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 June 30, 1999
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 June 30, 1999: 3,288,858 shares.
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION,
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at
June 30, 1999 and December 31, 1998 3
Consolidated Statements of Operations
for Three Months Ended June 30, 1999 and June 30, 1998
and Six Months Ended June 30, 1999 and June 30, 1998 4
Consolidated Statements of Cash Flows for Six Months
Ended June 30, 1999 and June 30, 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II OTHER INFORMATION 12
SIGNATURES 13
EXHIBITS - Exhibit 10.13, Settlement Agreement
- Exhibit 27, Financial Data Schedule
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, Dec 31,
1999 1998
ASSETS
Current Assets:
Cash and cash equivalents $ 860 $ 1,774
Accounts receivable 9,234 12,451
Inventory 2,068 2,389
Prepaid expenses 1,137 1,278
Deferred income taxes 201 242
Total current assets 13,500 18,134
Notes receivable-trade 2,314 2,304
Notes receivable-other 899 863
Property and equipment,
less accumulated depreciation 14,013 11,076
Capitalized development costs, net 724 877
Goodwill, net of amortization 1,099 1,147
Investment in unconsolidated affiliates 2,423 1,982
Other, net 411 427
Total assets $ 35,383 $ 36,810
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt
and capital leases $ 240 $ 150
Notes payable (see note 6) 7,620 178
Accounts payable 836 827
Accrued expenses 1,286 2,858
Deferred revenue 5,070 5,005
Total current liabilities 15,052 9,018
Long-term portion of capital leases 315 226
Long-term notes payable (see note 6) 5,289
Long-term deferred revenue 1,821 2,303
Deferred income taxes 407 465
Shareholders' equity:
Common stock 33 33
Additional paid-in capital 18,230 17,980
Retained earnings (deficit) (391) 1,269
Other comprehensive income (loss) (84) 227
Total shareholders' equity 17,788 19,509
Total liabilities and shareholders' equity $ 35,383 $ 36,810
See accompanying notes.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
Net sales:
Software licenses $ 1,736 $ 2,262 $ 3,552 $ 4,248
Support 2,091 1,929 4,148 3,823
Accelerated discovery services 1,528 514 2,892 1,704
Hardware 767 824 1,686 1,938
Total net sales 6,122 5,529 12,278 11,713
Operating costs and expenses:
Cost of sales 1,476 980 3,346 3,148
Sales and marketing 2,279 2,434 4,626 4,768
Research and development 2,786 1,445 4,533 2,797
General and administrative 1,300 991 2,397 1,862
Total costs and expenses 7,841 5,850 14,902 12,575
Loss from operations (1,719) (321) (2,624) (862)
Other income, net (172) 386 (52) 455
Income (loss) before income taxes (1,891) 65 (2,676) (407)
Income tax expense (benefit) (718) 24 (1,017) (146)
Net income (loss) $(1,173) $ 41 $(1,659) $ (261)
Basic earnings (loss) per share $(0.36) $ 0.01 $(0.51) $(0.08)
Diluted earnings(loss) per share $(0.36) $ 0.01 $(0.51) $(0.08)
Diluted weighted average
number of shares 3,268 3,510 3,263 3,185
See accompanying notes.
Item 1. Financial Statements (continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended
June 30, June 30,
1999 1998
Operating activities:
Net loss $(1,659) $ (261)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation of property and equipment 820 335
Amortization of capitalized development
costs and goodwill (270) 2,189
Deferred income taxes (17) (264)
Change in operating assets and liabilities:
Accounts receivable 2,851 2,603
Notes receivable-trade (271) (510)
Inventories 213
Prepaid expenses and other current assets 138 (1,300)
Accounts payable and accrued expenses (679) (2,939)
Deferred revenue (13) 1,178
Net cash provided by operating activities 1,113 1,031
Investing activities:
Net purchases, sales, and maturities
of investments 501
Notes receivable-other (18) (36)
Purchases of property and equipment (4,187) (1,096)
Capitalized development costs 500 (2)
Acquisition, including investment in
unconsolidated affiliates (385)
Other (152) (34)
Net cash (used in) investing activities (4,242) (667)
Financing activities:
Stock issuance pursuant to stock plans 250 300
Issuance of debt 2,411 146
Net cash provided by financing activities 2,661 446
Effect of foreign exchange rate changes
on cash and cash equivalents (446) (7)
Net change in cash and cash equivalents (914) 803
Cash and cash equivalents at
beginning of period 1,774 5,277
Cash and cash equivalents at end of period $ 860 $ 6,080
See accompanying notes.
Item 1. Financial Statements (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands except per share data)
(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. These statements should be read in
conjunction with the Company's consolidated financial statements
for the year ended December 31, 1998 set forth in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange
Commission. 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 six-month periods ended June 30, 1999 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1999.
(2) Income taxes
The provision for income taxes is computed using the liability
method. The primary difference between financial statement and
taxable income results from the use of different methods of
computing capitalized development costs, accrued vacation and
customer deposits.
(3) Comprehensive Income
The components of comprehensive income, net of related tax,
for the three-month and six-month periods ended June 30, 1999 and
1998 are as follows:
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
Net income (loss) $(1,173) $ 41 $(1,659) $(261)
Foreign currency translation
adjustments (139) (144) (311) (64)
Comprehensive income (loss) $(1,312) $(103) $(1,970) $(325)
The components of accumulated other comprehensive income, net of
related tax, at June 30, 1999 and December 31, 1998 are as follows:
1999 1998
Foreign currency translation adjustments $ (84) $ 227
Accumulated other comprehensive income (loss) $ (84) $ 227
(4) Earnings Per Share
The following table sets forth the computation of basic and
diluted earnings per share for the quarters ended June 30, 1999
and 1998.
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
Numerator:
Numerator for basic and diluted
earnings (loss) per share $(1,173) $ 41 $(1,659) $ (261)
Denominator:
Denominator for basic earnings
(loss) per share-weighted
average shares 3,268 3,193 3,263 3,185
Effect of dilutive securities:
Employee stock options Note A 317
Denominator for diluted earnings
(loss) per share--adjusted
weighted average shares
and assumed conversions 3,268 3,510 3,263 3,185
Basic earnings (loss) per share $ (0.36) $ 0.01 $(0.51) $(0.08)
Diluted earnings (loss) per share $ (0.36) $ 0.01 $(0.51) $(0.08)
Note A: Employee stock options to purchase shares of the
Company's common stock were not included in the June 30, 1999
computation of diluted earnings per share because the effect
would have been anti-dilutive.
(5) Inventory
The Company maintains a physical inventory of chemical
compound libraries in various states of completion. Costs
associated with the manufacture of compounds are calculated using
the standard cost method and are carried at the lower of cost or
market. Compounds that are acquired from third parties are also
carried at the lower of cost or market. Finished Goods inventory
may periodically contain costs of computer hardware that has been
acquired for resale to the Company's customers.
June 30, December 31,
1999 1998
Raw materials $ 42 $44
Work in process 360 1,764
Finished goods 1,666 581
$2,068 $2,389
(6) Long Term Debt
On April 30, 1999, the Company entered into a credit facility
with a bank, which refinanced an existing $12,000 Credit Agreement
and a mortgage note. The new Credit Agreement is for a total of
$15,320 which is broken into three separate credit facilities: a
$3,320 secured real estate mortgage, a $4,000 three-year secured
term loan, and an $8,000 three-year revolving line of credit. The
Credit Agreement is collateralized by substantially all of the
Company's U.S. assets and stock pledges for the Company's U.S. and
foreign subsidiaries. The credit facility also requires the
Company to meet certain financial covenants, including various
coverage ratios.
