EXHIBIT 10.24(a)
THIRD AMENDED AND RESTATED LOAN AGREEMENT
THIS AGREEMENT made and entered into as of the 30th day of August,
1996, by and between NATIONSBANK, N.A. (SOUTH) ("Lender"), a national banking
association which is the successor by merger to Bank South, a Georgia banking
corporation formerly known as Bank South, N.A., and CRYOLIFE, INC. ("Borrower"),
a Florida corporation.
W I T N E S S E T H:
Pursuant to a Loan Agreement, dated as of July 12, 1989, between
Lender and Borrower, as amended and restated by an Amended and Restated Loan
Agreement, dated as of February 20, 1992, between Lender and Borrower, and as
further amended and restated by a Second Amended and Restated Loan Agreement,
dated as of August 4, 1994, between Lender and Borrower (collectively, the
"Prior Loan Agreements"), Lender has agreed to make certain loans available to
Borrower. Borrower and Lender desire to again amend and restate the Prior Loan
Agreements and are entering into this Agreement for such purpose.
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements, warranties and representations herein made, Lender and
Borrower agree to amend and restate the Prior Loan Agreements as follows:
ARTICLE I - DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 101. Specific Definitions. As used herein, the following terms
shall have the following meanings:
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with Borrower. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"This Agreement" means this agreement as originally executed or as it
may from time to time be amended by one or more written amendments or
modification agreements entered into pursuant to the applicable provisions
hereof.
"Borrower" shall have the meaning given that term in the preamble to
this Agreement, and such term also shall include Borrower's successors and
assigns.
1
"Capital Expenditures" shall mean expenditures of over $10,000 each
made or liabilities incurred by Borrower for the acquisition of any fixed assets
or improvements (and any replacements, substitutions or additions thereto) which
have a useful life of more than one (1) year, including the direct or indirect
acquisition of such assets by way of increased product or service changes,
off-set items or otherwise, and payments made during the relevant fiscal period
with respect to Capitalized Lease Obligations, all as determined on a
consolidated basis; provided, however, that for purposes of determining
compliance with Section 507(b), capital expenditures for leasehold improvements
and equipment made by Borrower for its new corporate headquarters building shall
be excluded.
"Capitalized Lease Obligations" shall mean any indebtedness of
Borrower represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with generally
accepted accounting principles in effect from time to time, and the amount of
such indebtedness shall be the capitalized amount of such obligations determined
on a consolidated basis in accordance with generally accepted accounting
principles consistently applied.
"Collateral" means and includes all property assigned or pledged to
Lender or in which Lender has been granted a security interest or to which
Lender has been granted security title under this Agreement or the other
Financing Documents and the proceeds thereof.
"Contractual Obligation" of any Person shall mean any provision of any
agreement, instrument, security, or undertaking to which such Person is a party
or by which it or any of the property owned by it is bound.
"Credit Expiration Date" shall mean September 1, 1998, as such date
may be extended, accelerated or amended pursuant to this Agreement.
"Credit Parties" shall mean, collectively, Borrower and its
Subsidiaries.
"CryoLife International" shall mean CryoLife International, Inc., a
Florida corporation which is a Subsidiary of Borrower, and its successors and
assigns.
"Current Assets" shall mean, at any date, the amount which all of the
current assets of Borrower would be shown on a consolidated balance sheet of
Borrower at such date prepared in accordance with generally accepted accounting
principles consistently applied.
"Current Liabilities" shall mean, at any date, the amount at which all
of the current liabilities of Borrower would be shown on a consolidated balance
sheet of Borrower at such date prepared in accordance with generally accepted
accounting principles consistently applied.
2
"Current Maturities of Funded Debt" shall mean, with respect to any
particular period, the sum of all principal payments scheduled to be made during
such period in respect of the Funded Debt of Borrower (which for purposes hereof
shall include the allocated principal portion of payments due on Capitalized
Lease Obligations, and also shall include the current portion of any other
Funded Debt).
"Current Ratio" shall mean, at any date, the ratio of Borrower's
Current Assets to its Current Liabilities at such time.
"Debt Coverage Ratio" shall mean, with respect to any particular
fiscal period of Borrower, the ratio of (a) Borrower's EBITDAR for the
consecutive 4-quarter period ending therewith to (b) the sum (without
duplication) of (i) Borrower's Current Maturities of Funded Debt for the
immediately succeeding consecutive 4-quarter period plus (ii) Borrower's
Interest Expense for the consecutive 4-quarter period ending therewith plus
(iii) Borrower's Rental Expense for the immediately succeeding consecutive
4-quarter period, all as determined on a consolidated basis.
"Default" shall mean any event which, with the giving of notice or
lapse of time (or both), would become an Event of Default.
"EBIT" shall mean, for any fiscal period of Borrower, an amount equal
to the sum of Borrower's Net Income (Loss) for such period plus, to the extent
subtracted in determining such Net Income (Loss), (i) Borrower's taxes based on
income and (ii) Borrower's Interest Expense, all as determined on a consolidated
basis.
"EBITDAR" shall mean, for any fiscal period of Borrower, an amount
equal to Borrower's EBIT for such period plus, to the extent deducted in
determining such EBIT, Borrower's depreciation and amortization expenses and
Rental Expense, all as determined on a consolidated basis.
"Environmental Laws" shall mean all federal, state, local and foreign
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including without limitation ambient
air, surface water, ground water, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes, and any and all regulations, codes,
plans, orders, decrees, judgments, injunctions, notices or demand letters
issued, entered, promulgated or approved thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, P.L. 93-406, as amended.
"Event of Default" shall mean any of the events specified in Article
VII of this Agreement, provided that any express requirement therein for notice
or lapse of time shall have been satisfied.
3
"Final Maturity Date" shall mean September 1, 2003, as such date may
be extended, accelerated or amended pursuant to this Agreement.
"Financing Documents" means and includes this Agreement, the Note, the
Security Agreement, each Stock Pledge Agreement, each Subsidiary Guaranty, each
Subsidiary Security Agreement, and any extensions, renewals, modifications or
substitutions thereof or therefor, and all other associated loan and collateral
documents including, without limitation, all guaranties, suretyship agreements,
security agreements, pledge agreements, security deeds, subordination
agreements, exhibits, schedules, attachments, financing statements, notices,
consents, waivers, opinions, letters, reports, records, title certificates and
applications therefor, assignments, stock powers or transfers, documents,
instruments, information and other writings related thereto, or furnished by any
Credit Party to Lender in connection therewith or in connection with any of the
Collateral, including without limitation any such documents executed and
delivered pursuant to Section 202 hereof; provided, however, that this term
shall not include the Prior Loan Agreements or the Prior Security Agreements.
"Funded Debt" shall mean, for any particular Person, all Indebtedness
for money borrowed, Indebtedness secured by purchase money liens, Capitalized
Lease Obligations, conditional sales contracts and similar title retention debt
instruments, all as determined for such Person on a consolidated basis. The
calculation of Funded Debt for any particular Person shall include all Funded
Debt of such Person plus all Funded Debt of other Persons to the extent
guaranteed by such Person, to the extent secured by any assets of such Person,
or to the extent supported by a letter of credit issued for the account of such
Person.
"Governmental Authority" means any applicable nation or government,
any state, local or other political subdivision thereof, any court, and any
other entity exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including Contractual Obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received.
"Herein", "hereof", and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular article, paragraph,
section or other subdivision.
4
"Indebtedness" of any Person shall mean, without duplication: (i) all
obligations of such Person which in accordance with generally accepted
accounting principles consistently applied would be shown on a consolidated
balance sheet of such Person as a liability (including, without limitation,
obligations for borrowed money and for the deferred purchase price of property
or services, and obligations evidenced by bonds, debentures, notes or other
similar instruments); (ii) all rental obligations under leases required to be
capitalized under generally accepted accounting principles consistently applied;
(iii) all Guaranties of such Person (including contingent reimbursement
obligations under undrawn letters of credit); and (iv) Indebtedness of others
secured by any Lien upon property owned by such Person, whether or not assumed.
