EXHIBIT 10.8
EUROPEAN AMERICAN BANK
THIRD AMENDED AND RESTATED
REVOLVING CREDIT NOTE AND AGREEMENT
The within is an amendment and restatement of that certain
Amended and Restated Revolving Credit Note and Agreement in
the principal amount of $9,000,000 dated November 8, 1993 and
executed by the Borrower as hereinafter defined; said Note
having been previously amended and restated by a Second
Amended and Restated Revolving Credit Note and Agreement in
the principal amount of $10,000,000 dated August 9, 1994;
said Note having been previously modified by a Note
Modification Agreement dated February 10, 1995.
October 24, 1995
$10,000,000 Office Address: 730 Veterans Memorial Highway
Hauppauge, NY 11788
FOR VALUE RECEIVED, MEDICAL ACTION INDUSTRIES INC. (the "Borrower")
promises to pay to the order of EUROPEAN AMERICAN BANK (the "Bank") on or before
September 30, 19998 at the office of the Bank located at the place first above
stated or such other place as the holder hereof may from time to time designate
in writing, in lawful money of the United States of America in immediately
available funds, the principal sum of Ten Million ($10,000,000) Dollars (or such
lesser amount as may then be the aggregate unpaid principal balance of all loans
made by the Bank to the Borrower hereunder (each a "Loan" and collectively the
"Loans"). The Borrower also promises to pay interest (computed on the basis of a
360 day year for acutal days elapsed) at said office in like money on the unpaid
principal amount hereof from time to time outstanding from the date hereof until
maturity at the rate of one-quarter of one (0.25%) percent per annum in excess
of the Bank's Prime Rate (the rate stated by the Bank to be its prime rate as in
effect from time to time), which interest rate shall change when and as the
Prime Rate changes. Interest shall be payable monthly on the first day of each
month commencing on the first such day to occur after the date hereof and upon
payment in full of the unpaid principal amount hereof. If any payment of
principal or interest becomes due on a day on which banks in New York, New York
are required or permitted by law to remain closed, such payment may be made on
the next succeeding business day on which such banks are open, and such
extensions shall be included in computing interest in connection with such
payment. The Borrower further agrees that this Note shall bear interest after
any stated or accelerated maturity hereof at a rate of three (3%) percent per
annum in excess of the rate hereinbefore provided for, payable on demand. In no
event shall interest payable hereunder to be in excess of the maximum rate of
interest permitted under applicable law. The Borrower authorizes the Bank to
charge any of the Borrower's accounts for payments of principal and interest
hereunder.
In consideration of the granting of the Loans evidenced by this Note,
the Borrower hereby agrees as follows:
1. Revolving Credit Commitment.
(a) The loan evidenced by this Note is available in one or more
advances (each a "Loan" and collectively the "Loans") during the period which
commences on the date hereof and ends on September 30, 1998 (the "Credit
Period") in an aggregate principal amount up to, but not exceeding at any time
outstanding, the said principal sum of Ten Million ($10,000,000) Dollars (the
"Commitment"). During the Credit Period, the Borrower may use the Commitment by
borrowing, prepaying in whole or in part and reborrowing, on a revolving basis,
all in accordance with the terms and conditions hereof; provided, however, that
each such Loan or prepayment be in an amount not less than One Hundred Thousand
($100,000) Dollars.
(b) The date and amount of each Loan and of each payment of
principal shall be maintained by the Bank in its books and records at the time
of each Loan or payment. All such notations shall be presumed to be correct and
the aggregate net unpaid amount of Loans set forth therein shall be presumed to
be the principal balance hereof, except for manifest error.
(c) Each request for a Loan shall be subject to the satisfaction of
the following conditions precedent:
(i) The Borrower shall have given the Bank notice of such
request, setting forth the amount of the Loan requested and the date thereof.
Such notice may be written or oral and shall be sufficient if received by 1 p.m.
of the date the Loan is requested. If the request is oral it shall be thereafter
confirmed in writing by the Borrower by telecopier to the Bank.
