<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarter Ended: June 30, 1995 Commission File Number: 015340
PSICOR, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1228645
(State or other jurisdiction (IRS Employer ID#)
of incorporation or organization)
16818 Via del Campo Court, San Diego, CA 92127
(Address of principal executive offices) (zip code)
619/485-5599
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for 90 days: X Yes ___ No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: Common stock, no par
value, 4,349,532 shares outstanding as of June 30, 1995.
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PART I. FINANCIAL INFORMATION
PSICOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months For the Nine Months
Ended June 30 Ended June 30
1995 1994 1995 1994
(Unaudited) (Unaudited)
Revenue $24,262,000 $20,459,000 $72,499,000 $59,788,000
Cost of Sales and
Services 20,784,000 16,564,000 59,686,000 47,778,000
---------- ---------- ---------- ----------
Gross Profit 3,478,000 3,895,000 12,813,000 12,010,000
General and Admini-
strative 2,721,000 2,277,000 8,463,000 6,914,000
---------- --------- ---------- ----------
Operating Profit 757,000 1,618,000 4,350,000 5,096,000
Interest Expense 6,000 --- 48,000 ---
Other Income, net 63,000 204,000 199,000 325,000
---------- --------- ---------- ----------
Income Before Taxes 814,000 1,822,000 4,501,000 5,421,000
Provision for Income Taxes 335,000 778,000 1,882,000 2,227,000
-------- --------- --------- ---------
Net Income $ 479,000 $ 1,044,000 $ 2,619,000 $ 3,194,000
======== ========= ========= =========
Earnings Per Share $ 0.11 $ 0.24 $ 0.59 $ 0.73
======= ======= ======= =======
Number of Shares
Used in Computation 4,437,000 4,367,000 4,419,000 4,390,000
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PSICOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, September 30,
1995 1994
(Unaudited)
Current Assets:
Cash and equivalents $ 545,000 $ 1,473,000
Accounts receivable 15,918,000 11,973,000
Inventories 13,281,000 11,246,000
Prepaid expenses and other 1,828,000 1,601,000
Deferred income taxes 637,000 637,000
---------- ----------
Total Current Assets 32,209,000 26,930,000
Land, Building and Equipment - net 12,296,000 13,910,000
Intangibles and other 8,641,000 9,173,000
--------- ----------
Total Assets $ 53,146,000 $ 50,013,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,832,000 $ 6,563,000
Salaries and other compensation
payable 1,625,000 1,258,000
Employee benefit plans payable --- 750,000
Other accrued liabilities 1,737,000 2,198,000
Current portion of long-term
liabilities 212,000 262,000
----------- -----------
Total Current Liabilities 11,406,000 11,031,000
----------- -----------
Long-term Liabilities 642,000 818,000
----------- -----------
Commitments and Contingencies
Shareholders' Equity:
Common stock--no par value;
authorized 10,000,000 shares;
issued and outstanding
4,350,000 and 4,310,000
shares at June 30, 1995,
and September 30, 1994,
respectively 11,403,000 11,088,000
Retained earnings 29,695,000 27,076,000
----------- -----------
Total Shareholders' Equity 41,098,000 38,164,000
----------- -----------
Total Liabilities and Share-
holders' Equity $53,146,000 $50,013,000
=========== ===========
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PSICOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months For the Nine Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
(Unaudited) (Unaudited)
Cash Flows from Operating
Activities:
Net income $ 479,000 $1,044,000 $2,619,000 $3,194,000
---------- ----------- ----------- -----------
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 1,359,000 1,337,000 4,134,000 3,967,000
Deferred income tax
benefit --- --- --- (3,000)
Gain on sale of property
and equipment (59,000) (196,000) (114,000) (207,000)
Increase (decrease) from
changes in:
Accounts receivable (640,000) (799,000) (3,945,000) (1,297,000)
Inventories (268,000) (3,000) (2,035,000) (1,082,000)
Prepaid expenses and
other (102,000) 111,000 (227,000) (138,000)
Accounts payable 672,000 (1,208,000) 1,269,000 287,000
Salaries and other
compensation payable (283,000) 420,000 367,000 (425,000)
Employee benefit plans
payable, net --- 207,000 (750,000) (393,000)
Other accrued liabilities (57,000) 251,000 (461,000) (610,000)
--------- --------- --------- ---------
Total adjustments 622,000 120,000 (1,762,000) 99,000
--------- --------- --------- ---------
Net cash provided by
operating activities 1,101,000 1,164,000 857,000 3,293,000
--------- --------- --------- ---------
Cash Flows from Investing
Activities:
Purchase of property and
equipment (888,000) (424,000) (2,215,000) (4,120,000)
Proceeds from sales of
property and equipment 87,000 628,000 226,000 661,000
(Increase) decrease in
intangibles and other, net (10,000) 66,000 191,000 (85,000)
--------- --------- --------- ---------
Net cash provided by
(used in) investing
activities (811,000) 270,000 (1,798,000) (3,544,000)
---------- --------- --------- ---------
Cash Flows from Financing
Activities:
Proceeds from issuance of
common stock 141,000 1,000 239,000 175,000
Payments for treasury stock --- --- --- (314,000)
Borrowings of long-term debt --- --- 1,754,000 ---
Payments of long-term debt (194,000) --- (1,754,000) ---
Reduction of long-term
liabilities (63,000) (37,000) (226,000) (125,000)
---------- --------- ---------- ---------
Net cash provided by (used
in) financing activities (116,000) (36,000) 13,000 (264,000)
---------- --------- -------- ---------
Net increase (decrease)
in cash 174,000 1,398,000 (928,000) (515,000)
Cash and equivalents at
beginning of period 371,000 4,387,000 1,473,000 6,300,000
--------- --------- --------- ---------
Cash and equivalents at
end of period $ 545,000 $5,785,000 $ 545,000 $5,785,000
======= ========= ======= =========
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PSICOR, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(1) The condensed consolidated financial statements include the accounts
of PSICOR, Inc. and its subsidiaries (the "Company") and have been
prepared, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Although
the Company believes that the disclosures are adequate to make the
information presented not misleading, it is suggested that these
financial statements be read in connection with the financial statements
and the notes thereto included in the Company's annual report on Form 10-
K for the fiscal year ended September 30, 1994.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments of a normal and
recurring nature necessary to present fairly the financial position at
June 30, 1995 and September 30, 1994, and the results of operations for
the three- month and nine-month periods ended June 30, 1995 and 1994.