Effective June 30, 1999, the Company and the bank amended the
credit facility due to circumstances arising in the second quarter
of 1999. The amendment calls for adjustments in the pricing of
loans under the credit agreement, the timing of maturities, and
covenant levels. It is the Company's and the bank's intent to
renegotiate the credit facility during the fourth quarter of 1999
to better fit the future needs of the Company. As a result, the
current outstanding loans are classified as short-term debt pending
the completion of the negotiation of the credit agreement. At June
30, 1999, the availability under the revolving line of credit was
$3,200.
(7) Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("FAS 133"), which was required to be adopted
in years beginning after June 15, 1999. The FASB has since delayed
the effective date until years beginning after June 15, 2000. 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, 2001. 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.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Tripos, Inc. is a leader in discovery services, informatics
and products for life science organizations worldwide. Tripos'
current proprietary technologies and strategic relationships expand
its reputation in computational chemistry for efficient
pharmacological activity prediction and analysis, a major factor in
customers' cost-effective new product success. Based on scientific
expertise in these areas as well as a worldwide sales and marketing
organization, Tripos expanded its business model in 1997. The
Company now offers the following products and services: software,
software consulting services, technology transfer, screening
libraries, and contract discovery research. The Company continues
to be a reseller of third party hardware products that are
compatible with the Company's software products.
The Company's sales and expenses can vary from quarter to
quarter depending upon, among other things, the Company's ability
to produce compound libraries in a timely manner, the capital
expenditure budgets of its customers, lengthy sales cycles, 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,
partners and other vendors, and changes in general economic and
competitive conditions. In addition, the Company may chose to
negotiate a long-term software license contract that may, subject
to certain rules of SOP 97-2, be recognized ratably over the life
of the contract. A substantial portion of the Company's sales for
each quarter is attributable to a limited number of orders and
tends to be realized toward 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,
contract research, custom software development and chemical
compound sales than on sales
Item 2. Management's Discussion and Analysis of Financial
Condition and Results
of Operations (cont'd)
of hardware. The Company's profitability depends in part on the
mix of its sales components and not necessarily on total sales.
Year 2000 Issues
The Company provides software licenses that are activated and
remain active based on date and time of the computer where the
software resides. Management believes that Tripos' software
products currently offered to its customers are 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 dollar amount that the Company estimates
will be spent to remediate its Year 2000 issues relating to
software products currently offered and supported will not be
material and should not affect future financial results of
operations, liquidity or capital resources.
The Company has no software used for internal processing,
other than its software products that are already Year 2000
compliant, that are more than three years old. When written, this
software was Year 2000 compliant. The Company has been verifying
its Year 2000 compliance throughout 1998 and into 1999. In
addition to informal testing and purchases of Year 2000 compliant
software and equipment, the Company started development of a formal
plan in October 1998. The second phase of the planning, which was
completed in May 1999 includes a full written description of
potential problems. The third phase, consisting of developing a
written description of each solution and work-around as well as the
testing plan to validate a workable solution, was completed in June
1999. The fourth phase, validation of the proposed solutions, was
completed by July 31, 1999. In July 1999, the Company began
implementing the solutions. Finally, the Company expects to fully
implement the plan in September 1999. The implementation will mean
that a) all computers are Year 2000 compliant, or b) computers not
Year 2000 compliant will not affect the company's ability to
conduct business, and c) no changes will be made to already
validated systems unless adequate testing (re-validation) is
performed.
Tripos is dependent upon many third parties for the operation
of the business. These include hardware and software suppliers,
suppliers of raw materials to the compound business, and suppliers
of business services such as payroll and accounting services. To
date, the Company is not aware of any external agent with a Year
2000 issue that would materially impact the Company's results of
operations, liquidity, or capital resources. The Company will make
appropriate contingency plans should a vendor or supplier report
that it is not Year 2000 compliant or will not be by January 1,
2000. However, the Company has no means of ensuring that external
agents will be Year 2000 ready. The inability of external agents
to complete their Year 2000 resolution process in a timely fashion
could materially impact the Company. The effect of non-compliance
by external agents is not determinable.
The costs of the Year 2000 project are included in the
Company's annual software and hardware budget. These amounts do
not differ materially from those costs experienced in prior
periods. Acquisitions of new hardware are dealt with as part of
the ordinary capital purchase process and were not accelerated by
the Year 2000. Other costs will be expensed or capitalized
according to established Company procedures. At present, no
material costs are anticipated, and during the periods presented
there have been no costs incremental to normal operating
activities.
Management of the Company believes it has an effective program in
place to resolve the Year 2000 issue in a timely manner. As noted
above, the Company has not yet completed all necessary phases of
the year 2000 program. In the event that the Company does not
complete the final phase, the Company would be unable to take
customer orders for compounds, issue keys to activate software,
manufacture or ship products, invoice customers or collect payments.
The amount of lost revenue cannot be reasonably estimated at this time.
The Company is currently assessing its contingency plans.
These contingency plans are being developed as part of the remedial
steps taken in the second and third quarter of 1999.
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, 1998.
Results of Operations
Net sales for the second quarter of 1999 and 1998 were $6.1
million and $5.5 million, respectively. The Company experienced
increases in support and accelerated discovery services revenue
offset by decreases in software license and hardware sales in the
quarter. Net sales for the six-month period ending June 30, 1999
and 1998 were $12.3 million and $11.7 million, respectively.
For the three months ended June 30, 1999, software licenses
sales decreased 23.3% to $1.7 million. Software license sales for
the six-month year-to-date period decreased 16.4% to $3.6 million.
During 1999, quarter and year-to-date software sales were adversely
impacted by the tightening of funding in portions of the biotech
sector, along with two large contract renewals being delayed into
the third quarter. Support revenues increased 8.4% to $2.1 million
compared to the second quarter in 1998. For the six-month year-to-
date period, support revenues increased 8.5% to $4.1 million
compared to 1998. The increase in support revenue is due to the
sale of long term token license sales. The Company allocates a
portion of the sale to support which is recognized ratably over the
life of the agreement. Accelerated Discovery Services ("ADS")
sales accounted for $1.5 million in the second quarter of 1999 and
$0.5 million in the same period in 1998. Six-month year-to-date
ADS sales were $2.9 million 1999 compared to $1.7 million in 1998.
This increase in ADS business is attributable to large compound
contracts shipped in the current quarter. Hardware sales decreased
by 6.9% to $0.8 million for the three-month period and decreased
13.0% to $1.7 million for the six-month period in 1999. These
fluctuations are attributable to the occurrence of several large
orders in the first six months of 1998. Sales to existing
customers represent 92% of total net sales for the six-month period
ending June 30, 1999.
Net sales for the Company's activities outside of North
America represented approximately 58.9% for the three-month period
and 58.7% for the six-month period of 1999 compared to 51.0% and
44.6% for the same periods in 1998. Net sales in Europe increased
27.8% for the quarter and 42.0% for the six months year-to-date in
1999 compared to the same periods in 1998. This was 49.1% and
42.5% of net sales for the three-month periods in 1999 and 1998,
respectively and 48.7% and 36.0% of the six-month periods in 1999
and 1998, respectively. Net sales in the Pacific Rim, principally
Japan, increased 28.9% and 21.1% for the quarter and year-to-date
periods of 1999, respectively, compared to 1998 and accounted for
9.8% and 10.0% of net sales for the respective periods in 1999.
These results indicate the beginning of a modest recovery for the
Company in the Pacific Rim.
Cost of sales for the three-month period ending June 30, 1999
increased 50.6% compared to the same period in 1998. Cost of sales
was $1.5 million and $1.0 million for the second quarter of 1999
and 1998, respectively. The lower costs in 1998 directly related
to recoveries of costs stemming from the restructuring of the
Company's relationship with MDS Panlabs. Cost of sales as a
percent of net sales was 24.1% and 17.7% for the three-month
periods in 1999 and 1998, respectively. Cost of sales increased
6.3% for the six-month period in 1999 compared to 1998. Year-to-
date costs were $3.3 million in 1999 and $3.1 million in 1998 which
represent 27.3% and 26.9% of respective net sales.
