Exhibit 10.13
LOAN AGREEMENT
Borrower: MICROVISION MEDICAL SYSTEMS, INC., a
Delaware corporation
00000 000xx Xxxxxxx
Xxxxxxxxx, XX 00000-0000
Lender: XXXXXXX BANK, N.A.
000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
THIS LOAN AGREEMENT ("Agreement") between MICROVISION MEDICAL SYSTEMS,
INC., a Delaware corporation ("Borrower"), and XXXXXXX BANK, N.A. ("Lender")
is made and executed on the following terms and conditions. Borrower has
received prior commercial loans from Lender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those
which may be described on any exhibit or schedule attached to this Agreement.
All such loans and financial accommodations, together with all future loans
and financial accommodations from Lender to Borrower, are referred to in this
Agreement individually as the "Loan" and collectively as the "Loans."
Borrower understands and agrees that: (a) in granting, renewing or extending
any Loan, Lender is relying upon Borrower's representations, warranties and
agreements, as set forth in this Agreement; (b) the granting, renewing or
extending of any Loan by Lender at all times shall be subject to Lender's
sole judgment and discretion; and (c) all such Loans shall be and shall
remain subject to the following terms and conditions of this Agreement.
1. TERM. This Agreement shall be effective as of December 24, 1996, and
shall continue thereafter until all indebtedness of Borrower to Lender has
been performed in full and the parties terminate this Agreement in writing.
2. DEFINITIONS. The following words shall have the following meanings
when used in this Agreement. Terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial
Code. All references to dollar amounts shall mean amounts in lawful money of
the United States of America.
A. Agreement. The word "Agreement" means this Loan Agreement, as
this Agreement may be amended or modified from time to time, together
with all exhibits and schedules attached to this Agreement from time to
time.
B. Account. The word "Account" means a trade account, account
receivable, or other right to payment for goods sole or services
rendered owing to Borrower (or to a third party
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grantor acceptable to Lender).
C. Account Debtor. The words "Account Debtor" mean the person or entity
obligated upon an account.
D. Adjusted Net Income. The words "Adjusted Net Income" mean net income
after taxes plus depreciation, amortization, lease expense and interest
expense.
E. Advance. The word "Advance" means a disbursement of loan funds under
this Agreement.
F. Borrower: The word "Borrower" means MICROVISION MEDICAL SYSTEMS, INC.,
a Delaware corporation doing business as and authorized to do business in the
State of Florida.
G. Business Day. The words "Business Day" mean a day on which commercial
banks are open for business in the State of Florida.
H. CERCLA. The word "CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
I. ERISA. The word "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations and published
interpretations thereof.
J. Event of Default. The words "Event of Default" mean and include
without limitation any of the Events of Default set forth below in the
section titled "EVENTS OF DEFAULT."
K. Expiration Date. The words "Expiration Date" mean January 31, 1998, or
if earlier, the date of termination of Lender's commitment to lend under this
Agreement.
L. GAAP. The word "GAAP" means generally accepted accounting principles
consistently applied.
M. Indebtedness. The word "indebtedness" means an includes without
limitation all Loans, together with other obligations, debts and liabilities
of Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now existing,
contemporaneously with or hereafter incurred or created and any renewals,
modifications, extensions, substitutions or consolidations thereof, voluntary
or involuntary incurred, secured or unsecured, absolute or contingent,
liquidated or unliquidated; determined or
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undetermined; whether Borrower may be liable individually or jointly with
others, or primarily or secondarily, or as guarantor, surety, or otherwise;
whether recovery upon the indebtedness may be or hereafter may become barred
by any statute of limitations; and whether such indebtedness may be or
hereafter may become otherwise unenforceable.
N. Lender. The word "Lender" means XXXXXXX BANK, N.A., its successors
and/or assigns.
O. Line of Credit. The words "Line of Credit" mean the credit facility
described in the Section titled "LINE OF CREDIT" below.
P. Loan. The word "Loan" or "Loans" means and includes any and all loans,
advances , interest, costs, fees, documentary stamp tax and/or intangible
taxes, debts, overdraft indebtedness, leases, drafts, letters of credit,
credit cards, and business services from Lender to Borrower, whether now
existing, contemporaneously with, or hereafter incurred or created and any
renewals, modification, extensions, substitutions or consolidations thereof,
and however evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.
