INC.
Attest: \s\ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ By: \s\ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary Title: President
-44-
Exhibits:
--------
A - Form of International Facilities Agreement
B - Permitted Liens
C - Post-Closing Items
D - Form of Covenant Compliance Certificate
E - Litigation
F - Commitments and Contingencies
G - Locations
H - Indebtedness
I - Affiliate Indebtedness
J - Capitalization and Ownership of Subsidiaries
K - Financial Statements
L - ERISA Compliance
-45-
EXHIBIT B
PERMITTED LIENS
1. Equipment liens in favor of Mitel Finance Corp.
2. Two Equipment liens in favor of Meridian Leasing, Inc.
3. Equipment liens in favor of Steelcase Financial Services, Inc.
4. Equipment lien in favor of CoreStates, Leasing, Inc.
-46-
EXHIBIT C
POST-CLOSING ITEMS
1. Execution of the Pledge Agreement by and between Debtor and Bank, which is
in the form attached hereto as Annex 1, pledging sixty-six percent (66%) of
the ownership interests of Debtor in Euro Bio-Pharm Holdings, B.V.,
authentication by a German Notar and any and all other actions required to
be performed or have performed by Debtor in order to record and perfect the
lien of Bank upon such ownership interests.
2. Delivery of the originally executed Euro Bio-Pharm Clinical Services GmbH
Note, which is in the form attached hereto as Annex 2, and the Euro Bio-
Pharm, Ltd. Note, which is in the form attached hereto as Annex 3.
3. Delivery of executed Landlord's Waivers for each leased property.
4. Certificate of Good Standing and subsistence of Hardardt as of a recent
date from each state in which Hardardt is organized or qualified (or to be
qualified) to transact business.
5. Debtor acknowledges that Bank has requested certain lien searches on Debtor
and Hardardt but has not received the results of such lien searches as of
the date hereof. Debtor agrees to remove and discharge any and all liens,
judgments or encumbrances revealed by such lien searches (except Permitted
Liens) within fifteen (15) days of written notice of the search results
from Bank, and execute and deliver to Bank all necessary releases,
satisfactions, subordinations and terminations statements requested by
Bank.
6. Legal Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ in the form delivered on July 8,
1994.
7. Certificate of Incorporation of the Hardardt Group, Inc. certified by the
Secretary of State in the State in which it is organized.
8. Secretary's Certificate form the Secretary of The Hardardt Group, Inc. in
the form delivered by IBAH, Inc. on the date hereof.
9. Exhibit I to this Second Amended and Restated Loan and Security Agreement,
scheduling inter and intra company (affiliate) indebtedness.
-47-
EXHIBIT D
COVENANT COMPLIANCE CERTIFICATE
I hereby certify that IBAH, Inc. has maintained the following financial
covenants in accordance with Generally Accepted Accounting Principles, as
measured at the end of the calendar quarter ended _______________ in accordance
with Article 7.13 of the Second Amended and Restated Loan and Security
Agreement dated August , 1997 (the "Loan Agreement"). All capitalized
terms shall have the meanings provided therefor in the Loan Agreement.
IBAH, INC.
By: ____________________________________
Designated Officer
Date: ______________________
-48-
EXHIBIT E
LITIGATION
1. Claim by ex-employee of GmbH for bonus relating to sales commission at
600,000 ▇.▇.
2. Claim by third party for payment for service allegedly performed in the
amount of approximately $200,000.