"Intellectual Property Rights" shall mean, with respect to any
particular Person, all patents, patent applications, continuation, refile and
reissue patent applications, trademarks, service marks, trademark and service
mark applications, trade names, copyrights, copyright registrations, copyright
applications, trade secrets and other similar proprietary information
(including, but not by way of limitation, inventions, technical information,
processes, algorithms, procedures, specifications, designs, knowledge, know-how,
data and databases) now owned or hereafter acquired by such Person.
"Interest Expense" shall mean, for any fiscal period of Borrower, the
total interest expense of Borrower, as determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied.
"Lender" shall have the meaning given that term in the preamble to
this Agreement, and such term also shall include Lender's successors and
assigns.
"Leverage Ratio" shall mean, at any date, the ratio of Borrower's
Total Liabilities to its Net Worth at such time.
"Liabilities" means all indebtedness, liabilities, and obligations of
Borrower of any nature whatsoever which Lender may now or hereafter have, own or
hold, and which now or hereafter arise under or on account of this Agreement,
the Note or any of the other Financing Documents and any extensions, renewals,
modifications or substitutions thereof or therefor.
"Lien" shall mean any mortgage, pledge, collateral assignment,
security interest, security deposit, encumbrance, lien or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the filing
of or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction, but excluding licenses granted in the ordinary course
of the grantor's business).
"Loans" shall mean any and all Loans made by Lender to Borrower
pursuant to Section 201 hereof.
"Maximum Availability" shall mean $10,000,000, as such amount may be
reduced or amended pursuant to this Agreement.
5
"Net Income (Loss)" shall mean, for any fiscal period of Borrower, the
net income (or loss) of Borrower on a consolidated basis for such period (taken
as a single accounting period) determined in conformity with generally accepted
accounting principles consistently applied, but excluding therefrom (to the
extent otherwise included therein and without duplication) (i) any gains or
losses, together with any related provisions for taxes, realized by Borrower
upon any sale of its assets other than in the ordinary course of business, (ii)
any other non-recurring gains or losses, and (iii) any income or loss of any
other Person acquired prior to the date such other Person becomes a Subsidiary
of Borrower or is merged into or consolidated with Borrower or all or
substantially all of such other Person's assets are acquired by Borrower.
"Net Worth" shall mean, as of any particular date, Borrower's total
shareholder"s equity (including capital stock, additional paid-in capital, and
retained earnings after deducting treasury stock) which would appear as such on
a consolidated balance sheet of Borrower prepared in accordance with generally
accepted accounting principles as then in effect.
"Note" shall mean the Promissory Note substantially in the form of
Exhibit A attached hereto to be executed by Borrower in favor of Lender to
evidence the Loans, and all renewals, extensions, modifications or replacements
thereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Prior Loan Agreements" shall have the meaning given such term in the
preamble to this Agreement.
"Prior Security Agreements" shall mean the Security Agreement
(Equipment) and the Security Agreement (Receivables/Inventory), both dated
December 31, 1986, executed by Borrower in favor of Lender, as amended, and the
Equipment Security Agreement, dated as of August 4, 1994, executed by Borrower
in favor of Lender.
"Purchase Money Indebtedness" shall mean (i) Indebtedness for the
payment of all or any part of the purchase price of any fixed assets, (ii) any
Indebtedness incurred for the sole purpose of financing or refinancing all or
any part of the purchase price of any fixed assets, (iii) Capitalized Lease
Obligations, and (iv) any renewals, extensions or refinancings thereof (but not
any increases in the principal amounts thereof outstanding at that time).
"Purchase Money Lien" shall mean a Lien upon fixed assets which
secures the Purchase Money Indebtedness relating thereto but only if such Lien
shall at all times be confined solely to the fixed assets the purchase price of
which was financed or refinanced through the incurrence of the Purchase Money
Indebtedness secured by such Lien and only if such Lien secures solely such
Purchase Money Indebtedness.
6
"Rental Expense" shall mean, for any fiscal period of Borrower, the
total rental expense of Borrower for such period, as determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied, and which shall include without limitation rental expense
under operating leases.
"Revolving Loan Period" shall mean the period which runs from the date
of this Agreement until the Credit Expiration Date.
"Security Agreement" shall mean the Amended and Restated Security
Agreement, substantially in the form of Exhibit B attached hereto, executed or
to be executed by Borrower in favor of Lender pursuant to this Agreement and any
modification or replacement thereof or therefor.
"Stock Pledge Agreement" shall mean any and all Stock Pledge and
Security Agreements, substantially in the form of Exhibit C-1 attached hereto,
executed or to be executed by Borrower in favor of Lender pursuant to this
Agreement and any modification or replacement thereof or therefor.
"Subsidiary" means, as applied to Borrower, (i) any corporation of
which 50% or more of the outstanding stock (other than directors' qualifying
shares) having ordinary voting power to elect a majority of its board of
directors (or other governing body), regardless of the existence at the time of
a right of the holders of any class or classes (however designated) of
securities of such corporation to exercise such voting power by reason of the
happening of any contingency, or any partnership of which 50% or more of the
outstanding partnership interests is, at the time, directly or indirectly owned
by Borrower or by one or more Subsidiaries of Borrower, and (ii) any other
entity which is directly or indirectly controlled or capable of being controlled
by Borrower or by one or more Subsidiaries of Borrower.
"Subsidiary Guaranty" shall mean any and all Guaranty Agreements,
substantially in the form of Exhibit D attached hereto, executed or to be
executed by a Subsidiary of Borrower in favor of Lender and any modifications or
replacements thereof or therefor.
"Subsidiary Security Agreement" shall mean any and all Security
Agreements, substantially in the form of Exhibit E attached hereto, executed or
to be executed by a Subsidiary of Borrower in favor of Lender and any
modifications or replacements thereof or therefor.
"Term Loan Period" shall mean the period which runs from the Credit
Expiration Date through the Final Maturity Date.
"Tissue Freezers" shall mean, collectively, the tissue freezers leased
or loaned by Borrower to third parties in the ordinary course of Borrower's
business.
"Total Liabilities" shall mean, as of any particular date, the amount
which all liabilities of Borrower would be shown on a consolidated balance sheet
of Borrower at such date prepared in accordance with generally accepted
accounting principles consistently applied.
7
"Voting Stock" shall mean the securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors of such
corporation (or Persons performing similar functions).
SECTION 102. Accounting Terms. All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally
accepted accounting principles consistently applied.
SECTION 103. Titles. The titles of the Articles and Sections herein
appear as a matter of convenience only and shall not affect the interpretation
hereof.
SECTION 104. Number and Gender. Words importing the singular number
hereunder shall include the plural number and vice versa, and any pronoun used
herein shall be deemed to cover all genders.
ARTICLE II - THE LOANS
SECTION 201. The Loans. (a) From time to time upon Borrower's request,
and subject to the terms and conditions of this Agreement, Lender agrees to
advance to Borrower prior to the Credit Expiration Date amounts which do not
exceed the Maximum Availability in aggregate outstanding principal amount at any
one time. Advances made by Lender to Borrower under this Section 201 are
hereinafter collectively called the "Loans". Notwithstanding anything in this
Agreement to the contrary, the Lender shall not be obligated hereunder to make
any Loans on or after the earlier of (i) the Credit Expiration Date or such
later date to which such expiration date may be extended by Lender in its
discretion or (ii) the date Lender pursuant to Section 801(a) hereof terminates
its obligation to make any further Loans to Borrower hereunder. Subject to the
terms and conditions hereof, prior to the Credit Expiration Date, Borrower, at
its option, from time to time may borrow, repay and reborrow all or any portion
of the Loans, except that Borrower's right to prepay Loans bearing interest
based on the Adjusted LIBOR (as such term is defined in the Note) shall be
subject to the breakage provisions of the Note and any such prepayment shall be
applied as provided in the Note.
(b) The proceeds of the Loans may be used by Borrower only to finance
acquisitions by the Borrower and to finance Borrower's and its Subsidiaries'
working capital and other general corporate needs (including without limitation
to finance the cost of the leasehold improvements and equipment purchases made
or to be made by Borrower for its new corporate headquarters building in
Marietta, Georgia).
