1
LOAN AND SECURITY AGREEMENT
Dated as of January 19, 2000
among
MMC/GATX PARTNERSHIP NO. I
and
TRANSAMERICA BUSINESS CREDIT CORPORATION
as Lenders
and
TRIPATH IMAGING, INC.
a Delaware corporation
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
as Borrower
CREDIT AMOUNT: $7,000,000
Commitments: MMC/GATX Partnership No. I: $3,500,000
Transamerica Business Credit Corporation: $3,500,000
Repayment Period: 36 months
Treasury Note Maturity: 36 months
Loan Margin: 800 basis points
Commitment Termination Date: May 31, 2000
The defined terms and information set forth on this cover page are a
part of the LOAN AND SECURITY AGREEMENT, dated as of the date first written
above (this "Agreement"), entered into by and among MMC/GATX PARTNERSHIP NO. I
("MMC/GATX") and TRANSAMERICA BUSINESS CREDIT CORPORATION ("TBCC") (MMC/GATX and
TBCC are each individually a "Lender" and collectively, "Lenders") and the
borrower ("Borrower") set forth above. The terms and conditions of this
Agreement agreed to between Lenders and Borrower are as follows:
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ARTICLE I
INTERPRETATION
1.01. Certain Definitions. Unless otherwise indicated in this Agreement
or any other Operative Document, the following terms, when used in this
Agreement or any other Operative Document, shall have the following respective
meanings:
"Applicable Premium" shall mean an amount equal to the greater of (i)
zero and (ii) the excess of (x) the sum of the present values, at the date of
prepayment of the amount of each remaining scheduled payment of interest on and
principal on a Loan, or portion of such payment, which will not be required to
be made as a result of such prepayment (each such payment an "Amount Payable")
(each such Amount Payable discounted separately at the Treasury Rate, determined
on the date three (3) Business Days before the date of prepayment, compounded
monthly, from the date such Amount Payable would be due), over (y) the principal
amount of such Note to be prepaid. The "Treasury Rate" shall be the yield (as
quoted in The Wall Street Journal on the date which is three (3) Business Days
prior to the date of prepayment) on U.S. Treasury securities adjusted to a
constant maturity equal to the then remaining number of full months to maturity
of the applicable Note.
"Borrower's Home State" shall mean North Carolina, the state in which
Borrower's principal place of business is located.
"Business Day" shall mean any day other than a Saturday, Sunday or
public holiday under the laws of California, Illinois or Borrower's Home State
or other day on which banking institutions are authorized or obligated to close
in California, Illinois or Borrower's Home State.
"Claim" has the meaning given to that term in Section 10.03.
"Collateral" has the meaning given to that term in Section 5.01.
"Commitment" means, with respect to each Lender, the amount set forth
following such term on the cover page of this Agreement and "Commitments" means
all such amounts collectively.
"Commitment Fee" has the meaning given to that term in Section 2.04.
"Commitment Termination Date" shall mean the date specified on the
cover page of this Agreement.
"Credit Amount" shall mean the maximum aggregate amount of the Loans
under this Agreement (if the conditions specified in Schedule 3 are satisfied),
which amount is set forth following such term on the cover page of this
Agreement.
"Default" shall mean any event which with the passing of time or the
giving of notice or both would become an Event of Default hereunder.
"Default Rate" shall mean the per annum rate of interest equal to the
higher of (i) 18% or (ii) the Prime Rate plus 6%, but such rate shall in no
event be more than the highest rate permitted by applicable law.
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"Disclosure Schedule" has the meaning set forth in the definition of
the term "Permitted Indebtedness."
"Environmental Law" shall mean the Resource Conservation and Recovery
Act of 1987, the Comprehensive Environmental Response, Compensation and
Liability Act, and any other federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree (in each case having the force of law)
regulating or imposing liability or standards of conduct concerning any
Hazardous Material, as now or at any time hereafter in effect.
"Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.
"Event of Default" has the meaning given to that term in Section 9.01.
"Funding Date" shall mean a date on which a Loan is made to or on
account of Borrower under this Agreement.
"GAAP" shall mean generally accepted accounting principles and
practices as in effect in the United States of America from time to time,
consistently applied.
"Hazardous Material" means any hazardous, dangerous or toxic
constituent material, pollutant, waste or other substance, whether solid, liquid
or gaseous, which is regulated by any federal, state or local governmental
authority.
"Indebtedness" shall mean, with respect to Borrower or any Subsidiary,
the aggregate amount of, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services (excluding
trade payables aged less than 180 days), (d) all capital lease obligations of
such Person, (e) all obligations or liabilities of others secured by a lien on
any asset of such Person, whether or not such obligation or liability is
assumed, (f) all obligations or liabilities of others guaranteed by such Person;
and (g) any other obligations or liabilities which are required by GAAP to be
shown as debt on the balance sheet of such Person. Unless otherwise indicated,
the term "Indebtedness" shall include all Indebtedness of Borrower and the
Subsidiaries.
"Intellectual Property" shall mean all of Borrower's right, title and
interest in and to patents, patent rights (and applications and registrations
therefor), trademarks and service marks (and applications and registrations
therefor), inventions, copyrights, mask works (and applications and
registrations therefor), trade names, trade styles, software and computer
programs, trade secrets, methods, processes, know how, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect to any research
and development, all whether now owned or subsequently acquired or developed by
Borrower and whether in tangible or intangible form or contained on magnetic
media readable by machine together with all such magnetic media.
"Interim Interest" has the meaning given to that term in Section
2.01(c).
"Investment" shall mean the purchase or acquisition of any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or the extension of any advance, loan, extension of
credit or capital contribution to, or any other investment in, any Person.
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"Lien" shall mean any pledge, bailment, lease, mortgage, hypothecation,
conditional sales and title retention agreements, charge, claim, encumbrance or
other lien in favor of any Person.
"Loan" means a Loan advanced by a Lender to Borrower under this
Agreement according to the Commitment of such Lender.
"Loan Margin" shall mean the number of basis points set forth following
such term on the cover page of this Agreement.
"Loan Rate" shall mean, with respect to each Loan, the per annum rate
of interest (based on a year of twelve 30-day months) equal to the sum of (a)
the U.S. Treasury note rate of a term equal to the Treasury Note Maturity as
quoted in The Wall Street Journal on the date the Note with respect to each Loan
is prepared, plus (b) the Loan Margin.
"Note" shall mean one of the secured promissory notes of Borrower
substantially in the form of Exhibit A-1 or Exhibit A-2.
"Obligations" has the meaning given to that term in Section 5.01.
"Operative Documents" shall mean this Agreement, the Notes and the
Warrants and all other documents, instruments and agreements executed and
delivered in connection herewith or therewith or in respect of the closing of
the transactions contemplated hereby or thereby.
"Payment Date" has the meaning given to that term in the applicable
Note.
"Permitted Indebtedness" shall mean and include:
(a) Indebtedness of Borrower to Lenders;
(b) Indebtedness of Borrower secured by Liens permitted
under clause (e) of the definition of Permitted
Liens;
(c) Indebtedness arising from the endorsement of
instruments in the ordinary course of business;
(d) Indebtedness existing on the date hereof and set
forth on the disclosure schedule attached hereto as
Schedule 2 ("Disclosure Schedule");
(e) Indebtedness in an aggregate principal amount not
exceeding $5,000,000, consisting of: (1) a revolving
credit facility provided by Silicon Valley Bank in
which the loans are limited to less than 100% of
Borrower's outstanding accounts receivable, and (2)
the Non-Recourse Receivables Purchase Agreement dated
as of January 10, 2000 (the "Bank Factoring
Facility") between Silicon Valley Bank and Borrower
for the purchase of up to $2,000,000 of "Purchased
Receivables" (as defined thereunder); and
(f) Subordinated Indebtedness.
"Permitted Investments" shall mean and include:
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(a) Deposits with commercial banks organized under the
laws of the United States or a state thereof to the
extent such deposits are fully insured by the Federal
Deposit Insurance Corporation;
(b) Investments in marketable obligations issued or fully
guaranteed by the United States and maturing not more
than one (1) year from the date of issuance; and
(c) Investments in open market commercial paper rated at
least "A1" or "P1" or higher by a national credit
rating agency and maturing not more than one (1) year
from the creation thereof.
(d) Investments pursuant to or arising under currency
agreements or interest rate agreements entered into
in the ordinary course of business;
(e) Investments consisting of deposit accounts of
Borrower in which Lenders have a perfected security
interest;
(f) Other Investments aggregating not in excess of Two
Hundred Fifty Thousand Dollars ($250,000) at any
time;
(g) Investments Borrower now has as listed on the
Disclosure Schedule; and
(h) Investments acquired solely by issuance of Borrower's
Equity Securities and which do not result in the
incurrence or payment of Indebtedness.
"Permitted Liens" shall mean (a) the Lien created by this Agreement,
(b) Liens for fees, taxes, levies, imposts, duties or other governmental charges
of any kind which are not yet delinquent or which are being contested in good
faith by appropriate proceedings which suspend the collection thereof (provided,
however, that such proceedings do not involve any substantial danger of the
sale, forfeiture or loss of any item of equipment and that Borrower has
adequately bonded such Lien or reserves sufficient to discharge such Lien have
been provided on the books of Borrower), (c) Liens identified on the Disclosure
Schedule, (d) Liens to secure payment of worker's compensation, employment
insurance, old age pensions or other social security obligations of Borrower in
the ordinary course of business of Borrower, (e) Liens upon any equipment or
other personal property acquired by Borrower after the date hereof to secure (i)
the purchase price of such equipment or other personal property or (ii) lease
obligations or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment or other personal property; provided that (A) such
Liens are confined solely to the equipment or other personal property so
acquired and the amount secured does not exceed the acquisition price thereof,
and (B) no such Lien shall be created, incurred, assumed or suffered to exist in
favor of Borrower's officers, directors or shareholders holding five percent
(5%) or more of Borrower's Equity Securities, (f) carriers', warehousemen's,
mechanics', landlords', materialmen's, repairmen's or other similar Liens
arising in the ordinary course of business which are not delinquent or remain
payable without penalty or which are being contested in good faith and by
appropriate proceedings; (g) non-exclusive licenses of Intellectual Property
entered into in the ordinary course of business and non-exclusive licenses,
Liens or similar arrangements entered into in connection with joint ventures and
corporate collaborations in the ordinary course of business; and (h) Liens
securing Indebtedness permitted under clause (e) of the definition of Permitted
Indebtedness.
