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TBCC
Loan and Security Agreement
Borrower: VidaMed, Inc.,
a Delaware Corporation
Address: 00000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Date: October 20, 1998
THIS LOAN AND SECURITY AGREEMENT is entered into as of the above date, between
the above borrower (the "Borrower"), having its chief executive office and
principal place of business at the address shown above, and TRANSAMERICA
BUSINESS CREDIT CORPORATION, a Delaware corporation ("TBCC"), having its
principal office at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000
and having an office at 00000 Xxxxxxx Xxxx., Xxxxx 0000, Xxxxxxx Xxxx,
Xxxxxxxxxx 00000. The Schedule to this Agreement (the "Schedule") being signed
concurrently is an integral part of this Agreement. (Definitions of certain
terms used in this Agreement are set forth in Section 9 below.) The parties
agree as follows:
1. LOANS.
1.1 Loans. TBCC, subject to the terms and conditions of this Agreement,
agrees to make loans (the "Loans") to Borrower, from time to time during the
period from the date of this Agreement to the Maturity Date set forth in the
Schedule, at Borrower's request, in an aggregate principal amount at any one
time outstanding not to exceed the Credit Limit shown on the Schedule. If at any
time the total outstanding Loans and other monetary Obligations exceed said
limit, Borrower shall repay the excess immediately without demand. Borrower
shall use the proceeds of all Loans solely for lawful general business purposes.
1.2 Due Date. The Loans, all accrued interest and all other monetary
Obligations shall be payable in full on the Maturity Date. Borrower may borrow,
repay and reborrow Loans (other than any Term Loans), in whole or in part, in
accordance with the terms of this Agreement.
1.3 Loan Account. TBCC shall maintain an account on its books in the
name of Borrower (the "Loan Account"). All Loans and advances made by TBCC to
Borrower or for Borrower's account and all other monetary Obligations will be
charged to the Loan Account. All amounts received by TBCC from Borrower or for
Borrower's account will be credited to the Loan Account. TBCC will send Borrower
a monthly statement reflecting the activity in the Loan Account, and each such
monthly statement shall be an account stated between Borrower and TBCC and shall
be final conclusive and binding absent manifest error.
1.4 Collection of Receivables. Borrower shall remit to TBCC all
Collections including all checks, drafts and other documents and instruments
evidencing remittances in payment (collectively referred to as "Items of
Payment") within one Business Day after receipt, in the same form as received,
with any necessary indorsements. For purposes of calculating interest due to
TBCC, credit will be given for Collections and all other proceeds of Collateral
and other payments to TBCC three Business Days after receipt of cleared funds.
For all purposes of this Agreement any cleared funds received by TBCC later than
10:00 a.m. (California time) on any Business Day shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue. Borrower's Loan Account will be credited only with the net
amounts actually received in payment of Receivables, and such payments shall be
credited to the Obligations in such order as TBCC shall determine in its
discretion. Pending delivery to TBCC, Borrower will not commingle any Items of
Payment with any of its other funds or property, but will segregate them from
the other assets of Borrower and will hold them in trust and for the account and
as the property of TBCC. Borrower hereby agrees to endorse any Items of Payment
upon the request of TBCC.
1.5 Reserves. TBCC may, from time to time, in its Good Faith business
judgment: (i) establish and modify reserves against Eligible Receivables and
Eligible Inventory, (ii) modify advance rates with respect to Eligible
Receivables and Eligible Inventory, (iii) modify the standards of eligibility
set forth in the definitions of Eligible Receivables and Eligible Inventory, and
(iv) establish reserves against available Loans.
1.6 Term.
(a) The term of this Agreement shall be from the date of this
Agreement to the Maturity Date set forth in the Schedule, unless sooner
terminated in accordance with the terms of this Agreement, provided that the
Maturity Date shall automatically be extended, and this Agreement shall
automatically and continuously renew, for successive additional terms of one
year each, unless one party gives written notice to the other, not less than
sixty days prior to the next Maturity Date, that such party elects to terminate
this Agreement effective on the next Maturity Date. On the Maturity Date or on
any earlier termination of this
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Agreement Borrower shall pay in full all Obligations, and notwithstanding any
termination of this Agreement all of TBCC's security interests and all of TBCC's
other rights and remedies shall continue in full force and effect until payment
and performance in full of all Obligations.
(b) This Agreement may be terminated prior to the Maturity
Date as follows: (i) by Borrower, effective three business days after written
notice of termination is given to TBCC; or (ii) by TBCC at any time after the
occurrence of an Event of Default, without notice, effective immediately. If
this Agreement is terminated by Borrower or by TBCC under this Section 1.6(b),
Borrower shall pay to TBCC a termination fee (the "Termination Fee") in the
amount shown on the Schedule. The Termination Fee shall be due and payable on
the effective date of termination. Notwithstanding the foregoing, Borrower shall
have no right to terminate this Agreement at any time that any principal of, or
interest on any of the Loans or any other monetary Obligations are outstanding,
except upon prepayment of all Obligations and the satisfaction of all other
conditions set forth in the Loan Documents.
1.7 Payment Procedures. Borrower hereby authorizes TBCC to charge the
Loan Account with the amount of all interest, fees, expenses and other payments
to be made hereunder and under the other Loan Documents. TBCC may, but shall not
be obligated to, discharge Borrower's payment obligations hereunder by so
charging the Loan Account. Whenever any payment to be made hereunder is due on a
day that is not a Business Day, the payment may be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest due.
1.8 Conditions to Initial Loan. The obligation of TBCC to make the
initial Loan is subject to the satisfaction of the following conditions prior to
or concurrent with such initial Loan, and Borrower shall cause all such
conditions to be satisfied by the Closing Deadline set forth in the Schedule:
(a) Except for the filing of termination statements under the
Code by the existing lender to Borrower whose loans are being repaid with the
Loan proceeds and the documents and actions relating to the Liens of TBCC
created hereunder, as provided for in Section 1.8(c) below, no consent or
authorization of, filing with or other act by or in respect of any Governmental
Authority or any other Person is required in connection, with the execution,
delivery, performance, validity or enforceability of this Agreement, or the
other Loan Documents or the consummation of the transactions contemplated hereby
or thereby or the continuing operations of the Borrower following the
consummation of such transactions.
(b) TBCC and its counsel shall have performed (i) a review
satisfactory to TBCC of all of the Material Contracts and other assets of the
Borrower, the financial condition of the Borrower, including all of its tax,
litigation, environmental and other potential contingent liabilities, and the
corporate and capital structure of the Borrower and (ii) a pre-closing audit and
collateral review, in each case with results satisfactory to TBCC.
(c) TBCC shall have received the following, each dated the
date of the initial Loan or as of an earlier date acceptable to TBCC, in form
and substance satisfactory to TBCC and its counsel: (i) a Blocked Account
Agreement , duly executed by the Borrower and its bank on TBCC's standard form;
(ii) acknowledgment copies of Uniform Commercial Code financing statements
(naming TBCC as secured party and the Borrower as debtor), duly filed in all
jurisdictions that TBCC deems necessary or desirable to perfect and protect the
Liens created hereunder, and evidence that all other filings, registrations and
recordings have been made in the appropriate governmental offices, and all other
action has been taken, which shall be necessary to create, in favor of TBCC, a
perfected first priority Lien on the Collateral; (iii) the opinion of counsel
for the Borrower covering such matters incident to the transactions contemplated
by this Agreement as TBCC may specify in its discretion; (iv) certified copies
of all policies of insurance required by this Agreement and the other Loan
Documents, together with loss payee endorsements for all such policies naming
TBCC as lender loss payee and an additional insured; (v) copies of the
Borrower's articles or certificate of incorporation, certified as true, correct
and complete by the secretary of state of Borrower's state of incorporation
within 45 days of the date hereof; (vi) copies of the bylaws of the Borrower and
a copy of the resolutions of the Board of Directors of the Borrower authorizing
the execution, delivery and performance of this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, attached to
which is a certificate of the Secretary or an Assistant Secretary of the
Borrower certifying (A) that such copies of the bylaws and resolutions are true,
complete and accurate copies thereof, have not been amended or modified since
the date of such certificate and are in full force and effect and (B) the
incumbency, names and true signatures of the officers of the Borrower; (vii) a
good standing certificate from the Secretary of State of Borrower's state of
incorporation and each state in which the Borrower is qualified as a foreign
corporation, each dated within ten days of the date hereof; (viii) the
additional documents and agreements, if any, listed in the Schedule; and (ix)
such other agreements and instruments as TBCC deems necessary in its sole and
absolute discretion in connection with the transactions contemplated hereby.
1.9 Conditions to Lending. The obligation of TBCC to make any Loan is
subject to the satisfaction of the following conditions precedent:
(a) There shall be no pending or, to the knowledge of Borrower
after due inquiry, threatened litigation, proceeding, inquiry or other action
relating to this Agreement, or any other Loan Document, or which could be
expected to have a Material Adverse Effect in the judgment of TBCC;
(b) Borrower shall be in compliance with all Requirements of
Law and Material Contracts, other than such noncompliance that could not have a
Material Adverse Effect;
(c) The Liens in favor of TBCC shall have been duly perfected
and shall constitute first priority Liens, except for Permitted Liens;
(d) All representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct on and as of
the date of such Loan as if
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then made, other than representations and warranties that expressly relate
solely to an earlier date, in which case they shall have been true and correct
as of such earlier date;
(e) No Default or Event of Default shall have occurred and be
continuing or would result from the making of the requested Loan as of the date
of such request; and
(f) No Material Adverse Effect shall have occurred.
2. INTEREST AND FEES.
2.1 Interest. Borrower shall pay TBCC interest on all outstanding Loans
and other monetary Obligations, at the interest rate set forth in the Schedule.
Interest shall be payable monthly in arrears on the first Business Day of each
month, and on the Maturity Date. Following the occurrence and during the
continuance of any Event of Default, the interest rate applicable to all
Obligations shall be increased by two percent per annum.
2.2 Fees. Borrower shall pay TBCC the fees set forth in the Schedule.
2.3 Calculations. All interest and fees under this Agreement shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed in the period for which such interest or fees are payable.
2.4 Taxes. Any and all payments by Borrower under this Agreement or any
other Loan Document shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings and penalties, interest and all other liabilities with respect
thereto, excluding in the case of TBCC, taxes imposed on its net income and
franchise taxes imposed on it by the jurisdiction under the laws of which TBCC
is organized or any political subdivision thereof.
3. SECURITY.
3.1 Grant of Security Interest. To secure the payment and performance
when due of all of the Obligations, Borrower hereby grants to TBCC a security
interest in all of its present and future Receivables, Investment Property,
Inventory, Equipment, Other Property, and other Collateral, wherever located.
3.2 Other Liens; Location of Collateral. Borrower represents, warrants
and covenants that all of the Collateral is, and will at all times continue to
be, free and clear of all Liens, other than Permitted Liens and Liens in favor
of TBCC. All Collateral is and will continue to be maintained at the locations
shown on the Schedule.
3.3 Receivables.
(a) Schedules and Other Actions. As often as requested by
TBCC, Borrower shall execute and deliver to TBCC written schedules of
Receivables and Eligible Receivables (but the failure to execute or deliver any
schedule shall not affect or limit TBCC's security interest in all Receivables).
On TBCC's request, Borrower shall also furnish to TBCC copies of invoices to
customers and shipping and delivery receipts. Borrower shall deliver to TBCC the
originals of all letters of credit, notes, and instruments in its favor and such
endorsements or assignments as TBCC may reasonably request and, upon the request
of TBCC, Borrower shall deliver to TBCC all certificated securities with respect
to any Investment Property, with all necessary indorsements, and obtain such
account control agreements with securities intermediaries and take such other
action with respect to any Investment Property, as TBCC shall request, in form
and substance satisfactory to TBCC. Upon request of TBCC Borrower additionally
shall obtain consents from any letter of credit issuers with respect to the
assignment to TBCC of any letter of credit proceeds.
(b) Records, Collections. Borrower shall report all customer
credits to TBCC, on the regular reports to TBCC in the form from time to time
specified by TBCC. Borrower shall notify TBCC of all returns and recoveries of
merchandise and of all claims asserted with respect to merchandise, on its
regular reports to TBCC. Borrower shall not settle or adjust any dispute or
claim, or grant any discount, credit or allowance or accept any return of
merchandise, except in the ordinary course of its business, without TBCC's prior
written consent.