(c) The Loans are to be evidenced by the Note. Interest on the Loans
will accrue at the rate or rates per annum set forth in the Note, and principal
and interest on the Loans will be payable in the manner prescribed in the Note.
8
(d) Borrower shall pay to Lender an origination fee for the Loan
facility provided by Lender to Borrower under this Section 201, which fee shall
be in the amount of $5,000 (and Lender shall credit against such sum the $5,000
commitment letter fee previously paid by Borrower to Lender in connection with
such facility) and such fee shall be deemed fully earned by Lender upon the
parties' execution and delivery of this Agreement from the Borrower and shall be
non-refundable.
(e) Borrower shall pay to Lender unused facility fees for Borrower's
Loan facility hereunder during the Revolving Loan Period computed on the daily
average unused portion of the Maximum Availability at a rate per annum of
three-eighths of one percent (.375%). Such unused facility fees shall be payable
by Borrower to Lender quarterly in arrears, commencing on November 30, 1996, and
continuing to be due on the last day of each February, May, August and November
thereafter during the Revolving Loan Period as well as on the Credit Expiration
Date. Notwithstanding anything in this Section to the contrary, however, the
total unused facility fees payable by Borrower to Lender under clauses (x) and
(y) above shall not exceed the sum of $6,250 and $25,000, respectively, during
each of the following two periods: the period from the date of this Agreement
though August 31, 1997, and the period from September 1, 1997 through the Credit
Expiration Date.
(f) All of the Loans shall constitute one loan by Lender to Borrower.
Lender shall maintain a loan account on its books in which shall be recorded all
Loans, all payments made by Borrower on the Loans and all other appropriate
debits and credits as provided in this Agreement and the Note with respect
thereto, including without limitation all charges, expenses and interests. All
entries in such account shall be made in accordance with the Lender's customary
accounting practices as in effect from time to time. Lender shall render to
Borrower a monthly statement setting forth the balance of such account,
including principal, interest, expenses and fees, and each such statement shall,
absence manifest error or omissions, be presumed correct and binding upon
Borrower and shall constitute an account stated unless, within thirty (30) days
after receipt of any such statement from Lender, Borrower shall deliver to
Lender a written objection thereto specifying the error or errors or omission or
omissions, if any, contained in such statement.
(g) All interest and fees owing by Borrower to Lender hereunder or
under the other Financing Documents shall be computed on the basis of a 360-day
year and the actual days elapsed
SECTION 202. Collateral and Guaranties. (a) All of the Loans and the
other Liabilities shall be secured pursuant to the Security Agreement which
shall be duly executed and delivered by Borrower to Lender in connection with
this Agreement and pursuant to which Lender shall be granted a first-priority
security interest in all of Borrower's present or future accounts, contract
rights, chattel paper, general intangibles (excluding its Intellectual Property
Rights but including the proceeds thereof), instruments, documents, inventory,
equipment, fixtures, leasehold improvements, and other assets and all proceeds
thereof (excluding its Intellectual Property Rights but including the proceeds
9
thereof). In addition, all of the Loans and the other Liabilities shall also be
secured pursuant to a Stock Pledge Agreement which (together with an irrevocable
stock power in the form of Exhibit C-2 attached hereto) shall be duly executed
and delivered by Borrower to Lender in connection with this Agreement and
pursuant to which Lender shall be granted a first-priority security interest in
all of the capital stock of CryoLife International and all proceeds thereof.
(b) All of the Loans and the other Liabilities shall be fully
guaranteed by CryoLife International pursuant to a Subsidiary Guaranty which
shall be duly executed and delivered by CryoLife International to Lender in
connection with this Agreement. In addition, the obligations of CryoLife
International under such Subsidiary Guaranty shall be secured pursuant to a
Subsidiary Security Agreement which shall be duly executed and delivered by
CryoLife International to Lender in connection with this Agreement, and pursuant
to which Lender shall be granted a first-priority security interest in all of
CryoLife International's present or future accounts, contract rights, chattel
paper, general intangibles (excluding its Intellectual Property Rights but
including the proceeds thereof), instruments, documents, inventory, equipment,
fixtures, leasehold improvements, and other assets and all proceed thereof.
(c) Within ten (10) days after Borrower's creation or acquisition of
any Subsidiary, Borrower shall pledge all of the capital stock of such
Subsidiary to the Lender as additional collateral for the Liabilities, Borrower
shall cause such Subsidiary to guaranty the repayment of the Liabilities to
Lender, and Borrower shall cause such Subsidiary to grant to the Lender a
first-priority perfected security interest in and lien on all of its assets
(excluding its Intellectual Property Rights, but including the proceeds thereof)
as additional collateral for the Liabilities, all pursuant to such Subsidiary
Guaranties, Subsidiary Security Agreements, Stock Pledge Agreements and other
collateral documents as are acceptable in all respects to the Lender. Borrower
also shall provide Lender with any and all closing certificates, financing
statement filings, opinions of counsel and other closing documents of the types
described in Section 605 hereof as the Lender may request with respect to such
pledge, guaranty and collateral documents.
(d) Borrower shall execute (or cause to be executed) any and all
financing statements, fixture filings, certificate of title applications,
collateral assignments, stock powers or transfers, or other documents as Lender
may reasonably request from time to time in order to perfect or maintain the
perfection and priority of Lender's security interest in the Collateral now or
hereafter covered by the Security Agreement, any Stock Pledge Agreement or any
Subsidiary Security Agreement or any additional collateral documents executed by
Borrower or any Subsidiary pursuant to this Section 202.
(e) If any of the Collateral will be located on any premises which are
leased by Borrower or any of its Subsidiaries from a third party or, if such
premises are owned by Borrower or one of its Subsidiaries, on which any creditor
(other than Lender) holds a security deed, mortgage, or deed of trust granted by
Borrower or one of its Subsidiaries, Borrower shall cause each such third party
lessor or creditor to execute in favor of Lender a Waiver and Consent in
substantially the form of Exhibit I attached hereto (or in such other form as
may be acceptable to Lender).
10
SECTION 203. Agreements Regarding Interest and Other Charges. Pursuant
to the Official Code of Georgia Annotated Section 7-4-2, Lender and Borrower
hereby agree that the only charge imposed or to be imposed by Lender upon
Borrower for the use of money in connection with the Loans is and will be the
interest required under the Note, which interest will be at the rates which are
or will be expressed in simple interest terms in the Note as of the date of such
Note. Borrower hereby acknowledges and agrees that Lender has not imposed on it
any minimum borrowing requirements, reserve or escrow balances, or compensating
balances related in any way to this Agreement. In no event shall the amount of
interest due and payable under this Agreement, the Note or any of the other
Financing Documents exceed the maximum rate of interest allowed by applicable
law (including, without limitation, Official Code of Georgia Annotated Section
7-4-18) and, in the event any such payment is inadvertently made by Borrower or
inadvertently received by Lender, such excess sum shall be credited as a payment
of principal. It is the express intent hereof that Borrower not pay and Lender
not receive, directly or indirectly or in any manner, interest in excess of that
which may be lawfully paid under applicable law.
SECTION 204. Indemnity. Borrower agrees to indemnify and hold harmless
the Lender from and against any and all claims, liabilities, losses, damages,
actions and demands by any party against the Lender arising out of the making,
holding or administration of the Loans or the Collateral, allegations of any
participation by the Lender in the affairs of any or all of the Credit Parties
or allegations that the Lender has any joint liability with any or all of the
Credit Parties for any reason, or any claims against the Lender by any
shareholder of the Borrower, unless, with respect to the above, the Lender is
finally and judicially determined to have acted or failed to act with gross
negligence or to have engaged in willful misconduct.
