1
Exhibit 4.16
[NBD LOGO] LINE OF CREDIT AGREEMENT
NBD BANK (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 (the
"Borrower"), whose address is 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 and to acquire the assets of
the Ultracom Division of Ultrak Inc. Facility A shall expire
September 30, 2000 unless earlier withdrawn.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 funding 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, 1999 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 satisfactory 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 transactions 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
2
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.
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 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.
4.0 SECURITY.
4.1 Payment of the borrowings and all other obligations under the
Credit Facilities shall be secured by a first security interest
covering all assets to be acquired and 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, chattel
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 Borrower
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
2
3
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.
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.
3
4
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 and other
mutually agreed upon non-cash charges.
C. "Subordinated Debt" means debt subordinated to the Bank in
manner and by 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 underwriting 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. For purposes of this covenant, the sale of
any accounts receivable shall be deemed the incurring of debt
for borrowed money.
B. GUARANTIES. Guarantee or otherwise become or remain
secondarily liable on the undertaking of another, except for
endorsement of drafts for deposit and 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 EBITDA 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.
4
5
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;
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 the 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
5
6
company, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency,
department or 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 or (e) fax, telex or
other wire transmission with request for assurance of receipt in a
manner typical with respect to communication of that type. Notice
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 or
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 single 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.
6
7
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 26, 1998.
-------------------
NBD BANK AMERICAN DENTAL TECHNOLOGIES, INC.
By: /s/ XXXXX X. XXXXXXXXXX By: /s/ XXX X. XXXXXXX
--------------------------- ------------------------------
Xxxxx X. Xxxxxxxxxx Xxx X. Xxxxxxx
Its: Vice President Its: President
--------------------------- ------------------------------
Address for Notices Address for Notices
00000 Xxxxxxxxxxxx Xxxxxxx 18860 West Ten Mile Road
--------------------------------- -------------------------------------
Xxxxxxxxxx, Xxxxxxxx 00000 Xxxxxxxxxx, Xxxxxxxx 00000
--------------------------------- -------------------------------------
Fax/Telex No. 000-000-0000 Fax/Telex No. 000-000-0000
------------------- -----------------------
7
