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EXHIBIT 4.4
LINE OF CREDIT AGREEMENT
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Bank One, Michigan (the "Bank"), whose address is 000 Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000-0000, has approved the credit facilities listed below
(collectively, the "Credit Facilities," and, individually, as designated below)
to American Dental Technologies, Inc. (the "Borrower"), whose address is 0000
Xxxx Xxxx, Xxxxxx Xxxxxxx, XX 00000 subject to the terms and conditions set
forth in this agreement.
1.0 CREDIT FACILITIES.
1.1 FACILITY A. The Bank has approved a credit facility to the Borrower
in the principal sum not to exceed $7,500,000.00 in the aggregate at
any one time outstanding ("Facility A"). Credit under Facility A shall
be in the form of disbursements evidenced by credits to the Borrower's
account and shall be repayable as set forth in a Master Business
Credit Note executed concurrently (referred to in this agreement both
singularly and together with any other promissory notes referenced in
this Section 1 as the "Notes"). The proceeds of Facility A shall be
used for the following purpose: working capital. Facility A shall
expire September 30, 2001 unless earlier withdrawn.
The Bank agrees to review Facility A on or before September 30 of each
year to determine whether it desires to extend Facility A for an
additional year. The performance of the review will not obligate the
Bank to grant any extension. Such an extension will take place at the
Bank's sole discretion and may be conditioned upon any changes in the
terms of Facility A which the Bank may require in its sole discretion.
1.2 FACILITY B (PURCHASE MONEY TERM LOANS AND/OR LEASES). The Bank has
approved a credit facility to the Borrower in the principal sum not to
exceed $250,000.00 in the aggregate at any one time outstanding
("Facility B"). Facility B shall be in the form of loans evidenced by
the Borrower's notes on the Bank's form (referred to in this agreement
both singularly and together with any other promissory notes
referenced in this Section 1 as the "Notes") or lease agreements on
the Bank's standard lease form (referred to in this agreement as the
"Leases"), the proceeds of which shall be used to purchase equipment.
Interest on each loan shall accrue at a rate to be agreed upon by the
Bank and the Borrower at the time the loan is made. Rent under any
Lease shall be in an amount to be negotiated by the Borrower and the
Bank prior to finding of the Lease. The maturity of each note or the
term of any Lease shall not exceed 60 months from the note date or
lease commencement date. Notwithstanding the aggregate amount of
Facility B stated above, the original principal amount of each loan
shall not exceed the lesser of 80% of the cost of the equipment
purchased with loan proceeds or $250,000.00, and the amount funded
under each Lease shall not exceed the cost of the equipment. Facility
B shall expire on September 30, 2000 unless earlier withdrawn.
2.0 CONDITIONS PRECEDENT.
2.1 CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT. Before the first
extension of credit under this agreement, whether by disbursement of a
loan, issuance of a letter of credit, the funding of a Lease or
otherwise, the Borrower shall deliver to the Bank, in form and
substance to the Bank:
A. LOAN DOCUMENTS. The Notes, and if applicable, the Leases, the
letter of credit applications, the security agreement, financing
statements, mortgage, guaranties, subordination agreements and
any other loan documents which the Bank may reasonably require to
give effect to the transactions described by this agreement;
B. EVIDENCE OF DUE ORGANIZATION AND GOOD STANDING. Evidence
satisfactory to the Bank of the due organization and good
standing of the Borrower and every other business entity that is
a party to this agreement or any other loan document required by
this agreement;
C. EVIDENCE OF AUTHORITY TO ENTER INTO LOAN DOCUMENTS. Evidence
satisfactory to the bank that (i) each party to this agreement
and any other loan document required by this agreement is
authorized to enter into the transaction described by this
agreement and the other loan documents, and (ii) the person
signing on behalf of each party is authorized to do so; and
D. YEAR 2000 ASSESSMENT. If requested by the Bank, information
satisfactory to the Bank regarding the Borrower's plan for
addressing Year 2000 issues. "Year 2000 Issues" means anticipated
costs, problems and uncertainties associated with the inability
of certain computer applications to effectively handle data
including dates on and after January 1, 2000, as such inability
affects the business, operations, and financial condition of the
Borrower and of the Borrower's material customers, suppliers and
vendors.