Gross profit margin percentage for the second quarter of 1999
decreased to 75.9% from 82.3% of total net sales in the second
quarter of 1998. For the first
six months of 1999, gross margin percentage decreased to 72.7% from
73.1% for the same period in 1998. This decrease in gross profit
percentage for 1999 compared to 1998 is due to the restructuring
recoveries realized in 1998.
Sales and marketing expenses decreased 6.3% to $2.3 million
for the three-month period in 1999 and 3.0% to $4.6 million for the
six-month period ending June 30, 1999. Sales and marketing
expenses as a percentage of net sales were 37.2% and 37.7% for the
three- and six-month periods in 1999 as compared to 44.0% and 40.7%
for the same periods in 1998. The decreases in the percentage of
net sales for the three- and six-month periods of 1999 are due to
decreases in software and hardware sales resulting in a decrease in
commission expense.
Research and development expenses increased 92.8% to $2.8
million for the three-month period in 1999 and 62.0% to $4.5
million for the six-month period ending June 30, 1999. Research
and development expenses as a percentage of net sales were 45.5%
and 36.9% for the three- and six-month periods in 1999 as compared
to 26.1% and 23.9% for the same periods in 1998. The increase in
expenses as a percentage of net sales reflects the decrease in the
amount of capitalized costs as the Company moves from long-term
software development cycles to shorter-term development cycle for
web-based software applications, the increase in chemistry staff at
Tripos Receptor Research, shared costs for the collaborations with
Arena Pharmaceuticals and the Wolfson Institute, and an increase in
staff and facilities for software consulting programmers.
General and administrative ("G&A") expenses increased to $1.3
million for the second quarter of 1999 compared to $1.0 million for
the second quarter of 1998, and represent 21.2% and 17.9% of net
sales for the respective periods. For the six-month period, G & A
expenses were $2.4 million and $1.9 million in 1999 and 1998 and
represent 19.5% and 15.9% of net sales, respectively. The
increase in G & A expenses in the period is due to the addition of
Tripos Receptor Research administrative staff along with increased
costs attributable to improvements in network communications
infrastructure.
Other income (expense) decreased from $386 of income for the
second quarter in 1998 to $172 of expense for the comparable period
in 1999. For the first six months of 1998, other income was $455
compared to $52 of expense for 1999. This change was primarily due
to the acceleration of the amortization of deferred costs ($210)
from the prior credit facility through interest expense in
connection with the refinancing entered into in the second quarter
1999.
Income tax benefit was $718 for the second quarter in 1999,
which represents an effective tax rate of 38%, compared to an
income tax expense of $24 for the second quarter of 1998, an
effective rate of 37%. The rates reflect the change in the
relative weight of the Company's earnings and losses including
those from foreign subsidiaries.
Liquidity, Capital Resources and Capital Commitments
For the six-month period ending June 30, 1999, net cash
provided by operations was $1.1 million compared to $1.0 million
for the six-month period ending June 30, 1998.
Investments in property and equipment, attributable to the
production facilities at Tripos Receptor Research resulted in cash
used by investing activities of approximately $4.2 million in the
first six months of 1999. The second building at Tripos Receptor
Research opened in early May 1999 and became operational shortly
thereafter. As chemical compound production levels approach
management's target, investment in facilities and equipment are
nearing completion. The Company believes that current working
capital of $5.4 million, together with continued cash flow from
operations and the availability under the amended line of credit,
will be adequate to fund short-term liquidity requirements
including investment in research and development, remaining capital
purchases and any other commitments in the upcoming year.
Effective June 30, 1999, the Company and the bank amended
the credit facility due to circumstances arising in the second
quarter of 1999. The amendment calls for adjustments in the
pricing of loans under the credit agreement, the timing of
maturities, and covenant levels. It is the Company's and the
bank's intent to renegotiate the credit facility during the fourth
quarter of 1999 to better fit the future needs of the Company. As
a result, the current outstanding loans are classified as short-
term debt pending the completion of the negotiation of the credit
agreement. At June 30, 1999, the availability under the revolving
line of credit was $3,200.
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
Three matters were submitted to a vote of the shareholders
of the Company at its Annual Meeting of Shareholders on May
11, 1999:
The following directors were elected to serve for the
ensuing year or until the earlier of death, resignation
or removal. Votes cast were as follows:
Votes Votes
"For" "Withhold Authority"
Ralph S. Lobdell 2,828,707 12,612
Alfred Alberts 2,282,407 12,912
Stewart Carrell 2,828,202 13,117
John P. McAlister 2,833,918 7,401
Gary Meredith 2,827,994 13,325
Ferid Murad 2,832,921 8,398
Item 5. Other Information
Under Section 2.13 of Article II of the Company's
Bylaws, any shareholder proposal submitted with respect to
Tripos, Inc.'s 1999 Annual Meeting of Shareholders, which
proposal is submitted outside the requirements of Rule 14a-8
under the Securities Exchange Act of 1934, will be
considered untimely if notice thereof is received by the
Company before February 6, 1999 or after March 8, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
10.15 Loan Agreement dated April 30, 1999 among LaSalle
National Bank, as Lender, and Tripos, Inc., as
Borrower, and Tripos Realty, LLC, as Borrower and
Guarantor
27 Financial Data Schedule
(b) No reports on Form 8-K were required to be filed
during the period from March 31, 1999 to June 30, 1999.
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: August 10, 1999 /s/ John P. McAlister
John P. McAlister
President and
Chief Executive Officer
Date: August 10, 1999 /s/ Colleen A. Martin
Colleen A. Martin
Chief Financial Officer, Secretary
Exhibit 10.15
LOAN AGREEMENT
Dated as of April 30, 1999
among
LASALLE NATIONAL BANK
as Lender
and
TRIPOS, INC.