"Person" shall mean and include an individual, a partnership, a
corporation, a business trust, a joint stock company, a limited liability
company, an unincorporated association or other entity and any domestic
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or foreign national, state or local government, any political subdivision
thereof, and any department, agency, authority or bureau of any of the
foregoing.
"Prime Rate" shall mean the interest rate per annum specified in the
"Money Rates" column of The Wall Street Journal, but such rate shall in no event
be more than the highest interest rate permitted by applicable law.
"Subordinated Indebtedness" shall mean Indebtedness subordinated to the
Obligations on terms and conditions acceptable to Lenders in their sole
discretion.
"Subsidiary" shall mean any corporation of which a majority of the
outstanding capital stock entitled to vote for the election of directors
(otherwise than as the result of a default) is owned by Borrower directly or
indirectly through Subsidiaries.
"Term" shall mean the period from and after the date hereof until the
payment or satisfaction in full of all Obligations under this Agreement and the
other Operative Documents.
"Treasury Note Maturity" shall mean the period of months set forth
following such term on the cover page of this Agreement.
"Warrants" shall mean separate warrants to be issued at the direction
of the Lenders to purchase securities of Borrower substantially in the form of
Exhibit B.
1.02. Headings. Headings in this Agreement and each of the other
Operative Documents are for convenience of reference only and are not part of
the substance hereof or thereof.
1.03. Plural Terms. All terms defined in this Agreement or any other
Operative Document in the singular form shall have comparable meanings when used
in the plural form and vice versa.
1.04. Construction. This Agreement is the result of negotiations among,
and has been reviewed by, Borrower and Lenders and their respective counsel.
Accordingly, this Agreement shall be deemed to be the product of all parties
hereto, and no ambiguity shall be construed in favor of or against Borrower or
Lenders.
1.05. Entire Agreement. This Agreement, together with the terms set
forth in each of the other Operative Documents, taken together, constitute and,
contain the entire agreement of Borrower and Lenders and, with regard to their
respective subject matters, supersede any and all prior agreements, term sheets,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, with respect to their respective subject
matters. Borrower acknowledges that it is not relying on any representation or
agreement made by any Lender or any employee, agent or attorney of any Lenders,
other than the specific agreements set forth in this Agreement and the Operative
Documents.
1.06. Other Interpretive Provisions. References in this Agreement to
"Articles," "Sections," "Exhibits," "Schedules" and "Annexes" are to articles,
sections, exhibits, schedules and annexes herein and hereto unless otherwise
indicated. References in this Agreement and each of the other Operative
Documents to any document, instrument or agreement shall include (a) all
exhibits, schedules, annexes and other attachments thereto, (b) all documents,
instruments or agreements issued or executed in replacement thereof, and (c)
such document, instrument or agreement, or replacement or predecessor thereto,
as amended, modified and supplemented from time to time and in effect at any
given time. The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement or any other Operative Document
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shall refer to this Agreement or such other Operative Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Operative Document, as the case may be. The words "include" and
"including" and words of similar import when used in this Agreement or any other
Operative Document shall not be construed to be limiting or exclusive. Unless
otherwise indicated in this Agreement or any other Operative Document, all
accounting terms used in this Agreement or any other Operative Document shall be
construed, and all accounting and financial computations hereunder or thereunder
shall be computed, in accordance with GAAP.
ARTICLE II
THE CREDIT
2.01. Credit Facility.
(a) The Credit Amount. Subject to the terms and conditions of
this Agreement and relying upon the representations and warranties herein set
forth as and when made or deemed to be made, each Lender severally agrees to
lend to Borrower a Loan in the amount of such Lender's Commitment. No Lender
shall be required to make a Loan in an amount in excess of its Commitment. The
Loans may be prepaid only as set forth in Section 2.01(d).
Facility A:
MMC/GATX shall make one Loan in the amount of $3,500,000 on or before
January 31, 2000.
Facility B:
TBCC shall make one Loan in the amount of $1,750,000 on or before
January 31,2000.
Facility C:
TBCC shall make one Loan in the amount of $1,750,000 upon the
satisfaction of the conditions set forth in Section 8.03.
(b) Interest Rates. Borrower shall pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such Loan is paid
in full, at a per annum rate of interest equal to the Loan Rate for such Loan
determined in accordance with the definition of Loan Rate. The Loan Rate
applicable to a Loan shall not be subject to change in the absence of manifest
error. All computations of interest on a Loan shall be based on a year of twelve
30-day months. If Borrower pays interest on a Loan which is determined to be in
excess of the then legal maximum rate, then that portion of each interest
payment representing an amount in excess of the then legal maximum rate shall be
deemed a payment of principal and applied against the principal of such Loan.
(c) Payments of Principal and Interest. Borrower shall make
payments of accrued interest only on the outstanding principal amount of each
Loan on the first six Payment Dates specified in each Lender's Note and thirty
(30) equal payments of principal equal to 3.333% of the Loan Amount, plus
accrued interest on the outstanding principal amount of such Lender's Loan on
each subsequent Payment Date as set forth in such Lender's Note. If the Funding
Date is not the first day of a month, Borrower shall pay the interim interest
accruing between the Funding Date and the next first day of the month ("Interim
Interest") on the Funding Date.
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(d) Optional Prepayment with Premium. Upon ten (10) Business
Days' prior written notice to Lenders, Borrower may, at its option, at any time,
prepay all, and not less than all, of the Loans in full at a prepayment price
equal to the principal amount of each Loan, plus interest accrued on each Loan
through and including the date of such prepayment, plus a premium on each Loan
equal to the Applicable Premium. If an Event of Default occurs and is
continuing, and the Lenders exercise their right under Section 9.02 to
accelerate the Loans or the Loans are automatically accelerated, Borrower
expressly agrees that the amount then due and payable shall include the
Applicable Premium as of the date of such acceleration.
2.02. Use of Proceeds; the Loan and the Notes; Disbursement.
(a) Use of Proceeds. The proceeds of the Loans shall be used
solely for working capital or general corporate purposes of Borrower.
(b) The Loans and the Notes. The obligation of Borrower to
repay the unpaid principal amount of and interest on each Lender's Loan shall be
evidenced by a Note issued to each Lender and each Lender is authorized to
endorse on a grid annexed to its Note appropriate notations regarding payments
made on the Note; provided, however, that the failure to make, or an error in
making, any such notation shall not limit or otherwise affect the obligations of
Borrower hereunder or thereunder.
(c) Disbursement. Each Lender shall disburse its Loan by wire
transfer to Borrower unless otherwise directed in writing by Borrower.
Borrower's wire transfer instructions are: TriPath Imaging, Inc., Account No.
0000000000, Wachovia Bank & Trust, Winston-Salem, North Carolina, USA, ABA #
000000000, XXXXX-XXXX US3W. Notwithstanding anything stated herein to the
contrary, no Lender shall have any obligation to advance funds on behalf of the
another Lender.
(d) Termination of Commitment to Lend. Notwithstanding
anything to the contrary in the Operative Documents, Lenders' obligations to
advance the Loans hereunder shall terminate on the earlier of (i) the occurrence
of any Event of Default hereunder and (ii) the Commitment Termination Date.
2.03. Other Payment Terms.
(a) Place and Manner. Borrower shall make all payments due to
Lenders in lawful money of the United States, in immediately available funds, at
the address for payments and in the manner specified in Section 10.05(b).
(b) Date. Whenever any payment due hereunder shall fall due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.
(c) Default Rate. If either (i) any amounts required to be
paid by Borrower under this Agreement or the other Operative Documents
(including principal or interest payable on the Loan, any fees or other amounts)
remain unpaid after such amounts are due, or (ii) an Event of Default has
occurred and is continuing, Borrower shall pay interest on the outstanding
principal balance hereunder from the date due or from the date of the Event of
Default, as applicable, until such past due amounts are paid in full or until
all Events of Defaults are cured, as applicable, at a per annum rate equal to
the Default Rate, such rate to change from time to time as the Prime Rate shall
change. All computations of such interest at the Default Rate shall be based on
a year of 360 days and twelve 30-day months.
2.04. Commitment Fee. Borrower has paid a Commitment Fee in the
aggregate amount of $25,000 (the "Commitment Fee"). Any portion of the
Commitment Fee not utilized to pay Lenders' expenses in connection with due
diligence or the negotiation, documentation and funding of the Loans will be
applied
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pro rata to the first principal amounts due under the Notes for Facility A and
Facility B following the determination of Lenders' expenses. If the Loans under
Facility A and Facility B are not made, any remaining balance of the Commitment
Fee shall be retained by and divided among the Lenders as they shall determine.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01. Representations and Warranties. Except as set forth in the
Disclosure Schedule, Borrower makes the following representations and warranties
to Lenders as of the date hereof and again on the Funding Date:
(a) Organization and Qualification. Borrower is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation and is duly qualified to do business in Borrower's Home
State. Borrower has no Subsidiaries.
(b) Authority. Borrower has all necessary corporate power,
authority and legal right and has obtained all approvals and consents and has
given all notices necessary to execute and deliver this Agreement and the other
Operative Documents and to perform the terms hereof and thereof. Borrower has
all requisite corporate power and authority to own and operate its properties
and to carry on its businesses as now conducted.
(c) Conflict with Other Instruments, etc. Neither the
execution and delivery of any Operative Document to which Borrower is a party
nor the consummation of the transactions therein contemplated nor compliance
with the terms, conditions and provisions thereof will conflict with or result
in a breach of any of the terms, conditions or provisions of the charter or the
bylaws of Borrower or, to its knowledge, any law or any regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any
material agreement or instrument to which Borrower is a party or by which it or
any of its properties is bound or to which it or any of its properties is
subject, or constitute a default thereunder or result in the creation or
imposition of any Lien, other than Permitted Liens.