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2.2 CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. Before any
extension of credit under this agreement, whether by disbursement of a
loan, issuance of a letter of credit, the funding of a Lease or
otherwise, the following conditions shall have been satisfied:
A. REPRESENTATIONS. The Representations contained in this agreement
shall be true on and as of the date of the extension of credit;
B. NO EVENT OF DEFAULT. No event of default shall have occurred and
be continuing or would result from the extension of credit;
C. ADDITIONAL APPROVALS, OPINIONS, AND DOCUMENTS. The Bank shall
have received such other approvals, opinions and documents as it
may reasonably request.
3.0 FEES AND EXPENSES.
3.1 NONUSAGE FEE. The Borrower shall pay the Bank a nonusage fee on the
average daily unused portion of Facility A at a rate of 1/8% per
annum, payable quarterly in arrears within 30 days of the end of the
quarter for which the fee is owing.
3.2 OUT-OF-POCKET EXPENSES. The Borrower shall reimburse the Bank for its
out-of-pocket expenses, and reasonable attorney's fees (including the
fees of in-house counsel) allocated to the Credit Facilities.
4.0 SECURITY.
4.1 Payment of the borrowings and all other obligations under the Credit
Facilities shall be accrued by a first security interest and/or real
estate mortgage, as the case may be, covering the following property
and all its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"):
A. ACCOUNTS RECEIVABLE. All of the Borrower's accounts, chatal
paper, general intangibles, instruments and documents (as those
terms are defined in the Michigan Uniform Commercial Code),
rights to refunds of taxes paid at any time to any governmental
entity, and any letters of credit and drafts under them given in
support of the foregoing, wherever located. The Borrower shall
deliver to the Bank executed security agreements and financing
statements in form and substance satisfactory to the Bank.
B. INVENTORY. All of the Borrower's inventory, wherever located.
The Borrower shall deliver to the Bank executed security
agreements and financing statements in form and substance
satisfactory to the Bank.
C. EQUIPMENT. All of the Borrower's equipment, wherever located.
The Borrower shall deliver to the Bank executed security
agreements and financing statements in form and substance
satisfactory to the Bank.
D. PATENTS, COPYRIGHTS, TRADEMARKS. All of the Borrower's present
and future patents, copyrights and trademarks. The Borrow shall
deliver to the Bank executed assignments, pledges and financing
statements satisfactory to the Bank.
4.2 No forbearance or extension of time granted any subsequent owner of
the Collateral shall release the Borrower from liability.
4.3 ADDITIONAL COLLATERAL/SETOFF. To further secure payment of the
borrowings and all other obligations under the Credit Facilities and
all of the Borrower's other liabilities to the Bank, the Borrower
grants to the Bank a continuing security interest in: (i) all
securities and other property of the Borrower in the custody,
possession or control of the Bank (other than property held by the
Bank solely in a fiduciary capacity) and (ii) all balances of deposit
accounts of the Borrower with the Bank. The Bank shall have the right
at any time to apply its own debt or liability to the Borrower, or to
any other party liable for payment of the obligations under the Credit
Facilities, in whole or partial payment of such obligations or other
present or future liabilities, without any requirement of mutual
maturity.
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4.4 CROSS LIEN. Any of the Borrower's other property in which the Bank has
a security interest to secure payment of any other debt, whether
absolute, contingent, direct or indirect, including the Borrower's
guaranties of the debts of others, shall also secure payment of and be
part of the Collateral for the Credit Facilities.
5.0 AFFIRMATIVE COVENANTS. So long as any debt or obligation remains
outstanding under the Credit Facilities, the Borrower, and each of its
subsidiaries, if any, shall:
5.1 INSURANCE. Maintain insurance with financially sound and reputable
insurers covering its properties and business against those casualties
and contingencies and in the types and amounts as shall be in
accordance with sound business and industry practices.
5.2 EXISTENCE. Maintain its existence and business operations as presently
in effect in accordance with all applicable laws and regulations, pay
its debts and obligations when due under normal terms, and pay on or
before their due date, all taxes, assessments, fees and other
governmental monetary obligations, except as they may be contested in
good faith if they have been properly reflected on its books and, at
the Bank's request, adequate funds or security has been pledged to
insure payment.
5.3 FINANCIAL RECORDS. Maintain proper books and records of account, in
accordance with generally accepted accounting principles where
applicable, and consistent with financial statements previously
submitted to the Bank. The Bank retains the right to inspect the
Collateral and business records related to it at such times and at
such intervals as the Bank may reasonably require.
