CREDIT AND SECURITY AGREEMENT
Dated as of July 14, 1999
CIMA
LABS, INC., a Delaware corporation (the "Borrower"), and WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender"), hereby agree as follows:
ARTICLE I
Definitions
Section
1.1 Definitions. For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
"Accounts"
means the aggregate unpaid obligations of customers and other account debtors to the Borrower arising out of the sale or lease of goods or rendition of services by the
Borrower on an open account or deferred payment basis, whether now existing or hereafter arising.
"Advance"
has the meaning given in Section 2.1.
"Book
Net Income" or "Book Net Loss" means the Borrower's year-to-date net income or loss, as the case may be, determined in accordance with GAAP except excluding extraordinary items.
"Borrowing
Base" means, at any time and subject to change from time to time in the Lender's sole discretion, the lesser of:
- (a)
- the
Maximum Line; or
- (b)
- 80%
of Eligible Accounts.
"Collateral"
has the meaning given in Section 3.1.
"Default
Rate" means an annual rate equal to 3% over the Floating Rate, which rate shall change when and as the Floating Rate changes.
"Disclosure"
means that certain Disclosure dated of even date herewith.
"Eligible
Accounts" means all unpaid Accounts, net of any credits, except the following shall not in any event be deemed Eligible Accounts:
(1) That
portion of Accounts over 90 days past invoice date;
(2) That
portion of Accounts that are disputed or subject to a claim of offset or a contra account;
(3) That
portion of Accounts not yet earned by final delivery of goods or rendition of services, as applicable, by the Borrower to the customer;
(4) Accounts
owed by any unit of government, whether foreign or domestic (provided, however, that there shall be included in Eligible Accounts that portion of Accounts
owed by such units of government for which the Borrower has provided evidence satisfactory to the Lender that (A) the Lender has a first priority perfected security interest and (B) such
Accounts may be enforced by the Lender directly against such unit of government under all applicable laws);
(5) Accounts
owed by an account debtor located outside the United States which are not backed by a bank letter of credit assigned to the Lender, in the possession of
the Lender and acceptable to the Lender in all respects, in its sole discretion;
(6) Accounts
owed by an account debtor that is the subject of bankruptcy proceedings, has gone out of business or has poor credit;
(7) Accounts
owed by a shareholder, subsidiary, affiliate, officer or employee of the Borrower;
(8) Accounts
not subject to a duly perfected security interest in favor of the Lender or which are subject to any lien, security interest or claim in favor of any
Person other than the Lender;
(9) That
portion of Accounts that have been restructured, extended, amended or modified;
(10) That
portion of Accounts that constitutes finance charges, service charges or sales or excise taxes;
(11) Accounts
owed by an account debtor, regardless of whether otherwise eligible, if 10% or more of the total amount due under Accounts from such debtor is ineligible
under clauses (1), (2) or (9) above; and
(12) Accounts,
or portions thereof, otherwise deemed ineligible by the Lender in its sole discretion.
"Event
of Default" has the meaning specified in Section 7.1.
"Floating
Rate" means an annual rate equal to the sum of the Prime Rate plus two percent (2.0%) which annual rate shall change when and as the Prime Rate changes.
"GAAP"
means generally accepted accounting principles, applied on a basis consistent with the accounting practices applied in the financial statements described in Section 5.2.
"Guarantor"
means any person executing any liquidation support agreement in favor of the Lenders.
"Inventory"
means all of the Borrower's inventory, as such term is defined in the UCC, whether now owned or hereafter acquired.
"Loan
Documents" means this Agreement, the Note, the Disclosure, the Security Documents and any and all other related instruments, agreements and documents executed by the Borrower,
any Guarantor or any other party and delivered to the Lender.
"Maximum
Line" means $2,000,000.
"Note"
means the Borrower's revolving promissory note, payable to the order of the Lender in form and content satisfactory to Lender.
"Obligations"
means each and every debt, liability and obligation of every type and description which the Borrower may now or at any time hereafter owe to the Lender, including all
indebtedness arising under this Agreement, the Note or any other loan or credit agreement or guaranty between the Borrower and the Lender, whether now in effect or hereafter entered into.