SECTION 205. Capital Adequacy. Without limiting any other provisions
of this Agreement, in the event that the Lender determines after the date hereof
that the introduction or change after the date of this Agreement of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, or any change therein or in the interpretation
or application thereof after the date of this Agreement, or compliance by the
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) from a central bank or governmental authority or body having
jurisdiction which is introduced or changed after the date of this Agreement,
does or shall have the effect of reducing the rate of return on the Lender's
capital as a consequence of its obligations hereunder to a level below that
which the Lender could have achieved but for such law, treaty, rule, regulation,
guideline or order or such change or compliance (taking into consideration the
Lender's policies with respect to capital adequacy and assuming the full
utilization of the Lender's capital immediately before such adoption, change or
compliance) by an amount reasonably deemed by the Lender to be material, then
the Lender shall promptly after its determination of such occurrence notify the
Borrower thereof. The Borrower agrees to pay to the Lender as an additional fee
from time to time, within ten (10) days after written notice and demand by the
11
Lender, such amount as the Lender certifies to be the amount that will
compensate it for such reduction in connection with its obligations hereunder. A
certificate of the Lender claiming compensation under this Section shall be
conclusive in the absence of manifest error or fraud and shall set forth the
nature of the occurrence giving rise to such compensation, the additional amount
or amounts to be paid to it hereunder and the method by which such amounts were
determined. In determining such amount, the Lender may use reasonable averaging
and attribution methods.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that each of the following
is true, correct, complete and accurate in all respects:
SECTION 301. Organization and Existence; Subsidiaries. (a) Borrower is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, and is qualified to do business as a foreign
corporation in the State of Georgia. CryoLife International is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida, and is qualified to do business as a foreign corporation in
the State of Georgia.
(b) Borrower has no Subsidiaries as of the date of this Agreement,
except for the Subsidiaries identified on Schedule 301 attached hereto, and
Borrower agrees that it will not hereafter acquire or form any Subsidiaries
without giving Lender at least thirty (30) days' prior written notice thereof
and complying with any applicable requirements of Sections 202 and 503 hereof.
In the event Borrower so acquires or forms any Subsidiaries, each Subsidiary of
Borrower will be a corporation duly organized, validly existing and in good
standing with the laws of the state of its incorporation.
SECTION 302. Financial Statements. Each financial statement of any
Credit Party which has been delivered to Lender presents fairly the financial
condition of such Credit Party as of the date indicated therein and the results
of its operations for the period(s) shown therein. There has been no material
adverse change in the financial condition or operations of the Credit Parties
taken as a whole since the date of said financial statement, nor has any Credit
Party mortgaged, pledged or granted a security interest in or encumbered any of
its assets since such date.
SECTION 303. Borrower Authority and Power. Each Credit Party has full
power and authority to make, execute and perform in accordance with the
respective terms thereof each of the Financing Documents executed by it. The
execution and performance by each Credit Party of each and every of the
Financing Documents executed by it have been duly authorized by all requisite
action, and each and every one of them constitutes the legal, valid and binding
obligation of such Credit Party enforceable in accordance with its respective
terms.
12
SECTION 304. No Defaults. Except as set forth on Schedule 304 attached
hereto, none of the Credit Parties is in default under any contracts,
agreements, licenses, franchises, leases, security agreements, deeds, mortgages,
promissory notes, documents, instruments or chattel paper to which it is a party
or by which it or any of its properties or assets is bound or affected.
Execution, delivery and performance by any Credit Party of each and every of the
Financing Documents executed by it do not violate any provision of law or
regulations and does not result in a breach of or constitute a default under any
agreement, indenture or other instrument to which any Credit Party is a party or
by which any Credit Party is bound.
SECTION 305. No Pending Claims. Except as disclosed on Schedule 305
attached hereto, there is no claim, action, suit, arbitration, investigation,
condemnation or other proceeding at law or in equity, or by or before any
federal, state, local or other governmental agency, or by or before any other
agency or arbitrator, nor is there any judgment, order, writ, injunction or
decree of any court pending, anticipated or (to Borrower's knowledge) threatened
against any Credit Party or against any of its properties or assets which might
have a material adverse effect on the Credit Parties taken as a whole or their
respective properties or assets, or which might call into question the validity
or enforceability of any of the Financing Documents, or which might involve the
alleged violation by any Credit Party of any federal, state, local or other law,
rule or regulation; provided, however, that no representation is made in this
Section 305 with respect to Environmental Laws.
SECTION 306. No Outstanding Judgments. There are no outstanding or
unpaid judgments against any Credit Party.
SECTION 307. Outstanding Securities. All of Borrower's and each
Subsidiary's outstanding capital stock has been validly issued, fully paid and
is non-assessable. Borrower is not in violation of any applicable federal,
state, local, or other securities laws and regulations with respect to the
issuance of any of its capital stock or any other of its securities.
SECTION 308. Tax Returns. Each Credit Party has filed or caused to be
filed all required federal, state, local, or other tax returns when due and has
paid (except as otherwise permitted by Section 406 hereof) all governmental
taxes and other charges imposed upon it or on any of its properties or assets.
Borrower does not know of any proposed additional tax assessment against any
Credit Party.
SECTION 309. Franchises, Licenses, Permits, Etc. Each Credit Party has
all material franchises, licenses, permits, patents, copyrights, trademarks,
trade names, and other authority necessary to enable it to conduct its business
as presently conducted; provided, however, that no representation is made in
this Section 309 with respect to Environmental Laws.
13
SECTION 310. No Governmental Consents Required. No consent, approval,
order, authorization, designation, registration, declaration, or filing (except
the filing of financing statements or notations of liens on certificates of
title) with or of any federal, state, local, or other governmental authority or
public body on the part of any Credit Party is required in connection with any
Credit Party's execution, delivery or performance of any of the Financing
Documents; or if required, all such prerequisites have been fully satisfied.
SECTION 311. ERISA Matters. None of the Credit Parties has incurred
any material accumulated funding deficiency within the meaning of the ERISA, and
none of the Credit Parties has incurred any material liability to the Pension
Benefit Guaranty Corporation established under ERISA (or any successor thereto
under such Act) in connection with any employee benefit plan established or
maintained by any of the Credit Parties.
SECTION 312. Regulation U and Other Securities Law Matters. None of
the transactions contemplated in this Agreement (including, without limitation,
the use of the proceeds from the Loans) will violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including, without limitation, Regulations U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.
Borrower does not own or intend to carry or purchase any "margin stock" within
the meaning of said Regulation U, including margin stock originally issued by
it. None of the proceeds of the Loans will be used to purchase or carry (or
refinance any borrowing the proceeds of which were used to purchase or carry)
any "security" within the meaning of the Securities Exchange Act of 1934, as
amended.
SECTION 313. Environmental Representations. (a) Each Credit Party has
obtained all permits, licenses and other authorizations which are required under
Environmental Laws, and each Credit Party is in compliance in all material
respects with all terms and conditions of the required permits, licenses and
authorizations and is also in compliance in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Laws;
(b) Borrower is not aware of, and has not received notice of, any
past, present or future events, conditions, circumstances, activities,
14
practices, incidents, actions or plans which, with respect to any Credit Party,
may interfere with or prevent such Credit Party's compliance or continued
compliance in any material respect with Environmental Laws, or may give rise to
any material common law or legal liability, or otherwise form the basis of any
material claim, action, demand, suit, proceeding, hearing, study or
investigation against such Credit Party, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, chemical, or industrial, toxic or
hazardous substance or waste; and
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or threatened against any Credit Party
relating in any way to Environmental Laws.
SECTION 314. Reaffirmation. Each request for a Loan made by Borrower
pursuant to this Agreement shall constitute an automatic representation and
warranty by Borrower to Lender that there does not then exist any Default or
Event of Default as well as a reaffirmation as of the date of such request of
all of the representations and warranties of the Credit Parties contained in
this Agreement and the other Financing Documents (except as to those changes
otherwise consented to by Lender or contemplated herein).
ARTICLE IV - AFFIRMATIVE COVENANTS
For so long as this Agreement is in effect, and unless Lender
expressly consents in writing otherwise or to the contrary (which consent shall
not be unreasonably withheld), Borrower hereby expressly covenants and agrees as
follows:
SECTION 401. Inspection and Examination. Upon reasonable request of
Lender, each Credit Party shall permit during regular business hours any person
designated by Lender to inspect and examine such Credit Party's financial books
and records, its minute books and other business memoranda and writings;
provided, however, that so long as no Event of Default has occurred and is then
continuing Borrower may condition Lender's (or its designee's) access to any
Credit Party's business memoranda and writings (other than its financial books
and records) on Lender's (or such designee's) entering into a suitable written
confidentiality agreement. Each Credit Party shall make available its officers
and employees to Lender to discuss the financial affairs of such Credit Party at
such reasonable times and intervals as Lender may request, and each Credit Party
shall promptly confirm or furnish in reasonable detail whatever information
relative to such Credit Party as Lender's authorized representative, auditor or
counsel may reasonably request.