5.4 NOTICE. Give prompt notice to the Bank of the occurrence of (i) any
Event of Default, and (ii) any other development, financial or
otherwise, which would affect the Borrower's business, properties or
affairs in a materially adverse manner.
5.5 COLLATERAL AUDITS. Permit the Bank or its agents to perform periodic
audits of the Collateral. The Borrower shall compensate the Bank for
such audits in accordance with the Bank's schedule of fees as amended
from time to time.
5.6 MANAGEMENT. Maintain current management.
5.7 FINANCIAL REPORTS. Furnish to the Bank whatever information, books,
and records the Bank may reasonably request, including at a minimum:
(If the Borrower has subsidiaries, all financial statements required
will be provided on a consolidated and on a separate basis.)
A. Promptly upon (i) furnishing to the shareholders of the Borrower,
copies of all financial statements, reports and proxy statements
and (ii) filing with the Securities and Exchange Commission, copies
of all registration statements and annual, quarterly, monthly or
other regular reports, including but not limited to, the Borrower's
and any subsidiary's 10Qs and 10Ks.
B. Within five (5) days after filing, a signed copy of the annual tax
return, with exhibits, of the Borrower.
5.8 YEAR 2000 ISSUES. The Borrower will take all actions reasonably
necessary to assure that Year 2000 Issues will not have a material
adverse effect on the business operations or financial condition of
the Borrower. Upon the Bank's request, the Borrower will provide the
Bank with a description of its plan to address Year 2000 Issues,
including updates and progress reports. Borrower will advise the Bank
of any reasonably anticipated material adverse effect on the business
operations or financial condition of the Borrower as a result of Year
2000 Issues.
6.0 NEGATIVE COVENANTS.
6.1 DEFINITIONS. As used in this agreement, the following terms shall have
the following respective meanings:
A. "Debt Service" means for any period, principal and interest
payments either paid or due during that period on all debt of the
Borrower.
B. "EBITDA" means for any period, net income plus to the extent
deducted in determining net income, interest expense (including but
not limited to imputed interest on capital leases), tax expense,
depreciation, and amortization.
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C. "Subordinated Debt" means debt subordinated to the Bank in manner
and agreement satisfactory to the Bank.
D. "Tangible Net Worth" means total assets less intangible assets,
total liabilities, and all sums owing from stockholders, members,
or partners, as the case may be, and from officers, managers, and
directors. Intangible assets include goodwill, patents, copyrights,
mailing lists, catalogs, trademarks, bond discount and underwriter
expenses, organization expenses, and all other intangibles.
6.2 Unless otherwise noted, the financial requirements set forth in this
section shall be computed in accordance with generally accepted
accounting principles applied on a basis consistent with financial
statements previously submitted by the Borrower to the Bank.
6.3 Without the written consent of the Bank, so long as any debt or
obligation remains outstanding under the Credit Facilities, the
Borrower shall not: (where appropriate, covenants apply on a
consolidated basis).
A. DEBT. Incur, or permit to remain outstanding, debt for borrowed
money or installment obligations, except (i) debt reflected in the
latest financial statement of the Borrower furnished to the Bank
prior to execution of this agreement and not to be paid with
proceeds of borrowings or leases under the Credit Facilities and
(ii) purchase money term loans and/or leases to acquire equipment
in an aggregate, annual amount not to exceed $300,000.00. For
purposes of this covenant, the sale of any accounts receivable
shall be deemed the incurring of debt for borrowed money.
B. GUARANTIES. Guaranties or otherwise become or remain secondarily
liable on the undertaking of another, except for endorsement of
drafts for deposit an collection in the ordinary course of
business.
C. LIENS. Create or permit to exist any lien on any of its property,
real or personal, including but not limited to copyrights, patents
and trademarks, except: existing liens known to the Bank; liens to
the Bank; liens incurred in the ordinary course of business
securing current nondelinquent liabilities for taxes, worker's
compensation, unemployment insurance, social security and pension
liabilities; and liens for taxes being contested in good faith.
D. TANGIBLE NET WORTH PLUS SUBORDINATED DEBT. Permit its Tangible Net
Worth plus Subordinated Debt to be less than $7,500,000.00.
E. LEVERAGE RATIO. Permit the ratio of its total liabilities to its
Tangible Net Worth plus Subordinated Debt to exceed 1.50 to 1.00.
F. CASH FLOW COVERAGE RATIO. For each fiscal quarter, permit the ratio
of the Borrower's EBITA to its Debt Service, determined as of the
end of that quarter, to be less than 2.00 to 1.00.