"Person"
means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Prime
Rate" means the rate of interest publicly announced from time to time by Wells Fargo Bank, N.A. as its 'prime rate' or, if such bank ceases to announce a rate so designated,
any similar successor rate designated by the Lender.
"Security
Documents" means the Collateral Account Agreement and the Lockbox Agreement, each of even date herewith and by and among the Borrower, the Lender and Norwest Bank Minnesota,
National Association, and any and all other documents, instruments and agreements executed by the Borrower or any other party and delivered to the Lender as amended from time to time, as security for
the Obligations.
"Security
Interest" has the meaning given in Section 3.1.
"Termination
Date" has the meaning given in Section 2.4.
"UCC"
means the Uniform Commercial Code as in effect from time to time in the State of Minnesota.
ARTICLE II
Amount and Terms of the Credit Facility
Section
2.1 Revolving Advances. The Lender may, in its sole discretion, make advances to the Borrower
from time to time from the date this Agreement is signed and delivered to the Termination Date, on the terms and subject to the conditions herein set forth (each an "Advance"). The Lender shall not
consider any request for an Advance if, after giving effect to such requested Advance, the sum of the outstanding and unpaid Advances would exceed the Borrowing Base. The Borrower's obligation to pay
the Advances shall be evidenced by the Note. Within the limits set forth in this Section 2.1, the Borrower may request Advances, prepay, and request additional Advances. The Borrower shall make
each request for an Advance to the Lender before 11:00 a.m. (Minneapolis time) of the day of the requested Advance. Requests may be made in writing or by telephone.
Section
2.2 Interest; Default Interest.
(a) Revolving Note. Except as set forth in Sections 2.2(b) and 2.2(c) the outstanding principal balance
of the Advances shall bear interest at the Floating Rate. All interest shall be payable monthly in arrears on the first day of the month and on demand.
(b) Minimum Interest Charge. Notwithstanding the interest payable pursuant to Section 2.2(a) and
2.2(c) and subject to Section 2.2(d), the Borrower shall pay to the Lender interest of not less than $7,166 per month during the term of this Agreement (prorated for less than a full month) and
on the first day of
each month the Borrower shall pay any deficiency between such minimum interest charge and the amount of interest otherwise calculated under Sections 2.2(a) and 2.2(c).
(c) Default Interest Rate. From the first day of any month during which Borrower is not in compliance
with its agreements set forth in this Agreement or the Note, in the Lender's discretion and without waiving any of its other rights and remedies, the outstanding principal balance of the Advances
shall bear interest at the Default Rate.
(d) Unused Fee/Deactivation. The Borrower may from time to time (but no more than once during any
30-day period) by giving notice to the Lender in the same manner as set forth in Section 2.1, deactivate the revolving line of credit; and during each month thereafter in which the balance of
the Advances is Zero for each day of such period, the Borrower shall pay a monthly unused fee of $1,500 (prorated for less than a full month of this Agreement) on the first day of each calendar month
in lieu of the minimum interest otherwise payable pursuant to Section 2.2(b). The Borrower may reactivate the revolving line of credit upon giving notice to the Lender in the same manner as set
forth in Section 2.1; provided a collateral audit satisfactory to Lender has been performed within the previous 90 days.
Section
2.3 Fees.
(a) Closing Fee. The Borrower agrees to pay the Lender a closing fee of $15,000 upon the execution of
this Agreement.
(b) Monitoring Fees. The Borrower agrees to pay the Lender collateral monitoring fees for the expense
of auditors (not to exceed the then current standard applicable rate, which on the date of this Agreement is $62.50 per hour per auditor, plus out-of-pocket expenses).