Q. Note. The word "Note" means Borrower's promissory note or notes, if
any, evidencing Borrower's Loan obligations in favor of Lender, as well as
any renewal, extension, modification, consolidation, substitute, replacement
or refinancing note or notes therefor.
R. Permitted Liens. The words "Permitted Liens" mean: (a) liens and
security interested securing indebtedness owed by Borrower to Lender; (b)
liens for taxes, assessments, or similar charges either not yet due or being
contested in good faith; (c) liens of materialmen, mechanics, warehousemen,
or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (d) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure indebtedness
outstanding on the date of this Agreement or permitted to be incurred under
the paragraphs of this Agreement titled "Indebtedness and Liens"; (e) liens
and security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; (f) those liens and
security interests in which the aggregate constitute an immaterial and
insignificant monetary amount
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with respect to the net value of Borrower's assets; and (g) Such other
liens and security interests as Borrower may request Lender in writing to
approve and which Lender in its sole and absolute discretion shall give
Borrower written approval on.
S. Related Documents. The words "Related Documents" mean and
include without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, and all other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.
T. Security Interest. The words "Security Interest" mean and
include without limitation any type of collateral security, whether in
the form of a lien, charge, mortgage, deed of trust, assignment, pledge,
chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien or title retention contract, lease
or consignment intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract or otherwise.
U. XXXX. The word "XXXX" means the Superfund Amendments and
Reauthorization Act of 1985 as now or hereafter amended.
3. LINE OF CREDIT. Lender agrees to make Advances to the Borrower from
time to time from the date of this Agreement to the Expiration Date, provided
the aggregate amount of such Advances outstanding at any time does not exceed
$3,000,000.00. Within the foregoing limits, Borrower may borrow, partially or
wholly prepay, and reborrow under this Agreement as follows:
A. Conditions Precedent to Each Advance. Lender's obligation to
make any Advance to or for the account of Borrower under this Agreement
is subject to the following conditions precedent, with all documents,
instruments, opinions, reports, and other items required under this
Agreement to be in form and substance satisfactory to Lender.
(1) Lender shall have received evidence that this Agreement and
all Related Documents have been duly authorized, executed and
delivered by Borrower to Lender.
(2) Lender shall have received such opinions of counsel,
supplemental opinions, and documents as Lender may requested.
(3) all guaranties required by Lender for the Line
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of Credit shall have been executed by each Guarantor, delivered to
Lender, and be in full force and effect.
(4) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, inventory, books,
records, and operations, and Lender shall be satisfied as to their
condition.
(5) There shall not exist at the time of any Advance a condition
which would constitute an Event of Default under this Agreement, and
Borrower shall have delivered to Lender the compliance certificate
called for in the paragraph below titled "Compliance Certificate."
B. Making Loan Advances. Advances under the Lien of Credit may be
required only in writing subject to the limitations set forth below.
Each Advance shall be conclusively deemed to have been made at the
request of and for the benefit of Borrower. (a) when credited to any
deposit account of Borrower maintained with Lender; or (b) when advanced
in accordance with the instructions of an authorized person. Lender, at
its option, may set a cutoff time, after which all requests for Advances
will be treated as having been requested on the next succeeding Business
Day.
C. Mandatory Loan Repayments. If at any time the aggregate principal
amount of the outstanding Advances shall exceed $3,000,000.00, Borrower,
immediately upon written or oral notice from Lender, shall pay to Lender
an amount equal to the difference between the outstanding principal
balance of the Advances and $3,000,000.00. On the Expiration Date,
Borrower shall pay to Lender in full the aggregate unpaid principal
amount of all Advances then outstanding and all accrued unpaid interest,
together with all other applicable fees, costs and charges, if any, not
yet paid.
It is contemplated that Borrower will pay interest monthly on all
outstanding loan balances. Principal payments may be made by Borrower at
any time.
D. Loan Account. Lender shall maintain on its books a record of
account in which Lender shall make entries for each Advance and such
other debits and credits as shall be appropriate in connection with the
credit facility. Lender shall provide Borrower with periodic statements
of Borrower's account, which statements shall be considered to be correct
and conclusively binding on Borrower unless Borrower notifies Lender to
the contrary within thirty (30) days after Borrower's receipt of any such
statement which Borrower deems to be incorrect.