7.0 REPRESENTATIONS BY BORROWER. Each Borrower represents that: (a) the
execution and delivery of this agreement, the Notes, and the Leases and
the performance of the obligations they impose do not violate any law,
conflict with any agreement by which the Borrower is bound, or require
the consent or approval of any governmental authority or other third
party; (b) this agreement, the Notes, and the Leases are valid and
binding agreements, enforceable in accordance with their terms; and (c)
all balance sheets, profit and loss statements, and other financial
statements furnished to the Bank are accurate and fairly reflect the
financial condition of the organizations and persons to which they apply
on their effective dates, including contingent liabilities of every type,
which financial condition has not changed materially and adversely since
those dates. Each Borrower, if other than a natural person, further
represents that: (a) it is duly organized, existing and in good standing
under the laws of the jurisdiction under which it was organized; and (b)
the execution and delivery of this agreement, the Notes, and the Leases
and the performance of the obligations they impose (i) are within its
powers; (ii) have been duly authorized by all necessary action of its
governing body; and (iii) do not contravene the terms of its articles of
incorporation or organization, its bylaws, or any partnership, operating
or other agreement governing its affairs.
8.0 DEFAULT/ACCELERATION.
8.1 EVENTS OF DEFAULT/ACCELERATION. If any of the following events occurs,
the Credit Facilities shall terminate and all borrowings and other
obligations under them shall be due immediately, without notice, at
the Bank's option whether or not the Bank has made demand.
A. The Borrower or any guarantor of any of the Credit Facilities, the
Notes or the Leases ("Guarantor") fails to pay when due any amount
payable under the Credit Facilities or under any agreement or
instrument evidencing debt to any creditor.
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B. The Borrower or any Guarantor (a) fails to observe or perform any
other term of this agreement, the Notes, or the Leases; (b) makes
any materially incorrect or misleading representation, warranty,
or certificate to the Bank; (c) makes any materially incorrect or
misleading representation in any financial statement or other
information delivered to the Bank; or (d) defaults under terms of
any agreement or instrument relating to any debt for borrowed
money (other than borrowings under the Credit Facilities) such
that the creditor declares the debt due before its maturity;
C. There is a default under the terms of any loan agreement,
mortgage, security agreement or any other document executed as
part of the Credit Facilities, or any guaranty of the obligations
under the Credit Facilities becomes unenforceable in whole or in
part, or any Guarantor fails to promptly perform under its
guaranty;
D. A "reportable event" (as defined in the Employee Retirement
Income Security Act of 1974 as amended) occurs that would permit
the Pension Benefit Guaranty Corporation to terminate any
employee benefit plan of the Borrower or any affiliate of the
Borrower;
E. The Borrower or any Guarantor becomes insolvent or unable to pay
its debts as they become due;
F. The Borrower or any Guarantor (a) makes an assignment for the
benefit of creditors; (b) consents to the appointment of a
custodian, receiver or trustee for it or for a substantial part
of its assets; or (c) commences any proceeding under any
bankruptcy, reorganization, liquidation or similar laws of any
jurisdiction;
G. A custodian, receiver or trustee is appointed for the Borrower
or any Guarantor or for a substantial part of its assets without
its consent and is not removed within 60 days after such
appointment;
H. Proceedings are commenced against the Borrower or any Guarantor
under any bankruptcy, reorganization, liquidation, or similar
laws of any jurisdiction, and such proceedings remain undismissed
for 60 days after commencement; or the Borrower or Guarantor
consents to the commencement of such proceedings;
I. Any judgment is entered against the Borrower or any Guarantor, or
any attachment, levy or garnishment is issued against any property
of the Borrower or any Guarantor;
J. The Borrower or any Guarantor dies;
K. The Borrower or any Guarantor, without the Bank's written
consent, (a) is dissolved, (b) merges or consolidates with any
third party, (c) leases, sells or otherwise conveys a material
part of its assets or business outside the ordinary course of
business, (d) leases, purchases, or otherwise acquires a material
part of the assets of any other corporation or business entity,
except in the ordinary course of business, or (e) agrees to do any
of the foregoing, (notwithstanding the foregoing, any subsidiary
may merge or consolidate with any other subsidiary, or with the
Borrower, so long as the Borrower is the survivor);
L. The loan-to-value ratio of any pledged securities at any time
exceeds N/A%, and such excess continues for five (5) days after
notice from the Bank to the Borrower;
M. There is a substantial change in the existing or prospective
financial condition of the Borrower or any Guarantor which the
Bank in good faith determines to be materially adverse; or
N. The Bank in good faith shall deem itself insecure;
O. The acquisition by any Person (as defined below), or two or more
Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d.3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 20% or more of the
outstanding shares of voting stock of the Borrower. For purposes
of this covenant, "Person" means any natural person, corporation,
firm, joint venture, partnership, association, limited liability
company, enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department of
instrumentality thereof.
