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EXHIBIT 10.39
GENOME THERAPEUTICS CORP.
100 Beaver Street
Waltham, MA 02154
February 28, 1997
Fleet National Bank
75 State Street
Boston, MA 02109
Gentlemen:
This letter agreement will set forth certain understandings between
Genome Therapeutics Corp., a Massachusetts corporation (the "Borrower") and
Fleet National Bank (the "Bank") with respect to Term Loans (hereinafter
defined) to be made by the Bank to the Borrower. In consideration of the mutual
promises contained herein and in the other documents referred to below, and for
other good and valuable consideration, receipt and sufficiency of which are
hereby acknowledged, the Borrower and the Bank agree as follows:
I. AMOUNTS AND TERMS
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1.1. REFERENCES TO DOCUMENTS. Reference is made to (i) that certain
$6,000,000 face principal amount promissory note (the "Term Note") of even date
herewith made by the Borrower and payable to the order of the Bank, and (ii)
that certain Security Agreement (Equipment) of even date herewith from the
Borrower to the Bank (the "Security Agreement").
1.2. THE BORROWING; TERM NOTE. Subject to the terms and conditions
hereinafter set forth, the Bank will make one or more loans (the "Term Loans")
to the Borrower, as the Borrower may request, on any Business Day prior to the
first to occur of (i) December 31, 1997 or (ii) the earlier termination of the
within-described term loan facility pursuant to [Section]5.2 or [Section]6.5.
A Term Loan shall be made, not more than once per calendar month (except that
more than one Term Loan may be made in any calendar month provided that each
additional Term Loan in any one calendar month is in an amount of at least
$500,000), in order to finance costs of Qualifying Equipment acquired by
the Borrower within the 90 days preceding the request for such Term Loan, each
such Term Loan to be in such amount as may be requested by the Borrower;
provided that (i) no Term Loan will be made after December 31, 1997; (ii) the
aggregate original principal amounts of all Term Loans will not exceed
$6,000,000; and (iii) no Term Loan will be in an amount more than 100% of the
invoiced actual costs of the tangible property constituting the items of
Qualifying Equipment with respect to which such Term Loan is made (excluding
taxes, shipping, software, installation charges, training fees and other "soft
costs"). Prior to the making of each Term Loan, and as a precondition thereto,
the Borrower will provide the Bank with: (i) invoices supporting the costs of
the relevant Qualifying Equipment; (ii) such evidence as the Bank may
reasonably require showing that the Qualifying Equipment has been delivered to
and installed at the Borrower's Waltham, MA premises, has become fully
operational, has been paid for by the Borrower and is owned by the Borrower
free of all liens and interests of any other
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Person (other than the security interest of the Bank pursuant to the Security
Agreement); (iii) Uniform Commercial Code financing statements covering the
relevant Qualifying Equipment with respect to which such Term Loan is being made
and an appropriate supplement to the Security Agreement adding the relevant
Qualifying Equipment to the description of Collateral; and (iv) evidence
satisfactory to the Bank that the Qualifying Equipment is fully insured against
casualty loss, with insurance naming the Bank as secured party and first loss
payee. The Term Loans will be evidenced by the Term Note. The Borrower hereby
irrevocably authorizes the Bank to make or cause to be made, on a schedule
attached to the Term Note or on the books of the Bank, at or following the time
of making each Term Loan and of receiving any payment of principal, an
appropriate notation reflecting such transaction and the then aggregate unpaid
principal balance of the Term Loans. The amount so noted shall constitute
presumptive evidence as to the amount owed by the Borrower with respect to
principal of the Term Loans. Failure of the Bank to make any such notation shall
not, however, affect any obligation of the Borrower or any right of the Bank
hereunder or under the Term Note.
1.3. PRINCIPAL REPAYMENT OF TERM LOANS. The Borrower shall repay principal
of each Term Loan in 48 equal consecutive monthly installments, commencing on
the first day of the month next following the end of the calendar month in which
such Term Loan is made and continuing on the first day of each month thereafter.
Each such monthly installment of principal shall be in an amount equal to 1/48th
of the original principal amount of such Term Loan. In any event, the then
outstanding principal balance of each Term Loan and all interest then accrued
but unpaid thereon shall be due and payable in full on the first day of the 48th
month next following the end of the calendar month in which such Term Loan is
made. The Borrower may prepay, at any time or from time to time, without premium
or penalty, the whole or any portion of any Term Loan; provided that each such
principal prepayment shall be accompanied by payment of all interest under the
Term Note accrued but unpaid to the date of payment. Any partial prepayment of
principal of the Term Loans will be applied to installments of principal of the
Term Loans thereafter coming due in inverse order of normal maturity. Amounts
repaid or prepaid with respect to the Term Loans are not available for
reborrowing.
1.4. INTEREST RATE. Except as otherwise provided below in this
[Section]1.4, interest on the Term Loans will be payable at a fluctuating rate
per annum (the "Floating Rate") which shall at all times be equal to the sum of
(i) one-quarter of one percent (0.25%) plus (ii) Prime Rate as in effect from
time to time (but in no event in excess of the maximum rate permitted by then
applicable law), with a change in such rate of interest to become effective on
each day when a change in the Prime Rate becomes effective. Subject to the
conditions set forth herein, the Borrower may elect that all or any portion of
any Term Loan to be made under [Section]1.2 will be made as a LIBOR Loan, that
all or any portion of any Floating Rate Loan (but not any COF Loan) will be
converted to a LIBOR Loan and/or that any LIBOR Loan will be continued at the
expiration of the Interest Period applicable thereto as a new LIBOR Loan. Such
election shall be made by the Borrower giving to the Bank a written or
telephonic notice received by the Bank within the time period and containing
the information described in the next following sentence (a "Fixed Rate
Borrowing Notice"). The Fixed Rate Borrowing Notice must be received by the
Bank no later than 10:00 a.m. (Boston time) on that day which is two Business
Days prior to the date of
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the proposed borrowing, conversion or continuation, as the case may be, and must
specify the amount of the LIBOR Loan requested (which shall be $500,000 or an
integral multiple thereof), must identify the particular Term Loan or Loans so
to be made, converted or continued, as the case may be, and must specify the
proposed commencement date of the relevant Interest Period. Notwithstanding
anything provided elsewhere in this letter agreement, the Borrower may not elect
to have any installment of a Term Loan included in a LIBOR Loan if the Interest
Period applicable thereto would continue after the due date of such installment.
Any Fixed Rate Borrowing Notice shall, upon receipt by the Bank, become
irrevocable and binding on the Borrower, and the Borrower shall, upon demand and
receipt of a Bank Certificate with respect thereto, forthwith indemnify the Bank
against any loss or expense incurred by the Bank as a result of any failure by
the Borrower to obtain or maintain any requested LIBOR Loan, including, without
limitation, any loss or expense incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by the Bank to fund or maintain
such LIBOR Loan. At the expiration of each Interest Period applicable to a LIBOR
Loan, the principal amount of such LIBOR Loan may be continued as a new LIBOR
Loan to the extent and on the terms and conditions contained in this letter
agreement by delivery to the Bank of a new Fixed Rate Borrowing Notice
conforming to the requirements set forth above in this [Section]1.4 (and any
LIBOR Loan not repaid and not so continued as a new LIBOR Loan will be deemed
(subject to the provisions of the next following paragraph) to have been
converted into a Floating Rate Loan). Notwithstanding any other provision of
this letter agreement, the Bank need not make any LIBOR Loan or allow any
conversion of a Floating Rate Loan to a LIBOR Loan at any time when there
exists any Default or Event of Default.
On each of March 31, 1997, June 30, 1997, September 30, 1997 and December
31, 1997, the Borrower may convert to a COF Loan all (but not less than all) of
the Terms Loans then outstanding and not already subject to a COF Interest Rate.
If the Borrower desires such conversion to a COF Loan, it will notify the Bank
of same not less than two Business Days prior to the proposed conversion and
will request that the Bank offer with respect to such Term Loans a rate of
interest which shall be fixed (subject to adjustment as provided in this letter
agreement) for the period commencing on the date of such conversion and ending
on the final maturity date applicable to such Term Loans (the "Fixed Rate
Period"). Following such request for a fixed rate, the Bank will endeavor to
offer a proposed COF Interest Rate at a rate determined as provided below and
under conditions determined by the Bank in its sole discretion. The Borrower may
elect to accept such offer in the manner and within the time period specified in
such offer. Any such election shall be irrevocable on the part of the Borrower.