as Borrower
and
TRIPOS REALTY, LLC,
as Borrower and Guarantor
Table of Contents
Page
1. Effective Date. 6
2. Definitions and Rules of Construction. 7
2.1. Listed Definitions. 7
2.2. Other Definitions. 7
2.3. References to Borrower. 7
2.4. References to Covered Persons. 7
2.5. Accounting Terms. 7
2.6. Meaning of Satisfactory. 7
2.7. Computation of Time Periods. 7
2.8. General. 7
3. Lender's Commitment. 8
3.1. Revolving Loan Commitment. 8
3.1.1. Aggregate Amount; Reductions. 8
3.1.2. Limitation on Revolving Loan Advances. 8
3.1.3. Revolving Note. 8
3.2. Letter of Credit Commitment. 8
3.3. Term Loan A Commitment. 9
3.3.1. Amount. 9
3.3.2. Repayment of Term Loan A. 9
3.3.3. Term Note A. 9
3.4. Term Loan B Commitment. 9
3.4.1. Amount. 9
3.4.2. Repayment of Term Loan B. 9
3.4.3. Term Note B. 9
4. Interest. 9
4.1. Interest on Draws on Letters of Credit. 9
4.2. Interest on the Term Loan A. 10
4.3. Interest on the Term Loan B. 10
4.4. Interest on Loans; Interest Periods for Eurodollar Loans. 10
4.5. Increments. 10
4.6. Conversion of Loans. 11
4.7. Time of Accrual. 11
4.8. Computation. 12
4.9. Rate After Maturity. 12
4.10. Rate After Failure to Timely Deliver Financial
Statements. 12
5. Fees. 12
5.1. Closing Fee. 12
5.2. Unused Line Fee. 12
5.3. Letter of Credit Fees. 12
5.4. Calculation of Fees. 13
6. Payments. 13
6.1. Scheduled Payments on Revolving Loan. 13
6.1.1. Interest. 13
6.1.2. Principal. 13
6.2. Scheduled Payments on Term Loan A. 13
6.3. Scheduled Payments on Term Loan B. 13
6.4. Reimbursement Obligations. 13
6.5. Prepayments. 13
6.5.1. Revolving Loan Mandatory Prepayments When Over-
Advances Exist. 13
6.6. Manner of Payments and Timing of Application of Payments. 14
6.6.1. Payment Requirement. 14
6.7. Application of Payments and Proceeds. 14
6.7.1. Interest Calculation. 15
6.8. Returned Instruments. 15
6.9. Compelled Return of Payments or Proceeds. 15
6.10. Due Dates Not on Business Days. 15
7. Procedure for Obtaining Advances and Letters of Credit. 15
7.1. Initial Advances. 15
7.2. Borrowing Base Certificates. 15
7.3. Revolving Loan Advances. 16
7.3.1. Borrower Requests. 16
7.3.2. Lender's Right to Make Other Revolving Loan Advances. 16
7.4. Letters of Credit. 16
7.5. Disbursement. 16
7.6. Restrictions on Advances. 16
7.7. Restriction on Number of Eurodollar Loans. 17
7.8. Each Advance Request Certification. 17
7.9. Requirements for Every Advance Request. 17
7.10. Requirements for Every Request for Issuance of a Letter
of Credit. 17
7.11. Exoneration of Lender. 17
7.12. Suspension of Obligation to Make Eurodollar Advances. 18
8. Security and Guaranties. 18
8.1. Deed of Trust. 18
8.2. Security Agreements. 18
8.3. Collateral Assignments; Grant of Security Interest. 19
8.4. Pledge Agreements. 19
8.5. Guaranties. 19
9. Power of Attorney. 19
10. Conditions of Lending. 20
10.1. Conditions to Term Loans and Initial Advance. 20
10.1.1. Listed Documents and Other Items. 20
10.1.2. Financial Condition. 20
10.1.3. Default. 20
10.1.4. Perfection of Security Interests. 20
10.1.5. Representations and Warranties. 20
10.1.6. Material Adverse Change. 20
10.1.7. Pending Material Proceedings. 20
10.1.8. Payment of Fees. 20
10.1.9. Other Items. 20
10.2. Conditions to Subsequent Advances. 21
10.2.1. General Conditions. 21
10.2.2. Representations and Warranties. 21
10.2.3. Default. 21
10.2.4. No Material Adverse Change. 21
11. Conditions to Issuance of Letters of Credit. 21
11.1. Reimbursement Agreement. 21
11.2. No Prohibitions. 21
11.3. Conditions to Initial Advances. 21
11.4. Representations and Warranties. 21
11.5. No Default. 21
11.6. No Material Adverse Change. 22
12. Representations and Warranties. 22
12.1. Organization and Existence. 22
12.2. Authorization. 22
12.3. Due Execution. 22
12.4. Enforceability of Obligations. 22
12.5. Burdensome Obligations. 22
12.6. Legal Restraints. 22
12.7. Labor Disputes. 23
12.8. No Material Proceedings. 23
12.9. Material Licenses. 23
12.10. Compliance with Material Laws. 23
12.10.1. Proceedings. 23
12.10.2. Hazardous Materials on Real Property. 23
12.11. Other Names. 23
12.12. Financial Statements. 24
12.13. No Change in Condition. 24
12.14. No Defaults. 24
12.15. Solvency. 24
12.16. Encumbrances. 24
12.17. Real Property. 24
12.18. Indebtedness. 24
12.19. Investments. 24
12.20. Indirect Obligations. 24
12.21. Capital Leases. 24
12.22. Tax Liabilities; Governmental Charges. 24
12.23. Pension Benefit Plans. 25
12.24. Welfare Benefit Plans. 25
12.25. Retiree Benefits. 25
12.26. Distributions 25
12.27. Chief Place of Business; Locations of Collateral. 25
12.27.1. Chief Place of Business 25
12.27.2. Location of Books, Records and Chattel Paper 25
12.27.3. Location of Tangible Collateral 25
12.28. State of Collateral and Other Property 26
12.28.1. Accounts 26
12.28.2. Inventory 26
12.28.3. Equipment 26
12.28.4. Intellectual Property 26
12.28.5. Documents, Instruments and Chattel Paper 27
12.29. Negative Pledges 27
12.30. Margin Stock 27
12.31. Securities Matters 27
12.32. Investment Company Act 27
12.33. No Material Misstatements or Omissions 27
12.34. Year 2000 Compliance 28
13. Survival 28
14. Affirmative Covenants 28
14.1. Use of Proceeds 28
14.2. Corporate Existence 28
14.3. Maintenance of Property and Leases 29
14.4. Inventory 29
14.5. Insurance 29
14.6. Payment of Taxes and Other Obligations 29
14.7. Compliance With Laws 30
14.8. Discovery and Clean-Up of Hazardous Material 30
14.9. Termination of Pension Benefit Plan 30
14.10. Notice to Lender of Material Events 30
14.10.1. Material Proceeding 30
14.10.2. Violation of Material law 30
14.10.3. Default 31
14.10.4. Indebtedness of a Covered Person 31
14.10.5. Material Labor Dispute 31
14.10.6. Name Change 31
14.10.7. Material Adverse Effect 31
14.11. Borrowing Officer 31
14.12. Maintenance of Security Interests of Security Documents 32
14.12.1. Preservation and Perfection of Security Interests 32
14.12.2. Collateral Held by Warehouseman, Bailee, etc. 32
14.12.3. Compliance With Terms of Security Documents 32
14.13. Accounting System; Tracing of Proceeds. 32
14.14. Financial Statements 33
14.14.1. Annual Financial Statements 33
14.14.2. Quarterly Financial Statements 33
14.15. Other Financial Information 33
14.15.1. Other Reports or Information Concerning Accounts, or
Inventory 33
14.15.2. Stockholder and SEC Reports 33
14.15.3. Pension Benefit Plan Reports 34
14.15.4. Tax Returns 34
14.16. Review of Accounts 34
14.17. Inventory 34
14.18. Annual Projections 34
14.19. Other Information 34
14.20. Exams by Lender 34
14.21. Verification of Accounts, and Notices to Account Debtors34
14.22. Access to Officers and Auditors 34
14.23. Intercompany Indebtedness 35
14.24. Year 2000 Compliance 35
14.25. Further Assurances 35
15. Negative Covenants 36
15.1. Sale of Interests 36
15.2. Investments 36
15.2.1. United States or Qualified Financial Institution 36
15.2.2. Existing on Execution Date 36
15.2.3. Notes Collaterally Assigned to Lender 36
15.2.4. Customary Trade Terms 36
15.3. Indebtedness. 37
15.3.1. Incurred in Ordinary Course of Business 37
15.3.2. The Loan Obligations 37
15.3.3. Security Interests 37
15.3.4. Capital Leases 37
15.3.5. Operating Leases 37
15.3.6. Pursuant to Open Account 37
15.3.7. Existing and Disclosed 37
15.4. Security Interests. 37
15.4.1. In Accordance With GAAP 37
15.4.2. Arising Out Of Legislation 37
15.4.3. Security Deposits 37
15.4.4. Security Interests Imposed By Law 38
15.4.5. Securing Payment 38
15.4.6. Securing Operating Leases 38
15.4.7. Securing Indebtedness 38
15.4.8. Disclosed in Section 12.28 38
15.5. Foreign Assets. 38
15.6. Capital Leases. 38
15.7. Change of Control. 38
15.8. Distributions. 38
15.9. Indirect Obligations. 39
15.10. Capital Structure; Equity Securities. 39
15.11. Change of Business. 39
15.12. Transactions With Affiliates. 39
15.13. Cash Transfers. 39
15.14. No Default on Indebtedness or Material Agreements. 39
15.15. Conflicting Agreements. 39
15.16. Fiscal Year. 39
15.17. New Subsidiaries. 39
