FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
Commission File Number 0-23666
TRIPOS, INC.
(Exact Name of Registrant as Specified in its Charter)
Utah 43-1454986
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1699 South Hanley Road
St. Louis, Missouri 63144
(Address of Principal Executive Offices and Zip Code)
(314) 647-1099
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 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 requirement
for the past 90 days.
Yes X No
Number of shares outstanding of the issuer's Common Stock, par
value $.01 per share, as of September 30, 1998: 3,230,289 shares.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION, Item 1. Page
Financial Statements (Unaudited)
Consolidated Balance Sheets at
September 30, 1998 and December 31, 1997 3
Consolidated Statements of Operations
for Three and Nine Months Ended September 30, 1998
and September 30, 1997 4
Consolidated Statements of Cash Flows for Nine Months
Ended September 30, 1998 and September 30, 1997 5
Notes to Consolidated Financial Statements 6
PART I FINANCIAL INFORMATION, Item 2.
Management's -Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II OTHER INFORMATION 12
SIGNATURES 13
EXHIBITS 14
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Sep 30, Dec 31,
1998 1997
ASSETS
Current Assets:
Cash and cash equivalents $ 5,015 $ 5,277
Investments 395 1,647
Accounts receivable 7,314 10,247
Inventory 1,901 415
Prepaid expenses 993 520
Deferred income taxes 121 137
Total current assets $ 15,739 $ 18,243
Notes receivable-trade 2,919 1,703
Notes receivable-other 845 791
Property and equipment,
net of depreciation 8,553 5,995
Capitalized development costs,
net of amortization 950 3,412
Goodwill, net of amortization 1,205 1,171
Other, net 1,262 1,295
Total assets $ 31,473 $ 32,610
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 388 $ 1,390
Current portion of
long-term debt 329 178
Accrued expenses 1,620 3,216
Deferred revenue 5,852 4,695
Total current liabilities 8,189 9,479
Long-term debt 3,505 3,367
Deferred income taxes 499 855
Shareholders' equity:
Common stock 32 32
Additional paid-in capital 17,742 17,343
Accumulated earnings 1,007 1,198
Accumulated other
comprehensive income 499 336
Total shareholders' equity 19,280 18,909
Total liabilities and
shareholders' equity $ 31,473 $ 32,610
See accompanying notes.
Item 1. Financial Statements (continued)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
Sep 30, Sep 30, Sep 30, Sep 30,
1998 1997 1998 1997
Net sales:
Software licenses $ 2,804 $ 2,972 $ 7,050 $ 6,893
Support 2,054 1,807 5,879 5,336
Accelerated discovery services 386 2,503 2,090 6,298
Hardware 343 1,718 2,281 3,616
Total net sales 5,587 9,000 17,300 22,143
Operating costs and expenses:
Cost of sales 1,329 3,111 4,477 7,810
Sales and marketing 2,511 2,693 7,279 7,367
Research and development 1,580 985 4,377 2,736
General and administrative 936 1,019 2,798 2,407
Total costs and expenses 6,356 7,808 18,931 20,320
Income (loss) from operations (769) 1,192 (1,631) 1,823
Other income, net 877 164 1,332 430
Income (loss) before
income taxes 108 1,356 (299) 2,253
Income tax expense (benefit) 38 514 (108) 856
Net income (loss) $ 70 $ 842 $ (191) $ 1,397
Basic earnings (loss)
per share $ 0.02 $ 0.27 $(0.06) $ 0.46
Diluted earnings (loss)
per share $ 0.02 $ 0.24 $(0.06) $ 0.40
Diluted weighted average
number of shares 3,424 3,508 3,198 3,484
See accompanying notes.
Item 1. Financial Statements (continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands) (Unaudited)
Nine Months Ended
Sep 30, Sep 30,
1998 1997
Cash flows from operating activities
Net income (loss) $ (191) $ 1,397
Adjustments to reconcile net income(loss)
to Net cash provided by operating activities:
Depreciation of property and equipment 594 480
Amortization of capitalized
development costs 2,558 2,203
Deferred income taxes (340) 192
Change in operating assets and liabilities:
Accounts receivable 3,042 538
Notes receivable-trade (1,216) (1,145)
Inventory (1,408) 27
Prepaid expenses and other assets (451) (146)
Accounts payable and accrued expenses (2,917) (278)
Deferred revenue 1,078 751
Net cash provided by operating activities 749 4,019
Cash flows from investing activities:
Net purchases, sales, and
maturities of investments 1,252 1,047
Notes receivable-other (54) (773)
Purchases of property and equipment (3,023) (575)
Capitalized development costs 0 (2,635)
Other (68) (345)
Net cash used in investing activities (1,893) (3,281)
Cash flows from financing activities:
Stock issuance pursuant to stock plans 399 568
Issuance of long-term debt 252 0
Net cash provided by financing activities 651 568
Effect of foreign exchange rate changes
on cash and cash equivalents 231 (119)
Net increase (decrease) in cash and
cash equivalents (262) 1,187
Cash and cash equivalents at
beginning of period 5,277 5,393
Cash and cash equivalents at
end of period $ 5,015 $ 6,580
See accompanying notes.
Item 1. Financial Statements (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of significant accounting policies
(a) Organization
Tripos, Inc. (the "Company") delivers science, tools and
analysis services that advance customers' creativity and productivity
in pharmaceutical, agrochemical, biotechnology and related research
industries worldwide. The Company is also a value-added reseller of
third party hardware products required to operate its software
products. A substantial portion of the Company's business is
conducted with pharmaceutical companies, however, the Company is not
economically dependent on any customer on an ongoing basis.
(b) Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all normal
recurring adjustments necessary for a fair presentation of such
financial statements have been included. Operating results for the
three- and nine-month periods ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1998.
(2) Income taxes
The provision for income taxes is computed using the liability
method. The difference between financial statement and taxable
income results primarily from the use of different methods of
computing capitalized development costs, accrued vacation and
customer deposits.
(3) Recent Pronouncements
As of January 1, 1998, the Company adopted AICPA SOP 97-2,
"Software Revenue Recognition", which was effective for transactions
that the Company entered into in 1998. Prior years were not
restated.
For annual financial reporting beginning January 1, 1998 and for
interim reporting for years beginning January 1, 1999, the Company
will adopt the FASB's Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
("FAS 131"). FAS 131 superseded FASB Statement No. 14, "Financial
Reporting of Segments of a Business Enterprise". FAS 131 establishes
standards for the way that public business enterprises report
information about operating segments in annual financial statements
and requires that those enterprises report selected information
about operating segments in interim financial reports. FAS 131 also
establishes standards for related disclosures about products and
services, geographic areas, and major customers. The adoption of
FAS 131 will not affect results of operations or financial position,
but will require additional enterprise-wide disclosures.
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133"), which is required to be adopted in years
beginning after June 15, 1999. FAS 133 permits early adoption as of
the beginning of any fiscal quarter after its issuance. The Company
expects to adopt the new Statement effective January 1, 2000. FAS
133 will require the Company to recognize all derivatives on the
balance sheet at fair value. The Company has not yet determined what
the effect FAS 133 will be on the earnings and financial position of
the Company.
(4) Comprehensive Income
As of January 1, 1998, the Company adopted Statement 130,
"Reporting Comprehensive Income". Statement 130 establishes new
rules for the reporting and display of comprehensive income and its
components, however, the adoption of this Statement had no impact on
the Company's net income or shareholders' equity. Statement 130
requires foreign currency translation adjustments, which prior to
adoption were reported separately in shareholders' equity to be
included in other comprehensive income. Prior year financial
statements have been reclassified to conform to the requirements of
Statement 130.
The components of comprehensive income, net of related tax, for
the three- and nine-month periods ended September 30, 1998 and 1997
are as follows:
Three Months Ended Nine Months Ended
Sep 30, Sep 30, Sep 30, Sep 30,
1998 1997 1998 1997
Net income (loss) $ 70 $ 514 $ (108) $ 1,397
Foreign currency
translation adjustments 227 (118) 163 (275)
Comprehensive income (loss)$ 297 $ 396 $ 55 $(1,122)
The components of accumulated other comprehensive income, net
of related tax, at September 30, 1998 and December 31, 1997 are as
follows:
1998 1997
Foreign currency translation adjustments $ 499 $ 336
Accumulated other comprehensive income $ 499 $ 336
(5) Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share for the periods ended September 30, 1998 and 1997.
Three Months Nine Months
(In thousands, except per share data) Ended Ended
Sep 30, Sep 30, Sep 30, Sep 30,
1998 1997 1998 1997
Numerator:
Numerator for basic and diluted
earnings (loss) per share $ 70 $ 842 $ (191) $ 1,397
Denominator:
Denominator for basic earnings
(loss)per share -
weighted average shares 3,226 3,104 3,198 3,066
Effect of dilutive securities:
Employee stock options 198 404 0 418
Denominator for diluted earnings
(loss)per share - adjusted
weighted average shares and
assumed conversions 3,424 3,508 3,198 3,484
Basic earnings (loss) per share $ 0.02 $ 0.27 $(0.06) $ 0.46
Diluted earnings (loss) per share $ 0.02 $ 0.24 $(0.06) $ 0.40
The diluted per share denominator for the nine-month period ended
September 30, 1998 excludes incremental shares of 269,585 related
to employee stock options because of their anti-dilutive effect as
a result of the Company's net loss for the period.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Tripos, Inc. is a leader in providing discovery services,
informatics and products for compound research to life science
organizations worldwide.
The Company's quarterly operating results can vary significantly
depending upon such factors as the capital expenditure budgets of its
customers, lengthy sales cycles, customer selection of compounds from
our chemical compound library, market acceptance of new products and
enhanced versions of existing products, the timing of new product
introductions by the Company and other vendors, changes in pricing
policies by the Company and other vendors, and changes in general
economic and competitive conditions. In addition, a substantial
portion of the Company's revenues for each quarter is attributable to
a limited number of orders and tends to be realized towards the end
of each quarter. Thus, even short delays or deferrals of sales near
the end of a quarter can cause quarterly results to fluctuate
substantially. The Company typically experiences greater gross
margins on software licenses, consulting, and compound sales than on
sales of hardware. The Company's profitability depends in part on
the mix of its revenue components and not necessarily on total
revenues.
The Company's initial review of its Year 2000 compliance
position revealed limited exposure. A more detailed review and test
is scheduled to occur in the upcoming quarters. The Company provides
software licenses that are activated and remain active based on the
date and time of the computer where the software resides. The
Company's internally developed products are presently Year 2000
compliant. The Company relies on the hardware suppliers to address
any and all Year 2000 issues and provide letters of compliance to the
Company. The total cost that the Company estimates will be spent to
remediate its Year 2000 issues will not be material and should not
affect future financial results of operations, liquidity or capital
resources. At this time, the Company fully expects to be Year 2000
compliant, however, it will remain dependent on its hardware
suppliers to make Year 2000 compliant equipment available to its
customers.
Except for the historical information and statements contained
in Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A"), the matters and items contained in
this document, including MD&A, contain certain forward-looking
statements that involve uncertainties and risks. The Company's
future results could differ materially from those discussed in this
document. Factors that could cause a contribution to such
differences, include, but are not limited to, those presented in the
Company's Form 10-K for the year ended December 31, 1997.
Results of Operations
Net sales for the third quarter of 1998 were $5.6 million
compared with $9.0 million for the third quarter of 1997. The
overall decrease in net sales for the quarter was attributed to
significant decreases in the software, hardware and Accelerated
Discovery Service lines. Net sales for the first nine months of 1998
were $17.3 million compared to $22.1 million for the same period in
1997. Sales increases in software licenses and support were more
than offset by decreases in hardware and accelerated discovery
service sales during the nine-month period.
For the three months ended September 30, 1998, software licenses
sales decreased 5.6% to $2.8 million. The decrease is due to the
delayed renewal of a large wide-area network sale and the continuing
financial problems in the Pacific Rim. For the first nine months of
1998, software license sales increased 2.3% to $7.1 million compared
to the same period for 1997. Support revenues for the third quarter
of 1998 increased 13.7% to $2.1 million from the same period in 1997.
Support sales increased 10.2% to $5.9 million for the nine-month
period ending September 30, 1998. Accelerated discovery services
("ADS") sales decreased 84.6% to $0.4 million in the third quarter of
1998 and 66.8% to $2.1 million for the nine-months year-to-date. The
decrease in ADS revenue is due to production issues discussed below.
Hardware sales decreased 80.0% to $0.3 million for the third quarter
1998 and is attributable to the occurrence of several large orders in
the third quarter of 1997. For the first nine months of 1998,
hardware sales decreased 36.9% to $2.3 million compared to 1997.
Sales to existing customers represent 84% of total revenues for the
nine-month period. For the same period, sales of new products
represent 12.4% of software license and accelerated discovery service
sales.
In the second quarter of 1998, Tripos introduced its new
LeadQuestT library of compounds. LeadQuest includes compounds from
other third-party suppliers that meet the Company's quality and
diversity thresholds as well as newly designed compounds manufactured
at Tripos Receptor Research. The Company experienced delays,
estimated to be three months, in the design and construction of its
new physical laboratory facilities in England. The first phase of
the laboratory opened late in the third quarter. The delayed
availability of the LeadQuest compounds has had a material impact on
revenues and earnings for 1998, however, orders for LeadQuest
compounds were received at the end of the quarter which created a
backlog of shipments of $0.6 million.
In 1997, in response to a market demand for highly purified
compounds, Tripos and MDS Panlabs invested in state-of-the-art
equipment for the further analysis and purification of the Optiverse
compound library. The companies experienced delays in the
purification process which resulted in a shortage of enhanced
Optiverse compounds available for sale for the first half of 1998.
On March 30, 1998, the Company restructured its agreement with MDS
Panlabs to co-develop and market the OptiverseT library of chemical
compounds. Under the terms of the new agreement, MDS Panlabs would
begin to market the Optiverse library. After June 30, 1998, MDS
Panlabs assumed sole marketing and distribution rights to the
Optiverse compounds. As a result of this shift in their
relationship, MDS Panlabs agreed to make payments to Tripos for these
rights and to pay royalties on future sales of Optiverse. In the
second quarter of 1998, Tripos recognized revenues for its sales of
Optiverse compounds up to June 30th along with an initial payment for
the distribution rights. Tripos was to then recognize royalties from
future sales of Optiverse by MDS Panlabs in the periods in which they
were to occur. During the third quarter, the Company received a very
small royalty payment for sales of Optiverse compounds, thus giving
the Company concern for MDS Panlabs' ability to market the product.
As a result of this concern, the Company has accelerated its write-
down of remaining capitalized costs and the recognition of the
guaranteed income attributable to the transfer of the marketing and
distribution rights. This action eliminates future reliance upon MDS
Panlabs' ability to make sales of Optiverse.
Net sales for the Company's activities outside North America
represented approximately 44.7% of total sales for the first nine
months of 1998 compared to 38.6% for the same period in 1997. Net
sales in Europe increased 2.5% for the first nine months of 1998
compared to 1997 and accounted for 37.5% and 28.6% of total net sales
for the nine-month periods in 1998 and 1997, respectively. Net sales
in the Pacific Rim, principally Japan, accounted for 7.2% and 10.0%
of total net sales for the first nine months of 1998 and 1997,
respectively.
Cost of sales for the quarter ending September 30, 1998
decreased 57.3% to $1.3 million and decreased 42.7% to $4.5 million
for the nine-month period in 1998. These decreases were due to the
decreases in sales of hardware and ADS compounds. Cost of sales as a
percent of net sales was 23.8% and 25.9% for the three- and nine-
month periods in 1998, and 34.6% and 35.3% for the three- and nine-
month periods in 1997, respectively.
Gross profit margin percentage for the third quarter of 1998
increased to 76.2% from 65.4% in 1997. For the first nine months of
1998, gross margin percentage increased to 74.1% from 64.7% for the
same period in 1997. The increase in gross margin percentage is
attributable to a change in the sales mix in that lower margin
revenue sources, specifically hardware and chemical compound sales,
represented a lower percentage of total net sales in 1998 compared to
1997.
Sales and marketing expenses decreased 6.8% to $2.5 million
for the three-month period in 1998 and 1.2% to $7.3 million for the
nine-month period. Sales and marketing expenses as a percentage of
net sales were 44.9% and 42.1% for the three- and nine-month periods
in 1998 as compared to 30.0% and 33.3% for the same periods in 1997.
The increase in the percent to sales, for the three- and nine-month
periods of 1998, is a function of decreased sales.
Research and development costs, including the costs that were
capitalized, were $1.6 million and $2.0 million for the three-month
periods in 1998 and 1997, $4.4 million and $5.7 million for the nine-
month periods, respectively and represented 28.3%, 22.7%, 25.3% and
25.7% of net sales. Research and development expenses, net of
capitalized development costs, represented 28.3% and 10.9% of net
sales for the three-month periods in 1998 and 1997, and 25.3% and
12.4% of net sales for the nine-month periods ending September 30,
1998 and 1997, respectively. These decreases in gross R&D spending
reflect a change in the treatment of compound related costs after the
restructuring of the agreement with MDS/Panlabs. Due to the
specifics of the relationship with MDS/Panlabs, compound costs were
capitalized and amortized. However, compounds produced by the
Company are now reflected in inventory on a unit cost basis. The
increases in R&D expenses reflect the Company's commitment to
investments in new product research such as continued development in
web-based tools, desktop products, diverse compound libraries and
combinatorial chemistry markets. These increases also reflect the
Company's investment in sponsoring drug discovery research with the
Wolfson Institute (formerly the Cruciform Group) at the University
College of London and at Arena Pharmaceuticals, Inc.
General and administrative expenses decreased to $0.9 million
for the third quarter of 1998 compared to $1.0 million in 1997, and
represent 16.8% and 11.3% of net sales for the respective periods.
For the nine-month period, G & A expenses were $2.8 million and $2.4
million in 1998 and 1997, respectively. G&A year-to-date percent to
net sales was 16.2% in 1998 and 10.9% in 1997. The increases in G&A
percent to sales for 1998 relate to the addition of expenses related
to Tripos Receptor Research Ltd. coupled with the decline in sales.
Other income increased from $164,000 for the third quarter in
1997 to $877,000 for the comparable period in 1998. For the first
nine months of 1998, other income was $1.3 million compared to $0.4
million in 1997. This change was due to the addition of interest
expense from the financing of the Company's headquarters acquisition
which was offset by net rental revenues from the building's tenants
and recognition of the guaranteed income from the transfer of the
rights to the Optiverse library from MDS/Panlabs.
Income tax benefit was $108,000 for the nine-month period in
1998 which represents an effective tax rate of 36% compared to
$856,000 of income tax expense at a rate of 38% for the same period
in 1997. The Company's effective tax rate for the nine-months ended
September 30, 1998 reflects a decrease to approximate the expected
effective tax rate for the year ending December 31, 1998.
Liquidity, Capital Resources and Capital Commitments
For the nine-month period ending September 30, 1998, net cash
provided by operations was $0.7 million as a result of a net loss of
$0.2 million, depreciation and amortization of $3.1 million and an
increase in deferred revenue of $1.1 million and a decrease in
accounts receivable of $3.0 million offset by an increase in notes
receivable of $1.2 million, inventory of $1.4 million, prepaid
expenses of $0.5 million and a decrease in accounts payable and
accrued expenses of $2.9 million. For the same period in 1997, net
cash provided by operations was $4.0 million as a result of net
income of $1.4 million, depreciation and amortization of $2.7
million, an increase in accounts receivable of $0.5 million and an
increase in deferred revenue of $0.8 million offset by an increase in
notes receivable of $1.1 million and a decrease in accounts payable
and accrued expenses of $0.3 million. The increase in inventory is
due to the Company's acquisition of third party compounds for
inclusion in the LeadQuest library along with the accumulated costs
of producing compounds at its laboratory in England. Raw materials
($45,000), work-in-process ($30,000) and finished goods ($1,826,000)
make up the total value of the Company's inventory.
Investments of $3.0 million in property and equipment, primarily
at Tripos Receptor Research, were partially offset by a reduction of
$1.2 million in marketable securities, resulting in a use of cash
for investing activities of approximately $1.9 million in the first
three quarters of 1998. Capitalized development costs were
negligible for the first nine months of 1998 as the Company now
expenses software development as incurred due to the shorter amount
of time required to bring new products to market and uses the
inventory accounting method for the new LeadQuestTM library of
compounds. In the prior year, costs of designing and producing the
OptiverseTM compounds were capitalized along with software
development.
The Company believes that current working capital of $7.6
million, together with continued cashflow from operations and the
establishment of a $12 million line of credit with NationsBank, N.A.
in October, 1998, will be adequate to fund liquidity requirements
including investments in research and development, capital purchases,
primarily related to the construction of laboratory facilities at
Tripos Receptor Research in Bude, England, and any other commitments
in the upcoming year.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any material litigation and
is not aware of any threatened material litigation.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
10.14 Loan Agreement between NationsBank, N.A.
and Tripos, Inc.
27 Financial Data Schedule
(b) No reports on Form 8-K were required to be filed
during the period from June 30, 1998 to September 30, 1998.
TRIPOS, INC.
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 hereunto duly authorized.
TRIPOS, INC.
Date: November 10, 1998 John P. McAlister /s/
John P. McAlister
President and
Chief Executive Officer
Date: November 10, 1998 Colleen A. Martin /s/
Colleen A. Martin
Chief Financial Officer, Secretary
Exhibit Index
Exhibit No. Description
10.14 Loan Agreement between NationsBank, N.A. and Tripos, Inc.
27 Financial Data Schedule
Exhibit 10.14
LOAN AGREEMENT
between
NATIONSBANK, N.A.
as Lender
and
TRIPOS, INC.
as Borrower
Effective October 16, 1998
Table of Contents
1. Effective Date.
2. Definitions and Rules of Construction.
2.1. Listed Definitions.
2.2. Other Definitions.
2.3. References to Borrower.
2.4. References to Covered Persons.
2.5. Accounting Terms.
2.6. Meaning of Satisfactory.
2.7. Computation of Time Periods.
2.8. General.
3. Lender's Commitment.
3.1. Revolving Loan Commitment.
3.1.1. Aggregate Amount; Reductions.
3.1.2. Limitation on Revolving Loan Advances.
3.1.3. Revolving Note.
3.2. Letter of Credit Commitment.
4. Interest.
4.1. Interest on Draws on Letters of Credit.
4.2. Interest on Loans; Interest Periods for Eurodollar Loans.
4.3. Increments.
4.4. Conversion of Loans.
4.5. Time of Accrual.
4.6. Computation.
4.7. Rate After Maturity.
5. Fees.
5.1. Commitment Fee.
5.2. Letter of Credit Fees.
5.3. Calculation of Fees.
6. Payments.
6.1. Scheduled Payments on Revolving Loan.
6.1.1. Interest.
6.1.2. Principal.
6.2. Reimbursement Obligations.
6.3. Prepayments.
6.3.1. Mandatory Prepayments When Over-Advances Exist.
6.4. Manner of Payments and Timing of Application of Payments.
6.4.1. Payment Requirement.
6.5. Application of Payments and Proceeds.
6.5.1. Interest Calculation.
6.6. Voluntary Prepayments.
6.7. Returned Instruments.
6.8. Compelled Return of Payments or Proceeds.
6.9. Due Dates Not on Business Days.
7. Procedure for Obtaining Advances and Letters of Credit.
7.1. Initial Advances.
7.2. Revolving Loan Advances.
7.2.1. Borrower Requests.
7.2.2. Lender's Right to Make Other Revolving Loan Advances.
7.2.2.1. Payment of Loan Obligations.
7.2.2.2. Payments to Other Creditors.
7.3. Letters of Credit.
7.4. Disbursement.
7.5. Restrictions on Advances.
7.6. Restriction on Number of Eurodollar Loans.
7.7. Each Advance Request Certification.
7.8. Requirements for Every Advance Request.
7.9. Requirements for Every Request for Issuance of a Letter of Credit.
7.10. Exoneration of Lender.
7.11. Suspension of Obligation to Make Eurodollar Advances.
8. Security and Guaranties.
8.1. Mortgages.
8.2. Security Agreements.
8.3. Collateral Assignments; Grant of Security Interest.
8.4. Pledge Agreements.
8.5. Guaranties.
9. Power of Attorney.
10. Conditions of Lending.
10.1.Conditions to Initial Advance.
