PROMISSORY NOTE
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$3,000,000.00 May 11, 1999
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND
HEREBY, Strategic Diagnostics, Inc., a Delaware corporation with its chief
executive office at 111 Pencader Drive, Newark, Delaware 19702 ("SDI"), TSD
BioServices, Inc., a Delaware corporation with its chief executive office at 128
Sandy Drive, Newark, Delaware 19713 ("TSD") and HTI Bio-Products, Inc., a
California corporation with its chief executive office at 26578 Old Julian
Highway, Santa Ysabel, California 92070 ("HTI") (SDI, TSD and HTI are
hereinafter sometimes referred to and are jointly and severally obligated as
"Borrower"), promise to pay to the order of First Union National Bank ("Bank"),
a national bank with an office at 3 Beaver Valley Road, Wilmington, Delaware
19803-1115, at such address or at such other address as Bank shall designate to
Borrower, the principal sum of Three Million ($3,000,000.00) Dollars, together
with interest as set forth below, until the date on which the principal amount
is paid in full, payable in lawful money of the United States of America in
accordance with the terms of this Promissory Note (this "Note"). All outstanding
principal and any accrued and unpaid interest thereon shall be due and payable
on the fifth (5th) anniversary of the date hereof (the "Maturity Date"), unless
sooner accelerated in accordance with this Note or the Loan Agreement (as
hereinafter defined).
Reference is made to that certain Loan and Security Agreement
dated February 26, 1999 between Borrower and Bank (the "Loan Agreement"), the
terms, covenants and conditions of which are incorporated herein by this
reference. Capitalized terms appearing herein and not otherwise defined shall
have the respective meanings given to such terms in the Loan Agreement. This
Note is the ATAB Note referred to in the Loan Agreement.
1. Interest.
(a) Except as otherwise provided herein, interest
shall be charged on the outstanding principal balance from the date hereof until
the full amount of principal due hereunder has been paid at a rate equal to
LIBOR (as hereinafter defined), as determined by Bank prior to the commencement
of each consecutive LIBOR Interest Period during the term of this Note plus
three (3.0%) percent. "LIBOR," for any day, is the rate for one month U.S.
dollar deposits of that many months maturity as reported on Telerate page 3750
as of 11:00 a.m., London time, on the second London business day before the
relevant LIBOR Interest Period (or if not so reported, then as determined by
Bank from another recognized source or interbank quotation). Each LIBOR Interest
Period will begin on and include the date the next interest payment is due, with
the first LIBOR Interest Period commencing as of the date hereof. Upon
determination by Bank of the Rate for any LIBOR Interest Period, such Rate shall
remain in effect for the entire LIBOR Interest Period until redetermined for the
next successive LIBOR Interest Period.
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(b) Borrower indemnifies Bank against Bank's loss or
expense in employing deposits as a consequence (a) of Borrower's failure to make
any payment when due under this Note, or (b) any payment or prepayment of the
principal on a date other than the last day of the LIBOR Interest Period (the
"Indemnified Loss or Expense"). The amount of the Indemnified Loss or Expense
shall be determined by Bank based upon the assumption that Bank funded one
hundred (100%) percent of that portion of the principal in the London interbank
market.
(c) Interest shall be calculated daily on the basis
of the actual number of days elapsed over a three hundred sixty (360) day year.
(d) After the occurrence and during the continuance
of an Event of Default, all amounts remaining unpaid or thereafter accruing
under this Note shall, at Bank's option, bear interest at a default rate of
three (3%) percent per annum above the interest rate then in effect as set forth
in this Note (the "Default Rate"), or the highest permissible rate under
applicable usury law, whichever is less. Such interest shall be payable upon
demand, but in no event later than when the next scheduled interest payment is
due, and shall also be charged on the amounts owed by the undersigned to Bank
pursuant to any judgments entered in favor of Bank with respect to this Note.
Notwithstanding the entry of judgment, demand by Bank or acceleration of the
Obligations, the unpaid principal of the Obligations evidenced hereby shall
continue to accrue interest at the Default Rate until such Obligations are paid
in full.
(e) If, at any time, any of the interest rates that
are or may be charged under this Note (collectively, the "Rates") shall be
finally determined by any court of competent jurisdiction, governmental agency
or tribunal to exceed the maximum rate of interest permitted by any applicable
Laws, then, for such time as such Rate(s) would be deemed excessive, application
thereof shall be suspended and there shall be charged in lieu thereof the
maximum rate of interest permissible under such Laws.