(d) Properties. Except as disclosed in the Disclosure
Schedule, Borrower has good and marketable title to the Collateral, free and
clear of all Liens, other than Permitted Liens. Borrower has good title and
ownership of, or is licensed under, all of Borrower's current Intellectual
Property, with no known infringement of the rights of others. Borrower has not
received any communications alleging that Borrower has violated, or by
conducting its business as proposed, would violate any proprietary rights of any
other Person. Borrower has no knowledge of any infringement or violation by it
of the intellectual property rights of any third party and has no knowledge of
any violation or infringement by a third party of any of its Intellectual
Property. The Collateral and the Intellectual Property constitute substantially
all of the assets and property of Borrower.
(e) Authorization, Governmental Approvals, etc. The execution
and delivery by Borrower of each Operative Document, the granting of the
security interest in the Collateral, the issuance of the Warrants, the issuance
of the securities into which the Warrants are exercisable, and the performance
of the obligations herein and therein contemplated have each been duly
authorized by all necessary action on the part of Borrower. No authorization,
consent, approval, license or exemption of, and no registration, qualification,
designation, declaration or filing with, or notice to, any Person is, was or
will be necessary to (i) the valid execution and delivery of any Operative
Document to which Borrower is a party, (ii) the
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performance of Borrower's obligations under any Operative Document, or (iii) the
granting of the security interest in the Collateral, except for filings in
connection with the perfection of the security interest in any of the Collateral
or the issuance of the Warrants. The Operative Documents have been or will be
duly executed and delivered and constitute or will constitute legal, valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws of general application relating to or affecting
the enforcement of creditors' rights or by general principles of equity.
(f) Litigation. Except as disclosed in the Disclosure
Schedule, there are no actions, suits, proceedings or investigations pending or,
to the knowledge of Borrower, threatened against or affecting Borrower, or the
business or any property or asset owned by it, before any court or governmental
department, agency or instrumentality which, if adversely determined, could
reasonably be expected to have a material adverse effect on the financial
condition, business or operations of Borrower.
(g) Security Interest. Assuming the proper filing of one or
more financing statement(s) identifying the Collateral with the proper state
and/or local authorities, the security interests in the Collateral granted to
Lenders pursuant to this Agreement (i) constitute and will continue to
constitute security interests ranking second in priority only to the Liens
securing the Indebtedness permitted under clause (e) of the definition of
Permitted Indebtedness (except to the extent any other Permitted Lien may create
any priority to Lenders' Lien under this Agreement) and (ii) are and will
continue to be superior and prior to the rights in the Collateral of all other
creditors of Borrower (except to the extent of such Permitted Liens). Except as
set forth in the Disclosure Schedule, Borrower does not own any right, title or
interest in or to any real property (other than leasehold interests), motor
vehicles, promissory notes or other property (excluding Intellectual Property)
with respect to which a security interest must be perfected by a method other
than the filing of a UCC-1 financing statement. All of Borrower's federally
registered patents, trademarks and/or copyrights have been accurately disclosed
in the documents referred to in item (i) of Part I of Schedule 3 hereto.
(h) Executive Offices. The principal place of business and
chief executive office of Borrower, and the office where Borrower will keep all
records and files regarding the Collateral, is set forth on the cover page of
this Agreement.
(i) Solvency, Etc. Borrower is Solvent (as defined below) and,
after the execution and delivery of the Operative Documents and the consummation
of the transactions contemplated thereby, Borrower will be Solvent. "Solvent"
shall mean, with respect to any Person on any date, that on such date (a) the
fair value of the property of such Person is greater than the fair value of the
liabilities (including, without limitation, contingent liabilities) of such
Person, (b) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature and (d)
such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's property would
constitute an unreasonably small capital.
(j) Catastrophic Events; Labor Disputes. None of Borrower or
its properties is or has been affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or other casualty that could reasonably be expected to have a material
adverse effect on the financial condition, business or operations of Borrower.
There are no disputes presently subject to grievance procedure, arbitration or
litigation under any of the collective bargaining agreements, employment
contracts or employee welfare or incentive plans to which Borrower is a party,
and there are no strikes, lockouts, work stoppages or slowdowns, or, to the
knowledge of Borrower, jurisdictional
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disputes or organizing activity occurring or threatened which could reasonably
be expected to have a material adverse effect on the financial condition,
business or operations of Borrower.
(k) No Material Adverse Effect. No event has occurred and no
condition exists which could reasonably be expected to have a material adverse
effect on the financial condition, business or operations of Borrower since
September 30, 1999.
(l) Accuracy of Information Furnished. None of the Operative
Documents and none of the other certificates, statements or information
furnished to Lenders by or on behalf of Borrower in connection with the
Operative Documents or the transactions contemplated thereby contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Lenders recognize that
all financial projections furnished to Lenders by or on behalf of Borrower in
connection with the Operative Documents or the transactions contemplated thereby
are not to be viewed as facts and that actual results during the period or
periods covered by such projections may differ from the projected or forecasted
results.
(m) Certain Agreements of Officers, Employees and Consultants.
(i) To the knowledge of Borrower, no officer,
employee or consultant of Borrower is, or is now expected to be, in violation of
any term of any employment contract, proprietary information agreement,
nondisclosure agreement, noncompetition agreement, or any other material
contract or agreement or any restrictive covenant relating to the right of any
such officer, employee or consultant to be employed by Borrower because of the
nature of the business conducted or to be conducted by Borrower or relating to
the use of trade secrets or proprietary information of others, and to Borrower's
knowledge, the continued employment of Borrower's officers, employees and
consultants does not subject Borrower to any material liability for any claim or
claims arising out of or in connection with any such contract, agreement, or
covenant.
(ii) To the knowledge of Borrower, no officers of
Borrower, and no employee or consultant of Borrower whose termination, either
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the financial condition, business or operations of
Borrower, has any present intention of terminating his or her employment or
consulting relationship with Borrower.
ARTICLE IV
REPORTING REQUIREMENTS
4.01. Furnishing Reports. Borrower shall furnish to Lenders:
(a) Financial Statements. (i) At the time of filing of
Borrower's Form 10-K with the Securities and Exchange Commission after the end
of each fiscal year of Borrower, the financial statements of Borrower filed with
such Form 10-K; (ii) at the time of filing of Borrower's Form 10-Q with the
Securities and Exchange Commission after the end of each of the first three
fiscal quarters of Borrower, the financial statements of Borrower filed with
such Form 10-Q; and (iii) and such other financial information as Lenders may
reasonably request from time to time.
(b) Notice of Defaults. As soon as possible, and in any event
within five (5) Business Days after the discovery of a Default or Event of
Default provide Lenders with an officer's certificate of
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Borrower setting forth the facts relating to or giving rise to such Default or
Event of Default and the action which Borrower proposes to take with respect
thereto.
(c) Litigation Reporting. Quarterly written updates or at such
other times as Lenders may reasonably request, information and documentation
with respect to the progress of any patent litigation affecting the Borrower's
Intellectual Property, including the litigation involving Cytyc Corporation
(collectively, "Intellectual Property Litigation"). As soon as possible, and in
any event within two (2) Business Days thereafter, notification of significant
rulings and major developments which could affect the outcome of Intellectual
Property Litigation. Borrower shall continue to provide assistance to Lenders in
connection with inquiries regarding Intellectual Property Litigation.
(d) Miscellaneous. Such other information as Lenders may
reasonably request from time to time.
ARTICLE V
GRANT OF SECURITY INTEREST
GENERAL PROVISIONS CONCERNING SECURITY
5.01. Grant of Security Interest. Borrower, in order to secure the
payment of the principal and interest with respect to the Loans made pursuant to
this Agreement, all other sums due under and in respect hereof and of the other
Operative Documents, including fees, charges, expenses and attorneys' fees and
costs and the performance and observance by Borrower of all other terms,
conditions, covenants and agreements herein and in the other Operative Documents
(all such amounts and obligations being herein sometimes called the
"Obligations"), does hereby grant to Lenders and their successors and assigns, a
security interest in and to the following property (collectively, the
"Collateral"): All right, title, interest, claims and demands of Borrower in and
to:
(a) All goods and equipment now owned or hereafter acquired,
including, without limitation, all laboratory equipment, computer equipment,
office equipment, machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's books relating to any of the foregoing;
(c) All contract rights and general intangibles (including
Intellectual Property), now owned or hereafter acquired, including, without
limitation, goodwill, license agreements, franchise agreements, blueprints,
drawings, purchase orders, customer lists, route lists, infringements, claims,
computer programs, computer disks, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance and rights to
payment of any kind;
(d) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Borrower (subject, in each case, to the
contractual
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rights of third parties to require funds received by Borrower to be
expended in a particular manner), whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower and Borrower's books
relating to any of the foregoing;
(e) All documents, cash, deposit accounts, letters of credit,
certificates of deposit, instruments, chattel paper and investment property,
including, without limitation, all securities, whether certificated or
uncertificated, security entitlements, securities accounts, commodity contracts
and commodity accounts, and all financial assets held in any securities account
or otherwise, wherever located, now owned or hereafter acquired and Borrower's
books relating to the foregoing; and
(f) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof, including, without limitation, insurance, condemnation, requisition or
similar payments and proceeds of the sale or licensing of Intellectual Property.
5.02. Duration of Security Interest. Lenders' security interest in the
Collateral shall continue until the payment in full and the satisfaction of all
Obligations, whereupon such security interest shall terminate. Lenders, upon
payment in full and the satisfaction of the Obligations, shall execute such
further documents and take such further actions as may be necessary to effect
the release and/or termination contemplated by this Section 5.02, including duly
executing and delivering termination statements for filing in all relevant
jurisdictions.
5.03. Possession of Collateral. So long as no Event of Default has
occurred and is continuing, Borrower shall remain in full possession, enjoyment
and control of the Collateral (except only as may be otherwise required by
Lenders for perfection of its security interest therein) and to manage, operate
and use the same and each part thereof with the rights and franchises
appertaining thereto; provided, however, that the possession, enjoyment, control
and use of the Collateral shall at all times be subject to the observance and
performance of the terms of this Agreement.
5.04. Location of Collateral. Except as disclosed in the Disclosure
Schedule, the Collateral is and shall remain in the possession of Borrower at
Borrower's address stated on the cover page of this Agreement.