(c) Representations. Borrower represents and warrants to TBCC
that each Receivable with respect to which Loans are requested by Borrower
shall, on the date each Loan is requested and made, represent an undisputed,
bona fide, existing, unconditional obligation of the account debtor created by
the sale, delivery, and acceptance of goods, the licensing of software or the
rendition of services, in the ordinary course of Borrower's business, and meet
the Minimum Eligibility Requirements set forth in Section 9.1(n) below.
3.4 Inventory. Borrower shall maintain full, accurate and complete
records respecting the Inventory describing the kind, type and quantity of the
Inventory and Borrower's cost therefor, withdrawals therefrom and additions
thereto, including a perpetual inventory for work in process and finished goods.
3.5 Equipment. Borrower shall at all times keep correct and accurate
records itemizing and describing the location, kind, type, age and condition of
the Equipment, Borrower's cost therefor and accumulated depreciation thereof and
retirements, sales, or other dispositions thereof. Borrower shall keep all of
its Equipment in a satisfactory state of repair and satisfactory operating
condition in accordance with industry standards, ordinary wear and tear
excepted. No Equipment shall be annexed or affixed to or become part of any
realty, unless the owner of the realty has executed and delivered a Landlord
Waiver in such form as* TBCC. Where Borrower is permitted to dispose of any
Equipment under this Agreement or by any consent thereto hereafter given by
TBCC, Borrower shall do so at arm's length, in good faith and by obtaining the
maximum amount of recovery practicable therefor and without impairing the
operating integrity or value of the remaining Equipment.
*shall be reasonably acceptable to
3.6 Investment Property. Borrower shall have the right to retain all
Investment Property payments and distributions, unless and until a Default or an
Event of Default has occurred. If a Default or an Event of Default
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exists, Borrower shall hold all payments on, and proceeds of, and distributions
with respect to, Investment Property in trust for TBCC, and Borrower shall
deliver all such payments, proceeds and distributions to TBCC, immediately upon
receipt, in their original form, duly endorsed, to be applied to the Obligations
in such order as TBCC shall determine. Upon the request of TBCC, any such
distributions and payments with respect to any Investment Property held in any
securities account shall be held and retained in such securities account as part
of the Collateral.
3.7 Further Assurances. Borrower will perform any and all steps that
TBCC may reasonably request to perfect TBCC's security interests in the
Collateral, including, without limitation, executing and filing financing and
continuation statements in form and substance satisfactory to TBCC. TBCC is
hereby authorized by Borrower to sign Borrower's name or file any financing
statements or similar documents or instruments covering the Collateral whether
or not Borrower's signature appears thereon. Borrower agrees, from time to time,
at TBCC's request, to file notices of Liens, financing statements, similar
documents or instruments, and amendments, renewals and continuations thereof,
and cooperate with TBCC, in connection with the continued perfection and
protection of the Collateral. If any Collateral is in the possession or control
of any Person other than a public warehouseman where the warehouse receipt is in
the name of or held by TBCC, Borrower shall notify such Person of TBCC's
security interest therein and, upon request, instruct such Person or Persons to
hold all such Collateral for the account of TBCC and subject to TBCC's
instructions. If so requested by TBCC, Borrower will deliver to TBCC warehouse
receipts covering any Collateral located in warehouses showing TBCC as the
beneficiary thereof and will also cause the warehouseman to execute and deliver
such agreements as TBCC may request relating to waivers of liens by such
warehouseman and the release of the Inventory to TBCC on its demand. Borrower
shall defend the Collateral against all claims and demands of all Persons.
3.8 Power of Attorney. Borrower hereby appoints and constitutes TBCC as
Borrower's attorney-in-fact (i) to request at any time from account debtors
verification of information concerning Receivables and the amount owing thereon,
(ii) upon the occurrence and during the continuance of an Event of Default, to
convey any item of Collateral to any purchaser thereof, (iii) to give or sign
Borrower's name to any notices or statements necessary or desirable to create or
continue the Lien on any Collateral granted hereunder, (iv) to execute and
deliver to any securities intermediary or other Person any entitlement order,
account control agreement or other notice, document or instrument with respect
to any Investment Property, and (v) to make any payment or take any act
necessary or desirable to protect or preserve any Collateral. TBCC's authority
hereunder shall include, without limitation, the authority to execute and give
receipt for any certificate of ownership or any document, transfer title to any
item of Collateral and take any other actions arising from or incident to the
powers granted to TBCC under this Agreement. This power of attorney is coupled
with an interest and is irrevocable.
4. Representations and Warranties of Borrower. Borrower represents and warrants
as follows:
4.1 Organization, Good Standing and Qualification. Borrower (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State set forth above, (ii) has the corporate power and authority to own
its properties and assets and to transact the businesses in which it is engaged
and (iii) is duly qualified, authorized to do business and in good standing in
each jurisdiction where it is engaged in business, except to the extent that the
failure to so qualify or be in good standing would not have a Material Adverse
Effect.
4.2 Locations of Offices, Records and Collateral. The address of the
principal place of business and chief executive office of Borrower is, and the
books and records of Borrower and all of its chattel paper and records relating
to Collateral are maintained exclusively in the possession of Borrower at, the
address of Borrower specified in the heading of this Agreement. Borrower has
places of business, and Collateral is located, only at such address and at the
addresses set forth in the Schedule and at any additional locations reported to
TBCC as provided in Section 5.8(c) as to which TBCC has taken all necessary
action to perfect and protect its security interests in the Collateral at any
such locations.
4.3 Authority. Borrower has the requisite corporate power and authority
to execute, deliver and perform its obligations under each of the Loan
Documents. All corporate action necessary for the execution, delivery and
performance by Borrower of the Loan Documents has been taken.
4.4 Enforceability. This Agreement is, and, when executed and
delivered, each other Loan Document will be, the legal, valid and binding
obligation of Borrower enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity.
4.5 No Conflict. The execution, delivery and performance of each Loan
Document by Borrower does not and will not contravene (i) any of the Governing
Documents, (ii) any Requirement of Law or (iii) any Material Contract and will
not result in the imposition of any Liens other than in favor of TBCC.
4.6 Consents and Filings. No consent, authorization or approval of, or
filing with or other act by, any shareholders of Borrower or any Governmental
Authority or other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement or any other
Loan Document, the consummation of the transactions contemplated hereby or
thereby or the continuing operations of Borrower following such consummation,
except (i) those that have been obtained or made, (ii) the filing of financing
statements under the Uniform Commercial Code and (iii) any necessary filings
with U.S. Copyright Office and the U.S. Patent and Trademark Office.
4.7 Solvency. Borrower is Solvent and will be Solvent upon the
completion of all transactions contemplated to occur on or before the date of
this Agree-
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ment (including, without limitation, the Loans to be made on the date of this
Agreement).
4.8 Financial Data. Borrower has provided to TBCC complete and accurate
Financial Statements, which have been prepared in accordance with GAAP
consistently applied throughout the periods involved and fairly present the
financial position and results of operations of Borrower for each of the periods
covered, subject, in the case of any quarterly financial statements, to normal
year-end adjustments and the absence of notes. Borrower has no Contingent
Obligation or liability for taxes, unrealized losses, unusual forward or
long-term commitments or long-term leases, which is not reflected in such
Financial Statements or the footnotes thereto. Since the last date covered by
such Financial Statements, there has been no sale, transfer or other disposition
by Borrower of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the financial condition of Borrower at
said date. Since said date, (i) there has been no change, occurrence,
development or event which has had or could reasonably be expected to have a
Material Adverse Effect and (ii) none of the capital stock of Borrower has been
redeemed, retired, purchased or otherwise acquired for value by Borrower.
4.9 Accuracy and Completeness of Information. All data, reports and
information previously, now or hereafter furnished by or on behalf of Borrower
to TBCC or the Auditors are or will be true and accurate in all material
respects on the date as of which such data, reports and information are dated or
certified, and not incomplete by omitting to state any material fact necessary
to make such data, reports and information not materially misleading at such
time. There are no facts now known to Borrower which individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect and
which have not been disclosed in writing to TBCC*.
*or otherwise disclosed in Borrower's public filings with the
Securities and Exchange Commission
4.10 No Joint Ventures, Partnerships or Subsidiaries. Borrower is not
engaged in any joint venture or partnership with any other Person. Borrower has
no Subsidiaries.
4.11 Corporate and Trade Name. During the past five years, Borrower has
not been known by or used any other corporate, trade or fictitious name except
for its name as set forth on the signature page of this Agreement and the other
names specified in the Schedule.
4.12 No Actual or Pending Material Modification of Business. There
exists no actual or, to the best of Borrower's knowledge after due inquiry,
threatened termination, cancellation or limitation of, or any modification or
change in the business relationship of Borrower with any customer or group of
customers whose purchases individually or in the aggregate are material to the
operation of Borrower's business or with any material supplier.
4.13 No Broker's or Finder's Fees. No broker or finder brought about
this Agreement or the Loans. No broker's or finder's fees or commissions will be
payable by Borrower to any Person in connection with the transactions
contemplated by this Agreement.
4.14 Taxes and Tax Returns. Borrower has properly completed and timely
filed all income tax returns it is required to file. The information filed is
complete and accurate in all material respects. All deductions taken in such
income tax returns are appropriate and in accordance with applicable laws and
regulations, except deductions that may have been disallowed but are being
challenged in good faith and for which adequate reserves have been made in
accordance with GAAP. All taxes, assessments, fees and other governmental
charges for periods beginning prior to the date of this Agreement have been
timely paid (or, if not yet due, adequate reserves therefor have been
established in accordance with GAAP) and Borrower has no liability for taxes in
excess of the amounts so paid or reserves so established. No deficiencies for
taxes have been claimed, proposed or assessed by any taxing or other
Governmental Authority against Borrower and no notice of any tax Lien has been
filed. There are no pending or threatened audits, investigations or claims for
or relating to any liability for taxes and there are no matters under discussion
with any Governmental Authority which could result in an additional liability
for taxes. No extension of a statute of limitations relating to taxes,
assessments, fees or other governmental charges is in effect with respect to
Borrower. Borrower is not a party to and does not have any obligations under any
written tax sharing agreement or agreement regarding payments in lieu of taxes.
4.15 No Judgments or Litigation. Except as set forth in the Schedule,
no judgments, orders, writs or decrees are outstanding against Borrower, nor is
there now pending or, to the knowledge of Borrower after due inquiry, threatened
litigation, contested claim, investigation, arbitration, or governmental
proceeding by or against Borrower that (i) could individually or in the
aggregate be likely in the reasonable business judgment of TBCC to have a
Material Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of this Agreement, any other Loan Document or the consummation of
the transactions contemplated hereby or thereby.
4.16 Investments; Contracts. Borrower (i) has not committed to make any
Investment; (ii) is not a party to any indenture, agreement, contract,
instrument or lease or subject to any charter, by-law or other corporate
restriction or any injunction, order, restriction or decree, which would
materially and adversely affect its business, operations, assets or financial
condition; (iii) is not a party to any "take or pay" contract as to which it is
the purchaser; or (iv) has no material contingent or long-term liability,
including management contracts (excluding employment contracts of full-time
individual officers or employees), which could have a Material Adverse Effect.
4.17 No Defaults; Legal Compliance. Borrower is not in default under
any term of any Material Contract or in violation of any Requirement of Law, nor
is Borrower subject to any investigation with respect to a claimed violation of
any Requirement of Law.
4.18 Rights in Collateral; Priority of Liens. All Collateral is owned
or leased by Borrower, free and clear of any and all Liens in favor of third
parties, other than Permitted Liens. The Liens granted to TBCC pursuant to
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the Loan Documents constitute valid, enforceable and perfected first-priority
Liens on the Collateral, except for Permitted Liens.*
*Notwithstanding the foregoing, on the date of the initial funding of
the Loans hereunder, certain proceeds of such initial Loans will be used to
discharge Liens held by a financial institution that has made secured loans to
Borrower, and such Liens shall be discharged in full upon such repayment to such
financial institution.