15.18. Transactions Having a Material Adverse Effect or Causing
a Default. 39
15.19. Disposal of Property. 40
15.20. Intellectual Property. 40
15.21. Acquisitions. 40
16. Financial Covenants. 40
16.1. Special Definitions. 40
16.2. Maximum Leverage. 41
16.3. Minimum Current Ratio. 41
16.4. Minimum Fixed Charge Coverage Ratio. 41
16.5. Minimum EBITDA. 41
16.6. Maximum Capital Expenditures. 41
17. Default. 41
17.1. Events of Default. 41
17.1.1. Failure to Pay Principal or Interest. 41
17.1.2. Failure to Pay Other Amounts Owed to Lender. 42
17.1.3. Failure to Pay Amounts Owed to Other Persons. 42
17.1.4. Representations or Warranties. 42
17.1.5. Certain Covenants. 42
17.1.6. Other Covenants. 42
17.1.7. Acceleration of Other Indebtedness. 42
17.1.8. Default Under Other Agreements. 42
17.1.9. Bankruptcy; Insolvency; Etc. 42
17.1.10. Judgments; Attachment; Settlement; Etc. 43
17.1.11. Pension Benefit Plan Termination, Etc. 43
17.1.12. Liquidation or Dissolution. 43
17.1.13. Seizure of Assets. 43
17.1.14. Loan Documents; Security Interests. 44
17.1.15. Loss to Collateral. 44
17.1.16. Cross-Default. 44
17.1.17. Material Adverse Change. 44
17.1.18. Guaranty Default. 44
17.2. Rights and Remedies in the Event of Default. 44
17.2.1. Termination of Commitments. 44
17.2.2. Acceleration. 44
17.2.3. Right of Set-off. 44
17.2.4. Notice to Account Debtors. 45
17.2.5. Entry Upon Premises and Access to Information. 45
17.2.6. Borrower's Obligations. 45
17.2.7. Secured Party Rights. 45
17.2.8. Miscellaneous. 46
17.2.9. Application of Funds. 46
17.3. Limitation of Liability; Waiver. 46
17.4. Reasonable Notice. 47
18. Changes in Circumstances. 47
18.1. Compensation for Increased Costs and Reduced Returns;
Capital Adequacy. 47
18.1.1. Increased Costs or Reduced Returns to Lender. 47
18.1.2. Capital Adequacy. 48
18.1.3. Notice to Borrower. 48
18.2. Limitations on Eurodollar Loans. 48
18.2.1. Market Failure. 48
18.2.2. Inadequate Reflection of Cost. 48
18.3. Illegality. 48
18.4. Compensation. 49
18.4.1. Early Payment. 49
18.4.2. Failure to Take Advances. 49
18.5. Treatment of Affected Revolving Loans. 49
18.5.1. Payments. 49
18.5.2. Prime Rate. 49
19. Taxes. 50
19.1. Gross-Up. 50
19.2. Lender's Undertaking. 50
20. Usury Limitations. 50
21. General. 51
21.1. Lender's Right to Cure. 51
21.2. Rights Not Exclusive. 51
21.3. Survival of Agreements. 51
21.4. Payment of Expenses. 51
21.5. General Indemnity. 52
21.5.1. Indemnified Parties 52
21.5.2. Obligations Shall Survive 52
21.5.3. Indemnities Unenforceable 52
21.6. Letters of Credit. 52
21.7. Changes in Accounting Principles. 53
21.8. Other Security and Guaranties. 53
21.9. Loan Records. 53
21.10. Loan Obligations Payable in Dollars. 54
22. Miscellaneous. 54
22.1. Notices. 54
22.2. Confidentiality. 54
22.3. Amendments, Waivers and Consents. 55
22.4. Rights Cumulative. 55
22.5. Successors and Assigns. 55
22.6. Severability. 55
22.7. Counterparts. 55
22.8. Governing Law; No Third Party Rights. 56
22.9. Counterpart Facsimile Execution. 56
22.10. No Other Agreements. 56
22.11. Negotiated Transaction. 56
22.12. Acknowledgment of Licensing Arrangements. 56
22.13. CHOICE OF FORUM. 56
22.14. SERVICE OF PROCESS. 57
22.15. JURY TRIAL. 57
22.16. Incorporation By Reference. 57
22.17. Statutory Notice. 57
22.18. Statutory Notice-Insurance. 58
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"),
TRIPOS REALTY, LLC, a Missouri limited liability company ("Tripos
Realty" or "Guarantor") and LASALLE NATIONAL BANK ("Lender")
agree as follows:
Effective Date.
This Agreement is effective April 30, 1999.
Definitions and Rules of Construction.
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.
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.
References to Borrower.
The word "Borrower" refers to Tripos, Inc., a Utah corporation.
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, 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.
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.
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.
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 words 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.
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, 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.
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:
Revolving Loan Commitment.
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 $8,000,000 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.
Limitation on Revolving Loan Advances.
No Revolving Loan Advance will be made which would result in
the Revolving Loans 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 Revolving Loan Commitment 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 lesser of (a) the
Borrowing Base and (b) the Revolving Loan Commitment on such
date minus the sum of the aggregate amount of all
outstanding LOC Obligations. At any time that there is an
Existing Default, the Revolving Loan Commitment may be
canceled as provided in Section 17.2.
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. The Revolving Note shall be dated the Effective
Date and be duly and validly executed and delivered by
Borrower. The Revolving Note shall be in the form of
Exhibit 3.1.3 attached hereto.
Letter of Credit Commitment.
Lender commits to issue commercial and standby letters of credit
(each a "Letter of Credit") for the account of Borrower from time
to time from the Effective Date to the Revolving Loan Maturity
Date (the "Letter of Credit Commitment"), 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) $2,000,000 and (ii) any excess of the Maximum
Available Amount over the then outstanding Revolving Loans. 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.
Term Loan A Commitment.
Amount.
Subject to the limitations in Section 3.3.2 and elsewhere
herein, Lender commits to make Term Loan A to Borrower on
the Effective Date in the amount of $4,000,000.00 (the
"Term Loan A Commitment"). Subject to the limitations in
Section 3.3.2 and elsewhere herein, payments and prepayments
that are applied to reduce Term Loan A may not be
reborrowed.
Repayment of Term Loan A.
Term Loan A is due and payable and shall be repaid by
Borrower in accordance with Section 6 hereof and shall
otherwise be repaid by the payment of principal and interest
in full on the Term Loan Maturity Date, unless extended or
renewed by the mutual written agreement of Borrower,
Guarantor and Lender.
Term Note A.
The obligation of Borrower to repay Term Loan A shall be
evidenced by a promissory note payable to the order of
Lender in the amount of $4,000,000.00 and otherwise
satisfactory to Lender. Term Note A shall be dated the
Effective Date and be duly and validly executed and
delivered by Borrower. Term Note A shall be in the form of
Exhibit 3.3.3 attached hereto.
Term Loan B Commitment.
Amount.
Subject to the limitations in Section 3.4.2 and elsewhere
herein, Lender commits to make Term Loan B to Borrower and
Tripos Realty, jointly and severally, on the Effective Date
in the amount of $3,320,000.00 (the "Term Loan B
Commitment"). Subject to the limitations in Section 3.4.2
and elsewhere herein, payments and prepayments that are
applied to reduce Term Loan B may not be reborrowed.
Repayment of Term Loan B.
Term Loan B is due and payable and shall be repaid by
Borrower in accordance with Section 6 hereof and shall
otherwise be repaid by the payment of principal and interest
in full on the Term Loan Maturity Date, unless extended or
renewed by the mutual written agreement of Borrower, Tripos
Realty and Lender.
Term Note B.
The obligation of Borrower and Tripos Realty to repay Term
Loan B shall be evidenced by a promissory note payable to
the order of Lender in the amount of $3,320,000.00 and
otherwise satisfactory to Lender. Term Note B shall be
dated the Effective Date and be duly and validly executed
and delivered by Borrower and Tripos Realty. Term Note B
shall be in the form of Exhibit 3.4.3 attached hereto.