5.05. Lien Subordination. Lenders agree that the Liens granted to them
in Collateral hereunder shall be subordinate to the Liens granted in connection
with Indebtedness permitted by clause (e) of the definition of Permitted
Indebtedness. Lenders agree that the Liens granted to it hereunder in Third
Party Equipment (as defined below) shall be subordinate to the Liens of (i)
existing and future lenders providing equipment financing and equipment lessors;
provided, that such Liens are confined solely to the equipment so financed and
the proceeds thereof ("Third Party Equipment"); and provided, further, that the
Obligations hereunder shall not be subordinate in right of payment to any
obligations to any other lender, equipment lender or equipment lessors and
Lenders' rights and remedies hereunder shall not in any way be subordinate to
the rights and remedies of any such lender or equipment lessors. Lenders agree
to execute and deliver such agreements and documents as may be reasonably
requested by Borrower from time to time which set forth the lien subordination
described in this Section 5.05 and are reasonably acceptable to Lenders. Lenders
shall have no obligation to execute any agreement or document which would impose
obligations, restrictions or lien priority on Lenders which are less favorable
to Lenders than those described in this Section 5.05.
5.06 Intellectual Property. (a) Within 30 days of the date of this
Agreement, Borrower shall register or cause to be registered with the United
States Copyright Office (i) any software (material to the business of Borrower)
developed or
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acquired by Borrower in connection with any product developed or acquired for
sale or licensing. (b) While any Obligations remain outstanding, Borrower shall
register or cause to be registered with the United States Copyright Office (i)
any software (material to the business of Borrower) developed or acquired by
Borrower hereafter from time to time in connection with any product developed or
acquired for sale or licensing and (ii) any major revisions or upgrades to any
software that has previously been registered with the United States Copyright
Office. Borrower shall file for registration within 30 days from the development
or acquisition of such software, major revision or upgrade.
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01. Affirmative Covenants.
(a) Payment of Taxes, etc. Borrower shall pay and discharge
all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits, or upon any properties belonging to it, prior to the
date on which penalties attach thereto, and all lawful claims which, if unpaid,
might become a Lien upon any of its properties; provided that there shall be no
requirement to pay any such tax, assessment, charge, levy or claim (i) which is
being contested in good faith and by appropriate proceedings or which presents
no risk of seizure, forfeiture, levy or other event which could jeopardize any
Collateral or (ii) for which payment in full is bonded or reserved in Borrower's
financial statements.
(b) Inspection Rights. Borrower shall, at any reasonable time
and from time to time, permit Lenders or any of their agents or representatives
to inspect the Collateral, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, Borrower and to
discuss the affairs, finances and accounts of Borrower with any of its officers
or directors relating in each case to Lenders' capacity as lenders and secured
party hereunder and with respect to the Collateral.
(c) Maintenance of Equipment and Similar Assets. Borrower
shall keep and maintain all items of equipment and other similar types of
personal property that form any significant portion or portions of the
Collateral in good operating condition and repair and shall make all necessary
replacements thereof and renewals thereto so that the value and operating
efficiency thereof shall at all times be maintained and preserved. Borrower
shall not permit any such material item of Collateral to become a fixture to
real estate or an accession to other personal property, without the prior
written consent of Lenders. Borrower shall not permit any such material item of
Collateral to be operated or maintained in violation of any applicable law,
statute, rule or regulation. With respect to items of leased equipment (to the
extent Lenders have any security interest in any residual Borrower's interest in
such equipment under the lease), Borrower shall keep, maintain, repair, replace
and operate such leased equipment in accordance with the terms of the applicable
lease.
(d) Insurance. Borrower shall, obtain and maintain, at its own
expense, insurance of a type and with such limits as are carried by similarly
situated companies, including at a minimum:
(i) "All risk" insurance against loss or damage to
the Collateral. The coverage limit shall be determined to Lenders' reasonable
satisfaction. The deductible shall not exceed $25,000. The policy shall name
Lenders as loss payees with respect to the Equipment, shall not be invalidated
by any action of or breach of warranty by Borrower of any provision thereof and
waive subrogation against Lenders.
(ii) Commercial general liability insurance
(including contractual liability, products liability and completed operations
coverages) reasonably satisfactory to Lenders. The limit of liability shall be
at least $5,000,000 per occurrence. The policy shall be without deductible,
except for
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products liability coverage which may have a deductible up to $25,000. The
policy(ies) shall name Lenders as an additional insured in the full amount of
Borrower's liability coverage limits (or the coverage limits of any successor to
Borrower or such successor's parent which is providing coverage), be primary and
without contribution as respects any insurance carried by Lenders, and contain
cross liability and severability of interest clauses.
(iii) Such other insurance against risks of loss and
with terms as shall be reasonably required by Lenders.
All policies of insurance shall be placed with financially sound,
commercial insurers reasonably satisfactory to Lenders. All policies of
insurance shall provide that Lenders shall be given 30 days notice of
cancellation of coverage. This notice provision shall be without qualification.
On or prior to the first Funding Date and prior to each policy renewal, Borrower
shall furnish to Lenders certificates of insurance or other evidence
satisfactory to Lenders that insurance complying with all of the above
requirements is in effect.
ARTICLE VII
NEGATIVE COVENANTS
7.01. Negative Covenants. So long as the Obligations remain
outstanding, Borrower shall not:
(a) Name; Location of Chief Executive Office and Collateral.
Without thirty (30) days prior written notice to Lenders, change its chief
executive office or principal place of business or remove or cause to be removed
from the locations set forth on the cover page or in the Disclosure Schedule
hereof or move any Collateral to a location other than that set forth on the
cover page or in the Disclosure Schedule hereof.
(b) Liens on Collateral. Create, incur, assume or suffer to
exist any Lien of any kind upon any Collateral, whether now owned or hereafter
acquired, except Permitted Liens.
(c) [Reserved.]
(d) Dispositions of Collateral. Convey, sell, offer to sell,
lease, transfer, exchange or otherwise dispose of (collectively, a "Transfer")
all or any part of the Collateral to any Person, other than: (i) Transfers of
inventory in the ordinary course of business; (ii) Transfers which would
constitute Permitted Liens under clause (g) of the definition of Permitted
Liens; (iii) Transfers of worn-out or obsolete equipment, replaced equipment and
excess equipment; or (iv) sales of "Purchased Receivables" (as defined in the
Bank Factoring Facility (as defined in clause (e) of the definition of Permitted
Indebtedness)) up to an aggregate amount of $2,000,000 under the Bank Factoring
Facility. Borrower may, however, encumber the equipment listed in the Disclosure
Schedule through lease financing.
(e) Distributions. (i) Pay any dividends or make any
distributions on its Equity Securities; (ii) purchase, redeem, retire, defease
or otherwise acquire for value any of its Equity Securities (other than
repurchases by cancellation of indebtedness pursuant to the terms of employee
stock purchase plans, employee restricted stock agreements or similar
arrangements in an aggregate amount not to exceed $100,000); (iii) return any
capital to any holder of its Equity Securities as such; (iv) make any
distribution of assets, Equity Securities, obligations or securities to any
holder of its Equity Securities as such; or (v) set apart any sum for any such
purpose; provided, however, that Borrower may pay dividends payable solely in
Common Stock.
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(f) Mergers or Acquisitions. Merge or consolidate with or into
any other Person or acquire all or substantially all of the capital stock or
assets of another Person, except where acquisitions by Borrower are made solely
through the issuance of Borrower's Equity Securities and which do not result in
the incurrence or payment of Indebtedness.
(g) Transactions With Affiliates. Enter into any contractual
obligation with any affiliate or engage in any other transaction with any
affiliate only upon terms at least as favorable to Borrower as an arms-length
transaction with unaffiliated Persons, except for compensation, stock options
and stock grants made or paid to individuals for services rendered.
(h) Maintenance of Accounts. Maintain any deposit accounts or
accounts holding securities owned by Borrower except (i) accounts located at
Silicon Valley Bank and (ii) other accounts with respect to which Lenders take
such action as they deem necessary to obtain a perfected security interest in
such account.
(i) Indebtedness Payments. (i) Prepay, redeem, purchase,
defease or otherwise satisfy in any manner prior to the scheduled repayment
thereof any Indebtedness for borrowed money (other than amounts due or permitted
to be prepaid under this Loan Agreement or the Notes or under any revolving
credit agreement constituting Permitted Indebtedness under clause (e) of the
definition of Permitted Indebtedness) or lease obligations, (ii) amend, modify
or otherwise change the terms of any Indebtedness for borrowed money or lease
obligations so as to accelerate the scheduled repayment thereof or (iii) repay
any notes to officers, directors or shareholders.
(j) Indebtedness. Create, incur, assume or permit to exist any
Indebtedness except Permitted Indebtedness.
(k) Investments. Make any Investment except for Permitted
Investments.
ARTICLE VIII
CONDITIONS PRECEDENT
8.01. Closing. At the time of execution and delivery of this Agreement,
Borrower shall have duly executed and/or delivered to Lenders the items set
forth in Part I of Schedule 3.
8.02. Other Conditions. The obligation of the Lenders to make the Loans
under Facility A and Facility B shall be subject to the execution and/or
delivery to such Lenders of each of the items set forth in Part I of Schedule 3
and the satisfaction by Borrower of each condition set forth in Part II of
Schedule 3.
8.03. Other Conditions. The obligation of the TBCC to make the Loan
under Facility C shall be subject to the execution and/or delivery to TBCC of
each of the items set forth in Part I of Schedule 3, the satisfaction by
Borrower of each condition set forth in Part II of Schedule 3, and the
satisfaction by Borrower of each condition set forth in Part III of Schedule 3.
8.04. Covenant to Deliver. Borrower agrees (not as a condition but as a
covenant) to deliver to Lenders each item required to be delivered to Lenders as
a condition to a Loan, if the Loan is advanced. Borrower expressly agrees that
the extension of any Loan prior to the receipt by Lenders of any such item shall
not constitute a waiver by Lenders of Borrower's obligation to deliver such
item.