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4. REPRESENTATION AND WARRANTIES. Borrower represents and warrants to
Lender, as of the date of this Agreement, as of the date of each disbursement
of Loan proceeds, as of the date of any renewal, extension or modification of
any loan, and at all times any indebtedness exists:
A. Organization. Borrower is a corporation which is duly organized,
validly existing, and in good standing under the laws of the state of
Borrower's incorporation and is validly existing and in good standing in
all states in which Borrower is doing business. Borrower has the full
power and authority to own its properties and to transact the business in
which it is presently engaged or presently proposes to engage. Borrower
also is duly qualified as a foreign corporation and is in good standing
in all states in which the failure to so qualify would have a material
adverse effect on its businesses or financial condition.
B. Authorization. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower, to the extent to be
executed, delivered or performed by Borrower, have been duly authorized
by all necessary action by Borrower; do not require the consent or
approval of any other person, regulatory authority or governmental body;
and do not conflict with, result in a violation of, or constitute a
default under (a) any provision of its articles of incorporation or
organization, or bylaws, or any agreement or other instrument binding
upon Borrower or (b) any law, governmental regulation, court decree, or
order applicable to Borrower.
C. Financial Information. Each financial statement of Borrower and
each information, exhibit, or report supplied to Lender by Borrower, its
agents or accountants truly and completely disclosed Borrower's financial
condition as of the date of the statement in accordance with GAAP, and
there has been no material adverse change in Borrower's financial or
business condition or operations subsequent to the date of the most
recent financial statements supplied to Lender non are imminent or
threatened. Borrower has no material contingent obligations except as
disclosed in such financial statements. Borrower acknowledges and agrees
that Lender is relying on all such financial information in entering
into, continuing, renewing or extending any Loan.
D. Legal Effect. This Agreement constitutes, and any instrument or
agreement required hereunder to be given by Borrower when delivered will
constitute, legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
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E. Properties. Except for Permitted Liens, Borrower owns and has good
title to all of Borrower's properties free and clear of all Security
interests and has not executed any security documents or financing statements
relating to such properties. All of Borrower's properties are listed in
Borrower's legal name, and Borrower has not used, or filed a financing
statement under, any other name since March 31, 1996. Additionally, Borrower
and Borrower's real and personal properties comply fully with all laws,
ordinances, statutes, codes and requirements of the Americans with
Disabilities Act of 1990.
F. Hazardous Substances. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the "CERCLA," "XXXX,"
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 49 U.S.C. Section 6901, et seq.,
or other applicable state or Federal laws, rules or regulations adopted
pursuant to any of the foregoing. Except as disclosed to and acknowledged by
Lender in writing, Borrower represents and warrants that: (a) During the
period of Borrower's ownership, lease or use of any real or personal
properties, there has been no use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous waste or
substance by any person on, under, or about any of the properties. (b)
Borrower has no knowledge of or reason to believe that there has been (i) any
use, generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance by any prior owners or
occupants of any of the properties; or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters. (c)
Neither Borrower nor any tenant, contractor, agent, or other authorized user
of any of the properties shall use, generate, manufacture, store, treat,
dispose of, or release any hazardous waste or substance on, under, or about
any of the properties; and any such activity shall be conducted in compliance
with all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation those laws, regulations and
ordinances described above. Borrower authorizes Lender and its agents to
enter upon the properties to make such inspections and tests as Lender may
deem appropriate to determine compliance of the properties with this section
of the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be construed
to create any responsibility or liability on the part of Lender to Borrower
or to any other person. Borrower hereby (a) releases and waives any future
claims against Lender for indemnity or
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contribution in the event Borrower becomes liable for cleanup or other costs
under any such laws, and (b) agrees to fully and promptly pay, perform,
discharge, and defend, indemnify and hold harmless Lender against any and
all claims, orders, demands, causes of action, proceedings, judgments,
losses, liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of this
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring
prior to Borrower's ownership or interest in the properties, whether or not
the same was or should have been known to Borrower. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination or expiration of
this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
G. Litigation and Claims. No litigation, claims, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has
occurred which may materially adversely affect Borrower's financial condition
or properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
H. Taxes. To the best of Borrower's knowledge, all tax returns and
reports of Borrower that are or were required to be filed, have been filed,
and all taxes, assessments, and other governmental charges have been paid in
full, except those presently being or to be contested by Borrower in good
faith in the ordinary course of business and for which adequate reserves have
been provided.
I. Binding Effect. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note are
binding upon Borrower as well as upon Borrower's successors, representatives,
and assigns, and are legally enforceable in accordance with their respective
terms.