Section
2.4 Discretionary Nature of Credit Facility; Automatic Renewal. THE LENDER MAY AT ANY TIME AND
FOR ANY REASON REFUSE TO MAKE AN ADVANCE AND/OR DEMAND PAYMENT OF THE ADVANCES AND TERMINATE THIS AGREEMENT WHETHER BORROWER IS OR IS NOT IN COMPLIANCE WITH THIS AGREEMENT. The Lender need not show
that an adverse change has occurred in the Borrower's condition, financial or otherwise, in order to refuse to make any requested Advance or to demand payment of the Advances. Unless terminated by the
Lender at any time or by the Borrower pursuant to Section 2.5, this Agreement shall remain in effect until the one year anniversary of the date of this Agreement and, thereafter, shall automatically
renew for successive one year periods. Each such anniversary date is herein referred to as a "Termination Date".
Section
2.5 Termination by Borrower.
(a) Termination by Borrower. The Borrower may terminate this Agreement at any time subject to payment
and performance of all Obligations, may obtain any release or termination of the Security Interest to which the Borrower is otherwise entitled by law by (1) giving at least 30 days' prior
written notice to the Lender o the Borrower's intention to terminate this Agreement, and (2) paying the Lender a prepayment fee in accordance with Section 2.5 (b) if the Borrower terminates this
Agreement effective as of any date other than a Termination Date.
(b) Prepayment Fee. If the Borrower desires to terminate this Agreement as of a Termination Date but
without giving at least 30 days' prior written notice thereof, or if the Borrower desires to terminate this Agreement as of any date other than a Termination Date upon giving at least 30 days' prior
written notice to the Lender of the Borrower's intention to do so, Borrower shall pay to the Lender a prepayment fee of the greater of (i) prior to the first anniversary of this Agreement, 2% of the
Maximum Line or following the first anniversary of this Agreement, 1% of the Maximum Line or (ii) the monthly
Minimum Interest Charge pursuant to subsection 2.2(b) above multiplied by the number of months remaining in the term of this Agreement; provided that (i) no prepayment fee shall be due if the Borrower
shall prepay the Obligations solely from cash flow generated from the Borrower's operations in the ordinary course and (ii) no prepayment fee shall be required if the prepayment is wholly made
pursuant to a refinancing with another "Norwest" or "Wells Fargo" affiliated entity.
Section
2.6 Mandatory Prepayment. Without notice or demand, if the outstanding principal balance of the
Advances shall at any time exceed the Borrowing Base, the Borrower shall immediately prepay the Advances to the extent necessary to eliminate such excess.
Section
2.7 Advances Without Request. The Borrower hereby authorizes the Lender, in its discretion, at
any time or from time to time without the Borrower's request, to make Advances to pay accrued interest, fees, uncollected items that have been applied to the Obligations, and other Obligations due and
payable from time to time.
Section
2.8 Use of Proceeds. The Borrower shall use the proceeds of Advances for ordinary working
capital purposes.
ARTICLE III
Security Interest
Section
3.1 Grant of Security Interest. The Borrower hereby grants to the Lender a security interest
(the "Security Interest") in the following collateral (the "Collateral"), as security for the payment and performance of the Obligations:
INVENTORY: All
inventory of Borrower, as such term is defined in the UCC, whether now owned or hereafter acquired, whether consisting of whole goods, spare parts or components,
supplies or
materials, whether acquired, held or furnished for sale, for lease or under service contracts or for manufacture or processing, and wherever located; and
ACCOUNTS
AND OTHER RIGHTS TO PAYMENT: Each and every right of Borrower to the payment of money, whether such right to payment now exists or hereafter arises, whether such right to
payment arises out of a sale, lease or other disposition of goods or other property, out of a rendering of services, out of a loan, out of the overpayment of taxes or other liabilities, or otherwise
arises under any contract or agreement, whether such right to payment is created, generated or earned by Borrower or by some other person who subsequently transfers such person's interest to Borrower,
whether such right to payment is or is not already earned by performance, and howsoever such right to payment may be evidenced, together with all other rights and interests (including all liens and
security interests) which Borrower may at any time have by law or agreement against any account debtor or other obligor obligated to make any such payment or against any property of such account
debtor or other obligor; all including all of Borrower's rights to payment in the form of all present and future accounts contract rights, loans and obligations receivable, chattel papers, bonds,
notes and other debt instruments, tax refunds and rights to payment in the nature of general intangibles; and