(ii) No Event of Default, or event which would be an Event
of Default but for the giving of notice or the passage of time or both, has
occurred and is continuing; and all of the representations and warranties made
by the Borrower in Section 4 hereof shall be true and correct on and as of the
date of such request as if made on and as of such date.
(d) The outstanding principal balance of the Loans shall at no time
exceed the lesser of the Commitment or the aggregate amount available under the
following Borrowing Base (as such amount shall fluctuate from time to time):
(i) an amount equal to eighty (80%) percent of the
Borrower's "Eligible Accounts Receivable", which shall be defined as all
accounts of the Borrower, less: (w) uncollectible accounts; (x) accounts
remaining unpaid after a date which is ninety (90) days after invoice date (120
days in the case of accounts due from hospitals); (y) accounts of account
debtors of which at least twenty-five (25%) percent of the sum of such accounts
remain unpaid after a date which is 90 days after invoice date (120 days in the
case of accounts due from hospitals); and (z) maximum discounts, rebates,
credits and allowances which may be taken by or granted to account debtor; plus
(ii) an amount equal to fifty-five (55%) percent of the
purchase price of inventory acquired pursuant to commercial letters of credit
(each and "L/C" and collectively the "L/Cs") issued hereunder; plus
(iii) the lesser of $5,000,000 (or $6,500,000 during the
months of April through August, inclusive), or the amount equal to fifty-five
(55%) percent of the market value of "Eligible Inventory" on hand. Eligible
Inventory shall be defined as raw materials, inventory in transit, all finished
goods and shall not include work in process, packaging material and inventory
held outside the territorial jurisdiction of the United States of America.
(e) Sublimits under the Commitment are available to the Borrower
in an amount equal to the lesser of the Borrowing Base or $2,000,000 each for
documentary Letters of Credit ("L/C"), $400,000 for Standby L/C's and $4,000,000
for banker's acceptances (each an "Acceptance" and collectively the
"Acceptances"). For any advance made for an L/C, the Borrower shall pay
one-quarter of one (0.25%) percent upon each of the opening and negotiation of
the L/C. For each Standby L/C the Borrower shall pay a fee equal to one and
one-half (1.5%) percent per annum upon the issuance of the Standby L/C. For any
advance made for an Acceptance, the Borrower shall pay a fee equal to one and
one-half (1.5%) percent per annum upon the issuance of the Acceptance. Each L/C
shall have a maximum tenor of one (1) year, and shall be evidenced by the Bank's
standard letter of credit agreement. Each Standby L/C shall have a maximum tenor
of one hundred eighty (180) days, and shall be evidenced by the Bank's standard
standby letter of credit agreement. Acceptances have a maximum tenor of one
hundred eighty (180) days and shall be evidenced by the Bank's standard
acceptance credit agreement.
(f) Notwithstanding anything to the contrary herein contained, the
amount available for direct borrowings under the Commitment, as set forth in
Subsection 1(d) hereof, shall be reduced by any and all amounts outstanding
pursuant to the borrowing sublimit set forth in Subsection 1(e) hereof.
2. Commitment Fee.
As additional compensation for providing the Loans described
herein, the Borrower agrees to pay the Bank a commitment fee for the Credit
Period at the rate of one-quarter of one (0.25%) percent per annum on the
average daily unused portion of the Commitment. Such commitment fee shall be
payable quarterly, on the first day of each December, February, May and August
during the Credit Period commencing December 1, 1995.
3. Conditions Precedent.
Prior to the first Loan, the Borrower shall satisfy the
following conditions precedent including delivery to the Bank of the following:
(a) A favorable written opinion, dated of even date herewith, of
the Borrower's counsel (which counsel must be satisfactory to the Bank) with
respect to the matters set forth in Section 4 hereof with the exception of
Subsection 4(g);
(b) A copy of the resolutions passed by the Borrower's Board of
Directors certified by its Secretary as being in full force and effect on the
date of this Agreement, authorizing the Loan herein provided for, the execution,
delivery and performance of this Note and any other instrument or agreement
required hereunder and containing a certificate of incumbency as to the person
or persons authorized to execute and deliver the same;
(c) Evidence that the Bank has been named as loss payee on the
insurance maintained by the Borrower on its inventory. Said insurance policy
shall be issued by a financially sound and reputable insurance company
reasonably satisfactory to the Bank;
(d) Copies of the Borrower's certificate of incorporation, and a
certificate of good standing dated not more than sixty (60) days prior to the
date hereof;
(e) The Bank shall have received at the closing the sum of Forty
Thousand ($40,000) Dollars which represents the facility fee due from the
Borrower.