Upon such election, the interest rate payable with respect to the outstanding
Term Loans shall be fixed (subject to adjustment as provided in this letter
agreement) for the Fixed Rate Period and at the rate communicated by the Bank as
its proposed COF Interest Rate. Any proposed COF Interest Rate offered under
this Section will be a rate per annum equal to the sum of (i) 2.0% per annum
plus (ii) the COF Rate for the applicable Fixed Rate Period (expressed as a per
annum rate); provided, however, that the COF Interest Rate shall in no event
exceed the maximum rate permitted by applicable law. The COF Rate shall be
determined by the Bank in its discretion for the purposes of any proposed COF
Interest Rate offered under this Section. The Bank may base the COF Rate for the
purpose of computing the proposed COF Interest Rate on any (or any
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combination of) recognized sources of available funding for transactions of this
type, including, but not limited to, the interbank market, the domestic and
European certificate of deposit market and sales of commercial paper. The COF
Rate for purposes of this computation shall in any event include adjustments for
the costs of maintaining reserves, insurance (including, without limitation,
assessments by the FDIC), taxes, hedging and other costs which may be incurred
by the Bank with respect to the applicable source or sources of funding, all as
determined by the Bank in its discretion. The source or sources of funding
utilized for the computation of the proposed rate shall be selected by the Bank
at its sole discretion for offering to the Borrower, and the Borrower shall not
have any claim against the Bank with respect to computation of any proposed COF
Interest Rate. If the Borrower is dissatisfied with any proposed COF Interest
Rate, the Borrower's sole remedy with respect thereto shall be not to accept
such proposed COF Interest Rate within the applicable time period, and thus to
cause interest on the Term Loans to be payable at the Floating Rate (subject to
the Borrower's ability set forth elsewhere herein to obtain LIBOR Loans).
Notwithstanding the foregoing provisions hereof, the Bank need not offer a
proposed COF Interest Rate for any period of time with respect to which the
Bank, in its sole discretion, determines that there are no recognized sources of
funding available to it for such time period or principal amount or that the
cost of funds with respect thereto would be unreasonably high or if there then
exists any Default or Event of Default. Further, the Borrower may not convert
into a COF Loan any LIBOR Loan prior to the end of the Interest Period
applicable to such LIBOR Loan.
Any request for a Fixed Rate Loan and any election to convert all or any
portion of the Term Loans to a Fixed Rate Loan may be made on behalf of the
Borrower only by a duly authorized officer; provided, however, that the Bank may
conclusively rely upon any written or facsimile communication received from any
individual whom the Bank believes in good faith to be such a duly authorized
officer.
1.5. INTEREST PAYMENTS. The Borrower will pay interest on the principal
amount of the Term Loans outstanding from time to time, from the date hereof
until payment of the Term Loans and the Term Note in full and the termination of
this letter agreement. Interest on Floating Rate Loans and COF Loans will be
payable monthly in arrears on the first day of each month. Interest on each
LIBOR Loan will be paid in arrears on the applicable Interest Payment Date. In
any event, interest shall also be paid on the date of payment of the Term Loans
in full. Interest on Floating Rate Loans shall be payable at the Floating Rate.
The rate of interest payable on any LIBOR Loan will be the Eurodollar Interest
Rate applicable thereto. Interest on any COF Loan will be payable at the
applicable COF Interest Rate. In any event, overdue principal of any Term Loan
and, to the extent permitted by law, overdue interest on any Term Loan shall
bear interest at a rate per annum which at all times shall be equal to the sum
of (i) two (2%) percent per annum plus (ii) the rate otherwise applicable to
such overdue principal (or to the principal amount as to which such interest is
overdue) under the Term Note, payable on demand. All interest payable hereunder
and/or under the Term Note will be calculated on the basis of a 360-day year for
the actual number of days elapsed.
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1.6. RATE DETERMINATION PROTECTION. In the event that:
(i) the Bank shall determine that, by reason of circumstances
affecting the London interbank market or otherwise, adequate and
reasonable methods do not exist for ascertaining the Eurodollar
Interest Rate which would otherwise be applicable during any
Interest Period, or
(ii) the Bank shall determine that:
(A) the making or continuation of any LIBOR Loan has been made
impracticable or unlawful by (1) the occurrence of any
contingency that materially and adversely affects the London
interbank market or (2) compliance by the Bank with any
applicable law or governmental regulation, guideline or order
or interpretation or change thereof by any governmental
authority charged with the interpretation or administration
thereof or with any request or directive of any such
governmental authority (whether or not having the force of
law); or
(B) LIBOR will not, in the reasonable determination of the
Bank, adequately and fairly reflect the cost to the Bank of
funding the LIBOR Loans for such Interest Period
then the Bank shall forthwith give notice of such determination
(which shall be conclusive and binding on the Borrower) to the
Borrower. In such event the obligations of the Bank to make LIBOR
Loans shall be suspended until the Bank determines that the
circumstances giving rise to such suspension no longer exist,
whereupon the Bank shall notify the Borrower.
1.7. PREPAYMENT OF FIXED RATE LOANS. The following provisions of this
[Section]1.7 shall be effective only with respect to Fixed Rate Loans: If, due
to acceleration of the Term Note or due to voluntary prepayment or due to any
other reason, the Bank receives payment of any principal of a LIBOR Loan on any
date prior to the last day of the relevant Interest Period or receives payment
of all or any portion of any installment of a COF Loan prior to the regularly
scheduled due date for such installment, the Borrower shall, upon demand and
receipt of a Bank Certificate from the Bank with respect thereto, pay forthwith
to the Bank all amounts required to compensate the Bank for losses, costs or
expenses which it may have incurred and may reasonably incur as a result of
such payment, including, without limitation, any loss or expense incurred by
reason of the liquidation or redeployment of funds acquired by the Bank to fund
or maintain the relevant Fixed Rate Loan.
1.8. Increased Costs; Capital Adequacy.
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(i) If the adoption, effectiveness or phase-in, after the date
hereof, of any applicable law, rule or regulation, or any change
therein, or any change in the
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interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank
with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency:
(A) shall subject the Bank to any Imposition or other charge
with respect to any Fixed Rate Loan, the Term Note or the
Bank's agreement to make Fixed Rate Loans, or shall change the
basis of taxation of payments to the Bank of the principal of
or interest on any Fixed Rate Loan or any other amounts due
under this letter agreement in respect of the Fixed Rate Loans
or the Bank's agreement to make Fixed Rate Loans (except for
changes in the rate of tax on the over-all net income of the
Bank); or
(B) shall impose, modify or deem applicable any reserve,
special deposit, deposit insurance or similar requirement
(including, without limitation, any such requirement imposed
by the Board of Governors of the Federal Reserve System, but
excluding, with respect to any LIBOR Loan, any such
requirement already included in the applicable Reserve Rate)
against assets of, deposits with or for the account of, or
credit extended by, the Bank or shall impose on the Bank or on
the London interbank market any other condition affecting any
Fixed Rate Loans, the Term Note or the Bank's agreement to
make Fixed Rate Loans
and the result of any of the foregoing is to increase the cost to
the Bank of making or maintaining any Fixed Rate Loan or to reduce
the amount of any sum received or receivable by the Bank under this
letter agreement or under the Term Note with respect to any Fixed
Rate Loan by an amount deemed by the Bank to be material, then, upon
demand by the Bank and receipt of a Bank Certificate from the Bank
with respect thereto, the Borrower shall pay to the Bank such
additional amount or amounts as the Bank certifies to be necessary
to compensate the Bank for such increased cost or reduction in
amount received or receivable.
(ii) If the Bank shall have determined that the adoption,
effectiveness or phase-in after the date hereof of any applicable
law, rule or regulation regarding capital requirements for banks or
bank holding companies, or any change therein after the date hereof,
or any change after the date hereof in the interpretation or
administration thereof by any governmental authority, central bank
or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request
or directive of such entity regarding capital adequacy (whether or
not having the force of law) has or would have the effect of
reducing the return on the Bank's capital with respect to its
agreement hereunder to make Term Loans or with respect to any Term
Loan (whether or not then subject to any Eurodollar Interest Rate or
COF Interest Rate) to a level below that which the Bank could have
achieved (taking into consideration the Bank's policies with
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respect to capital adequacy immediately before such adoption,
effectiveness, phase-in, change or compliance and assuming that the
Bank's capital was then fully utilized) by any amount deemed by the
Bank to be material: (A) the Bank shall promptly after its
determination of such occurrence give notice thereof to the
Borrower; and (B) the Borrower shall pay to the Bank as an
additional fee from time to time on demand such amount as the Bank
certifies to be the amount that will compensate it for such
reduction.
(iii) A Bank Certificate of the Bank claiming compensation under
this [Section]1.8 shall be conclusive in the absence of manifest
error. Such certificate shall set forth the nature of the
occurrence giving rise to such compensation, the additional amount
or amounts to be paid to the Bank hereunder and the method by
which such amounts are determined. In determining any such amount,
the Bank may use any reasonable averaging and attribution methods.
(iv) No failure on the part of the Bank to demand compensation on
any one occasion shall constitute a waiver of its right to demand
such compensation on any other occasion and no failure on the part
of the Bank to deliver any Bank Certificate in a timely manner shall
in any way reduce any obligation of the Borrower to the Bank under
this [Section]1.8.
1.9. ILLEGALITY OR IMPOSSIBILITY. Notwithstanding any other provision of
this letter agreement, if the introduction of or any change in or in the
interpretation or administration of any law or regulation applicable to the Bank
or the Bank's activities in the London interbank market shall make it unlawful,
or any central bank or other governmental authority having jurisdiction over the
Bank or the Bank's activities in the London interbank market shall assert that
it is unlawful, or otherwise make it impossible, for the Bank to perform its
obligations hereunder to make LIBOR Loans or to continue to fund or maintain
LIBOR Loans, then on notice thereof and demand therefor by the Bank to the
Borrower, (i) the obligation of the Bank to fund LIBOR Loans shall terminate and
(ii) the Borrower shall prepay in full all affected LIBOR Loans on or prior to
the last day on which such LIBOR Loans may legally remain outstanding.