EQUIPMENT: All
of the Borrower's goods and equipment, as such term is defined in the UCC whether now or hereafter owned, including all present and future machinery, vehicles,
furniture, fixtures, manufacturing equipment, shop equipment, office and recordkeeping equipment, parts, tools,
supplies, and including specifically the goods described in any equipment schedule or list herewith or hereafter furnished to the Lender by the Borrower;
INVESTMENT
PROPERTY: All of the Borrower's investment property, as such term is defined in the UCC, including without limitation securities, securities accounts, securities
entitlements, financial assets and certificates of deposit of the Borrower and all funds of the Borrower on deposit with and all property in the possession of the Lender or any depository institution,
each whether now owned or hereafter acquired; and
GENERAL
INTANGIBLES: All of the Borrower's general intangibles, as such term is defined in the UCC, whether now owned or hereafter acquired, including all present and future contract
rights, patents, patent applications, copyrights, trademarks, trade names, trade secrets, customer or supplier lists and contracts, manuals, operating instructions, permits, franchises, the right to
use the Borrower's name, and the goodwill of the Borrower's business; and
PROCEEDS: Together
with all substitutions and replacements for and products of any of the foregoing property and together with proceeds of any and all of the foregoing property and, in
the case of all tangible property, together with all accessions and together with (i) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in
connection with any such tangible property, and (ii) all warehouse receipts, bills of lading and other documents of title now or hereafter covering such tangible property.
Section
3.2 Notification of Account Debtors and Other Obligors. The Lender may at any time after the
occurrence of an Event of Default, or during any period when an Event of Default would occur through the passage of time, notify any account debtor or other person obligated to pay the amount due that
such right to payment has been assigned or transferred to the Lender for the security and shall be paid directly to the Lender. The Borrower will join in giving such notice if the Lender so requests.
At any such time after the occurrence of an Event of Default, or during any period when an Event of Default would occur through the passage of time, and after the occurrence of an Even of Default, or
during any period when an Event of Default would occur through the passage of time, and after the Borrower of the Lender gives such notice to an account debtor or other obligor, the Lender may, but
need not, as the Borrower's agent and attorney-in-fact, notify the United States Postal Service to change the address for delivery of the Borrower's mail to any address designated by the Lender,
otherwise intercept the Borrower's mail, and receive, open and dispose of the Borrower's mail, applying all Collateral as permitted under this
Agreement and holding all other mail for the Borrower's account or forwarding such mail to the Borrower's last known address.
Section
3.3 Occupancy.
(a) The
Borrower hereby irrevocably grants to the Lender the right tot take possession of each premises where Borrower conducts its business and has any rights of
possession (the "Premises") at any time after the occurrence and during the continuance of an Event of Default.
(b) The
Lender may use the Premises only to hold, process, manufacture, sell, use, store, liquidate, realize upon or otherwise dispose of goods that are Collateral and
for other purposes that the Lender in good faith considers related.
(c) The
Lender's right to hold the Premises shall terminate upon the earlier of payment in full of all Obligations, or final sale or disposition of all goods
constituting Collateral and delivery of all such goods to purchasers.
(d) The
Lender shall not be obligated to pay or account for any rent or other compensation for the possession or use of any of the Premises; provided, however, that if
the Lender does pay or account for any rent or other compensation for the possession or use of any of the Premises, the Borrower shall reimburse the Lender promptly for the full amount thereof.
Section
3.4 License/Maintenance of Intellectual Property. The Borrower hereby grants to the Lender a
nonexclusive worldwide and royalty-free license to use or otherwise exploit all trademarks, franchises, trade names, copyrights and patents owned by or licensed to the Borrower for the purpose of
selling, leasing or otherwise disposing of any or all Collateral following an Event of Default. The Borrower shall not sell, transfer, assign (by operation of law or otherwise), exchange, lease,
license, allow to go abandoned or otherwise dispose of all or any portion of said intellectual property and shall maintain and protect all of such property in accordance with all applicable state,
federal and foreign laws.