4. Representations And Warranties. The Borrower hereby
represents and warrants to the Bank that:
(a) It is duly organized, validly existing and in good standing
under the laws of the state of its incorporation and is qualified to do
business and in good standing under the laws of each state where its failure to
so qualify would have a material adverse effect on its business, operations or
properties.
(b) This Note has been duly authorized, executed and delivered
and constitutes the valid and legally binding obligation of the Borrower,
enforceable in accordance with its terms.
(c) The execution and delivery of this Note and performance
hereunder will not violate any provision of law.
(d) There are no actions or proceedings pending before any
court or governmental authority, bureau or agency with respect to or threatened
against or affecting the Borrower, or any Subsidiary, which if determined
adversely would have a material adverse effect on the business, the assets or
the financial condition of the Borrower or any Subsidiary. As used herein, the
term "Subsidiary" or "Subsidiaries" means any corproation or corporations of
which the Borrower alone, or the Borrower and/or one or more of its
Subsidiaries, owns, directly or indirectly, at least a majority of the
securities having ordinary voting power for the election of directors.
(e) Neither the Borrower nor any Subsidiary is in default
under, or in violation of, any term of any agreement, ordinance, resolution,
decree, bond, note, indenture, or judgment to which it is a party or by which it
is bound, or by which any of the properties or assets owned by it or used in the
conduct of its business is affected, which default or violation may have a
material adverse effect on the business, the assets or the financial condition
of the Borrower or any Subsidiary. The operations of the Borrower and each
Subsidiary comply in all respects with all laws, ordinances and regulations
applicable to them.
(f) Neither the Borrower nor any Subsidiary is a party to or
bound by, nor are any of the properties or assets owned by it or used in the
conduct of its business affected by, any agreement, ordinance, resolution,
decree, bond, note, indenture, order or judgment, or subject to any charter or
other corporate restriction, which materially and adversely affects the business
or financial condition of the Borrower or any Subsidiary.
(g) All balance sheets, profit and loss statements and other
financial information heretofore furnished to the Bank are true, correct and
complete and present fairly the financial condition of the Borrower and its
Subsidiaries as at the dates thereof and for the periods covered thereby,
including contingent liabilities of every kind, which financial condition has
not materially adversely changed since the date of the most recently dated
balance sheets of the Borrower heretofore furnished to the Bank.
(h) No part of the proceeds of the Loans will be used directly
or indirectly for the purpose of purchasing or carrying, or for payments in full
or in part of indebtedness which was incurred for the purpose of purchasing or
carrying, any margin stock as such term is defined in Sec. 221.2 of Regulation U
of the Board of governors of the Federal Reserve System.
(i) The Borrower and its Subsidiaries are in compliance in all
material respects with the Employee Retirement Income Security Act of 1974
("ERISA") and all rules and regulations thereunder. Neither the Borrower nor any
of its Subsidiaries has any unfunded vested liability under any type of plan
described in Section 4021(a) of ERISA ("Plan") and no reportable event, as set
forth in section 4043(b) of ERISA, has occurred or is continuing with respect to
any Plan.
5. Financial Statements. The Borrower shall deliver to the Bank:
(a) Annually, as soon as available, but in any event within
120 days after the last day of each of its fiscal years, the consolidated and
consolidating balance sheet of the Borrower, as at such last day of the fiscal
year, and consolidated and consolidating statements of income, retained earnings
and cash flows for such fiscal year, prepared in accordance with generally
accepted accounting principles consistently applied, in reasonable detail. The
consolidated statements delivered pursuant to this Section 5(a) shall be
certified without qualification by a firm of independent certified public
accountants satisfactory to the Bank and the consolidating statements shall be
internally prepared by the Borrower.