J. Permits. Borrower possess and will continue to possess all permits,
licenses, copyrights, trademarks, trade names, patents and rights thereto to
conduct its business and its business does not conflict or violate any valid
rights of others with respect to the foregoing.
K. Commercial Purposes. Borrower intends to use the Loan proceeds solely
for business or commercial related
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purposes and will not purchase or carry margin stock (within the meaning of
Regulations G, T and U of the Board of Governors of the Federal Reserve
System).
L. Employee Benefit Plans. Each employee benefit plan as to which
Borrower may have any liability complies in all material aspects with all
applicable requirements of law and regulations, and (i) no Reportable Event
nor Prohibited Transaction (as defined in ERISA) has occurred with respect to
any such plan, (ii) Borrower has not withdrawn from any such plan or
indicated steps to do so, and (iii) no steps have been taken to terminate any
such plan.
M. Location of Borrower's Offices and Records. The chief place of
business of Borrower and the office of offices where Borrower keeps its
records is located at 00000 000xx Xxxxxxx, Xxxxxxxxx, XX 00000, or such other
location and to which Borrower gives Lender thirty days written notice of.
N. Information. All information heretofore or contemporaneously
herewith furnished by Borrower to Lender for the purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower or Lender will
be, true and accurate in every material respect on the date of which such
information is dated or certified; an none of such information is or will be
incomplete by omitting to state any material fact necessary to make such
information not misleading.
O. Survival of Representatives and Warranties. Borrower understands and
agrees that Lender, without independent investigation, is relying upon the
above representations and warranties in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect until
such time as Borrower's indebtedness shall be paid in full, or until this
Agreement shall be terminated in the manner provided above, whichever is the
last to occur.
5. AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that,
while this Agreement is in effect, Borrower shall:
A. Deposit Accounts. Maintain its primary banking accounts with Lender.
B. Litigation. Promptly inform Lender in writing of (a) all material
adverse changes in Borrower's financial
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condition, and (b) all litigation and claims and all threatened litigation
and claims affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of
any Guarantor.
C. Updates. Promptly inform Lender in writing of details of all
litigation, legal or administrative proceedings, investigation or other
action of similar nature, pending or threatened against Borrower, at any
time during the term of this Agreement, which in part or in whole may or
will render any of the above representations and warranties no longer
true, accurate and correct in each and every respect. Borrower will bring
such details to Lender's attention, in writing, within thirty (30) days
from the date Borrower acquires knowledge of same.
D. Financial Records. Maintain its books and records in accordance
with GAAP and permit Lender to examine and audit Borrower's books and
records at all reasonable times.
E. Financial Statements. Furnish Lender with, as soon as available,
but in no event later than one hundred twenty (120) days after the end of
each fiscal year, Borrower's balance sheet and income statement,
statement of cash flow and notes to statements for the year ended,
reviewed by a certified public accountant satisfactory to Lender, and, as
soon as available, but in no event later than forty-five (45) days after
the end of each month, Borrower's balance sheet and profit and loss
statement for the period ended, prepared and certified as correct to the
best knowledge and belief by Borrower's chief financial officer or other
officer or person acceptable to the Lender. All financial records
required to be provided under this Agreement shall be prepared in
accordance with GAAP and certified by Borrower as being true and correct.
Provide to Lender annually for each individual Borrower and Guarantor, if
any, signed and dated personal financial statements on Lender's forms
and, immediately after filing, the person income tax return filed for the
past calendar year. Simultaneously with the financial information
required herein of Borrower, the same information of all corporate or
partnership guarantors, if any, prepared in accordance with GAAP.
Promptly, after the furnishing thereof, provide Lender with copies
of any statement or report furnished to any other party pursuant to the
terms of any indenture, loan, credit or similar agreement and not
otherwise required to be furnished to Lender pursuant to any other
section of this Agreement.
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Promptly after the sending or filing thereof, provide Lender with copies
of all proxy statements, financial statements and reports which Borrower sends
to its stockholders, copies of all regular periodic, special reports, and all
registration statements which Borrower files with the Securities and Exchange
Commission or any governmental authority which may be substituted therefor,
or with any national securities exchange.
F. Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
G. Insurance. Maintain fire and other risk insurance, business
interruption, theft, public liability insurance, and such other insurance in
such amounts and covering such risks as are usually covered by businesses
engaged in the same or a similar business and similarly situated with respect
to Borrower's properties and operations in form, coverage and with insurance
companies reasonably acceptable to Lender. Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be canceled or diminished without at least thirty (30)
days prior written notice to Lender.