(2) In June 1995, the Company renewed its $10,000,000 credit facility
with a bank. The renewed credit facility contains essentially the same
terms and conditions as the previous credit facility, and, as in the
previous credit facility, includes a term loan option.
(3) During the three months ended June 30, 1995 and 1994 the Company
paid interest of $6,000 and zero, respectively, and paid income taxes of
$767,000 and $522,000, respectively. During the nine months ended June
30, 1995 and 1994 the Company paid interest of $48,000 and zero,
respectively, and paid income taxes of $2,631,000 and $2,180,000,
respectively.
(4) Earnings per share is computed based on the weighted average number
of common shares outstanding adjusted for the number of shares issuable
upon assumed exercise of stock options, after the assumed repurchase of
shares with the related proceeds.
(5) In July 1995, the Company purchased all of the outstanding common
stock of Cardio-Pulmonary Resources, Inc. and Cardio-Pulmonary Supplies,
Inc., each a Nevada corporation providing perfusion services and
supplies, respectively, to hospitals in the Las Vegas, Nevada area.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The company's revenues for the three-month and nine-month periods
ended June 30, 1995 increased 18.6% and 21.3%, respectively, as compared
with revenues during the same periods in 1994. This revenue growth is
primarily attributable to the acquisition of Meditech Diagnostic Systems,
Inc. (now called PSICOR Office Laboratories), a laboratory services
company, in August, 1994. The Company's perfusion revenues for the three-
month and nine-month periods ended June 30, 1995 increased 4.5% and 5.2%,
respectively. This revenue growth is attributable to an increase in the
number of client hospitals served, primarily as a result of the
acquisition of three perfusion companies over the past year. In
addition, due to the current environment in the health care industry,
which has resulted from the uncertain status and content of health care
legislation, and the impact of continuing pressures at the Company's
client hospitals to control health care costs, the fees the Company is
able to charge for professional services have remained relatively flat
overall and have declined in selective accounts.
The Company's cost of sales and services increased 25.5% and 24.9%,
respectively, for the three-month and nine-month periods ended June 30,
1995, primarily as a function of the additional costs associated with the
increase in revenue. The major components of the cost of sales and
services are clinical employee salaries and the cost of disposable
supplies. The Company's gross profit, as a percentage of revenue,
decreased from 19.0% to 14.3%, and from 20.1% to 17.7%, respectively, for
the three-month and nine-month periods ended June 30, 1995, as compared
to the same periods in 1994. This decrease is due to losses sustained by
the PSICOR Office Laboratories business as well as pricing pressures and
the lack of significant caseload increases that would result in greater
clinical staff efficiency and utilization in the perfusion business. The
physician office laboratory business incurred losses of $292,000, or $.07
per share, in the third quarter. The Company incurred significant
initial marketing and sales expenses in connection with this business in
order to achieve growth. In addition, the business is recovering from
the financial impact of the integration of systems, warehouse and
inventory functions.
General and administrative expenses increased by 19.5% and 22.4%,
respectively, for the three-month and nine-month periods ended June 30,
1995 as compared with the same periods in the previous year, the majority
of which is attributable to the added costs related to the PSICOR Office
Laboratories acquisition. As a percentage of revenue, consolidated
general and administrative expenses increased by 0.1% of total revenues
as compared to both periods in the previous year. General and
administrative expenses attributed to PSICOR Office Laboratories were
approximately 13% of the laboratories' revenues for the nine-months ended
June 30, 1995.
Other income for the three-month and nine-month periods ended June
30, 1995 consisted primarily of the gain on the sale of corporate assets.
Interest expense of $6,000 and $48,000, respectively, resulted from
borrowings during the three-month and nine-month periods ended June 30,
1995, which were used in connection with the acquisition and further
investment in the growth of PSICOR Office Laboratories.
Despite the increase in revenues during the three-month and nine-
month periods ended June 30, 1995, as compared to the prior year, net
income declined as a percentage of revenue from 5.1% to 2.0% and 5.3% to
3.6%, respectively, due to the foregoing factors. While the Company
expects increased revenues from the PSICOR Office Laboratories
acquisition and continues its efforts to reduce costs and expenses, there
can be no assurances that the Company's net income will return to historical
levels.
LIQUIDITY AND CAPITAL RESOURCES
Internally generated funds and bank borrowings have been the primary
source used to fund the Company's needs for working capital and capital
expenditures.
The PSICOR Office Laboratories acquisition and ongoing investments in
its operations will be funded primarily by internally generated cash
balances and limited bank borrowings.