1.10. ADVANCES AND PAYMENTS. The proceeds of all Term Loans shall be
credited by the Bank to a general deposit account maintained by the Borrower
with the Bank. The proceeds of each Term Loan will be used by the Borrower
solely for acquisition of Qualifying Equipment.
The Bank may charge any general deposit account of the Borrower at the
Bank with the amount of all payments of interest, principal and other sums due,
from time to time, under this letter agreement and/or the Term Note; and will
thereafter notify the Borrower of the amount so charged. The failure of the Bank
so to charge any account or to give any such notice shall not affect the
obligation of the Borrower to pay interest, principal or other sums as provided
herein or in the Term Note.
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Whenever any payment to be made to the Bank hereunder or under the Term
Note shall be stated to be due on a day which is not a Business Day, such
payment may be made on the next succeeding Business Day, and interest payable on
each such date shall include the amount thereof which shall accrue during the
period of such extension of time. All payments by the Borrower hereunder and/or
in respect of the Term Note shall be made net of any Impositions or taxes and
without deduction, set-off or counterclaim, notwithstanding any claim which the
Borrower may now or at any time hereafter have against the Bank. All payments of
interest, principal and any other sum payable hereunder and/or under the Term
Note shall be made to the Bank, in immediately available funds, at its office at
75 State Street, Boston, MA 02109 or to such other address as the Bank may from
time to time direct. All payments received by the Bank after 2:00 p.m. on any
day shall be deemed received as of the next succeeding Business Day. All monies
received by the Bank shall be applied first to fees, charges, costs and expenses
payable to the Bank under this letter agreement, the Term Note and/or any of the
other Loan Documents, next to interest then accrued on account of any Term Loans
and only thereafter to principal of the Term Loans.
1.11. CONDITIONS TO ADVANCE. Prior to the making of the initial Term Loan,
the Borrower shall deliver to the Bank duly executed copies of this letter
agreement, the Security Agreement, the Term Note and the documents and other
items listed on the Closing Agenda delivered herewith by the Bank to the
Borrower, all of which, as well as all legal matters incident to the
transactions contemplated hereby, shall be satisfactory in form and substance to
the Bank and its counsel.
Without limiting the foregoing, any Term Loan (including the initial Term
Loan) is subject to the further conditions precedent that on the date on which
such Term Loan is made (and after giving effect thereto):
(a) All statements, representations and warranties of the Borrower made in
this letter agreement and/or in the Security Agreement shall continue to be
correct in all material respects as of the date of such Term Loan.
(b) All covenants and agreements of the Borrower contained herein and/or
in any of the other Loan Documents shall have been complied with in all material
respects on and as of the date of such Term Loan.
(c) No event which constitutes, or which with notice or lapse of time or
both could constitute, an Event of Default shall have occurred and be
continuing.
(d) No material adverse change shall have occurred in the financial
condition of the Borrower from that disclosed in the financial statements then
most recently furnished to the Bank.
Each request by the Borrower for any Term Loan, and each acceptance by the
Borrower of the proceeds of any Term Loan, will be deemed a representation and
warranty by the
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Borrower that at the date of such Term Loan and after giving effect thereto all
of the conditions set forth in the foregoing clauses (a)-(d) of this
[Section]1.11 will be satisfied.
II. REPRESENTATIONS AND WARRANTIES
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2.1. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to enter
into this letter agreement and to make Term Loans hereunder, the Borrower
warrants and represents to the Bank as follows:
(a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of The Commonwealth of Massachusetts. The Borrower
has full corporate power to own its property and conduct its business as now
conducted and as proposed to be conducted, to grant the security interests
contemplated by the Security Agreement and to enter into and perform this letter
agreement and the other Loan Documents. The Borrower is duly qualified to do
business and in good standing in each jurisdiction in which the Borrower
maintains any plant, office, warehouse or other facility and in each other
jurisdiction where the failure so to qualify could (singly or in the aggregate
with all other such failures) have a material adverse effect on the financial
condition, business or prospects of the Borrower, all such jurisdictions being
listed on item 2.1(a) of the attached Disclosure Schedule. At the date hereof,
the Borrower has no Subsidiaries, except as shown on said item 2.1(a) of the
attached Disclosure Schedule. The Borrower is not a member of any partnership or
joint venture.
(b) At the date of this letter agreement, no Person is known by the
Borrower to own, of record and/or beneficially, more than 5% of the outstanding
shares of any class of the Borrower's capital stock, except as set forth on item
2.1(b) of the attached Disclosure Schedule.
(c) The execution, delivery and performance by the Borrower of this
letter agreement and each of the other Loan Documents have been duly authorized
by all necessary corporate and other action and do not and will not:
(i) violate any provision of, or require as a prerequisite to
effectiveness any filing (other than filings under the Uniform Commercial
Code), registration, consent or approval under, any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Borrower;
(ii) violate any provision of the charter or by-laws of the
Borrower, or result in a breach of or constitute a default or require any
waiver or consent under any indenture or loan or credit agreement or any
other material agreement, lease or instrument to which the Borrower is a
party or by which the Borrower or any of its properties may be bound or
affected or require any other consent of any Person; or
(iii) result in, or require, the creation or imposition of any lien,
security interest or other encumbrance (other than in favor of the Bank),
upon or with respect to any of the properties now owned or hereafter
acquired by the Borrower.
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(d) This letter agreement and each of the other Loan Documents delivered
herewith has been duly executed and delivered by the Borrower and each is a
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its respective terms.
(e) Except as described on item 2.1(e) of the attached Disclosure
Schedule, there are no actions, suits, proceedings or investigations pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which could hinder or
prevent the consummation of the transactions contemplated hereby or call into
question the validity of this letter agreement or any of the other Loan
Documents or any action taken or to be taken in connection with the transactions
contemplated hereby or thereby or which in any single case or in the aggregate
may result in any material adverse change in the business, prospects, condition,
affairs or operations of the Borrower or any Subsidiary.
(f) The Borrower is not in violation of any term of its charter or by-laws
as now in effect. Neither the Borrower nor any Subsidiary of the Borrower is in
material violation of any term of any mortgage, indenture or judgment, decree or
order, or any other material instrument, contract or agreement to which it is a
party or by which any of its property is bound.
(g) The Borrower has filed (and has caused each of its Subsidiaries to
file) all federal, foreign, state and local tax returns, reports and estimates
required to be filed by the Borrower and/or by any such Subsidiary. All such
filed returns, reports and estimates are proper and accurate and the Borrower or
the relevant Subsidiary has paid all taxes, assessments, impositions, fees and
other governmental charges required to be paid in respect of the periods covered
by such returns, reports or estimates. No deficiencies for any tax, assessment
or governmental charge have been asserted or assessed, and the Borrower knows of
no material tax liability or basis therefor.
(h) The Borrower is in compliance (and each Subsidiary of the Borrower is
in compliance) with all requirements of law, federal, foreign, state and local,
and all requirements of all governmental bodies or agencies having jurisdiction
over it, the conduct of its business, the use of its properties and assets, and
all premises occupied by it, failure to comply with any of which could (singly
or in the aggregate with all other such failures) have a material adverse effect
upon the assets, business, financial condition or prospects of the Borrower or
any such Subsidiary. Without limiting the foregoing, the Borrower has all the
material franchises, licenses, leases, permits, certificates and authorizations
needed for the conduct of its business and the use of its properties and all
premises occupied by it, as now conducted, owned and used and as proposed to be
conducted, owned and used.
(i) The audited financial statements of the Borrower and Subsidiaries as
at August 31, 1996 and the management-generated statements of the Borrower and
Subsidiaries as at November 30, 1996, each heretofore delivered to the Bank, are
complete and accurate and fairly
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present the financial condition of the Borrower and Subsidiaries as at the
respective dates thereof and for the periods covered thereby, except that the
management-generated statements do not have footnotes and thus do not present
the information which would normally be contained in footnotes to financial
statements and are subject to normal year-end adjustments, which shall not be
material. Neither the Borrower nor any of the Borrower's Subsidiaries has any
liability, contingent or otherwise, not disclosed in the aforesaid financial
statements or in any notes thereto that could materially affect the financial
condition of the Borrower. Since August 31, 1996, here has been no material
adverse development in the business, condition or prospects of the Borrower, and
the Borrower has not entered into any material transaction other than in the
ordinary course.
(j) The principal place of business and chief executive offices of the
Borrower are located at 100 Beaver Street, Waltham, Massachusetts 02154 (the
"Premises"). All of the books and records of the Borrower are located at the
Premises. Except as described on item 2.1(j) of the attached Disclosure
Schedule, no assets of the Borrower are located at any other address. Said item
2.1(j) of the attached Disclosure Schedule sets forth the names and addresses of
all record owners of the Premises.
(k) The Borrower owns or has a valid right to use all of the material
patents, licenses, copyrights, trademarks and trade names now being used to
conduct its business. The conduct of the Borrower's business as now operated
does not conflict with valid patents, copyrights, trademarks or trade names of
others in any manner that could materially adversely affect the business,
prospects, assets or condition, financial or otherwise, of the Borrower.