10.1.1. Listed Documents and Other Items.
10.1.2. Financial Condition.
10.1.3. Default.
10.1.4. Perfection of Security Interests.
10.1.5. Representations and Warranties.
10.1.6. Material Adverse Change.
10.1.7. Pending Material Proceedings.
10.1.8. Payment of Fees.
10.1.9. Other Items.
10.2. Conditions to Subsequent Advances.
10.2.1. General Conditions.
10.2.2. Representations and Warranties.
10.2.3. Default.
10.2.4. No Material Adverse Change.
11. Conditions to Issuance of Letters of Credit.
11.1. Reimbursement Agreement.
11.2. No Prohibitions.
11.3. Conditions to Initial Advances.
11.4. Representations and Warranties.
11.5. No Default.
11.6. No Material Adverse Change.
12. Representations and Warranties.
12.1. Organization and Existence.
12.2. Authorization.
12.3. Due Execution.
12.4. Enforceability of Obligations.
12.5. Burdensome Obligations.
12.6. Legal Restraints.
12.7. Labor Disputes.
12.8. No Material Proceedings.
12.9. Material Licenses.
12.10. Compliance with Material Laws.
12.10.1. Proceedings.
12.10.2. Hazardous Materials on Real Property.
12.11. Other Names.
12.12. Financial Statements.
12.13. No Change in Condition.
12.14. No Defaults.
12.15. Solvency.
12.16. Encumbrances.
12.17. Real Property.
12.18. Indebtedness.
12.19. Investments.
12.20. Indirect Obligations.
12.21. Capital Leases.
12.22. Tax Liabilities; Governmental Charges.
12.23. Pension Benefit Plans.
12.24. Welfare Benefit Plans.
12.25. Retiree Benefits.
12.26. Distributions.
12.27. Chief Place of Business; Locations of Collateral.
12.28. State of Collateral and other Property.
12.28.1. Accounts.
12.28.2. Inventory.
12.28.3. Equipment.
12.28.4. Intellectual Property.
12.28.5. Documents, Instruments and Chattel Paper.
12.29. Negative Pledges.
12.30. Margin Stock.
12.31. Securities Matters.
12.32. Investment Company Act, Etc.
12.33. No Material Misstatements or Omissions.
12.34. Year 2000 Compliance.
13. Survival.
14. Affirmative Covenants.
14.1. Use of Proceeds.
14.2. Corporate Existence.
14.3. Maintenance of Property and Leases.
14.4. Inventory.
14.5. Insurance.
14.6. Payment of Taxes and Other Obligations.
14.7. Compliance With Laws.
14.8. Discovery and Clean-Up of Hazardous Material.
14.9. Termination of Pension Benefit Plan.
14.10. Notice to Lender of Material Events.
14.11. Borrowing Officer.
14.12. Maintenance of Security Interests of Security Documents.
14.12.1. Preservation and Perfection of Security Interests.
14.12.2. Collateral Held by Warehouseman, Bailee, etc.
14.12.3. Compliance With Terms of Security Documents.
14.13. Accounting System; Tracing of Proceeds.
14.14. Financial Statements.
14.14.1. Annual Financial Statements.
14.14.2. Quarterly Financial Statements.
14.15. Other Financial Information.
14.15.1. Other Reports or Information Concerning Accounts,
or Inventory.
14.15.2. Stockholder and SEC Reports.
14.15.3. Pension Benefit Plan Reports.
14.15.4. Tax Returns.
14.16. Review of Accounts.
14.17. Inventory.
14.18. Annual Projections.
14.19. Other Information.
14.20. Exams by Lender.
14.21. Verification of Accounts, and Notices to Account Debtors.
14.22. Access to Officers and Auditors.
14.23. Intercompany Indebtedness.
14.24. Year 2000 Compliance.
14.25. Further Assurances.
15. Negative Covenants.
15.1. Investments.
15.2. Indebtedness.
15.3. Security Interests.
15.4. Capital Leases.
15.5. Change of Control.
15.6. Distributions.
15.7. Indirect Obligations.
15.8. Capital Structure; Equity Securities.
15.9. Change of Business.
15.10. Transactions With Affiliates.
15.11. Cash Transfers.
15.12. No Default on Indebtedness or Material Agreements.
15.13. Conflicting Agreements.
15.14. Fiscal Year.
15.15. New Subsidiaries.
15.16. Transactions Having a Material Adverse Effect or
Causing a Default.
15.17. Disposal of Property.
15.18. Intellectual Property.
15.19. Acquisitions.
16. Financial Covenants.
16.1. Special Definitions.
16.2. Maximum Leverage.
16.3. Minimum Current Ratio.
16.4. Minimum Fixed Charge Coverage Ratio.
16.5. Minimum EBITDA.
16.6. Maximum Capital Expenditures.
17. Default.
17.1. Events of Default.
17.1.1. Failure to Pay Principal or Interest.
17.1.2. Failure to Pay Other Amounts Owed to Lender.
17.1.3. Failure to Pay Amounts Owed to Other Persons.
17.1.4. Representations or Warranties.
17.1.5. Certain Covenants.
17.1.6. Other Covenants.
17.1.7. Acceleration of Other Indebtedness.
17.1.8. Default Under Other Agreements.
17.1.9. Default Under Tripos Realty NationsBank Indebtedness.
17.1.10. Bankruptcy; Insolvency; Etc.
17.1.11. Judgments; Attachment; Settlement; Etc.
17.1.12. Pension Benefit Plan Termination, Etc.
17.1.13. Liquidation or Dissolution.
17.1.14. Seizure of Assets.
17.1.15. Loan Documents; Security Interests.
17.1.16. Loss to Collateral.
17.1.17. Cross-Default.
17.1.18. Material Adverse Change.
17.1.19. Guaranty Default.
17.2. Rights and Remedies in the Event of Default.
17.2.1. Termination of Commitments.
17.2.2. Acceleration.
17.2.3. Right of Set-off.
17.2.4. Notice to Account Debtors.
17.2.5. Entry Upon Premises and Access to Information.
17.2.6. Borrower's Obligations.
17.2.7. Secured Party Rights.
17.2.8. Miscellaneous.
17.2.9. Application of Funds.
17.3. Limitation of Liability; Waiver.
17.4. Notice.
18. Changes in Circumstances.
18.1. Compensation for Increased Costs and Reduced Returns;
Capital Adequacy.
18.1.1. Increased Costs or Reduced Returns to Lender.
18.1.2. Capital Adequacy.
18.1.3. Notice to Borrower.
18.2. Limitations on Eurodollar Loans.
18.2.1. Market Failure.
18.2.2. Inadequate Reflection of Cost.
18.3. Illegality.
18.4. Compensation.
18.4.1. Early Payment.
18.4.2. Failure to Take Advances.
18.5. Treatment of Affected Revolving Loans.
18.5.1. Payments.
18.5.2. Prime Rate.
19. Taxes.
19.1. Gross-Up.
19.2. Lender's Undertaking.
20. Usury Limitations.
21. General.
21.1. Lender's Right to Cure.
21.2. Rights Not Exclusive.
21.3. Survival of Agreements.
21.4. Payment of Expenses.
21.5. General Indemnity.
21.6. Letters of Credit.
21.7. Changes in Accounting Principles.
21.8. Other Security.
21.9. Loan Records.
21.10. Loan Obligations Payable in Dollars.
21.11. Other Security and Guaranties.
22. Miscellaneous.
22.1. Notices.
22.2. Confidentiality.
22.3. Amendments, Waivers and Consents.
22.4. Rights Cumulative.
22.5. Successors and Assigns.
22.6. Severability.
22.7. Counterparts.
22.8. Governing Law; No Third Party Rights.
22.9. Counterpart Facsimile Execution.
22.10. No Other Agreements.
22.11. Negotiated Transaction.
22.13. Acknowledgment of Licensing Arrangements.
22.14. CHOICE OF FORUM.
22.15. SERVICE OF PROCESS.
22.16. JURY TRIAL.
22.17. Incorporation By Reference.
22.18. Statutory Notice.
22.19. Statutory Notice-Insurance.
IV. Fixed Charge Coverage (Section 16.4)
V. Minimum EBITDA (Section 16.5)
LOAN AGREEMENT
In consideration of the mutual agreements herein and other
sufficient consideration, the receipt of which is hereby
acknowledged, Tripos, Inc., a Utah corporation ("Borrower") and
NationsBank, N.A. ("Lender") agree as follows:
1. Effective Date.
This Agreement is effective October 16, 1998.
2. Definitions and Rules of Construction.
2.1. Listed Definitions.
Capitalized words defined in the Glossary and Index of Defined
Terms attached hereto as Exhibit 2.1 shall have such defined
meanings wherever used in this Agreement and the other Loan
Documents.
2.2. Other Definitions.
If a capitalized word in this Agreement is not defined in the
Glossary and Index of Defined Terms, it shall have such meaning as
defined elsewhere herein, or if not defined elsewhere herein, the
meaning defined in the UCC.
2.3. References to Borrower.
The word "Borrower" refers to Tripos, Inc., a Utah corporation.
2.4. References to Covered Persons.
The words "Covered Person", "a Covered Person", "any Covered
Person", "each Covered Person", and "every Covered Person" refer to
Borrower and each of its direct and indirect Subsidiaries
separately, including, without limitation, Tripos Realty, LLC,
Tripos UK Holdings Limited, Tripos UK Limited, Tripos Receptor
Research Limited, Tripos SARL, and Tripos GmbH. The words "Covered
Persons" refer to Borrower and its Subsidiaries collectively.
2.5. Accounting Terms.
Unless the context otherwise requires, accounting terms herein that
are not defined herein shall be determined under GAAP. All
financial measurements contemplated hereunder respecting Borrower
shall be made and calculated for Borrower and all of its now
existing or later acquired, created or organized subsidiaries, on a
consolidated basis in accordance with GAAP unless expressly
provided otherwise herein.
2.6. Meaning of Satisfactory.
Whenever herein a document or matter is required to be satisfactory
to Lender, unless expressly stated otherwise such document must be
satisfactory to Lender in both form and substance in its
commercially reasonable discretion, and unless expressly stated
otherwise, Lender shall have the commercially reasonable discretion
to determine whether the document or matter is satisfactory. The
right to exercise such discretion is absolute.
2.7. Computation of Time Periods.
In computing or defining periods of time from a specified date to a
later specified date, and in computing the accrual of interest or
fees, the word from shall mean from and including and the words to
and until shall each mean to but excluding. Periods of days
referred to in this Agreement shall be counted in calendar days
unless Business Days are expressly prescribed, and references in
this Agreement to months and years are to calendar months and
calendar years unless otherwise specified.
2.8. General.
Unless the context of this Agreement clearly requires otherwise:
(i) references to the plural include the singular and vice versa;
(ii) references to any Person include such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement; (iii) references to one gender
include all genders; (iv) including is not limiting; (v) or has
the inclusive meaning represented by the phrase and/or; (vi) the
words hereof, herein, hereby, hereunder and similar terms in this
Agreement refer to this Agreement as a whole, including its
Exhibits, and not to any particular provision of this Agreement;
(vii) the word Section or section and Page or page refer to a
section or page, respectively, of, and the word Exhibit refers to
an Exhibit to, this Agreement unless it expressly refers to
something else; (viii) reference to any agreement, document, or
instrument (including this Agreement and any other Loan Document or
other agreement, document or instrument defined herein), means such
agreement, document, or instrument as amended, modified, restated
or replaced and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof, and includes
all attachments thereto and documents incorporated therein, if any;
and (ix) general and specific references to any Law means such Law
as amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time. Section captions and the Table of
Contents are for convenience only and shall not affect the
interpretation or construction of this Agreement or the other Loan
Documents.
3. Lender's Commitment.
Subject to the terms and conditions hereof, and in reliance upon
the representations and warranties of Borrower herein, and the
representations and warranties of Guarantors in their Guaranty,
Lender makes the following commitment to Borrower:
3.1. Revolving Loan Commitment.
3.1.1. Aggregate Amount; Reductions.
Subject to the limitations in Section 3.1.2 and elsewhere
herein, Lender commits to make available to Borrower, from the
Effective Date to the Revolving Loan Maturity Date a
"Revolving Loan Commitment" of $12,000,000 by funding
Revolving Loan Advances made from time to time by Lender as
provided herein to accounts at Lender. Subject to the
limitations in Section 3.1.2 and elsewhere herein, payments
and prepayments that are applied to reduce the Revolving Loan
may be reborrowed through Revolving Loan Advances. The
Revolving Loan Commitment will reduce automatically to a
lesser Dollar amount on certain dates as listed in the table
below.
Effective Date Reduction New Revolving Loan
of Reduction Commitment
October 16, 2001 $3,000,000 $9,000,000
October 16, 2002v $3,000,000 $6,000,000
Borrower may also reduce the amount of the Revolving Loan
Commitment in whole multiples of $100,000 at any time and from
time to time, but only if (i) Borrower gives Lender written
notice of Borrower's intention to make such reduction at least
three Business Days prior to the effective date of the
reduction, and (ii) Borrower makes on the effective date of
the reduction any payment on the Revolving Loan required under
Section 6.3.1 as a consequence of the reduction. Any such
reduction of the amount of the Revolving Loan Commitment,
whether scheduled or voluntary, shall be permanent.
3.1.2. Limitation on Revolving Loan Advances.
No Revolving Loan Advance will be made which would result in
the Revolving Loan exceeding the Maximum Available Amount and
no Revolving Loan Advance will be made on or after the
Revolving Loan Maturity Date. Lender may, however, in its
absolute discretion make Revolving Loan Advances exceeding the
Maximum Available Amount, but shall not be deemed by doing so
to have increased the Maximum Available Amount and shall not
be obligated to make any such Revolving Loan Advances
thereafter. The "Maximum Available Amount" on any date shall
be a Dollar amount equal to the Revolving Loan Commitment on
such date minus the Letter of Credit Exposure on such date
(except to the extent that such Revolving Advance will be used
immediately to reimburse Lender for unreimbursed draws on a
Letter of Credit. At any time that there is an Existing
Default, the Revolving Loan Commitment may be canceled as
provided in Section 17.2 0.
3.1.3. Revolving Note.
The obligation of Borrower to repay Lender's Revolving Loan
shall be evidenced by a promissory note payable to the order
of Lender in a maximum principal amount equal to the amount of
the Revolving Loan Commitment and otherwise satisfactory to
Lender.
3.2. Letter of Credit Commitment.
Lender commits to issue commercial and standby letters of credit
for the account of Borrower from time to time from the Effective
Date to the Revolving Loan Maturity Date, but only in connection
with transactions satisfactory to Lender and only if the Letter of
Credit Exposure will not as a result of such issuance exceed the
lesser of (i) $2,500,000 and (ii) any excess of the Maximum
Available Amount over the Aggregate Revolving Loan. The expiration
date of any Letter of Credit will not be more than one year after
its issuance date and in no event will be later than the Revolving
Loan Maturity Date unless Borrower deposits with Lender cash
collateral satisfactory to Lender to secure reimbursement by
Borrower of all amounts drawn on such Letter of Credit and all
applicable fees.
4. Interest.
4.1. Interest on Draws on Letters of Credit.
Borrower shall pay interest on the unreimbursed amount of each draw
on a Letter of Credit at a rate per annum equal to the Prime Rate.
4.2. Interest on Loans; Interest Periods for Eurodollar Loans.
Borrower may, as provided herein, designate each Advance or part of
an Advance to be either a Prime Rate Advance or a Eurodollar
Advance; provided, however, during the existence of an Existing
Default, Borrower may not designate an Advance or part of an
Advance as a Eurodollar Advance. Each Prime Rate Advance when made
will become a Prime Rate Loan, which shall bear interest at the
Prime Rate (which will fluctuate as described in Section 4.6) plus
the Prime Increment (determined from time to time as provided in
Section 4.3). Each Eurodollar Advance when made will become a
Eurodollar Loan, which shall bear interest at the Adjusted
Eurodollar Rate. The "Adjusted Eurodollar Rate" for any Eurodollar
Loan is the Adjusted Eurodollar Base Rate (which shall be
determined before the beginning of the applicable Interest Period
as provided herein and shall apply throughout such Interest Period)
plus the applicable Eurodollar Increment (as defined below)
determined from time to time as provided in Section 4.3. Borrower
may also, as provided herein, convert some or all of a Prime Rate
Loan into a Eurodollar Loan, and some or all of a Eurodollar Loan
into a Prime Rate Loan. Borrower shall select an Interest Period
for each Eurodollar Loan. Each Interest Period shall be either
one, two, three, or six months; provided that (i) every such
Interest Period shall commence on the date of the Advance; (ii) if
any Interest Period would otherwise expire on a day of a calendar
month which is not a Business Day, then such Interest Period shall
expire on the next succeeding Business Day in that calendar month;
provided, however, that if the next succeeding Business Day would
be in the following calendar month, it shall expire on the first
preceding Business Day; (iii) any Interest Period that begins on
the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day
of a calendar month; and (iv) no Interest Period shall extend
beyond the Revolving Loan Maturity Date. A Eurodollar Loan shall
bear interest at the Adjusted Eurodollar Rate throughout the
applicable Interest Period designated by Borrower.
4.3. Increments.
The initial applicable Prime Increment and Eurodollar Increment
shall be determined on the Effective Date in accordance with the
table below based on the ratio of (i) the Total Funded Indebtedness
of Borrower to (ii) the EBITDA of Borrower for the twelve month
period ended June 30, 1998. Thereafter, the applicable Prime
Increment and Eurodollar Increment shall be determined quarterly,
beginning with Borrower's fiscal quarter ended September 30, 1998
in accordance with the table below, based on the ratio of
Borrower's Total Funded Indebtedness to Borrower's EBITDA, as
reflected in the consolidated Financial Statements of Borrower for
the fiscal quarter most recently ended, for the twelve month period
then ended:
Ratio of Total Funded Prime Eurodollar
Indebtedness to Increment Increment
EBITDA (%) (%)
Greater than or 0% +1.75%
equal to 1.75 to 1.00
Greater than or 0% +1.50%
equal to 1.50 to
1.00 and less than
1.75 to 1.00
Less than 1.50 to 1.00 0% +1.25%
Any change in the Prime Increment and Eurodollar Increment shall
become applicable on the fifth Business Day following the day when
Borrower delivers its Financial Statements for the fiscal quarter
most recently ended to Lender as required in Section 14.14.2. The
foregoing notwithstanding, any change in the Eurodollar Increment
shall not become applicable to any Eurodollar Loan until and unless
it is renewed as a Eurodollar Loan.
4.4. Conversion of Loans.
Borrower may (i) at any time convert some or all of a Prime Rate
Loan to a Eurodollar Loan, or (ii) at the end of any Interest
Period of a Eurodollar Loan, continue the Loan as a Eurodollar Loan
for an additional Interest Period or convert some or all of such
Eurodollar Loan to a Prime Rate Loan. To cause any conversion or
continuation, Borrower shall give Lender, prior to 11:00 a.m. St.
Louis time at least two Business Days prior to the date the
conversion or continuation is to be effective, a written request
(which may be mailed, personally delivered or telecopied as
provided in Section 22.1) or an oral request (which must be
confirmed by facsimile on such date) (a) specifying whether a
conversion or continuation is requested, (b) in the case of a
conversion, specifying the amount to be converted and whether it is
to be a Eurodollar Loan or a Prime Rate Loan upon the conversion,
and (c) in the case of any conversion to or continuation of a
Eurodollar Loan, specifying the Interest Period therefor. If such
notice is not given by 11:00 a.m. St. Louis time on the second
Business Day preceding the last day of the Interest Period of a
Eurodollar Loan, then Borrower shall be deemed to have timely given
a notice to Lender requesting to convert all of such Eurodollar
Loan to a Prime Rate Loan. In the case of a Eurodollar Loan, any
conversion or continuation shall become effective only on the day
following the last day of the current Interest Period.
4.5. Time of Accrual.
Interest shall accrue on all principal amounts outstanding from the
date when first outstanding to the date when no longer outstanding.
Amounts shall be deemed outstanding until payments are applied
thereto as provided herein.
4.6. Computation.
Interest shall be computed for the actual days elapsed over a year
deemed to consist of 360 days. Interest rates that are based on
the Prime Rate shall change simultaneously with any change in the
Prime Rate and shall be effective for the entire day on which such
change becomes effective. The Prime Rate will be determined by
Lender before the initial Advance on the Effective Date and on each
Business Day thereafter when the Prime Rate changes.
4.7. Rate After Maturity.
Borrower shall pay interest on the Loans after their Maturity, and
(at the option of Lender on the Loans and on the other Loan
Obligations) upon the occurrence and during the continuance of an
Event of Default, at a rate per annum of three percent (3%) plus
the interest rate otherwise in effect hereunder.
5. Fees.
5.1. Commitment Fee.
Borrower shall pay to Lender a "Commitment Fee" calculated by
applying the daily equivalent of the applicable per annum
"Commitment Fee Percentage" from the table below (based on the
ratio of Borrower's Total Funded Indebtedness to Borrower's EBITDA,
as reflected in the consolidated Financial Statements of Borrower
for the fiscal quarter most recently ended, for the twelve month
period then ended) to the Unused Revolving Commitment on each day
during the period from the Effective Date to the Maturity Date.
The "Unused Revolving Commitment" on any day shall be the amount of
the Revolving Loan Commitment minus the sum of the Aggregate
Revolving Loan and the Letter of Credit Exposure. The Commitment
Fee shall be payable quarterly in arrears, commencing on the first
day of the first calendar quarter beginning after the Effective
Date and continuing on the first day of each calendar quarter
thereafter and on the Maturity Date. Any change in the Commitment
Fee Percentage shall become applicable on the fifth Business Day
following the day when Borrower delivers its Financial Statements
for the fiscal quarter most recently ended to Lender as required in
Section 14.14.2.
Ratio of Total Funded Commitment fee
Indebtedness to EBITDA Percentage
Greater than or equal to 1.75 to 1.00 .375%
Greater than or equal to 1.50 .250%
to 1.00 and less than 1.75 to 1.00
Less than 1.50 to 1.00 .125%
5.2. Letter of Credit Fees.
Borrower shall pay to Lender a "Letter of Credit Fee" for each
Letter of Credit issued by Lender. The Letter of Credit Fee for
each standby Letter of Credit shall be calculated by applying the
daily equivalent of the per annum Eurodollar Increment in effect on
the date of issuance of such Letter of Credit to the undrawn amount
available under such Letter of Credit as of each day commencing
when such Letter of Credit is issued by Lender. The Letter of
Credit Fee for each documentary Letter of Credit shall be
calculated by applying the daily equivalent of the per annum
Commitment Fee Percentage in effect on the date of issuance of such
Letter of Credit to the undrawn amount available under such Letter
of Credit as of each day commencing when such Letter of Credit is
issued by Lender. Borrower shall also pay to Lender a "Fronting
Fee" equal to .125% of the undrawn amount available under each
Letter of Credit issued by Lender as of its issuance date, and
Lender's other customary, nominal fees for issuance, amendment, or
renewal of a Letter of Credit and, as Lender and Borrower may agree
with respect to each Letter of Credit, for each negotiation of a
draft drawn under such Letter of Credit. The Letter of Credit Fee
due for any Letter of Credit shall be payable quarterly in arrears
beginning on the first day of the first calendar quarter after the
date such Letter of Credit is issued and continuing on the first
day of each calendar quarter thereafter while such Letter of Credit
is outstanding. The Fronting Fee due for any Letter of credit
shall be payable in advance, commencing on the issuance date of
such Letter of Credit. Lender's customary fees for processing
draws on Letters of Credit and the like shall be payable in
accordance with Lender's practice at the time.
5.3. Calculation of Fees.
All of the foregoing fees and all other fees payable to Lender that
are based on an annual percentage shall be calculated on the basis
of a year deemed to consist of 360 days and for the actual number
of days elapsed, and in accordance with Section 2.7.
6. Payments.
6.1. Scheduled Payments on Revolving Loan.
6.1.1. Interest.
Borrower shall pay interest accrued on each Prime Rate Loan
included in the Revolving Loan quarterly in arrears beginning
on the first day of the first full calendar quarter following
the Effective Date and continuing on the first day of each
calendar quarter thereafter, and on the Revolving Loan
Maturity Date. Borrower shall pay interest accrued on each
Eurodollar Loan included in the Revolving Loan at the end of
its Interest Period. Borrower shall pay interest accrued on
each Revolving Loan after the Revolving Loan Maturity Date on
demand.
6.1.2. Principal.
Borrower shall repay the entire amount of the Revolving Loan
on the Revolving Loan Maturity Date.
6.2. Reimbursement Obligations.
Borrower hereby unconditionally agrees to immediately pay to Lender
on demand at the Lending Office all amounts required to pay all
drafts drawn under all Letters of Credit issued for the account of
Borrower and all reasonable expenses incurred by Lender in
connection with such Letters of Credit and, in any event and
without demand, to remit to Lender (which may be through obtaining
Advances if permitted under Section 3.1.2) sufficient funds to pay
all Obligations arising under any Letter of Credit issued for the
account of Borrower. Borrower agrees to comply with all provisions
of any Letter of Credit application and reimbursement agreement,
and each application and reimbursement agreement shall be deemed to
be a "Loan Document" hereunder.
6.3. Prepayments.
6.3.1. Mandatory Prepayments When Over-Advances Exist.
If at any time the Revolving Loan exceeds the Maximum
Available Amount, whether as a result of optional Revolving
Loan Advances by Lender as contemplated by Section 3.1.2,
reductions in the Revolving Loan Commitment, or otherwise,
Borrower shall immediately make a payment in the amount of
such excess to Lender and the failure to make any such payment
shall be an Event of Default. Each such prepayment will be
applied by Lender first to reduce the Prime Rate Loans that
are included in the Revolving Loan until they are reduced to
zero, and then to reduce the Eurodollar Loans that are
included in the Revolving Loan.