The Company believes that funds generated through operations and
borrowings available under its remaining credit facilities will be
adequate to meet the Company's foreseeable capital requirements and
future acquisition opportunities.
The Company has a $1,665,000 equity investment in Clarus, Inc., a
medical device development company of which Clarus' former President and
Chief Executive Officer serves on the Company's board of directors, and
the Company's Chief Executive Officer serves on Clarus' board of
directors. In May, 1995, the Company made a bridge loan to Clarus, Inc.
in the amount of $35,000; an additional bridge loan of $35,000 was made
in July, 1995. The bridge loans are expected to be converted to
additional equity during fiscal 1995. The preferred stock investment in
Clarus is carried at cost and is included in intangibles and other assets
on the accompanying balance sheets. While the Company expects that
Clarus, Inc. will continue as a going concern, there can be no assurances
that this will be the case.
SUBSEQUENT EVENT
In July, 1995, the Company purchased all of the outstanding common
stock of Cardio-Pulmonary Resources, Inc. (CPR) and Cardio-Pulmonary
Supplies, Inc. (CPS). CPR provides professional contract perfusion
services for open-heart surgery, autotransfusion, physiologic monitoring,
and related intra-aortic balloon pumping to six hospitals in Las Vegas.
CPS provides perfusion supplies to area hospitals under contract. PSICOR
has added approximately 1,500 open-heart cases along with an additional
500 related procedures as a result of this acquisition.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) 10(a) Business Loan Agreement between the registrant and Bank
of America National Trust and Savings Association (supersedes Business
Loan Agreement filed as Exhibit No. 10(i) with registrant's quarterly
report on Form 10Q for the quarter ended June 30, 1993 and amendment No.
1 to Business Loan Agreement with Bank of America National Trust and
Savings Association filed as Exhibit No. 10 with registrant's
quarterly report on Form 10Q for the quarter ended June 30, 1994).
(b) No reports on Form 8-K were filed by the registrant, and none
were required to be filed during the quarter for which this report is
filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PSICOR, Inc.
(Registrant)
/S/ MICHAEL W. DUNAWAY
Michael W. Dunaway
Chairman and Chief Executive
Officer
/S/ MICHAEL D. KEBELY
Michael D. Kebely
Chief Financial Officer
August 14, 1995
EXHIBIT INDEX
Exhibit No. Description
10(a) Business Loan Agreement, between the
registrant and Bank of America National
Trust and Savings Association (supersedes
Business Loan Agreement filed as Exhibit
No. 10(i) with the registrant's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1993, as amended)
27 Financial Data Schedule (EDGAR filing only)
Bank of America
National Trust and Savings Association
This Agreement dated as of June 30, 1995, is between Bank of America
National Trust and Savings
Association (the "Bank') and PSICOR, Inc. (the "Borrower").
1. FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS
1.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will
provide a line of credit to the Borrower. The amount of the line of
credit (the "Facility No. 1 Commitment") is Ten Million Dollars
($10,000,000).
(b) This is a revolving line of credit with two term repayment options
and with a within line facility for letters of credit. During the
availability period, the Borrower may repay principal amounts and
reborrow them.
(c) Once during the period from the date of this Agreement, to and
including April 1, 1996, and once again during the period from April 2,
1996, to and including April 1, 1997, the Borrower may elect to convert a
portion of the principal balance outstanding under the line of credit to
a term loan; provided, however, that the total amount converted shall not
exceed Ten Million Dollars ($10,000,000).
(d) The Borrower agrees not to permit the outstanding principal balance
of the line of credit, including amounts converted to term, plus the
outstanding amounts of any letters of credit, including amounts drawn on
letters of credit and not yet reimbursed, to exceed the Facility No. 1
Commitment.
1.2 Availability Period. The line of credit is available between the
date of this Agreement and April 1, 1997 (the 'Expiration Date") unless
the Borrower is in default.
1.3 Interest Rate.
(a) Unless the Borrower elects an optional interest rate as described
below, the interest rate is the Bank's Reference Rate on any portion of
the principal balance outstanding under the line of credit that has not
been termed out under Paragraph 1.1(c) above, and Bank's Reference Rate
plus .25% of a percentage point on any portions that have been termed out
under Paragraph 1. 1 (c) above.
(b) The Reference Rate is the rate of interest publicly announced from
time to time by the Bank in San Francisco, California, as its Reference
Rate. The Reference Rate is set by the Bank based on various factors,
including the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans. The Bank may price loans to its customers at, above,
or below the Reference Rate. Any change in the Reference Rate shall take
effect at the opening of business on the day specified in the public
announcement of a change in the Bank's Reference Rate.
1.4 Repayment Terms.
(a) The Borrower will pay interest on April 30, 1995, and then monthly
thereafter until payment in full of any principal outstanding under this
line of credit.
(b) Except with respect to portions of principal which may have been
termed out, which shall be paid in accordance with Paragraphs 1.4(d) or
1.4(e) below, as applicable, Borrower may repay in full all principal and
any unpaid interest or other charges outstanding under this line of
credit no later than the Expiration Date.
(c) Any amount bearing interest at an optional interest rate (as
described below) may be repaid at the end of the applicable interest
period, which shall be no later than the Expiration Date.
(d) The Borrower will repay any portion of the line of credit termed out
on or before April 1, 1996 in 48 successive equal monthly installments
starting on the last day of the first month after the month in which the
election to term out the portion is made. On the date of the final
installment, the Borrower will repay the remaining principal balance plus
any interest then due.