H. Insurance Reports. Furnish to Lender, upon request of Lender, reports
on each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the name
of the insurer; (b) the risks insured; (c) the amount of the policy; (d) the
properties insured; (e) the then current property values on the basis of
which insurance has been obtained, and the manner of determining those
values; and (f) the expiration date of the policy. In addition, upon request
of Lender (however not more often than annually), Borrower will have an
independent appraiser satisfactory to Lender determine, as applicable, the
actual cash value or replacement cost of any Collateral. The cost of such
appraisal shall be paid by Borrower.
I. Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any other
party and notify Lender immediately in writing of any default in connection
with any other such agreements.
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J. Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
K. Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if unpaid,
might become a lien or charge upon any of Borrower's properties, income, or
profits. Provided however, Borrower will not be required to pay and discharge
any such assessment, tax, charge, xxxx, xxxx or claim so long as (a) the
legality of the same shall be contested in good faith by appropriate
proceedings, and (b) Borrower shall have established on its books adequate
reserves with respect to such contested assessment, tax, charge, levy, lien,
or claim in accordance with generally accepted accounting practices.
Borrower, upon demand of Lender, will furnish to Lender evidence of payment
of the assessments, taxes, charges, levies, liens and claims and will
authorize the appropriate governmental official to deliver to Lender at any
time a written statement of any assessments, taxes, charges, levies, liens
and claims against Borrower's properties, income, or profits.
L. Performance. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in the Related Documents in a
timely manner, and promptly notify Lender if Borrower learns of the
occurrence of any event which constitutes an Event of Default under this
Agreement or under any of the Related Documents.
M. Operations. Substantially maintain its present executive and
management personnel, conduct its business affairs in a reasonable and
prudent manner and in compliance with all applicable federal, state and
municipal laws, ordinances, rules and regulations respecting its properties,
charters, businesses and operations, including without limitation compliance
with the Americans With Disabilities Act and with all minimum funding
standards and other requirements of ERISA and other laws applicable to
Borrower's employee benefit plans, and continue to engage in an efficient and
economical manner in a business of the same general type as now conducted by
it, provided, however, that nothing contained in this Agreement shall prevent
Borrower from discontinuing any part of Borrower's business, if in Borrower's
opinion, this discontinuance is in the best interests of Borrower and not
disadvantageous to Lender.
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N. Maintenance. Maintain, keep and preserve Borrower's buildings and
properties and every part thereof in good repair, working order, and
condition and from time to time make all needful and proper repairs,
renewals, replacements, additions, betterments and improvements thereto,
so that at all times the efficiency thereof shall be fully preserved and
maintained, ordinary wear and tear expected.
O. Inspection. Permit employees or agents of Lender at any reasonable
time to examine or audit Borrower's books, accounts and records to make
copies and memoranda of Borrower's books, accounts and records. If Borrower
now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for
the generation of such records) in the possession of a third party,
Borrower, upon request of Lender, shall notify such party to permit
Lender free access to such records at all reasonable times and to provide
Lender with copies of any records it may request, all at Borrower's expense
and discuss the affairs, finances and accounts of Borrower with Lender.
P. Compliance Certificate. Unless waived in writing by Lender, provide
Lender quarterly a compliance certificate executed by Borrower's chief
financial officer, or other officer or person acceptable to Lender,
certifying that the representation and warranties set forth in this
Agreement are true and correct as of the date of the certificate and
further certifying that, as of the date of the certificate, no default or
Event of Default has occurred, or has occurred and is continuing under
this Agreement.
Q. Environmental Compliance and Reports. Borrower shall comply in all
respects with all environmental protection federal, state and local laws,
statutes, regulations and ordinances; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on its part
or on the part of any third party, on property owned and/or occupied by
Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
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R. Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.
6. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that
while this Agreement is in effect, Borrower shall not, without the prior
written consent of Lender:
A. Indebtedness and Liens. (a) Except for trade debt incurred in
the normal course of business, purchase money security interests (for
which the maximum aggregate amount which may be incurred annually is
$250,000.00); operating leases (for which the maximum aggregate amount
which may be paid annually is $250,000.00), and indebtedness to Lender
contemplated by this Agreement, create, incur or assume additional
indebtedness for borrowed money, including capital leases, in excess of
U.S. $250,000.00, (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security interest in
or encumber any of Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender and except for Borrower's accounts
as allowed as a permitted lien.
B. Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (b) cease operations, wind up, liquidate, merge, reorganize,
transfer, acquire or consolidate with any other entity, change
ownership, dissolve, transfer or sell or acquire Collateral or assets
out of the ordinary course of business, or (c) pay, declare, set aside,
or allocate any dividends in cash or other property, on Borrower's stock
(however, if Borrower is a Subchapter S corporation, Borrower may make
distributions to each shareholder which is necessary to pay for any
personal income tax liability incurred by that shareholder as a direct
result of profits generated by the Subchapter S corporation) or purchase
or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure, except for the right to acquire shares
from former employees.
C. Loans, Acquisitions and Guaranties. (a) Loan, invest in or
advance money or assets (except to shareholders or officers of Borrower
and in which the aggregate amount outstanding at any time may not exceed
$250,000.00), (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) assume, endorse, be liable for or incur any
agreement or obligation as surety or guarantor.
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7. CESSATION OF ADVANCES. If Lender has made any commitment to make
any Loan to Borrower whether under this Agreement or under any other
agreement, Lender shall have no obligation to make Loan Advances or to
disburse Loan proceeds if (a) Borrower or any Guarantor is in default under
the terms of this Agreement or any of the Related Documents or any other
agreement that Borrower or any Guarantor has with Lender: (b) Borrower or
any Guarantor becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (c) there occurs a material adverse
change in Borrower's financial condition. In the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; (d) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other Loan with Lender.
8. ADVANCE INSTRUCTIONS. One banking day before Borrower desires to
obtain an advance, Borrower shall give Lender notice of the amount it intends
to borrow and instructions on the method of Lender's disbursing the proceeds
of the advance. All advances shall bear interest initially at the rate in
effect on the date on which each advance is made.
9. AGING OF ACCOUNTS PAYABLE. Unless otherwise waived or modified in
writing by Lender, Borrower shall from time to time hereafter but not less
often than quarterly execute and deliver to Lender no later than the 15th day
of the end of each quarter during the term of this Agreement a detailed aging
of accounts payable by total, a summary of accounts by account creditor, and
a reconciliation statement.
10. RIGHT OF SETOFF. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge, withdraw or setoff all sums owing on
this Agreement against any and all the accounts set forth below in the
Accounts section without prior demand or notice to Borrower.
11. ACCOUNTS. Borrower grants to Lender a contractual possessory
security interest in, and hereby assigns, conveys, delivers, pledges, and
transfers to Lender all of Borrower's right, title and interest in and to,
Borrower's deposits, accounts (whether checking, savings, or some other
account), or securities now or hereafter in the possession of or any deposit
with Lender or with any Xxxxxxx Xxxxx, Inc. affiliate or subsidiary
including without limitation all accounts held jointly with someone else and
all accounts Borrower may open in the future, excluding however all XXX,
Xxxxx, and trust accounts.
12. EVENTS OF DEFAULT. If any of the following events shall occur each
shall constitute an Event of Default under this Agreement:
15
A. Default on Indebtedness. An event of default as defined in any
Loan or Note or demand for full payment of any Loan or Note.
B. Other Defaults. Failure of Borrower or any Grantor to comply with
or to perform within thirty (30) days after notice by Lender of any
other term, obligation, covenant or condition contained in this Agreement
or in any of the Related Documents, or failure of Borrower to comply with
or to perform any other term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.
C. Default in Favor of Third Parties. Should Borrower or any Grantor
default under any loan, extension of credit, security agreement, purchase
or sales agreement or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property or
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.
D. False Statements. Any warranty, representation, or statement made
or furnished to Lender by or on behalf of Borrower or any Grantor under
this Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished.
E. Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect at any time and for any
reason.
F. Insolvency. The dissolution or termination of Borrower's existence
as a going business, insolvency, appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any
type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
G. Credit Proceedings. Commencement of foreclosure proceedings,
whether by judicial proceeding, self-help, repossession or any other
method, by any creditor of Borrower, any creditor of any grantor of
collateral of Borrower, any creditor of any grantor of collateral for the
Loan. This includes a garnishment, attachment, or levy on or of any of
Borrower's deposit accounts with Lender.
H. Forfeiture. The filing of formal charges under any federal or state
law against Borrower which forfeiture is the penalty. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower
as to the validity or reasonableness of the claim which is the basis of
16
the proceeding, and if Borrower gives Lender written notice of the
proceeding and furnishes reserves or a surety bond for the proceeding
satisfactory to Lender.
I. Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or such Guarantor
dies or becomes incompetent.
J. Insecurity. Lender, in good faith, deems itself insecure.
13. EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur,
except where otherwise provided in this Agreement or the Related Documents,
all commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option,
all indebtedness immediately will become due and payable, all without notice
of any kind to Borrower, except that in the case of an Event of Default of
the type described in the "Insolvency" subsection above, such acceleration
shall be automatic and not optional. In addition, Lender shall have all the
rights and remedies provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable law, all of
Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or
to take action to perform an obligation of Borrower or of any Grantor shall
not affect Lender's right to declare a default and to exercise its rights and
remedies.
14. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are
a part of this Agreement:
A. Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement and supersedes all prior
understandings and correspondence, oral or written, with respect to the
subject matter hereof. No alternation of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
B. Applicable Law. This Agreement shall be governed buy and construed
in accordance with the laws of the State of Florida.
C. Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not be
17
used to interpret or define the provisions of this Agreement.
D. Continuing Agreement. This Agreement is a continuing agreement
and shall continue in effect notwithstanding that from time to time, no
indebtedness may exist.
E. Consent to Loan Participation. Borrower agrees and consents to
Lender's sale or transfer, whether now or later, of one or more
participation interests in the Loans to one or more purchasers, whether
related or unrelated to Lender. Lender may provide, without any
limitation whatsoever, to any one or more purchasers, or potential
purchasers, any information or knowledge Lender may have about Borrower
or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy it may have with respect to such matters.
Borrower additionally waives any and all notices of sale of participation
interest, as well as all notices of any repurchase of such participation
interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the Loans and will have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees
that either Lender or such purchaser may enforce Borrower's obligation
under the Loans irrespective of the failure or insolvency of any holder
of any interest in the Loans. Borrower further agrees that the purchaser
of any such participation interest may enforce its interests irrespective
of any personal claims or defenses that Borrower may have against Lender.
F. Costs and Expenses. Borrower agrees to pay upon demand all of
Lender's out-of-pocket expenses, including reasonable attorney's fees,
incurred in connection with the preparation, execution, enforcement and
collection of this Agreement, or in connection with the Loans made
pursuant to this Agreement. Lender may pay someone else to help collect
the Loans and to enforce this Agreement, and Borrower will pay that
amount. This includes, subject to any limits under applicable law,
Lender's reasonable attorney's fees and Lender's legal expenses, whether
or not there is a lawsuit, including reasonable attorney's fees for
bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Borrower also will pay any court costs, in addition
to all other sums provided by law.
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G. Notices. All notices required to be given under this Agreement
shall be given in writing and shall be effective when actually delivered
or when deposited with a nationally recognized overnight courier or
deposited in the United States registered or certified mail, first class,
postage prepaid, return receipt requested, addressed to the party to whom
the notice is to be given at the address shown above. Any party may
change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the
notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower, notice to any
Borrower will constitute notice to all Borrowers. For notice purposes,
Borrower agrees to keep Lender informed at all times of Borrower's
current address(es).
H. Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision
invalid or unenforceable as to any other person or circumstances. If
feasible, any such offending provision shall be deemed to be modified to
be within the limits of enforceability of validity; however, if the
offending provision cannot be so modified, it shall be stricken and all
other provisions of this Agreement in all other respects shall remain
valid and enforceable.
I. Successors and Assigns. All covenants and agreements contained
by or on behalf of Borrower shall bind its successors and assigns and
shall inure to the benefit of Lender, its successors and assigns,
Borrower shall not, however, have the right to assign its rights under
this Agreement or any interest therein, without the prior written consent
of the Lender.
J. Survival. All warranties, representations, and covenants made by
Borrower in this Agreement or in any certificate or other instrument
delivered by Borrower to Lender under this Agreement shall be considered
to have been relied upon by Lender and will survive the making of the
Loan and delivery to Lender of the Related Documents, regardless of any
investigation made by Lender or on Lender's behalf.
K. Time. Time is of the essence in the performance of this
Agreement.
L. Waiver. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a
19
waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or
between Lender and any Guarantor, shall constitute a waiver of any of
Lender's rights or of any obligation of Borrower or of any Guarantor as
to any future transactions. Whenever the consent of Lender is required
under this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent in subsequent instances
where such consent is required, and in all cases such consent may be
granted or withheld in the sole discretion of Lender.