4.19 Intellectual Property. Set forth in the written Representations
and Warranties of Borrower previously delivered to TBCC is a complete and
accurate list of all patents, trademarks, trade names, service marks and
copyrights (registered and unregistered), and all applications therefor and
licenses thereof, of Borrower. Borrower owns or licenses all material patents,
trademarks, service-marks, logos, tradenames, trade secrets, know-how,
copyrights, or licenses and other rights with respect to any of the foregoing,
which are necessary or advisable for the operation of its business as presently
conducted or proposed to be conducted. To the best of its knowledge Borrower has
not infringed any patent, trademark, service-xxxx, tradename, copyright, license
or other right owned by any other Person by the sale or use of any product,
process, method, substance, part or other material presently contemplated to be
sold or used, where such sale or use would reasonably be expected to have a
Material Adverse Effect and no claim or litigation is pending, or to the best of
Borrower's knowledge, threatened against or affecting Borrower that contests its
right to sell or use any such product, process, method, substance, part or other
material.
4.20 Labor Matters. There are no existing or threatened strikes,
lockouts or other disputes relating to any collective bargaining or similar
agreement to which Borrower is a party which would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
4.21 Licenses and Permits. Borrower has obtained and holds in full
force and effect, all franchises, licenses, leases, permits, certificates,
authorizations, qualifications, easements, rights of way and other rights and
approvals which are necessary or advisable for the operation of its business as
presently conducted and as proposed to be conducted, except where the failure to
possess any of the foregoing (individually or in the aggregate) would not have a
Material Adverse Effect.
4.22 Government Regulation. Borrower is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940, or any other
Requirement of Law that limits its ability to incur indebtedness or its ability
to consummate the transactions contemplated by this Agreement and the other Loan
Documents.
4.23 Business and Properties. The business of Borrower is not affected
by any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance) that could reasonably be
expected to have a Material Adverse Effect.
4.24 Affiliate Transactions. Borrower is not a party to or bound by any
agreement or arrangement (whether oral or written) to which any Affiliate of
Borrower is a party except (i) in the ordinary course of and pursuant to the
reasonable requirements of the business of Borrower and (ii) upon fair and
reasonable terms no less favorable to Borrower than it could obtain in a
comparable arm's-length transaction with an unaffiliated Person.
4.25 Survival of Representations. All representations made by Borrower
in this Agreement and in any other Loan Document executed and delivered by it in
connection herewith shall survive the execution and delivery hereof and thereof
and the closing of the transactions contemplated hereby and thereby.
5. AFFIRMATIVE COVENANTS OF THE BORROWER. Until termination of this Agreement
and payment and satisfaction of all Obligations:
5.1 Corporate Existence. Borrower shall (i) maintain its corporate
existence, (ii) maintain in full force and effect all material licenses, bonds,
franchises, leases, trademarks, qualifications and authorizations to do
business, and all material patents, contracts and other rights necessary or
advisable to the profitable conduct of its business, and (iii) continue in, and
limit its operations to, the same lines of business as presently conducted by
it.
5.2 Maintenance of Property. Borrower shall keep all property useful
and necessary to its business in good working order and condition (ordinary wear
and tear excepted) in accordance with its past operating practices.
5.3 Affiliate Transactions. Borrower shall conduct transactions with
any of its Affiliates on an arm's-length basis or other basis no less favorable
to Borrower and which are approved by the board of directors of Borrower.
5.4 Taxes. Borrower shall pay when due (i) all tax assessments, and
other governmental charges and levies imposed against it or any of its property
and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its
property; provided, however, that, unless such tax assessment, charge, levy or
claim has become a Lien on any of the property of Borrower, it need not be paid
if it is being contested in good faith, by appropriate proceedings diligently
conducted and an adequate reserve or other appropriate provision shall have been
made therefor as required in accordance with GAAP.
5.5 Requirements of Law. Borrower shall comply with all Requirements of
Law applicable to it, including, without limitation, all applicable Federal,
State, local or foreign laws and regulations, including, without limitation,
those relating to environmental matters, employee matters, the Employee
Retirement Income Security Act of 1974, and the collection, payment and deposit
of employees' income, unemployment and social security taxes, provided that
Borrower shall not be deemed in violation hereof if Borrower's failure to comply
with any of the foregoing would not require more than * to cure the same.
*$75,000
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5.6 Insurance. Borrower shall maintain public liability insurance,
business interruption insurance, third party property damage insurance and
replacement value insurance on its assets (including the Collateral) under such
policies of insurance, with such insurance companies, in such amounts and
covering such risks as are at all times satisfactory to TBCC in its commercially
reasonable judgment, all of which policies covering the Collateral shall name
TBCC as an additional insured and lender loss payee in case of loss, and contain
other provisions as TBCC may reasonably require to protect fully TBCC's interest
in the Collateral and any payments to be made under such policies.
5.7 Books and Records; Inspections. Borrower shall (i) maintain books
and records (including computer records) pertaining to the Collateral in such
detail, form and scope as is consistent with good business practice and (ii)
provide TBCC and its agents access to the premises of Borrower at any time and
from time to time, during normal business hours and upon reasonable notice under
the circumstances, and at any time on and after the occurrence of a Default or
Event of Default, for the purposes of (A) inspecting and verifying the
Collateral, (B) inspecting and copying (at Borrower's expense) any and all
records pertaining thereto, and (C) discussing the affairs, finances and
business of Borrower with any officer, employee or director of Borrower or with
the Auditors. Borrower shall reimburse TBCC for the reasonable travel and
related expenses of TBCC's employees or, at TBCC's option, of such outside
accountants or examiners as may be retained by TBCC to verify or inspect
Collateral, records or documents of Borrower on a regular basis or for a special
inspection if TBCC deems the same appropriate. If TBCC's own employees are used,
Borrower shall also pay therefor $600 per person per day (or such other amount
as shall represent TBCC's then current standard charge for the same), or, if
outside examiners or accountants are used, Borrower shall also pay TBCC such sum
as TBCC may be obligated to pay as fees therefor.
5.8 Notification Requirements. Borrower shall give TBCC the following
notices and other documents:
(a) Notice of Defaults. Borrower shall give TBCC written
notice of any Default or Event of Default within two Business Days after
becoming aware of the same.
(b) Proceedings or Adverse Changes. Borrower shall give TBCC
written notice of any of the following, promptly, and in any event within five
Business Days after Borrower becomes aware of any of the following: (i) any
proceeding being instituted or threatened by or against it in any federal,
state, local or foreign court or before any commission or other regulatory body
involving a sum, together with the sum involved in all other similar
proceedings, in excess of * in the aggregate, (ii) any order, judgment or decree
being entered against Borrower or any of its properties or assets involving a
sum, together with the sum of all other orders, judgments or decrees, in excess
of * in the aggregate, and (iii) any actual or prospective change, development
or event which has had or could reasonably be expected to have a Material
Adverse Effect.
*$75,000
(c) Change of Name or Chief Executive Office; Opening
Additional Places of Business. Borrower shall give TBCC at least 30 days prior
written notice of any change of Borrower's corporate name or its chief executive
office or of the opening of any additional place of business.
(d) Casualty Loss. Borrower shall (i) provide written notice
to TBCC, within ten Business Days, of any material damage to, the destruction of
or any other material loss to any asset or property owned or used by Borrower
other than any such asset or property with a net book value (individually or in
the aggregate) less than * or any condemnation, confiscation or other taking, in
whole or in part, or any event that otherwise diminishes so as to render
impracticable or unreasonable the use of such asset or property owned or used by
Borrower together with the amount of the damage, destruction, loss or diminution
in value and (ii) diligently file and prosecute its claim or claims for any
award or payment in connection with any of the foregoing.
*$25,000
(e) Intellectual Property. Borrower shall promptly give TBCC
written notice of any copyright registration made by it, any rights Borrower may
obtain to any copyrightable works, new trademarks or any new patentable
inventions, and of any renewal or extension of any trademark registration, or if
it shall otherwise become entitled to the benefit of any patent or patent
application or trademark or trademark application.
(f) Deposit Accounts and Security Accounts. Borrower shall
promptly give TBCC written notice of the opening of any new bank account or
other deposit account, and any new securities account.
5.9 Qualify to Transact Business. Borrower shall qualify to transact
business as a foreign corporation in each jurisdiction where the nature or
extent of its business or the ownership of its property requires it to be so
qualified or authorized and where failure to qualify or be authorized would have
a Material Adverse Effect.
5.10 Financial Reporting. Borrower shall timely deliver to TBCC the
following financial information: the information set forth in the Schedule, and,
when requested by TBCC in its good-faith judgment, any further information
respecting Borrower or any Collateral. Borrower authorizes TBCC to communicate
directly with its officers, employees and Auditors and to examine and make
abstracts from its books and records. Borrower authorizes its Auditors to
disclose to TBCC any and all financial statements, work papers and other
information of any kind that they may have with respect to Borrower and its
business and financial and other affairs. Borrower shall deliver a letter
addressed to the Auditors requesting them to comply with the provisions of this
paragraph when requested by TBCC.
5.11 Payment of Liabilities. Borrower shall pay and discharge, in the
ordinary course of business, all Indebtedness, except where the same may be
contested in good faith by appropriate proceedings and adequate reserves with
respect thereto have been provided on the books and records of Borrower in
accordance with GAAP.
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5.12 Patents, Trademarks, Etc. Borrower shall do and cause to be done
all things necessary to preserve, maintain and keep in full force and effect all
of its registrations of trademarks, service marks and other marks, trade names
and other trade rights, patents, copyrights and other intellectual property in
accordance with *prudent business practices.
*commercially reasonable
5.13 Proceeds of Collateral. Without limiting any of the other terms of
this Agreement, and without implying any consent to any sale or other transfer
of Collateral in violation of any provision of this Agreement, Borrower shall
deliver to TBCC all proceeds of any sale or other transfer or disposition of any
Collateral, immediately upon receipt of the same and in the same form as
received, with any necessary endorsements, and Borrower will not commingle any
such proceeds with any of its other funds or property, but will segregate them
from the other assets of Borrower and will hold them in trust and for the
account and as the property of TBCC.
5.14 Solvency. Borrower shall be Solvent at all times.
6. Negative Covenants. Until termination of this Agreement and payment and
satisfaction of all Obligations:
6.1 Contingent Obligations. Borrower will not, directly or indirectly,
incur, assume, or suffer to exist any Contingent Obligation, excluding
indemnities given in connection with this Agreement or the other Loan Documents
in favor of TBCC or in connection with the sale of Inventory or other asset
dispositions permitted hereunder.
6.2 Corporate Changes. Borrower will not, directly or indirectly, merge
or consolidate with any Person, or liquidate or dissolve (or suffer any
liquidation or dissolution)*.
*, except that Borrower may merge or consolidate if the surviving
entity shall be Borrower and shall have a net worth immediately after giving
effect to such merger or consolidation of at least as great as the net worth of
Borrower prior to such merger or consolidation and such merger or consolidation
shall not result in any Event of Default, provided that TBCC has taken all
necessary steps to protect and continue perfected its first priority security
interest in the Collateral (subject only to Permitted Liens)
6.3 Change in Nature of Business. Borrower will not at any time make
any material change in the lines of its business as carried on at the date of
this Agreement or enter into any new line of business.
6.4 Sales of Assets. Borrower will not, directly or indirectly, in any
fiscal year, sell, transfer or otherwise dispose of any assets, or grant any
option or other right to purchase or otherwise acquire any assets other than (i)
Equipment with an aggregate value of less than $25,000 the proceeds of which
shall be paid to TBCC and applied to the Obligations, (ii) sales of Inventory in
the ordinary course of business and (iii) licenses or sublicenses on a
non-exclusive basis of intellectual property in the ordinary course of
Borrower's business.
6.5 Cancellation of Debt. Borrower will not cancel any claim or debt
owed to it, except in the ordinary course of business.*
*The foregoing provision shall not prohibit Borrower from forgiving any
indebtedness existing on the date hereof of employees of Borrower owing to
Borrower, provided that all such forgiven indebtedness does not exceed $350,000
in the aggregate.