6.4. Manner of Payments and Timing of Application of Payments.
6.4.1. Payment Requirement.
Borrower shall make each payment on the Loan Obligations to
Lender for the account of Lender as required hereunder and
under the other Loan Documents at the Lending Office on the
date when due, without deduction, set-off or counterclaim.
All payments on the Loan Obligations shall be by wire transfer
or direct debit to accounts maintained by Borrower at Lender.
6.5. Application of Payments and Proceeds.
All payments received by Lender in immediately available funds at
or before 1:00 p.m. (St. Louis time) on a Business Day will be
applied to the relevant Loan Obligation on the same day. Such
payments received on a day that is not a Business Day or after 1:00
p.m. on a Business Day will be applied to the relevant Loan
Obligation on the next Business Day. Except as expressly provided
otherwise herein, Lender may apply, and reverse and reapply,
payments and proceeds of the Collateral to the Loan Obligations in
such order and manner as Lender determines in its absolute
discretion absent specific instructions by Borrower. Borrower
hereby irrevocably waives the right to direct the application of
payments and proceeds of Collateral so long as there is any
Existing Default. All payments and prepayments shall be deemed
made on Prime Rate Loans that are included in the Revolving Loan,
and then to the Eurodollar Loans included in the Revolving Loan;
provided, however, that payments received on the last day of any
Interest Period shall first be applied to the Eurodollar Loans with
an Interest Period ending on such date until such Loans are paid in
full, and then to the Prime Rate Loans included in the Revolving
Loan.
6.5.1. Interest Calculation.
Section 6.5 notwithstanding, for purposes of interest
calculation only (i) a payment in cash, by wire transfer, or
by ACH transfer, received at or before 1:00 p.m. (St. Louis
time) on a Business Day shall be deemed to have been applied
to the relevant Loan Obligation on the Business Day when it is
received, and (ii) a payment in cash, by wire transfer or by
ACH transfer, received on a day that is not a Business Day or
after 1:00 p.m. (St. Louis time) on a Business Day shall be
deemed to have been applied to the relevant Loan Obligation on
the next Business Day.
6.6. Voluntary Prepayments.
Borrower shall not be entitled to prepay any Eurodollar Loan
(except at the end of the applicable Interest Period). Borrower
may wholly prepay any Prime Rate Loan that is included in the
Revolving Loan at any time and may make a partial prepayment
thereon from time to time, without penalty or premium.
6.7. Returned Instruments.
If a payment is made by check, draft or other instrument and the
check, draft or other instrument is returned unpaid, any
application of the payment to the Loan Obligations will be reversed
and will be treated as never having been made.
6.8. Compelled Return of Payments or Proceeds.
If Lender is for any reason compelled to surrender any payment or
any proceeds of Collateral because such payment or the application
of such proceeds is for any reason invalidated, declared
fraudulent, set aside, or determined to be void or voidable as a
preference, an impermissible setoff, or a diversion of trust funds,
then this Agreement and the Loan Obligations to which such payment
or proceeds was applied or intended to be applied shall be revived
as if such application was never made; and Borrower shall be liable
to pay to Lender, and shall indemnify Lender for and hold Lender
harmless from any loss with respect to, the amount of such payment
or proceeds surrendered. This Section shall be effective
notwithstanding any contrary action that Lender may take in
reliance upon its receipt of any such payment or proceeds. Any
such contrary action so taken by Lender shall be without prejudice
to Lender's rights under this Agreement and shall be deemed to have
been conditioned upon the application of such payment or proceeds
having become final and indefeasible. The provisions of this
Section shall survive termination of the Commitments, the
expiration of all Letters of Credit, and the payment and
satisfaction of all of the Loan Obligations.
6.9. Due Dates Not on Business Days.
If any payment required hereunder becomes due on a date that is not
a Business Day, then such due date shall be deemed automatically
extended to the next Business Day.
7. Procedure for Obtaining Advances and Letters of Credit.
7.1. Initial Advances.
Lender will fund and make the initial Revolving Loan Advance on the
Effective Date if directed by Borrower in a written direction
delivered to Lender. The manner of disbursement shall be subject
to Lender's approval.
7.2. Revolving Loan Advances.
7.2.1. Borrower Requests.
Borrower may request a Revolving Loan Advance at any time, but
not more often than once each Business Day, by submitting a
request therefor to Lender as provided in Section 7.8. Every
request for a Revolving Loan Advance shall be irrevocable. A
request for an Advance received by Lender on a day that is not
a Business Day or that is received by Lender after 11:00 a.m.
(St. Louis time) on a Business Day shall be treated as having
been received by Lender at 11:00 a.m. (St. Louis time) on the
next Business Day. All Advances shall be funded to Borrower's
account at Lender.
7.2.2. Lender's Right to Make Other Revolving Loan Advances.
7.2.2.1. Payment of Loan Obligations.
Lender shall have the right to make Revolving Loan
Advances at any time and from time to time to cause
timely payment of any of the Loan Obligations or any
other amounts required to be paid by Borrower hereunder
or under any of the other Loan Documents. Lender may
select the Advance Date for any such Revolving Loan
Advance, but such Advance Date may only be a Business
Day. Lender will use reasonable efforts to give notice
to Borrower after any such Revolving Loan Advance is made
(but shall have no liability for failing to give such
notice). Any such Revolving Loan Advance will be a Prime
Rate Advance.
7.2.2.2. Payments to Other Creditors.
If Lender becomes obligated to reimburse or pay to any
creditor of Borrower any amount in order to (i) obtain a
release of such creditor's Security Interest in any of
the Collateral, or (ii) otherwise satisfy an Obligation
of Borrower to such creditor to the extent not
indefeasibly satisfied by the initial Advances, then
Lender shall have the right to make Revolving Loan
Advances for that purpose. Lender may select the Advance
Date for any such Advance, but such Advance Date may only
be a Business Day. Lender will use reasonable efforts to
give notice to Borrower prior to such Revolving Loan
Advance being made (but shall have no liability for
failure to give such notice) and will give notice to
Borrower after any such Revolving Loan Advance is made.
Any such Revolving Loan Advance will be a Prime Rate
Advance.
7.3. Letters of Credit.
Borrower may request the issuance of a Letter of Credit by
submitting an issuance request to Lender that meets the
requirements of Section 7.9 and executing the reimbursement
agreement required under Section 11.1 no less than five Business
Days prior to the requested issue date for such Letter of Credit.
7.4. Disbursement.
Provided that all conditions precedent herein to a requested
Advance have been satisfied, Lender will make the amount of such
requested Advance available to Borrower on the applicable Advance
Date in immediately available funds in Dollars at the Lending
Office.
7.5. Restrictions on Advances.
No Prime Rate Advance will be made unless it is a whole multiple of
$100,000 and not less than $100,000. No Eurodollar Advance will be
made unless it is a whole multiple of $250,000 and not less than
$250,000. No more than one Revolving Loan Advance (which may
include a portion which is a Eurodollar Loan and a portion which is
a Prime Rate Loan) will be made on any one day pursuant to a
request for a Revolving Loan Advance although a second Revolving
Loan Advance on a given day may be made for a Prime Rate Loan
pursuant to a request for a Revolving Loan Advance that was made on
a different day than the other request. Advances will only be made
for the purposes permitted in Section 14.1.
7.6. Restriction on Number of Eurodollar Loans.
No more than six (6) Eurodollar Loans may be outstanding at any one
time.
7.7. Each Advance Request Certification.
Each submittal of a request for an Advance by a Borrowing Officer
shall constitute a certification by Borrower that (i) there is no
Existing Default, (ii) all representations and warranties of
Borrower in this Agreement and the other Loan Documents are then
true, with such exceptions as have been disclosed to Lender in
writing by Borrower as addenda to the Disclosure Schedule which are
satisfactory to Lender, and will be true on the Advance Date or
issuance date, as applicable, as if then made with such exceptions
and except that with respect to the representations and warranties
made regarding Financial Statements or financial data, such
representations and warranties shall be deemed made with respect to
the most recent Financial Statements and other financial data
delivered by Borrower, and (iii) all conditions precedent hereunder
to the making of the requested Advance shall have been satisfied.
7.8. Requirements for Every Advance Request.
Only a request (which shall be in writing and mailed, personally
delivered or telecopied as provided in Section 22.1; or if oral,
which shall be confirmed in writing via facsimile on the date of
such request) in the form of Exhibit 7.8 from a Borrowing Officer
to Lender that specifies the amount of the Advance to be made, the
Advance Date for the requested Advance, the portion of the Advance
which is requested to be a Eurodollar Advance, the portion of the
Advance which is requested to be a Prime Rate Advance, and the
Interest Period to be applicable to the Eurodollar Loan that will
result from a requested Eurodollar Advance, shall be treated as a
request for an Advance. No Advance Date for any requested Advance
may be other than a Business Day. A request for a Eurodollar
Advance must be given prior to 11:00 a.m., St. Louis time, at least
two Business Days prior to the Advance Date for such Eurodollar
Advance. A request for a Prime Rate Advance must be given prior to
11:00 a.m., St. Louis time, on the Advance Date for such Prime Rate
Advance.
7.9. Requirements for Every Request for Issuance of a Letter
of Credit.
Only a written request from a Borrowing Officer to Lender that
specifies the amount, the requested issue date and the beneficiary
of the requested Letter of Credit and other information necessary
for its issuance shall be treated as an issuance request for the
purposes hereof.
7.10. Exoneration of Lender.
Lender shall not incur any liability to Borrower for treating a
request that meets the express requirements of Section 7.8 as a
request for an Advance or a request for issuance of a Letter of
Credit, as applicable, if Lender believes in good faith that the
Person making the request is a Borrowing Officer. Lender shall not
incur any liability to Borrower for failing to treat any such
request as a request for an Advance or a request for issuance of a
Letter of Credit, as applicable, if Lender believes in good faith
that the Person making the request is not a Borrowing Officer.
7.11. Suspension of Obligation to Make Eurodollar Advances.
If (i) on any date for determining the Eurodollar Rate for any
Interest Period, by reason of any changes arising after the
Execution Date affecting the London Interbank Market or Lender's
position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for
in the definition herein of Eurodollar Rate, or (ii) the making of
any Advance which is to be a Eurodollar Advance or the continuance
by Lender of any Eurodollar Loan has become unlawful by compliance
by Lender in good faith with any Law or any pronouncement of a
Governmental Authority (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful), then
Lender shall promptly give notice to Borrower of such
determination. Until Lender notifies Borrower that the
circumstances giving rise to the suspension described herein no
longer exist, (a) the obligation of Lender to fund Eurodollar
Advances shall be suspended, (b) each outstanding Eurodollar Loan
shall be automatically converted into a Prime Rate Loan, on the
earlier of the last day of the Interest Period for such Eurodollar
Loan or the last date permitted by applicable Law, and (c) all
Revolving Loan Advances shall be Prime Rate Advances.
Notwithstanding anything to the contrary contained herein, if any
part of a Eurodollar Loan is converted to a Prime Rate Loan
pursuant to this Section 7.11, the per annum interest rate
applicable thereto from and after the effective date of such
conversion shall be the Prime Rate (but otherwise calculated as
provided in Section 4).
8. Security and Guaranties.
To secure the payment and performance of the Loan Obligations,
Borrower shall on the Execution Date execute and deliver, or cause
to be executed and delivered, to Lender the following documents
from time to time, each satisfactory to Lender:
8.1. Mortgages.
An amendment to the Deed of Trust previously executed by Tripos
Realty, LLC providing that such Deed of Trust secures all of the
Loan Obligations of Borrower, satisfactory to Lender and providing
that Lender will release such Deed of Trust upon the indefeasible
payment in full in cash of the Tripos Realty NationsBank
Indebtedness and the reduction of the Revolving Loan Commitment to
an amount not greater than $6,000,000 so long as there is no
Existing Default at such time. If Borrower or any other Covered
Person acquires or leases any real property in the United States
after the Execution Date (other than any lease which is not a
ground lease), such Covered Person shall notify Lender thereof and
shall deliver to Lender a deed of trust or mortgage, or leasehold
deed of trust or mortgage, as appropriate, on each parcel of such
real property promptly upon request by Lender, and if any other
tenants have possession of a material portion of such real
property, Borrower or such Covered Person shall deliver or cause to
be delivered to Lender a nondisturbance, attornment, and
subordination agreement executed by such tenant and acceptable to
Lender.
8.2. Security Agreements.
Except as otherwise expressly agreed herein or in the Security
Documents, security agreements from Borrower and Tripos Realty, LLC
satisfactory to Lender and granting to Lender a Security Interest
under the UCC in all of the Goods, Equipment, Accounts, Inventory,
Instruments, Documents, Chattel Paper, General Intangibles, and
Fixtures and all other assets of Borrower and Tripos Realty, LLC
located in the United States, whether now owned or hereafter
acquired, and all proceeds thereof, subject only to Permitted
Security Interests.
8.3. Collateral Assignments; Grant of Security Interest.
Collateral assignments of promissory notes executed by any Covered
Person and payable to the order of Borrower and a grant of Security
Interest in Borrower's trademarks patents and copyrights, all
pursuant to documents satisfactory to Lender, each subject to no
other Security Interests except Permitted Security Interests.
8.4. Pledge Agreements.
Stock pledge and membership pledge agreements executed by Borrower
pledging 100% of the membership interests in Tripos Realty, LLC,
65% of its stock interests in Tripos UK Holdings Limited, and 65%
of its ownership interests in Tripos SARL and Tripos GmbH; and a
stock pledge agreement executed by Tripos UK Holdings Limited
pledging 65% of its stock in Tripos UK Limited and Tripos Receptor
Research Limited.
8.5. Guaranties.
The unconditional guaranty of the Loan Obligations by Tripos
Realty, LLC pursuant to a guaranty satisfactory to Lender.
Lender may, either before or after an Event of Default, exchange,
waive or release the Security Interests in any of the Collateral,
or in Lender's absolute discretion permit Borrower to substitute
any real or personal property for any of the Collateral, without
affecting the Loan Obligations or Lender's right to take any other
action with respect to any other Collateral. Upon indefeasible
payment in full in cash of the Loan Obligations and the termination
of the Commitments, Lender shall, upon the request of Borrower, and
at Borrower's sole cost and expense, provide documentation
satisfactory to Borrower that Lender has released all mortgages,
security agreements, UCC financing statements, collateral
assignments, pledge agreements, and guaranties.
9. Power of Attorney.
Borrower hereby authorizes Lender and irrevocably appoints Lender
(acting by any of its officers) as agent and attorney-in-fact for
Borrower and Tripos Realty, LLC (which appointment is coupled with
an interest and is therefore irrevocable) to do any of the
following until all of the Loan Obligations are fully and
irrevocably paid and satisfied in full in cash, and the Commitments
are terminated: (a) while there is an Existing Default (i) demand
payment of any Account, (ii) enforce payment of any Account by
legal proceedings or otherwise, and endorse Borrower's (or Tripos
Realty, LLC's) name upon any items of payment and apply the
proceeds thereof to the Loan Obligations as provided herein, (iii)
exercise all or any of Borrower's (or Tripos Realty, LLC's) rights
and remedies in proceedings brought to collect any Account, (iv)
sell or assign any Account upon such terms, for such amount and at
such time or times as Lender deems advisable; (v) settle, adjust,
compromise, extend, or renew any account, (vi) discharge and
release any Account, (vii) prepare, file and sign Borrower's (or
Tripos Realty, LLC's) name on any proof of claim in bankruptcy or
other similar documents against an Account Debtor; (viii) notify
the postal authorities of any change of the address for delivery of
Borrower's (or Tripos Realty, LLC's) mail to any address designated
by Lender, and open and process all mail addressed to any Covered
Person (provided Lender uses reasonable efforts to deliver copies
of all such mail to the Covered Person to which such mail was
addressed (but Lender shall have no liability for failure to
deliver such copies); (ix) endorse Borrower's (or Tripos Realty,
LLC's) name on any verification of accounts and notices thereof to
Account Debtors, and endorse Borrower's (or Tripos Realty, LLC's)
name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to expenses of any of the
foregoing, and (x) do anything that Lender deems necessary in its
reasonable discretion to assure that the Loan Obligations are fully
paid in cash; and (b) at any time until all of the Loan Obligations
are fully and irrevocably paid and satisfied in full in cash, and
the Commitments are terminated, execute in Borrower's (or Tripos
Realty, LLC's) name and on Borrower's (or Tripos Realty, LLC's)
behalf any financing statement or amendment thereto deemed
necessary or appropriate by Lender to assure the perfection or
continued perfection of Lender's Security Interests in the
Collateral. The foregoing power of attorney and authorization
shall be deemed automatically revoked upon the irrevocable payment
in full in cash of all of the Loan Obligations, and the termination
of the Commitments.
10. Conditions of Lending.
10.1. Conditions to Initial Advance.
Lender will have no obligation to fund the initial Revolving Loan
Advance or any subsequent Revolving Loan Advance unless:
10.1.1. Listed Documents and Other Items.
Lender shall have received on or before the Effective Date all
of the documents and other items listed or described in
Exhibit 10.1.1 hereto as being conditions to the initial
Advances, with each being satisfactory to Lender and (as
applicable) duly executed and (also as applicable) sealed,
attested, acknowledged, certified, or authenticated.
10.1.2. Financial Condition.
Lender shall have determined to its satisfaction that the
financial statements of Borrower for the period ended June 30,
1998 as furnished to Lender, and other information furnished
to Lender by Borrower (i) for the periods ended on or before
the Effective Date, fairly and accurately reflect the business
and financial condition of Borrower, its cash flows and the
results of its operations for such periods, and (ii) for the
periods that will end after the Effective Date, reasonably
forecast the business and financial condition of Borrower, its
cash flows, and the results of its operations for such
periods.
10.1.3. Default.
There shall be no Existing Default and no Default or Event of
Default will occur as a result of such Advance being requested
or made or the application of the proceeds thereof.
10.1.4. Perfection of Security Interests.
Except as otherwise expressly agreed, every Security Interest
required to be granted by Borrower to Lender under Section 8
shall have been perfected and shall be, subject to Permitted
Security Interests, a first priority Security Interest.
10.1.5. Representations and Warranties.
The representations and warranties contained in the Loan
Documents shall be true and correct.
10.1.6. Material Adverse Change.
Since June 30, 1998, with respect to each Covered Person,
there shall not have been any change which has or is
reasonably likely to have a Material Adverse Effect.
10.1.7. Pending Material Proceedings.
There shall be no pending Material Proceedings involving
Borrower or any Covered Person.
10.1.8. Payment of Fees.
Borrower shall have paid in cash and reimbursed to Lender all
fees, costs and expenses that are payable or reimbursable to
Lender hereunder on or before the Effective Date.
10.1.9. Other Items.
Lender shall have received such other consents, approvals,
opinions, certificates, documents or information as it
reasonably deems necessary.
10.2. Conditions to Subsequent Advances.
Lender will have no obligation to fund any Advance after the
initial Revolving Loan Advance unless:
10.2.1. General Conditions.
All of the conditions to the initial Advances in Section 10.1
shall have been and shall remain satisfied.
10.2.2. Representations and Warranties.
The representations and warranties contained in the Loan
Documents, with such exceptions as have been disclosed to
Lender in writing by Borrower from time to time and are
satisfactory to Lender, shall be true and correct as of the
time of such Advance, with the same force and effect as if
made at such time.
10.2.3. Default.
There shall be no Existing Default and no Default or Event of
Default will occur as a result of such Advance being requested
or made or the application of the proceeds thereof.
10.2.4. No Material Adverse Change.
Since the date of the most recent prior Advance or issuance of
a Letter of Credit nothing has occurred which has had or is
reasonably likely to have a Material Adverse Effect.
11. Conditions to Issuance of Letters of Credit.
No Letter of Credit will be issued unless at the time of such
issuance:
11.1. Reimbursement Agreement.
Borrower has executed and delivered to Lender a reimbursement
agreement satisfactory to Lender under which Borrower undertakes to
reimburse to Lender on demand the amount of each draw on such
Letter of Credit, together with interest from the date of the draw
at the Prime Rate.
11.2. No Prohibitions.
No order, judgment or decree of any Governmental Authority exists
which purports by its terms to enjoin or restrain Lender from
issuing such Letter of Credit, and no Law or request or directive
(whether or not having the force of law) from any Governmental
Authority with jurisdiction over Lender shall exist which
prohibits, or requests that Lender refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular,
or imposes upon Lender with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which Lender is
not otherwise compensable by Borrower hereunder).
11.3. Conditions to Initial Advances.
All of the conditions in Section 10.1 have been and remain
satisfied.
11.4. Representations and Warranties.
The Representations and Warranties are true and correct as of the
time of the issuance of such Letter of Credit.
11.5. No Default.
There is no Existing Default and no Default or Event of Default
will occur as a result of the issuance of the Letter of Credit or
the incurrence of Borrower's reimbursement obligations with respect
thereto.
11.6. No Material Adverse Change.
Since the date of the most recent prior Advance or issuance of a
Letter of Credit nothing has occurred which has had or is
reasonably likely to have a Material Adverse Effect.
12. Representations and Warranties.
Except as otherwise described in the Disclosure Schedule attached
hereto as Exhibit 12 (which references the specific Sections of
this Section 12 hereof), Borrower represents and warrants to Lender
as follows:
12.1. Organization and Existence.
Each Covered Person is duly organized and existing in good standing
under the Laws of the state or nation of its organization, is duly
qualified to do business and is in good standing in every state
where the nature or extent of its business or properties require it
to be qualified to do business, except where the failure to so
qualify will not have a Material Adverse Effect. Each Covered
Person has the power and authority to own its properties and carry
on its business as now being conducted.
12.2. Authorization.
Each Covered Person is duly authorized to execute and perform every
Loan Document to which such Covered Person is a party, and Borrower
is duly authorized to borrow hereunder, and this Agreement and the
other Loan Documents have been duly authorized by all requisite
corporate action of each Covered Person. No consent, approval or
authorization of, or declaration or filing with, any Governmental
Authority (other than the filings for the purpose of perfection of
the Security Interests in the Collateral), and no consent of any
other Person, is required in connection with each Covered Person's
execution, delivery or performance of this Agreement and the other
Loan Documents, except for those already duly obtained (and except
to the extent that the grant of a Security Interest in a Material
Agreement requires the consent of any other Person).
12.3. Due Execution.
Every Loan Document to which a Covered Person is a party has been
executed on behalf of such Covered Person by a Person duly
authorized to do so.
12.4. Enforceability of Obligations.
Each of the Loan Documents to which a Covered Person is a party
constitutes the legal, valid and binding obligation of such Covered
Person, enforceable against such Covered Person in accordance with
its terms, except to the extent that the enforceability thereof
against such Covered Person may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting
creditors' rights generally or by equitable principles of general
application.
12.5. Burdensome Obligations.
No Covered Person is a party to or bound by any Contract or is
subject to any provision in the Charter Documents of such Covered
Person which requires the Covered Person to take some action which
would, if performed by such Covered Person, result in a Default or
Event of Default either immediately or upon the elapsing of time.
12.6. Legal Restraints.
The execution and performance of any Loan Document by a Covered
Person will not violate or constitute a default under the Charter
Documents of such Covered Person, any Material Agreement of such
Covered Person (except to the extent that the grant of a Security
Interest in such Material Agreement to Lender would cause a breach
by such Covered Person under such Material Agreement), or any
Material Law, and will not, except as expressly contemplated or
permitted in this Agreement, result in any Security Interest being
imposed on any of such Covered Person's property.
12.7. Labor Disputes.
There is no pending or, to Borrower's knowledge, threatened,
strike, work stoppage, unfair labor practice claim or other labor
dispute against or affecting any Covered Person or its employees,
which could reasonably be likely to have a Material Adverse Effect.
12.8. No Material Proceedings.
There are no Material Proceedings pending or, to the best knowledge
of Borrower, threatened.
12.9. Material Licenses.
All Material Licenses have been obtained for each Covered Person.
12.10. Compliance with Material Laws.
Each Covered Person is in compliance with all Material Laws.
Without limiting the generality of the foregoing:
12.10.1. Proceedings.
None of the operations of any Covered Person are the subject
of any judicial or administrative complaint, order or
proceeding alleging the violation of any applicable
Environmental Laws or Employment Laws. None of the operations
of any Covered Person are the subject of investigation by any
Governmental Authority regarding the improper transportation,
storage, disposal, generation or release into the environment
of any Hazardous Material, the results of which have or are
reasonably likely to have a Material Adverse Effect on such
Covered Person, or reduce materially the value of Covered
Person's property.