Section
3.5 Filing a Copy. A carbon, photographic, or other reproduction of this Agreement or of a
financing statement signed by Borrower is sufficient as a financing statement.
ARTICLE IV
Conditions of Lending
In view of the fact that Advances may be made in the sole discretion of the Lender, this Agreement does not set forth conditions precedent to Advances. The
Lender will advise the Borrower of the Lender's documentation and other requirements before considering any Advance.
ARTICLE V
Representations and Warranties
The Borrower represents and warrants to the Lender as follows:
Section
5.1 Name; Locations; Tax ID No., Subsidiaries. During its existence, the Borrower has done
business solely under its corporate name as set forth herein and under such trade names and such other corporate names as disclosed to Lender in writing before this Agreement is signed and delivered.
The address of Borrower's chief executive office and principal place of business and its federal tax identification number are set forth below its signature to this Agreement. All Inventory is located
at the location or at one of the other locations disclosed to Lender in writing before this Agreement is signed and delivered. The Borrower has no subsidiaries except as disclosed to Lender in writing
before this Agreement is signed and delivered.
Section
5.2 Financial Condition; No Adverse Change. Before this Agreement was signed and delivered, the
Borrower furnished the lender certain of its unaudited financial statements certified by the
Borrower. Those statements fairly present the Borrower's financial condition as the dates indicated therein and the results of its operations for the period ended March 31, 1999 and were prepared in
accordance with generally accepted accounting principles. Since March 31, 1999, there has been no
material adverse change in the business, properties or condition (financial or otherwise) of the Borrower.
ARTICLE VI
Affirmative Covenants of the Borrower
So long as the Advances or any other obligations shall remain unpaid, the Borrower will comply with the requirements in this Article, unless the Lender shall
otherwise consent in writing.
Section
6.1 Reporting Requirements. The Borrower will deliver to the Lender each of the following in
form and detail acceptable to the Lender:
(a) as
soon as available, and in any event within 120 days after the end of each fiscal year of the Borrower, the Borrower's audited financial statements prepared in
accordance with GAAP;
(b) as
soon as available and in any event within 20 days after the end of each month, an unaudited/ internal balance sheet and statement of income and retained earnings
of the Borrower as at the end of and for such month and for the year to date period then ended, prepared in accordance with GAAP, subject to reclassifications and year-end adjustments, together with a
completed compliance certificate in the form attached hereto;
(c) within
15 days after the end of each month, agings of the Borrower's accounts receivable, together with a certificate of ineligible accounts, and agings of the
Borrower's accounts payable, each as of the end of such month;
(d) as
soon as available, and within fifteen (15) days of receipt thereof, a copy of the bank account statements of the Borrower from each bank with which Borrower
maintains an account;
(e) from
time to time, with reasonable promptness, any and all receivables schedules, collection reports, deposit records, equipment schedules, copies of invoices to
account debtors, shipment documents and delivery receipts for goods sold, and such other material, reports, records or information as the Lender may request;
(f) within
seven (7) days of Borrower's payment of or deposit of taxes, including but not limited to payroll taxes, proof of such payment in form acceptable to the
Lender;
(g) at
least thirty (30) days before the beginning of each of Borrower's fiscal years, projections of Borrower's monthly balance sheets and income statements for such
fiscal year; and
(h) immediately
after the commencement thereof, notice in writing of all litigation and of all proceedings before any governmental or regulatory agency affecting the
Borrower or which seek a monetary recovery against the Borrower in excess of $10,000.
Section
6.2 Inspection. Upon the Lender's request, the Borrower will permit any officer, employee,
attorney, agent or accountant for the Lender to audit, review, make extracts from or copy any and all records of the Borrower (except for confidential information of Borrower's partners) and to
inspect the Collateral at all times during ordinary business hours.