M. SAFEGUARD SCIENTIFICS, INC. shall unconditionally and
unqualifiedly guarantee full payment and performance of all indebtedness
of the Borrower to Xxxxxxx, and execute a Guaranty Agreement acceptable
to Xxxxxxx. Notwithstanding anything contained herein to the contrary, a
default by SAFEGUARD SCIENTIFIECS, INC. in their existing
$100,000,000.00 line of credit with PNC shall constitute a default under
this Loan Agreement.
N. Borrower and Guarantor shall provide to Lender annual audited
financial statements of Borrower and Guarantor within 120 days of fiscal
year end.
O. Borrower and Guarantor shall provide to Lender quarterly
company-prepared financial statements of Borrower and Guarantor within
45 days of quarter end.
P. A default by Safeguard Scientifics, Inc. on their existing
$100,000,000.00 line of credit with PNC shall constitute a default under
this Loan Agreement.
Q. Primary Banking Relationship. The Borrower will maintain its
primary depository relationship with the Lender unless and until the
Note in the sum of $3,000,000.00 between the parties of even date
herewith is assigned to a third party not affiliated with Xxxxxxx Xxxxx,
Inc. Upon written request of the Lender, the Lender shall have the right
to debit the Borrower's deposit account with the Lender for the monthly
and other payments to be made to the Lender under the Note. If the funds
in the Borrower's deposit account are insufficient to satisfy any
payments on the required payment dates, the Borrower shall immediately
remit to the Lender the amount of such deficiency.
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THE FOLLOWING SHALL CONSTITUTE AN EVENT OF DEFAULT:
R. Borrower's or any guarantor's assignment for the benefit of its
creditors, admissions in writing of its inability to pay its debts as
they become due, the filing of a petition of bankruptcy or being
adjudicated as bankrupt or insolvent, or filing of a petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, receivership or similar relief under any present or future
statute, law or regulations. The foregoing shall also apply to any
general partner of Borrower or of any guarantor.
S. Any change of the financial condition of Borrower or any
Guarantor, subsequent to the above date of this commitment which is, in
the sole discretion of Xxxxxxx, material and adverse.
T. If any statement or representation made by Borrower in the Loan
Agreement or in support of the Loan shall prove to be materially untrue.
U. Default by Borrower in the performance of any other covenant,
condition or agreement set forth in this Agreement.
V. Default by Borrower or any guarantor under any other Loan or
extension of credit by Xxxxxxx to Borrower or any Guarantor.
WAIVER OF TRIAL BY JURY. THE BORROWER HEREBY, AND THE LENDER, BY
ACCEPTANCE OF THIS LOAN AGREEMENT, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS LOAN AGREEMENT
AND ALL LOAN DOCUMENTS AND OTHER AGREEMENTS EXECUTED OR CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTION OF EITHER PARTY, WHETHER IN CONNECTION WITH THE MAKING OF
THE LOAN, COLLECTION OF THE LOAN, OR OTHERWISE. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDER MAKING THE LOAN EVIDENCE BY THIS LOAN AGREEMENT.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
12/24, 1996.
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BORROWER:
MICROVISION MEDICAL SYSTEMS,
INC., a Delaware corporation
/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------- -------------------------------
Witness Signature President
/s/ Xxxx X. Xxxxxx Address: 10305 102nd Terrace
---------------------------------- Xxxxxxxxx, XX 00000
Print Witness Name
/s/ X.X. Xxxxx
----------------------------------
Witness Signature
/s/ Xxxxxxx X. Xxxxx
----------------------------------
Print Witness Name
LENDER:
XXXXXXX BANK, N.A.
/s/ Illegible By: /s/ Illegible
---------------------------------- -------------------------------
Witness Signature
/s/ Illegible
---------------------------------- Address: 000 Xxxxxxx Xxxxxxxxx
Print Witness Name Suite 123
/s/ Illegible Xxxxxxx, XX 00000
----------------------------------
Witness Signature
/s/ Illegible
----------------------------------
Print Witness Name
GUARANTOR:
/s/ Xxxxxx Xxxxxx
---------------------------------- SAFEGUARD SCIENTIFICS, INC.
Witness Signature
Xxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxx
---------------------------------- ----------------------------------
Print Witness Name Xxxxxxx Xxxxx, VP and CFO
/s/ Xxxxx X. Ainsunk
----------------------------------
Witness Signature
Xxxxx X. Ainsunk
----------------------------------
Print Witness Name
22