(b) As soon as available, but in any event within 60 days
after the end of each of its fiscal quarters, the 10-Q report filed or to be
filed with the Securities and Exchange Commission, and the consolidated and
consolidating balance sheet of the Borrower as at the last day of such fiscal
quarter, and consolidated and consolidating statements of income, retained
earnings and cash flows for the portion of the fiscal year through such date,
all in reasonable detail, each such statement to be prepared in accordance with
generally accepted accounting principles consistently applied. The consolidated
statements and the consolidating statements referred to herein shall be
internally prepared by the Borrower.
(c) Promptly after a written request therefor, such other
financial data or information as the Bank may reasonably request from time to
time.
(d) At the same time as it delivers the financial statements
required under the provisions of Subsections 5(a) and 5(b), a certificate signed
by the president and principal accounting officer of the Borrower, to the effect
that no Event of Default hereunder or under any other agreement to which the
Borrower or any Subsidiary is a party or by which it is bound, or by which any
of its properties or assets may be affected, and no event which, with the giving
of notice or the lapse of time, or both, would constitute such an Event of
Default, has occurred.
6. Affirmative Covenants. The Borrower will, and with respect
to the agreements set forth in Subsections 6(a) through 6(f) hereof, will cause
each Subsidiary to:
(a) with respect to its properties, assets and business,
maintain insurance against loss or damage, to the extent that property, assets
and businesses of similar character are usually so insured by companies
similarly situated and operating like properties, assets or businesses with
responsible insurance companies satisfactory to the Bank; such insurance to be
endorsed to name the Bank as loss payee;
(b) duly pay and discharge all taxes or other claims which
might become a lien upon any of its property except to the extent that such
items are being in good faith appropriately contested;
(c) maintain, preserve and keep its properties in good repair,
working order and condition, and make all reasonable repairs, replacements,
additions, betterments and improvements thereto;
(d) conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and conducted;
(e) comply with all statutes, rules and regulations and maintain
its corporate existence;
(f) permit the Bank to make or cause to be made, semi-annual
field audits of any books, records and papers of the Borrower at the Borrower's
sole cost and expense at times reasonably required by the Bank, and to permit
the Bank to make such other audits of its books, records and papers at the
Bank's expense at all such reasonable times and as often as the Bank may
require;
(g) use the proceeds of the Loans for the following purposes and
for no other purpose: To finance any inventory purchases by and accounts
receivable of the Borrower, and to refinance any amounts outstanding under an
existing line of credit provided to the Borrower from the Bank;
(h) deliver to the Bank, as soon as available, but in any
event within 60 days after the end of each of its fiscal quarters, a certificate
signed by the president and principal accounting officer, certifying the value
of the Borrower's Eligible Accounts Receivables and Inventory;
(i) deliver to the Bank, as soon as available, but in any
event within 15 days after the end of each calendar month, borrowing base
certificates, accounts receivable aging and inventory schedules all in form and
substance satisfactory to the Bank.