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ARTICLE IX
DEFAULT AND REMEDIES
9.01. Events of Default. An "Event of Default" shall mean the
occurrence of one or more of the following described events:
(a) Borrower shall (i) default in the payment of principal of
or interest on any Loan when the same is due, or (ii) default in the payment of
any expense or other amount payable hereunder or thereunder for five (5) days
after receipt of written notice from a Lender that the same is due; or
(b) Borrower shall breach any provision of Section 6.01(d) or
Section 7.01; or
(c) Borrower shall default in the performance of any covenant,
agreement or obligation (other than a covenant, agreement or obligation referred
to in, Section 9.01(a) or Section 9.01(b)) contained in any Operative Document
(other than the Warrants) and Borrower shall fail to cure within thirty (30)
days after receipt of written notice from Lenders any default in the performance
of any such covenant, agreement or obligation contained therein; or
(d) Borrower shall have breached the terms of any of the
Warrants and Borrower shall fail to cure such breach within thirty (30) days of
the earlier of: (i) Borrower's receipt of written notice from Lenders of such
breach, or (ii) Borrower becoming aware of such breach; or
(e) Any representation or warranty made herein or on the
Funding Date by Borrower in any Operative Document, or any certificate or
financial statement furnished pursuant to the provisions of any Operative
Document, shall prove to have been false or misleading in any material respect
as of the time made or furnished; or
(f) Any Operative Document shall in any material respect cease
to be, or Borrower shall assert that any Operative Document is not, a legal,
valid and binding obligation of Borrower enforceable in accordance with its
terms; or
(g) Defaults shall exist under any agreements of Borrower
which consist of the failure to pay any Indebtedness at maturity or which result
in a right by such third party or parties, whether or not exercised, to
accelerate the maturity of Indebtedness of Borrower in an aggregate amount in
excess of Five Hundred Thousand Dollars ($500,000) or a default shall exist
under any financing agreement with a Lender or any of such Lender's affiliates;
or
(h) A proceeding shall have been instituted in a court of
competent jurisdiction seeking a decree or order for relief in respect of
Borrower in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee (or similar official) of
Borrower or for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of sixty (60) consecutive days or such court
shall enter a decree or order granting the relief sought in such proceeding; or
(i) Borrower shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian (or other similar
official) of Borrower or for any substantial
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part of its property, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action in furtherance of any of the foregoing; or
(j) A final judgment or order for the payment of money in
excess of Five Hundred Thousand Dollars ($500,000) (exclusive of amounts covered
by insurance issued by an insurer not an affiliate of Borrower) shall be
rendered against Borrower and the same shall remain undischarged for a period of
thirty (30) days during which execution shall not be effectively stayed, or any
judgment, writ, assessment, warrant of attachment, or execution or similar
process shall be issued or levied against a substantial part of the property of
Borrower and such judgment, writ, or similar process shall not be released,
stayed, vacated or otherwise dismissed within thirty (30) days after issue or
levy; or
(k) If there occurs a material adverse change in Borrower's
business, or if there is a material impairment of the prospect of repayment of
any portion of the Obligations owing to Lenders or a material impairment of the
value or priority of Lenders' security interests in the Collateral; or
(l) If any material portion of Borrower's assets is attached,
seized, subjected to writ or distress warrant, or is levied upon, or comes into
possession of any trustee, receiver or Person acting in a similar capacity and
such attachment, seizure, writ or distress warrant or levy has not been removed,
discharged or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other
claim becomes a lien or encumbrance upon any material portion of Borrower's
assets, or if a notice of lien, levy, or assessment is filed of record with
respect to any of Borrower's assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute and Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contesting by Borrower; or
(m) If there occurs a development or ruling in Borrower's
Intellectual Property Litigation, which Lenders in their good faith business
judgment believe indicates a likelihood of a material adverse effect on: (i)
Borrower's business, (ii) the prospect of repayment of any portion of the
Obligations owing to Lenders or (iii) the value or priority of Lenders' security
interests in the Collateral.
9.02. Consequences of Event of Default.
(a) If an Event of Default specified under any of clauses (a)
through (g) or (j) through (m) of Section 9.01 shall occur and be continuing,
any Lender may (i) declare all of the Loans, together with interest thereon,
plus the Applicable Premium and all other liabilities of Borrower hereunder and
under the other Operative Documents to be immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived, and (ii) terminate any commitment to make the Loans and
terminate any commitment to advance money or extend credit to or for the benefit
of Borrower pursuant to any other agreement or commitment extended by a Lender
to Borrower.
(b) If an Event of Default specified under clause (h) or (i)
of Section 9.01 shall occur, then immediately and without notice (i) the Loans,
together with interest thereon, plus the Applicable Premium and all other
liabilities of Borrower hereunder and under the other Operative Documents shall
automatically become due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and (ii) Lenders'
commitments hereunder to make the Loans and any
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other commitment of Lenders to Borrower to advance money or extend credit
pursuant to any other agreement or commitment shall be terminated.
(c) Borrower expressly agrees that the amount due and payable
upon any such acceleration or prepayment of the Loans contrary to the terms
hereof shall include a Applicable Premium as of the date of such acceleration or
prepayment.
9.03. Rights Regarding Collateral. Borrower agrees that when any Event
of Default has occurred and is continuing, Lenders shall have the rights,
options, duties and remedies of a secured party as permitted by law and, in
addition to and without limiting the foregoing, Lenders may exercise any one or
more or all, and in any order, of the remedies herein set forth, including the
following:
(a) Lenders, personally or by agents or attorneys, shall have
the right (subject to compliance with any applicable mandatory legal
requirements) to require Borrower to assemble the Collateral and make it
available to Lenders at a place to be designated by Lenders or to take immediate
possession of the Collateral, or any portion thereof, and for that purpose may
pursue the same wherever it may be found, and may enter any of premises of
Borrower, with or without notice, demand, process of law or legal procedure, to
the extent permitted by applicable law, and search for, take possession of,
remove, keep and store the same, or use and operate or lease the same until
sold. In furtherance of Lenders' rights hereunder, Borrower hereby grants to
Lenders an irrevocable, non-exclusive license (exercisable without royalty or
other payment by Lenders) to use, license or sublicense any patent, trademark,
trade name, copyright or other intellectual property in which Borrower now or
hereafter has any right, title or interest together with the right of access to
all media in which any of the foregoing may be recorded or stored; provided,
however, that such license shall only be exercisable in connection with the
disposition of Collateral upon Lenders' exercise of their remedies hereunder.
(b) Lenders may, if at the time such action may be lawful and
always subject to compliance with any mandatory legal requirements, either with
or without taking possession and either before or after taking possession,
without instituting any legal proceedings whatsoever, having first given notice
of such sale by registered or certified mail to Borrower once at least ten (10)
days prior to the date of such sale, and having first given any other notice
which may be required by law, sell and dispose of the Collateral, or any part
thereof, at a private sale or at public auction, to the highest bidder, in one
lot as an entirety or in separate lots, and either for cash or on credit and on
such terms as Lenders may determine, and at any place (whether or not it be the
location of the Collateral or any part thereof) designated in the notice
referred to above. To the extent permitted by applicable law, any such sale or
sales may be adjourned from time to time by announcement at the time and place
appointed for such sale or sales, or for any such adjourned sale or sales,
without further published notice, and Borrower, Lenders or the holder or holders
of the Notes, or of any interest therein, may bid and become the purchaser at
any such sale.
(c) Lenders may proceed to protect and enforce this Agreement
and the other Operative Documents by suit or suits or proceedings in equity, at
law or in bankruptcy, and whether for the specific performance of any covenant
or agreement herein contained or in execution or aid of any power herein
granted; or for foreclosure hereunder, or for the appointment of a receiver or
receivers for any real property security or any part thereof, or for the
recovery of judgment for the Obligations or for the enforcement of any other
proper, legal or equitable remedy available under applicable law.
9.04. Waiver by Borrower. Upon the occurrence of an Event of Default,
to the extent permitted by law, Borrower covenants that it will not at any time
insist upon or plead, or in any manner whatsoever claim or take any benefit or
advantage of, any stay or extension law now or at any time hereafter in force,
nor
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claim, take nor insist upon any benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the Collateral
or any part thereof prior to any sale or sales thereof to be made pursuant to
any provision herein contained, or to the decree, judgment or order of any court
of competent jurisdiction; nor, after such sale or sales, claim or exercise any
right under any statute now or hereafter made or enacted by any state or
otherwise to redeem the property so sold or any part thereof, and, to the full
extent legally permitted, except as to rights expressly provided herein, hereby
expressly waives for itself and on behalf of each and every Person, except
decree or judgment creditors of Borrower, acquiring any interest in or title to
the Collateral or any part thereof subsequent to the date of this Agreement, all
benefit and advantage of any such law or laws, and covenants that it will not
invoke or utilize any such law or laws or otherwise hinder, delay or impede the
execution of any power herein granted and delegated to Lenders, but will suffer
and permit the execution of every such power as though no such power, law or
laws had been made or enacted.
9.05. Effect of Sale. Any sale, whether under any power of sale
available to Lenders or by virtue of judicial proceedings, shall operate to
divest all right, title, interest, claim and demand whatsoever, either at law or
in equity, of Borrower in and to the property sold, and shall be a perpetual
bar, both at law and in equity, against Borrower, its successors and assigns,
and against any and all persons claiming the property sold or any part thereof
under, by or through Borrower, its successors or assigns.
9.06. Application of Collateral Proceeds. The proceeds and/or avails of
the Collateral, or any part thereof, and the proceeds and the avails of any
remedy hereunder (as well as any other amounts of any kind held by Lenders at
the time of, or received by Lenders after, the occurrence of an Event of Default
hereunder) shall be paid to and applied as follows:
(a) First, to the payment of reasonable costs and expenses,
including all amounts expended to preserve the value of the Collateral, of
foreclosure or suit, if any, and of such sale and the exercise of any other
rights or remedies, and of all proper fees, expenses, liability and advances,
including reasonable legal expenses and attorneys' fees, incurred or made
hereunder by Lenders;
(b) Second, to the payment to Lenders of the amount then owing
or unpaid on the Notes, and in case such proceeds shall be insufficient to pay
in full the whole amount so due, owing or unpaid upon the Notes, then first, to
the unpaid interest thereon, second, to unpaid principal thereof and third to
the remaining balance of the Obligations under the Notes; such application to be
made upon presentation of the Notes, and the notation thereon of the payment, if
partially paid, or the surrender and cancellation thereof, if fully paid;
(c) Third, to the payment of other amounts then payable to
Lenders under any of the Operative Documents; and
(d) Fourth, to the payment of the surplus, if any, to
Borrower, its successors and assigns, or to whomsoever may be lawfully entitled
to receive the same.