(e) The Borrower will repay any portion of the line of credit termed out
on or before April 1, 1997 in 36 successive equal monthly installments
starting on the last day of the first month after the month in which the
election to term out the portion is made. On the date of the final
installment, the Borrower will repay the remaining principal balance plus
any interest then due.
(f) The Borrower may prepay the loan in full or in part at any time.
The prepayment will be applied to the most remote installment of
principal due under this Agreement.
1.5 Optional Interest Rates. Instead of the interest rate based on the
Bank's Reference Rate, the Borrower may elect to have all or portions of
the line of credit (during the availability period and during the term
repayment period) bear interest at the rate(s) described below during an
interest period agreed to by the Bank and the Borrower. Each interest
rate is a rate per year. Interest will be paid on the last day of each
interest period, and on the last day each month during the interest
period. At the end of any interest period, the interest rate will revert
to the rate based on the Reference Rate, unless the Borrower has
designated another optional interest rate for the portion.
1.6 Fixed Rate. The Borrower may elect to have all or portions of the
principal balance of the line of credit bear interest at the Fixed Rate,
subject to the following requirements:
(a) The "Fixed Rate" means the fixed interest rate the Bank and the
Borrower agree will apply to the portion during the applicable interest
period.
(b) The interest period during which the Fixed Rate will be in effect
will be no shorter than 30 days and no longer than one year.
(c) Each Fixed Rate portion will be for an amount not less than Five
Hundred Thousand Dollars ($500,000).
(d) The Borrower may not elect a Fixed Rate with respect to any portion
of the principal balance of the line of credit which is scheduled to be
repaid before the last day of the applicable interest period.
(e) Any portion of the principal balance of the line of credit already
bearing interest at the Fixed Rate will not be converted to a different
rate during its interest period.
(f) Each prepayment of a Fixed Rate portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid, and a prepayment fee equal to the
amount (if any) by which
(i) the additional interest which would have been payable on the amount
prepaid had it not been paid until the last day of the interest period,
exceeds
(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the certificate of deposit
market for a period starting on the date on which it was prepaid and
ending on the last day of the interest period for such portion.
1.7 Offshore Rate. The Borrower may elect to have all or portions of
the principal balance of the line of credit bear interest at the Offshore
Rate, subject to the following requirements:
(a) The "Offshore Rate" means the interest rate the Bank and the
Borrower agree will apply to the portion during the applicable interest
period.
(b) The interest period during which the Offshore Rate will be in effect
will be no shorter than 30 days and no longer than one year. The last
day of the interest period will be determined by the Bank using the
practices of the offshore dollar inter-bank market.
(c) Each Offshore Rate portion will be for an amount not less than Five
Hundred Thousand Dollars ($500,000).
(d) The Borrower may not elect an Offshore Rate with respect to any
portion of the principal balance of the line of credit which is scheduled
to be repaid before the last day of the applicable interest period.
(e) Any portion of the principal balance of the line of credit already
bearing interest at the Offshore Rate will not be converted to a
different rate during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid, and a prepayment fee equal to the
amount (if any) by which
(i) the additional interest which would have been payable on the amount
prepaid had it not been paid until the last day of the interest period,
exceeds
(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the offshore dollar market for a
period starting on the date on which it was prepaid and ending on the
last day of the interest period for such portion.
(g) The Bank will have no obligation to accept an election for an
Offshore Rate portion if any of the following described events has
occurred and is continuing:
(i) Dollar deposits in the principal amount, and for periods equal to
the interest period, of an Offshore Rate portion are not available in the
offshore dollar inter-bank markets; or
(ii) the Offshore Rate does not accurately reflect the cost of an
Offshore Rate portion.
1.8 Letters of Credit. This line of credit may be used for financing:
(i) commercial letters of credit with a maximum maturity of 180 days but
not to extend beyond the Expiration Date. Each commercial letter of
credit will require drafts payable at sight.
(ii) standby letters of credit with a maximum maturity of 365 days but
not to extend beyond the Expiration Date.
(iii) The amount of the letters of credit outstanding at any one time,
(including amounts drawn on the letters of credit and not yet
reimbursed), may not exceed Three Million Dollars ($3,000,000).
The Borrower agrees:
(a) any sum drawn under a letter of credit may, at the option of the
Bank, be added to the principal amount outstanding under this Agreement.
The amount will bear interest and be due as described elsewhere in this
Agreement.
(b) if there is a default under this Agreement, to immediately prepay
and make the Bank whole for any outstanding letters of credit.
(c) the issuance of any letter of credit and any amendment to a letter
of credit is subject to the Bank's written approval and must be in form
and content satisfactory to the Bank and in favor of a beneficiary
acceptable to the Bank.
(d) to sign the Bank's form Application and Agreement for Commercial
Letter of Credit or Application and Agreement for Standby Letter of
Credit.
(e) to pay any issuance and/or other fees that the Bank notifies the
Borrower will be charged for issuing and processing letters of credit for
the Borrower.
(f) to allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.
(g) to pay the Bank a non-refundable fee equal to 1.25% per annum of the
outstanding undrawn amount of each standby letter of credit, payable
quarterly in advance, calculated on the basis of the face amount
outstanding on the day the fee is calculated.
2. FACILITY NO. 2: FOREIGN EXCHANGE FACILITY
2.1 Foreign Exchange Facility.
(a) During the availability period, the Bank in its discretion may enter
into spot and future foreign exchange contracts with the Borrower. The
foreign exchange contract limit will be Two Million Five Hundred Thousand
U.S. Dollars (U.S. $2,500,000), and the settlement limit will be Five
Hundred Thousand U.S. Dollars (U.S. $500,000). The "foreign exchange
contract limit" is the maximum limit on the net difference between the
total foreign exchange contracts outstanding less the total foreign
exchange contracts for which the Borrower has already compensated the
Bank. The "settlement limit" is the maximum limit on the gross total
amount of all sale and purchase contracts on which delivery is to be
effected and settlement allowed on any one banking day.