6.6 Loans to Other Persons. Borrower will not at any time make loans or
advance any credit (except to trade debtors in the ordinary course of business)
to any Person in excess of $25,000 in the aggregate at any time for all such
loans.
6.7 Liens. Borrower will not, directly or indirectly, at any time
create, incur, assume or suffer to exist any Lien on or with respect to any of
the Collateral, other than: Liens created hereunder and by any other Loan
Document; and Permitted Liens.
6.8 Dividends, Stock Redemptions. Borrower will not, directly or
indirectly, pay any dividends or distributions on, purchase, redeem or retire
any shares of any class of its capital stock or any warrants, options or rights
to purchase any such capital stock, whether now or hereafter outstanding
("Stock"), or make any payment on account of or set apart assets for a sinking
or other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of its Stock, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Borrower, except for dividends paid solely in stock of the
Borrower.
6.9 Investments in Other Persons. Borrower will not, directly or
indirectly, at any time make or hold any Investment in any Person (whether in
cash, securities or other property of any kind) other than Investments in Cash
Equivalents.
6.10 Partnerships; Subsidiaries; Joint Ventures; Management Contracts.
Borrower will not at any time create any direct or indirect Subsidiary, enter
into any joint venture or similar arrangement or become a partner in any general
or limited partnership or enter into any management contract (other than an
employment contract for the employment of an officer or employee entered into in
the regular course of Borrower's business) permitting third party management
rights with respect to Borrower's business.
6.11 Fiscal Year. Borrower will not change its fiscal year.
6.12 Accounting Changes. Borrower will not at any time make or permit
any change in accounting policies or reporting practices, except as required *by
GAAP.
*or permitted
6.13 Broker's or Finder's Fees. Borrower will not pay or incur any
broker's or finder's fees in connection with this Agreement or the transactions
contemplated hereby.
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6.14 Unusual Terms of Sale. Borrower will not sell goods or products on
extended terms, consignment terms, on a progress billing or xxxx and hold basis,
or on any other unusual terms*.
* or which would not otherwise be in accordance with Borrower's
customary business practices
6.15 Amendments of Material Contracts. Borrower will not amend, modify,
cancel or terminate, or permit the amendment, modification, cancellation or
termination of, any Material Contract, if such amendment, modification,
cancellation or termination could have a Material Adverse Effect.
6.16 Sale and Leaseback Obligations. Borrower will not at any time
create, incur or assume any obligations as lessee for the rental of real or
personal property in connection with any sale and leaseback transaction.
6.17 Acquisition of Stock or Assets. Borrower will not acquire or
commit or agree to acquire all or any stock, securities or assets of any other
Person other than Inventory and Equipment acquired in the ordinary course of
business.
7. EVENTS OF DEFAULT.
7.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default":
(a) Borrower shall fail to pay any principal, interest, fees,
expenses or other Obligations when payable, whether at stated maturity, by
acceleration, or otherwise; or
(b) Borrower shall default in the performance or observance of
any agreement, covenant, condition, provision or term contained in Section 1.1,
1.2, 1.4, 3.3, 5.7, 5.13, 6 (and its Sections and subsections), or 8.1 of this
Agreement, or Borrower shall fail to perform any non-monetary Obligation which
by its nature cannot be cured; or
(c) Borrower shall default in the performance or observance of
any other agreement, covenant, condition, provision or term of this Agreement
(other than those referred to in Section 7.1(a) above or Section 7.1(b) above)
or any other Loan Document, and such failure continues uncured for a period of
five Business Days after the date it occurs; or
(d) Borrower or any Guarantor shall dissolve, wind up or
otherwise cease to conduct its business; or
(e) Borrower or any Guarantor shall become the subject of (i)
an Insolvency Event except as set forth in clause (e) of the definition of
Insolvency Event or (ii) an Insolvency Event as set forth in clause (e) of the
definition of Insolvency Event that is not dismissed within sixty days; or
(f) any representation or warranty made by or on behalf of
Borrower or any Guarantor to TBCC, under this Agreement or otherwise, shall be
incorrect or misleading in any material respect when made or deemed made; or
(g) A change in the ownership or control* of more than ** of
the voting stock of the Borrower compared to such ownership on the date of this
Agreement;
*of the Borrower as a result of the acquisition of beneficial ownership
by any Person or group of Persons acting in concert
**50%
(h) any judgment or order for the payment of money shall be
rendered against Borrower and shall not be stayed, vacated, bonded or discharged
within thirty days; or
(i) any defined "Event of Default" shall occur under any other
Loan Document; or Borrower or any Guarantor shall deny or disaffirm its
obligations under any of the Loan Documents or any Liens granted in connection
therewith or shall otherwise challenge any of its obligations under any of the
Loan Documents; or any Liens granted in any of the Collateral shall be
determined to be void, voidable or invalid, are subordinated or are not given
the priority contemplated by this Agreement; or
(j) any Loan Document shall for any reason cease to create a
valid and perfected Lien on the Collateral purported to be covered thereby, of
first priority (except for Permitted Liens); or
(k) the Auditors for Borrower shall deliver a Qualified
opinion on any Financial Statement; or
(l) Borrower or any Guarantor (i) shall fail to pay any
Indebtedness owing to TBCC under any other agreement with TBCC or note or
instrument in favor of TBCC, when due (whether at scheduled maturity or by
required prepayment, acceleration, demand or otherwise), or (ii) shall otherwise
be in breach of or default in any of its obligations under any such agreement,
note or instrument with respect to any such Indebtedness; or
(m) Borrower or any Guarantor (i) shall fail to pay any
Indebtedness in excess of $50,000 owing to any Person other than TBCC or any
interest or premium thereon, when due (whether at scheduled maturity or by
required prepayment, acceleration, demand or otherwise), or (ii) shall otherwise
be in breach or default in any of its obligations under any agreement with
respect to any such Indebtedness, if the effect of such breach, default or
failure to pay is to cause such Indebtedness to become due or redeemed or permit
the holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to declare such Indebtedness due or require such
Indebtedness to be redeemed prior to its stated maturity; or
(n) the occurrence of any event or condition that, in TBCC's
*judgment, could reasonably be expected to have a Material Adverse Effect.
*good faith business
TBCC may cease making any Loans hereunder during any of the above cure periods,
and thereafter if any Event of Default has occurred and is continuing.
7.2 Remedies. Upon the occurrence and during the continuance of an
Event of Default, TBCC shall have all rights and remedies under applicable law
and the Loan Documents, and TBCC may do any or all of the following: Declare all
Obligations to be immediately due and payable (except with respect to any Event
of Default with respect to Borrower set forth in Section 7.1(e), in which case
all
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Obligations shall automatically become immediately due and payable) without
presentment, demand, protest or any other action or obligation of TBCC;
(a) Cease making any Loans or other extensions of credit to
Borrower of any kind;
(b) Take possession of all documents, instruments, files and
records (including the copying of any computer records) relating to the
Receivables or other Collateral and use (at the expense of Borrower) such
supplies or space of Borrower at Borrower's places of business necessary to
administer and collect the Receivables and other Collateral;
(c) Accelerate or extend the time of payment, compromise,
issue credits, or bring suit on the Receivables and other Collateral (in the
name of Borrower or TBCC) and otherwise administer and collect the Receivables
and other Collateral;
(d) Collect, receive, dispose of and realize upon any
Investment Property, including withdrawal of any and all funds from any
securities accounts;
(e) Sell, assign and deliver the Receivables and other
Collateral, with or without advertisement, at public or private sale, for cash,
on credit or otherwise, subject to applicable law; and
(f) Foreclose on the security interests created pursuant to
the Loan Documents by any available procedure, take possession of any or all of
the Collateral, with or without judicial process and enter any premises where
any Collateral may be located for the purpose of taking possession of or
removing the same.
(g) TBCC may bid or become a purchaser at any sale, free from
any right of redemption, which right is expressly waived by Borrower, if
permitted under applicable law. If notice of intended disposition of any
Collateral is required by law, it is agreed that ten days' notice shall
constitute reasonable notification. Borrower will assemble the Collateral and
make it available at such locations as TBCC may specify, whether at the premises
of Borrower or elsewhere, and will make available to TBCC the premises and
facilities of Borrower for the purpose of TBCC's taking possession of or
removing the Collateral or putting the Collateral in salable form.
(h) Borrower recognizes that TBCC may be unable to make a
public sale of any or all of the Investment Property, by reason of prohibitions
contained in applicable securities laws or otherwise, and expressly agrees that
a private sale to a restricted group of purchasers for investment and not with a
view to any distribution thereof shall be considered a commercially reasonable
sale.
7.3 Receivables. Upon the occurrence and during the continuance of an
Event of Default, or at any time that TBCC believes in good faith that fraud has
occurred or that Borrower has failed to deliver the proceeds of Receivables or
other Collateral to TBCC as required by this Agreement or any other Loan
Document, TBCC may (i) settle or adjust disputes or claims directly with account
debtors for amounts and upon terms which it considers advisable, and (ii) notify
account debtors on the Receivables and other Collateral that the Receivables and
Collateral have been assigned to TBCC, and that payments in respect thereof
shall be made directly to TBCC. If an Event of Default has occurred and is
continuing or TBCC reasonably believes in good faith that fraud has occurred, or
that Borrower has failed to deliver the proceeds of Receivables or other
Collateral to TBCC as required by this Agreement or any other Loan Document,
Borrower hereby irrevocably authorizes and appoints TBCC, or any Person TBCC may
designate, as its attorney-in-fact, at Borrower's sole cost and expense, to
exercise, all of the following powers, which are coupled with an interest and
are irrevocable, until all of the Obligations have been indefeasibly paid and
satisfied in full in cash: (A) to receive, take, endorse, sign, assign and
deliver, all in the name of TBCC or Borrower, any and all checks, notes, drafts,
and other documents or instruments relating to the Collateral; (B) to receive,
open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as TBCC
may designate; and (C) to take or bring, in the name of TBCC or Borrower, all
steps, actions, suits or proceedings deemed by TBCC necessary or desirable to
enforce or effect collection of Receivables and other Collateral or file and
sign Borrower's name on a proof of claim in bankruptcy or similar document
against any obligor of Borrower.
7.4 Right of Setoff. In addition to all rights of offset that TBCC may
have under applicable law, upon the occurrence and during the continuance of any
Event of Default, and whether or not TBCC has made any demand or the Obligations
of Borrower have matured, TBCC shall have the right to appropriate and apply to
the payment of the Obligations of Borrower all deposits and other obligations
then or thereafter owing by TBCC to or for the credit or the account of
Borrower. In the event that TBCC exercises any of its rights under this Section,
TBCC shall provide notice to Borrower of such exercise, provided that the
failure to give such notice shall not affect the validity of the exercise of
such rights.
7.5 License for Use of Software and Other Intellectual Property. After
the occurrence and during the continuance of an Event of Default, unless
expressly prohibited by any licensor thereof, TBCC is hereby granted a license
to use all computer software programs, data bases, processes, trademarks,
tradenames and materials used by Borrower in connection with its businesses or
in connection with the Collateral.
7.6 No Marshalling; Deficiencies; Remedies Cumulative. The net cash
proceeds resulting from TBCC's exercise of any of its rights with respect to
Collateral, including any and all Collections (after deducting all of TBCC's
reasonable expenses related thereto), shall be applied by TBCC to such of the
Obligations in such order as TBCC shall elect in its sole and absolute
discretion, whether due or to become due. Borrower shall remain liable to TBCC
for any deficiencies and TBCC shall remit to Borrower or its successor or
assign, any surplus resulting therefrom. The remedies specified in this
Agreement are cumulative, may be exercised in such order and with respect to
such Collateral as TBCC may deem desirable and are not intended to be exclusive,
and the full or partial exercise of any of them shall not preclude the full or
partial exercise of any other available remedy under this
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Agreement, under any other Loan Document, at equity or at law.
7.7 Waivers. Borrower hereby waives any bonds, security or sureties
required by any statute, rule or any other law as an incident to any taking of
possession by TBCC of any Collateral. Borrower also waives any damages (direct,
consequential or otherwise) occasioned by the enforcement of TBCC's rights under
this Agreement or any other Loan Document including the taking of possession of
any Collateral or the giving of notice to any account debtor or the collection
of any Receivable or other Collateral (other than damages that are the result of
acts or omissions constituting gross negligence or willful misconduct of TBCC).