12.10.2. Hazardous Materials on Real Property.
No Covered Person, nor to Borrower's knowledge, any other
Person, has at any time transported, stored, disposed of,
generated or released any Hazardous Material on the surface,
below the surface, or within the boundaries of the real
property owned or operated by such Covered Person or any
improvements thereon. Borrower has no knowledge of any
Hazardous Material on the surface, below the surface, or
within the boundaries of the real property owned or operated
by such Covered Person or any improvements thereon, other than
the Hazardous Materials described in the studies performed by
Environmental Operations, Inc. dated July 16, 1997 and October
14, 1997 and previously delivered to Lender. No property of
such Covered Person is subject to a Security Interest in favor
of any Governmental Authority for any liability under any
Environmental Law or damages arising from or costs incurred by
such Governmental Authority in response to a spill or release
of Hazardous Material into the environment.
12.11. Other Names.
Neither Borrower nor Tripos Realty, LLC has used any name other
than the full name which identifies it in this Agreement, except
that Borrower has previously used the name Tripos Associates, Inc.
The only trade name or trade style under which a Covered Person
sells Inventory or creates Accounts or to which instruments in
payment of Accounts are made payable, is the name which identifies
such Covered Person in this Agreement.
12.12. Financial Statements.
The Financial Statements are and shall remain complete and correct
in all material respects, have been prepared in accordance with
GAAP, and fairly reflect the financial condition, results of
operations and cash flows of the Persons covered thereby as of the
dates and for the periods stated therein, subject, in the case of
monthly and quarterly Financial Statements, to normal year-end
adjustments made in accordance with GAAP.
12.13. No Change in Condition.
There has been no change which has or is reasonably likely to have
a Material Adverse Effect on any Covered Person.
12.14. No Defaults.
No Covered Person has breached or violated or has defaulted under
any Material Agreement, or has defaulted with respect to any
Material Obligation of such Covered Person. No Default has
occurred which is continuing and no Event of Default has occurred.
12.15. Solvency.
Borrower is solvent prior to and after giving effect to the making
of the initial Revolving Loan Advance on the Effective Date.
12.16. Encumbrances.
None of the real property purported to be owned by a Covered Person
and located in the United States is subject to any Encumbrances
other than Encumbrances existing on November 14, 1997 and
previously disclosed to Lender.
12.17. Real Property.
Section 12.17 of the Disclosure Schedule contains a correct and
complete list of (i) the street addresses and a general description
of all real property owned by each Covered Person, and (ii) a list
of all leases and subleases of real property by each Covered
Person, with such Covered Person identified for each as the
lessee, sublessee, lessor, or sublessor, as is the case, together
with the street addresses and a general description of the real
property involved and the names of the other parties to such leases
and subleases. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and
effect, and no material default by any party to any such lease or
sublease exists.
12.18. Indebtedness.
No Covered Person has any Indebtedness except Permitted
Indebtedness (as specified in Section 15.1 hereof).
12.19. Investments.
No Covered Person has any Investments in other Persons except
Permitted Investments.
12.20. Indirect Obligations.
No Covered Person has any Indirect Obligations except Permitted
Indirect Obligations.
12.21. Capital Leases.
No Covered Person has an interest as a lessee under any Capital
Leases other than Capital Leases that do not cause a breach on any
limitation herein on Capital Expenditures.
12.22. Tax Liabilities; Governmental Charges.
Each Covered Person has filed or caused to be filed all tax reports
and returns required to be filed by it with any Governmental
Authority, except where extensions have been properly obtained.
Each Covered Person has paid or made adequate provision for payment
of all Taxes of such Covered Person, except Taxes which are being
diligently contested in good faith by appropriate proceedings and
as to which such Covered Person has established adequate reserves
in conformity with GAAP. No Security Interest for any such Taxes
has been filed and no claims are being asserted with respect to any
such Taxes which, if adversely determined, has or is reasonably
likely to have a Material Adverse Effect on such Covered Person.
The IRS has not audited the federal income tax returns of any
Covered Person and has not notified any Covered Person that it
intends to perform an audit. There are no material unresolved
issues or other matters concerning any liability of a Covered
Person for any Taxes which, if adversely determined, has or is
reasonably likely to have a Material Adverse Effect on such Covered
Person.
12.23. Pension Benefit Plans.
All Pension Benefit Plans maintained by each Covered Person or an
ERISA Affiliate of any Covered Person qualify under Section 401 of
the Code and are in compliance with the provisions of ERISA, except
where the failure to comply could not reasonably be likely to have
a Material Adverse Effect.
12.24. Welfare Benefit Plans.
No Covered Person or ERISA Affiliate of any Covered Person
maintains a Welfare Benefit Plan that has a liability which, if
enforced or collected, has or is reasonably likely to have a
Material Adverse Effect. Each Covered Person and each ERISA
Affiliate of any Covered Person has complied in all material
respects with the applicable requirements of Section 4980B of the
Code pertaining to continuation coverage as mandated by COBRA.
12.25. Retiree Benefits.
No Covered Person or ERISA Affiliate of any Covered Person has an
obligation to provide any Person with any medical, life insurance,
or similar benefit following such Person's retirement or
termination of employment (or to such Person's beneficiary
subsequent to such Person's death) other than (i) such benefits
provided to Persons at such Person's sole expense and
(ii) obligations under COBRA.
12.26. Distributions.
No Distribution has been declared, paid or made upon or in respect
of any capital stock or other securities of Borrower on and after
the Execution Date, except as expressly permitted hereby.
12.27. Chief Place of Business; Locations of Collateral.
As of the Execution Date,
12.27.1.
the only chief executive office and the principal places of
business of Borrower are located at the places listed and so
identified in item 12.27.1 of the Disclosure Schedule;
12.27.2.
the books and records of Borrower, and all of the Borrower's
chattel paper and all records of Accounts, are located only at
the places listed and so identified in item 12.27.2 of the
Disclosure Schedule; and
12.27.3.
all of the tangible Collateral (except for Inventory which is
in transit and the Real Property Collateral) is located only
at the places listed and so identified in item 12.27.3 of the
Disclosure Schedule.
12.28. State of Collateral and other Property.
Each Covered Person has good and marketable or merchantable title
to all real and personal property purported to be owned by it or
reflected in the Financial Statements, except for personal property
sold in the ordinary course of business after the date of the
Financial Statements. There are no Security Interests on any of
the property purported to be owned by any Covered Person, including
the Collateral, except Permitted Security Interests. Each tangible
item of Personal Property Collateral purported to be owned by a
Covered Person is in good operating condition and repair and is
suitable for the use to which it is customarily put by its owner.
Without limiting the generality of the foregoing:
12.28.1. Accounts.
With respect to each Account of each Covered Person: (i) the
Account is assignable, (ii) the Account arose in the ordinary
course of such Covered Person's business, (iii) the services
furnished and/or goods sold giving rise to the Account are not
subject to any Security Interest except the first priority,
perfected Security Interest granted to Lender and except the
Permitted Security Interests, and (iv) there are no
proceedings or actions which are threatened or pending against
the Account Debtor with respect to the Account (other than
proceedings or actions initiated by a Covered Person in the
ordinary course of business).
12.28.2. Inventory.
With respect to Inventory of each Covered Person: (i) such
Inventory (except for Inventory in transit) is located at one
or another of the premises listed in item 12.28.2 of the
Disclosure Schedule, (ii) such Covered Person has good and
merchantable title to such Inventory subject to no Security
Interest whatsoever except for the first priority, perfected
Security Interest granted to Lender and except for Permitted
Security Interests, and (iii) such Inventory is of good and
merchantable quality, free from any material defects.
12.28.3. Equipment.
With respect to the equipment of each Covered Person: (i) such
Covered Person has good and marketable title thereto, (ii)
none of such equipment is subject to any Security Interests
except for the first priority Security Interest granted to
Lender pursuant hereto and except for Permitted Security
Interests, and (iii) all such equipment is in good operating
condition and repair, ordinary wear and tear alone excepted,
and is suitable for the uses to which customarily put in the
conduct of Borrower's business.
12.28.4. Intellectual Property.
(i) Item 12.28.4 of the Disclosure Schedule contains a
complete and correct list of all of each Covered Person's
Intellectual Property, (ii) such Covered Person owns all
right, title and interest in, under and to such Intellectual
Property, subject to no licenses or any other contractual
interests therein or other agreements relating thereto, except
for the applicable Collateral Assignment and except for
licenses and other agreements entered into in the ordinary
course of Borrower's business; (iii) no Intellectual Property
or grant of license by or to a Covered Person is subject to
any pending or, to Borrower's knowledge, threatened challenge;
(iv) to Borrower's knowledge, no Covered Person has committed
any patent, trademark, trade name, service mark or copyright
infringement, and the present conduct of each Covered
Person's business does not infringe any patents, trademarks,
trade name rights, service marks, copyrights, publication
rights, trade secrets or other proprietary rights of any
Person; and (v) there are no claims or demands of any Person
pertaining to, or any proceedings which are pending or, to
Borrower's knowledge, threatened, which challenge any Covered
Person's rights in respect of any proprietary or confidential
information or trade secrets used in the conduct of a Covered
Person's business.
12.28.5. Documents, Instruments and Chattel Paper.
All documents, instruments and chattel paper describing,
evidencing or constituting Collateral, and all signatures and
endorsements thereon, are complete, valid, and genuine, and
all goods evidenced by such documents, instruments and chattel
paper are owned by Borrower free and clear of all Security
Interests other than Permitted Security Interests.
12.29. Negative Pledges.
No Covered Person is a party to or bound by any Contract, other
than the Loan Documents, which prohibits the creation or existence
of any Security Interest upon or assignment or conveyance of any of
the Collateral.
12.30. Margin Stock.
No Covered Person is engaged and no Covered Person will engage,
principally or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U), and no part of
the proceeds of any Advance will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any purpose
which violates, or which would be inconsistent with, the provisions
of Regulation U or Regulation G.
12.31. Securities Matters.
No proceeds of any Advance will be used to acquire any security in
any transaction which is subject to Sections 13 and 14 of the
Securities Exchange Act of 1934.
12.32. Investment Company Act, Etc.
No Covered Person is an investment company registered or required
to be registered under the Investment Company Act of 1940, or a
company controlled (within the meaning of such Investment Company
Act) by such an investment company or an affiliated person of, or
promoter or principal underwriter for, an investment company, as
such terms are defined in the Investment Company Act of 1940. No
Covered Person is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act or any other Law limiting or regulating its ability to
incur Indebtedness for money borrowed.
12.33. No Material Misstatements or Omissions.
Neither the Loan Documents, any of the Financial Statements nor any
statement, list, certificate or other information furnished or to
be furnished by any Covered Person to Lender in connection with the
Loan Documents or any of the transactions contemplated thereby
contains any untrue statement of a material fact, or omits to state
a material fact necessary to make the statements therein not
misleading. Each Covered Person has disclosed to Lender everything
known to a Responsible Officer regarding the business, operations,
property, financial condition, or business prospects of itself and
every Covered Person that has or is reasonably likely to have a
Material Adverse Effect on any Covered Person.
12.34. Year 2000 Compliance.
12.34.1.
Borrower has begun analyzing the operations of each
Covered Person and that could be adversely affected by
failure to become year 2000 compliant (that is, that
computer applications, imbedded microchips and other
systems will be able to perform date-sensitive functions
prior to and after December 31, 1999); and Borrower
reasonably believes that each Covered Person will become
year 2000 compliant for its operations on a timely basis
except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect
on any Covered Person.
12.34.2.
Borrower reasonably believes any suppliers and vendors
that are material to the operations of any Covered Person
will be year 2000 compliant for their own computer
applications on a timely basis except to the extent that
a failure to do so could not reasonably be expected to
have a Material Adverse Effect on any Covered Person.
13. Survival.
All representations and warranties, covenants and agreements,
contained herein, in any other Loan Document, or in any certificate
delivered by any Covered Person pursuant hereto or thereto, as the
same may be updated, modified or amended from time to time upon a
Covered Person's written request to Lender of such update,
modification or amendment and upon Lender's written approval of the
same shall survive execution of each of the Loan Documents and the
making of every Advance, and may be relied upon by Lender as being
true and correct as of the date when made or deemed made or
reaffirmed until all of the Loan Obligations are fully and
indefeasibly paid in full in cash.
14. Affirmative Covenants.
Borrower covenants and agrees that, while any of the Commitments
remains in effect, or while any Letters of Credit are outstanding,
and until all of the Loan Obligations are fully and indefeasibly
paid in full in cash, Borrower shall do, and cause each Covered
Person to do, each of the following:
14.1. Use of Proceeds.
Subject to the terms and conditions hereof, the proceeds of the
Revolving Loan Advances shall be used for Capital Expenditures, as
well as for general corporate and working capital purposes.
14.2. Corporate Existence.
Each Covered Person shall maintain its existence in good standing
and shall maintain in good standing its right to transact business
in those states or countries in which it is now or hereafter doing
business, except where the failure to so qualify will not have and
will not be reasonably likely to have a Material Adverse Effect.
Each Covered Person shall obtain and maintain all Material Licenses
for such Covered Person.
14.3. Maintenance of Property and Leases.
Each Covered Person shall maintain in good condition and working
order, and repair (ordinary wear and tear excepted) and replace as
required, all buildings, equipment, machinery, fixtures and other
real and personal property whose useful economic life to such
Covered Person has not elapsed and which is reasonably necessary
for the ordinary conduct of the business of such Covered Person.
Each Covered Person shall maintain in good standing and free of
material defaults all of its leases of buildings, equipment,
machinery, fixtures and other real and personal property whose
useful economic life to such Covered Person has not elapsed and
which is necessary for the ordinary conduct of the business of such
Covered Person.
14.4. Inventory.
Each Covered Person shall keep its Inventory in good and
merchantable condition at its own expense and shall hold such
Inventory for sale or lease, or to be furnished in connection with
the rendition of services, in the ordinary course of such Covered
Person's business, on terms which are customary for the industry in
which such Covered Person operates. All such Inventory shall be
produced in accordance with the Federal Fair Labor Standards Act of
1938 and all rules, regulations, and orders thereunder.
14.5. Insurance.
Each Covered Person shall at all times keep insured or cause to be
kept insured, in insurance companies having a rating of at least
"A" by Best's Rating Service, all property owned by it of a
character usually insured by others carrying on businesses similar
to that of such Covered Person in such manner and to such extent
and covering such risks as such properties are usually insured.
Each Covered Person shall carry business interruption insurance at
such levels as are acceptable to Lender. Each Covered Person shall
at all times carry insurance, in insurance companies having a
rating of at least "A" by Best's Rating Service, against liability
on account of damage to persons or property (including product
liability insurance and insurance required under all Laws
pertaining to workers' compensation) and covering all other
liabilities common to such Covered Person's business, in such
manner and to such extent as such coverage is usually carried by
others conducting businesses similar to that of such Covered
Person. All policies of liability insurance maintained hereunder
shall name Lender as an additional insured; all fire and casualty
policies of insurance maintained by Borrower hereunder shall
reflect Lender's interest therein as mortgagee under a standard New
York or Union mortgagee clause. If an Event of Default has
occurred, Lender is authorized, but not obligated, as the attorney-
in-fact for Borrower, (i) to adjust and compromise proceeds payable
under such policies of insurance, (ii) to collect, receive and give
receipts for such proceeds in the name of Borrower and Lender, and
(iii) to endorse Borrower's name upon any instrument in payment
thereof. Such power granted to Lender shall be deemed coupled with
an interest and shall be irrevocable. All policies of insurance
maintained hereunder shall contain a clause providing that such
policies may not be canceled, reduced in coverage or otherwise
modified without 30 days prior written notice to Lender. Borrower
shall upon request of Lender at any time furnish to Lender updated
evidence of insurance (in the form required as a condition to
Lender's lending hereunder) for such insurance.
14.6. Payment of Taxes and Other Obligations.
Each Covered Person shall promptly pay and discharge or cause to be
paid and discharged, as and when due, any and all income taxes,
federal or otherwise, lawfully assessed and imposed upon any of the
Collateral or its other property, and any and all lawful taxes,
rates, levies, and assessments whatsoever upon its properties and
every part thereof, or upon the income or profits therefrom and all
claims of materialmen, mechanics, carriers, warehousemen, landlords
and other like Persons for labor, materials, supplies, storage or
other items or services which if unpaid might be or become a
Security Interest or charge upon any of the Collateral or its other
property; provided, however, that a Covered Person may diligently
contest in good faith by appropriate proceedings the validity of
any such taxes, rates, levies, or assessments, provided such
Covered Person has established adequate reserves therefor in
conformity with GAAP on the books of such Covered Person, and no
Security Interest, other than a Permitted Security Interest,
results from such non-payment.
14.7. Compliance With Laws.
Each Covered Person shall comply with all Material Laws.
14.8. Discovery and Clean-Up of Hazardous Material.
Upon any Responsible Officer of any Covered Person receiving notice
or becoming aware of any violation of Environmental Laws or any
similar notice described in Section 14.10.2, or upon any Covered
Person otherwise discovering Hazardous Material on any property
owned or leased by such Borrower which is in violation of, or which
would result in liability under, any Environmental Law, Borrower
shall: (i) promptly take such acts as may be necessary to prevent
danger or harm to the property or any person therein as a result of
such Hazardous Material; and (ii) take all necessary steps to
initiate and expeditiously complete all removal, remedial,
response, corrective and other action to eliminate any such
environmental problems, and keep Lender informed of such actions
and the results thereof.
14.9. Termination of Pension Benefit Plan.
No Covered Person or ERISA Affiliate of any Covered Person shall
terminate or amend any Pension Benefit Plan maintained by such
Covered Person or such ERISA Affiliate if such termination or
amendment would result in any liability to such Covered Person or
such ERISA Affiliate under ERISA, which could reasonably be likely
to have a Material Adverse Effect, or any increase in current
liability for the plan year for which such Covered Person or such
ERISA Affiliate is required to provide security to such Pension
Benefit Plan under the Code, which could reasonably be likely to
have a Material Adverse Effect.
14.10. Notice to Lender of Material Events.
Borrower shall, promptly upon any Responsible Officer of Borrower
or Tripos Receptor Research Limited obtaining knowledge or notice
thereof, give notice to Lender of (i) any breach of any of the
covenants in Section 14, 15, or 16; (ii) any Default or Event of
Default; (iii) the commencement of any Material Proceeding; and
(iv) any loss of or damage to any assets of a Covered Person or the
commencement of any proceeding for the condemnation or other taking
of any of the assets of a Covered Person, or if such loss, damage
or proceeding has or is reasonably likely to have a Material
Adverse Effect on such Covered Person. In addition,
14.10.1.
Borrower shall furnish to Lender from time to time all
information which Lender requests with respect to the status
of any Material Proceeding.
14.10.2.
Borrower shall promptly inform Lender of its receipt of, and
deliver to Lender a copy of, any (i) notice that any violation
of any Material Law may have been committed or is about to be
committed by any Covered Person, or (ii) notice that any
administrative or judicial complaint or order has been filed
or is about to be filed against any Covered Person alleging
violations of any Material Law.
14.10.3.
Borrower shall promptly deliver to Lender notice of any
default or event of default, or the occurrence of any event
which would with the passage of time, giving of notice or
otherwise, constitute a default or event of default with
respect to any of the Permitted Indebtedness and which could
reasonably be expected to result in a Material Adverse Effect.
14.10.4.
Borrower shall promptly deliver notice to Lender of the
assertion by the holder of any Indebtedness of a Covered
Person in the outstanding principal amount in excess of
$100,000 that a material default exists with respect thereto
or that such Covered Person is not in material compliance with
the terms thereof, or of the threat or commencement by such
holder of any enforcement action because of such asserted
default or noncompliance.
14.10.5.
Borrower shall, promptly after any Responsible Officer of
Borrower becoming aware thereof, deliver notice to Lender of
any pending or threatened strike, work stoppage, unfair labor
practice claim or other material labor dispute affecting a
Covered Person, which could reasonably be likely to have a
Material Adverse Effect.
14.10.6.
Borrower shall promptly deliver notice to Lender of any change
in the name, state of incorporation, or form of organization
of any Covered Person, or the trade names or styles under
which a Covered Person will sell Inventory or create Accounts,
or to which instruments in payment of Accounts may be made
payable, at least 30 days prior to such change.
14.10.7.
Borrower shall, promptly after any Responsible Officer of
Borrower becoming aware thereof, deliver notice to Lender of
any event that has or is reasonably likely to have a Material
Adverse Effect with respect to any Covered Person, and
Borrower shall provide such additional information to Lender
regarding any such event as Lender may reasonably request from
time to time.
14.11. Borrowing Officer.
Borrower shall keep on file with Lender at all times an appropriate
instrument naming each Borrowing Officer.
14.12. Maintenance of Security Interests of Security Documents.
14.12.1. Preservation and Perfection of Security
Interests.
Borrower or any other Covered Person executing a Security
Document shall promptly, upon the reasonable request of Lender
and at Borrower's expense, execute, acknowledge and deliver,
or cause the execution, acknowledgment and delivery of, and
thereafter file or record in the appropriate governmental
office, any document or instrument supplementing or confirming
the Security Documents or otherwise deemed necessary by Lender
to create, preserve or perfect any Security Interest purported
to be created by the Security Documents or to fully consummate
the transactions contemplated by the Loan Documents. The
foregoing actions requested by Lender from Borrower or such
other Covered Person shall include (i) filing financing or
continuation statements, and amendments thereof, in form and
substance satisfactory to Lender; (ii) delivering to Lender
the originals of all instruments, documents and chattel paper,
and all other Collateral of which Lender determines it should
have physical possession in order to perfect and protect
Lender's Security Interest, duly endorsed or assigned to
Lender without restriction; (iii) delivering to Lender
warehouse receipts covering any portion of the Collateral
located in warehouses and for which warehouse receipts are
issued; (iv) placing a durable notice of the existence of
Lender's Security Interest, acceptable to Lender, upon such
items of the Collateral as are designated by Lender; and
(v) placing a notice of the existence of Lender's Security
Interest, acceptable to Lender, upon the books and records of
Borrower pertaining to the Collateral, as designated by
Lender.
14.12.2. Collateral Held by Warehouseman, Bailee, etc.
If any Collateral (other than source codes for software) is at
any time in the possession or control of a warehouseman,
bailee or any of Borrower's agents or processors, then
Borrower shall notify Lender thereof and shall notify such
Person of Lender's Security Interest in such Collateral and,
upon Lender's request, instruct such Person to hold all such
Collateral for Lender's account subject to Lender's
instructions. If at any time any Collateral (other than
source code for software) is located on any premises that are
not owned by Borrower or another Covered Person (other than
Borrower's sales offices in California and New Jersey, and
other than premises located outside of the United States so
long as material portions of Collateral are not at any time
located on such premises), then Borrower shall obtain written
waivers, in form and substance satisfactory to Lender, of all
present and future Security Interests to which the owner or
lessor or any mortgagee of such premises may be entitled to
assert against the Collateral.
14.12.3. Compliance With Terms of Security Documents.
Borrower shall comply with, and shall cause each Covered
Person to comply with, all of the terms, conditions and
covenants in the Security Documents to which Borrower or such
Covered Person is a party.
14.13. Accounting System; Tracing of Proceeds.
Each Covered Person shall maintain a system of accounting
established and administered in accordance with GAAP. Each Covered
Person shall maintain materially accurate and reasonably detailed
records of proceeds of the Loans and substantial transfers of
proceeds of the Loans (i) received by it from the Lender,
(ii) transferred from it to any other Covered Person, and
(iii) received by it from another Covered Person. Borrower
acknowledges that (i) its ability to obtain the Loans hereunder is
made possible by the fact that each of the Covered Persons is
guarantying the Loan Obligations, (ii) the business operations of
each Covered Person complement one another, and such entities have
a common business purpose, and (iii) the proceeds of Advances
hereunder will benefit each Covered Person, severally and jointly,
regardless of which Covered Person receives part or all of any
Advance.
14.14. Financial Statements.
Borrower shall deliver to Lender:
14.14.1. Annual Financial Statements.
Within 120 days after the close of each fiscal year of
Borrower, year-end consolidated and consolidating financial
statements prepared in accordance with GAAP, containing a
balance sheet, income statement, statement of cash flows and
(in the case of the consolidated financial statements) an
audit report without qualification by a "big six" independent
certified public accounting firm selected by Borrower and
satisfactory to Lender, and accompanied by a management letter
and report on internal controls delivered by such independent
certified public accounting firm in connection with their
audit.
14.14.2. Quarterly Financial Statements.
Within 45 days after the end of each fiscal quarter of
Borrower (including each fiscal quarter ended December 31),
unaudited consolidated and consolidating financial statements
of Borrower prepared in accordance with GAAP for each of the
months not covered by the latest year-end financial
statements, in each case containing a balance sheet, income
statement, and statement of cash flows and accompanied by
(a) a Compliance Certificate of the Chief Financial Officer of
Borrower or other Responsible Officer, and (b) in the case of
the consolidated financial statements, a statement comparing
the current statements delivered pursuant to this Section with
the statements for the equivalent months and equivalent
elapsed periods during the prior fiscal year of Borrower.