Interest.
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.
Interest on the Term Loan A.
Borrower shall pay interest on Term Loan A at a variable rate of
interest determined quarterly, beginning with Borrower's fiscal
quarter ended June 30, 1999, at a rate of interest to be
determined in accordance with Sections 4.4 and 4.5 below.
Interest on the Term Loan B.
Borrower shall pay interest on Term Loan B at a rate of interest
in an amount equal to two and twenty five one hundredths of one
percent (2.25%) above the from time to time Eurodollar Rate for
90 day Interest Periods, as determined two days before the first
day of each calendar quarter; from the date hereof through and
including the period ending June 30, 1999, the Eurodollar Rate
shall be determined as of April 28, 1999.
Interest on Loans; Interest Periods for Eurodollar Loans.
Borrower may, as provided herein, designate Term Loan A or any
Revolving Loan or part of any such Loan to be either a Prime Rate
Loan or a Eurodollar Loan; provided, however, during the
existence of an Existing Default, Borrower may not designate a
Loan or any part of any such Loan as a Eurodollar Loan. Each
Prime Rate Loan when made will bear interest at the Prime Rate
(which will fluctuate as described in Section 4.8) plus the Prime
Increment (determined from time to time as provided in Section
4.5). Each Eurodollar Loan when made will bear interest at the
Adjusted Eurodollar Rate. The "Adjusted Eurodollar Rate" for any
Eurodollar Loan is the Eurodollar 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 4.5. Except
for Term Loan B, 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,
provided, however, that with respect to Term Loan B, the
applicable Interest Period shall always be ninety (90) days.
Subject to the foregoing, each Interest Period shall be either
thirty (30), sixty (60) or ninety (90) days; provided that
(i) every such Interest Period shall commence on the date of the
Advance, or, with respect to Term Loan A, shall commence on the
date such loan is converted from a Prime Rate Loan to a
Eurodollar Loan or the date such loan is continued as a
Eurodollar Loan; (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 or the Term Loan Maturity Date,
as the case may be.
Increments.
For the period commencing as of the Effective Date through and
including June 30, 1999, the Prime Increment shall be 1.75% and
the Eurodollar Increment shall be 1.75%. Thereafter, the
applicable Prime Increment and Eurodollar Increment shall be
determined quarterly, beginning with Borrower's fiscal quarter
ended June 30, 1999 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 Prime Eurodollar
Funded Increment Increment
Indebtedness to (%) (%)
EBITDA
Greater than or 0% +2.75%
equal to 3.50:1.00
Greater than or 0% +2.50%
equal to 3.00:1.00,
but less than
3.50:1.00
Greater than or 0% +2.25%
equal to 2.50:1.00,
but less than
3.00:1.00
Greater than or 0% +2.00%
equal to 2.00:1.00,
but less than
2.50:1.00
Greater than or 0% +1.75%
equal to 1.50:1.00
and less than
2.00:1.00
Less than 1.50:1.00 0% +1.50%
Except as otherwise provided in Section 14.10 hereof, any change
in the Prime Increment or the 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.
Conversion of Loans.
Except with regard to Term Loan B, 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 such 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 such 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.
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.
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.
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.
Rate After Failure to Timely Deliver Financial Statements.
Notwithstanding anything set forth herein to the contrary, if
Borrower fails to timely deliver Financial Statements as required
by Section 14 hereof, the rate of interest, effective as of the
date such Financial Statements were to have been delivered, shall
be the greater of, the Prime Rate and the Eurodollar Rate, which
Eurodollar Rate shall be calculated using a Eurodollar Increment
equal to two and seventy five one hundredths of one percent
(2.75%).
Fees.
Closing Fee.
Borrower shall pay to Lender a "Closing Fee" equal to Fifty
Thousand Dollars ($50,000.00) on the Effective Date. Once
received by Lender, the Closing Fee shall not be refundable to
Borrower for any reason.
Unused Line Fee.
In consideration of the Revolving Loan Commitment, Borrower
agrees to pay Lender a fee (the "Unused Line Fee") on the
Revolving Loan Commitment less the aggregate amount of
outstanding Revolving Loans and LOC Obligations for each day
during the applicable Unused Line Fee Calculation Period (as
hereinafter defined) at a rate per annum equal to three hundred
seventy five one thousandths of one percent (.375%) times the
unused portion of the Revolving Loan Commitment. The Unused Line
Fee shall commence to accrue on the Effective Date and shall be
due and payable in arrears on the first Business Day of each
calendar quarter for the immediately preceding quarter (or
portion thereof) (each such quarter or portion thereof for which
the Unused Line Fee is payable hereunder being herein referred to
as the "Unused Line Fee Calculation Period"), beginning with the
first of such dates to occur after the Closing Date.
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 determined in accordance with Lender's published letter of
credit fee schedule for documentary letters 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.
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.
Payments.
Scheduled Payments on Revolving Loan.
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 and on the Revolving
Loan Maturity Date. Borrower shall pay interest accrued on
each Revolving Loan after the Revolving Loan Maturity Date
on demand.
Principal.
Borrower shall repay the entire amount of the Revolving Loan
on the Revolving Loan Maturity Date.
Scheduled Payments on Term Loan A.
For the period commencing as of the Effective Date through and
including December 31, 1999, Borrower shall pay interest accrued
on Term Loan A 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, through and including January 1, 2000. Commencing
with the quarter beginning April 1, 2000, and for each quarter
thereafter, Borrower shall pay quarterly installments of
principal in the amount of Two Hundred Fifty Thousand Dollars
($250,000.00), plus accrued interest, on the first day of the
next succeeding calendar quarter, and shall make a final payment
of the outstanding principal, plus accrued interest, on the Term
Loan Maturity Date.
Scheduled Payments on Term Loan B.
Commencing July 1, 1999, Borrower and Tripos Realty shall pay
quarterly installments of principal in the amount of Forty One
Thousand Five Hundred Dollars ($41,500.00), plus accrued
interest, on the first day of each calendar quarter, and shall
make a final payment of the outstanding principal, plus accrued
interest, on the Term Loan Maturity Date.
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.
Prepayments.
Revolving Loan Mandatory Prepayments When Over-Advances Exist.
If at any time the Revolving Loans exceed 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 Loans until they
are reduced to zero, and then to reduce the Eurodollar Loans
that are included in the Revolving Loans. On the prepayment
date, the Borrower shall pay interest on the amount prepaid,
accrued to the prepayment date.
6.5.2 Revolving Loan 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. On the prepayment date, the Borrower
shall pay interest on the amount prepaid, accrued to the
prepayment date.
6.5.3 Term Loan Mandatory Prepayments.
Borrower shall be obligated to prepay the Term Loan A in
accordance with Section 15.1 hereof. The Borrower and
Tripos Realty, in the case of Term Loan B, shall also be
obligated to prepay the Term Loans in full together with
accrued and unpaid interest thereon upon any termination of
this Agreement or upon any acceleration of the Term Loans.
On such prepayment date, the Borrower shall pay interest on
the amount prepaid, accrued to the prepayment date.
6.5.4 Term Loan Voluntary Prepayments.
Borrower and Tripos Realty, in the case of Term Loan B,
shall have the right at any time and from time to time to
prepay the Term Loans in whole or in part on any Business
Day. Each partial prepayment of any Term Loan shall be in a
principal amount equal to $500,000 or any integral multiple
thereof and shall be applied to the principal installments
of the Term Loan in the inverse order of their maturities.
On the prepayment date, Borrower and Tripos Realty shall pay
interest on the amount prepaid, accrued to the prepayment
date.
Manner of Payments and Timing of Application of Payments.
Payment Requirement.
Borrower and Tripos Realty, in the case of Term Loan B,
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.