Section
6.3 Account Verification. The Borrower will at any time and from time to time upon request of
the Lender send requests for verification of Accounts or notices of assignment to account debtors and
other obligors. The Borrower authorizes the Lender to verify Accounts directly with account debtors or other obligors from time to time, including on a daily basis (and the Borrower understands the
Lender intends to do so by telephone and/or in writing).
Section
6.4 No Other Liens. The Borrower will keep all Collateral free and clear of all security
interests, liens and encumbrances except the Security Interest, purchase money security interests in equipment, and other security interests approved by the Lender in writing.
Section
6.5 Insurance. The Borrower will at all times keep all tangible collateral insured against
risks of fire (including so-called extended coverage), theft, collision (for Collateral consisting of motor vehicles) and such other risks and in such amounts as the Lender may reasonably request,
with a lender's loss payable clause in favor of Lender to the extent of its interest.
Section
6.6 Lockbox; Collateral Account. The Borrower has provided the Lender with agreements regarding
a lockbox and a collateral account in connection with the collection of Accounts.
Section
6.7 Minimum Book Net Income. The Borrower will at all times maintain during each period
described below, a Book Net Income (on an unconsolidated, Borrower-only basis), determined as of the end of each month on a year-to-date basis, of at least the amount set forth opposite such period
(bracketed amounts indicate maximum book Net Loss):
Period
|
|
Minimum Book Net Income
|
| |
|
|
| May 31 through June 30, 1999 |
|
($2,271,000) |
| July 31 through November 30, 1999 |
|
($2,440,000) |
| December 31, 1999 |
|
($2,294,000) |
Lender
shall set the Book Net Income covenant levels for subsequent periods based on Borrower's projections provided pursuant to Section 6.1(g).
Section
6.8 No Sale or Transfer of Collateral and Other Assets. The Borrower will not sell, lease,
assign, transfer or otherwise dispose of (i) the stock of any subsidiary, (ii) all or substantial part of its assets, or (iii) any Collateral or any interest therein (whether in one transaction or in
a series of transactions) to anyone other than the sale of Inventory in the ordinary course of business.
Section
6.9 Place of Business; Name. The Borrower will not change the location of its chief executive
office or principal place of business from that disclosed pursuant to Section 5.1. The Borrower will not permit any tangible Collateral to be located in any state or area in which, in the event of
such location, a financing statement covering such Collateral would be required to be, but has not in fact been, filed in order to perfect the Security Interest. The Borrower will not change its name.
Section
6.10 Maximum Unfinanced Capital Expenditures. The Borrower will not expend or contract to
expend more than $400,000 in the aggregate during 1999 for fixed assets, including Equipment, except for (i) capital expenditures financed through long term debt or (ii) capital expenditures for which
the Borrower is reimbursed by its customers.
ARTICLE VII
Events of Default, Rights and Remedies
Section
7.1 Events of Default. An "Event of Default" as used herein shall mean any of the following:
(a) Failure
to pay the Note when demanded, and in this connection Borrower hereby waives presentment, notice of dishonor and protest;
(b) A
petition shall be filed by or against the Borrower under the United States Bankruptcy Code naming the Borrower of such Guarantor as debtor;
(c) Default
in the performance, or breach, of any covenant or agreement of the Borrower, or any other related party contained in this Agreement or any other Loan
Document.
Section
7.2 Rights and Remedies. As provided in Section 2.4, the Lender may, at any time and for any
reason, refuse to make any requested Advance or demand payment of the Advances. Upon such demand or upon the occurrence of an Event of Default or at any time thereafter, the lender may exercise any or
all of the following rights and remedies:
(a) The
Lender may exercise and enforce any and all rights and remedies available upon default to a secured party under the UCC, including the right to take possession
of Collateral, or any evidence thereof, proceeding without judicial process or by judicial process (without a prior hearing or notice thereof, which the Borrower hereby expressly waives) and the right
to sell, lease or otherwise dispose of any or all of the Collateral, and in connection therewith, the Borrower will on demand assemble the Collateral and make it available to the Lender at a place to
be designated by the Lender which is reasonably convenient to both parties;
(b) the
Lender may exercise any other rights and remedies available to it by law or agreement.