Each Compliance Certificate shall be provided within 45 days
after the end of each fiscal quarter, shall be in the form of
Exhibit 14.14.2, and shall contain detailed calculations of
the financial measurements referred to in Section 16 for the
relevant periods. If any Compliance Certificate delivered to
Lender discloses that a representation or warranty is not true
and correct, or that there is an Existing Default that has not
been waived in writing by Lender, such Compliance Certificate
shall state what action Borrower has taken or proposes to take
with respect thereto.
14.15. Other Financial Information.
Borrower shall also deliver the following to Lender, as specified
below:
14.15.1. Other Reports or Information Concerning
Accounts, or Inventory.
Promptly and only upon the reasonable request of Lender, such
other reports and information, in form and detail reasonably
satisfactory to Lender, and documents, concerning Accounts, or
Inventory including, to the extent reasonably requested by
Lender, copies of all invoices, bills of lading, shipping
receipts, purchase orders, and warehouse receipts.
14.15.2. Stockholder and SEC Reports.
Copies of any (i) proxy statements, financial statements and
reports which Borrower makes available to its stockholders,
and (ii) reports, registration statements and prospectuses
filed by Borrower with any securities exchange or the
Securities and Exchange Commission or any Governmental
Authority succeeding to any of its functions within 15 days of
the date of filing.
14.15.3. Pension Benefit Plan Reports.
Promptly and upon the reasonable request of Lender at any time
or from time to time, a copy of each annual report or other
filing or notice filed with respect to each Pension Benefit
Plan of a Covered Person or an ERISA Affiliate of a Covered
Person.
14.15.4. Tax Returns.
A copy of each federal, state, or local tax return or report
filed by any Covered Person as Lender may reasonably request
from time to time.
14.16. Review of Accounts.
Not less often than annually, and promptly at Lender's request if
there is an Existing Default, Borrower shall conduct a review of
its Accounts, bad debt reserves, and collection histories of
Account Debtors and promptly following such review provide Lender
with a report of such review in form and detail satisfactory to
Lender.
14.17. Inventory.
Not less often than annually, and promptly at Lender's request if
there is an Existing Default, Borrower shall conduct a physical
count of its Inventory and promptly following the completion of
such count provide Lender with a report thereof in form and detail
satisfactory to Lender, including the value of such Inventory.
14.18. Annual Projections.
Prior to the first day of each fiscal year of Borrower, projected
balance sheets, statements of income and expense, and statements of
cash flows for Borrower as of the end of, and for each quarter of,
such fiscal year.
14.19. Other Information.
Upon the request of Lender, Borrower shall promptly deliver to
Lender such other information about the business, operations,
revenues, financial condition, property, or business prospects of
any Covered Person as Lender may, from time to time, reasonably
request.
14.20. Exams by Lender.
Lender or Persons authorized by and acting on behalf of Lender may
at any time during normal business hours (but not more often than
once during any twelve month period so long as there is no Existing
Default) examine the books and records and inspect any of the
property of each Covered Person from time to time upon reasonable
notice (except that during an Existing Default, no prior notice
shall be required) to such Covered Person, and in the course
thereof may make copies or abstracts of such books and records and
discuss the affairs, finances and books and records of such Covered
Person with its accountants, officers and employees. Each Covered
Person shall cooperate with Lender and such Persons in the conduct
of such exams and shall deliver to Lender any instrument necessary
for Lender to obtain records from any service bureau maintaining
records for such Covered Person. Borrower shall reimburse Lender
for all reasonable costs and expenses actually incurred by it in
conducting each exam, but if an Event of Default has not occurred,
such reimbursement for each such exam shall be limited to $500 per
day for each Person involved in conducting the exam plus Lender's
other actual out-of-pocket costs and expenses.
14.21. Verification of Accounts, and Notices to Account
Debtors.
Lender shall have the right at any time there is an Existing
Default to verify the validity and amount of any Account, and any
other matter relating to an Account by communicating in writing or
orally directly with the Account Debtor or any Person who
represents or Lender believes represents the Account Debtor.
14.22. Access to Officers and Auditors.
Each Covered Person shall permit Lender and Persons authorized by
Lender to discuss the business, operations, revenues, financial
condition, property, or business prospects of such Covered Person
with its officers, employees, accountants and independent auditors
as often as Lender may reasonably request in its discretion and
Lender shall have a bona fide reason for such request, and such
Covered Person shall direct such officers, employees, accountants
and independent auditors to cooperate with Lender and make full
disclosure to Lender of those matters that they may deem relevant
to the continuing ability of Borrower timely to pay and perform the
Loan Obligations except as provided in this Agreement. Lender
agrees that it will not disclose to third Persons any information
that it obtains about any Covered Person or its operations or
finances. Lender may, however, disclose such information to all of
its officers, attorneys, auditors, accountants, bank examiners,
agents and representatives who have a need to know such information
in connection with the administration, interpretation or
enforcement of the Loan Documents or the lending and collection
activity contemplated therein or to the extent required by Law or a
Governmental Authority. Lender shall advise such Persons that such
information is to be treated as confidential and Lender is
contractually obligated to keep such information confidential.
Lender may also disclose such information in any documents that it
files in any legal proceeding to pursue, enforce or preserve its
rights under the Loan Documents to the extent that Lender's counsel
advises it that such disclosure is reasonably necessary. Lender's
non-disclosure obligation shall not apply to any information that
(i) is disclosed to Lender by a third Person not affiliated with or
employed by Borrower who does not have a duty of non-disclosure, or
(ii) becomes publicly known other than as a result of disclosure by
Lender.
14.23. Intercompany Indebtedness.
Any Indebtedness owing from Borrower to any other Covered Person
from time to time, shall, at all times during which the Commitments
shall be outstanding or any Loan Obligations shall be owing to
Lender, be unsecured and subordinated to the indefeasible prior
repayment in full in cash of all of the Loan Obligations.
14.24. Year 2000 Compliance.
Borrower will develop a plan for becoming year 2000 compliant (as
defined in Section 12.34.1) before December 31, 1998 and will
implement such plan on a timely basis, and Borrower will promptly
notify Lender in the event Borrower determines that any computer
application which is material to the operations of any Covered
Person or any of their material vendors or suppliers will not be
year 2000 compliant (as defined in Section 12.34.1) on a timely
basis except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect on any
Covered Person.
14.25. Further Assurances.
Borrower and each other Covered Person shall execute and deliver,
or cause to be executed and delivered, to Lender such documents and
agreements, and shall take or cause to be taken such actions, as
Lender may from time to time reasonably request to carry out the
terms and conditions of this Agreement and the other Loan
Documents. During the continuance of an Existing Default and at
any time thereafter, Borrower covenants and agrees that the Lender
may, in its sole and absolute discretion, proceed directly against
Borrower, or any other Person liable for the payment or performance
of the Loan Obligations, or any or all of Borrower's property, or
any combination of the foregoing, in one or more claims, actions or
proceedings, whether or not any such claims, actions or proceedings
are instituted simultaneously or at different times.
15. Negative Covenants.
Borrower covenants and agrees that, while any of the Commitments
remains in effect and until all Letters of Credit have expired and
all of the Loan Obligations are fully and indefeasibly paid in full
in cash, Borrower shall not, directly or indirectly, do any of the
following, or permit any other Covered Person to do any of the
following, without the prior written consent of Lender:
15.1. Investments.
Make any Investments in any other Person except the following:
15.1.1.
Investments in (i) interest-bearing United States government
obligations; (ii) certificates of deposit issued by Lender;
(iii) prime commercial paper rated A1 or better by Standard
and Poor's Corporation or Prime P1 or better by Moody's
Investor Service, Inc.; (iv) agreements involving the sale to
Borrower of United States government securities and their
guarantied repurchase the next Business Day by a Qualified
Financial Institution; (v) certificates of deposit issued by
and time deposits with any Qualified Financial Institution; or
(vi) money market mutual funds.
15.1.2.
Investments existing on the Execution Date and disclosed in
Section 12.19 of the Disclosure Schedule.
15.1.3.
Loans from Borrower to Tripos Receptor Research Limited which
are evidenced by promissory notes which are collaterally
assigned to Lender pursuant to Section 8.3, and loans from
Borrower to Tripos UK Limited, Tripos SARL and Tripos GmbH
which are evidenced by promissory notes which are collaterally
assigned to Lender pursuant to Section 8.3 in an aggregate
amount outstanding which does not exceed $450,000 at any time,
the existing loan from Borrower to Tripos UK Holdings Limited
which is evidenced by that certain promissory note dated as of
November 11, 1997 in the original principal amount of $950,000
which has been collaterally assigned to Lender pursuant to
Section 8.3, the existing loan from Borrower to Arena
Pharmaceuticals, Inc. which is evidenced by that certain
promissory note dated as of June 30, 1997 in the original
principal amount of $755,000, and an additional loan to Arena
Pharmaceuticals, Inc. made after the Effective Date so long as
the principal amount thereof does not exceed $1,500,000 and so
long as the maturity date thereof is on or before January 31,
1999.
15.1.4.
Accounts arising in the ordinary course of business and
payable in accordance with Borrower's customary trade terms.
15.2. Indebtedness.
Create, incur, assume, or allow to exist any Indebtedness of any
kind or description, except the following:
15.2.1.
Indebtedness to trade creditors incurred in the ordinary
course of business, to the extent that it does not remain
unpaid for a period greater than sixty (60) days from the date
due, except for Indebtedness to trade creditors subject to a
bona fide dispute (the amount of which is reflected on the
Financial Statements).
15.2.2.
The Loan Obligations.
15.2.3.
Indebtedness secured by purchase money Security Interests
permitted by Section 15.3.
15.2.4.
Indebtedness represented by Capital Leases to the extent
permitted hereunder.
15.2.5.
The Tripos Realty NationsBank Indebtedness.
15.2.6.
Indebtedness of any Covered Person to Borrower incurred in the
ordinary course of such Covered Person's business, as
presently conducted, pursuant to an "open account"
arrangement, or as permitted by Section 15.1.3.
15.2.7.
Other Indebtedness existing on the date hereof and disclosed
in the Disclosure Schedule.
15.3. Security Interests.
Create, incur, assume or allow to exist any Security Interest upon
all or any part of its property, real or personal, now owned or
hereafter acquired, except the following:
15.3.1.
Security Interests for taxes, assessments or governmental
charges not delinquent or being diligently contested in good
faith and by appropriate proceedings and for which adequate
book reserves in accordance with GAAP are maintained.
15.3.2.
Security Interests arising out of deposits in connection with
workers' compensation insurance, unemployment insurance, old
age pensions, or other social security or retirement benefits
legislation.
15.3.3.
Deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds, and other obligations of
like nature arising in the ordinary course of business.
15.3.4.
Security Interests imposed by any Law, such as mechanics',
workmen's, materialmen's, landlords', carriers', or other like
Security Interests arising in the ordinary course of business
which secure payment of obligations which are not past due or
which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in
accordance with GAAP are maintained on Borrower's books.
15.3.5.
Purchase money Security Interests securing payment of the
purchase price of capital assets acquired by such Covered
Person after the Execution Date so long as the amount of the
Indebtedness to be secured thereby does not exceed $500,000 in
the aggregate at any time.
15.3.6.
Purchase money Security Interests securing Indebtedness
described in Section 15.2.1 so long as the amount of
Indebtedness secured thereby does not exceed $250,000 in the
aggregate at any time.
15.3.7.
Security Interests existing on the Execution Date that are
disclosed in Section 12.28 of the Disclosure Schedule and are
satisfactory to Lender.
15.4. Capital Leases.
Enter into any Capital Lease after the Execution Date with an
original capitalized amount which, when aggregated with the
original capitalized amounts of all other Capital Leases entered
into after the Execution Date, exceeds $500,000.
15.5. Change of Control.
Merge or consolidate with or into another Person, or permit any
Person, other than the current shareholders, to become the record
or beneficial owner, directly or indirectly, of securities
representing 30% or more of the voting power of any Covered
Person's then outstanding securities, or acquiring a sufficient
interest to elect a majority of the board of directors, elect or
appoint the managing partner(s) or otherwise direct the day-to-day
control of any Covered Person, or in the case of any Covered Person
other than Borrower, permit any Person, other than another Covered
Person, to obtain any direct or indirect ownership interest in such
Covered Person.
15.6. Distributions.
Declare or pay any Distribution. For purposes of this Section
15.6, "Distribution" means and includes (a) any cash dividend or
distribution to the stockholders of Borrower with respect to the
stock of Borrower, (b) any acquisition or redemption of any
outstanding stock or other equity interest of Borrower, (c) any
retirement or prepayment of debt securities before their regularly
scheduled maturity dates by any Covered Person (other than a
prepayment to Borrower), and (d) any loan, payment, or advance to
any stockholder of Borrower.
15.7. Indirect Obligations.
Create, incur, assume or allow to exist any Indirect Obligations,
except for Indirect Obligations of Borrower existing on the
Effective Date and disclosed to Lender on Exhibit 12.
15.8. Capital Structure; Equity Securities.
Make any change in the capital structure of any Covered Person
which has or is reasonably likely to have a Material Adverse
Effect; or issue or create any securities (except for director
qualifying shares in the case of Covered Persons not organized
under the laws of the United States) of any Covered Person other
than Borrower, except as approved in advance by Lender (such
approval not to be unreasonably withheld).
15.9. Change of Business.
Engage in any business other than the business currently conducted
by Borrower or a business reasonably related thereto.
15.10. Transactions With Affiliates.
Enter into or be a party to any transaction or arrangement,
including the purchase, sale or exchange of property of any kind or
the rendering of any service with any Affiliate, or make any loans
or advances to any Affiliate, in each case on terms more favorable
than could be obtained with independent third parties.
15.11. Cash Transfers.
Cause or permit any cash (whether proceeds of the Loans or
otherwise) to be transferred from Borrower to any Covered Person at
any time except as permitted or contemplated by Section 15.1.3 or
Section 15.10.
15.12. No Default on Indebtedness or Material Agreements.
Default upon or fail to pay any Indebtedness for borrowed money in
excess of $100,000, as the same matures, or breach, violate, or be
in default under any Material Agreement and fail to cure such
failure to pay, breach, violation, or default within the applicable
cure period provided therein.
15.13. Conflicting Agreements.
Enter into any agreement that would require a Covered Person to
take action which would result in a Default or Event of Default
either immediately or upon the elapsing of time.
15.14. Fiscal Year.
Change its fiscal year end, which is currently December 31.
15.15. New Subsidiaries.
Organize, create or acquire any Subsidiary other than those in
existence on the date hereof and disclosed on the Disclosure
Schedule, unless simultaneously with such Person becoming a
Subsidiary, such Person becomes a Borrower or a Guarantor under
this Agreement and executes any joinder agreements or other
documents deemed necessary by Lender to evidence such Subsidiary's
joint and several liability for the Loan Obligations.
15.16. Transactions Having a Material Adverse Effect or
Causing a Default.
Enter into any transaction which has or is reasonably likely to
have a Material Adverse Effect; or enter into any transaction, or
take or contemplate taking any other action, or omit or contemplate
omitting to take any action, which any Responsible Officer knows,
or reasonably should know, is likely to cause a Default or Event of
Default hereunder.
15.17. Disposal of Property.
Sell, transfer, exchange, lease, license, or otherwise dispose of
any of its assets to any Person, including, without limitation, to
any other Covered Person except in the ordinary course of business.
Any Covered Person may sell, transfer or otherwise dispose of
obsolete or unusable equipment or other equipment, other than in
the ordinary course of business, having an orderly liquidation
value no greater than $100,000 in the aggregate for all Covered
Persons in any fiscal year of Borrower unless Lender otherwise
consents in writing (such consent not to be unreasonably withheld).
15.18. Intellectual Property.
Cause or permit ownership of any Intellectual Property to be
transferred from Borrower to any other Covered Person.
15.19. Acquisitions.
Acquire stock or any other equity interest in a Person sufficient
for such Person to become a Subsidiary or Affiliate of a Covered
Person, or acquire all or substantially all of the assets of a
Person (including all or substantially all of the operating assets
of an operating division of a Person), or make any acquisition of
property not in the ordinary course of business consistent with
past practices..
16. Financial Covenants.
16.1. Special Definitions.
As used in this Section 16 and elsewhere herein, the following
capitalized terms have the following meanings:
"EBITDA" means for any period of calculation, an amount equal
to the sum of (i) Net Income, (ii) federal, state and local
income tax expense paid or accrued for as a liability,
(iii) Interest Expense, (iv) depreciation and amortization
expense, (v) losses on the sale or other disposition of
assets, (vi) extraordinary losses, minus (a) gains on the sale
or other disposition of assets, (b) extraordinary gains, and
(c) the full amount of capitalized research and development
expenditures.
"Fixed Charges" means for any period of calculation, the sum
of (i) Interest Expense, (ii) regularly scheduled principal
payments of Total Funded Indebtedness, (iii) federal, state
and local income taxes paid or accrued, and (iv) Distributions
accrued, declared, or paid.
"Interest Expense" means, for any period of calculation, all
interest, whether paid or accrued as a liability, but without
duplication, on Indebtedness of Borrower during such period.
"Total Funded Indebtedness" means, as of any time, the sum of
any contractual obligations to pay borrowed money (including,
without limitation, any such Indebtedness incurred in
connection with purchase money financing) and to make payments
or reimbursements with respect to letters of credit (whether
or not there have been drawings thereunder) at such time
including, without limitation, the Loan and the aggregate
dollar amount of Capital Leases presented in Borrower's most
recent Financial Statements as Liabilities (as defined under
GAAP).
All other capitalized terms used in this Section 16 shall have the
meanings given them, and shall be determined, under GAAP. All
calculations shall be for Borrower and its Subsidiaries on a
consolidated basis.
16.2. Maximum Leverage.
Borrower covenants and agrees that the ratio of Borrower's Total
Funded Indebtedness to Borrower's EBITDA for the preceding twelve
(12) month period, calculated as of the last day of each fiscal
quarter, shall at no time be greater than 2.00 to 1.00.
16.3. Minimum Current Ratio.
Borrower covenants and agrees that the ratio of Borrower's Current
Assets (excluding cash and marketable securities) to Current
Liabilities, calculated as of the last day of each fiscal quarter,
shall at no time be less than 1.10 to 1.00.
16.4. Minimum Fixed Charge Coverage Ratio.
Borrower covenants and agrees that the ratio of Borrower's EBITDA
to Borrower's Fixed Charges for the preceding twelve (12) month
period, calculated as of the last day of each fiscal quarter, shall
at no time be less than 1.60 to 1.00.
16.5. Minimum EBITDA.
Borrower covenants and agrees that Borrower's EBITDA, calculated as
of the last day of each fiscal quarter for the twelve(12) month
period then ended, shall not be less than the greater of:
(a) $4,500,000 and (b) an amount equal to the product of (i) the
highest EBITDA for any twelve month period ending on or after the
Effective Date, multiplied by (ii) 80%.
16.6. Maximum Capital Expenditures.
Borrower's Capital Expenditures (excluding Capital Expenditures of
Tripos Receptor Research Limited incurred in connection with the
construction of two buildings in the United Kingdom and the
purchase of Equipment by Tripos Receptor Research Limited),
calculated as of the last day of each fiscal quarter for the twelve
(12) month period then ended shall not exceed $2,000,000.
17. Default.
17.1. Events of Default.
Any one or more of the following shall constitute an event of
default (an "Event of Default") under this Agreement:
17.1.1. Failure to Pay Principal or Interest.
Failure of Borrower to pay any principal of the Loans when due
or interest accrued thereon.
17.1.2. Failure to Pay Other Amounts Owed to Lender.
Failure of Borrower to pay any of the Loan Obligations (other
than principal of the Loans or interest accrued thereon)
within 5 days after the date when due; provided, however, that
if the date on which payment of such Loan Obligation is due is
not specified in this Agreement or any other Loan Document and
Borrower does not have knowledge that such payment is due, the
5 day grace period provided in this Section 17.1.2 shall begin
on the date on which Borrower receives notice, including any
invoice, or otherwise becomes aware that such Loan Obligation
is due.
17.1.3. Failure to Pay Amounts Owed to Other Persons.
Failure of any Covered Person to make any payment due on
Indebtedness of such Covered Person to any Affiliate or
Subsidiary of Lender which continues unwaived beyond any
applicable grace periods specified in the documents evidencing
such Indebtedness; or failure of any Covered Person to make
any payment due on Indebtedness of such Covered Person over
$100,000 to Persons other than an Affiliate or Subsidiary of
Lender which continues unwaived beyond any applicable grace
period (except to the extent that such Covered Person disputes
in good faith that such payment is due, is validly contesting
the payment, and makes appropriate reserves under GAAP).
17.1.4. Representations or Warranties.
Any representation or warranty made by Borrower, for itself or
any Covered Person in this Agreement or in any other Loan
Document, or in any statement or representation made in any
certificate, report, opinion or other document delivered
pursuant to any of the foregoing by Borrower or any other
Borrower, is discovered to have been false in any material
respect when made.
17.1.5. Certain Covenants.
Failure of Borrower to comply with the covenants in Sections
14.1, 14.10, 14.13, 14.14, 14.18, 14.20, 14.22, 14.24, 15, or
16.
17.1.6. Other Covenants.
Failure of any Covered Person to comply with any of the terms
or provisions of any of the Loan Documents applicable to it
(other than a failure which constitutes an Event of Default
under any of Sections 17.1.1 through 17.1.5), which such
failure is not remedied or waived in writing by Lender within
30 days after the initial occurrence of such failure.
17.1.7. Acceleration of Other Indebtedness.
Any Obligation of a Covered Person (other than the Loan
Obligations) for the payment of borrowed money in excess of
$100,000 becomes or is declared to be due and payable or
required to be prepaid (other than by a regularly scheduled
prepayment) prior to the original or stated Maturity thereof.
17.1.8. Default Under Other Agreements.
The occurrence of any default or event of default under any
agreement to which Borrower or any other Covered Person is a
party (other than the Loan Documents), which default or breach
continues unwaived beyond any applicable grace period provided
therein and likely has or is reasonably likely to have a
Material Adverse Effect.
17.1.9. Default Under Tripos Realty NationsBank
Indebtedness.
The occurrence of any event of default under any document
executed in connection with the Tripos Realty NationsBank
Indebtedness, or the acceleration of the Tripos Realty
NationsBank Indebtedness.
17.1.10. Bankruptcy; Insolvency; Etc.
A Covered Person (i) fails to pay, or admits in writing its
inability to pay, its debts generally as they become due, or
otherwise becomes insolvent (however evidenced); (ii) makes an
assignment for the benefit of creditors; (iii) files a
petition in bankruptcy, is adjudicated insolvent or bankrupt,
petitions or applies to any tribunal for any receiver or any
trustee of such Covered Person or any substantial part of its
property; (iv) commences any proceeding relating to such
Covered Person under any reorganization, arrangement,
readjustment of debt, dissolution or liquidation Law of any
jurisdiction, whether now or hereafter in effect; (v) has
commenced against it any such proceeding which remains
undismissed for a period of 60 days, or by any act indicates
its consent to, approval of, or acquiescence in any such
proceeding or the appointment of any receiver of or any
trustee for it or of any substantial part of its property, or
allows any such receivership or trusteeship to continue
undischarged for a period of 60 days; or (vi) takes any action
to authorize any of the foregoing.
17.1.11. Judgments; Attachment; Settlement; Etc.
Any one or more judgments or orders is entered against a
Covered Person or any attachment or other levy is made against
the property of a Covered Person (including any Collateral)
with respect to a claim or claims involving in the aggregate
liabilities (not paid or fully covered by insurance, less the
amount of reasonable deductibles in effect on the Execution
Date) in excess of $100,000 becomes final and non-appealable
and remains unsatisfied for 30 days, or if timely appealed is
not fully bonded and collection thereof stayed pending the
appeal.
17.1.12. Pension Benefit Plan Termination, Etc.
Any Pension Benefit Plan termination by the PBGC or the
appointment by the appropriate United States District Court of
a trustee to administer any Pension Benefit Plan or to
liquidate any Pension Benefit Plan; or any event which
constitutes grounds either for the termination of any Pension
Benefit Plan by PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer or
liquidate any Pension Benefit Plan shall have occurred and be
continuing for thirty (30) days after Borrower has notice of
any such event; or any voluntary termination of any Pension
Benefit Plan which is a defined benefit pension plan as
defined in Section 3(35) of ERISA while such defined benefit
pension plan has an accumulated funding deficiency, unless
Lender has been notified of such intent to voluntarily
terminate such plan and Lender have given their consent and
agreed that such event shall not constitute a Default; or the
plan administrator of any Pension Benefit Plan applies under
Section 412(d) of the Code for a waiver of the minimum funding
standards of Section 412(1) of the Code and Lender determine
that the substantial business hardship upon which the
application for such waiver is based could subject any Covered
Person or ERISA Affiliate of any Covered Person to a liability
in excess of $100,000.
17.1.13. Liquidation or Dissolution.
Any Covered Person files a certificate of dissolution under
applicable Law or is liquidated or dissolved or suspends or
terminates the operation of its business, or has commenced
against it any action or proceeding for its liquidation or
dissolution or the winding up of its business, or takes any
corporate action in furtherance thereof, except in connection
with the consolidation of such a Covered Person and its assets
with another Covered Person and its assets.