(b) The Bank shall not be required to pay the Borrower or deliver any
foreign currency to the Borrower under any foreign exchange contract
until the Bank receives evidence satisfactory to it that the Borrower has
paid the Bank the required U. S. Dollars in immediately available funds
or delivered the required foreign currency to the Bank under such foreign
exchange contract. The Bank shall not be liable for interest or other
damages caused by any such failure to pay or deliver or any such delay in
payment or delivery.
(c) The Borrower will pay the Bank on demand the Bank's then standard
foreign exchange contract fees for each contract.
(d) Foreign exchange contracts will be in form and substance
satisfactory to the Bank.
(e) No foreign exchange contracts will mature later than ninety (90)
days after the last day of the availability period.
(f) The Bank shall not be liable for any loss suffered by the Borrower
as a result of the Borrower's foreign exchange transactions.
(g) Any sum owed to the Bank under a foreign exchange contract may, at
the option of the Bank, be added to the principal amount outstanding
under this Agreement. The amount will bear interest and be due as
described elsewhere in this Agreement.
(h) In addition to any other rights or remedies which the Bank may have
under this Agreement or otherwise, upon the occurrence of an event of
default the Bank may:
(i) Suspend performance of its obligations to the Borrower under any
foreign exchange contract;
(ii) Declare all foreign exchange contracts, interest and any other
amounts which are payable by the Borrower to the Bank immediately due and
payable; and
(iii) Without notice to the Borrower, close out any or all foreign
exchange contracts or positions of the Borrower with the Bank.
The Bank shall not be under any obligation to exercise any such rights or
remedies or to exercise them at a time or in a manner beneficial to the
Borrower. The Borrower shall be liable for any amounts owing to the Bank
after exercise of any such rights and remedies.
3. FEES AND EXPENSES
3.1 Unused Commitment Fee.
(a) The Borrower agrees to pay a fee on any difference between the
Facility No. 1 Commitment and the amount of credit it actually uses,
determined by the weighted average loan balance maintained during the
specified period. The fee will be calculated at 0.15% per year on the
unused portion of the first Five Million Dollars ($5,000,000) plus 0.10%
per year on the unused portion in excess of Five million Dollars
($5,000,000).
(b) The fee will be calculated quarterly.
(c) The fee is due 10 days from the Bank's billing date and will be paid
quarterly.
3.2 Expenses. The Borrower agrees to reimburse the Bank for any
expenses it incurs in the preparation of this Agreement and any agreement
or instrument required by this Agreement up to a maximum of One Thousand
Dollars ($1,000). Expenses include, but are not limited to, reasonable
attorneys' fees, including any allocated costs of the Bank's in-house
counsel.
4. DISBURSEMENTS, PAYMENTS AND COSTS
4.1 Requests for Credit. Each request for an extension of credit will
be made in writing in a manner acceptable to the Bank, or by another
means acceptable to the Bank.
4.2 Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the Bank
from time to time;
(b) made for the account of the Bank's branch selected by the Bank from
time to time;
(c) made in immediately available funds, or such other type of funds
selected by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may,
at its discretion, require the Borrower to sign one or more promissory
notes.
4.3 Telephone Authorization.
(a) The Bank may honor telephone instructions for advances or repayments
or for the designation of optional interest rates given by any one of the
individuals authorized to sign loan agreements on behalf of the Borrower,
or any other individual designated by any one of such authorized signers.
(b) Advances will be deposited in and repayments will be withdrawn from
the Borrower's account number 14504-02826, or such other of the
Borrower's accounts with the Bank as designated in writing by the
Borrower.
(c) The Borrower indemnifies and excuses the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone instructions it
reasonably believes are made by any individual authorized by the Borrower
to give such instructions. This indemnity and excuse will survive this
Agreement.
4.4 Direct Debit (Pre-Billing).
(a) The Borrower agrees that the Bank will debit the Borrower's deposit
account number 14504-02826 (the "Designated Account") on the date each
payment of principal and interest and any fees from the Borrower becomes
due (the "Due Date"). If the Due Date is not a banking day, the
Designated Account will be debited on the next banking day.
(b) Approximately 10 days prior to each Due Date, the Bank will mail to
the Borrower a statement of the amounts that will be due on that Due Date
(the "Billed Amount"). The calculation will be made on the assumption
that no new extensions of credit or payments will be made between the
date of the billing statement and the Due Date, and that there will be no
changes in the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "Accrued Amount").
If the Billed Amount debited to the Designated Account differs from the
Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued Amount, the Billed
Amount for the following Due Date will be increased by the amount of the
discrepancy. The Borrower will not be in default by reason of any such
discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the Billed
Amount for the following Due Date will be decreased by the amount of the
discrepancy.
Regardless of any such discrepancy, interest will continue to accrue
based on the actual amount of principal outstanding without compounding.
The Bank will not pay the Borrower interest on any overpayment.
(d) The Borrower will maintain sufficient funds in the Designated
Account to cover each debit. If there are insufficient funds in the
Designated Account on the date the Bank enters any debit authorized by
this Agreement, the debit will be reversed.