(l) None of the executive officers or key employees of the Borrower is
subject to any agreement in favor of anyone other than the Borrower which
materially limits or restricts that person's right to engage in the type of
business activity conducted or proposed to be conducted by the Borrower or which
grants to anyone other than the Borrower any rights in any inventions or other
ideas susceptible to legal protection developed or conceived by any such officer
or key employee.
(m) The Borrower is not a party to any contract or agreement which now has
or, as far as can be foreseen by the Borrower at the date hereof, may have a
material adverse effect on the financial condition, business, prospects or
properties of the Borrower.
III. AFFIRMATIVE COVENANTS AND REPORTING REQUIREMENTS
------------------------------------------------
Without limitation of any other covenants and agreements contained herein
or elsewhere, the Borrower agrees that so long as the financing arrangements
contemplated hereby are in effect or all or any portion of any Term Loan or any
of the other Obligations shall be outstanding:
3.1. LEGAL EXISTENCE; QUALIFICATION; COMPLIANCE. The Borrower will
maintain (and will cause each Subsidiary of the Borrower to maintain) its
corporate existence and good standing in the jurisdiction of its incorporation.
The Borrower will qualify to do business and
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will remain qualified and in good standing (and the Borrower will cause each
Subsidiary of the Borrower to qualify and remain qualified and in good standing)
in each other jurisdiction where the Borrower or such Subsidiary, as the case
may be, maintains any plant, office, warehouse or other facility and in each
other jurisdiction where the failure so to qualify could (singly or in the
aggregate with all other such failures) have a material adverse effect on the
financial condition, business or prospects of the Borrower or any such
Subsidiary. The Borrower will comply (and will cause each Subsidiary of the
Borrower to comply) with its charter documents and by-laws. The Borrower will
comply with (and will cause each Subsidiary of the Borrower to comply with) all
applicable laws, rules and regulations (including, without limitation, ERISA and
those relating to environmental protection) other than (i) laws, rules or
regulations the validity or applicability of which the Borrower or such
Subsidiary shall be contesting in good faith by proceedings which serve as a
matter of law to stay the enforcement thereof and (ii) those laws, rules and
regulations the failure to comply with any of which could not (singly or in the
aggregate) have a material adverse effect on the financial condition, business
or prospects of the Borrower or any such Subsidiary.
3.2. MAINTENANCE OF PROPERTY; INSURANCE. The Borrower will maintain and
preserve (and will cause each Subsidiary of the Borrower to maintain and
preserve) all of its fixed assets used in its business in good working order and
condition, making all necessary repairs thereto and replacements thereof. The
Borrower will maintain all such insurance as may be required under the Security
Agreement and will also maintain, with financially sound and reputable insurers,
insurance with respect to its property and business against such liabilities,
casualties and contingencies and of such types and in such amounts as shall be
reasonably satisfactory to the Bank from time to time and in any event all such
insurance as may from time to time be customary for companies conducting a
business similar to that of the Borrower in similar locales.
3.3. PAYMENT OF TAXES AND CHARGES. The Borrower will pay and discharge
(and will cause each Subsidiary of the Borrower to pay and discharge) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or property, including, without limitation, taxes, assessments, charges
or levies relating to real and personal property, franchises, income,
unemployment, old age benefits, withholding, or sales or use, prior to the date
on which penalties would attach thereto, and all lawful claims (whether for any
of the foregoing or otherwise) which, if unpaid, might give rise to a lien upon
any property of the Borrower or any such Subsidiary, except any of the foregoing
which is being contested in good faith and by appropriate proceedings which
serve as a matter of law to stay the enforcement thereof and for which the
Borrower has established and is maintaining adequate reserves. The Borrower will
pay, and will cause each of its Subsidiaries to pay, in a timely manner, all
material lease obligations, material trade debt, material purchase money
obligations and material equipment lease obligations. The Borrower will perform
and fulfill all material covenants and agreements under any material leases of
real estate, material agreements relating to purchase money debt, material
equipment leases and other material contracts. The Borrower will maintain in
full force and effect, and comply with the terms and conditions of, all permits,
permissions and licenses necessary or desirable for its business.
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3.4. ACCOUNTS. The Borrower will maintain its principal depository and
operating accounts with the Bank. The average daily collected balance in such
account (averaged over the period of each calendar quarter) shall be not less
than $200,000.
3.5. CONDUCT OF BUSINESS. The Borrower will conduct, in the ordinary
course, the business in which it is presently engaged. The Borrower will not,
without the prior written consent of the Bank, directly or indirectly (itself or
through any Subsidiary) enter into any other unrelated lines of business,
businesses or ventures.
3.6. REPORTING REQUIREMENTS. The Borrower will furnish to the Bank (or
cause to be furnished to the Bank):
(i) Within 90 days after the end of each fiscal year of the
Borrower, a copy of the annual audit report for such fiscal year for the
Borrower, including therein consolidated and consolidating balance sheets
of the Borrower and Subsidiaries as at the end of such fiscal year and
related consolidated and consolidating statements of income, stockholders'
equity and cash flow for the fiscal year then ended. The annual
consolidated financial statements shall be certified by independent public
accountants selected by the Borrower and reasonably acceptable to the
Bank, such certification to be in such form as is generally recognized as
"unqualified". The Borrower will also deliver to the Bank, within 90 days
after the commencement of each fiscal year, projections of sales, income
and expenses of the Borrower for such fiscal year, prepared by the
Borrower's management and approved by the Borrower's Board of Directors,
such projections to be in such detail as is reasonably satisfactory to the
Bank.
(ii) Within 45 days after the end of each fiscal quarter of the
Borrower, a copy of the Borrower's Quarterly Report on Form 10-Q, as filed
with the Securities and Exchange Commission ("SEC"). If, for any reason,
the Borrower is not required to file or does not file such Quarterly
Report on Form 10-Q with the SEC within 45 days after the end of any
fiscal quarter, then within such 45-day period after the end of such
fiscal quarter the Borrower will deliver to the Bank consolidated and
consolidating balance sheets of the Borrower and Subsidiaries and related
consolidated and consolidating statements of income and cash flow,
unaudited but complete and accurate and prepared in accordance with
generally accepted accounting principles consistently applied fairly
presenting the financial condition of the Borrower and Subsidiaries as at
the dates thereof and for the periods covered thereby (except that such
quarterly statements need not contain footnotes) and certified as accurate
by the chief financial officer of the Borrower, such balance sheets to be
as at the end of such fiscal quarter and such statements of income and
cash flow to be for such fiscal quarter and for the year to date, in each
case together with a comparison to budget and a comparison to the results
for the corresponding fiscal period of the immediately prior fiscal year.
(iii) At the time of delivery of each annual or quarterly report or
financial statement of the Borrower, a certificate executed by the chief
financial officer of the
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Borrower stating that he or she has reviewed this letter agreement and the
other Loan Documents and has no knowledge of any default by the Borrower
in the performance or observance of any of the provisions of this letter
agreement or of any of the other Loan Documents or, if he or she has such
knowledge, specifying each such default and the nature thereof. Each
financial statement given as at the end of any fiscal quarter of the
Borrower will also set forth the calculations necessary to evidence
compliance with [Sections]3.7-3.9.
(iv) Promptly after receipt, a copy of all audits or reports
submitted to the Borrower by independent public accountants in connection
with any annual, special or interim audits of the books of the Borrower
and any letter of comments directed by such accountants to the management
of the Borrower.
(v) As soon as possible and in any event within five days after the
occurrence of any Default or Event of Default, the statement of the
Borrower setting forth details of each such Default or Event of Default
and the action which the Borrower proposes to take with respect thereto.
(vi) Promptly after the commencement thereof, notice of all actions,
suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
to which the Borrower or any Subsidiary of the Borrower is a party.
(vii) Promptly upon filing any registration statement or listing
application, a copy of same.
(viii) As long as the Borrower has a class of securities which is
publicly traded, a copy of each periodic or current report of the Borrower
filed with the SEC or any successor agency and each annual report, proxy
statement and other communication sent by the Borrower to shareholders or
other securityholders generally, such copy to be provided to the Bank
promptly upon such filing with the SEC or such communication with
shareholders or securityholders, as the case may be.
(ix) Promptly after the Borrower has knowledge thereof, written
notice of any development or circumstance which may reasonably be expected
to have a material adverse effect on the Borrower or its business,
properties, assets, Subsidiaries or condition, financial or otherwise.
(x) Promptly upon request, such other information respecting the
financial condition, operations, receivables, inventory, machinery or
equipment of the Borrower or any Subsidiary as the Bank may from time to
time reasonably request.
3.7. CAPITAL BASE. The Borrower will maintain, as at the end of each
fiscal quarter (commencing with February 28, 1997), a consolidated Capital Base
of not less than $20,000,000.
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3.8. LIQUIDITY. The Borrower will maintain as at the end of each fiscal
quarter of Borrower (commencing with February 28, 1997), a ratio of Net Quick
Assets to Total Liabilities, which ratio shall be not less than 1.5 to 1.