15
SECTION 402. Books and Records. Each Credit Party shall keep its
books, records and accounts in accordance with generally accepted accounting
principles and practices applied on a basis consistent with preceding years.
SECTION 403. Financial Statements and Other Information. Borrower
shall promptly furnish to Lender: (1) Not later than 120 days after the end of
each subsequent fiscal year, consolidated and consolidating financial statements
of the Borrower, to include balance sheets and statements of income and
stockholders' equity, all in reasonable detail, prepared in accordance with
generally accepted accounting principles and certified by an independent
accounting firm acceptable to Lender and accompanied by a duly completed
Compliance Certificate in the form of Exhibit J attached hereto executed on
behalf of Borrower by its chief financial officer; (2) Not later than 30 days
after and as of the end of each month (other than the final month of each fiscal
year), consolidated financial statements of Borrower, to include balance sheets
and statements of income and stockholders' equity, all in reasonable detail,
prepared in accordance with generally accepted accounting principles (subject to
changes resulting from year-end adjustments), and certified by the chief
financial officer of Borrower and accompanied by a duly completed Compliance
Certificate in the form of Exhibit J attached hereto executed on behalf of
Borrower by its chief financial officer; (3) Promptly upon becoming aware of the
existence of any Default or Event of Default, a written notice specifying the
nature and period of existence thereof and what action Borrower is taking or
proposes to take with respect thereto; (4)Promptly upon becoming aware that the
holder of any other evidence of indebtedness or security of any Credit Party has
given notice or taken any other action with respect to a claimed default or
event of default or event which, with the giving of notice or passage of time,
or both, would constitute a default, a written notice specifying the notice
given or action taken by such holder and the nature of the claimed default or
event and what action Borrower is taking or proposes to take with respect
thereto; (5) Promptly upon transmission thereof, copies of all financial
statements, proxy statements, notices and reports as Borrower shall send to its
public shareholders, if any, and copies of all registration statements and all
other reports which Borrower may file from time to time with the Securities and
Exchange Commission or any comparable state securities regulatory agency; and
(6) From time to time upon request of Lender, such other information relating to
the operations, business, and financial condition of any Credit Party as Lender
may reasonably request.
SECTION 404. Maintenance of Assets. Each Credit Party shall maintain
and keep all of its property and assets (other than Tissue Freezers) in good
repair, working order and condition and shall from time to time make all needful
and proper repairs, renewals and replacements thereto subject to reasonable wear
and tear.
SECTION 405. Maintenance of Insurance. Each Credit Party shall
maintain with financially sound and reputable insurers acceptable to Lender (i)
with reference to its property other than the Collateral, insurance against such
risks and in such amounts as is customary in the case of Persons of established
16
reputations engaged in the same or similar business and similarly situated, and
(ii) liability and worker's compensation insurance in such amounts as is
customary in the case of Persons of established reputations engaged in the same
or similar business and similarly situated (except that the dollar amount of
each Credit Party's liability insurance coverage must be acceptable to Lender),
and, upon request by Lender, shall furnish Lender copies of the policies under
which such insurance is carried. The Credit Parties' obligations concerning
insurance of the Collateral are governed by the applicable Financing Documents.
The Credit Parties shall not be required to maintain property insurance on
Tissue Freezers.
SECTION 406. Payment of Taxes. Each Credit Party shall punctually pay
and discharge all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or upon any of its property, as well as all claims of
any kind which, if unpaid, might by law become a Lien upon its property, except
taxes, assessments, charges, levies or claims which are in good faith being
timely litigated or otherwise properly contested by such Credit Party and which
cannot become a Lien upon any of the Collateral with priority over the security
interest of Lender or as to which such Credit Party has established reserves
satisfactory to Lender. Upon any Credit Party's failure to make prompt payment
of any such obligation of such Credit Party not excepted above, Lender may, but
is under no obligation to, pay all or any part of the same or effect a
settlement or compromise thereof in the name of such Credit Party; and all
amounts so paid by Lender as well as the expenses incurred in negotiating or
attempting to negotiate a compromise or settlement will automatically become a
part of the Liabilities of Borrower under this Agreement and will bear interest
from the date of such payment at the lower of (i) the highest rate of interest
which Borrower has contracted to pay on any of the Liabilities or (ii) the
highest rate permissible under applicable law.
SECTION 407. Environmental Matters. Borrower shall notify Lender in
writing, promptly upon learning thereof, of:
(i) any notice that any Credit Party is not in compliance in any
material respect with all terms and conditions of all permits, licenses and
authorizations which are required under Environmental Laws, or that any Credit
Party is not in compliance in any material respect with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any applicable Environmental Laws;
(ii) any notice of any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which, with
respect to any Credit Party, may interfere with or prevent its compliance or
continued compliance in any material respect with Environmental Laws, or may
give rise to any material common law or legal liability on its part, or
otherwise form the basis of any material claim, action, demand, suit,
proceeding, hearing, study or investigation against it, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste; and
17
(iii) any notice or claim of any civil, criminal or administrative
action, suit, demand, claim, hearing, notice or demand letter, notice of
violation, investigation, or proceeding pending or threatened against any Credit
Party relating in any way to Environmental Laws.
SECTION 408. Primary Depository Relationships. To the maximum extent
permitted by applicable law, the Credit Parties shall maintain their primary
depository relationships with Lender.
ARTICLE V - NEGATIVE COVENANTS
For so long as this Agreement is in effect, and unless Lender
expressly consents in writing otherwise or to the contrary (which consent shall
not be unreasonably withheld), Borrower hereby expressly covenants and agrees to
the following negative covenants:
SECTION 501. Type of Business. Borrower and its Subsidiaries shall not
engage in any type of business other than the development, sale, licensing or
use of medical products, bio-technology or tissue engineering or any activity
reasonably incidental thereto.
SECTION 502. Transactions with Affiliates. None of the Credit Parties
shall engage in any transactions with an Affiliate, except on terms no less
favorable to such Credit Party than could be obtained in arms-length
transactions with others.
SECTION 503. Merger, Consolidation, Acquisitions, Etc. None of the
Credit Parties shall: (i) transfer all or substantially all of its assets to,
consolidate with or merge with any other Person; (ii) acquire all or
substantially all of the properties or capital stock of any other Person; or
(iii) create or acquire any Subsidiary or enter into any partnership or joint
venture; provided, however, that (a) any Subsidiary of Borrower may merge or
consolidate with, or convey all or substantially all of its assets to, Borrower
or another Subsidiary of Borrower (but Borrower must be the surviving
corporation for any such merger or consolidation involving Borrower), (b)
Borrower may acquire all or substantially all of the properties or capital stock
of another Person (or Borrower may form a Subsidiary to make such acquisition)
so long as such transaction does not cause a violation of Section 501 above or
503(iii)(e) below, Borrower complies with any and all requirements of Section
202(c) applicable thereto and no other Default or Event of Default would be
caused thereby, (c) Borrower may form a new Subsidiary so long as such
transaction does not cause a violation of Section 501 above or Section
503(iii)(e) below and Borrower complies with any and all requirements of Section
202(c) applicable thereto and no other Default or Event of Default would be
caused thereby, (d) any Credit Party may enter into a merger or consolidation in
connection with any acquisition transaction permitted under clause (b) above so
long as such Credit Party is the surviving corporation therefrom and no other
Default or Event of Default would be caused thereby, and (e) Borrower may
18
acquire all or substantially all of the properties or capital stock of another
Person or create or acquire Subsidiaries or enter into partnerships or joint
ventures so long as Borrower's total investment in all such acquisitions,
Subsidiaries, partnerships or joint ventures (whether in the form of cash, loans
or other property but exclusive of contributions or transfers of Intellectual
Property Rights) does not exceed $7,000,000 in the aggregate and no other
Default or Event of Default would be caused thereby. Lender agrees that, upon
request of Borrower from time to time (but not more frequently than once per
fiscal year), Lender may in its sole discretion increase the aforesaid
limitation on investment set forth in clause (e) above, which increase shall
become effective upon Lender's written notice to Borrower thereof.