4.5 Banking Days. Unless otherwise provided in this Agreement, a
banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California. For amounts bearing interest at an
offshore rate (if any), a banking day is a day other than a Saturday or a
Sunday on which the Bank is open for business in California and dealing
in offshore dollars. All payments and disbursements which would be due
on a day which is not a banking day will be due on the next banking day.
All payments received on a day which is not a banking day will be applied
to the credit on the next banking day.
4.6 Taxes. The Borrower will not deduct any taxes from any payments it
makes to the Bank. If any government authority imposes any taxes on any
payments made by the Borrower, the Borrower will pay the taxes and will
also pay to the Bank, at the time interest is paid, any additional amount
which the Bank specifies as necessary to preserve the after-tax yield the
Bank would have received if such taxes had not been imposed. Upon
request by the Bank, the Borrower will confirm that it has paid the taxes
by giving the Bank official tax receipts (or notarized copies) within 30
days after the due date. However, the Borrower will not pay the Bank's
net income taxes.
4.7 Additional Costs. The Borrower will pay the Bank, on demand, for
the Bank's costs or losses arising from any statute or regulation, or any
request or requirement of a regulatory agency which is applicable to all
national banks or a class of all national banks. The costs and losses
will be allocated to the loan in a manner determined by the Bank, using
any reasonable method. The costs include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and
commitments for credit.
4.8 Interest Calculation. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the basis
of a 360-day year and the actual number of days elapsed. This results in
more interest or a higher fee than if 365-day year is used.
4.9 Interest on Late Payments. At the Bank's sole option in each
instance, any amount not paid when due under this Agreement (including
interest) shall bear interest from the due date at the Bank's Reference
Rate plus 2.00 percentage points. This may result in compounding of
interest.
4.10 Default Rate. Upon the occurrence and during the continuation of
any default under this Agreement, advances under this Agreement will at
the option of the Bank bear interest at a rate per annum which is 2.00
percentage point(s) higher than the rate of interest otherwise provided
under this Agreement. This will not constitute a waiver of any default.
5. CONDITIONS
The Bank must receive the following items, in form and content acceptable
to the Bank, before it is required to extend any credit to the Borrower
under this Agreement:
5.1 Authorizations. Evidence that the execution, delivery and
performance by the Borrower of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.
5.2 Other Items. Any other items that the Bank reasonably requires.
6. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in
full, the Borrower makes the following representations and warranties.
Each request for an extension of credit constitutes a renewed
representation.
6.1 Organization of Borrower. The Borrower is a corporation duly formed
and existing under the laws of the state where organized.
6.2 Authorization. This Agreement, and any instrument or agreement
required hereunder, are within the Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational papers.
6.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance
with its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and
enforceable.
6.4 Good Standing. In each state in which the Borrower does business,
it is properly licensed, in good standing, and, where required, in
compliance with fictitious name statutes.
6.5 No Conflicts. This Agreement does not conflict with any law,
agreement, or obligation by which the
Borrower is bound.
6.6 Financial Information. All financial and other information that has
been or will be supplied to the Bank is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's financial condition.
(b) in form and content required by the Bank.
(c) in compliance with all government regulations that apply.
6.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending
or threatened against the Borrower, which, if lost, would impair the
Borrower's financial condition or ability to repay the loan, except as
have been disclosed in writing to the Bank.
6.8 Permits, Franchises. The Borrower possesses all permits,
memberships, franchises, contracts and licenses required and all
trademark rights, trade name rights, patent rights and fictitious name
rights necessary to enable it to conduct the business in which it is now
engaged..
6.9 Other Obligations. The Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material
lease, commitment, contract, instrument or obligation, except as have
been disclosed in writing to the Bank.
6.10 Income Tax Returns. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year.
6.11 No Event of Default. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.
6.12 ERISA Plans.
(a) The Borrower has fulfilled its obligations, if any, under the
minimum funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and has not incurred any
liability with respect to any Plan under Title IV of ERISA.
(b) No reportable event has occurred under Section 4043(b) of ERISA for
which the PBGC requires 30 day notice.
(c) No action by the Borrower to terminate or withdraw from any Plan has
been taken and no notice of intent to terminate a Plan has been filed
under Section 4041 of ERISA.
(d) No proceeding has been commenced with respect to a Plan under
Section 4042 of ERISA, and no event has occurred or condition exists
which might constitute grounds for the commencement of such a
proceeding.
(e) The following terms have the meanings indicated for purposes of this
Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(ii) "ERISA" means the Employee Retirement Income Act of 1974, as
amended from time to time.
(iii) "PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
(iv) "Plan" means any employee pension benefit plan maintained or
contributed to by the Borrower and insured by the Pension Benefit
Guaranty Corporation under Title IV of ERISA.
6.13 Location of Borrower. The Borrower's place of business (or, if the
Borrower has more than one place of business, its chief executive office)
is located at the address listed under the Borrower's signature on this
Agreement.
7. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement
and until the Bank is repaid in full:
7.1 Use of Proceeds. To use the proceeds of the credit only for working
capital, acquisitions and to purchase machinery and equipment.
7.2 Financial Information. To provide the following financial
information and statements and such additional information as requested
by the Bank from time to time:
(a) Within 120 days of the Borrower's fiscal year end, the Borrower's
annual financial statements. These financial statements must be audited
(with an unqualified opinion) by a Certified Public Accountant ("CPA")
acceptable to the Bank. The statements shall be prepared on a
consolidated basis.
(b) Copies of the Borrower's Form 10-K Annual Report, within 120 days of
the Borrower's fiscal year end and Form 10-Q Quarterly Report and Form 8-
K Current Report within 60 days after the period's end.