3.9. DEBT SERVICE COVERAGE. As used herein, "Determination Date" means the
last day of each fiscal quarter of the Borrower. The Borrower will maintain on a
consolidated basis, as at each Determination Date (commencing with February 28,
1997), a Debt Service Coverage Ratio of not less than 2.0 to 1. As used herein,
the "Debt Service Coverage Ratio", as determined as at any Determination Date,
means the ratio of (x) EBITDA of the Borrower and Subsidiaries for the 12-month
period ending on such Determination Date to (y) the total of (1) all interest on
any Indebtedness (whether senior or subordinated, long-term or current), which
interest was paid or payable or accrued by the Borrower or any Subsidiary of the
Borrower during such 12-month period ending on such Determination Date, PLUS (2)
the aggregate current maturities of long-term debt of the Borrower and
Subsidiaries outstanding at such Determination Date. Notwithstanding the
foregoing, the Borrower need not comply with the foregoing provisions of this
[Section]3.9 as at any Determination Date if the Borrower's Unencumbered Cash
Balance as at such Determination Date exceeds $18,000,000.
3.10. BOOKS AND RECORDS. The Borrower will maintain (and will cause each
of its Subsidiaries to maintain) complete and accurate books, records and
accounts which will at all times accurately and fairly reflect all of its
transactions in accordance with generally accepted accounting principles
consistently applied. The Borrower will, at any reasonable time and from time to
time upon reasonable notice and during normal business hours (and at any time
and without any necessity for notice following the occurrence of an Event of
Default), permit the Bank, and any agents or representatives thereof, to examine
and make copies of and take abstracts from the records and books of account of,
and visit the properties of the Borrower and any of its Subsidiaries, and to
discuss its affairs, finances and accounts with its officers, directors and/or
independent accountants, all of whom are hereby authorized and directed to
cooperate with the Bank in carrying out the intent of this [Section]3.10. Each
financial statement of the Borrower hereafter delivered pursuant to this letter
agreement will be complete and accurate and will fairly present the financial
condition of the Borrower as at the date thereof and for the periods covered
thereby.
3.11. SUBORDINATION AGREEMENTS. Prior to the making of the first Term
Loan, the Borrower will obtain, and will thereafter maintain in effect at all
times, subordination agreements in form and substance satisfactory to the Bank
providing for full subordination of all of the obligations of the Borrower now
or hereafter owed to any shareholder or other affiliates of the Borrower.
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IV. NEGATIVE COVENANTS
------------------
Without limitation of any other covenants and agreements contained herein
or elsewhere, the Borrower agrees that so long as the financing arrangements
contemplated hereby are in effect or all or any portion of any Term Loan or any
of the other Obligations shall be outstanding:
4.1. INDEBTEDNESS. The Borrower will not create, incur, assume or suffer
to exist any Indebtedness (nor allow any of its Subsidiaries to create, incur,
assume or suffer to exist any Indebtedness), except for:
(i) Indebtedness owed to the Bank, including, without limitation,
the Indebtedness represented by the Term Note;
(ii) Indebtedness of the Borrower or any Subsidiary for taxes,
assessments and governmental charges or levies not yet due and payable;
(iii) unsecured current liabilities of the Borrower or any
Subsidiary (other than for money borrowed or for purchase money
Indebtedness with respect to fixed assets) incurred upon customary terms
in the ordinary course of business;
(iv) other Indebtedness of the Borrower up to $15,000,000 in the
aggregate outstanding at any time, provided such Indebtedness is unsecured
and no Default exists at the time of the incurrence thereof or could
reasonably be expected to result from the incurrence thereof;
(v) purchase money Indebtedness (including, without limitation,
Indebtedness in respect of capitalized equipment leases) owed to equipment
vendors and/or lessors for equipment purchased or leased by the Borrower
for use in the Borrower's business, provided that the total of
Indebtedness permitted under this clause (iv) plus presently-existing
equipment financing permitted under clause (v) of this [Section]4.1 will
not exceed $1,000,000 in the aggregate outstanding at any one time;
(vi) other Indebtedness (not described in any of clauses (i)-(iv)
above) existing at the date hereof, but only to the extent set forth on
item 4.1 of the attached Disclosure Schedule; and
(vii) any guaranties or other contingent liabilities expressly
permitted pursuant to [Section]4.3.
4.2. LIENS. The Borrower will not create, incur, assume or suffer to exist
(nor allow any of its Subsidiaries to create, incur, assume or suffer to exist)
any mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance (including the lien or retained security title of a conditional
vendor) of any nature (collectively, "Liens"), upon or with respect
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to any of its property or assets, now owned or hereafter acquired, except that
the foregoing restrictions shall not apply to:
(i) Liens for taxes, assessments or governmental charges or levies
on property of the Borrower or any of its Subsidiaries if the same shall
not at the time be delinquent or thereafter can be paid without interest
or penalty or are being contested in good faith and by appropriate
proceedings which serve as a matter of law to stay any enforcement thereof
and as to which adequate reserves are maintained;
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar Liens arising in the ordinary course of
business for sums not yet due or which are being contested in good faith
and by appropriate proceedings which serve as a matter of law to stay the
enforcement thereof and as to which adequate reserves are maintained;
(iii) pledges or deposits under workmen's compensation laws,
unemployment insurance, social security, retirement benefits or similar
legislation;
(iv) Liens in favor of the Bank;
(v) Liens in favor of equipment vendors and/or lessors securing
purchase money Indebtedness to the extent permitted by clause (iv) of
[Section]4.1; provided that no such Lien will extend to any property of
the Borrower other than the specific items of equipment financed; or
(vi) other Liens existing at the date hereof, but only to the extent
and with the relative priorities set forth on item 4.2 of the attached
Disclosure Schedule.
Without limitation of the foregoing, the Borrower covenants and agrees
that it will not enter into (and represents and warrants that it is not now a
party to or subject to) any agreement or understanding with any Person other
than the Bank which could prohibit or restrict in any manner the right of the
Borrower to grant Liens on its assets to the Bank.
4.3. GUARANTIES. The Borrower will not, without the prior written consent
of the Bank, assume, guarantee, endorse or otherwise become directly or
contingently liable (including, without limitation, liable by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in any debtor or otherwise to assure any creditor
against loss) (and will not permit any of its Subsidiaries so to assume,
guaranty or become directly or contingently liable) in connection with any
indebtedness of any other Person, except (i) guaranties by endorsement for
deposit or collection in the ordinary course of business, and (ii) guaranties
existing at the date hereof and described on item 4.3 of the attached Disclosure
Schedule.
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4.4. DIVIDENDS. The Borrower will not, without the prior written consent
of the Bank, make any distributions to its shareholders, pay any dividends
(other than dividends payable solely in capital stock of the Borrower) or
redeem, purchase or otherwise acquire, directly or indirectly any of its capital
stock.
4.5. LOANS AND ADVANCES. The Borrower will not make (and will not permit
any Subsidiary to make) any loans or advances to any Person, including, without
limitation, the Borrower's directors, officers and employees, except advances to
such directors, officers or employees with respect to expenses incurred by them
in the ordinary course of their duties and advances against salary, all of which
loans and advances will not exceed, in the aggregate, $200,000 outstanding at
any one time.
4.6. INVESTMENTS. The Borrower will not, without the Bank's prior written
consent, invest in, hold or purchase any stock or securities of any Person (nor
will the Borrower permit any of its Subsidiaries to invest in, purchase or hold
any such stock or securities) except: (i) readily marketable direct obligations
of, or obligations guarantied by, the United States of America or any agency
thereof; (ii) other investment grade debt securities; (iii) mutual funds, the
assets of which are primarily invested in items of the kind described in the
foregoing clauses (i) and (ii) of this [Section]4.6; (iv) deposits with or
certificates of deposit issued by the Bank and any other obligations of the Bank
or the Bank's parent; (v) deposits in any other bank organized in the United
States having capital in excess of $100,000,000; (vi) investments in any
Subsidiaries now existing or hereafter created by the Borrower pursuant to
[Section]4.7 below and (vii) other investments consistent with the Borrower's
existing investment policy as described in item 4.6 of the attached Disclosure
Schedule; provided that in any event the Tangible Net Worth of the Borrower
alone (exclusive of its investment in Subsidiaries and any debt owed by any
Subsidiary to the Borrower) will not be less than 90% of the consolidated
Tangible Net Worth of the Borrower and Subsidiaries.
4.7. SUBSIDIARIES; ACQUISITIONS. The Borrower will not, without the prior
written consent of the Bank, form or acquire any Subsidiary or make any other
acquisition of the stock of any other Person or of all or substantially all of
the assets of any other Person. The Borrower will not become a partner in any
partnership.
4.8. MERGER. The Borrower will not, without the prior written consent of
the Bank, merge or consolidate with any Person, or sell, lease, transfer or
otherwise dispose of any material portion of its assets (whether in one or more
transactions), other than sale of inventory in the ordinary course.