2. Payment. Borrower shall make payments on account of the
ATAB Loan as follows:
(a) Commencing on July 1, 1999 and continuing on the
first day of each month thereafter until the Maturity Date, Borrower shall make
consecutive equal monthly payments of principal each in the amount of Fifty
Thousand ($50,000.00) Dollars plus accrued and unpaid interest;
(b) On the Maturity Date, Borrower shall make a
payment of all outstanding principal, accrued and unpaid interest and all other
charges then due and owing under this Note and the Loan Agreement.
3. Prepayments. This Note may be prepaid in whole or in part
at any time and from time to time without payment of a penalty or premium
provided that each such prepayment is accompanied by a payment of interest on
the amount of such prepayment calculated at the applicable
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Rate to the date of such prepayment, and any partial prepayments shall be
applied to installments in the inverse order of their maturity (last
installment(s) credited first).
4. Late Payments. If any payment of principal and/or interest
is not received in full by Bank before the tenth (10th) day after the due date
thereof, there shall be immediately added to the Obligations, a late charge
equal to five ($.05) cents for each one ($1.00) dollar or part thereof so
overdue. All late charges are immediately due and payable without notice or
demand.
5. Bank's Rights Upon Default. Upon the occurrence of any
Event of Default and without the necessity of giving any prior written notice to
Borrower, Bank shall have all of the rights and remedies described in the Loan
Agreement and available to the Bank at law, in equity or otherwise and shall
also have the right, pursuant to the Warrant of Attorney contained herein, to
confess judgment against Borrower.
6. Application of Funds. All sums realized by Bank on account
of this Note, from whatever source received, shall be applied first to any fees,
costs and expenses (including reasonable attorney's fees) incurred by Bank,
second to accrued and unpaid interest, and then to principal. Borrower waives
and releases any right to require Bank to collect any of the Obligations from
any other collateral under any theory of marshalling of assets or otherwise, and
specifically authorizes Bank to apply any collateral in which Borrower has any
right, title or interest against any of the Obligations in any manner that Bank
may determine.
7. Warrant of Attorney. BORROWER HEREBY IRREVOCABLY AUTHORIZES
AND EMPOWERS ANY ATTORNEY OR ANY CLERK OF ANY COURT OF RECORD UPON OR AFTER THE
OCCURRENCE OF ANY EVENT OF DEFAULT TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
BORROWER, (A) FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME DUE ON THE BORROWER'S
OBLIGATIONS, AND/OR (B) IN ANY ACTION OF REPLEVIN INSTITUTED BY BANK TO OBTAIN
POSSESSION OF ANY COLLATERAL OR OTHER COLLATERAL SECURITY FOR THE OBLIGATIONS OF
BORROWER TO BANK, IN EITHER CASE WITH OR WITHOUT DECLARATION, WITH COSTS OF
SUIT, WITHOUT STAY OF EXECUTION AND WITH FIVE (5%) PERCENT OF THE PRINCIPAL
AMOUNT THEREOF, BUT NOT LESS THAN FIVE THOUSAND ($5,000.00) DOLLARS, ADDED FOR
LIEN PRIORITY PURPOSES, WITH ACTUAL ATTORNEYS' FEES GOVERNED BY PARAGRAPH 8
HEREOF. BORROWER UNCONDITIONALLY AND IRREVOCABLY: (A) WAIVES THE RIGHT OF
INQUISITION ON ANY REAL ESTATE LEVIED ON, VOLUNTARILY CONDEMNS THE SAME,
AUTHORIZES THE PROTHONOTARY OR CLERK TO ENTER UPON THE WRIT OF EXECUTION SAID
VOLUNTARY CONDEMNATION AND AGREES THAT SAID REAL ESTATE MAY BE SOLD ON A WRIT OF
EXECUTION; (B) WAIVES AND RELEASES ALL RELIEF FROM ALL REDEMPTION, APPRAISEMENT,
STAY, EXEMPTION OR APPEAL LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED;
AND (C) RELEASES ALL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS NOTE,
VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF BANK SHALL HAVE
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BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL OF
THIS NOTE AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND
ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE
THEREOF, AND THE SAME MAY BE EXERCISED, FROM TIME TO TIME, AS OFTEN AS BANK
SHALL DEEM NECESSARY AND DESIRABLE, AND THIS NOTE SHALL BE A SUFFICIENT WARRANT
THEREFORE. BANK MAY ENTER ONE OR MORE JUDGMENTS IN THE SAME OR DIFFERENT
COUNTIES FOR ALL OR PART OF THE BORROWER'S OBLIGATIONS, WITHOUT REGARD TO
WHETHER JUDGMENT HAS BEEN ENTERED ON MORE THAN ONE OCCASION FOR THE SAME
BORROWER'S OBLIGATIONS. IN THE EVENT ANY JUDGMENT ENTERED AGAINST BORROWER
HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR ON BORROWER'S BEHALF FOR
ANY REASON WHATSOEVER, BANK IS HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR
FOR AND CONFESS JUDGMENT AGAINST BORROWER; SUBJECT, HOWEVER, TO THE LIMITATION
THAT SUCH SUBSEQUENT ENTRY OR ENTRIES OF JUDGMENT BY BANK MAY ONLY BE DONE TO
CURE ANY ERRORS IN PRIOR PROCEEDINGS, ONLY AND TO THE EXTENT THAT SUCH ERRORS
ARE SUBJECT TO CURE IN THE LATER PROCEEDINGS.