17.1.14. Seizure of Assets.
All or a material part of the property of any Covered Person
is nationalized, expropriated, seized or otherwise
appropriated, or custody or control of such property or of any
Covered Person shall be assumed by any Governmental Authority
or any court of competent jurisdiction at the instance of any
Governmental Authority, unless the same is being contested in
good faith by proper proceedings diligently pursued and a stay
of enforcement is in effect.
17.1.15. Loan Documents; Security Interests.
For any reason other than the failure of Lender to take any
action available to it to maintain perfection of the Security
Interests created in favor of Lender pursuant to the Loan
Documents, any Loan Document ceases to be in full force and
effect or any Security Interest with respect to any material
portion of the Collateral intended to be secured thereby
ceases to be, or is not, valid, perfected and prior to all
other Security Interests (other than the Permitted Security
Interests) or is terminated, revoked or declared void or
invalid.
17.1.16. Loss to Collateral.
Any loss, theft, damage or destruction of any item or items of
property occurs which either (i) has or is reasonably likely
to have a Material Adverse Effect on any Covered Person.
17.1.17. Cross-Default.
Any Event of Default under this Agreement will constitute an
event of default under any other agreement between any Covered
Person and Lender or any Affiliate or Subsidiary of Lender and
under any evidence of Indebtedness of any Covered Person held
by Lender or any Affiliate or Subsidiary of Lender, whether or
not it is defined as such therein.
17.1.18. Material Adverse Change.
There occurs any material adverse change in any Covered
Person's property, business, operation, or condition
(financial or otherwise), or there occurs any event which has
or is reasonably likely to have a Material Adverse Effect.
17.1.19. Guaranty Default.
Any Guarantor denies any liability under its Guaranty, or any
Guaranty becomes or is asserted to be unenforceable or void,
or there is a default under or breach of any term of any
Guaranty.
17.2. Rights and Remedies in the Event of Default.
17.2.1. Termination of Commitments.
Upon an Event of Default described in Section 17.1.10, the
Commitments shall be deemed automatically canceled. During
any other Existing Default, Lender may cancel the Commitments.
Such cancellation may be, in either case, without presentment,
demand or notice of any kind, which Borrower expressly waives.
17.2.2. Acceleration.
Upon an Event of Default described in Section 17.1.10, all of
the outstanding Loan Obligations shall automatically become
immediately due and payable. During any other Existing
Default, Lender may declare all of the outstanding Loan
Obligations immediately due and payable. Such acceleration
may be, in either case, without presentment, demand or notice
of any kind, which Borrower expressly waives.
17.2.3. Right of Set-off.
During any Existing Default, Lender is hereby authorized,
without notice to Borrower (any such notice being expressly
waived by Borrower; Lender will use reasonable efforts to
provide subsequent notice to Borrower but Lender shall not be
liable for any failure to give such notice), to set off and
apply against the Loan Obligations any and all deposits
(general or special, time or demand, provisional or final) or
other assets at any time held or at Lender, or any other
Indebtedness at any time owing by Lender to or for the credit
or the account of Borrower, irrespective of whether or not
Lender shall have made any demand under this Agreement or the
Notes and although such Loan Obligations may be unmatured.
The rights of Lender under this Section are in addition to
other rights and remedies (including, without limitation,
other rights of set-off) which Lender may otherwise have.
17.2.4. Notice to Account Debtors.
Upon the occurrence and during the continuance of any Event of
Default and at any time and from time to time thereafter,
Lender may, without prior notice to Borrower (Lender will use
reasonable efforts to provide subsequent notice to Borrower
but Lender shall not be liable for any failure to give such
notice), notify any or all Account Debtors that the Accounts
have been assigned to Lender and that Lender has a Security
Interest therein, and Lender may direct, or Borrower, at
Lender's request, shall direct, any or all Account Debtors to
make all payments upon the Accounts directly to Lender for the
benefit of Lender.
17.2.5. Entry Upon Premises and Access to Information.
During an Existing Default and acceleration of the Loan
Obligations as provided herein, and at any time thereafter:
Lender may (i) enter upon the premises leased or owned by
Borrower where Collateral is located (or is believed to be
located) without any obligation to pay rent to Borrower, or
any other place or places where Collateral is believed to be
located, (ii) render Collateral usable or saleable,
(iii) remove Collateral to the premises of Lender or any agent
of Lender for such time as Lender may desire in order
effectively to collect or liquidate Collateral; (iv) take
possession of, and make copies and abstracts of Borrower's
original books and records, obtain access to Borrower's data
processing equipment, computer hardware and software relating
to any of the Collateral and use all of the foregoing and the
information contained therein in any manner Lender deems
appropriate in connection with the exercise of Lender's
rights; and (v) notify postal authorities to change the
address for delivery of Borrower's mail to an address
designated by Lender and to receive, open and process all mail
addressed to Borrower (so long as Lender provides copies of
such mail to Borrower; it being agreed that Lender shall not
be liable for any failure to provide such copies).
17.2.6. Borrower's Obligations.
During an Existing Default, Borrower shall, if Lender so
requests, assemble all the movable tangible Collateral and
make it available to Lender at a place or places to be
designated by Lender in its reasonable discretion.
17.2.7. Secured Party Rights.
During an Existing Default and acceleration of the Loan
Obligations as provided herein, and at any time and from time
to time thereafter:
17.2.7.1. Lender may exercise any or all of its
rights under the Security Documents as a secured party
under the UCC and any other applicable Law; and
17.2.7.2.
Lender may sell or otherwise dispose of any or all of the
Collateral at public or private sale in a commercially
reasonable manner, which sale Lender may postpone from
time to time by announcement at the time and place of
sale stated in the notice of sale or by announcement at
any adjourned sale without being required to give a new
notice of sale, all as Lender deems advisable, for cash
or credit. Lender may become the purchaser at any such
sale if permissible under applicable Law, and Lender may,
in lieu of actual payment of the purchase price, offset
the amount thereof against Borrower's obligations owing
to Lender, and Borrower agrees that Lender has no
obligation to preserve rights to Collateral against prior
parties or to marshal any Collateral for the benefit of
any Person.
In connection with the advertising for sale, selling, further
manufacture, or otherwise realizing upon any of the Collateral
securing the obligations of Borrower to Lender, Lender may use
and is hereby granted a license to use, without charge or
liability to Lender therefor, any of Borrower's labels, trade
names, trademarks, trade secrets, service marks, patents,
patent applications, licenses, certificates of authority,
advertising materials, or any of Borrower's other properties
or interests in properties of similar nature, to the extent
that such use thereof is not prohibited by agreements under
which Borrower has rights therein, and all of Borrower's
rights under license, franchise and similar agreements shall
inure to Lender's benefit.
17.2.8. Miscellaneous.
During an Existing Default and at any time thereafter, Lender
may exercise any other rights and remedies available to Lender
under the Loan Documents or otherwise available to Lender at
law or in equity.
17.2.9. Application of Funds.
Any funds received by Lender with respect to the Loan
Obligations after maturity or any acceleration, including
proceeds of any of any Covered Person's property, shall be
applied as follows: (i) first, to reimburse Lender for any
amounts due to Lender under Section 21.5; (ii) second, to
reimburse to Lender all unreimbursed costs and expenses paid
or incurred by Lender that are payable or reimbursable by
Borrower hereunder; (iii) third, to the payment of accrued and
unpaid fees due hereunder and all other amounts due hereunder
(other than the Loans and interest accrued thereon);
(iv) fourth, to the payment of interest accrued on the Loans
to Lender; (v) fifth, to the payment of the Loans, in such
order as Lender determines in its absolute discretion; and
(vi) sixth, to the payment of the other Loan Obligations. Any
remaining amounts shall be paid to Borrower or such other
Persons as shall be legally entitled thereto. Borrower hereby
waives the right to direct the application of payments and
proceeds of the Collateral.
17.3. Limitation of Liability; Waiver.
Lender shall not be liable to Borrower or any other Covered Person
as a result of any commercially reasonable possession,
repossession, collection or sale by Lender of Collateral; and
Borrower hereby waives all rights of redemption from any such sale
and the benefit of all valuation, appraisal and exemption Laws. If
Lender seeks to take possession of any of the Collateral by
replevin or other court process after an Event of Default, Borrower
hereby irrevocably waives (i) the posting of any bonds, surety and
security relating thereto required by any statute, court rule or
otherwise as an incident to such possession, (ii) any demand for
possession of the Collateral prior to the commencement of any suit
or action to recover possession thereof, (iii) any requirement that
Lender retain possession and not dispose of any Collateral until
after trial or final judgment, and (iv) to the extent permitted by
applicable Law, all rights to notice and hearing prior to the
exercise by Lender of its right to repossess the Collateral without
judicial process or to replevy, attach or levy upon the Collateral
without notice or hearing. No Lender shall have any obligation to
preserve rights to the Collateral or to marshall any Collateral for
the benefit of any Person.
17.4. Notice.
Any notice of intended action required to be given by Lender
(including notice of a public or private sale of Collateral), if
given as provided in Section 22.1 at least 10 days prior to such
proposed action, shall be effective and constitute reasonable and
fair notice to Borrower.
18. Changes in Circumstances.
18.1. Compensation for Increased Costs and Reduced Returns;
Capital Adequacy.
18.1.1. Increased Costs or Reduced Returns to Lender.
If, after the date hereof, the adoption of any applicable Law
or any change in any applicable Law or any change in the
interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration
thereof, or compliance by Lender (or the Lending Office) with
any request or directive (whether or not having the force of
law) of any such Governmental Authority:
(i) subjects Lender (or the Lending Office) to any Tax
with respect to any Eurodollar Loan or its obligation to
make any Advance that will be a Eurodollar Loan, or
change the basis of taxation of any amounts payable to
Lender (or the Lending Office) under this Agreement in
respect of any Eurodollar Loan (other than Taxes imposed
on the overall net income of Lender by the jurisdiction
in which Lender has its principal office or the Lending
Office);
(ii) imposes, modifies, or deems applicable any reserve,
special deposit, assessment, compulsory loan or similar
requirement (other than the Reserve Requirement) relating
to any extensions of credit or other assets of, or any
deposits with or other liabilities or Commitments of,
Lender (or the Lending Office), including the Commitments
of Lender hereunder; or
(iii) imposes on Lender (or the Lending Office), or
the London interbank market, any other condition
affecting this Agreement, the Commitments or any of the
Loan Obligations;
and the result of any of the foregoing is to increase the cost
to Lender (or the Lending Office) of making, converting into,
continuing, or maintaining any Revolving Loan or to reduce any
sum received or receivable by Lender (or the Lending Office)
under this Agreement or any of the other Loan Documents with
respect to any Revolving Loan, then Borrower shall pay to
Lender on demand such amount or amounts as will compensate
Lender for such increased cost or reduction. If Lender
requests compensation by Borrower under this Section Borrower
may, by notice to Lender, suspend the obligation of Lender to
make or continue Revolving Loans of the type with respect to
which such compensation is requested, or to convert Revolving
Loans of any other type into Revolving Loans of such type,
until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of
Section 18.5 shall be applicable); provided, however, that
such suspension shall not affect the right of Lender to
receive the compensation so requested for any continuing
Revolving Loan outstanding or any subsequent Revolving Loan.
Notwithstanding the foregoing provisions of this Section
18.1.1 during any Interest Period, Borrower shall not be
liable to Lender for any additional costs imposed on Lender in
connection with any Eurodollar Loan which arise as a result of
a cost increase described above during such Interest Period
(but will be liable for such costs during any subsequent
Interest Periods).
18.1.2. Capital Adequacy.
If at any time after the date hereof Lender determines that
the adoption of any applicable Law regarding capital adequacy
or any change therein or in the interpretation or
administration thereof by any governmental authority, charged
with the interpretation or administration thereof, or any
request or directive regarding capital adequacy (whether or
not having the force of law) of any such Governmental
Authority, has or would have the effect of reducing the rate
of return on the capital of Lender or any corporation
controlling Lender as a consequence of Lender's obligations
hereunder to a level below that which Lender or such
corporation could have achieved but for such adoption, change,
request, or directive (taking into consideration its policies
with respect to capital adequacy), then from time to time upon
demand Borrower shall pay to Lender such additional amount or
amounts as will compensate Lender for such reduction.
18.1.3. Notice to Borrower.
Lender shall promptly notify Borrower of any event of which it
has knowledge, occurring after the date hereof, which will
entitle Lender to compensation pursuant to this Section 18.1
and will designate a different Lending Office if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of Lender, be
otherwise disadvantageous to it. If Lender claims
compensation under this Section, Lender will furnish to
Borrower a statement stating the additional amount or amounts
to be paid to it hereunder, which shall be conclusive in the
absence of manifest error. In determining such amount, Lender
may use any reasonable averaging and attribution methods.
18.2. Limitations on Eurodollar Loans.
If on or prior to the first day of any Interest Period for any
Eurodollar Loan:
18.2.1. Market Failure.
Lender determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period; or
18.2.2. Inadequate Reflection of Cost.
Lender determines (which determination shall be conclusive)
that the Eurodollar Rate will not adequately and fairly
reflect the cost to Lender of funding Eurodollar Loans for
such Interest Period;
then Lender will give Borrower prompt notice thereof, and while
such condition remains in effect, Lender will have no obligation to
make additional Advances that will be Eurodollar Loans, to continue
Eurodollar Loans, or to convert Prime Rate Loans into Eurodollar
Loans.
18.3. Illegality.
Notwithstanding any other provision of this Agreement, in the event
that it becomes unlawful for Lender or the Lending Office to make
Advances that will be Eurodollar Loans or maintain Eurodollar Loans
hereunder, then Lender shall promptly notify Borrower thereof and
Lender's obligation to do so or to convert Prime Rate Loans into
Eurodollar Loans shall be suspended until such time as Lender may
again do so, and Lender's outstanding Eurodollar Loans shall be
converted into Prime Rate Loans in accordance with Section 18.5.
18.4. Compensation.
Upon the request of Lender, Borrower shall pay to Lender such
amount or amounts as will be sufficient (in the reasonable
determination of Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a
result of:
18.4.1. Early Payment.
any payment, prepayment, or conversion of a Eurodollar Loan
for any reason (including, without limitation, the
acceleration of the Revolving Loan pursuant to the terms
hereof) on a date other than the last day of the Interest
Period for such Eurodollar Loan; or
18.4.2. Failure to Take Advances.
any failure by Borrower for any reason (other than pursuant to
Section 18.2 or 18.3) to take an Advance that is requested to
be a Eurodollar Loan or to convert, continue, or prepay a
Eurodollar Loan on the date therefor specified in the relevant
request for an Advance or notice of prepayment, continuation,
or conversion under this Agreement.
If Lender claims compensation under this Section 18.4, Lender
shall furnish a certificate to Borrower that states the amount to
be paid to it hereunder and includes a description in reasonable
detail of the method used by Lender in calculating such amount.
Borrower shall have the burden of proving that the amount of any
such compensation calculated by Lender is not correct. Any
compensation payable by Borrower to Lender under this Section shall
be payable without regard to whether Lender has funded any Advance
or Eurodollar Loan through the purchase of deposits in an amount or
of a maturity corresponding to the deposits used as a reference in
determining the Eurodollar Rate as provided herein.
18.5. Treatment of Affected Revolving Loans.
If the obligation of Lender to make an Advance that will be a
Eurodollar Loan or to continue any Eurodollar Loan or to convert
any Prime Rate Loan into a Eurodollar Loan shall be suspended
pursuant to Section 18.2 or 18.3 each such Revolving Loan shall be
automatically and immediately converted into a Prime Rate Loan on
the last day of its Interest Period (or, in the case of a
conversion required by Section 18.3, on such earlier date as Lender
may specify to Borrower). Unless and until Lender gives notice as
provided below that the circumstances specified in Section 18.2 or
18.3 that gave rise to such conversion no longer exist:
18.5.1. Payments.
To the extent that such Revolving Loans have been so
converted, all payments and prepayments of principal that
would otherwise be applied to such Revolving Loans shall
continue to be made and applied as provided for herein; and
18.5.2. Prime Rate.
All Advances by Lender that would otherwise become Eurodollar
Loans and all Revolving Loans that would otherwise be
continued by Lender as Eurodollar Loans shall become or be
continued instead as Prime Rate Loans, and all Revolving Loans
that would otherwise be converted into Eurodollar Loans shall
be converted instead into (or shall remain as) Prime Rate
Loans.
Lender shall give prompt notice to Borrower if and when the
circumstances specified in Section 18.2 or 18.3 that gave rise to
the conversion of Revolving Loans pursuant to this Section 18.5 no
longer exist.
19. Taxes.
19.1. Gross-Up.
All payments by Borrower to or for the account of Lender hereunder
or under any other Loan Document shall be made free and clear of
and without deduction for all present or future Taxes, excluding
franchise Taxes and Taxes imposed on Lender's net income, by the
jurisdiction under the Laws of which Lender is organized or the
Lending Office is located or any political subdivision thereof. If
Borrower is required by Law to deduct any Taxes from or in respect
of any sum payable under this Agreement or any other Loan Document
to Lender, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions
applicable to additional sums payable under this Section) Lender
receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such
deductions, (iii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance
with applicable Law, and (iv) Borrower shall furnish to Lender, at
its address referred to herein, the original or a certified copy of
a receipt evidencing payment thereof. In addition, Borrower agrees
to pay any and all present or future Impositions. Impositions
include stamp or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from the Loan
Obligations, any payment made under this Agreement or any other
Loan Document or from the execution or delivery of, or otherwise
with respect to, the Loan Obligations, this Agreement or any other
Loan Document. Borrower agrees to indemnify Lender for the full
amount of all Impositions and Taxes, excluding franchise Taxes and
Taxes imposed on Lender's net income, (including any such Taxes or
Impositions imposed or asserted by any jurisdiction on amounts
payable under this Section) paid by Lender and any liability
(including penalties, interest and expenses) arising therefrom or
with respect thereto. Within thirty days after the date of any
payment of Taxes, Borrower shall furnish Lender the original or a
certified copy of a receipt evidencing such payment.
19.2. Lender's Undertaking.
If Borrower is required to pay additional amounts to or for the
account of Lender pursuant to Section 19.1, then Lender will use
reasonable efforts to change the jurisdiction of the Lending Office
so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of Lender, is not
otherwise disadvantageous to Lender.
20. Usury Limitations.
Notwithstanding any provisions to the contrary in Section 4 or
elsewhere in any of the Loan Documents, Borrower shall not be
obligated to pay interest at a rate which exceeds the maximum rate
permitted by Law. If, but for this Section 20, Borrower would be
deemed obligated to pay interest at a rate which exceeds the
maximum rate permitted by Law, or if any of the Loan Obligations is
paid or becomes payable before its originally scheduled Maturity
and as a result Borrower has paid or would be obligated to pay
interest at such an excessive rate, then (i) Borrower shall not be
obligated to pay interest to the extent it exceeds the interest
that would be payable at the maximum rate permitted by Law; (ii) if
the outstanding Loan Obligations have not been accelerated as
provided in Section 17.2.2, any such excess interest that has been
paid by Borrower shall be refunded; (iii) if the outstanding Loan
Obligations have been accelerated as provided in Section 17.2.2,
any such excess that has been paid by Borrower shall be applied to
the Loan Obligations as provided in Section 17.2.9; and (iv) the
effective rate of interest shall be deemed automatically reduced to
the maximum rate permitted by Law.
21. General.
21.1. Lender's Right to Cure.
So long as there is an Existing Default, after first giving notice
to Borrower, Lender may from time to time, in its absolute
discretion, for Borrower's account and at Borrower's expense, pay
or make a Revolving Loan Advance to pay any amount or do any act
required of Borrower hereunder. So long as there is an Existing
Default, Lender may also from time to time, in its absolute
discretion, for Borrower's account and at Borrower's expense pay or
make a Revolving Loan Advance to pay any amount or do any act
reasonably requested by Lender to preserve, protect, maintain or
enforce the Loan Obligations, the Collateral or Lenders' Security
Interests therein and which Borrower fails to pay or do. Such
payments and actions include payment of any judgment against
Borrower, insurance premium, taxes or assessments, warehouse
charge, finishing or processing charge, landlord's claim, and any
other claim. All payments made by Lender pursuant to this Section
and all out-of-pocket costs and expenses incurred by Lender in
connection with any action taken by Lender hereunder shall be a
part of the Loan Obligations, the repayment of which shall be
secured by the Collateral. Any payment made or other action taken
by Lender pursuant to this Section shall be without prejudice to
any right to assert an Event of Default hereunder and to pursue
Lender's other rights and remedies with respect thereto.
21.2. Rights Not Exclusive.
Every right granted to Lender hereunder or under any other Loan
Document or allowed to it at law or in equity shall be deemed
cumulative and may be exercised from time to time.
21.3. Survival of Agreements.
All covenants and agreements made herein and in the other Loan
Documents shall survive the execution and delivery of this
Agreement, the Notes and other Loan Documents and the making of
every Advance. All agreements, obligations and liabilities of
Borrower under this Agreement concerning the payment of money to
Lender, including Borrower's obligations under Sections 21.4 and
21.5, but excluding the obligation to repay the Loans and interest
accrued thereon, shall survive the indefeasible repayment in full
of the Loans and interest accrued thereon, the return of the Notes
to Borrower, and the termination of the Commitments.
21.4. Payment of Expenses.
Borrower agrees to pay or reimburse to Lender all of Lender's
reasonable out-of-pocket costs incurred in connection with Lender's
due diligence review before execution of the Loan Documents; the
negotiation and preparation of any proposal, a commitment letter
and the Loan Documents; the perfection of Lender's Security
Interest in any Collateral, the interpretation of any of the Loan
Documents; the enforcement of Lender's rights and remedies under
the Loan Documents after a Default or Event of Default; any
amendment of or supplementation to any of the Loan Documents; and
any waiver, consent or forbearance with respect to any Default or
Event of Default. Lender's reasonable out-of-pocket costs may
include but are not limited to the following, to the extent they
are actually paid or incurred by Lender: title insurance fees and
premiums; the cost of searches for Security Interests existing
against Covered Persons; recording and filing fees; appraisal fees;
audit and exam fees; environmental consultant fees; litigation
costs; and all reasonable attorneys' and paralegals' expenses and
reasonable fees; and all reasonable expenses incurred in connection
with any of the foregoing. Attorneys' and paralegals' expenses may
include but are not limited to filing charges; telephone, data
transmission, facsimile and other communication costs; courier and
other delivery charges; and photocopying charges. Litigation costs
may include but are not limited to filing fees, deposition costs,
expert witness fees, expenses of service of process, and other such
costs paid or incurred in any administrative, arbitration, or court
proceedings involving Lender and any Covered Person, including
proceedings under the Federal Bankruptcy Code. All costs which
Borrower is obligated to pay or reimburse Lender are Loan
Obligations payable to Lender are Loan Obligations which are
secured by the Collateral, and are payable on demand by Lender.
21.5. General Indemnity.
21.5.1.
Borrower shall pay, indemnify and hold harmless Lender and its
respective directors, officers, employees, agents, and
representatives (the "Indemnified Parties") for, from and
against, and promptly to reimburse the Indemnified Parties
for, any and all claims, damages, liabilities, losses, costs
and expenses (including reasonable attorneys' fees and
expenses and amounts paid in settlement) incurred, paid or
sustained by the Indemnified Parties in connection with,
arising out of, based upon or otherwise involving or resulting
from any threatened, pending or completed action, suit,
investigation or other proceeding by, against or otherwise
involving the Indemnified Parties and in any way dealing with,
relating to or otherwise involving this Agreement, any of the
other Loan Documents, or any transaction contemplated hereby
or thereby except to the extent that they arise from the gross
negligence, bad faith or willful misconduct of any of the
Indemnified Parties. Borrower shall pay, indemnify and hold
harmless the Indemnified Parties for, from and against, and
promptly reimburse the Indemnified Parties for, any and all
claims, damages, liabilities, losses, costs and expenses
(including reasonable attorneys' and consultant fees and
expenses, investigation and laboratory fees, removal,
remedial, response and corrective action costs, and amounts
paid in settlement) incurred, paid or sustained by the
Indemnified Parties as a result of the manufacture, storage,
transportation, release or disposal of any Hazardous Material
on, from, over or affecting any of the Collateral or any of
the assets, properties, or operations of any Covered Person or
any predecessor in interest, directly or indirectly.
21.5.2.
The obligations of Borrower under this Section 21.5 shall
survive the termination of the Commitments, and the
indefeasible full payment and satisfaction of all of the Loan
Obligations, and the release of the Collateral.
21.5.3.
To the extent that any of the indemnities required from
Borrower under this Section are unenforceable because they
violate any Law or public policy, Borrower shall pay the
maximum amount which it is permitted to pay under applicable
Law.