These waivers and all other waivers provided for in this Agreement and the other
Loan Documents have been negotiated by the parties and Borrower acknowledges
that it has been represented by counsel of its own choice and has consulted such
counsel with respect to its rights hereunder.
7.8 Right to Make Payments. In the event that Borrower shall fail to
purchase or maintain insurance required hereunder, or to pay any tax,
assessment, government charge or levy, except as the same may be otherwise
permitted hereunder, or in the event that any Lien prohibited hereby shall not
be paid in full or discharged, or in the event that Borrower shall fail to
perform or comply with any other covenant, promise or obligation to TBCC
hereunder or under any other Loan Document, TBCC may (but shall not be required
to) perform, pay, satisfy, discharge or bond the same for the account of
Borrower, and all amounts so paid by TBCC shall be treated as a Loan hereunder
to Borrower and shall constitute part of the Obligations.
8. ASSIGNMENTS AND PARTICIPATIONS.
8.1 Assignments. Borrower shall not assign this Agreement or any right
or obligation hereunder without the prior written consent of TBCC. TBCC may
assign (without the consent of Borrower) to one or more Persons all or a portion
of its rights and obligations under this Agreement and the other Loan Documents.
8.2 Participations. TBCC may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Loans); provided, however, that TBCC's
obligations under this Agreement shall remain unchanged.
8.3 Disclosure. TBCC may, in connection with any permitted assignment
or participation or proposed assignment or participation pursuant to this
Agreement, disclose to the assignee or participant or proposed assignee or
participant any information relating to Borrower furnished to TBCC by or on
behalf of Borrower.
9. DEFINITIONS.
9.1 General Definitions. As used herein, the following terms shall have
the meanings herein specified (to be equally applicable to both the singular and
plural forms of the terms defined):
(a) "Affiliate" means as to any Person, any other Person who
directly or indirectly controls, is under common control with, is controlled by
or is a director or officer of such Person. As used in this definition,
"control" (including its correlative meanings, "controlled by" and "under common
control with") means possession, directly or indirectly, of the power to direct
or cause the direction of management or policies (whether through ownership of
voting securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person who owns directly or
indirectly twenty percent (20%) or more of the securities having ordinary voting
power for the election of the members of the board of directors or other
governing body of a corporation or twenty percent (20%) or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such
corporation, partnership or other Person.
(b) "Agreement" means this Loan and Security Agreement, as
amended, supplemented or otherwise modified from time to time.
(c) "Auditors" means a nationally recognized firm of
independent public accountants selected by Borrower and reasonably satisfactory
to TBCC.
(d) "Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy," as that title may be amended from time to time, or any
successor statute.
(e) "Borrowing" means a borrowing of Loans.
(f) "Business Day" means any day other than a Saturday, Sunday
or any other day on which commercial banks in Chicago, Illinois are required or
permitted by law to close.
(g) "Cash Equivalents" means (i) securities issued, guaranteed
or insured by the United States or any of its agencies with maturities of not
more than one year from the date acquired; (ii) certificates of deposit with
maturities of not more than one year from the date acquired, issued by any U.S.
federal or state chartered commercial bank of recognized standing which has
capital and unimpaired surplus in excess of $100,000,000; (iii) investments in
money market funds registered under the Investment Company Act of 1940; and (iv)
other instruments, commercial paper or investments acceptable to TBCC in its
sole discretion.
(h) "Collateral" means Receivables, Investment Property,
Inventory, Equipment, and Other Property, and all additions and accessions
thereto and substitutions and replacements therefor and improvements thereon,
and all proceeds (whether cash or other property) and products thereof,
including, without limitation, all proceeds of insurance covering the same and
all tort claims in connection therewith, and all records, files, computer
programs and files, data and writings relating to the foregoing, and all
equipment containing the foregoing.
(i) "Collections" means all cash, funds, checks, notes,
instruments, any other form of remittance tendered by account debtors in respect
of payment of Receivables and any other payments received by Borrower with
respect to any other Collateral.
(j) "Compliance Certificate" means a certificate as to
compliance with the Obligations, on TBCC's standard form (in effect from time to
time).
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(k) "Contingent Obligation" means any direct, indirect,
contingent or non-contingent guaranty or obligation for the Indebtedness of
another Person, except endorsements in the ordinary course of business.
(l) "Default" means any of the events specified in Section
7.1, whether or not any of the requirements for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
(m) "Eligible Receivables" means and includes only those
Receivables which TBCC in its sole discretion deems eligible for borrowing,
based on such considerations as TBCC in its sole discretion may deem appropriate
from time to time and less any such reserves as TBCC, in its sole discretion,
may require. Without limiting the fact that the determination of which
Receivables are eligible for borrowing is a matter of TBCC's sole discretion,
the following (the "Minimum Eligibility Requirements") are the minimum
requirements for a Receivable to be an Eligible Receivable: (i) the Receivable
must not be outstanding for more than 90 days from its invoice date, (ii) the
Receivable must not represent progress xxxxxxxx, or be due under a fulfillment
or requirements contract with the account debtor, (iii) the Receivable must not
be subject to any contingencies (including Receivables arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
account debtor may be conditional), (iv) the Receivable must not be owing from
an account debtor with whom the Borrower has any dispute (whether or not
relating to the particular Receivable), (v) the Receivable must not be owing
from an Affiliate of Borrower, (vi) the Receivable must not be owing from an
account debtor which is subject to any insolvency or bankruptcy proceeding, or
whose financial condition is not acceptable to TBCC, or which, fails or goes out
of a material portion of its business, (vii) the Receivable must not be owing
from the United States or any department, agency or instrumentality thereof
(unless there has been compliance, to TBCC's satisfaction, with the United
States Assignment of Claims Act), (viii) the Receivable must not be owing from
an account debtor located outside the United States or Canada (unless
pre-approved by TBCC in its discretion in writing, or backed by a letter of
credit satisfactory to TBCC, or FCIA insured satisfactory to TBCC), (ix) the
Receivable must not be owing from an account debtor to whom Borrower is or may
be liable for goods purchased from such account debtor or otherwise, (x) the
Receivable must not violate any representation or warranty set forth in this
Agreement, and (xi) the Receivable must not be one in which TBCC does not have a
first-priority, valid, perfected Lien. Without limiting the generality of the
foregoing, Borrower must be in compliance with all requirements of the Loan
Documents regarding registration with the U.S. Copyright Office of any
copyrightable software in order for any Receivable arising from any licensing of
such software to constitute an Eligible Receivable hereunder. Receivables owing
from one account debtor will not be deemed Eligible Receivables to the extent
they exceed 25% of the total eligible Receivables outstanding. In addition, if
more than 50% of the Receivables owing from an account debtor are outstanding
more than 90 days from their invoice date (without regard to unapplied credits)
or are otherwise not eligible Receivables, then all Receivables owing from that
account debtor will be deemed ineligible for borrowing. TBCC may, from time to
time, in its sole discretion, revise the Minimum Eligibility Requirements, upon
written notice to the Borrower.
(n) "Equipment" means all machinery, equipment, furniture,
fixtures, conveyors, tools, materials, storage and handling equipment, hydraulic
presses, cutting equipment, computer equipment and hardware, including central
processing units, terminals, drives, memory units, printers, keyboards, screens,
peripherals and input or output devices, molds, dies, stamps, vehicles, and
other equipment of every kind and nature and wherever situated now or hereafter
owned by Borrower or in which Borrower may have any interest as lessee or
otherwise (to the extent of such interest), together with all additions and
accessions thereto, all replacements and all accessories and parts therefor, all
manuals, blueprints, know-how, warranties and records in connection therewith,
all rights against suppliers, warrantors, manufacturers, sellers or others in
connection therewith, and together with all substitutes for any of the
foregoing.
(o) "Event of Default" means the occurrence of any of the
events specified in Section 7.1.
(p) "Financial Statements" means the balance sheets, profit
and loss statements, statements of cash flow, and statements of changes in
intercompany accounts, if any, for the period specified, prepared in accordance
with GAAP and consistent with prior practices.
(q) "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination. Whenever any accounting
term is used herein which is not otherwise defined, it shall be interpreted in
accordance with GAAP.
(r) "Good Faith" means "good faith" as defined in the Uniform
Commercial Code, from time to time in effect in the State of Illinois.
(s) "Governing Documents" means the articles or certificate of
incorporation and by-laws of Borrower.
(t) "Governmental Authority" means any nation or government,
any state or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
(u) "Guarantor" means any present or future guarantor of any
or all of the Obligations.
(v) "Indebtedness" means, with respect to any Person, as of
the date of determination any indebtedness, liability or obligation of such
Person (including without limitation obligations under capital leases and
Contingent Obligations).
(w) "Insolvency Event" means, with respect to any Person, the
occurrence of any of the following: (a) such Person shall be adjudicated
insolvent or bankrupt, or shall generally fail to pay or admit in writing its
inability to pay its debts as they become due, (b) such Person shall seek
dissolution or reorganization or the appointment of a
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receiver, trustee, custodian or liquidator for it or a substantial portion of
its property, assets or business or to effect a plan or other arrangement with
its creditors, (c) such Person shall make a general assignment for the benefit
of its creditors, or consent to or acquiesce in the appointment of a receiver,
trustee, custodian or liquidator for a substantial portion of its property,
assets or business, (d) such Person shall file a voluntary petition under any
bankruptcy, insolvency or similar law or take any corporate or similar act in
furtherance thereof, or (e) such Person, or a substantial portion of its
property, assets or business shall become the subject of an involuntary
proceeding or petition for its dissolution, reorganization, and such proceeding
is not dismissed or stayed within sixty days, or the appointment of a receiver,
trustee, custodian or liquidator, and such receiver is not dismissed within
sixty days.
(x) "Inventory" means all present and future goods intended
for sale, lease or other disposition by Borrower including, without limitation,
all raw materials, work in process, finished goods and other retail inventory,
goods in the possession of outside processors or other third parties, goods
consigned to Borrower to the extent of its interest therein as consignee,
materials and supplies of any kind, nature or description which are or might be
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of any such goods, and all documents of title or documents
representing the same.
(y) "Investment" in any Person means, as of the date of
determination thereof, any payment or contribution, or commitment to make a
payment or contribution, by any Person including, without limitation, property
contributed or committed to be contributed by any Person, on its account for or
in connection with its acquisition of any stock, bonds, notes, debentures,
partnership or other ownership interest or any other security of the Person in
whom such Investment is made or any evidence of indebtedness by reason of a
loan, advance, extension of credit, guaranty or other similar obligation for any
debt, liability or indebtedness of such Person in whom the Investment is made.
(z) "Investment Property" means any and all investment
property of Borrower, including all securities, whether certificated or
uncertificated, security entitlements, securities accounts, commodity contracts
and commodity accounts, and all financial assets held in any securities account
or otherwise, wherever located, and whether now existing or hereafter acquired
or arising.
(aa) "Lien" means any lien, claim, charge, pledge, security
interest, assignment, hypothecation, deed of trust, mortgage, lease, conditional
sale, retention of title or other preferential arrangement having substantially
the same economic effect as any of the foregoing, whether voluntary or imposed
by law.
(bb) "Loan Account" has the meaning specified in Section 1.3.
(cc) "Loan Documents" means this Agreement and all present and
future documents and instruments delivered or to be delivered by Borrower or any
of its Affiliates or any Guarantor under, in connection with or relating to this
Agreement, as each of the same may be amended, supplemented or otherwise
modified from time to time.
(dd) "Loans" means the loans and financial accommodations made
by TBCC hereunder.
(ee) "Material Adverse Effect" means (i) a material adverse
effect on the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower, (ii) the
impairment of Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of TBCC to enforce the Obligations or
realize upon the Collateral or (iii) a material adverse effect on the value of
the Collateral or the amount which TBCC would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of the Collateral.
(ff) "Material Contract" means any contract or other
arrangement to which Borrower is a party (other than the Loan Documents) for
which breach, nonperformance, cancellation or failure to renew could have a
Material Adverse Effect.