SECTION 504. ERISA Matters. None of the Credit Parties shall incur or
suffer to exist any material accumulated funding deficiency within the meaning
of ERISA or incur any material liability to the Pension Benefit Guaranty
Corporation established under ERISA (or any successor thereto under ERISA).
SECTION 505. Liens. None of the Credit Parties shall create, incur,
assume or suffer to exist any Lien of any kind upon any of its property or
assets now owned or hereafter acquired, excluding, however, from the operation
of this covenant: (1) liens in connection with worker's compensation; (2)
deposits or pledges to secure the performance of bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds, and other obligations of a like nature arising in the normal
and ordinary course of business; (3) mechanics', workmen's, materialmen's, and
other like liens arising in the normal and ordinary course of business in
respect of obligations which are not overdue or which are being contested in
good faith by such Credit Party and as to which such Credit Party has
established reserves satisfactory to the Lender; (4) tax or other nonconsensual
liens, encumbrances or charges which are being litigated or otherwise properly
contested in good faith by such Credit Party and as to which such Credit Party
has established reserves satisfactory to the Lender; (5) the security interests,
security titles and liens conveyed to Lender under any of the Financing
Documents; (6) Purchase Money Liens securing Purchase Money Indebtedness to the
extent permitted under Section 508; and (7) any other Liens disclosed on
Schedule 505 attached hereto.
SECTION 506. Guaranties. None of the Credit Parties shall in any
manner, directly or indirectly, become a guarantor of any obligation of, or an
endorser of, or otherwise assume or become liable upon any obligations or other
indebtedness of any other Person except (i) pursuant to the Financing Documents
or (ii) in connection with the depositing of checks in the normal and ordinary
course of business.
SECTION 507. Financial Covenants. Borrower shall not violate any of
the following financial covenants.
(a) Borrower shall not change its fiscal year without Lender's
consent;
19
(b) Borrower shall not make Capital Expenditures in any one fiscal
year ending on or after December 31, 1996, which exceed $2,000,000 in total
amount for such fiscal year;
(c) Borrower shall not permit its Current Ratio at any time on or
after the date of this Agreement to be less than 2.0 to 1.0;
(d) Borrower shall not permit its Leverage Ratio to exceed 1.0 to 1.0
at any time on or after the date of this Agreement;
(e) Borrower shall not permit its Net Worth to be less than
$18,000,000 at any time during the period from the date of this Agreement
through December 31, 1996, and Borrower shall not permit its Net Worth at any
time during each fiscal year of Borrower ending thereafter to be less than its
minimum required Net Worth hereunder for its immediately preceding fiscal year
plus $500,000; and
(f) Borrower shall not permit its Debt Coverage Ratio for any fiscal
quarter or year to be less than 1.3 to 1.0.
SECTION 508. Funded Debt. None of the Credit Parties shall incur,
assume, or suffer to exist any Funded Debt of such Credit Party, except (i)
Funded Debt arising under this Agreement or any of the other Financing
Documents, (ii) Purchase Money Indebtedness not to exceed $250,000 in total
amount for all the Credit Parties incurred in any fiscal year, and (iii) any
other Funded Debt described on Schedule 508 attached hereto.
ARTICLE VI - CONDITIONS TO LENDING
All of Lender's obligations under this Agreement, including without
limitation any obligation to lend or advance moneys to Borrower, are subject to
the fulfillment of each of the following conditions at or before the date hereof
as well as at the time each Loan is requested or made hereunder:
SECTION 601. Representations and Warranties. All representations and
warranties of the Credit Parties contained in this Agreement and in each and
every of the other Financing Documents are true, correct, complete and accurate
in all material respects.
SECTION 602. Performance of Covenants. The Credit Parties shall have
duly and properly performed in all respects all covenants, agreements, and
obligations required by the terms of this Agreement or any of the other
Financing Documents to be performed by them.
SECTION 603. No Violation of Negative Covenants. None of the Credit
Parties has taken or permitted to be taken any actions which would conflict with
any of the provisions of Article V of this Agreement.
20
SECTION 604. No Material Adverse Changes. Since the date of this
Agreement, no material adverse change shall have occurred in the business,
operations, financial condition or assets of the Credit Parties taken as a
whole.
SECTION 605. Delivery of Loan Documents. Borrower has delivered to
Lender, or caused to be delivered to the Lender, duly executed counterparts of
this Agreement, the Note, and the other Financing Documents required under
Sections 202(a) and 202(b), together with the following described additional
documents:
(a) Certificates from the Secretaries of State of Florida and Georgia
issued as of the date of this Agreement (or within 45 days thereof) stating that
each of the Borrower and CryoLife International is a corporation duly organized
(or, in the case of Georgia, is a foreign corporation qualified to do business)
and is in good standing under the laws of such states;
(b) A copy (certified by the Secretary of State of Florida within 45
days of the date of this Agreement) of each of Borrower's and CryoLife
International's certificate of incorporation;
(c) A Certificate of the Borrower in the form of Exhibit F attached
hereto, duly completed and executed;
(d) A Certificate of CryoLife International in the form of Exhibit G
attached hereto;
(e) An opinion of counsel for Borrower in the form of Exhibit H
attached hereto;
(f) Satisfactory evidence of the recording of such Uniform Commercial
Code financing statements and other documents in such filing offices as Lender
may deem necessary or appropriate to perfect or maintain the perfection of the
Lender's security interests under the Security Agreement and the Subsidiary
Security Agreement, as well as written reports of examinations of the public
records of such filing office as the Lender may deem necessary or appropriate
indicating that there are no other Liens of record covering any of the
Collateral covered by the Security Agreement or the Subsidiary Security
Agreement (except Liens permitted under Section 505 hereof);
(g) Any Waivers and Consents required from any landlord or creditor
under Section 202 hereof.
(h) Such other documents, instruments and agreements as may be
reasonably required by Lender or Lender's counsel in connection with any loan or
advance hereunder.
SECTION 606. No Default or Event of Default. No Default or Event of
Default shall have occurred.
21
SECTION 607. Incidental Matters. All matters incidental to each
advance hereunder shall be reasonably satisfactory to Lender.
ARTICLE VII - EVENTS OF DEFAULT
The occurrence of any one or more of the following events will
constitute an event of default (herein called an "Event of Default") by Borrower
under this Agreement.
SECTION 701. Failure to Pay Liabilities. Failure of Borrower
punctually to make payment of any amount payable to Lender, whether principal or
interest, on any of the Liabilities within five (5) days of the date the same
becomes due and payable, whether at maturity, or at a date fixed for any
prepayment or partial prepayment, or by acceleration or otherwise.
SECTION 702. Representations and Warranties. If any statement,
representation, or warranty of any Credit Party made in this Agreement or in any
of the other Financing Documents at any time furnished by or on behalf of any
Credit Party to Lender proves to have been untrue, incorrect, misleading, or
incomplete in any material respect as of the date made.
SECTION 703. Negative Covenant Breach. Failure of any Credit Party
punctually and fully to perform, observe, discharge or comply with any of the
covenants set forth in Article V of this Agreement.
SECTION 704. Other Covenant Breach. Failure of any Credit Party
punctually and fully to perform, observe, discharge or comply with any of the
covenants set forth in this Agreement (other than Article V), which failure is
not cured within thirty (30) days after notice from Lender to Borrower.
SECTION 705. Other Agreements with Lender. The occurrence of a
default, an event of default or an Event of Default under any of the other
Financing Documents or under any other agreement to which any Credit Party and
Lender are parties or under any other instrument executed by any Credit Party in
favor of Lender, including any loan agreements, notes, leases, deeds or other
documents.
SECTION 706. Voluntary Bankruptcy. If any Credit Party becomes
insolvent as defined in the Georgia Uniform Commercial Code or makes an
assignment for the benefit of creditors; or if any action is brought by any
Credit Party seeking dissolution of such Credit Party or liquidation of its
assets or seeking the appointment of a trustee, interim trustee, receiver, or
other custodian for any of its property; or if any Credit Party commences a
voluntary case under the Federal Bankruptcy Code; or if any reorganization or
arrangement proceeding is instituted by any Credit Party for the settlement,
readjustment, composition or extension of any of its debts upon any terms; or if
any action or petition is otherwise brought by any Credit Party seeking similar
relief or alleging that it is insolvent or unable to pay its debts as they
mature.