4.9. AFFILIATE TRANSACTIONS. The Borrower will not, without prior written
consent of the Bank, enter into any transaction, including, without limitation,
the purchase, sale or exchange of any property or the rendering of any service,
with any affiliate of the Borrower, except in the ordinary course of and
pursuant to the reasonable requirements of the Borrower's business and upon fair
and reasonable terms no less favorable to the Borrower than would be obtained in
a comparable arms'-length transaction with any Person not an affiliate; provided
that nothing in
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this [Section]4.9 shall be deemed to restrict the payment of salary or other
similar payments to any officer or director of the Borrower at a level
consistent with the salary and other payments being paid at the date of this
letter agreement and heretofore disclosed in writing to the Bank, nor to prevent
the hiring of additional officers at a salary level consistent with industry
practice, nor to prevent reasonable periodic increases in salary. For the
purposes of this letter agreement, "affiliate" means any Person which, directly
or indirectly, controls or is controlled by or is under common control with the
Borrower; any officer or director or former officer or director of the Borrower;
any Person owning of record or beneficially, directly or indirectly, 5% or more
of any class of capital stock of the Borrower or 5% or more of any class of
capital stock or other equity interest having voting power (under ordinary
circumstances) of any of the other Persons described above; and any member of
the immediate family of any of the foregoing. "Control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of any Person, whether through ownership of voting
equity, by contract or otherwise.
4.10. CHANGE OF ADDRESS, ETC. The Borrower will not change its corporate
name or legal structure, nor will the Borrower change its chief executive
offices or principal place of business from the address described in
[Section]2.1(j) above, nor will the Borrower keep any Collateral at any location
other than the Premises without, in each instance, giving the Bank at least 30
days' prior written notice and providing all such financing statements,
certificates and other documentation as the Bank may request in order to
maintain the perfection and priority of the security interests granted or
intended to be granted pursuant to the Security Agreement. The Borrower will not
change its fiscal year or methods of financial reporting unless, in each
instance, prior written notice of such change is given to the Bank and prior to
such change the Borrower enters into amendments to this letter agreement in form
and substance reasonably satisfactory to the Bank in order to preserve
unimpaired the rights of the Bank and the obligations of the Borrower hereunder.
4.11. HAZARDOUS WASTE. Except as provided below, the Borrower will not
dispose of or suffer or permit to exist any hazardous material or oil on any
site or vessel owned, occupied or operated by the Borrower or any Subsidiary of
the Borrower, nor shall the Borrower store (or permit any Subsidiary to store)
on any site or vessel owned, occupied or operated by the Borrower or any such
Subsidiary, or transport or arrange the transport of, any hazardous material or
oil (the terms "hazardous material", "oil", "site" and "vessel", respectively,
being used herein with the meanings given those terms in Mass. Gen. Laws, Ch.
21E or any comparable terms in any comparable statute in effect in any other
relevant jurisdiction). The Borrower shall provide the Bank with written notice
of (i) the intended storage or transport of any hazardous material or oil by the
Borrower or any Subsidiary of the Borrower, (ii) any potential or known release
or threat of release of any hazardous material or oil at or from any site or
vessel owned, occupied or operated by the Borrower or any Subsidiary of the
Borrower, and (iii) any incurrence of any expense or loss by any government or
governmental authority in connection with the assessment, containment or removal
of any hazardous material or oil for which expense or loss the Borrower or any
Subsidiary of the Borrower may be liable. Notwithstanding the foregoing, the
Borrower and its Subsidiaries may use, store and transport, and need not notify
the Bank of the use, storage
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or transportation of, (x) oil in reasonable quantities, as fuel for heating of
their respective facilities or for vehicles or machinery used in the ordinary
course of their respective businesses and (y) hazardous materials that are
solvents, cleaning agents or other materials used in the ordinary course of the
respective business operations of the Borrower and its Subsidiaries, in
reasonable quantities, as long as in any case the Borrower or the Subsidiary
concerned (as the case may be) has obtained and maintains in effect any
necessary governmental permits, licenses and approvals, complies with all
requirements of applicable federal, state and local law relating to such use,
storage or transportation, follows the protective and safety procedures that a
prudent businessperson conducting a business the same as or similar to that of
the Borrower or such Subsidiary (as the case may be) would follow, and disposes
of such materials (not consumed in the ordinary course) only through licensed
providers of hazardous waste removal services.
4.12. NO MARGIN STOCK. No proceeds of any Term Loan shall be used directly
or indirectly to purchase or carry any margin security.
4.13. SUBORDINATED DEBT. The Borrower will not directly or indirectly make
any optional or voluntary prepayment or purchase of Subordinated Debt or modify,
alter or add any provisions with respect to payment of Subordinated Debt. In any
event, the Borrower will not make any payment of any principal of or interest on
any Subordinated Debt at any time when there exists, or if there would result
therefrom, any Default or Event of Default hereunder.
V. DEFAULT AND REMEDIES
--------------------
5.1. EVENTS OF DEFAULT. The occurrence of any one of the following events
shall constitute an Event of Default hereunder:
(a) The Borrower shall fail to make any payment of principal of or
interest on the Term Note on or before the date when due; or
(b) Any representation or warranty of the Borrower contained herein shall
at any time prove to have been incorrect in any material respect when made or
any representation or warranty made by the Borrower in connection with any Term
Loan shall at any time prove to have been incorrect in any material respect when
made; or
(c) The Borrower shall default in the performance or observance of any
agreement or obligation under any of [Sections]3.1, 3.3, 3.6, 3.7, 3.8 or 3.9 or
any provision of Article IV; or
(d) The Borrower shall default in the performance of any other term,
covenant or agreement contained in this letter agreement and such default shall
continue unremedied for 30 days after notice thereof shall have been given to
the Borrower; or
(e) Any default on the part of the Borrower or any Subsidiary of the
Borrower shall exist, and shall remain unwaived or uncured beyond the expiration
of any applicable notice
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21
and/or grace period, under any other contract, agreement or undertaking now
existing or hereafter entered into with or for the benefit of the Bank (or any
affiliate of the Bank); or
(f) Any default shall exist and remain unwaived or uncured with respect to
any Subordinated Debt of the Borrower or with respect to any instrument
evidencing, guaranteeing or otherwise relating to any such Subordinated Debt, or
any such Subordinated Debt shall not have been paid when due, whether by
acceleration or otherwise, or shall have been declared to be due and payable
prior to its stated maturity, or any event or circumstance shall occur which
permits, or with the lapse of time or the giving of notice or both would permit,
the acceleration of the maturity of any Subordinated Debt by the holder or
holders thereof; or
(g) Any default shall exist and remain unwaived or uncured with respect to
any other Indebtedness of the Borrower or any Subsidiary of the Borrower in
excess of $100,000 in aggregate principal amount or with respect to any
instrument evidencing, guaranteeing, securing or otherwise relating to any such
Indebtedness, or any such Indebtedness in excess of $100,000 in aggregate
principal amount shall not have been paid when due, whether by acceleration or
otherwise, or shall have been declared to be due and payable prior to its stated
maturity, or any event or circumstance shall occur which permits, or with the
lapse of time or the giving of notice or both would permit, the acceleration of
the maturity of any such Indebtedness by the holder of holders thereof; or
(h) The Borrower shall be dissolved, or the Borrower or any Subsidiary of
the Borrower shall become insolvent or bankrupt or shall cease paying its debts
as they mature or shall make an assignment for the benefit of creditors, or a
trustee, receiver or liquidator shall be appointed for the Borrower or any
Subsidiary of the Borrower or for a substantial part of the property of the
Borrower or any such Subsidiary, or bankruptcy, reorganization, arrangement,
insolvency or similar proceedings shall be instituted by or against the Borrower
or any such Subsidiary under the laws of any jurisdiction (except for an
involuntary proceeding filed against the Borrower or any Subsidiary of the
Borrower which is dismissed within 60 days following the institution thereof);
or
(i) Any attachment, execution or similar process shall be issued or levied
against any property of the Borrower or any Subsidiary and such attachment,
execution or similar process shall not be paid, stayed, released, vacated or
fully bonded within 10 days after its issue or levy; or
(j) Any final uninsured judgment in excess of $100,000 shall be entered
against the Borrower or any Subsidiary of the Borrower by any court of competent
jurisdiction; or
(k) The Borrower or any Subsidiary of the Borrower shall fail to meet its
minimum funding requirements under ERISA with respect to any employee benefit
plan (or other class of benefit which the PBGC has elected to insure) or any
such plan shall be the subject of termination proceedings (whether voluntary or
involuntary) and there shall result from such termination proceedings a
liability of the Borrower or any Subsidiary of the Borrower to the
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PBGC which, in each case, in the reasonable opinion of the Bank may have a
material adverse effect upon the financial condition of the Borrower or any such
Subsidiary; or
(l) The Security Agreement or any other Loan Document shall for any reason
(other than due to payment in full of all amounts secured or evidenced thereby
or due to discharge in writing by the Bank) not remain in full force and effect;
or
(m) The security interest and liens of the Bank in and on any of the
Collateral covered or intended to be covered by the Security Agreement shall for
any reason (other than written release by the Bank) not be fully perfected liens
and security interests; or
(n) If, at any time, more than 50% of any class of voting stock of the
Borrower shall be held, of record and/or beneficially, by any Person or by any
"group" (as defined in the Securities Exchange Act of 1934, as amended, and the
regulations thereunder); or
(o) There shall occur any other material adverse change in the conditions
(financial or otherwise), operations, properties, assets, liabilities or
earnings of the Borrower.