(j) maintain a minimum Capital Base ("Capital Base") (to be
equal to the sum of capital surplus, earned surplus and capital stock minus
deferred charges, intangibles, treasury stock, officer and employee loans
receivable, and joint venture investments and advances and assets held for
disposition) of not less than the following:
Period Minimum Capital Base
March 31, 1995 through March 30, 1996 $ 8,200,000
March 31, 1996 through March 30, 1997 $ 8,650,000
March 31, 1997 through March 30, 1998 $ 9,500,000
March 31, 1998 through Maturity $10,250,000
(k) maintains a Current Ratio, the ratio of current assets to
current liabilities (current liabilities shall include all borrowings hereunder)
of not less than the following:
Period Minimum Current Ratio
March 31, 1995 through March 30, 1996 1.4:1
March 31, 1996 through March 30, 1997 1.4:1
March 31, 1997 through March 30, 1998 1.5:1
March 31, 1998 through Maturity 1.7:1
(l) maintain a minimum Working Capital, the excess of current
assets over current liabilities (current liabilities to include all borrowings
hereunder) of not less than the following:
Period Minimum Working Capital
March 31, 1995 through March 30, 1996 $ 5,500,000
March 31, 1996 through March 30, 1997 $ 5,500,000
March 31, 1997 through March 30, 1998 $ 6,500,000
March 31, 1998 through Maturity $ 7,500,000
(m) maintain a maximum ratio of total unsubordinated liabilities
("TUL") to Capital Base of not greater than the following:
Period Minimum TUL to Capital Base
March 31, 1995 through March 30, 1996 1.75:1
March 31, 1996 through March 30, 1997 1.6:1
March 31, 1997 through March 30, 1998 1.4:1
March 31, 1998 through Maturity 1.2:1
(n) maintain at each fiscal year end a ratio of Earnings Before
Interest and Taxes for each fiscal year to interest expenditure for such
fiscal year of not less than 1.25:1.
(o) immediately give notice to the Bank that an Event of
Default has occurred or that an event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default, has occurred and
specifying the action which the Borrower has taken and proposes to take with
respect thereto.
7. Negative Covenants. The Borrower will not, and will not
permit any Subsidiary to:
(a) incur, or permit to exist, any indebtedness for borrowed
money, exclusive of borrowings hereunder and of any other loans made by the Bank
in its discretion to the Borrower or any Subsidiary, other than existing loans
for the purchase of equipment and existing indebtedness disclosed on the
Borrower's balance sheet as of 6/30/95, and future purchase money loans for the
purchase of equipment.
(b) enter into any merger or consolidation or liquidate, wind
up or dissolve itself or sell, transfer or lease or otherwise dispose of all or
any substantial part of its assets (other than sales in the ordinary course of
business) or acquire by purchase or otherwise the business or assets of, or
stock of, another corporation; except that any Subsidiary may merge into or
consolidate with any other Subsidiary which is wholly-owned by the Borrower, and
any Subsidiary which is wholly-owned by the borrower may merge with or
consolidate into the Borrower provided that the Borrower is the surviving
corporation;
(c) lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any firm, corporation, or
other person other than existing loans made prior to March 31, 1992 or officer
loans in the maximum amount of Sixty Thousand ($60,000) Dollars per officer and
One Hundred Thousand ($100,000) Dollars in the aggregate, except investments in
United States Government obligations and certificates of deposit of any banking
institution with combined capital and surplus of at least Two Hundred Thousand
($200,000) Dollars;
(d) create, assume or permit to exist, any mortgage, pledge,
lien or encumbrance of or upon security interest in, any of its property or
assets now owned or hereafter acquired except (i) mortgages, liens, pledges and
security interests in favor of the Bank; (ii) other liens, charges and
encumbrances incidental to the conduct of its business or the ownership of its
property and assets which were not incurred in connection with the borrowing of
money or the obtaining of advances or credit and which do not materially impair
the use thereof in the operation of its business; and (iii) liens for taxes or
other governmental charges which are not delinquent or which are being contested
in good faith and for which a reserve shall have been established in accordance
with generally accepted accounting principles; (iv) mortgage liens existing as
of the date hereof;
(e) assume, endorse, be or become liable for or guarantee the
obligations of any person except by the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business;
(f) declare or pay any dividends on its capital stock (other
than dividends payable solely in shares of its own common stock), or purchase,
redeem, retire or otherwise acquire any of its capital stock at any time
outstanding, except that any Subsidiary wholly-owned by the Borrower may declare
any pay dividends to the Borrower;
(g) expend in excess of $750,000 per fiscal year in the aggregate
for the acquisition of fixed assets for the Borrower and its Subsidiaries.
(h) (i) terminate any Plan so as to result in any material
liability to The Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV or ERISA (the "PBGC"), (ii) engage in or permit any
person to engage in any "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended)
involving any Plan which would subject the Borrower to any material tax, penalty
or other liability, (iii) incur or suffer to exist any material "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Plan, or (iv) allow or suffer to exist any event or condition,
which presents a material risk of incurring a material liability to the PBGC by
reason of termination of any Plan.