(gg) "Obligations" means and includes all loans (including the
Loans), advances, debts, liabilities, obligations, covenants and duties owing by
Borrower to TBCC of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, which may arise under, out
of, or in connection with, this Agreement, any other Loan Document or any other
agreement executed in connection herewith or therewith or otherwise, whether or
not for the payment of money, whether arising by reason of an extension of
credit, opening, guaranteeing or confirming of a letter of credit, loan,
guaranty, indemnification or in any other manner, whether direct or indirect
(including those acquired by assignment, purchase, discount or otherwise),
whether absolute or contingent, due or to become due, now due or hereafter
arising and however acquired. The term includes, without limitation, all
interest (including interest accruing on or after an Insolvency Event, whether
or not an allowed claim), charges, expenses, commitment, facility, closing and
collateral management fees, letter of credit fees, reasonable attorneys' fees,
and any other sum properly chargeable to Borrower under this Agreement, the
other Loan Documents or any other agreement executed in connection herewith or
therewith or otherwise.
(hh) "Other Property" means all present and future:
instruments, documents, documents of title, securities, bonds, notes, promissory
notes, drafts, acceptances, letters of credit and rights to receive proceeds of
letters of credit, deposit accounts, chattel paper, certificates, insurance
policies, insurance proceeds, leases, computer tapes, causes of action,
judgments, claims against third parties, leasehold rights in any personal
property, books, ledgers, files and records, general intangibles (including
without limitation, all contract rights, tax refunds, rights to receive tax
refunds, patents, patent applications, copyrights (registered and unregistered),
royalties, licenses, permits, franchise rights, authorizations, customer lists,
rights of indemnification, contribution and subrogation, computer programs,
discs and software, trade secrets, computer service contracts, trademarks, trade
names, service marks and names, logos, goodwill, deposits,
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choses in action, designs, blueprints, plans, know-how, telephone numbers and
rights thereto, credits, reserves, and all forms of obligations whatsoever now
or hereafter owing to Borrower), all property at any time in the possession or
under the control of TBCC, and all security given by Borrower to TBCC pursuant
to any other Loan Document or agreement.
(ii) "Permitted Liens" means such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced and be continuing: (i) Liens for taxes, assessments and other
governmental charges or levies or the claims or demands of landlords, carriers,
warehousemen, mechanics, laborers, materialmen and other like Persons arising by
operation of law in the ordinary course of business for sums which are not yet
due and payable,* (ii) deposits or pledges to secure the payment of workmen's
compensation, unemployment insurance or other social security benefits or
obligations, public or statutory obligations, surety or appeal bonds, bid or
performance bonds, or other obligations of a like nature incurred in the
ordinary course of business (but nothing in this clause (ii) shall permit the
creation of Liens on Receivables, Investment Property, Inventory or Other
Property), (iii) zoning restrictions, easements, encroachments, licenses,
restrictions or covenants on the use of the Property which do not materially
impair either the use of the Property in the operation of the business of
Borrower or the value of the Property, (iv) rights of general application
reserved to or vested in any municipality or other governmental, statutory or
public authority to control or regulate property, or to use property in a manner
which does not materially impair the use of the property for the purposes for
which it is held by Borrower, (v) state and municipal Liens for personal
property taxes which are not yet due and payable, and (vi) Purchase Money Liens.
* including, in the case of Liens securing tax obligations of Borrower,
Liens securing taxes that are due and payable by Borrower but are being
contested in good faith by Borrower in appropriate proceedings, so long as such
tax liabilities are adequately reserved against in accordance with GAAP,
(jj) "Person" means any individual, sole proprietorship,
partnership, joint venture, limited liability company, trust, unincorporated
organization, joint stock company, association, corporation, institution,
entity, party or government (including any division, agency or department
thereof) or any other legal entity, whether acting in an individual, fiduciary
or other capacity, and, as applicable, the successors, heirs and assigns of
each.
(kk) "Plan" means any employee benefit plan, program or
arrangement maintained or contributed to by Borrower or with respect to which it
may incur liability.
(ll) "Purchase Money Lien" means a Lien on any item of
Equipment created substantially simultaneously with the acquisition of such
Equipment for the purpose of financing such acquisition, provided that such Lien
shall attach only to the Equipment acquired.
(mm) "Qualification" or "Qualified" means, with respect to any
report of Auditors covering Financial Statements, a material qualification to
such report (i) resulting from a limitation on the scope of examination of such
Financial Statements or the underlying data, (ii) as to the capability of
Borrower to continue operations as a going concern or (iii) which could be
eliminated by changes in Financial Statements or notes thereto covered by such
report (such as by the creation of or increase in a reserve or a decrease in the
carrying value of assets) and which if so eliminated by the making of any such
change and after giving effect thereto would result in a Default or an Event of
Default.
(nn) "Receivables" means all present and future accounts and
accounts receivable, together with all security therefor and guaranties thereof
and all rights and remedies relating thereto, including any right of stoppage in
transit.
(oo) "Requirement of Law" means (a) the Governing Documents,
(b) any law, treaty, rule, regulation, order or determination of an arbitrator,
court or other Governmental Authority or (c) any franchise, license, lease,
permit, certificate, authorization, qualification, easement, right of way, right
or approval binding on Borrower or any of its property.
(pp) "Schedule" means the Schedule to this Agreement being
signed concurrently by Borrower and TBCC, as amended from time to time.
(qq) "Solvent" means when used with respect to any Person that
as of the date as to which such Person's solvency is to be measured: (a) the
fair salable value of its assets is in excess of the total amount of its
liabilities (including contingent liabilities as valued in accordance with
applicable law) as they become absolute and matured; (b) it has sufficient
capital to conduct its business; and (c) it is able to meet its debts as they
mature.
(rr) "Subsidiary" means, as to any Person, a corporation or
other entity in which that Person directly or indirectly owns or controls shares
of stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or appoint other managers of such corporation
or other entity.
9.2 Accounting Terms and Determinations. Unless otherwise defined or
specified herein, all accounting terms used in this Agreement shall be construed
in accordance with GAAP, applied on a basis consistent in all material respects
with the Financial Statements delivered to TBCC on or before the date of this
Agreement. All accounting determinations for purposes of determining compliance
with this Agreement shall be made in accordance with GAAP as in effect on the
date of this Agreement and applied on a basis consistent in all material
respects with the audited Financial Statements delivered to TBCC on or before
the date of this Agreement. The Financial Statements required to be delivered
hereunder, and all financial records, shall be maintained in accordance with
GAAP. If GAAP shall change from the basis used in preparing the audited
Financial Statements delivered to TBCC on or before the date of this Agreement,
the Compliance Certificates required to be delivered pursuant to this Agreement
shall include calculations setting forth the adjustments necessary to
demonstrate how Borrower is in compliance with the Financial Covenants (if any)
based upon GAAP as in effect on the date of this Agreement.
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9.3 Other Terms; Headings; Construction. Unless otherwise defined
herein, terms used herein that are defined in the Uniform Commercial Code, from
time to time in effect in the State of Illinois, shall have the meanings set
forth therein. Each of the words "hereof," "herein," and "hereunder" refer to
this Agreement as a whole. The term "including", whenever used in this
Agreement, shall mean "including (but not limited to)". An Event of Default
shall "continue" or be "continuing" unless and until such Event of Default has
been waived or cured within the grace period specified therefor under Section
7.1. References to Articles, Sections, Annexes, Schedules, and Exhibits are
internal references to this Agreement, and to its attachments, unless otherwise
specified. The headings and any Table of Contents are for convenience only and
shall not affect the meaning or construction of any provision of this Agreement.
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against TBCC or Borrower under any rule of construction or
otherwise.
10. GENERAL PROVISIONS.
10.1 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS.
10.2 SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN THE BORROWER AND
TBCC, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED
ONLY BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS TO
WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT TBCC SHALL HAVE
THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
BORROWER OR ITS PROPERTY IN ANY LOCATION REASONABLY SELECTED BY TBCC IN GOOD
FAITH TO ENABLE TBCC TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF TBCC. THE BORROWER AGREES THAT IT WILL NOT ASSERT
ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT
BY TBCC. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH TBCC HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.
10.3 SERVICE OF PROCESS. THE BORROWER HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM, 0000 XXXXXX XXXXXX, XXXXXXXXXX, XXXXXXXX 00000, AS THE
DESIGNEE AND AGENT OF THE BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE
BORROWER, SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH
PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL
TO THE BORROWER, BUT THE FAILURE OF THE BORROWER TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
10.4 LIMITATION OF LIABILITY. TBCC SHALL HAVE NO LIABILITY TO THE
BORROWER (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED
BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE
TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON TBCC THAT THE
LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF TBCC. THE BORROWER HEREBY WAIVES ALL FUTURE CLAIMS AGAINST
TBCC FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.
10.5 Delays; Partial Exercise of Remedies. No delay or omission of TBCC
to exercise any right or remedy hereunder shall impair any such right or operate
as a waiver thereof. No single or partial exercise by TBCC of any right or
remedy shall preclude any other or further exercise thereof, or preclude any
other right or remedy.
10.6 Notices. Except as otherwise provided herein, all notices and
correspondence hereunder shall be in writing and sent by certified or registered
mail, return receipt requested, by overnight delivery service, with all charges
prepaid, or by telecopier followed by a hard copy sent by regular mail, to the
parties at their addresses set forth in the heading to this Agreement. All such
notices and correspondence shall be deemed given (i) if sent by certified or
registered mail, three Business Days after being postmarked, (ii) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is refused and (iii) if sent by telecopier transmission, when receipt
of such transmission is acknowledged. Borrower's and TBCC's telecopier numbers
for purpose of notice hereunder are set forth in the Schedule; each party's
number may be changed by written notice to the other party.
10.7 Indemnification; Reimbursement of Expenses of Collection. Borrower
hereby indemnifies and agrees, whether or not any of the transactions
contemplated by this Agreement or the other Loan Documents are consummated, to
defend and hold harmless (on an after-tax basis) TBCC, its successors and
assigns and their respective directors, officers, agents, employees, advisors,
shareholders, attorneys and Affiliates (each, an "Indemnified Party")
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from and against any and all losses, claims, damages, liabilities, deficiencies,
obligations, fines, penalties, actions (whether threatened or existing),
judgments, suits (whether threatened or existing) or expenses (including,
without limitation, reasonable fees and disbursements of counsel, experts,
consultants and other professionals) incurred by any of them (collectively,
"Claims") (except, in the case of each Indemnified Party, to the extent that any
Claim is determined in a final and non-appealable judgment by a court of
competent jurisdiction to have directly resulted from such Indemnified Party's
gross negligence or willful misconduct) arising out of or by reason of (i) any
litigation, investigation, claim or proceeding which arises out of or is related
to (A) Borrower, or this Agreement, any other Loan Document or the transactions
contemplated hereby or thereby, (B) any actual or proposed use by Borrower of
the proceeds of the Loans, or (C) TBCC's entering into this Agreement or any
other Loan Document or any other agreements and documents relating hereto,
including, without limitation, amounts paid in settlement, court costs and the
reasonable fees and disbursements of counsel incurred in connection with any
such litigation, investigation, claim or proceeding, (ii) any remedial or other
action taken by Borrower in connection with compliance by Borrower, or any of
its properties, with any federal, state or local environmental laws, rules or
regulations, and (iii) any pending, threatened or actual action, claim,
proceeding or suit by any shareholder or director of Borrower or any actual or
purported violation of Borrower's charter, by-laws or any other agreement or
instrument to which Borrower is a party or by which any of its properties is
bound. In addition and without limiting the generality of the foregoing,
Borrower shall, upon demand, pay to TBCC all reasonable costs and expenses
incurred by TBCC (including the reasonable fees and disbursements of counsel and
other professionals) in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents, and pay to
TBCC all reasonable costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by TBCC in
order to enforce or defend any of its rights under or in respect of this
Agreement, any other Loan Document or any other document or instrument now or
hereafter executed and delivered in connection herewith, collect the Obligations
or otherwise administer this Agreement, foreclose or otherwise realize upon the
Collateral or any part thereof, prosecute actions against, or defend actions by,
account debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower's books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce TBCC's security interest in, the Collateral; and otherwise
represent TBCC in any litigation relating to Borrower. Without limiting the
generality of the foregoing, Borrower shall pay TBCC a fee with respect to each
wire transfer in the amount of $15 plus all bank charges and a fee of $15 for
all returned checks plus all bank charges. If either TBCC or Borrower files any
lawsuit against the other predicated on a breach of this Agreement, the
prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including (but not limited to) reasonable attorneys'
fees and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. If and to the extent that the Obligations of
Borrower hereunder are unenforceable for any reason, Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of the Obligations
which is permissible under applicable law. Borrower's obligations under Section
2.4 and this Section shall survive any termination of this Agreement and the
other Loan Documents and the payment in full of the Obligations, and are in
addition to, and not in substitution of, any of the other Obligations.