The
remedies provided hereunder are cumulative.
Section
7.3 Certain Notices. If notice to the Borrower of any intended disposition of Collateral or any
other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner specified in Section 8.1) at least 10 calendar days
before the date of intended disposition or other action.
ARTICLE VIII
Miscellaneous
Section
8.1 Addresses for Notices, Etc. Except as otherwise expressly provided herein, all notices,
requests, demands and other communications provided for hereunder shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, (c) sent by overnight courier
of national reputation, or (d) transmitted by telecopy, in each case addressed or telecopied to the party to whom notice is being given at its address or telecopy number as set forth below its
signature to this Agreement.
Section
8.2 Costs and Expenses. The Borrower agrees to pay on demand all costs and expenses (including
reasonable legal fees) incurred by the Lender in connection with the Loan Documents, and any other document or agreement related thereto, and the transactions contemplated hereby, including wire
transfer and ACH charges, the cost of credit reports, overadvance fees, the expense of any auditors (not to exceed the then current standard applicable rate, which on the date of this Agreement is
$62.50 per hour per auditor, plus out of pocket expenses), and fees and expenses in enforcing this Agreement.
Section
8.3 Indemnity. In addition to the payment of expenses pursuant to Section 8.2, the Borrower
agrees to indemnify, defend and hold harmless the Lender, and any of its participants, parent corporations, subsidiary corporations, affiliated corporations, successor corporations, and all present
and future officers, directors, employees, attorneys and agents of the foregoing (the "Indemnitees") from and against any of the following (collectively, "Indemnified Liabilities":
(1) any
and all transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of this Agreement
and the other Loan Documents or the making of the Advances;
(2) any
and all liabilities, losses, damages, penalties, judgments, suits, claims, costs and expenses of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel) in connection with any investigative, administrative or judicial proceedings, whether or not such Indemnitee shall be designated a party thereto,
which may be imposed on, incurred by or asserted against any such Indemnitee, in any manner related to or arising out of or in connection with the making of the Advances, this Agreement and the other
Loan Documents or the use or intended use of the proceeds of the Advances; and
(3) any
claim, loss or damage to which any Indemnitee may be subjected as a result of any violation of any federal, state, local or other governmental statue,
regulation, law, or ordinance dealing with the protection of human health and the environment, in any manner related to or arising out of or in connection with the making of the Advances, this
Agreement and the other Loan Documents or the use or intended use of the proceeds of the Advances.
If
any investigative, judicial or administrative proceeding arising from any of the foregoing is brought against any Indemnitee, the Borrower, or counsel designated by the Borrower
and satisfactory to the Indemnitee, will resist and defend such action, suit or proceeding to the extent and in the manner directed by the Indemnitee. Each Indemnitee will use its best efforts to
cooperate in the defense of any such action, suit or proceeding. If the foregoing undertaking to indemnify, defend and hold harmless may be held to be unenforceable because it violates any law or
public policy, the Borrower shall nevertheless make the maximum contribution to the payment and satisfaction of each of the Idemnified Liabilities which is permissible under applicable law. The
Borrower's obligation under this Section 8.3 shall survive the termination of this Agreement and the discharge of the Borrower's other obligations hereunder.
Section
8.4 Binding Effect; Assignment; Sharing of Information. The Loan Documents shall be binding
upon and inure to the benefit of the Borrower and the Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights thereunder or any
interest therein without the prior written consent of the Lender. Without limitation of the Lender's right to share information regarding the Borrower and its Affiliates with Lender's participants,
accountants, lawyers and other advisors, the Lender may share at any time with Norwest Corporation, and all direct and indirect subsidiaries of Norwest Corporation, any and all information the Lender
may have in its possession regarding the Borrower and its Affiliates, and the Borrower waives any right of confidentiality it may have with respect to such sharing of information.