8.2 REMEDIES. If the borrowings and all other obligations under the
Credit Facilities are not paid at maturity, whether by demand, acceleration or
otherwise, the Bank shall have all of the rights and remedies provided by any
law or agreement. Any requirement of reasonable notice shall be met if the Bank
sends the notice to the Borrower at least seven (7) days prior to the date of
sale, disposition or other event giving rise to the required notice. The Bank
is authorized to cause all or any part of the Collateral to be transferred to
or registered in its name or in the name of any other person, firm or
corporation, with or without designation of the capacity of such nominee. The
Borrower shall be liable for any deficiency remaining after disposition of any
Collateral. The Borrower is liable to the Bank for all reasonable costs and
expenses of every kind incurred in the making or collection of the Credit
Facilities, including, without limitation, reasonable attorney's fees and court
costs (whether attributable to the Bank's in-house or outside counsel). These
costs and expenses shall include, without limitation, any costs or expenses
incurred by the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding.
9.0 MISCELLANEOUS.
9.1 Notice from one party to another relating to this agreement shall be
deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or fax number set forth
under its name below by any of the following means: (a) hand delivery, (b)
registered or certified mail, postage prepaid, with return receipt requested,
(c) first class or express mail, postage prepaid, (d) Federal Express or like
overnight courier service
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or (e) fax, telex, or other wire transmission with request for
assurance of receipts in a manner typical with respect to
communication of that type. Notices made in accordance with this
section shall be deemed delivered upon receipt, if delivered by hand
or wire transmission, 3 business days after mailing if mailed by first
class, registered of certified mail, or one business day after mailing
or deposit with an overnight courier service if delivered by express
mail or overnight courier.
9.2 No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver. No singer or partial exercise by the
Bank of any right or remedy shall preclude any other future exercise
of it or the exercise of any other right or remedy. No waiver or
indulgence by the Bank of any default shall be effective unless in
writing and signed by the Bank, nor shall a waiver on one occasion be
construed as a bar to or waiver of that right on any future occasion.
9.3 This agreement, the Notes, the Leases and any related loan documents
embody the entire agreement and understanding between the Borrower and
the Bank and supersede all prior agreements and understandings
relating to their subject matter. If any one or more of the
obligations of the Borrower under this agreement, the Notes or the
Leases shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining obligations
of the Borrower shall not in any way be affected or impaired, and such
invalidity, illegality or unenforceability in one jurisdiction shall
not affect the validity, legality or enforceability of the obligations
of the Borrower under this agreement, the Notes or the Leases in any
other jurisdiction.
9.4 The Borrower, if more than one, shall be jointly and severally liable.
9.5 This agreement is delivered in the State of Michigan and governed by
Michigan law. This agreement is binding on the Borrower and its
successors, and shall inure to the benefit of the Bank, its successors
and assigns.
9.6 Section headings are for convenience of reference only and shall not
affect the interpretation of this agreement.
10.0 Waiver of Jury Trial. The Bank and the Borrower knowingly and voluntarily
waive any right either of them have to a trial by jury in any proceeding
(whether sounding in contract or tort) which is in any way connected with
this or any related agreement, or the relationship established under them.
This provision may only be modified in a written instrument executed by the
Bank and the Borrower.
Executed by the parties on: September 30, 1999.
Bank One, Michigan Borrower: American Dental Technologies,
Inc.
By: /s/ XXXXX X. XXXXXXXXXX By: /s/ XXX X. XXXXXXX
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Xxxxx X. Xxxxxxxxxx, Xxx X. Xxxxxxx, President
Vice President
Address for Notices Address for Notices
00000 Xxxxxxxxxxxx Xxxxxxx 0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000 Xxxxxx Xxxxxxx, Xxxxx 00000
Fax/Telex No. (000) 000-0000 Fax/Telex No.
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