10.8 Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and signed by Borrower and TBCC and then any such amendment
or waiver shall be effective only to the extent set forth therein. The failure
of TBCC at any time or times to require Borrower to strictly comply with any of
the provisions of this Agreement or any other present or future agreement
between Borrower and TBCC shall not waive or diminish any right of TBCC later to
demand and receive strict compliance therewith. Any waiver of any default shall
not waive or affect any other default, whether prior or subsequent, and whether
or not similar. None of the provisions of this Agreement or any other agreement
now or in the future executed by Borrower and delivered to TBCC shall be deemed
to have been waived by any act or knowledge of TBCC or its agents or employees,
but only by a specific written waiver signed by an authorized officer of TBCC
and delivered to Borrower.
10.9 Counterparts; Telecopied Signatures. This Agreement and any waiver
or amendment hereto may be executed in counterparts and by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but both of which shall together constitute one and the same
instrument. This Agreement and each of the other Loan Documents and any notices
given in connection herewith or therewith may be executed and delivered by
telecopier or other facsimile transmission all with the same force and effect as
if the same was a fully executed and delivered original manual counterpart.
10.10 Severability. In case any provision in or obligation under this
Agreement or any other Loan Document shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
10.11 Joint and Several Liability. If Borrower consists of more than
one Person, their liability shall be joint and several, and the compromise of
any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.
10.12 Maximum Rate. Notwithstanding anything to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the parties hereto
hereby agree that all agreements between them under this Agreement and the other
Loan Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to TBCC for the use,
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TBCC Loan and Security Agreement
--------------------------------------------------------------------------------
forbearance, or detention of the money loaned to Borrower and evidenced hereby
or thereby or for the performance or payment of any covenant or obligation
contained herein or therein, exceed the maximum non-usurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Obligations, under the laws of the State of
Illinois (or the laws of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Agreement and the other Loan
Documents), or under applicable federal laws which may presently or hereafter be
in effect and which allow a higher maximum non-usurious interest rate than under
the laws of the State of Illinois (or such other jurisdiction), in any case
after taking into account, to the extent permitted by applicable law, any and
all relevant payments or charges under this Agreement and the other Loan
Documents executed in connection herewith, and any available exemptions,
exceptions and exclusions (the "Highest Lawful Rate"). If due to any
circumstance whatsoever, fulfillment of any provisions of this Agreement or any
of the other Loan Documents at the time performance of such provision shall be
due shall exceed the Highest Lawful Rate, then, automatically, the obligation to
be fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance TBCC
should ever receive anything of value deemed interest by applicable law which
would exceed the Highest Lawful Rate, such excessive interest shall be applied
to the reduction of the principal amount then outstanding hereunder or on
account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid balance
then outstanding hereunder and such other then outstanding Obligations, such
excess shall be refunded to Borrower. All sums paid or agreed to be paid to TBCC
for the use, forbearance, or detention of the Obligations and other indebtedness
of Borrower to TBCC shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness, until payment in full thereof, so that the actual rate of interest
on account of all such indebtedness does not exceed the Highest Lawful Rate
throughout the entire term of such indebtedness. The terms and provisions of
this Section shall control every other provision of this Agreement, the other
Loan Documents and all other agreements between the parties hereto.
10.13 Entire Agreement; Successors and Assigns. This Agreement and the
other Loan Documents constitute the entire agreement between the parties,
supersede any prior written and verbal agreements between them, and shall bind
and benefit the parties and their respective successors and permitted assigns.
There are no oral understandings, oral representations or oral agreements
between the parties which are not set forth in this Agreement or in other
written agreements signed by the parties in connection herewith.
10.14 MUTUAL WAIVER OF JURY TRIAL. TBCC AND BORROWER EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN TBCC AND BORROWER; OR (III) ANY CONDUCT,
ACTS OR OMISSIONS OF TBCC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH TBCC OR
BORROWER; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE.
Borrower:
VIDAMED, INC.
By: ______________________
Title: ____________________
TBCC:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: ______________________
Title: ____________________
-17-
--------------------------------------------------------------------------------
TBCC
Schedule to
Loan and Security Agreement
Borrower: VidaMed, Inc.,
a Delaware Corporation
Address: 00000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Date: October 20, 1998
This Schedule is an integral part of the Loan and Security Agreement between
TRANSAMERICA BUSINESS CREDIT CORPORATION ("TBCC") and the above borrower
("Borrower") of even date.
1. Credit Limit (Section 1.1): In respect of the Loans constituting the
revolving credit facility (the "Revolving
Loans"), an amount not to exceed the lesser
of (1) or (2) below:
(1) $3,000,000 at any one time outstanding;
or
(2) an amount equal to 80% of the amount of
Borrower's Eligible Receivables (as defined
in Section 9.1(n) above).
In respect of the term loans (each a "Term
Loan") to be made hereunder as contemplated
by the Equipment Loan Rider hereto, an amount
not to exceed a principal amount of
$2,500,000 in the aggregate. As used herein,
the term "Loans" shall include the Revolving
Loans and the Term Loans.
2. Interest (Section 2.1): 1. The following shall apply to the Revolving
Loans:
The interest rate in effect throughout each
calendar month during the term of this
Agreement shall be the highest "Base Rate" in
effect during such month, plus 2% per annum,
provided that the interest rate in effect in
each month shall not be less than 9% per
annum, and provided that the interest charged
for each month in respect of the revolving
credit facility shall be a minimum of $4,000
through December 31, 1998, and $96,000 per
annum thereafter, regardless of the amount of
the Obligations outstanding. Interest shall
be calculated on the basis of a 360-day year
for the actual number of days elapsed. "Base
Rate" shall mean the higher of (a) the
highest prime, base or equivalent rate of
interest announced from time to time by
Citibank, N.A., First National Bank of
Chicago and Bank of America National Trust
and Savings Association (which may not be the
lowest rate of interest charged by such bank)
and (b) the published annualized rate for
90-day dealer commercial paper which appears
in the "Money Rates" section of The Wall
Street Journal.
2. Interest on the Term Loans shall accrue at
the interest rate set forth in the promissory
note applicable thereto (each a "Term Note").
3. Fees (Section 2.2): Loan Fee (Revolving Loans): $37,500, payable
concurrently herewith and to be allocated as
follows: $30,000 shall be for the account of
TBCC and $7,500 shall be for the account of
Sand Hill Capital.
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TBCC Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
Loan Fee (Term Loan): $25,000, payable
concurrently herewith and to be allocated as
follows: $12,500 shall be for the account of
TBCC and $12,500 shall be for the account of
Sand Hill Capital.
Termination Fee: (1) Revolving Loan facility:
an amount equal to $8,000 multiplied by each
month (or portion thereof) from the effective
date of termination to the Maturity Date,
which Termination Fee shall be payable on the
date of termination; (2) Term Loan facility:
none.
4. Maturity Date (Section 1.6): In respect of the Revolving Loans, December
31, 1999 (the "Maturity Date"), subject to
automatic renewal and early termination as
provided in Section 1.6 above. The Term Loans
shall mature on the dates set forth in the
Term Notes.
5. Reporting (Section 5.10): Borrower shall provide TBCC with the
following reports:
(a) Monthly Financial Statements.
Monthly unaudited financial
statements, as soon as available,
and in any event within 30 days
after the end of each month.
(b) Monthly Receivable Agings. Monthly
Receivable agings, aged by invoice
date, within 10 days after the end
of each month.
(c) Monthly Payable Agings. Monthly
accounts payable agings, aged by
invoice date, and outstanding or
held check registers within 10 days
after the end of each month.
(d) Monthly Inventory Reports. Monthly
perpetual inventory reports for the
Inventory valued on a first-in,
first-out basis at the lower of
cost or market (in accordance with
generally accepted accounting
principles) or such other inventory
reports as are reasonably requested
by TBCC, all within 30 days after
the end of each month.
(e) Monthly Compliance Certificates. As
soon as available, but not later
than thirty days after the end of
each month, a Compliance
Certificate, with an attached
schedule of calculations
demonstrating compliance or
indicating non-compliance with any
Financial Covenants.
(f) Quarterly Financial Statements.
Quarterly unaudited financial
statements, as soon as available,
and in any event within 30 days
after the end of each fiscal
quarter of Borrower.
(g) Annual Financial Statements. As
soon as available, but not later
than 90 days after the end of the
Borrower's fiscal year, (A)
Borrower's annual audited Financial
Statements; (B) a comparison in
reasonable detail to the prior
year's audited Financial
Statements; (C) the Auditors'
opinion without Qualification, a
"Management Letter" and a statement
indicating that the Auditors have
not obtained knowledge of the
existence of any Default or Event
of Default during their audit; (D)
a narrative discussion of
Borrower's financial condition and
results of operations and the
liquidity and capital resources for
such fiscal year (such discussion
may consist of the "Management's
Discussion and Analysis" Section of
Borrower's reports to the
Securities and Exchange
Commission).
6. Borrower Information: (a) Prior Names of Borrower (Section
4.11): None.
(b) Prior Trade Names of Borrower
(Section 4.11): None.
(c) Existing Trade Names of Borrower
(Section 4.11): None.
-2-
TBCC Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
(d) Other Places of Business and
Locations of Collateral (Section
4.2).
Telo Electronics, Inc.
00 Xxxxxxxxxxxx Xx.
Xxx Xxxx, XX 00000
(Manufactures Borrower's generators, holds
materials and finished product)
(e) Litigation, etc. (Section 4.15):
None.
7. FACSIMILE NUMBERS: Borrower: 000-000-0000
TBCC: 000-000-0000
8. CLOSING DEADLINE (Section 1.8): October 20, 1998
9. ADDITIONAL CLOSING The following additional agreements, in form
CONDITIONS (Section 1.8): and substance satisfactory to TBCC and its
counsel, shall be executed and delivered by
Borrower as conditions pursuant to closing:
(a) Streamlined Facility Agreement;
(b) Patent and Trademark Security
Agreement;
(c) Security Agreement in Copyrighted
Works;
(d) a Landlord Agreement in respect of
the Borrower's location at 00000
Xxxxxxx Xxxxxxx, Xxxxxxx,
Xxxxxxxxxx; and
(e) Equipment Loan Rider.
10. ADDITIONAL PROVISIONS: 1. Warrant. On or before the Closing
Deadline, the Borrower shall provide TBCC
with five-year warrants to purchase 55,000
shares of Common Stock of the Borrower, on
the terms to be set forth in a Stock
Subscription Warrant (the "Warrant"), in
form and substance satisfactory to TBCC, at
an exercise price equal to the 10-day
trading average price of Borrower's Common
Stock for the 10-day period immediately
preceding the Closing Date. Said warrants
shall be deemed fully earned on the date of
issuance thereof, shall be in addition to
all interest and other fees, and shall be
non-refundable.
2. Copyright Registration. Borrower agrees
promptly, and in any event not later than 60
days after the date hereof (the "Registration
Completion Date"), to have any of its
currently unregistered material copyrightable
software, computer programs and other
materials registered with the U.S. Copyright
Office in Washington, D.C. (the "Copyright
Office") and to promptly provide TBCC with
evidence of such registration. Borrower will,
on an ongoing basis, promptly register any
future unregistered material copyrightable
software, computer programs and other
materials with the Copyright Office. Until
the Registration Completion Date Borrower may
request Loans notwithstanding any
noncompliance with Section 2(g) of the
Security Agreement in Copyrighted Works (the
"Security Agreement in Copyrighted Works")
between Borrower and TBCC (which Section 2(g)
requires registration with the Copyright
Office of any copyright the sale, licensing
or other disposition of which results in any
Receivable (a "Copyright Receivable") with
respect to which any Loan is requested).