Section
8.5 Governing Law; Jurisdiction Venue; Waiver of Jury Trial. This Agreement and the Note shall
be governed by and construed in accordance with the laws (other than conflict laws) of the State of Minnesota. Each party consents to the personal jurisdiction of the state and federal courts in the
State of Minnesota in connection with any controversy related to this Agreement, waives any argument that venue in any such forum is not convenient and agrees that any litigation initiated by any of
them in connection with this Agreement shall be venued in either the District Court of Hennepin County, Minnesota located in Minneapolis Minnesota, or the United States District court, District of
Minnesota, Fourth Division. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date first above written.
| WELLS FARGO BUSINESS CREDIT, INC. |
|
CIMA LABS, INC. |
By: |
Michael J. Wolf
Its Vice President |
|
By: |
Keith P. Salenger
Its Vice President of Finance & CFO |
Address: |
|
Address: |
| Norwest Center |
|
10000 Valley View Road |
| Sixth Street and Marquette Avenue |
|
Eden Prairie, MN 55344 |
| Minneapolis, Minnesota 55479-0152 |
|
|
| |
|
Telecopy No. (612) 947-8770 |
| Telecopy No. (612) 341-2472 |
|
Federal Tax ID No. 41-1569769 |
| Federal Tax ID No. 41-1712687 |
|
|
[Signature
Page to Credit and Security Agreement]
COMPLIANCE CERTIFICATE
To: Mike
Guillou
Wells Fargo Business Credit, Inc.
Date:
Subject: CIMA
LABS, INC.
Financial Statements
In
accordance with our Credit and Security Agreement dated as of July , 1999 (the 'Credit Agreement'), attached are the financial statements of CIMA LABS, INC. (the
'Borrower') as of and for (the 'Reporting Date') and the year-to-date period then ended (the 'Current Financials'). All terms used in this certificate have the
meanings given in the
Credit Agreement.
I
certify that the Current Financials have been prepared in accordance with GAAP, subject to reclassification and year-end adjustments, and fairly present the Borrower's financial
condition as of the date thereof.
Event of Default. (Check one):
/ / The
undersigned does not have knowledge of the occurrence of a Default or Event of Default under the Credit Agreement.
/ / The
undersigned has knowledge of the occurrence of a Default or Event of Default under the Credit Agreement and attached hereto is a statement of the
facts with respect to thereto.
Representation and Warranties. (Check one):
/ / The
undersigned hereby reaffirms the representations and warranties as set forth in the Credit Agreement, each of which are true and correct as of the
date hereof.
/ / The
undersigned hereby reaffirms the representations and warranties set forth in the Credit Agreement, each of which are true and correct as of the date
hereof except as described in the statement attached hereto.
Financial Covenants. I further hereby certify as follows:
- 1.
- Minimum Book Net Income. Pursuant to Section 6.7 of the Credit Agreement, as of the Reporting Date, the Borrower's
Book Net Income was $ . Which / / satisfies / / does not satisfy the requirement that such amount be not less than
$ on the Reporting Date as set forth in table below:
Period
|
|
Minimum Book Net Income
|
| |
|
|
| May 31 through June 30, 1999 |
|
($2,271,000) |
| July 31 through November 30, 1999 |
|
($2,440,000) |
| December 31, 1999 |
|
($2,294,000) |
Attached hereto are all relevant facts in reasonable detail to evidence, and the computations of the financial covenants referred to above. These computations were made in accordance
with GAAP subject to reclassifications and year-end adjustments.
| |
|
CIMA LABS, INC. |
|
|
By: |
Keith P. Salenger
Its Vice President of Finance and CFO |
CREDIT AND SECURITY AGREEMENT
ARTICLE I
Definitions
ARTICLE II
Amount and Terms of the Credit Facility
ARTICLE III
Security Interest
ARTICLE IV
Conditions of Lending
ARTICLE V
Representations and Warranties
ARTICLE VI
Affirmative Covenants of the Borrower
ARTICLE VII
Events of Default, Rights and Remedies
ARTICLE VIII
Miscellaneous
[SIGNATURE PAGE FOLLOWS]