9.07. Reinstatement of Rights. If Lenders shall have proceeded to
enforce any right under this Agreement or any other Operative Document by
foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Lenders shall be restored to their former position and
rights hereunder with respect to the property subject to the security interest
created under this Agreement.
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ARTICLE X
MISCELLANEOUS
10.01. Modifications, Amendments or Waivers. The provisions of any
Operative Document may be modified, amended or waived only by a written
instrument signed by the parties thereto.
10.02. No Implied Waivers; Cumulative Remedies; Writing Required. No
delay or failure of Lenders in exercising any right, power or remedy hereunder
shall affect or operate as a waiver thereof; nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power or remedy preclude any further exercise thereof or of any other
right, power or remedy. The rights and remedies hereunder of Lenders are
cumulative and not exclusive of any rights or remedies which it would otherwise
have. Any waiver, permit, consent or approval of any kind or character on the
part of Lenders of any breach or default under this Agreement or any such waiver
of any provision or condition of this Agreement must be in writing and shall be
effective only in the specified instance and to the extent specifically set
forth in such writing.
10.03. Expenses; Indemnification. Borrower agrees upon demand to pay or
reimburse Lenders for all liabilities, obligations and out-of-pocket expenses,
including reasonable fees and expenses of counsel for Lenders, from time to time
arising in connection with the enforcement or collection of sums due under the
Operative Documents, and in connection with any amendment or modification of the
Operative Documents or any "work-out" in connection with the Operative
Documents. Borrower shall indemnify, reimburse and hold Lenders, each of
Lenders' partners, and each of their respective successors, assigns, agents,
officers, directors, shareholders, servants, agents and employees harmless from
and against all liabilities, losses, damages, actions, suits, demands, claims of
any kind and nature (including claims relating to environmental discharge,
cleanup or compliance), all costs and expenses whatsoever to the extent they may
be incurred or suffered by such indemnified party in connection therewith
(including reasonable attorneys' fees and expenses), fines, penalties (and other
charges of applicable governmental authorities), licensing fees relating to any
item of Collateral, damage to or loss of use of property (including
consequential or special damages to third parties or damages to Borrower's
property), or bodily injury to or death of any person (including any agent or
employee of Borrower) (each, a "Claim"), directly or indirectly relating to or
arising out of the use of the proceeds of the Loans or otherwise, the falsity of
any representation or warranty of Borrower or Borrower's failure to comply with
the terms of this Agreement or any other Operative Document during the Term. The
foregoing indemnity shall cover, without limitation, (i) any Claim in connection
with a design or other defect (latent or patent) in any item of equipment
included in the Collateral, (ii) any Claim for infringement of any patent,
copyright, trademark or other intellectual property right, (iii) any Claim
resulting from the presence on or under or the escape, seepage, leakage,
spillage, discharge, emission or release of any Hazardous Materials on the
premises of Borrower, including any Claims asserted or arising under any
Environmental Law, or (iv) any Claim for negligence or strict or absolute
liability in tort; provided, however, that Borrower shall not indemnify Lenders
for any liability incurred by Lenders as a direct and sole result of Lenders'
gross negligence or willful misconduct. Such indemnities shall continue in full
force and effect, notwithstanding the expiration or termination of this
Agreement. Upon Lenders' written demand, Borrower shall assume and diligently
conduct, at its sole cost and expense, the entire defense of Lenders, each of
its partners, and each of their respective, agents, employees, directors,
officers, shareholders, successors and assigns against any indemnified Claim
described in this Section 10.03. Borrower shall not settle or compromise any
Claim against or involving Lenders without first obtaining Lenders' written
consent thereto, which consent shall not be unreasonably withheld.
10.04. Waivers. (a) Borrower shall give Lenders written notice within
one hundred eighty (180) days of obtaining knowledge of the occurrence of any
claim or cause of action it believes it has, or may seek
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to assert to allege against Lenders whether such claim is based in law or
equity, arising under or related to this Agreement or any of the other Operative
Documents or to the transactions contemplated hereby or thereby, or any act or
omission to act by Lenders with respect hereto or thereto, and that if it shall
fail to give such notice to Lenders with regard to any such claim or cause of
action, Borrower shall be deemed to have waived, and shall be forever barred
from bringing or asserting such claim or cause of action in any suit, action or
proceeding in any court or before any governmental agency or authority or any
arbitrator. (b) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM LENDERS
UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.
10.05. Notices; Payments.
(a) All notices and other communications given to or made upon
any party hereto in connection with this Agreement shall be in writing
(including telexed, telecopied or telegraphic communication) and mailed (by
certified or registered mail), telexed, telegraphed, telecopied or delivered to
the respective parties, as follows:
Borrower: At the address set forth on the cover page of this
Agreement.
Lenders: MMC/GATX PARTNERSHIP NO.
c/o XXXXX XXXXXXXX & COMPANY
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, Xxxxxxxxxx 00000
Attention: Contract Administration
FAX: (000) 000-0000
PH: (000) 000-0000
and
TRANSAMERICA BUSINESS CREDIT CORPORATION
00 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 000000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx.
FAX: (000) 000-0000
PH: (000) 000-0000
or in accordance with any subsequent written direction from either party to the
other. All such notices and other communications shall, except as otherwise
expressly herein provided, be effective when received; or in the case of
delivery by messenger or overnight delivery service, when left at the
appropriate address.
(b) Unless Lenders specify otherwise in writing, all payments
shall be made by wire transfer to:
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GATX Capital Corporation
Bank Name: Bank of America
Bank Address: Xxxxxx, Xxxxx 00000
Account No.: 3750878673
ABA Routing No.: 111-000012
Reference: TriPath Imaging Invoice #_________
and
Transamerica Business Credit Corporation
Bank Name: The First National Bank of Chicago
Bank Address: Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Account No.: 55-75427
ABA Routing No.: 000-000-000
Reference: TriPath Imaging
Customer No. ____________
Account Name: Transamerica Technology Finance
10.06. Termination. This Agreement shall terminate at the end of the
Term; provided, however, that the termination of this Agreement shall not affect
any of the rights and remedies of Lenders hereunder, it being understood and
agreed that all such rights and remedies shall continue in full force and effect
until payment of all amounts owed to Lenders under or in connection with the
Operative Documents, whether on account of principal, interest, fees or
otherwise.
10.07. Severability. If any provision of any Operative Document is held
invalid or unenforceable to any extent or in any application, the remainder of
such Operative Document and all other Operative Documents, or the application of
such provision to different Persons or circumstances or in different
jurisdictions, shall not be affected thereby.
10.08. Survival. All representations, warranties, covenants and
agreements of Borrower contained herein or made in writing in connection
herewith shall survive the execution and delivery of the Operative Documents,
the making of the Loans hereunder, the granting of security and the issuance of
the Notes.
10.09. Relationship of Parties. Subject to a separate Intercreditor
Agreement between the Lenders, Borrower and each Lender acknowledge, understand
and agree that:
(a) The relationship between the Borrower, on the one hand,
and Lenders, on the other, is, and at all time shall remain solely that of a
borrower and lenders. Lenders shall not under any circumstances be construed to
be partners or joint venturers of Borrower or any of its Affiliates; nor shall
Lenders under any circumstances be deemed to be in a relationship of confidence
or trust or a fiduciary relationship with Borrower or any of its Affiliates, or
to owe any fiduciary duty to Borrower or any of its Affiliates. Lenders do not
undertake or assume any responsibility or duty to Borrower or any of its
Affiliates to select, review, inspect, supervise, pass judgment upon or
otherwise inform the Borrower or any of its Affiliates of any matter in
connection with its or their Property, any Collateral held by any Lender or the
operations of Borrower or any of its Affiliates. Borrower and each of its
Affiliates shall rely entirely on their own judgment with respect to such
matters, and any review, inspection, supervision, exercise of judgment or
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supply of information undertaken or assumed by any Lender in connection with
such matters is solely for the protection of Lenders and neither Borrower nor
any Affiliate is entitled to rely thereon.
(b) The relationship between the Lenders is, and at all time
shall remain solely that of co-lenders. Lenders shall not under any
circumstances be construed to be partners or joint venturers of each other; nor
shall the Lenders under any circumstances be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with each other, or to owe any
fiduciary duty to each other. Lenders do not undertake or assume any
responsibility or duty to each other to select, review, inspect, supervise, pass
judgment upon or otherwise inform each other of any matter in connection with
Borrower or Borrower's Property, any Collateral held by any Lender or the
operations of Borrower. Each Lender shall rely entirely on its own judgment with
respect to such matters, and any review, inspection, supervision, exercise of
judgment or supply of information undertaken or assumed by any Lender in
connection with such matters is solely for the protection of such Lender.
10.10. Governing Law. This Agreement, the other Operative Documents and
the rights and obligations of the parties hereto and thereto shall be governed
by and construed and enforced in accordance with the laws of the State of
California. Any action to enforce this Agreement against Borrower may be brought
in California or, with regard to Collateral, may also be brought wherever such
Collateral is located.
10.11. Successors and Assigns. This Agreement and the other Operative
Documents shall be binding upon and inure to the benefit of Lenders, all future
holders of the Notes, Borrower and their respective successors and permitted
assigns, except that Borrower may not assign or transfer its rights hereunder or
any interest herein without the prior written consent of Lenders. Each Lender
may sell to any other financial entity (a "Participant") participation interests
in Lender's rights under this Agreement and the other Operative Documents;
provided that notwithstanding the sale of participations, such Lender shall
remain solely responsible for the performance of its obligations under this
Agreement, such Lenders shall remain the holder of its Note for all purposes
under this Agreement and Borrower shall continue to deal solely and directly
with such Lender in connection with this Agreement and the other Operative
Documents. Lenders may disclose the Operative Documents and any other financial
or other information relating to Borrower or any Subsidiary to any potential
Participant, provided that such Participant agrees to protect the
confidentiality of such documents and information using the same measures that
it uses to protect its own confidential information.