21.6. Letters of Credit.
Borrower assumes all risks of the acts or omissions of any
beneficiary of any of the Letters of Credit. Neither Lender nor
any of its directors, officers, employees, agents, or
representatives shall be liable or responsible for: (a) the use
which may be made of any of the Letters of Credit or for any acts
or omissions of beneficiary in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any
endorsement(s) thereon, even if such documents should in fact prove
to be in any or all respects invalid, insufficient, fraudulent or
forged; (c) payment by Lender against presentation of documents
which, on their face, appear to comply with the terms of any Letter
of Credit, even though such documents may fail to bear any
reference or adequate reference to any such Letter of Credit; or
(d) any other circumstances whatsoever in making or failing to make
payment under any Letter of Credit in connection with which Lender
would, pursuant to the Uniform Customs and Practices for
Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (as amended from time to time), be
absolved from liability. In furtherance and not in limitation of
the foregoing, Lender may accept documents that appear on their
face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary.
21.7. Changes in Accounting Principles.
If Borrower, at the end of its fiscal year and with the concurrence
of its independent certified public accountants, changes the method
of valuing the Inventory of Borrower, or if any other changes in
accounting principles from those used in the preparation of any of
the Financial Statements are required by or result from the
promulgation of principles, rules, regulations, guidelines,
pronouncements or opinions by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or
successors thereto or bodies with similar functions), and any of
such changes result in a change in the method of calculation of, or
affect the results of such calculation of, any of the financial
covenants, standards or terms found herein, then the parties hereto
agree to enter into and diligently pursue negotiations in order to
amend such financial covenants, standards or terms so as to
equitably reflect such changes, with the desired result that the
criteria for evaluating the financial condition and results of
operations of Borrower shall be the same after such changes as if
such changes had not been made; provided, however, that until such
changes are made, all financial covenants herein and all the
provisions hereof which contemplate financial calculation hereunder
shall remain in full force and effect.
21.8. Other Security.
Lender may, without notice or demand and without affecting
Borrower's obligations hereunder, from time to time: (a) take from
any Person and hold collateral (other than the Collateral) for the
payment of all or any part of the Loan Obligations and exchange,
enforce and release such collateral or any part thereof; and
(b) accept and hold any endorsement or guaranty of payment of all
or any part of the Loan Obligations and release or substitute any
such endorser or guarantor, or any Person who has given any
Security Interest in any other collateral as security for the
payment of all or any part of the Loan Obligations, or any other
Person in any way obligated to pay all or any part of the Loan
Obligations.
21.9. Loan Records.
The date and amount of all Advances to Borrower and payments of
amounts due from Borrower under the Loan Documents will be recorded
in the records that Lender normally maintains for such types of
transactions. The failure to record, or any error in recording,
any of the foregoing shall not, however, affect the obligation of
Borrower to repay the Loans and other amounts payable under the
Loan Documents. Borrower shall have the burden of proving that
such records are not correct. Borrower agrees that Lender's books
and records showing the Loan Obligations and the transactions
pursuant to this Agreement shall be admissible in any action or
proceeding arising therefrom, irrespective of whether any Loan
Obligation is also evidenced by a promissory note or other
instrument. Such statement shall be deemed correct, accurate and
binding on Borrower and an account stated (except for reversals and
reapplications of payments as provided in Section 6.8 and
corrections of errors discovered by Lender), unless Borrower
notifies Lender in writing to the contrary within 30 days after
such statement is rendered. In the event a timely written notice
of objections is given by Borrower, only the items to which
exception is expressly made will be considered to be disputed by
Borrower.
21.10. Loan Obligations Payable in Dollars.
All Loan Obligations that are payable in Dollars under the terms of
the Loan Documents shall be payable only in Dollars. If, however,
to obtain a judgment in any court it is necessary to convert a Loan
Obligation payable in Dollars into another currency, the rate of
exchange used shall be that at which Lender, using its customary
procedures, could purchase Dollars with such other currency in New
York, New York on the Business Day immediately preceding the day on
which such judgment is rendered. If any sum in another currency is
paid to Lender or received by Lender and applied to a Loan
Obligation payable in Dollars, such Loan Obligation shall be deemed
paid and discharged only to the extent of the amount of Dollars
that Lender, using its customary procedures, is able to purchase in
New York, New York with such sum on the Business Day immediately
following receipt thereof. Borrower agrees to indemnify Lender
against any loss in Dollars that it may incur on such Loan
Obligation as a result of such payment or receipt and application
to such Loan Obligation.
21.11. Other Security and Guaranties.
Lender may, without notice or demand and without affecting
Borrower's obligations hereunder, from time to time: (a) take from
any Person and hold collateral (other than the Collateral) for the
payment of all or any part of the Loan Obligations and exchange,
enforce and release such collateral or any part thereof; and (b)
accept and hold any endorsement or guaranty of payment of all or
any part of the Loan Obligations and release or substitute any such
endorser or guarantor, or any Person who has given any Security
Interest in any other collateral as security for the payment of all
or any part of the Loan Obligations, or any other Person in any way
obligated to pay all or any part of the Loan Obligations.
22. Miscellaneous.
22.1. Notices.
All notices, consents, requests and demands to or upon the
respective parties hereto shall be in writing, and shall be deemed
to have been given or made when delivered in person to those
Persons listed on the signature pages hereof or four days after
being deposited in the United States mail, postage prepaid, or, in
the case of overnight courier services, one Business Day after
delivery to the overnight courier service, or in the case of telex
or telecopy notice, when sent, verification received, in each case
addressed as set forth on the signature pages hereof, or such other
address as either party may designate by notice to the other in
accordance with the terms of this Section. No notice given to or
demand made on Borrower by Lender in any instance shall entitle
Borrower to notice or demand in any other instance.
22.2. Confidentiality.
Except as provided in this Section, Lender agrees that it will not
disclose to third parties any Confidential Information. For the
purposes of this Section 22.2, "Confidential Information" means
information delivered to Lender by or on behalf of Borrower or any
Covered Person in connection with the transactions contemplated by
or otherwise pursuant to this Agreement that is proprietary in
nature and that was clearly marked or labeled or otherwise
adequately identified when received by Lender as being confidential
information of the Borrower or such Covered Person, provided that
such term does not include information that (a) was publicly known
or otherwise known by Lender prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission
by Lender or any person acting on behalf of Lender, (c) otherwise
becomes known to Lender other than through disclosure by Borrower
or any Covered Person or (d) constitutes Financial Statements or
other information delivered to Lender as required hereunder that
are otherwise publicly available. Lender will maintain the
confidentiality of such Confidential Information in accordance with
procedures adopted by Lender in good faith to protect Confidential
Information delivered to Lender, provided that Lender may deliver
or disclose Confidential Information to (i) its directors,
officers, employees, agents, attorneys and affiliates (to the
extent such disclosure reasonably relates to the administration of
the Loans and the Loan Documents), (ii) its financial advisors and
other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms
of this Section, (iii) any proposed assignee, participant or
transferee of Lender with respect to the Loans (if such Person has
agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section),
(iv) any Governmental Authority having jurisdiction over Lender, or
(v) any other Person to which such delivery or disclosure may be
necessary or appropriate (a) to effect compliance with any Law,
rule, regulation or order applicable to Lender, (b) in response to
any subpoena or other legal process, (c) in connection with any
litigation to which Lender is a party, or (d) if an Event of
Default has occurred and is continuing, to the extent Lender may
reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the
rights and remedies under this Agreement or any other Loan
Document.
22.3. Amendments, Waivers and Consents.
Unless otherwise provided herein, no amendment to or waiver of any
provision of this Agreement, or of any of the other Loan Documents,
nor consent to any departure by Borrower herefrom or therefrom,
shall be effective unless it is in writing and signed by authorized
officers of Borrower and Lender; provided, however, that any such
amendment, waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice
to or demand on Borrower in any instance shall entitle Borrower to
any other or further notice or demand in another similar or
different instance. No failure by Lender to exercise, and no delay
by Lender in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise by Lender of any right, remedy, power or
privilege hereunder preclude any other exercise thereof, or the
exercise of any other right, remedy, power or privilege existing
under any Law or otherwise.
22.4. Rights Cumulative.
Each of the rights and remedies of Lender under this Agreement
shall be in addition to all of its other rights and remedies under
applicable Law, and nothing in this Agreement shall be construed as
limiting any such rights or remedies.
22.5. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and all future holders of the Notes and their
respective successors and assigns, except that Borrower may not
assign, delegate or transfer any of its rights or obligations under
this Agreement without the prior written consent of Lender. With
respect to Borrower's successors and assigns, such successors and
assigns shall include any receiver, trustee or debtor-in-possession
of or for Borrower.
22.6. Severability.
Any provision of this Agreement which is prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or lack of authorization without invalidating the
remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other
jurisdiction unless the ineffectiveness of such provision would
result in such a material change as to cause completion of the
transactions contemplated hereby to be unreasonable.
22.7. Counterparts.
This Agreement may be executed by the parties hereto on any number
of separate counterparts, and all such counterparts taken together
shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account
for more than one counterpart signed by the party to be charged.
22.8. Governing Law; No Third Party Rights.
This Agreement, the other Loan Documents and the Notes and the
rights and obligations of the parties hereunder and thereunder
shall be governed by and construed and interpreted in accordance
with the internal Laws of the State of Missouri applicable to
contracts made and to be performed wholly within such state,
without regard to choice or conflict of laws provisions; except
that the provisions of the Loan Documents pertaining to the
creation or perfection of Security Interests or the enforcement of
rights of Lender in Collateral located in a State other than the
State of Missouri shall be governed by the laws of such other
State. This Agreement is solely for the benefit of the parties
hereto and their respective successors and assigns, and no other
Person shall have any right, benefit, priority or interest under,
or because of the existence of, this Agreement.
22.9. Counterpart Facsimile Execution.
For purposes of this Agreement, a document (or signature page
thereto) signed and transmitted by facsimile machine or telecopier
is to be treated as an original document. The signature of any
Person thereon, for purposes hereof, is to be considered as an
original signature, and the document transmitted is to be
considered to have the same binding effect as an original signature
on an original document. At the request of any party hereto, any
facsimile or telecopy document is to be re-executed in original
form by the Persons who executed the facsimile or telecopy
document. No party hereto may raise the use of a facsimile machine
or telecopier or the fact that any signature was transmitted
through the use of a facsimile or telecopier machine as a defense
to the enforcement of this Agreement or any amendment or other
document executed in compliance with this Section.
22.10. No Other Agreements.
There are no other agreements between Lender and Borrower, oral or
written, concerning the subject matter of the Loan Documents, and
all prior agreements concerning the same subject matter, including
any proposal or Commitment Letter, are merged into the Loan
Documents and thereby extinguished.
22.11. Negotiated Transaction.
Borrower and Lender represent each to the others that in the
negotiation and drafting of this Agreement and the other Loan
Documents they have been represented by and have relied upon the
advice of counsel of their choice. Borrower and Lender affirm that
their counsel have both had substantial roles in the drafting and
negotiation of this Agreement and Lender affirms that its counsel
has participated in the drafting and negotiation of this Agreement;
therefore, this Agreement will be deemed drafted by all of Borrower
and Lender and the rule of construction to the effect that any
ambiguities are to be resolved against the drafter will not be
employed in the interpretation of this Agreement.
22.12.
MANDATORY ARBITRATION.
22.12.1.
Any controversy or claim between or among the parties hereto
arising out of or relating to this Agreement or the other Loan
Documents, including any claim based on or arising from an
alleged tort, shall be determined by binding arbitration in
accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice
and Procedure for the Arbitration of Commercial Disputes of
Judicial Arbitration and Mediation Services, Inc., predecessor
in interest to Endispute, Inc., doing business as
"J.A.M.S./Endispute" and the "Special Rules" set forth below.
In the event of any inconsistency, the Special Rules shall
control. Judgment upon any arbitration award may be entered
in any court having jurisdiction. Any party to this Agreement
may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim
to which this Agreement applies in any court having
jurisdiction over such action.
22.12.2.
The arbitration shall be conducted in the St. Louis, Missouri
and administered by J.A.M.S./Endispute who will appoint an
arbitrator; if J.A.M.S./Endispute is unable or legally
precluded from administering the arbitration, then the
American Arbitration Association will serve. All arbitration
hearings will be commenced within ninety (90) calendar days of
the demand for arbitration; further, the arbitrator shall
only, upon a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional sixty
(60) calendar days.
22.12.3.
Nothing in this Agreement shall be deemed to (i) limit the
applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this
Agreement; or (ii) be a waiver by Lender of the protection
afforded to it by 12 U.S.C. Sec. 91 or any substantially
equivalent state law; or (iii) limit the right of Lender
(A) to exercise self help remedies such as (but not limited
to) setoff, or (B) foreclose against any Collateral or (C) to
obtain from a court provisional or ancillary remedies such as
(but not limited to) injunctive relief or the appointment of a
receiver. Lender may exercise such self help rights,
foreclose upon such Collateral, obtain such provisional or
ancillary remedies, or take any other action with respect to
the Collateral permitted by law or equity against Borrower or
any other Person liable for all or any portion of the Loan
Obligations, before, during or after the pendency of any
arbitration proceeding brought pursuant to this Agreement or
any of the other Loan Documents. Neither the exercise of self
help remedies nor the institution or maintenance of an action
for foreclosure or provisional or ancillary remedies shall
constitute a waiver of the right of any party, including the
claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies. No
provision herein or in this Agreement or the Loan Documents
regarding submission to jurisdiction, choice of forum, jury
trial waiver, and/or venue in any court is intended or shall
be construed to be in derogation of the provisions herein or
therein for arbitration of any controversy or claim.
22.13. Acknowledgment of Licensing Arrangements.
Nothing contained in this Agreement or in the Loan Documents shall
be construed as prohibiting Borrower from entering into licensing
or other contractual arrangements with respect to its software and
patents for the purpose of creating revenue for Borrower in the
ordinary course of Borrower's business as presently conducted.
22.14. CHOICE OF FORUM.
Subject only to the exception in the next sentence, Borrower and
Lender hereby agree to the exclusive jurisdiction of the federal
court of the Eastern District of Missouri and the state courts of
Missouri located in St. Louis County, Missouri, and waive any
objection based on venue or forum non conveniens with respect to
any action instituted therein, and agree that any dispute
concerning the relationship between Lender and Borrower or the
conduct of any of them in connection with this Agreement or
otherwise shall be heard only in the courts described above.
Notwithstanding the foregoing: (1) Lender shall have the right to
bring any action or proceeding against Borrower or its property in
any courts of any other jurisdiction Lender deem necessary or
appropriate in order to realize on the Collateral, real estate, or
other security for the Loan Obligations, and (2) each of the
parties hereto acknowledges that any appeals from the courts
described in the immediately preceding sentence may have to be
heard by a court located outside those jurisdictions. Borrower
shall cause each Covered Person to comply with the terms of this
Section.
22.15. SERVICE OF PROCESS.
Borrower hereby waives personal service of any and all process upon
it and consents that all such service of process may be made by
registered mail (return receipt requested) directed to Borrower at
its address set forth on the signature pages hereof, and service so
made shall be deemed to be completed five days after the same shall
have been so deposited in the U.S. mails (or, if Lender has
exercised its right to receive and open Borrower's mail as provided
herein, on the date service of process is received by Borrower); or
at Lender's option, by service upon CT Corporation, which Borrower
irrevocably appoints as Borrower's agent for the purpose of
accepting service of process within the State of Missouri. Lender
shall promptly forward by registered mail any process so served
upon said agent to Borrower at its address on the signature pages
hereof. Nothing in this section shall affect the right of Lender
to serve legal process in any other manner permitted by Law.
Borrower shall cause each other Covered Person to agree to the
terms of this Section.
22.16. JURY TRIAL.
Borrower and Lender hereby waive any right to trial by jury of any
claim, demand, action or cause of action (1) arising under this
Agreement or any other Loan Document, or (2) in any way connected
with or related or incidental to the dealings of the parties hereto
or either of them in respect of this Agreement or any other Loan
Document, or the transactions related hereto or thereto, in each
case whether now existing or hereafter arising, and whether
sounding in contract or tort or otherwise. Borrower and Lender
agree and consent that any such claim, demand, action or cause of
action shall be decided by court trial without a jury and that
either may file an original counterpart or a copy of this Agreement
with any court as written evidence of the consent of the parties
hereto to the waiver of their right to trial by jury. Borrower
shall cause each other Covered Person to agree to the terms of this
Section.
22.17. Incorporation By Reference.
All of the terms of the other Loan Documents are incorporated in
and made a part of this Agreement by this reference.
22.18. Statutory Notice.
The following notice is given pursuant to Section 432.045 of the
Missouri Revised Statutes; nothing contained in such notice shall
be deemed to limit or modify the terms of the Loan Documents:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO
PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING
OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS
WE MAY LATER AGREE IN WRITING TO MODIFY IT.
22.19. Statutory Notice-Insurance.
The following notice is given pursuant to Section 427.120 of the
Missouri Revised Statutes; nothing contained in such notice shall
be deemed to limit or modify the terms of the Loan Documents:
UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED
BY YOUR AGREEMENT WITH US, WE MAY PURCHASE INSURANCE AT YOUR
EXPENSE TO PROTECT OUR INTERESTS IN YOUR COLLATERAL. THIS
INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS. THE
COVERAGE THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE
OR ANY CLAIM THAT IS MADE AGAINST YOU IN CONNECTION WITH THE
COLLATERAL. YOU MAY LATER CANCEL ANY INSURANCE PURCHASED BY
US, BUT ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE OBTAINED
INSURANCE AS REQUIRED BY OUR AGREEMENT. IF WE PURCHASE
INSURANCE FOR THE COLLATERAL, YOU WILL BE RESPONSIBLE FOR THE
COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM,
INTEREST AND ANY OTHER CHARGES WE MAY IMPOSE IN CONNECTION
WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE
OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS
OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING
BALANCE OR OBLIGATION. THE COSTS OF THE INSURANCE MAY BE MORE
THAN THE COST OF INSURANCE YOU MAY BE ABLE TO OBTAIN ON YOUR
OWN.
[remainder of page intentionally blank]
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by appropriate duly authorized officers as of the date
first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION CLAUSE WHICH MAY
BE ENFORCED BY THE PARTIES.
TRIPOS, INC.
By: Colleen A. Martin /s/
Print Name: Colleen A. Martin
Title: V.P. Finance and Corporate Secretary
Notice Address for Borrower and all Covered Persons:
Tripos, Inc.
1699 Hanley Road
St. Louis, Missouri 63144-2913
Attn: John Yingling,
U.S. Controller and Corporate Treasurer
FAX No.: 314-647-8108
Confirming Telephone No.: 314-647-1099
NATIONSBANK, N.A.
By: Susan D. Patterson /s/
Print Name: Susan D. Patterson
Title: Assistant Vice President
Notice Address for Lender:
NationsBank, N.A.
One NationsBank Plaza
M01-800-12-01
800 Market Street
St. Louis, Missouri 63101
Attention: Susan Patterson
FAX No.: 314-466-6744
Confirming Telephone No.: 314-466-7010
with a copy to:
Lewis, Rice & Fingersh, L.C.
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
Attention: Steven C. Drapekin, Esq.
FAX No.: 314-241-6056
Confirming Telephone No.: 314-444-7600
EXHIBIT 2.1
GLOSSARY AND INDEX OF DEFINED TERMS
Account -- as to any Person, the right of such Person to payment
for goods sold or leased or for services rendered by such Person.
Account Debtor -- the obligor on any Account.
Adjusted Eurodollar Rate -- the rate of interest defined in Section 4.
Adjusted Eurodollar Base Rate -- for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Agent to
be equal to the quotient obtained by dividing (a) the Eurodollar
Rate for such Eurodollar Loan for such Interest Period by (b) the
result of subtracting from one the Reserve Requirement for such
Eurodollar Loan for such Interest Period expressed as a decimal.
Advance -- a Revolving Loan Advance.
Advance Date -- the date on which an Advance is requested by
Borrower to be made, or is otherwise contemplated or intended to be
made, as provided herein.
Affiliate -- with respect to any Person, (a) any other Person who
is a partner, director, officer or stockholder of such Person; and
(b) any other Person which, directly or indirectly, is in control
of, is controlled by or is under common control with such Person,
and any partner, director, officer or stockholder of such other
Person described. For purposes of this Agreement, control of a
Person by another Person shall be deemed to exist if such other
Person has the power, directly or indirectly, either to (i) vote
ten percent (10%) or more of the securities or partnership
interests having the power to vote in an election of directors of
such Person, or (ii) direct the management of such Person, whether
by contract or otherwise and whether alone or in combination with
others.
Asbestos Material -- either asbestos or asbestos-containing materials.
Assigned Collateral -- any tangible or intangible property of
Borrower, now owned or hereafter acquired in which Lender holds or
will hold a Security Interest under a Collateral Assignment to
secure payment or performance of any of the Loan Obligations as
required or contemplated under Section 8.3, and all proceeds thereof.
Beneficial Owner -- as defined in Rule 13-D-3 of the Securities and
Exchange Commission.
Borrowing Officer -- each individual of Borrower who is duly
authorized by Borrower to submit a request for an Advance on behalf
of Borrower.
Business Day -- a day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required to close under
the Laws of either the United States or the State of Missouri.
Capital Expenditure -- an expenditure for an asset that must be
depreciated or amortized under GAAP, for goodwill, or for any asset
that under GAAP must be treated as a capital asset, including
payments under Capital Leases. An expenditure for purposes of this
definition includes any deferred or seller financed portion of the
purchase price of an asset and the original capitalized amount of a
Capital Lease. The original capitalized amount of all Capital
Leases shall be taken into account during the applicable
calculation period in which such Capital Leases were entered.
Capital Lease -- any lease that has been or should be capitalized
under GAAP.
Charter Documents -- the articles or certificate of incorporation
and bylaws of a corporation; the certificate of limited partnership
and partnership agreement of a limited partnership; the partnership
agreement of a general partnership; the articles of organization
and operating agreement of a limited liability company; or the
indenture of a trust.
COBRA -- the Consolidated Omnibus Budget Reconciliation Act.
Code -- the Internal Revenue Code of 1986 and all regulations
thereunder of the IRS.
Collateral -- all of the Real Property Collateral, all of the
Personal Property Collateral, the Assigned Collateral, other
property in which Lender has a Security Interest to secure payment
or performance of the Loan Obligations and all proceeds thereof.
Collateral Assignment -- any of the collateral assignments required
or contemplated under Section 8.3 to be executed and delivered to
Lender.
Commitment -- the Revolving Loan Commitment or the Letter of Credit
Commitment of Lender, or when in the plural form "Commitments",
both the Revolving Loan Commitment and the Letter of Credit
Commitment.
Commonly Controlled Entity -- a Person which is under common
control with another Person within the meaning of Section 414(b) or
(c) of the Code.
Contract -- any contract, note, bond, indenture, deed, mortgage,
deed of trust, security agreement, pledge, hypothecation agreement,
assignment, or other agreement or undertaking, or any security.
Currency Hedge Obligation- any obligations of Borrower to any
Affiliate or Subsidiary of Lender under an agreement or agreements
between Borrower and any Affiliate or Subsidiary of Lender under
which the exposure of Borrower to fluctuations in foreign currency
values is effectively limited.
Default -- any of the events listed in Section 17.1 of this
Agreement, without giving effect to any requirement for the giving
of notice, for the lapse of time, or both, or for the happening of
any other condition, event or act.
Default Rate -- the rate of interest payable on each Loan after its
Maturity and in certain other circumstances as provided in
Section 4.7.
Disclosure Schedule -- the disclosure schedule of Borrower attached
hereto as Exhibit 11.
DOL -- the United States Department of Labor.
Dollars and the sign $ -- lawful money of the United States.
EBITDA -- defined in Section 16.1.
Effective Date -- the date when this Agreement is effective as
provided in Section 1.
Employment Law -- ERISA, the Occupational Safety and Health Act,
the Fair Labor Standards Act, or any other Law pertaining to the
terms or conditions of labor or safety in the workplace or
discrimination or sexual harassment in the workplace.
Encumbrance -- as to any item of real or personal property, any
easement, right-of-way, license, condition, or restrictive
covenant, or zoning or similar restriction, that is not a Security
Interest but is enforceable by any Person other than the record
owner of such property.
Environmental Law -- the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response, Compensation and
Liability Act, the Clean Water Act, the Clean Air Act, or any other
Law pertaining to environmental quality or remediation of Hazardous
Material.
EPA -- the United States Environmental Protection Agency.
ERISA -- the Employee Retirement Income Security Act of 1974.
ERISA Affiliate -- as to any Person, any trade or business
(irrespective of whether incorporated) which is a member of a group
of which such Person is a member and thereafter treated as a single
employer under 414(b), (c), (m) or (o) of the Code or applicable
Treasury Regulations.
Eurodollar Advance -- an Advance that will become a Eurodollar
Loan.
Eurodollar Loan -- any portion of a Loan on which interest accrues
at the Adjusted Eurodollar Rate.