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 Loans, and then to the Eurodollar Loans included in the
Revolving Loans; 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. Any payments received
pursuant to Section 15.1 with respect to Term Loan A and/or Term
Loan B shall be applied in inverse order of Maturity.
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.
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.
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.
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.
Procedure for Obtaining Advances and Letters of Credit.
Initial Advances.
Lender will fund and make the Term Loans on the Effective Date.
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.
Borrowing Base Certificates.
On the Effective Date and on the 15th day of each month
thereafter and upon each request of Lender, Borrower shall
deliver (a) an aging of all Accounts, and (b) a Borrowing Base
Certificate to Lender in the form of Exhibit 7.2 attached hereto,
reflecting the Accounts at the end of the preceding calendar
month, together with such supporting information as Lender may
require from time to time.
Revolving Loan Advances.
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 7.9. 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.
Lender's Right to Make Other Revolving Loan Advances.
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.
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.
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 7.10 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.
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.
Restrictions on Advances.
No Prime Rate Advance will be made unless it is a whole multiple
of $1,000.00 and not less than $10,000.00. No Eurodollar Advance
will be made unless it is a whole multiple of $50,000.00 and not
less than $100,000.00. 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.
Restriction on Number of Eurodollar Loans.
No more than seven (7) Eurodollar Loans may be outstanding at any
one time.
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, (iii) the amount of the
requested Revolving Loan Advance will not, when added to the
current amount of the aggregate Revolving Loans, exceed the
Maximum Available Amount and (iv) all conditions precedent
hereunder to the making of the requested Advance shall have been
satisfied.
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 7.9 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.
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.
Exoneration of Lender.
Lender shall not incur any liability to Borrower for treating a
request that meets the express requirements of Section 7.9 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.
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 7.12, 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).
Security and Guaranties.
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.
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:
Deed of Trust.
A Deed of Trust and Security Agreement and Assignment of Rents on
the Mortgaged Property executed and delivered to Lender by Tripos
Realty ("Deed of Trust"), satisfactory to Lender and if any
tenants have possession of a material portion of the Mortgaged
Property, Borrower shall also deliver or cause to be delivered to
Lender a nondisturbance, attornment, and subordination agreement
or an estoppel certificate, as elected by Lender in its
discretion, executed by such tenant and acceptable to Lender.
Security Agreements.
Except as otherwise expressly agreed herein or in the Security
Documents, security agreements from Borrower and Tripos Realty
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 located in the United States, whether now owned or
hereafter acquired, and all proceeds thereof, subject only to
Permitted Security Interests.
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.
Pledge Agreements.
Stock pledge and membership pledge agreements executed by
Borrower pledging 100% of the membership interests in Tripos
Realty, 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.
Guaranties.
The unconditional guaranty of the Loan Obligations (other than
with respect to Term Loan B, on which Guarantor is a direct
obligor) by Tripos Realty (the "Guarantor"), pursuant to a
guaranty in the form of Exhibit 8.5 attached hereto (the
"Guaranty").
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 Guarantor (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
Guarantor'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 Guarantor'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 Guarantor'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 Guarantor'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 Guarantor's)
name on any verification of accounts and notices thereof to
Account Debtors, and endorse Borrower's (or Guarantor'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 Guarantor's) name and on Borrower's (or
Guarantor'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.
Conditions of Lending.
Conditions to Term Loans and Initial Advance.
Lender will have no obligation to fund the Term Loans or the
initial Revolving Loan Advance or any subsequent Revolving Loan
Advance unless:
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.
Financial Condition.
Lender shall have determined to its satisfaction that the
financial statements of Borrower for the period ended
December 31, 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.
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.
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.
Representations and Warranties.
The representations and warranties contained in the Loan
Documents shall be true and correct.
Material Adverse Change.
Since December 31, 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.
Pending Material Proceedings.
There shall be no pending Material Proceedings involving
Borrower or any Covered Person.
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.
Other Items.
Lender shall have received such other consents, approvals,
opinions, certificates, documents or information as it
reasonably deems necessary.
Conditions to Subsequent Advances.
Lender will have no obligation to fund any Advance after the
initial Revolving Loan Advance unless:
General Conditions.
All of the conditions to the initial Advances in Section
10.1 shall have been and shall remain satisfied.
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.
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.
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.
Conditions to Issuance of Letters of Credit.
No Letter of Credit will be issued unless at the time of such
issuance:
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 rate set forth in Section 4.1.
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).
Conditions to Initial Advances.
All of the conditions in Section 10.1 have been and remain
satisfied.
Representations and Warranties.
The Representations and Warranties are true and correct as of the
time of the issuance of such Letter of Credit.
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.
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.
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:
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.
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).
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.
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.
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.
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.
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.
No Material Proceedings.
There are no Material Proceedings pending or, to the best
knowledge of Borrower, threatened.
Material Licenses.
All Material Licenses have been obtained for each Covered Person.
Compliance with Material Laws.
Each Covered Person is in compliance with all Material Laws.
Without limiting the generality of the foregoing:
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.
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, as updated, reaffirmed and re-
certified in favor of Lender as of April 20, 1999, and
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.
Other Names.
Neither Borrower nor Tripos Realty has used any name other than
the full name which identifies it in this Agreement, except that
Borrower has previously used, but does not currently and will not
in the future use, the name Tripos Associates, Inc., and Borrower
is qualified to do business in California in the name California
Tripos, 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.
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.
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.
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.
Solvency.
Borrower is solvent prior to and after giving effect to the
making of the Term Loans and the initial Revolving Loan Advance
on the Effective Date.
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 March 8, 1999
and previously disclosed to Lender.
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.
Indebtedness.
No Covered Person has any Indebtedness except Permitted
Indebtedness (as specified in Section 15.3 hereof).
Investments.
No Covered Person has any Investments in other Persons except
Permitted Investments.
Indirect Obligations.
No Covered Person has any Indirect Obligations except Permitted
Indirect Obligations.
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.
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. [Borrower was
audited in 1998 by the IRS with respect to its 1996 and 1997
federal income taxes, and no material adjustments in taxes were
made as a result of such audit; the IRS has not notified any
Covered Person that it intends to perform any other 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.
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.
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.
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.
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.
Chief Place of Business; Locations of Collateral.
As of the Execution Date:
Chief Place of Business
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;
Location of Books, Records and Chattel Paper
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
Location of Tangible Collateral
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.
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:
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).
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.
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.
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. Item 12.28.4A of the
Disclosure Schedule contains a complete list of Intellectual
Property of Borrower which in the aggregate was principally
responsible for Borrower's gross revenues for fiscal year
1998.
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.
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.
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.
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.
Investment Company Act
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.
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.
Year 2000 Compliance
Borrower has reviewed the areas within the business and
operations of each Covered Person which could be adversely
affected by, and has developed or is developing a program to
address, the Year 2000 Problem by September 30, 1999 and has made
related appropriate inquiry of material suppliers, customers,
vendors and commercial counterparties. Based on such review and
program, Borrower believes that no Covered Person will have a
Year 2000 Problem that will have a Material Adverse Effect on any
Covered Person. From time to time, at the request of Lender,
Borrower shall provide Lender such updated information or
documentation as is requested regarding the status of each
Covered Person's efforts to address the Year 2000 Problem. As
used herein "Year 2000 Problem" means the risk that any or all
software, embedded microchips and/or other computer and/or
processing capabilities utilized by such Covered Person, and/or
included in any software, products, goods and/or services sold
and/or leased by such Covered Person (the "Computer
Applications"), may be unable to correctly and properly
recognize, interpret, process, calculate, compare, sequence and
manipulate data and date sensitive functions from, into, and
between the twentieth and twenty-first centuries, and the years
1999 and 2000 and leap year calculations, and to the extent that
other information technology, used in combination with the
Computer Applications, it may be unable to properly exchange
date/time data with it. To the best of Borrower's knowledge
after due inquiry, no software, products, goods or components
designed, distributed and/or sold by a Covered Person contain a
Year 2000 Problem.