(c) By October 31 of each year, annual projections of the Borrower's
balance sheet , income statement and cash flow, by quarter, for the
following fiscal year.
7.3 Tangible Net Worth. To maintain on a consolidated basis tangible
net worth equal to at least Thirty One Million Dollars ($31,000,000).
"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization
expense, treasury stock, unamortized debt discount and expense, deferred
research and development costs, deferred marketing expenses, and other
like intangibles, and monies due from affiliates, officers, directors or
shareholders of the Borrower) less total liabilities, including but not
limited to accrued and deferred income taxes, and any reserves against
assets.
7.4 Total Liabilities to Tangible Net Worth Ratio. To maintain on a
consolidated basis a ratio of total liabilities to tangible net worth not
exceeding 1.00:1.0.
"Total liabilities" means the sum of current liabilities plus long term
liabilities.
7.5 Cash Flow Ratio. To maintain on a consolidated basis a cash flow
ratio of at least 1.50:1.0.
"Cash flow ratio' means the ratio of cash flow to the current portion of
long term debt plus the current portion of capitalized leases plus 20% of
funded advances under the Facility No. 1 Commitment. "Cash flow" is
defined as net income from operations and investments, after taxes, plus
depreciation, depletion, amortization and other non-cash charges. This
ratio will be calculated at the end of each fiscal quarter, using the
results of that quarter and each of the 3 immediately preceding quarters.
The current portion of long term debt will be measured as of the last day
of the preceding fiscal year.
7.6 Profitability. Not to incur any two consecutive quarterly net
losses, net losses being measured before
taxes and extraordinary items, on a consolidated basis.
7.7 Minimum Net Income. To earn on a consolidated basis net income
before taxes and extraordinary items of at least One Million Five Hundred
Thousand Dollars ($1,500,000) for each period consisting of four (4)
consecutive fiscal quarters.
7.8 Other Debts. Not to have outstanding or incur any direct or
contingent debts or lease obligations (other than those to the Bank), or
become liable for the debts of others without the Bank's written consent.
This does not prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of
business.
(c) Obtaining surety bonds in the usual course of business.
(d) Debts and lines of credit in existence on the date of this Agreement
disclosed in writing to the Bank.
7.9 Other Liens. Not to create, assume, or allow any security interest
or lien (including judicial liens) on property the Borrower now or later
owns, except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed in writing
to the Bank.
7.10 Dividends. Not to declare or pay any dividends on any of its
shares without the Bank's prior written consent.
7.11 Notices to Bank. To promptly notify the Bank in writing of:
(a) any lawsuit over Two Hundred Fifty Thousand Dollars ($250,000)
against the Borrower.
(b) any substantial dispute between the Borrower and any government
authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's financial condition or
operations.
(e) any change in the Borrower's name, legal structure, place of
business, or chief executive office if the Borrower has more than one
place of business.
7.12 Books and Records. To maintain adequate books and records.
7.13 Audits. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit and make copies of books and records at any
reasonable time. If any of the Borrower's properties, books or records
are in the possession of a third party, the Borrower authorizes that
third party to permit the Bank or its agents to have access to perform
inspections or audits and to respond to the Bank's requests for
information concerning such properties, books and records.
7.14 Compliance with Laws. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body
with authority over the Borrower's business.
7.15 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises the Borrower now has.
7.16 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's properties in good working condition.
7.17 Cooperation. To take any action requested by the Bank to carry out
the intent of this Agreement.
7.18 Insurance. To maintain insurance as is usual for the business it
is in.
7.19 Additional Negative Covenants. Not to, without the Bank's written
consent:
(a) engage in any business activities substantially different from the
Borrower's present business.
(b) liquidate or dissolve the Borrower's business.
(c) enter into any consolidation, merger, pool, joint venture,
syndicate, or other combination except as allowed in 7.19(e) and 7.19(f)
below.
(d) lease, or dispose of all or a substantial part of the Borrower's
business or the Borrower's assets.
(e) acquire or purchase any perfusionist company without providing
information satisfactory to the Bank on acquired company upon completion
of transaction.
(f) acquire or purchase any non-perfusionist company or its assets for
consideration in excess of an annual aggregate amount of One Million
Dollars ($1,000,000).
(g) make any acquisition that is deemed to be hostile by the acquired
company.
(h) sell or otherwise dispose of any assets for less than fair market
value, or enter into any sale and leaseback agreement covering any of its
fixed or capital assets.
7.20 ERISA Plans. To give prompt written notice to the Bank of:
(a) The occurrence of any reportable event under Section 4043(b) of ERISA
for which the PBGC requires 30 day notice.
(b) Any action by the Borrower to terminate or withdraw from a Plan or
the filing of any notice of intent to terminate under Section 4041 of
ERISA.
(c) Any notice of noncompliance made with respect to a Plan under
Section 4041(b) of ERISA.
(d) The commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA.
8. DEFAULT
If any of the following events occur, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional
credit available to the Borrower, and require the Borrower to repay its
entire debt immediately and without prior notice. If an event of default
occurs under the paragraph entitled "Bankruptcy," below, with respect to
the Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.
8.1 Failure to Pay. The Borrower fails to make a payment under this
Agreement when due.
8.2 False Information. The Borrower has given the Bank false or
misleading information or representations.
8.3 Bankruptcy. The Borrower files a bankruptcy petition, a bankruptcy
petition is filed against the Borrower, or the Borrower makes a general
assignment for the benefit of creditors.
8.4 Receivers. A receiver or similar official is appointed for the
Borrower's business, or the business is terminated.