8. Collateral Security. As collateral security for the payment
of any and all sums owing under this Note and all other obligations, direct or
contingent, joint, several or independent, of the Borrower and of any Subsidiary
and each endorser or guarantor hereof now or hereafter existing, due or to
become due to, or held, or to be held by, the Bank, whether created directly or
acquired by assignment or otherwise (all of such obligations, including this
Note, are hereinafter called the "Obligations"), the Borrower hereby grants to
the Bank a first priority lien on and security interest in all of the Borrower's
inventory and accounts receivable and any and all deposits or other sums at any
time credited by or due from the Bank to the Borrower, whether in regular or
special depository accounts or otherwise, and any and all monies, securities and
other property of the Borrower, and the proceeds thereof, now or hereafter held
or received by or in transit to the Bank from or for the Borrower, whether for
safekeeping, custody, pledge, transmission, collection or otherwise, and any
such deposits, sums, monies, securities and other property, may at any time
after the occurrence of any Event of Default be set-off, appropriated and
applied by the Bank against any of the Obligations whether or not such
Obligations are then due or are secured by any collateral, or, if they are so
secured, whether or not such collateral held by the Bank is considered to be
adequate and with respect to all collateral security by the Bank shall have all
the rights and remedies available to it under the Uniform Commercial Code of New
York and other applicable law.
9. Events of Default. If any one or more of the following
events ("Events of Default") shall occur, the entire unpaid balance of the
principal of and interest on the Obligations shall immediately become due and
payable:
(a) Failure to make any payment of principal or interest in respect
of any of the Obligations when due; or,
(b) Failure to observe any of the covenants in Sections 6 and 7
hereof; or,
(c) Failure by the Borrower to perform any other term, condition
or covenant of this Note or any other agreement, instrument or document
delivered pursuant hereto or in connection herewith or therewith, which shall
remain unremedied for a period of 15 days after notice thereof shall have been
given by the Bank to the Borrower; or,
(d) (i) Failure to perform any term, condition or covenant of any
bond, note, debenture, loan agreement, indenture, guaranty, trust agreement,
mortgage or other instrument or agreement in connection with the borrowing of
money or the obtaining of advances or credit to which the Borrower or any
Subsidiary is a party or by which it is bound, or by which any of its properties
or assets may be affected (a "Debt Instrument"), so that, as a result of any
such failure to perform (regardless of the satisfaction of any requirement for
the giving of appropriate notice thereof or the lapse of time), the indebtedness
included therein or secured or covered thereby may be declared due and payable
prior to the date on which such indebtedness would otherwise become due and
payable; or,
(ii) any event or condition referred to in any Debt
Instrument shall occur or fail to occur, so that, as a result thereof
(regardless of the satisfaction of any requirement for the giving of appropriate
notice thereof or the lapse of time), the indebtedness included therein or
secured or covered thereby may be declared due and payable prior to the date on
which such indebtedness would otherwise become due and payable; or,
(iii) any indebtedness included in any Debt Instrument or
secured or covered thereby is not paid when due; or
(e) Any representation or warranty made in writing to the Bank
in this Note or in connection with the making of the Loans evidenced hereby or
any certificate, statement or report made in compliance with this Note, shall
have been false in any material respect when made; or
(f) An order for relief under the United States Bankruptcy code
as now or hereafter in effect, shall be entered against the Borrower or any
Subsidiary; or the Borrower or any Subsidiary shall become insolvent, generally
fail to pay its debts as they become due, make an assignment for the benefit of
creditors, file a petition or apply to any tribunal for the appointment of a
receiver or any trustee for its or a substantial part of its assets, or shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or if there shall have been
filed any such petition or application, or any such proceeding shall have been
commenced against it, which remains undismissed for a period of thirty days or
more; or the Borrower or any Subsidiary or endorser or guarantor hereof by any
act or omission shall indicate its consent to, approval of or acquiescence in
any such petition, application or proceeding or the appointment of a receiver of
or any trustee for it or any substantial part of any of its properties, or shall
suffer any such receivership or trusteeship to continue undischarged for a
period of thirty days or more; or,
(g) Any judgment against the Borrower or any Subsidiary or any
attachment, levy or execution against any of its properties for any amount shall
remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a
period of sixty days or more; or,
(h) The Bank shall have determined, in its sole discretion, that
one or more conditions exist or events have occurred which may result in a
material adverse change in the business, properties or financial condition of
the Borrower.