5.2. RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any Event of
Default, in addition to any other rights and remedies available to the Bank
hereunder or otherwise, the Bank may exercise any one or more of the following
rights and remedies (all of which shall be cumulative):
(a) Declare the entire unpaid principal amount of the Term Note then
outstanding, all interest accrued and unpaid thereon and all other amounts
payable under this letter agreement, and all other Indebtedness of the Borrower
to the Bank, to be forthwith due and payable, whereupon the same shall become
forthwith due and payable, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Borrower.
(b) Terminate the arrangements for Term Loans provided for by this letter
agreement.
(c) Exercise all rights and remedies hereunder, under the Security
Agreement, under the Term Note and under each and any other agreement with the
Bank; and exercise all other rights and remedies which the Bank may have under
applicable law.
5.3. SET-OFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, the Bank is hereby authorized at any time or
from time to time, without presentment, demand, protest or other notice of any
kind to the Borrower or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits and any
other Indebtedness at any time held or owing by the Bank or any affiliate
thereof to or for the credit or the account of the Borrower against and on
account of the obligations and liabilities of the Borrower to the Bank under
this letter agreement or otherwise, irrespective of whether or not the
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Bank shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, may then be contingent or unmatured and
without regard for the availability or adequacy of other collateral. As security
for the Obligations, the Borrower grants to the Bank a security interest with
respect to all its deposits and all securities or other property in the
possession of the Bank or any affiliate of the Bank from time to time, and, upon
the occurrence of any Event of Default, the Bank may exercise all rights and
remedies of a secured party under the Uniform Commercial Code.
VI. MISCELLANEOUS
-------------
6.1. COSTS AND EXPENSES. The Borrower agrees to pay, on demand and
delivery of a Bank Certificate therefor, all costs and expenses (including,
without limitation, reasonable legal fees) of the Bank in connection with the
preparation, execution and delivery of this letter agreement, the Security
Agreement, the Term Note and all other instruments and documents to be delivered
in connection with any Term Loan and any amendments or modifications of any of
the foregoing, as well as the costs and expenses (including, without limitation,
the reasonable fees and expenses of legal counsel) incurred by the Bank in
connection with preserving, enforcing or exercising, upon default, any rights or
remedies under this letter agreement, the Security Agreement, the Term Note and
all other instruments and documents delivered or to be delivered hereunder or in
connection herewith, all whether or not legal action is instituted. In addition,
the Borrower shall be obligated to pay any and all stamp and other taxes payable
or determined to be payable in connection with the execution and delivery of
this letter agreement, the Security Agreement, the Term Note and all other
instruments and documents to be delivered in connection with any Obligation. Any
fees, expenses or other charges which the Bank is entitled to receive from the
Borrower under this Section shall bear interest from the date of any demand
therefor until the date when paid at a rate per annum equal to 2% per annum the
highest per annum rate otherwise payable under the Term Note (but in no event in
excess of the maximum rate permitted by then applicable law).
6.2. OTHER AGREEMENTS. The provisions of this letter agreement are not in
derogation or limitation of any obligations, liabilities or duties of the
Borrower under any of the other Loan Documents or any other agreement with or
for the benefit of the Bank. No inconsistency in default provisions between this
letter agreement and any of the other Loan Documents or any such other agreement
will be deemed to create any additional grace period or otherwise derogate from
the express terms of each such default provision. No covenant, agreement or
obligation of the Borrower contained herein, nor any right or remedy of the Bank
contained herein, shall in any respect be limited by or be deemed in limitation
of any inconsistent or additional provisions contained in any of the other Loan
Documents or any such other agreement.
6.3. GOVERNING LAW. This letter agreement and the Term Note shall be
governed by, and construed and enforced in accordance with, the laws of The
Commonwealth of Massachusetts.
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6.4. ADDRESSES FOR NOTICES, ETC. All notices, requests, demands and other
communications provided for hereunder shall be in writing and shall be mailed or
delivered to the applicable party at the address indicated below:
If to the Borrower:
Genome Therapeutics Corp.
100 Beaver Street
Waltham, MA 02154
Attention: Fenel M. Eloi, Chief Financial Officer
If to the Bank:
Fleet National Bank
High Technology Group
75 State Street
Boston, MA 02109
Attention: Kimberly Martone, Vice President
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall be deemed delivered on the earlier of (i) the date received
or (ii) the date of delivery, refusal or non-delivery indicated on the return
receipt if deposited in the United States mails, sent postage prepaid, certified
or registered mail, return receipt requested, addressed as aforesaid.
6.5. BINDING EFFECT; ASSIGNMENT; TERMINATION. This letter agreement shall
be binding upon the Borrower, its successors and assigns and shall inure to the
benefit of the Borrower and the Bank and their respective permitted successors
and assigns. The Borrower may not assign this letter agreement or any rights
hereunder without the express written consent of the Bank. The Bank may, in
accordance with applicable law, from time to time assign or grant participations
in this letter agreement, the Term Loans and/or the Term Note. The Borrower may
terminate this letter agreement and the financing arrangements made herein by
giving written notice of such termination to the Bank provided that no such
termination will release or waive any of the Bank's rights or remedies or any of
the Borrower's obligations under this letter agreement or any of the other Loan
Documents unless and until the Borrower has paid in full the Term Loans and all
interest thereon and all fees and charges payable in connection therewith.
6.6. CONSENT TO JURISDICTION. The Borrower irrevocably submits to the
non-exclusive jurisdiction of any Massachusetts court or any federal court
sitting within The Commonwealth of Massachusetts over any suit, action or
proceeding arising out of or relating to this letter agreement and/or the Term
Note. The Borrower irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any
such suit, action or proceeding brought in such a court and any claim that any
such suit, action or
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proceeding has been brought in an inconvenient forum. The Borrower agrees that
final judgment in any such suit, action or proceeding brought in such a court
shall be enforced in any court of proper jurisdiction by a suit upon such
judgment, provided that service of process in such action, suit or proceeding
shall have been effected upon the Borrower in one of the manners specified in
the following paragraph of this [Section]6.6 or as otherwise permitted by law.
The Borrower hereby consents to process being served in any suit, action
or proceeding of the nature referred to in the preceding paragraph of this
[Section]6.6 either (i) by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to it at its address set forth
in [Section]6.4 (as such address may be changed from time to time pursuant to
said [Section]6.4) or (ii) by serving a copy thereof upon it at its address set
forth in [Section]6.4 (as such address may be changed from time to time pursuant
to said [Section]6.4).
6.7. SEVERABILITY. In the event that any provision of this letter
agreement or the application thereof to any Person, property or circumstances
shall be held to any extent to be invalid or unenforceable, the remainder of
this letter agreement, and the application of such provision to Persons,
properties or circumstances other than those as to which it has been held
invalid and unenforceable, shall not be affected thereby, and each provision of
this letter agreement shall be valid and enforced to the fullest extent
permitted by law.
VII. DEFINED TERMS
-------------
7.1. DEFINITIONS. In addition to terms defined elsewhere in this letter
agreement, as used in this letter agreement, the following terms have the
following respective meanings:
"Bank Certificate" - A certificate signed by an officer of the Bank
setting forth any additional amount required to be paid by the Borrower to the
Bank pursuant to [Section]1.4, [Section]1.7, [Section]1.8 or [Section]6.1 of
this letter agreement, which certificate shall be submitted by the Bank to the
Borrower in connection with each demand made at any time by the Bank upon the
Borrower with respect to any such additional amount, and each such certificate
shall, save for manifest error, constitute presumptive evidence of the
additional amount required to be paid by the Borrower to the Bank upon each
demand. A claim by the Bank for all or any part of any additional amount
required to be paid by the Borrower may be made before and/or after the end of
the Interest Period to which such claim relates or during which such claim has
arisen and before and/or after any payment hereunder to which such claim
relates. Each Bank Certificate shall set forth in reasonable detail the basis
for and the calculation of the claim to which it relates.
"Business Day" - Any day which is not a Saturday, nor a Sunday nor a
public holiday under the laws of the United States of America or The
Commonwealth of Massachusetts applicable to a national bank; provided however
that if the applicable provision relates to a LIBOR Loan, then the term
"Business Day" shall not include any day on which dealings are not carried on in
the London interbank market or on which banks are not open for business in
London.
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"Capital Base" - At any time, the sum of (i) the consolidated Tangible Net
Worth of the Borrower and Subsidiaries then existing, PLUS (ii) the principal
amount of Subordinated Debt of the Borrower then outstanding (nothing contained
herein being deemed to authorize the incurrence of any such Subordinated Debt).
"Cash-Equivalents" - Each of the following: (i) readily marketable direct
obligations of, or obligations guarantied by, the United States of America or
any agency thereof and entitled to the full faith and credit of the United
States of America, (ii) demand deposits with the Bank or with any other
commercial bank chartered by the United States or by any state and having
undivided capital and surplus of not less than $1,000,000,000, or (iii)
interests in mutual funds, substantially all of the assets of which shall be
governmental obligations of the type described in clause (i) of this sentence.