-49-
EXHIBIT F
COMMITMENTS AND CONTINGENCIES
Material Employment Agreements
------------------------------
1. ▇▇▇▇▇▇▇ ▇▇▇▇
2. ▇▇▇ ▇▇▇▇▇▇▇▇▇
3. ▇▇▇▇▇ ▇▇▇▇▇▇▇
4. ▇▇▇▇▇▇ ▇▇▇▇▇
5. ▇▇▇▇ Weaker
6. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-50-
EXHIBIT F
COMMITMENTS AND CONTINGENCIES
Material Real Property Leases
-----------------------------
Bio-Pharm Clinical Services Bio-Pharm Pharmaceutics Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Bio-Pharm Pharmaceutics Services, Inc. Bio-Pharm Regional
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Bio-Pharm Clinical Services Pacific Bio-Pharm
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Euro Bio-Pharm GmbH Euro Bio-Pharm
Konigsteiner Star. 10 2 Ter, Villa Thoreton
65812 Bad ▇▇▇▇▇ a. Ts. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ France
Euro Bio-Pharm Euro Bio-Pharm AG
Wessex Business Centre Muhlemattstrasse 22
Bumpers Way, Bumpers Farm 4104 Oberwil/Bael
Chippenham, Wiltshire Switzerland
England SN14 6NQ
Euro Bio-Pharm Euro Bio-Pharm A/S
Blv ▇. ▇▇▇▇▇▇ 161 Box 4 Kongens Nytorv 6, 4. Floor
1030 Bruseels KD ▇▇▇▇
▇▇▇▇▇▇▇ Copenhagen
Bio-Pharm International, Inc. Ao De-Scor/ Ao Katuar
Betlem Palasi-Betlemesky palac ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇ Dom 1-A, #45
11000 ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Resource Biometrics, Inc. The Hardardt Group
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ 6 Century Drive
Emeryville, CA 94608-1928 USA ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
The Hardardt Group
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ and 640
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
-51-
EXHIBIT G
LOCATIONS
Bio-Pharm Clinical Services Bio-Pharm Phamaceutics Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Bio-Pharm Phamaceutics Services, Inc. Bio-Pharm Regional
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Bio-Pharm Clinical Services Pacific Bio-Pharm
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Euro Bio-Pharm GmbH Euro Bio-Pharm
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇ ▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Bad ▇▇▇▇▇ a. Ts. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ France
Euro Bio-Pharm Euro Bio-Pharm AG
Wessex Business Centre Muhlemattstrasse 22
Bumpers Way, Bumpers Farm 4104 Oberwil/Bael
Chippenham, Wiltshire Switzerland
England SN14 6NQ
Euro Bio-Pharm Euro Bio-Pharm A/S
Blv ▇. ▇▇▇▇▇▇ 161 Box 4 Kongens Nytorv 6, 4. Floor
1030 Bruseels KD ▇▇▇▇
▇▇▇▇▇▇▇ Copenhagen
Bio-Pharm International, Inc. Ao De-Scor/ Ao Katuar
Betlem Palasi-Betlemesky palac ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇ Dom 1-A, #45
11000 ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Resource Biometrics, Inc. The Hardardt Group
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ 6 Century Drive
Emeryville, CA 94608-1928 USA ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
The Hardardt Group
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ and 640
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
-52-
EXHIBIT H
INDEBTEDNESS
1. This Second Amended and Restated Loan and Security Agreement with
CoreStates Bank, N.A.
-53-
EXHIBIT J
CAPITALIZATION AND OWNERSHIP OF MAJOR SUBSIDIARIES
1. Bio-Pharm Pharmaceutics Services, Inc.
Authorized Capital Stock 100 share s Common Stock
Issued and Outstanding Capital Stock 100 shares Common Stock, held by IBAH, Inc.
2. Euro Bio-Pharm Clinical Services, Inc.
Authorized Capital Stock 100 shares Common Stock
Issued and Outstanding Capital Stock 100 shares Common Stock, held by IBAH, Inc.
3. Euro Bio-Pharm, Ltd.
Authorized Capital Stock 300,000 ordinary shares, 100 B. ordinary shares
Issued and Outstanding Capital Stock 16,286 ordinary shares, held by Euro Bio-Pharm
Holdings, B.V.
4. Euro Bio-Pharm Clinical Services, GmbH
Authorized Capital Stock 100,000 shares
Fully paid Capital Stock 100,000 shares, held by Euro Bio-Pharm
Holdings, B.V.
5. Euro Bio-Pharm Holdings, B.V.
[Authorized Issued Capital?] 400 shares - authorized
400 shares - held by IBAH, Inc.
6. The Hardardt Group, Inc.
[Authorized Issued Capital?] 1,000 shares - authorized
1,000 shares - held by IBAH, Inc.
-54-
EXHIBIT K
FINANCIAL STATEMENTS
-55-
EXHIBIT L
ERISA COMPLIANCE
-56-