10. Interest Adjustment. Notwithstanding anything to the contrary
contained in this Note, the rate of interest payable on this Note shall never
exceed the maximum rate of interest permitted under applicable law. If at any
time the rate of interest otherwise prescribed herein shall exceed such maximum
rate, and such prescribed rate is thereafter below such maximum rate, the
prescribed rate shall be increased to the maximum rate for such period of time
as is required so that the total amount of interest received by the Bank is that
which would have been received by the Bank, except for the operation of the
first sentence of this Section 10.
11. Miscellaneous.
(a) All agreements, representations and warranties made herein
shall survive the delivery of this Note. The Borrower waives trial by jury,
set-off and counterclaim of any nature or description other than mandatory
counterclaims in any litigation in any court with respect to, in connection
with, or arising out of, this Note or any instrument or document delivered
pursuant hereto or the validity, protection, interpretation, collection or
enforcement hereof.
(b) No modification or waiver of or with respect to any
provision of this Note, or consent to any departure by the Borrower from any of
the terms or conditions hereof, shall in any event be effective unless it shall
be in writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the borrower in any case shall, of itself, entitle it to
any other or future notice or demand in similar or other circumstances.
(c) Each and every right granted to the Bank hereunder or
under any other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall be cumulative and may be exercised from time
to time. No failure on the part of the Bank or the holder of this Note to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other future exercise thereof or the exercise of any other right.
(d) In the event that this Note is placed in the hands of an
attorney for collection by reason of any default hereunder, the Borrower agrees
to pay reasonable attorney's fees so incurred. The Borrower promises to pay all
expenses of any nature as soon as incurred whether in or out of court and
whether incurred before or after this Note shall become due at its maturity date
or otherwise and costs which the Bank may deem necessary or proper in connection
with the satisfaction of the indebtedness or the administration, supervision,
preservation, protection (including but not limited to maintenance of adequate
insurance) of or the realization upon the collateral.
(e) The Borrower hereby waives presentment, demand for
payment, protest, notice of protest, notice of dishonor, and any or all other
notices or demands except as otherwise expressly provided for herein.
(f) All accounting terms not otherwise defined in this Note
shall have the meanings ascribed thereto under generally accepted accounting
principles.
12. Notices. All notices, requests and other communications
pursuant to this Note shall be in writing, either by letter (delivered by hand
or sent by certified mail, return receipt requested) or overnight mail,
addressed as follows:
(a) If to the Borrower:
Medical Action Industries Inc.
150 Motor Parkway
Hauppauge, New York 11788
Attn: Richard G. Satin
Vice President and General Counsel
and,
(b) If to the Bank:
European American Bank
730 Veterans Memorial Highway
Hauppauge, New York 11788
Attn: Richard Romano
Vice President
Any notice, request or communication hereunder shall be deemed to have been
given when deposited in the mails, postage prepaid, or in the case of
telegraphic notice, when delivered to the telegraph company, addressed as
aforesaid. Any party may change the person or address to whom or which the
notices are to be given hereunder, but any such notice shall be effective only
when actually received by the party to whom it is addressed.
13. Governing Law. This Note and the rights and obligations of
the parties shall be construed and interpreted in accordance with the laws of
the State of New York and the Borrower consents to the jurisdiction of the
courts of New York in any action brought to enforce any rights of the Bank under
this Note.
MEDICAL ACTION INDUSTRIES INC.
By: s/ Paul D. Meringola
-----------------------------
Paul D. Meringola, President