22
SECTION 707. Involuntary Bankruptcy. If any action is brought against
any Credit Party seeking dissolution of such Credit Party or liquidation of any
of its assets or seeking the appointment of a trustee, interim trustee, receiver
or other custodian for any of its property, and such action is consented to or
acquiesced in by such Credit Party or is not dismissed within sixty (60) days of
the date upon which it was instituted; or if any proceeding under the Federal
Bankruptcy Code is instituted against such Credit Party and (i) an order for
relief is entered in such proceeding or (ii) such proceeding is consented to or
acquiesced in by such Credit Party or is not dismissed within sixty (60) days of
the date upon which it was instituted; or if any reorganization or arrangement
proceeding is instituted against any Credit Party for the settlement,
readjustment, composition, or extension of any of its debts upon any terms, and
such proceeding is consented to or acquiesced in by such Credit Party or is not
dismissed within sixty (60) days of the date upon which it was instituted; or if
any action or petition is otherwise brought against any Credit Party seeking
similar relief or alleging that it is insolvent, unable to pay its debts as they
mature, or generally not paying its debts as they become due, and such action or
petition is consented to or acquiesced in by such Credit Party or is not
dismissed within sixty (60) days of the date upon which it was brought.
SECTION 708. Other Indebtedness. If any Credit Party is in default on
indebtedness to another Person having any outstanding balance of $100,000 or
more or an event has occurred which, with the giving of notice or passage of
time, or both, will cause such Credit Party to be in default on any such
indebtedness to another Person.
SECTION 709. Material Adverse Change. Any material adverse change in
the Credit Parties' financial condition or means or ability to pay the
Liabilities.
SECTION 710. Change in Control. The acquisition after the date of this
Agreement by any Person (or by any two or more Persons acting in concert) except
Steven G. Anderson of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission) of either (i) a sufficient number of the
Voting Stock of Borrower so that the total number of such shares beneficially
owned by such Person (or group of Persons acting in concert) equals or exceeds
twenty-five percent (25%) of the outstanding Voting Stock of Borrower or (ii)
the power to direct or cause the direction of the management and policies of
Borrower (whether through ownership of voting securities, by contract or
otherwise).
23
ARTICLE VIII - REMEDIES UPON DEFAULT
SECTION 801. Acceleration and Other Remedies. Upon the occurrence of
an Event of Default:
(a) Lender may, at its option and without prior notice to Borrower,
terminate its remaining obligations hereunder to make any further Loans to
Borrower;
(b) Any of the Liabilities may (notwithstanding any provisions
contained therein or herein to the contrary), at the option of Lender and
without presentment, demand, notice or protest of any kind (all of which are
expressly waived by Borrower in this Agreement), be declared due and payable,
whereupon they immediately will become due and payable;
(c) Lender may also, at its option, and without notice or demand of
any kind, exercise from time to time any and all rights and remedies available
to it under this Agreement or under any of the other Financing Documents, as
well as exercise from time to time any and all rights and remedies available to
a secured party when a debtor is in default under a security agreement as
provided in the Uniform Commercial Code of Georgia, or available to Lender under
any other applicable law or in equity, including without limitation the right to
any deficiency remaining after disposition of the Collateral; and
(d) Borrower shall pay all of the reasonable costs and expenses
actually incurred by Lender in enforcing its rights under this Agreement and the
other Financing Documents. In the event any claim under this Agreement or under
any of the other Financing Documents is referred to an attorney for collection,
or collected by or through an attorney at law, Borrower will be liable to Lender
for all reasonable expenses actually incurred by it in seeking to collect the
Liabilities or to enforce its rights hereunder, in the other Financing Documents
or in the Collateral, including without limitation actual and reasonable
attorneys' fees.
SECTION 802. Application of Proceeds; Collection Costs. Any proceeds
from disposition of any of the Collateral may be applied by Lender first to the
payment of all reasonable expenses and costs actually incurred by Lender in
collecting such Liabilities, in enforcing the rights of Lender under each and
every of the Financing Documents and in collecting, retaking, holding and
preparing the Collateral for and advertising the sale or other disposition of
and realizing upon the Collateral, including without limitation the reasonable
expenses of liquidating any liens or claims upon the Collateral and reasonable
attorneys' fees (but not to exceed actual fees incurred) as well as all other
legal expenses and court costs. Any balance of such proceeds may be applied by
Lender toward the payment of such of the Liabilities and in such order of
application as the Lender may from time to time elect. Lender shall pay the
surplus, if any, to Borrower. Borrower shall pay the deficiency, if any, to
Lender.
24
ARTICLE IX - MISCELLANEOUS
SECTION 901. Time of Essence. Time is of the essence of this
Agreement.
SECTION 902. Entire Agreement. This Agreement, together with the Note
and all of the other Financing Documents, supersedes and replaces the Prior Loan
Agreements, the Prior Security Agreements, and all other prior discussions and
agreements by and between any of the Credit Parties and Lender with respect to
the Loans or the Collateral, and together they constitute the sole and entire
agreement between the parties with respect thereto. No promises, covenants,
representations, or agreements other than as expressly set forth in the
Financing Documents have been made to or with any Credit Party, and Borrower
represents and warrants that it is not relying on any promises, covenants,
representations or agreements, other than as expressly set forth in such
documents in entering into this Agreement.
SECTION 903. Several Counterparts. This Agreement may be executed in
any number of counterparts each of which shall be deemed an original, and all of
such counterparts together shall constitute one and the same instrument.
SECTION 904. Survival of Warranties. All representations, covenants,
and warranties made in this Agreement, or in any of the other Financing
Documents are cumulative and in addition to those imposed by law or equity, and
are to survive the execution hereof, the making of the Loans, and the delivery
hereof and of all the other Financing Documents.
SECTION 905. Rights Cumulative. All rights and remedies of Lender,
whether provided for herein or in any of the other Financing Documents or
conferred by law or in equity or by statute or otherwise, are cumulative and not
alternative, and may be enforced successively or concurrently. The collection,
repossession, sale or retention of any of the Collateral by Lender will not bar
an action by Lender for the recovery of any of the Liabilities of Borrower to
Lender (Borrower having expressly agreed herein to remain fully liable for any
deficiency), nor will Lender's bringing of an action against Borrower to recover
moneys owing under any of the Liabilities bar Lender's right to collect or
repossess any of the Collateral.
SECTION 906. No Release; Term of Agreement. No sale, assignment,
transfer, renewal, addition, extension, consolidation, subdivision,
modification, or substitution of any of the Liabilities, or of any of the
Financing Documents, or of any interest thereunder, nor any loss, damage,
injury, theft, or destruction of any of the Collateral will release Borrower
from its obligations hereunder. The Liabilities may from time to time be paid
and Liabilities thereafter incurred, and neither this Agreement nor the security
interests and security titles conveyed under the Financing Documents shall lapse
or terminate because no Liabilities are outstanding. This Agreement shall remain
in full force and effect until such time as (i) no Liabilities are outstanding
and (ii) Lender is under no obligation to make any Loans hereunder to Borrower.
25
SECTION 907. Waivers and Modifications. Lender will not be deemed as a
consequence of any act, delay, failure, omission, or forbearance (including
without limitation failure to exercise its right of accelerating the maturity of
any of the Liabilities or other indulgences granted from time to time by Lender)
or for any other reason: (1) to have waived, or to be estopped from exercising,
any of its rights or remedies under this Agreement or under any of the other
Financing Documents, or (2) to have modified, changed, amended, terminated,
rescinded, or superseded any of the terms of this Agreement or of any of the
other Financing Documents, unless such waiver, modification, amendment, change,
termination, rescission, or supersession is express, in writing and signed by a
duly authorized officer of Lender. No single or partial exercise by Lender of
any right or remedy will preclude other or further exercise thereof or preclude
the exercise of any other right or remedy, and a waiver expressly made in
writing on one occasion will be effective only in that specific instance and
only for the precise purpose for which given, and will not be construed as a
consent to or a waiver of any right or remedy on any future occasion. No notice
to or demand on Borrower in any instance will entitle Borrower to any other or
future notice or demand in similar or other circumstances.