Effective the Registration Completion Date,
no Loan request under the Revolving Credit
may be made with respect to any Copyright
Receivables if TBCC has not made its filing
with the Copyright Office with respect to the
copyright giving rise to such Copyright
Receivables.
-3-
TBCC Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
Borrower: TBCC:
TRANSAMERICA BUSINESS CREDIT
VIDAMED, INC. CORPORATION
By: ______________________ By: ______________________
Title: ____________________ Title: ____________________
-4-
--------------------------------------------------------------------------------
TBCC
STREAMLINED FACILITY AGREEMENT
October 20, 1998
Ladies and Gentlemen:
This Streamlined Facility Agreement (this "Agreement") is entered into
between Transamerica Business Credit Corporation ("TBCC") , and VidaMed, Inc.
("Borrower"), in connection with the Loan and Security between TBCC and Borrower
dated October 20, 1998 (the "Loan Agreement"). (This Agreement, the Loan
Agreement, and all other written documents and agreements between TBCC and
Borrower are referred to herein collectively as the "Loan Documents".
Capitalized terms used but not defined in this Agreement, shall have the
meanings set forth in the Loan Agreement.)
This will confirm our agreement that the following provisions (the
"Streamlined Provisions") shall apply, effective on the date hereof, until
terminated as provided below:
1. Borrower will provide TBCC with a monthly Borrowing Base Certificate,
in such form as TBCC shall from time to time specify, within 10 days
after the end of each month, and TBCC shall not require more frequent
schedules of Receivables or other Collateral reporting with respect to
the Receivables, except for the information required in connection with
an advance request. In the event, as of the end of any month, the total
of all Loans and all other Obligations exceeds the Credit Limit,
Borrower shall immediately pay the amount of the excess to TBCC.
2. Delivery of the proceeds of Receivables and other Collateral within one
Business Day after receipt, as called for by Section 1.4 of the Loan
Agreement, will not be required.
3. TBCC will also not require any Blocked Account Agreement, as called for
by Section 1.8 of the Loan Agreement. In addition, Borrower will not be
required to provide TBCC with copies of invoices to customers or
shipping and delivery receipts, as called for by Section 3.3(a) of the
Loan Agreement, or to report customer credits, returns and recoveries
of merchandise as called for by Section 3.3(b) of the Loan Agreement.
TBCC shall have the right to terminate the Streamlined Provisions (i)
at any time upon 15 days' prior written notice to Borrower and (ii) at any time
effective immediately upon written notice to Borrower if any Default or Event of
Default occurs and is continuing.
Upon any termination of the Streamlined Provisions, Borrower shall,
then and thereafter, provide TBCC with such other or additional reporting of
Receivables as TBCC shall request under Section 3.3(a) of the Loan Agreement,
comply in all respects with Section 3.3(b) of the Loan Agreement, and deliver
all proceeds of Receivables and other Collateral to TBCC, within one Business
Day after receipt, as called for by Section 1.4 of the Loan Agreement.
Additionally, Borrower and its
TBCC Streamlined Facility Agreement
--------------------------------------------------------------------------------
bank shall execute and deliver a Blocked Account Agreement, in form and
substance satisfactory to TBCC.
Please confirm your agreement to the foregoing by signing the enclosed
copy of this Agreement and returning it to us.
Sincerely yours,
Transamerica Business Credit Corporation
By: ________________________________
Title: _____________________________
Acknowledged and Agreed:
VidaMed, Inc.
By: ________________________________
Title: _____________________________
-2-
--------------------------------------------------------------------------------
REVOLVING CREDIT NOTE
$3,000,000 Chicago, Illinois October 20, 1998
FOR VALUE RECEIVED, VidaMed, Inc., a Delaware corporation having its
chief executive office and principal place of business at 00000 Xxxxxxx Xxxxxxx,
Xxxxxxx, Xxxxxxxxxx 00000-0000 (the "Borrower"), hereby unconditionally and
absolutely promises to pay to the order of TRANSAMERICA BUSINESS CREDIT
CORPORATION, a Delaware corporation ("TBCC"), on the Maturity Date, at TBCC's
office at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, or at
such other location as TBCC may from time to time designate, in lawful money of
the United States of America and in immediately available funds, the principal
amount equal to $3,000,000 or such greater or lesser amount as represents the
aggregate unpaid principal amount of all Loans made by TBCC to the Borrower
under the revolving credit facility made available pursuant to the Loan and
Security Agreement between TBCC and Borrower dated October 20, 1998 (the "Loan
Agreement"). The Borrower further promises to pay interest in like money and
funds at TBCC's office specified above (or at such other location as TBCC may
from time to time designate) on the unpaid principal amount hereof from time to
time outstanding from and including the date hereof until paid in full (both
before and after judgment) at the rates and on the dates set forth in the Loan
Agreement. All capitalized terms used herein which are not defined herein shall
have the meanings ascribed to such terms in the Loan Agreement.
Whenever any payment to be made hereunder shall be stated to be due on
a day that is not a Business Day, the payment may be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest due hereunder.
This Note is entitled to the benefit of all terms and conditions of,
and the security of all security interests, liens, mortgages, deeds of trust and
rights granted pursuant to, the Loan Agreement and the other Loan Documents, and
is subject to optional and mandatory prepayment as provided therein.
Upon the occurrence of any one or more Events of Default, all amounts
then remaining unpaid on this Note may be declared to be or may automatically
become immediately due and payable as provided in the Loan Agreement.
The Borrower acknowledges that the holder of this Note may assign,
transfer or sell all or a portion of its rights and interests to and under this
Note to one or more Persons as provided in the Loan Agreement and that such
Persons shall thereupon become vested with all of the rights and benefits of
TBCC in respect hereof as to all or that portion of this Note which is so
assigned, transferred or sold.
In the event of any conflict between the terms hereof and the terms and
provisions of the Loan Agreement, the terms and provisions of the Loan Agreement
shall control.
The Borrower and all other parties that at any time may be liable
hereupon in any capacity, jointly or severally, waive presentment, demand for
payment, protest and notice of dishonor of this Note and authorize the holder
hereof, without notice, to increase or decrease the rate of interest on any
amount owing under this Note in accordance with the Loan Agreement. The Borrower
further waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Obligations and any requirement that TBCC exhaust any
rights or take any action against any other Person or any Collateral. The
Borrower further hereby waives notice of or proof of reliance by TBCC upon this
Note, and the Obligations shall conclusively be deemed to have been created,
contracted, incurred, renewed, extended, amended or waived in reliance upon this
Note. The Borrower shall make all payments hereunder and under the Loan
Agreement without defense, offset or counterclaim. No failure to exercise and no
delay in exercising any rights hereunder on the part of the holder hereof shall
operate as a waiver of such rights. This Note may not be changed orally, but
only by an agreement in writing, which is signed by the party or parties against
whom enforcement of any waiver, change, modification or discharge is sought.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS NOTE AND THE OTHER
LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS NOTE,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY
THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS
OF THE STATE OF ILLINOIS.
ALL DISPUTES ARISING UNDER OR IN CONNECTION WITH THIS NOTE AND ANY
OTHER LOAN DOCUMENT BETWEEN THE BORROWER AND TBCC, WHETHER SOUNDING IN CONTRACT,
TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS
LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE
TAKEN; PROVIDED, HOWEVER, THAT TBCC SHALL HAVE THE RIGHT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN
ANY LOCATION REASONABLY SELECTED BY TBCC IN GOOD FAITH TO ENABLE TBCC TO REALIZE
ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
TBCC. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS,
SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY TBCC. THE BORROWER WAIVES
ANY OBJECTION THAT THE BORROWER MAY HAVE TO THE LOCATION OF THE
-1-
TBCC Streamlined Facility Agreement
--------------------------------------------------------------------------------
COURT IN WHICH TBCC HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
THE BORROWER HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM, 0000
XXXXXX XXXXXX, XXXXXXXXXX, XXXXXXXX 00000 AS THE DESIGNEE AND AGENT OF THE
BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER SERVICE OF PROCESS IN ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN DOCUMENT.
IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS
WILL BE PROMPTLY FORWARDED BY MAIL TO THE BORROWER, BUT THE FAILURE OF THE
BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF TBCC TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW.
THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, TBCC EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO: (I) THIS NOTE; OR (II) ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN TBCC AND BORROWER; OR (III) ANY CONDUCT, ACTS OR
OMISSIONS OF TBCC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH TBCC OR BORROWER; IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
VidaMed, Inc.
By: ________________________________
Title: _____________________________
-2-
TBCC Streamlined Facility Agreement
--------------------------------------------------------------------------------------------------
SCHEDULE
TO REVOLVING CREDIT NOTE
DATED OCTOBER 20, 1998
OF VIDAMED, INC. TO
TRANSAMERICA BUSINESS CREDIT CORPORATION
Amount of Unpaid Principal Notation
Date Amount of Loan Interest Rate Principal Paid Balance Made by
---- -------------- ------------- -------------- ------- -------
-3-
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TBCC
Amendment Agreement
Borrower: VidaMed, Inc.,
a Delaware corporation
Address: 00000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Date: January 12, 1999
THIS AMENDMENT AGREEMENT (this "Amendment") is entered into as of the above
date, between the above borrower (the "Borrower"), having its chief executive
office and principal place of business at the address shown above, and
TRANSAMERICA BUSINESS CREDIT CORPORATION, a Delaware corporation ("TBCC"),
having its principal office at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxx 00000 and having an office at 00000 Xxxxxxx Xxxx., Xxxxx 0000, Xxxxxxx
Xxxx, Xxxxxxxxxx 00000.
TBCC and Borrower agree to amend and supplement the Loan and Security Agreement
between them, dated October 20, 1998, as follows. (This Amendment, the Loan
Agreement, any prior written amendments to the Loan Agreement signed by TBCC and
Borrower, and all other written documents and agreements between TBCC and
Borrower, are referred to herein collectively as the "Loan Documents."
Capitalized terms used but not defined in this Amendment shall have the meanings
set forth in the Loan Agreement.)
1. Amendments. The Loan Documents shall be amended as set forth
below.
(a) Section 4.10 of the Loan Agreement captioned "No Joint
Ventures, Partnerships or Subsidiaries" is hereby amended and
restated in its entirety as follows:
No Joint Ventures, Partnerships or Subsidiaries. Borrower is
not engaged in any joint venture or partnership with any other
Person. Borrower has no subsidiaries, except as set forth in
the Schedule.
(b) The Schedule to the Loan Agreement is hereby amended to
add the following subparagraph (f) to paragraph 6 captioned "Borrower
Information":
(f) Subsidiaries (Section 4.10):
(i) VidaMed Australia PTY LTD.
(ii) VidaMed International LTD. [UK]
2. Representations True. To induce TBCC to enter into this
Amendment, Borrower hereby confirms and restates, as of the date hereof, the
representations and warranties made by it in Section 4 of the Loan Agreement.
For the purposes of this Section 2 each reference in Section 4 of the Loan
Agreement to "this Agreement," and the words "hereof," "herein," "hereunder," or
words of like import in such Section, shall mean and be a reference to the Loan
Agreement as amended by this Amendment.
3. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN
TBCC Amendment Agreement
--------------------------------------------------------------------------------
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS.
4. General Provisions. TBCC's execution and delivery of, or
acceptance of, this Amendment and any other documents and instruments in
connection herewith shall not be deemed to create a course of dealing or
otherwise create any express or implied duty by it to provide any other or
further amendments, consents or waivers in the future. This Amendment, the Loan
Agreement, and the other Loan Documents set forth in full all of the
representations and agreements of the parties with respect to the subject matter
hereof and supersede all prior discussions, representations, agreements and
understandings between the parties with respect to the subject hereof. Except as
herein expressly amended and supplemented, all of the terms and provisions of
the Loan Agreement and the other Loan Documents shall continue in full force and
effect and the same are hereby ratified and confirmed. This Amendment forms part
of the Loan Agreement and the terms of the Loan Agreement are incorporated
herein by reference.
Borrower: TBCC:
TRANSAMERICA BUSINESS CREDIT
VIDAMED, INC. CORPORATION
By: ______________________ By: ______________________
Title: ____________________ Title: ____________________
2