"COF Interest Rate" - A rate of interest per annum which is offered to the
Borrower with respect to its outstanding Term Loans pursuant to the second
paragraph of [Section]1.4 and which is accepted by the Borrower as described
therein.
"COF Loan" - Any Term Loan which bears interest at a COF Interest Rate.
"COF Rate" - A fixed rate of interest per annum determined by the Bank as
described in the second paragraph of [Section]1.4.
"Collateral" - All property now or hereafter owned by the Borrower or in
which the Borrower now or hereafter has any interest which is now or hereafter
described as "Collateral" in the Security Agreement.
"Default" - Any event or circumstance which, with the passage of time or
the giving of notice or both, could become an Event of Default.
"EBITDA" - The consolidated Net Income (or consolidated Net Loss) of the
Borrower and Subsidiaries for any period, PLUS, without duplication of any item,
(i) all federal and state income taxes (but not taxes in the nature of an AD
VALOREM property tax or a sales or excise tax) paid or accrued with respect to
such period, (ii) all interest on any Indebtedness (whether senior debt or
subordinated debt) paid or accrued by the Borrower and/or any of its
Subsidiaries for such period and actually deducted on the consolidated books of
the Borrower for the purposes of computation of consolidated Net Income (or
consolidated Net Loss) for the period involved, and (iii) the amount of the
provision for depreciation and/or amortization actually deducted on the
consolidated books of the Borrower for the purposes of computation of
consolidated Net Income (or consolidated Net Loss) for the period involved.
"ERISA" - The Employee Retirement Income Security Act of 1974, as amended.
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"Eurocurrency Liabilities" - Has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor), as in effect from time to time, or in any successor regulation
relating to the liabilities described in said Regulation D.
"Eurodollar Interest Rate" - For any Interest Period, an interest rate per
annum, expressed as a percentage, determined by the Bank pursuant to the
following formula:
*EIR = LIBOR + 2.0
-------------
[1.00 - RR]
Where EIR = Eurodollar Interest Rate
LIBOR = See definition of LIBOR
RR = Reserve Rate
*EIR and each component thereof to be rounded upwards to
the next higher 1/8th of 1%
"FDIC" - The Federal Deposit Insurance Company or any successor thereto.
"Fixed Interest Rate" - As to any LIBOR Loan, the applicable Eurodollar
Interest Rate; and as to any COF Loan, the applicable COF Interest Rate.
"Fixed Rate Loan" - All or any portion of any Term Loan which bears
interest at a Fixed Interest Rate.
"Floating Rate" - As defined in [Section]1.4.
"Floating Rate Loan" - All or any portion of any Term Loan which bears
interest at a rate calculated with reference to the Prime Rate.
"Impositions" - All present and future taxes, levies, duties, impositions,
deductions, charges and withholdings applicable to the Bank with respect to any
Fixed Rate Loan, excluding, however, any taxes imposed directly on the Bank's
income and any franchise taxes imposed on it by the jurisdiction under the laws
of which the Bank is organized or any political subdivision thereof.
"Indebtedness" - All obligations of a Person, whether current or
long-term, senior or subordinated, which in accordance with generally accepted
accounting principles would be included as liabilities upon such Person's
balance sheet at the date as of which Indebtedness, is to be determined, and
shall also include guaranties, endorsements (other than for collection in the
ordinary course of business) or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement, contingent
or otherwise, to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
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"Interest Payment Date" - As to each LIBOR Loan, the last day of Interest
Period applicable to such LIBOR Loan.
"Interest Period" - As to each LIBOR Loan, the period commencing with the
date of the making of such LIBOR Loan and ending three months thereafter;
provided that (A) any such Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day occurs in a new calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day, (B) any
such Interest Period which begins on a day for which there is no numerically
corresponding day in the calendar month during which such Interest Period is to
end shall end on the last Business Day of such calendar month, and (C) no
Interest Period may be selected which would end after the Expiration Date.
"LIBOR" - With respect to each Interest Period for a LIBOR Loan, that rate
per annum (rounded upward, if necessary, to the nearest 1/8th of 1%) at which
deposits in United States Dollars are offered to the Bank, for delivery on the
first day of the applicable Interest Period, in the London interbank market at
10:00 a.m. London time two Business Days prior to the first day of the
applicable Interest Period for a term equal to the term of the LIBOR Loan
requested for such Interest Period and in an amount substantially equal to the
principal amount of the relevant LIBOR Loan. The Bank shall give prompt notice
to the Borrower of LIBOR as determined for each LIBOR Loan and such notice shall
be conclusive and binding, absent manifest error.
"LIBOR Loan" - All or any portion of a Term Loan which bears interest at a
Eurodollar Interest Rate.
"Loan Documents" - Each of this letter agreement, the Term Note, the
Security Agreement and each other instrument, document or agreement evidencing,
securing, guaranteeing or relating in any way to any of the Term Loans, all
whether now existing or hereafter arising or entered into.
"London" - The City of London in England.
"Net Income" (or "Net Loss") - The book net income (or book net loss, as
the case may be) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with
generally accepted accounting principles consistently applied.
"Net Quick Assets" - Such current assets of the Borrower as consist of
cash, Cash-Equivalents, readily-marketable securities and Receivables (less an
allowance for bad debt consistent with the Borrower's prior experience).
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"Obligations" - All Indebtedness, covenants, agreements, liabilities and
obligations, now existing or hereafter arising, made by the Borrower with or for
the benefit of the Bank or owed by the Borrower to the Bank in any capacity.
"PBGC" - The Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" - An individual, corporation, partnership, limited liability
company, joint venture, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Premises" - As defined in Subsection 2.1(j).
"Prime Rate" - That rate of interest per annum announced by the Bank, from
time to time, as being its prime rate, it being understood that such rate is
merely a reference rate, not necessarily the lowest, which serves as the basis
upon which effective rates of interest are calculated for obligations making
reference thereto.
"Qualifying Equipment" - Laboratory and computer-related equipment
(including furniture and fixtures, but not including prepackaged software)
purchased by the Borrower after October 1, 1996 for use in the Borrower's
business which meets all of the following criteria: (i) such equipment consists
of one of the items shown on the Equipment List heretofore delivered by the
Borrower to the Bank or has otherwise been approved by the Bank for use in
supporting a Term Loan, (ii) each item of such equipment has been delivered to
and installed at the Premises and has become fully operational, and (iii) the
Borrower has paid in full for each item of such equipment and holds title to
same, free of all interests and claims of any other Person (other than the
security interest of the Bank).
"Receivables" - As to any Person, all of such Person's present and future
accounts receivable for goods sold or for services rendered.
"Reserve Rate" - The aggregate rate, expressed as a decimal, at which the
Bank would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulation
relating to such reserve requirements) against Eurocurrency Liabilities, as well
as any other reserve required of the Bank with respect to the LIBOR Loans. The
Eurodollar Interest Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Rate.
"Subordinated Debt" - Any Indebtedness of the Borrower which is expressly
subordinated, pursuant to a subordination agreement in form and substance
satisfactory to the Bank, to all Indebtedness now or hereafter owed by the
Borrower to the Bank.
"Subsidiary" - Any corporation or other entity of which the Borrower
and/or any of its Subsidiaries, directly or indirectly, owns, or has the right
to control or direct the voting of, fifty
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(50%) percent or more of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances).
"Tangible Net Worth" - An amount equal to the total assets of any Person
(excluding (i) the total intangible assets of such Person, (ii) any minority
interests in Subsidiaries and (iii) any assets representing amounts due from any
officer or employee of such Person or from any Subsidiary of such Person) minus
the total liabilities of such Person. Total intangible assets shall be deemed to
include, but shall not be limited to, the excess of cost over book value of
acquired businesses accounted for by the purchase method, formulae, trademarks,
trade names, patents, patent rights and deferred expenses (including, but not
limited to, unamortized debt discount and expense, organizational expense,
capitalized software costs and experimental and development expenses).
"Total Liabilities" - All Indebtedness of the Borrower and/or any
Subsidiary of the Borrower (secured or unsecured, senior or subordinated) which
would properly be included in liabilities shown on a balance sheet of the
Borrower prepared in accordance with generally accepted accounting principles.
"Unencumbered Cash Balance" - At any time, the total of all cash and
Cash-Equivalents of the Borrower which are not subject to any pledge, lien,
encumbrance or other restriction.
Any defined term used in the plural preceded by the definite article shall
be taken to encompass all members of the relevant class. Any defined term used
in the singular preceded by "any" shall be taken to indicate any number of the
members of the relevant class.
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This letter agreement is executed, as an instrument under seal, as of
the day and year first above written.
Very truly yours,
GENOME THERAPEUTICS CORP.
By
------------------------
Name:
Title:
Accepted and agreed:
FLEET NATIONAL BANK
By
--------------------------
Its
By
--------------------------
Its
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DISCLOSURE SCHEDULE
Item 2.1(a) Jurisdictions in which Borrower is qualified; Subsidiaries
Item 2.1(b) 5% Stockholders
Item 2.1(e) Litigation
Item 2.1(j) Collateral locations; record owner of each location
Item 4.1 Existing Indebtedness
Item 4.2 Existing Liens
Item 4.3 Existing Guaranties
Item 4.6 Investment Policy