8. Attorney's Fees and Costs. In the event that Bank engages
an attorney to represent it in connection with (a) any alleged default by
Borrower under this Note, the HTI Note, the Loan Agreement or any of the
Collateral Documents (collectively, the "Loan Documents"), (b) the enforcement
of any of Bank's rights and remedies under any of the Loan Documents, or the
negotiation and preparation of any amendment to any of the Loan Documents (c)
any potential and/or actual bankruptcy or other insolvency proceedings commenced
by or against Borrower and/or (d) any potential and/or actual litigation arising
out of or related to any of the foregoing, the Loan Documents or any of the
Obligations, then Borrower shall be liable to and shall reimburse Bank on demand
for all reasonable attorneys' fees, costs and expenses incurred by the Bank in
connection with any of the foregoing. Borrower shall also be liable and shall
also reimburse Bank on demand for all other costs and expenses (including
attorney's fees) incurred by Bank in connection with the collection,
preservation and/or liquidation of any collateral security for any of the
Obligations and/or in the enforcement of the Obligations.
9. Waiver of Jury Trial. IN ANY LITIGATION ARISING OUT OF OR
RELATING TO THE LOAN DOCUMENTS OR ANY OF THE OTHER OBLIGATIONS IN WHICH BORROWER
AND BANK ARE ADVERSE PARTIES, BORROWER AND BANK
HEREBY WAIVE TRIAL BY JURY.
10. Jurisdiction. In any litigation arising out of or relating
to the Loan Documents or any of the other Obligations, Borrower hereby consent
to the personal jurisdiction of the State and Federal courts of the State of
Delaware.
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11. Applicable Law. The substantive Laws of the State of
Delaware shall govern the construction of this Note and the rights and remedies
of the parties hereto.
12. Miscellaneous.
(a) Borrower hereby waives protest, notice of
protest, presentment, dishonor, notice of dishonor and demand. To the extent
permitted by law, Borrower hereby waives and releases all errors, defects and
imperfections in any proceedings instituted by Bank under the terms of this
Note.
(b) The rights and privileges of Bank under this Note
shall inure to the benefit of its successors and assigns. All representations,
warranties and agreements of Borrower made in connection with this Note shall
bind Borrower's successors and assigns.
(c) If any provision of this Note shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Note
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
(d) The waiver of any Event of Default or the failure
of Bank to exercise any right or remedy to which it may be entitled shall not be
deemed to be a waiver of any subsequent Event of Default or of Bank's right to
exercise that or any other right or remedy to which Bank is entitled.
(e) The rights and remedies of Bank under this Note
and the Loan Documents shall be in addition to any other rights and remedies
available to Bank at law or in equity, all of which may be exercised singly or
concurrently.
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IN WITNESS WHEREOF, Borrower has caused this Promissory Note
to be executed under seal by its duly authorized officer the day and year first
above written.
STRATEGIC DIAGNOSTICS INC.
Attest: /s/ Martha C. Reider By: /s/ Arthur A. Koch, Jr.
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Name: Martha C. Reider Name: Arthur A. Koch, Jr.
Title: Vice President Title: Vice President
[CORPORATE SEAL]
TSD BIOSERVICES, INC.
Attest: /s/ Martha C. Reider By: /s/ Arthur A. Koch, Jr.
------------------------- ---------------------------
Name: Martha C. Reider Name: Arthur A. Koch, Jr.
Title: Vice President Title: Vice President
[CORPORATE SEAL]
HTI BIO-PRODUCTS, INC.
Attest: /s/ Martha C. Reider By: /s/ Arthur A. Koch, Jr.
------------------------ ---------------------------
Name: Martha C. Reider Name: Arthur A. Koch, Jr.
Title: Vice President Title: Vice President
[CORPORATE SEAL]
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