8.5 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or
more trade creditors against the Borrower in an aggregate amount of Two
Hundred Fifty Thousand Dollars ($250,000) or more in excess of any
insurance coverage.
8.6 Judgments. Any judgments or arbitration awards are entered against
the Borrower, or the Borrower enters into any settlement agreements with
respect to any litigation or arbitration, in an aggregate amount of One
Million Five Hundred Thousand Dollars ($1,500,000) or more in excess of
any insurance coverage.
8.7 Government Action. Any government authority takes action that the
Bank believes materially adversely affects the Borrower's financial
condition or ability to repay.
8.8 Material Adverse Change. A material adverse change occurs in the
Borrower's financial condition, properties or prospects, or ability to
repay the loan.
8.9 Cross-default. Any default occurs under any agreement in connection
with any credit the Borrower has obtained from anyone else or which the
Borrower has guaranteed in the amount of Five Hundred Thousand Dollars
($500,000) or more in the aggregate if the default consists of failing to
make a payment when due or gives the other lender the right to accelerate
the obligation.
8.10 Other Bank Agreements. The Borrower fails to meet the conditions
of, or fails to perform any obligation under any other agreement the
Borrower has with the Bank or any affiliate of the Bank.
8.11 ERISA Plans. The occurrence of any one or more of the following
events with respect to the Borrower, provided such event or events could
reasonably be expected, in the judgment of the Bank, to subject the
Borrower to any tax, penalty or liability (or any combination of the
foregoing) which, in the aggregate, could have a material adverse effect
on the financial condition of the Borrower with respect to a Plan:
(a) reportable event shall occur with respect to a Plan which is, in
the reasonable judgment of the Bank likely to result in the termination
of such Plan for purposes of Title IV of ERISA.
(b) Any Plan termination (or commencement of proceedings to terminate a
Plan) or the Borrower's full or partial withdrawal from a Plan.
8.12 Other Breach Under Agreement. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article.
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS
9.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made
under generally accepted accounting principles, consistently applied.
9.2 California Law. This Agreement is governed by California law.
9.3 Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may
not assign this Agreement without the Bank's prior consent. The Bank may
sell participations in or assign this loan, and may exchange financial
information about the Borrower with actual or potential participants or
assignees. If a participation is sold or the loan is assigned, the
purchaser will have the right of set-off against the Borrower.
9.4 Arbitration.
(a) This paragraph concerns the resolution of any controversies or
claims between the Borrower and the Bank, including but not limited to
those that arise from:
(i) This Agreement (including any renewals, extensions or modifications
of this Agreement);
(ii) Any document, agreement or procedure related to or delivered in
connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for injury to
persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies
or claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by California
law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent of
the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide whether
any such claim or controversy is barred by the statute of limitations
and, if so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises from
or relates to an obligation to the Bank secured by real property located
in California. In this case, both the Borrower and the Bank must consent
to submission of the claim or controversy to arbitration. If both
parties do not consent to arbitration, the controversy or claim will be
settled as follows:
(i) The Borrower and the Bank will designate a referee (or a panel of
referees) selected under the auspices of the American Arbitration
Association in the same manner as arbitrators are selected in
Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be appointed
by a court as provided in California Code of Civil Procedure Section 638
and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be an
active attorney or a refired judge; and
(iv) The award that results from the decision of the referee (or the
panel) will be entered as a judgment in the court that appointed the
referee, in accordance with the provisions of California Code of Civil
Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or the Bank
to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property collateral;
or
(iii) act in a court of law, before, during or after the arbitration
proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if the
other party contests the lawsuit. However, if the controversy or claim
arises from or relates to an obligation to the Bank which is secured by
real property located in California at the time of the proposed
submission to arbitration, this right is limited according to the
provision above requiring the consent of both the Borrower and the Bank
to seek resolution through arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
9.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains
all rights, even if it makes a loan after default. If the Bank waives a
default, it may enforce a later default. Any consent or waiver under
this Agreement must be in writing.
9.6 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection
with the enforcement or preservation of any rights or remedies under this
Agreement and any other documents executed in connection with this
Agreement, and including any amendment, waiver, "workout" or
restructuring under this Agreement. In the event of a lawsuit or
arbitration proceeding, the prevailing party is entitled to recover costs
and reasonable attorneys' fees incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator. As
used in this paragraph, "attorneys' fees" includes the allocated costs of
in-house counsel.
9.7 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the
Bank and the Borrower concerning this credit; and
(b) replace any prior oral or written agreements between the Bank and
the Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other
agreements required by this Agreement, this Agreement will prevail.
9.8 Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature page of this Agreement, or to such other
addresses as the Bank and the Borrower may specify from time to time in
writing.
9.9 Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
9.10 Counterparts. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.
9.11 Prior Agreement Superseded. This Agreement supersedes the Business
Loan Agreement entered into as of April 1, 1993, between the Bank and the
Borrower, and any credit outstanding thereunder shall be deemed to be
outstanding under this Agreement.
This Agreement is executed as of the date stated at the top of the first
page.
Bank of America PSICOR, Inc.
National Trust and Savings
Association
/S/ GORDON WIENS /S/ MICHAEL D. KEBELY
-------------------------- -------------------------
By: Gordon Wiens By: Michael D. Kebely
Title: Vice President Title: Vice President-CFO
Address where notices to the Address where notices to the
Bank are to be sent: Borrower are to be sent:
450 B Street 16818 Via Del Campo Court
San Diego, CA 92101 San Diego, CA 92127
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