SECTION 908. Waiver of Presentment, Etc. Borrower hereby expressly
waives presentment, demand, dishonor, protest, notice for payment, notice of
non-payment, notice of dishonor, notice of default, notice of compromises or
surrender and any other demand or notice whatsoever in connection with the
Financing Documents.
SECTION 909. Notices. Except as provided otherwise in this Agreement,
all notices and other communications under this Agreement are to be in writing
and are to be deemed to have been duly given and to be effective upon delivery
to the party to whom they are directed. If sent by U.S. mail, first class,
certified, return receipt requested, postage prepaid, and addressed to Lender or
to Borrower at their respective addresses set forth beneath their respective
signatures below, such notices, demands and other communications are to be
deemed to have been delivered on the second business day after being so posted.
Either Lender or Borrower may by written notice to the other designate a
different address for receiving notices under this Agreement; provided, however,
that no such change of address will be effective until written notice thereof is
actually received by the party to whom such change of address is sent.
SECTION 910. No Assignment by Borrower. Borrower may not, without the
consent of Lender, assign any of its rights or duties hereunder or under any of
the other Financing Documents.
SECTION 911. Lender's Expenses. All statements, reports, certificates,
opinions, and other documents or information furnished to Lender under the
Financing Documents shall be supplied by Borrower without cost to Lender.
Further, Borrower shall reimburse Lender on demand for all reasonable
out-of-pocket costs and expenses (including actual and reasonable legal fees)
incurred by the Lender or its participants in connection with the preparation,
establishment, operation, enforcement, and termination of the Financing
26
Documents or the protection or preservation of any right or claim of the Lender
with respect to the Financing Documents; provided, however, that Borrower's
obligation to reimburse Lender for its attorney's fees and expenses relating to
the initial preparation and establishment of this Agreement and the other
Financing Documents shall not exceed $10,000.
SECTION 912. Payment of Taxes. Borrower will pay all taxes (if any) in
connection with this Agreement, any of the other Financing Documents, any loans
made in connection with this Agreement, or the issuance or ownership of any of
the Financing Documents and in connection with any modification of said loans,
this Agreement, or any of the other Financing Documents (excluding, however, any
taxes imposed upon or measured by the net income of the Lender), and will save
the Lender harmless without limitation as to time against any and all
liabilities with respect to all such taxes. The obligations of Borrower under
this section shall survive the payment of the Liabilities and the termination of
this Agreement.
SECTION 913. Demand Liabilities. If any of the Liabilities are by
their terms demand obligations, nothing contained herein shall affect, impair or
modify the demand nature of such obligations, and the occurrence of a Default or
an Event of Default shall not be a prerequisite for Lender's requiring payment
of such obligations.
SECTION 914. Set-Offs Against Deposits. Upon the occurrence of an
Event of Default hereunder, Lender, without notice or demand of any kind, may
hold and set off against such of the Liabilities (whether matured or unmatured)
as Lender may elect, any balance or amount to the credit of Borrower in any
deposit, agency, reserve, holdback or other account of any nature whatsoever
maintained by or on behalf of Borrower with Lender at any of its offices,
regardless of whether such accounts are general or special and regardless of
whether such accounts are individual or joint.
SECTION 915. Participant Set-Off. Any Person purchasing an interest in
debt obligations under this Agreement held by Lender may exercise all rights of
offset with respect to such interest as fully as if such Person were a holder of
debt obligations hereunder in the amount of such interest.
SECTION 916. Confidentiality. Each of the parties to this Agreement
shall use reasonable, good faith efforts to maintain as confidential, in
accordance with such Person's normal practices and policies for protecting its
own confidential information, this Agreement and the other Financing Documents
and the terms and conditions thereof, and all other information delivered to
such party in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise identified as being confidential information;
provided, however, that each such Person may disclose information concerning the
aforesaid Financing Documents or their terms and conditions or such other
confidential information described above (i) as required in its counsel's
opinion pursuant to the lawful requirements or requests of any Governmental
27
Authority, (ii) as required in its counsel's opinion by any governmental or
administrative rule, judicial process or subpoena, (iii) to their respective
attorneys, accountants, advisers or consultants (but only on a confidential
basis as provided below), (iv) to the extent necessary in its counsel's opinion
to enforce such Person's rights or remedies or perform such Person's obligations
under any of the Financing Documents or applicable law, (v) to the extent
necessary or appropriate in the opinion of its counsel in connection with any
litigation or other proceeding having it or any of its Affiliates as a party
thereto, and (vi) Lender may disclose such information to any actual or
prospective assignee or participant of Lender. If Lender or any Credit Party
discloses any information covered by this subsection to any of its attorneys,
accountants, advisers or consultants, such Person shall advise such attorneys,
accountants, advisers or consultants of the provisions of this Section but such
Person shall not be liable for any misappropriation or misuse of such
information by such attorneys, accountants, consultants or advisers other than
occasioned by such Person's own gross negligence or willful misconduct. The
obligations of the parties under this Section 916 shall survive until one year
after the date of any termination of this Agreement. Lender agrees, upon request
of Borrower following any termination of this Agreement, to use reasonable
efforts to return to Borrower any confidential or proprietary information of
Borrower delivered to Lender pursuant to this Agreement and in Lender's
possession.
SECTION 917. Governing Law; Severability. This Agreement and all of
the other Financing Documents have been made and delivered in the State of
Georgia, and the terms, provisions and performance thereof are in all respects,
including without limitation all matters of construction, interpretation,
validity, enforcement, and performance, to be construed in accordance with and
governed by the internal laws of that State, including without limitation the
Uniform Commercial Code of Georgia, as amended and in effect on the date of this
Agreement. Wherever possible, each provision of this Agreement and of each and
every of the other Financing Documents is to be interpreted in such manner as to
be effective and valid under applicable law, but if any provision thereof is
prohibited or invalid under such law, such provision is to be ineffective only
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement or of
any of the other Financing Documents.
SECTION 918. Successors and Assigns. All rights of Lender under the
Financing Documents shall inure to the benefit of its successors and assigns.
All obligations of Borrower under the Financing Documents shall bind its
successors and permitted assigns.
28
SECTION 919. Jury Trial Waiver and Consent to Jurisdiction and Venue.
EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT SUCH PARTY MAY HAVE UNDER
ANY APPLICABLE LAW TO A TRIAL BY JURY WITH RESPECT TO ANY SUIT OR LEGAL ACTION
WHICH MAY BE COMMENCED BY OR AGAINST SUCH PERSON OR THE OTHER PARTIES CONCERNING
THE INTERPRETATION, CONSTRUCTION, VALIDITY, ENFORCEMENT OR PERFORMANCE OF THIS
AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS. EACH PARTY TO THIS AGREEMENT
FURTHER AGREES AND CONSENTS TO THE JURISDICTION OF ANY FEDERAL COURT SITTING IN
FULTON COUNTY, GEORGIA WITH RESPECT TO ANY SUCH SUIT OR LEGAL ACTION, AND EACH
PARTY TO THIS AGREEMENT FURTHER AGREES AND CONSENTS TO VENUE OF ANY FEDERAL
COURT SITTING IN FULTON COUNTY, GEORGIA WITH REGARD TO ANY SUCH SUIT OR LEGAL
ACTION.
IN WITNESS WHEREOF, Lender has executed this Agreement, and Borrower
has executed this Agreement and placed its seal hereon, all as of the day and
year first above written.
BORROWER:
CRYOLIFE, INC.
By:
----------------------------------------
President
Address: 2211 New Market Parkway
Suite 142
Marietta, Georgia 30067
(CORPORATE SEAL)
LENDER:
NATIONSBANK, N.A. (SOUTH)
By:
----------------------------------------
Senior Vice President
Address: 600 Peachtree Street, N.E.
18th Floor
Atlanta, Georgia 30308
Attn: Christopher L. Jones
Senior Vice President
29