10.12. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
10.13. Further Assurances. Borrower will, at its own expense, from time
to time do, execute, acknowledge and deliver all further acts, deeds,
conveyances, transfers and assurances, and all financing and continuation
statements and similar notices, reasonably necessary or proper for the
perfection of the security interest being herein provided for in the Collateral,
whether now owned or hereafter acquired.
10.14. Power of Attorney in Respect of the Collateral. Borrower does
hereby irrevocably appoint each Lender, the true and lawful attorney-in-fact of
Borrower with full power of substitution, for it and in its name to execute any
UCC financing statements or UCC financing statement amendments as to Collateral
in any applicable jurisdiction, and generally to use its name in the exercise of
all powers hereby conferred on each Lender with full power of substitution. The
power and authority hereby given and granted to each Lender shall be deemed
coupled with an interest and not revocable by any party. Borrower does hereby
irrevocably appoint Lenders (which appointment is coupled with an interest), the
true and lawful attorney-in-
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fact of Borrower with full power of substitution, for it and in its name (a) to
perform (but Lenders shall not be obligated to and shall incur no liability to
Borrower or any third party for failure to perform) any act which Borrower is
obligated by this Agreement to perform, (b) to ask, demand, collect, receive,
receipt for, xxx for, compound and give acquittance for any and all rents,
issues, profits, avails, distributions, income, payment draws and other sums in
which a security interest is granted under Section 5.01 with full power to
settle, adjust or compromise any claim thereunder as fully as if Lenders were
Borrower itself, (c) to receive payment of and to endorse the name of Borrower
to any items of Collateral (including checks, drafts and other orders for the
payment of money) that come into Lenders' possession or under Lenders' control,
(d) to make all demands, consents and waivers, or take any other action with
respect to, the Collateral, (e) in Lenders' discretion, to file any claim or
take any other action or institute proceedings, either in its own name or in the
name of Borrower or otherwise, which Lenders may reasonably deem necessary or
appropriate to protect and preserve the right, title and interest of Lenders in
and to the Collateral, and (f) to otherwise act with respect thereto as though
Lenders were the outright owner of the Collateral; provided, however, that the
power of attorney herein granted shall be exercisable only upon the occurrence
and during the continuation of an Event of Default unless in Lenders' reasonable
opinion immediate action is necessary to preserve or protect the Collateral.
Borrower agrees to reimburse Lenders upon demand for all reasonable costs and
expenses, including attorneys' fees and expenses, which Lenders may incur while
acting as Borrower's attorney in fact hereunder, all of which costs and expenses
are included within the Obligations.
10.15. Confidentiality. All information (other than periodic reports
filed by Borrower with the Securities and Exchange Commission) disclosed by
Borrower to Lenders in writing or through inspection pursuant to this Agreement
shall be considered confidential. Lenders agree to use the same degree of care
to safeguard and prevent disclosure of such confidential information as Lenders
uses with its own confidential information, but in any event no less than a
reasonable degree of care. Lenders shall not disclose such information to any
third party (other than Lenders' or Lenders' partner's attorneys and auditors
subject to the same confidentiality obligation set forth herein) and shall use
such information only for purposes of evaluation of its investment in Borrower
and the exercise of Lenders' rights and the enforcement of their remedies under
this Agreement and the other Operative Agreements. The obligations of
confidentiality shall not apply to any information that (a) was known to the
public prior to disclosure by Borrower under this Agreement, (b) becomes known
to the public through no fault of Lenders, (c) is disclosed to Lenders by a
third party' having a legal right to make such disclosure, or (d) is
independently developed by Lenders.
10.16 Logos. Borrower agrees to provide to each Lender camera ready
artwork of typestyles and logos of Borrower for use in promotional material by
either Lender and Borrower, upon the request of such Lender. Borrower agrees to
issue a press release relating to the proposed financing, upon the request of
Lenders.
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first above
written.
TRIPATH IMAGING, INC
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
----------------------------------------
Title: Chief Financial Officer
----------------------------------------
MMC/GATX PARTNERSHIP NO. I
By: GATX Capital Corporation, as general
partner
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
----------------------------------------
Title: VP
----------------------------------------
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Xxxx X. Xxxx
----------------------------------------
Name: Xxxx X. Xxxx
----------------------------------------
Title: Senior Vice President
----------------------------------------
27
SCHEDULES
1 Funding Certificate
2 Disclosure Schedule
3 Conditions Precedent
EXHIBITS
A-1 Form of MMC/GATX Secured Promissory Note
A-1 Form of TBCC Secured Promissory Note
B Form of Warrant
C Form of Opinion of Counsel
28
SCHEDULE 1
FUNDING CERTIFICATE
The undersigned, , being the duly elected and acting
------------------- of TRIPATH IMAGING, INC., a Delaware corporation
("Borrower"), does hereby certify to the Lenders (as defined in the Loan
Agreement defined below) in connection with that certain Loan and Security
Agreement dated as of January 19, 2000, among Borrower and certain Lenders named
therein (the "Loan Agreement"; with other capitalized terms used below having
the meanings ascribed thereto in the Loan Agreement) that:
1. The representations and warranties made by Borrower in Article
III of the Loan Agreement and in the other Operative Documents
are true and correct as of the date hereof.
2. No event or condition has occurred and is continuing that
would constitute a Default or an Event of Default under the
Loan Agreement or any other Operative Document.
3. Borrower is in compliance with the covenants and requirements
contained in Articles IV, V, VI and VII of the Loan Agreement.
4. All conditions referred to in Article VIII of the Loan
Agreement to the making of the Loan to be made on or about the
date hereof have been satisfied.
5. No material adverse change in the general affairs, management,
results of operations, condition (financial or otherwise) or
prospects of Borrower, whether or not arising from
transactions in the ordinary course of business, has occurred.
Dated:
----------,------- TRIPATH IMAGING, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
29
SCHEDULE 2
DISCLOSURE SCHEDULE
PERMITTED INDEBTEDNESS
CLAUSE (g):
PERMITTED LIENS
CLAUSE (c):
REPRESENTATIONS AND WARRANTIES
SECTION 3.01(d) PROPERTIES:
SECTION 3.01(f) LITIGATION:
AFFIRMATIVE COVENANTS
SECTION 5.04 LOCATION OF COLLATERAL:
30
SCHEDULE 3
CONDITIONS PRECEDENT
PART I:
At the time of execution and delivery of this Agreement, there shall
also have been duly executed and delivered to Lenders:
(a) The Warrants executed in favor of Lenders (or Persons
specified by Lenders) which are exercisable for shares of
Borrower's common stock, in form acceptable to Lenders;
(b) A subordination agreement with Silicon Valley Bank in form
acceptable to Lenders;
(c) An intercreditor agreement between the Lenders;
(d) A favorable opinion of counsel for Borrower, dated as of the
closing date, in the form attached hereto as Exhibit C or such
other form or forms as Lenders may accept;
(e) Copies, certified by the Secretary, Assistant Secretary or
Chief Financial Officer of Borrower as of the closing date, of
Borrower's charter documents and bylaws and of all documents
evidencing corporate action taken by Borrower authorizing the
execution, delivery and performance of the Operative Documents
to which Borrower is a party, in form and substance
satisfactory to Lenders and its counsel;
(f) Good standing certificate from Borrower's state of
incorporation and the state in which Borrower's principal
place of business is located, together with certificates of
the applicable governmental authorities that Borrower is in
compliance with the franchise tax laws of each such state,
each dated as of a recent date;
(g) Evidence of the insurance coverage required by Section 6.01(d)
of this Agreement;
(h) Form UCC-1 Financing Statements, duly executed by Borrower, or
other documents, and Borrower shall have taken such actions,
if any, as Lenders shall reasonably determine are necessary or
desirable to perfect and protect its security interest in the
Collateral;
(i) Notices of Security Interest to Depository Banks in the forms
provided by Lenders;
(j) Grants of Security Interest in patents and trademarks, in the
forms provided by Lenders;
(k) All other documents as Lenders shall have reasonably
requested.
PART II
On or prior to the Funding Date of the Loans, each of the items set
forth in Part I of this Schedule 3 shall have been delivered to such Lenders and
the following conditions shall have been satisfied or waived by such Lenders:
(a) Borrower shall have provided to Lenders such documents,
instruments and agreements as Lenders shall reasonably request
to evidence the perfection and priority of the security
interests granted to Lenders pursuant to Article V;
31
(b) No Event of Default or Default shall have occurred and be
continuing;
(c) Borrower shall have duly executed and delivered to each Lender
a Note in the amount of such Lender's Loan and a Funding
Certificate in the form of Schedule 1;
(d) In Lenders' sole discretion, there shall not have occurred any
material adverse change in the general affairs, management,
results of operations, condition (financial or otherwise) or
prospects of Borrower, whether or not arising from
transactions in the ordinary course of business, and there
shall not have occurred since the date first written on the
cover page of this Agreement any material adverse deviation by
Borrower from the business plan of Borrower presented to and
not disapproved by Lenders;
(e) The representations and warranties contained in this Agreement
and the other Operative Documents to which Borrower is a party
shall be true and correct in all material respects as if made
on such Funding Date;
(f) Each of the Operative Documents remains in full force and
effect; and
(g) The Funding Date of the Loans under Facility A and Facility B
shall not be later than January 31, 2000.
PART III
On or prior to the Funding Date of the Loan under Facility C, each of
the items set forth in Part I of this Schedule 3 and Part II of this Schedule 3
shall have been delivered to such Lenders and the following conditions shall
have been satisfied or waived by TBCC:
(a) Borrower shall have provided to TBCC Borrower's first quarter
2000 financial statements including income statements, balance
statements, cash flow statements and any financial reports as
TBCC shall request ("Financial Statements") and TBCC is
satisfied with its review of the Financial Statements; and
(b) The Funding Date of the Loan under Facility C shall not be
later than the Commitment Termination Date.