Eurodollar Rate -- the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%), as determined by Lender
appearing, in the case of a Eurodollar Loan denominated in Dollars,
on Dow Jones Markets Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars, at
approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate for a Eurodollar Loan
denominated in dollars is not available, the term Eurodollar Rate
shall mean, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the
London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if
necessary, to the nearest 1/100 of 1%).
Event of Default -- any of the events listed in Section 17.1 of
this Agreement as to which any requirement for the giving of
notice, for the lapse of time, or both, or for the happening of any
further condition, event or act has been satisfied.
Execution Date -- the date when this Agreement has been executed.
Existing Default -- an Event of Default which has occurred and is
continuing, which has not been waived in writing by Lender.
Financial Statements -- the most recent of the Initial Financial
Statements and the financial statements of Borrower required to be
furnished to Lender under Section 14.14 of this Agreement.
FRB -- the Board of Governors of the Federal Reserve System and any
successor thereto or to the functions thereof.
GAAP -- those generally accepted accounting principles set forth in
Statements of the Financial Accounting Standards Board and in
Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants or which have other
substantial authoritative support in the United States and are
applicable in the circumstances, as applied on a consistent basis.
Governmental Authority -- the federal government of the United
States; the government of any foreign country that is recognized by
the United States or is a member of the United Nations; any state
of the United States; any local government or municipality within
the territory or under the jurisdiction of any of the foregoing;
any department, agency, division, or instrumentality of any of the
foregoing; and any court, arbitrator, or board of arbitrators whose
orders or judgements are enforceable by or within the territory of
any of the foregoing.
Hazardous Material -- any hazardous, radioactive, toxic, solid or
special waste, material, substance or constituent thereof, or any
other such substance (as defined under any applicable Law or
regulation), including Asbestos Material. Hazardous Material does
not include materials or products containing hazardous constituents
which are not considered to be waste under the applicable
Environmental Law or which are considered to be waste but are
transported, handled or disposed of in accordance with the
applicable Environmental Law, or Asbestos Material which is not
friable.
Indebtedness -- as to any Person at any particular date, any
contractual obligation enforceable against such Person (i) to repay
borrowed money; (ii) to pay the deferred purchase price of property
or services; (iii) to make payments or reimbursements with respect
to bank acceptances or to a factor; (iv) to make payments or
reimbursements with respect to letters of credit whether or not
there have been drawings thereunder; (v) with respect to which
there is any Security Interest in any property of such Person;
(vi) to make any payment or contribution to a Multi-Employer Plan;
(vii) that is evidenced by a note, bond, debenture or similar
instrument; (viii) under any conditional sale agreement or title
retention agreement; or (ix) to pay interest or fees with respect
to any of the foregoing. Indebtedness also includes any other
Obligation that either (i) is non-contingent and liquidated in
amount or (ii) should under GAAP be included in liabilities and not
just as a footnote on a balance sheet.
Indirect Obligation -- as to any Person, (a) any guaranty by such
Person of any Obligation of another Person; (b) any Security
Interest in any property of such Person that secures any Obligation
of another Person, (c) any enforceable contractual requirement that
such Person (i) purchase an Obligation of another Person or any
property that is security for such Obligation, (ii) advance or
contribute funds to another Person for the payment of an Obligation
of such other Person or to maintain the working capital, net worth
or solvency of such other Person as required in any documents
evidencing an Obligation of such other Person, (iii) purchase
property, securities or services from another Person for the
purpose of assuring the beneficiary of any Obligation of such other
Person that such other Person has the ability to timely pay or
discharge such Obligation, (iv) grant a Security Interest in any
property of such Person to secure any Obligation of another Person,
or (v) otherwise assure or hold harmless the beneficiary of any
Obligation of another Person against loss in respect thereof; and
(d) any other contractual requirement enforceable against such
Person that has the same substantive effect as any of the
foregoing. The term Indirect Obligation does not, however, include
the indorsement by a Person of instruments for deposit or
collection in the ordinary course of business or the liability of a
general partner of a partnership for Obligations of such
partnership. The amount of any Indirect Obligation of a Person
shall be deemed to be the stated or determinable amount of the
Obligation in respect of which such Indirect Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good
faith.
Intellectual Property -- as to any Person, any domestic or foreign
patents or patent applications of such Person, any inventions made
or owned by such Person upon which either domestic or foreign
patent applications have not yet been filed, any domestic or
foreign trade names or trademarks of such Person, any domestic or
foreign trademark registrations or applications filed by such
Person, any domestic or foreign service marks of such Person, any
domestic or foreign service mark registrations and applications by
such Person, any domestic or foreign copyrights of such Person, and
any domestic or foreign copyright registrations or applications by
such Person.
Initial Financial Statements -- the financial statements, including
the pro-forma financial statements, of Borrower referred to in
Section 10.1.2.
Interest Hedge Obligation- any obligations of Borrower to Lender or
any Affiliate or Subsidiary of Lender under an agreement or
agreements between Borrower and Lender or any Affiliate or
Subsidiary of Lender under which the exposure of Borrower to
fluctuations in interest rates is effectively limited, whether in
the form of one or more interest rate cap, collar, or corridor
agreements, interest rate swaps, or the like, or options therefor.
Interest Period -- the period during which a particular Adjusted
Eurodollar Rate applies to a Eurodollar Loan, as selected by
Borrower as provided in Section 4.2.
Inventory -- goods owned and held by a Person for sale, lease or
resale or furnished or to be furnished under contracts for
services, and raw materials, goods in process, materials, component
parts and supplies used or consumed, or held for use or consumption
in such Person's business.
Investment -- (a) a loan or advance of money or property to a
Person, (b) stock or other equity interest in a Person, (c) a debt
instrument issued by a Person, whether or not convertible to stock
or other equity interest in such Person, or (d) any other interest
in or rights with respect to a Person which include, in whole or in
part, a right to share, with or without conditions or restrictions,
some or all of the revenues or net income of such Person.
IRS -- the Internal Revenue Service.
Law -- any statute, rule, regulation, order, judgment, award or
decree of any Governmental Authority.
Lender -- is defined in the Preamble of this Agreement.
Lending Office -- the address of Lender set forth on the signature
page hereto, or such other address or wire instructions as Lender
may designate from time to time by notice to Borrower in accordance
with the terms of Section 22.1.
Letter of Credit Commitment -- the commitment of Lender to issue
letters of credit as provided in Section 3.2.
Letter of Credit Exposure -- the undrawn amount of all outstanding
letters of credit issued by Lender under the Letter of Credit
Commitment plus all amounts drawn on such letters of credit and not
yet reimbursed to Lender by Borrower.
Loan -- a Revolving Loan.
Loan Documents -- this Agreement, the Notes, letter of credit
applications and reimbursement agreements, and all other
agreements, certificates, documents, instruments and other writings
executed in connection herewith or in connection with the Tripos
Realty NationsBank Indebtedness.
Loan Obligations -- all of Borrower's and any other Covered
Person's Indebtedness owing to Lender under the Loan Documents,
whether as principal, interest, fees or otherwise, all
reimbursement obligations of Borrower with respect to the Letter of
Credit Exposure, and all other Obligations and liabilities of
Borrower and the other Covered Persons to Lender under the Loan
Documents (including the Tripos Realty NationsBank Indebtedness)and
all Interest Hedge Obligations and Currency Hedge Obligations (in
each case including all extensions, renewals, modifications,
rearrangements, restructures, replacements and refinancings of the
foregoing, whether or not the same involve modifications to
interest rates or other payment terms), whether now existing or
hereafter created, absolute or contingent, direct or indirect,
joint or several, secured or unsecured, due or not due, contractual
or tortious, liquidated or unliquidated, arising by operation of
law or otherwise, including but not limited to the obligation of
Borrower and any other Covered Person to repay future advances by
Lender, whether or not made pursuant to commitment and whether or
not presently contemplated by Borrower, any other Covered Person,
and/or Lender in the Loan Documents.
Material Adverse Effect -- as to any Person and with respect to any
event or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, investigation or
proceeding), a material adverse effect on the business, operations,
revenues, financial condition, property, or business prospects of
any Covered Person, or the value of property of any Covered Person,
or the ability of any Covered Person to timely pay or perform its
Obligations generally, or to Lender specifically.
Material Agreement -- as to any Person, any Contract to which such
Person is a party or by which such Person is bound which, if
violated or breached, has or is reasonably likely to have a
Material Adverse Effect on such Person or any Covered Person,
including the Loan Documents.
Material Law -- any separately enforceable provision of a Law whose
violation by a Person has or is reasonably likely to have a
Material Adverse Effect with respect to such Person or any Covered
Person.
Material License -- (i) as to any Covered Person, any license,
permit or consent from a Governmental Authority or other Person and
any registration and filing with a Governmental Authority or other
Person which if not obtained, held or made by such Borrower has or
is reasonably likely to have a Material Adverse Effect with respect
to such Borrower or any other Borrower and (ii) as to any Person
who is a party to this Agreement or any of the other Loan
Documents, any license, permit or consent from a Governmental
Authority or other Person and any registration or filing with a
Governmental Authority or other Person that is necessary for the
execution or performance by such party, or the validity or
enforceability against such party, of this Agreement or such other
Loan Document.
Material Obligation -- as to any Person, an Obligation of such
Person which if not fully and timely paid or performed has or is
reasonably likely to have a Material Adverse Effect on such Person
or any Covered Person.
Material Proceeding -- any litigation, investigation or other
proceeding by or before any Governmental Authority (i) which
involves any of the Loan Documents or any of the transactions
contemplated thereby, or involves a Covered Person as a party or
any property of a Covered Person and has or is reasonably likely to
have a Material Adverse Effect on a Covered Person if adversely
determined, (ii) in which there has been issued an injunction,
writ, temporary restraining order or any other order of any nature
which purports to restrain or enjoin the making of any Advance, the
consummation of any other transaction contemplated by the Loan
Documents, or the enforceability of any provision of any of the
Loan Documents, (iii) which involves the actual or alleged breach
or violation by a Covered Person of, or default by a Covered Person
under, any Material Agreement and has or is reasonably likely to
have a Material Adverse Effect on a Covered Person, or (iv) which
involves the actual or alleged violation by a Covered Person of any
Material Law and has or is reasonably likely to have a Material
Adverse Effect on a Covered Person.
Maturity -- as to any Indebtedness, the time when it becomes
payable in full, whether at a regularly scheduled time, because of
acceleration or otherwise.
Maximum Available Amount -- the maximum Dollar amount available for
Revolving Loan Advances on any date as stated in Section 3.1.2, as
it may be changed as provided herein.
Multi-employer Plan -- a Pension Benefit Plan which is a multi-
employer plan as defined in Section 4001(a)(3) of ERISA.
Note -- any Revolving Note .
Obligation -- as to any Person, any Indebtedness of such Person,
any guaranty by such Person of any Indebtedness of another Person,
and any contractual requirement enforceable against such Person
that does not constitute Indebtedness of such Person or a guaranty
by such Person but which would involve the expenditure of money by
such Person if complied with or enforced.
PBGC -- the Pension Benefit Guaranty Corporation.
Pension Benefit Plan -- any pension or profit-sharing plan which is
covered by Title I of ERISA and all other benefit plans, in each
case in respect of which a Covered Person or a Commonly Controlled
Entity of such Covered Person is an "employer" as defined in
Section 3(5) of ERISA.
Permitted Indebtedness -- Indebtedness that the Covered Persons are
permitted under Section 15.2 to incur, assume, or allow to exist.
Permitted Indirect Obligations -- Indirect Obligations that the
Covered Persons are permitted under Section 15.7 to create, incur,
assume, or allow to exist.
Permitted Investments -- Investments that the Covered Persons are
permitted under Section 15.1 to make in other Persons.
Permitted Security Interests -- Security Interests that the Covered
Persons are permitted under Section 15.3 to create, incur, assume,
or allow to exist.
Person -- any individual, partnership, corporation, trust,
unincorporated association, joint venture, limited liability
company, Governmental Authority, or other organization in any form
that has the legal capacity to sue or be sued. If the context so
implies or requires, the term Person includes Borrower.
Personal Property Collateral -- all of the Goods, Accounts,
Inventory, Instruments, Documents, Chattel Paper, and other
personal property of Borrower or any other Covered Person, whether
now owned or hereafter acquired, and all proceeds thereof, in which
Lender at any time holds a Security Interest.
Prime Rate -- the per annum interest rate so designated from time
to time as the Prime Rate by Lender, which is a reference rate and
does not necessarily represent the lowest or best rate charged to
any customer of Lender.
Prime Rate Advance -- an Advance that will become a Prime Rate
Loan.
Prime Rate Loan -- any portion of a Loan on which interest accrues
at the Prime Rate.
Qualified Financial Institution -- is any commercial bank chartered
under the laws of the United States or any state thereof which has
capital and surplus of not less than $500,000,000.
Real Property Collateral -- all real property of any Covered
Person, whether now owned or hereafter acquired, or whether now
leased or hereafter leased, in which Lender holds or will hold
Security Interest to secure the payment or performance of any of
the Loan Obligations as required or contemplated under Section 8,
and all income therefrom and proceeds thereof.
Regulation D, Regulation G, and Regulation U -- respectively,
Regulation D issued by the FRB, Regulation G issued by the FRB, and
Regulation U issued by the FRB.
Reportable Event -- a reportable event as defined in Title IV of
ERISA or the regulations thereunder.
Reserve Requirement -- the maximum rate at which reserves
(including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the FRB or any other
Governmental Authority to which Lender (or its successor) is
subject, including, in the case of Eurodollar Loans, "Eurocurrency
liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the reserve requirement shall
reflect any other reserves required to be maintained by any Lender
with respect to any category of liabilities which includes deposits
by reference to which the Eurodollar Rate is to be determined, or
any category of extensions of credit or other assets which include
Eurodollar Loans. (The entire amount of a Eurodollar Loan shall be
deemed to constitute a Eurocurrency liability and as such shall be
deemed to be subject to such reserve requirements without benefit
of credits for proration, exceptions or set-offs which may be
available from time to time to any Lender under Regulation D.)
Responsible Officer -- as to any Person that is not an individual,
partnership or trust, the Chairman of the Board of Directors, the
President, the chief executive officer, the chief operating
officer, the chief financial officer, the Corporate Treasurer, or
the Secretary; as to any partnership, any individual who is a
general partner thereof or any individual who has general
management or administrative authority over all or any principal
unit of the partnership's business; and as to any trust, any
individual who is a trustee.
Revolving Loan -- Lender's aggregate Revolving Loan Advances.
Revolving Loan Advance -- an advance by Lender under the Revolving
Loan Commitment.
Revolving Loan Commitment -- the commitment of Lender as stated in
Section 3.1.1 to fund Revolving Advances.
Revolving Loan Maturity Date - October 16, 2003.
Revolving Note -- any note delivered to Lender as required by
Section 3.1.3 to evidence Borrower's obligation to repay Lender's
Revolving Loan.
Security Agreement -- any security agreement, mortgage, deed of
trust or similar document required or contemplated under
Section 8.2 to be executed and delivered to Lender.
Security Documents -- all of the documents required or contemplated
to be executed and delivered to Lender under Section 8, all
documents granting a Security Interest to Lender in any asset of
Borrower or any other Person to secure the Loan Obligations from
time to time, including, any such documents listed on Exhibit
10.1.1, and any similar documents at any time executed and
delivered to Lender from time to time, by Borrower or any other
Person to secure payment or performance of any of the Loan
Obligations.
Security Interest -- as to any item of tangible or intangible
property, any interest therein or right with respect thereto that
secures an Obligation or an Indirect Obligation, whether such
interest or right is created under a Contract, or by operation of
law or statute (such as but not limited to a statutory lien for
work or materials), or as a result of a judgment, or which arises
under any form of preferential or title retention agreement or
arrangement (including a conditional sale agreement or a lease)
that has substantially the same economic effect as any of the
foregoing.
Solvent -- as to any Person, such Person not being "insolvent"
within the meaning of Section 101(32) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act (the "UFTA") or
Section 428.014 of the Missouri Revised Statutes, (ii) such Person
not having unreasonably small capital, within the meaning of
Section 548 of the Bankruptcy Code, Section 4 of the UFTA or
Section 428.024 of the Missouri Revised Statutes, and (iii) such
Person not being unable to pay such Person's debts as they become
due within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA or Section 428.024 of the Missouri Revised
Statutes.
Subsidiary -- as to any Person, a corporation, limited liability
company, trust or partnership with respect to which more than 50%
of the outstanding shares of stock, membership interests,
partnership interests or trustee powers having ordinary voting
power (other than stock having such power only by reason of the
happening of a contingency) is at the time owned by such Person or
by one or more Subsidiaries of such Person.
Tax -- as to any Person, any tax, assessment, fee, or other charge
levied by a Governmental Authority on the income or property of
such Person, including any interest or penalties thereon, and which
is payable by such Person.
this Agreement -- this document (including every document that is
stated herein to be an appendix, exhibit or schedule hereto,
whether or not physically attached to this document).
total funded indebtedness -- defined in Section 16.1.
Tripos Realty NationsBank Indebtedness - the Indebtedness of Tripos
Realty, LLC to NationsBank, N.A. pursuant to that certain Loan
Agreement dated as of November 14, 1997 and the other documents
executed in connection therewith, including that certain Term Note
of even date therewith in the original principal amount of
$3,560,000).
UCC -- the Uniform Commercial Code as in effect from time to time
in the State of Missouri or such other similar statute as in effect
from time to time in Missouri or any other appropriate
jurisdiction.
United States -- when used in a geographical sense, all the states
of the United States of America and the District of Columbia; and
when used in a legal jurisdictional sense, the government of the
country that is the United States of America.
Welfare Benefit Plan -- any plan described by Section 3(1) of
ERISA.
EXHIBIT 7.7
FORM OF REQUEST FOR REVOLVING LOAN ADVANCE
NationsBank, N.A.
One NationsBank Plaza
800 North Market Street
St. Louis, Missouri 63101
Attn.: Susan Patterson
Re: Loan Agreement effective October 16, 1998 between Tripos, Inc.
("Borrower) and NationsBank, N.A. ("Lender"), as it may be
amended, modified, restated or replaced from time to time (the
"Loan Agreement")
Attention:
Ladies and Gentlemen:
The undersigned is the authorized Borrowing Officer and, as
such is authorized to make and deliver this Advance Request
pursuant to Section 7.8 of the Loan Agreement. All capitalized
words used herein that are defined in the Loan Agreement have the
meanings defined in the Loan Agreement.
Borrower hereby requests that Lender make a Revolving Loan
Advance of $_______ to Borrower under the terms of the Loan
Agreement on _______________. Of the requested Revolving Loan
Advance, $<_> is to be a Eurodollar Advance, and $<_> is to be a
Prime Rate Advance. The Interest Period for the portion that is a
Eurodollar Advance is ______ months. The proceeds of the Advance
should be deposited ____________________, .
The undersigned hereby certifies on behalf of Borrower that:
(i) There is no Existing Default.
(ii) The representations and warranties of Borrower in
Section 12 of the Loan Agreement are true as if made on
the date hereof except as otherwise provided in Section
7.7 of the Loan Agreement.
(iii) The amount of the requested Revolving Loan
Advance will not, when added to the current amount of the
Aggregate Revolving Loan, exceed the Maximum Available
Amount.
(iv) All conditions precedent under Section 10.2 of the
Loan Agreement have been satisfied, (subject to Lender's
giving Borrower notice that the matters described in the
attachment hereto are satisfactory to them).
Executed this ____ day of _______________, _____.
TRIPOS, INC.
By:
Title:
EXHIBIT 12
DISCLOSURE SCHEDULE OF BORROWER
EXHIBIT 14.14.2
FORM OF COMPLIANCE CERTIFICATE
TO: NATIONSBANK, N.A.
This Compliance Certificate is furnished pursuant to that certain
Loan Agreement by and between Tripos, Inc. ("Borrower") and
NationsBank, N.A. ("Lender"), effective October 16, 1998 (as the
same may be amended, modified, restated or replaced from time to
time, the "Loan Agreement"). Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the
meanings defined in the Loan Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________ of Borrower and am
authorized to provide this Certificate on behalf of Borrower
pursuant to the Loan Agreement.
2. I have reviewed the terms of the Loan Agreement and the Loan
Documents and I have made, or have caused to be made under my
supervision, a review of the transactions and conditions of
Borrower during the accounting period covered by the attached
Financial Statements.
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or event
which constitutes an Default or Event of Default as of the date of
this Compliance Certificate; and to my knowledge all of the
representations and warranties of Borrower contained in the Loan
Agreement and other Loan Documents are true and correct.
4. [Use for annual financial statements: Schedule I attached
hereto contains the Financial Statements for Borrower for the
fiscal year ended __________, which are complete and correct in all
material respects and have been prepared in accordance with GAAP
applied consistently throughout the period and with prior periods
(except as disclosed therein).]
[Use for quarterly financial statements:
Schedule I attached hereto contains the
Financial Statements for Borrower for the
fiscal quarter ended __________, which are
complete and correct in all material respects
(subject to normal year-end audit adjustments)
and have been prepared in accordance with GAAP
applied consistently throughout the period and
with prior periods (except as disclosed therein).]
5. Borrower is in compliance with all of the covenants in the
Loan Agreement, including the financial covenants in Section 16,
and Schedule II attached hereto contains calculations based on
Borrower's financial statements and other financial records that
show Borrower's compliance with such financial covenants. The
calculations and the data upon which they are based are believed by
me to be complete and correct.
This Compliance Certificate, together with the Schedules hereto, is
executed and delivered this _____ day of ________________________.
TRIPOS, INC.
Print Name:
Title:
Schedule I - Financial Statements
Schedule II - Financial Covenant Calculations
SCHEDULE I TO COMPLIANCE CERTIFICATE
See current Financial Statements.
SCHEDULE II TO COMPLIANCE CERTIFICATE
All calculations done in accordance with GAAP on a
consolidated basis, in accordance with the provisions of the Loan
Agreement and based on the period ended __________________. Any
inconsistencies between the descriptions of the items set forth in
this Schedule II and the terms of any of Sections 16.1 through 16.2
shall be resolved in favor of the terms set forth in Sections 16.1
through 16.2. Reference should be made to Sections 16.1 through
16.2 of the Loan Agreement for more specific instructions regarding
the calculation periods and how the components of the financial
covenants should be calculated.
I. EBITDA (for preceding 12 month period):
(i) Net Income $_________
(ii) Federal, State and Local Income
Tax expense paid or accrued for as a liability $_________
(iii) Interest Expense $_________
(iv) Depreciation and amortization expense $_________
(v) Loss on asset sales & dispositions $_________
(vi) Extraordinary losses $_________
(vii) Sum of Items (i), (ii), (iii),
(iv), (v), and (vi) $_________
(viii) Extraordinary income/gain $_________
(ix) Gain on asset sales & dispositions $_________
(x) Capitalized research and development $_________
(xi) Item (vii) minus the sum of Items
(viii), (ix), and (x)-EBITDA $_________
II. Maximum Leverage Ratio (Section 16.2)
A. Total Funded Indebtedness $_________
B. EBITDA for preceding 12 months, per Item I $_________
C. Ratio of Item A to Item B _________
D. Maximum Leverage Ratio permitted by
Section 16.2 2.00 to 1.00
III. Current Ratio (Section 16.3)
A. Current Assets (excluding cash and marketable securities) $_________
B. Current Liabilities $_________
C. Ratio of Item A to Item B _________
D. Minimum ratio of Current Assets to
Current Liabilities required by Section 16.3 1.10 to 1.00
IV. Fixed Charge Coverage (Section 16.4)
A. EBITDA (Item I) $_________
B. Fixed Charges $_________
(i) Interest Expense $_________
(ii)Current maturities of Total Funded
Indebtedness (including current maturities
of capital lease obligations) $_________
(iii) Federal, state, and local income taxes $_________
(iv) Distributions $_________
(v) Sum of items (i) through (iv) $_________
C. Ratio of Item A to Item B _________
D. Minimum Fixed Charge Coverage Ratio
required by Section 16.4 1.60 to 1.00
V. Minimum EBITDA (Section 16.5)
A. EBITDA (see Item I above) $__________
B. Minimum EBITDA Required for Period by Section 16.5 $__________
VI. Maximum Capital Expenditures (Section 16.6)
A. Capital Expenditures $________
B. Maximum Capital Expenditures permitted by Section 16.6 $________
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 5410
<SECURITIES> 0
<RECEIVABLES> 7404
<ALLOWANCES> 90
<INVENTORY> 1901
<CURRENT-ASSETS> 15739
<PP&E> 15230
<DEPRECIATION> 6676
<TOTAL-ASSETS> 31473
<CURRENT-LIABILITIES> 8189
<BONDS> 0
0
0
<COMMON> 32
<OTHER-SE> 19248
<TOTAL-LIABILITY-AND-EQUITY> 31473
<SALES> 17300
<TOTAL-REVENUES> 17300
<CGS> 4477
<TOTAL-COSTS> 4477
<OTHER-EXPENSES> 14454
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (120)
<INCOME-PRETAX> (299)
<INCOME-TAX> (108)
<INCOME-CONTINUING> (191)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (191)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