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EXHIBIT A-1
SECURED PROMISSORY NOTE
$3,500,000 Dated: January __, 2000
FOR VALUE RECEIVED, the undersigned, TRIPATH IMAGING, INC., a Delaware
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of MMC/GATX
PARTNERSHIP NO. I ("Lender") the principal amount of Three Million Five Hundred
Thousand Dollars ($3,500,000) or such lesser amount as shall equal the
outstanding principal balance of the Loan made to Borrower by Lender pursuant to
the Loan and Security Agreement referred to below (the "Loan Agreement"), and to
pay all other amounts due with respect to the Loan on the dates and in the
amounts set forth in the Loan Agreement.
Interest on the principal amount of this Note from the date of this
Note shall accrue at the Loan Rate or, if applicable, the Default Rate. The Loan
Rate for this Note is % per annum based on a year of twelve 30-day months.
Borrower shall make payment of Interim Interest, if any, on the Funding Date.
Borrower shall make payments of accrued interest only on the outstanding
principal amount of the Loan on the first day of each month ("Payment Date"),
commencing February 1, 2000, through and including July 1, 2000. Commencing on
August 1, 2000, and continuing on consecutive Payment Dates thereafter, Borrower
shall make to Lender thirty (30) equal payments of principal in the amount of
$116,666.67, plus accrued interest on the then outstanding principal amount.
Principal, interest and all other amounts due with respect to the Loan,
are payable in lawful money of the United States of America to Lender by wire
transfer according to the wire transfer instructions set forth in the Loan
Agreement. The principal amount of this Note and the interest rate applicable
thereto, and all payments made with respect thereto, shall be recorded by Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto which is
part of this Note.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Loan and Security Agreement, dated as of January 19, 2000, to
which Borrower and Lender are parties. The Loan Agreement, among other things,
(a) provides for the making of a secured Loan to Borrower, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events. Capitalized terms, unless otherwise defined herein, shall have
the meaning given such terms in the Loan Agreement.
This Note may be not be prepaid except as set forth in Section 2.01(d)
of the Loan Agreement.
This Note and the obligation of Borrower to repay the unpaid principal
amount of the Loan, plus the premium set forth in Section 2.01(d), interest on
the Loan and all other amounts due Lenders under the Loan Agreement is secured
under the Loan Agreement.
Presentment for payment, demand, notice of protest and all other
demands and notices of any kind in connection with the execution, delivery,
performance and enforcement of this Note are hereby waived.
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees (based on the normal hourly rates of such
attorneys or allocated costs of in-house counsel and not on a percentage of the
balance of the Note) and costs, incurred by Lenders in the enforcement or
attempt to enforce any of Borrower's obligations hereunder not performed when
due. This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California.
-A-1-
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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
by one of its officers thereunto duly authorized on the date hereof.
TRIPATH IMAGING, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-A-2-
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EXHIBIT A-2
SECURED PROMISSORY NOTE
$1,750,000 Dated: ___________, 2000
FOR VALUE RECEIVED, the undersigned, TRIPATH IMAGING, INC., a Delaware
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of TRANSAMERICA
BUSINESS CREDIT CORPORATION ("Lender") the principal amount of One Million Seven
Hundred Fifty Thousand Dollars ($1,750,000) or such lesser amount as shall equal
the outstanding principal balance of the Loan made to Borrower by Lender
pursuant to the Loan and Security Agreement referred to below (the "Loan
Agreement"), and to pay all other amounts due with respect to the Loan on the
dates and in the amounts set forth in the Loan Agreement.
Interest on the principal amount of this Note from the date of this
Note shall accrue at the Loan Rate or, if applicable, the Default Rate. The Loan
Rate for this Note is % per annum based on a year of twelve 30-day months.
Borrower shall make payment of Interim Interest, if any, on the Funding Date.
Borrower shall make payments of accrued interest only on the outstanding
principal amount of the Loan on the first day of each month ("Payment Date"),
commencing _________, 2000, through and including ______, 2000. Commencing on
______, 2000, and continuing on consecutive Payment Dates thereafter, Borrower
shall make to Lender thirty (30) equal payments of principal in the amount of
$58,333.34, plus accrued interest on the then outstanding principal amount.
Principal, interest and all other amounts due with respect to the Loan,
are payable in lawful money of the United States of America to Lender by wire
transfer according to the wire transfer instructions set forth in the Loan
Agreement. The principal amount of this Note and the interest rate applicable
thereto, and all payments made with respect thereto, shall be recorded by Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto which is
part of this Note.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Loan and Security Agreement, dated as of January 19, 2000, to
which Borrower and Lender are parties. The Loan Agreement, among other things,
(a) provides for the making of a secured Loan to Borrower, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events. Capitalized terms, unless otherwise defined herein, shall have
the meaning given such term in the Loan Agreement.
This Note may be not be prepaid except as set forth in Section 2.01(d)
of the Loan Agreement.
This Note and the obligation of Borrower to repay the unpaid principal
amount of the Loan, plus the premium set forth in Section 2.01(d), interest on
the Loan and all other amounts due Lenders under the Loan Agreement is secured
under the Loan Agreement.
Presentment for payment, demand, notice of protest and all other
demands and notices of any kind in connection with the execution, delivery,
performance and enforcement of this Note are hereby waived.
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees (based on the normal hourly rates of such
attorneys or allocated costs of in-house counsel and not on a percentage of the
balance of the Note) and costs, incurred by Lenders in the enforcement or
attempt to enforce any of Borrower's obligations hereunder not performed when
due. This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California.
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35
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
by one of its officers thereunto duly authorized on the date hereof.
TRIPATH IMAGING, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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36
EXHIBIT C
FORM OF OPINION OF COUNSEL
[Date]
MMC/GATX PARTNERSHIP NO. I
c/o GATX Capital Corporation, Agent
Four Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
and
TRANSAMERICA BUSINESS CREDIT CORPORATION
00 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 000000-0000
Ladies and Gentlemen:
We have acted as counsel for TRIPATH IMAGING, INC. (the "Borrower") in
connection with (i) the execution of the Loan and Security Agreement of even
date herewith (the "Loan Agreement") among Borrower, MMC/GATX PARTNERSHIP NO. I
and TRANSAMERICA BUSINESS CREDIT CORPORATION ("Lenders"), (ii) the issuance of
warrants to purchase Borrower's Common Stock (the "Warrants") and (iii) the
transactions contemplated thereby. This opinion is being rendered to you
pursuant to Section 8.01 of the Loan Agreement. Capitalized terms not otherwise
defined in this opinion have the meaning given them in the Loan Agreement.
In connection with this opinion and our representation, we have
examined originals, or copies certified or otherwise identified to our
satisfaction, of the following:
(i) The Loan Agreement;
(ii) The Warrants;
(iii) The Notes dated as of [Date];
(iv) The Restated Articles of Incorporation and the Bylaws of
Borrower, each as in effect on the date hereof;
(v) The certificate of an officer of Borrower as to certain
factual matters ("Officer Certificate");
(vi) Certificates issued by the Secretary of State of the State of
[state of incorporation] dated December __, 1999, certifying
the good standing of Borrower;
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37
(vii) Such other documents, records, and certificates as we have
deemed necessary or appropriate as a basis for the opinions
hereafter expressed.
The Loan Agreement, the Notes and the Warrants are hereinafter referred
to as the "Transaction Documents."
In such examinations we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity to originals of all documents submitted to us as certified,
facsimile, telecopied or photostatic copies thereof. As to certain matters of
fact material to our opinion, we have relied upon the Officer Certificate and
upon your representations in the Transaction Documents.
As used in this opinion, the expression "to the best of our knowledge,"
means the actual present knowledge or belief of those attorneys in our firm who
have or who are currently representing Borrower. We have not undertaken any
independent investigation to determine the existence or nonexistence of other
facts, and no inference as to our knowledge of the existence or nonexistence of
other facts should be drawn from the fact of this firm's representation of
Borrower in connection with the Transaction Documents.
Based upon and subject to the foregoing and subject to the
qualifications contained herein, we are of the opinion that:
(a) Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of [state of incorporation].
(b) Borrower has the requisite corporate power and authority to
execute, deliver and perform the Transaction Documents and to issue the
Warrants. All action on the part of Borrower, its directors and its shareholders
necessary for the authorization, execution, delivery and performance of the
Transaction Documents, has been taken. The Transaction Documents have been duly
executed and delivered by an authorized officer of Borrower.
(c) The execution, delivery and performance of the Transaction
Documents do not conflict with or violate any provision of Borrower's Restated
Articles of Incorporation or Bylaws or of applicable law and, to the best of our
knowledge, do not conflict with or constitute a default under any provision of
any judgment, writ, decree, order or material agreement, indenture, or
instrument to which Borrower is a party or by which it is bound.
(d) The Transaction Documents constitute legal, valid and binding
obligations of Borrower, enforceable in accordance with their respective terms.
To our knowledge, no filing need be made with any governmental authority with
respect to the Transaction Documents in connection with an exemption from state
usury laws or in connection with any other matter.
(e) The shares of Common Stock issuable upon exercise of the Warrants
have been duly authorized and reserved for issuance upon such exercise, and when
issued in accordance with the terms of the Warrants, will be duly authorized,
validly issued, fully paid and non-assessable.
The opinions set forth above are subject to the following additional
qualifications, assumptions, limitations and exceptions:
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(A) The effect of bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws relating to or affecting the
rights and remedies of creditors generally.
(B) Limitations imposed by general equitable principles upon the
specific enforceability of any of the provisions of the Transaction Documents
and upon the availability of injunctive relief or other equitable remedies.
(C) We express no opinion as to the enforceability of any choice of law
provision in the documents.
(D) We express no opinion as to the compliance or noncompliance with
applicable antifraud statutes under the rules and regulations of state and
federal securities laws concerning the issuance of the Warrant.
(E) We express no opinion herein concerning any law other than the law
of the State of California, [the General Corporation Law of the State of
Delaware] and the federal laws of the United States of America.
This opinion is furnished to you solely for your benefit and may not be
relied upon by any other person (other than assignees of any of your rights)
without our prior written consent, which consent shall not be unreasonably
withheld or delayed.
Very truly yours,
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