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.
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:
Use of Proceeds
Subject to the terms and conditions hereof, the proceeds of (a)
the Revolving Loan Advances shall be used for Capital
Expenditures, as well as for general corporate and working
capital purposes, (b) Term Loan A shall be used for Capital
Expenditures of Tripos Receptor Research Limited and to refinance
the existing indebtedness of Borrower to NationsBank, and (c)
Term Loan B shall be used to refinance the existing indebtedness
of Tripos Realty secured by the Mortgaged Property.
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.
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.
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.
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.
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.
Compliance With Laws
Each Covered Person shall comply with all Material Laws.
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.
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.
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,
Material Proceeding
Borrower shall furnish to Lender from time to time all
information which Lender requests with respect to the status
of any Material Proceeding.
Violation of Material law
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.
Default
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.
Indebtedness of a Covered Person
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.
Material Labor Dispute
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.
Name Change
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.
Material Adverse Effect
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.
Borrowing Officer
Borrower shall keep on file with Lender at all times an
appropriate instrument naming each Borrowing Officer.
Maintenance of Security Interests of Security Documents
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.
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.
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.
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.
Financial Statements
Borrower shall deliver to Lender:
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.
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.
Other Financial Information
Borrower shall also deliver the following to Lender, as specified
below:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Year 2000 Compliance
Borrower has developed a plan to address the Year 2000 Problem
(as defined in Section 12.34.1) for all Covered Persons and will
have fully implemented such plan by September 30, 1999 in all
material respects. Borrower is using commercially reasonable
efforts to review the areas within each Covered Person's business
and operations which could be adversely affected by the Year 2000
Problem and has made related appropriate inquiry of material
suppliers, customers, vendors and other commercial
counterparties. Borrower will promptly notify Lender in the event
Borrower determines that any Computer Application that is
material to the operations of any Covered Person or any of their
material vendors, customers, suppliers or other commercial
counterparties will result in a Material Adverse Effect as a
result of the Year 2000 Problem.
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.
Negative Covenants
Borrower covenants and agrees that, while any of the Commitments
remain 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:
Sale of Interests
Sell or otherwise dispose of Borrower's interest in any
Subsidiary or Affiliate, provided, however, that Borrower may
sell or otherwise dispose of its interests in Arena
Pharmaceuticals, Inc. and Phase-I Molecular Toxicology, Inc. for
consideration deemed fair and reasonable by the board of
directors of Borrower, provided further that fifty percent (50%)
of the proceeds of any such sale or disposition shall be applied
to Term Loan A in inverse order of Maturity and the remaining
fifty percent (50%) shall be applied to the Revolving Loans or
used by Borrower for Capital Expenditures. Notwithstanding
anything set forth herein to the contrary, during a Default or an
Existing Default, one hundred percent (100%) of the proceeds of
any such sale or disposition shall be applied to Term Loan A in
inverse order of Maturity.
Investments
Make any Investments in any other Person except the following:
United States or Qualified Financial Institution
Investments in (i) interest-bearing United States government
obligations; (ii) certificates of deposit issued by Lender;
(iii) prime commercial paper rated A-1 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.
Existing on Execution Date
Investments existing on the Execution Date and disclosed in
Section 12.19 of the Disclosure Schedule.
Notes Collaterally Assigned to Lender
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, and
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.
Customary Trade Terms
Accounts arising in the ordinary course of business and
payable in accordance with Borrower's customary trade terms.
Indebtedness.
Create, incur, assume, or allow to exist any Indebtedness as to
any Covered Person of any kind or description, except the
following:
Incurred in Ordinary Course of Business
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).
The Loan Obligations
Security Interests
Indebtedness secured by purchase money Security Interests
permitted by Section 15.4.
Capital Leases
Indebtedness represented by Capital Leases to the extent
permitted hereunder.
Operating Leases
Indebtedness represented by operating leases to the extent
permitted hereunder, provided that any Security Interest
granted to the lessor under any such operating leases do not
extend to property of any Covered Persons other than the
property subject to such operating leases.
Pursuant to Open Account
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 15.2.3.
Existing and Disclosed
Other Indebtedness existing on the date hereof and disclosed
in the Disclosure Schedule.
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:
In Accordance With GAAP
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.
Arising Out Of Legislation
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.
Security Deposits
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.
Security Interests Imposed By Law
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.
Securing Payment
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.
Securing Operating Leases
Security Interests securing obligations under operating
leases so long as the Security Interest does not extend to
property of any Covered Persons other than the property
subject to such operating leases.
Securing Indebtedness
Purchase money Security Interests securing Indebtedness
described in Section 15.3.1 so long as the amount of
Indebtedness secured thereby does not exceed $250,000 in the
aggregate at any time.
Disclosed in Section 12.28
Security Interests existing on the Execution Date that are
disclosed in Section 12.28 of the Disclosure Schedule and
are satisfactory to Lender.
Foreign Assets.
Create, incur, assume or allow to exist any Security Interest on
any of Borrower's assets located outside of the United States,
including, but limited to, the building and equipment located in
the United Kingdom and Accounts generated from non-United States
Account Debtors.
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 $1,200,000.
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.
Distributions.
Declare or pay any Distribution. For purposes of this Section
15.8, "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, other than loans to
employees of Borrower provided such loans do not exceed an
aggregate amount of $100,000 at any time.
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.
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).
Change of Business.
Engage in any business other than the business currently
conducted by Borrower or a business reasonably related thereto.
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.
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 15.2.3
or Section 15.12.
No Default on Indebtedness or Material Agreements.
Default upon or fail to pay any Indebtedness for borrowed money
in excess of $100,000.00, 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.
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.
Fiscal Year.
Change its fiscal year end, which is currently December 31.
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.
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.
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).
Intellectual Property.
Cause or permit ownership of any Intellectual Property to be
transferred from Borrower to any other Covered Person.
Acquisitions.
Except for Permitted Investments, 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.
Financial Covenants.
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, (iv) Capital
Expenditures (excluding (A) all Capital Expenditures of
Tripos Receptor Research Limited incurred prior to the date
hereof, (B) from the date hereof through March 31, 2000, the
first $6,000,000.00 of 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 related thereto, (C) from April 1,
2000 through March 31, 2001, the first $500,000.00 of
Capital Expenditures of Tripos Receptor Research Limited,
and (D) from April 1, 2001 through March 31, 2002, the first
$500,000.00 of Capital Expenditures of Tripos Receptor
Research Limited) and (v) 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.
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, beginning June 30, 1999, shall at no time be greater
than (a) 4.25:1.00 for the quarter ending June 30, 1999, (b)
3.75:1.00 for the quarter ending September 30, 1999, and (c)
3.00:1.00 for the quarter ending December 31, 1999 and for each
quarter thereafter.
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, beginning June 30, 1999, shall at no time be less than
1.00 to 1.00.
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 for June 30, 1999 and for September 30, 1999,
shall at no time be less than 1.15 to 1.00, and calculated for
December 31, 1999 and for the last day of each fiscal quarter
thereafter, shall at no time be less than 1.20 to 1.00.
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 (a) $2,000,000
for the quarter ending June 30, 1999, (b) $2,500,000 for the
quarter ending September 30, 1999, and (c) $4,500,000 for the
quarter ending December 31, 1999 and for each quarter thereafter.
Maximum Capital Expenditures.
Borrower's Capital Expenditures (excluding (A) from the date
hereof through March 31, 2000, the first $6,000,000.00 of 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 related thereto, (B) from
April 1, 2000 through March 31, 2001, the first $500,000.00 of
Capital Expenditures of Tripos Receptor Research Limited, and (C)
from April 1, 2001 through March 31, 2002, the first $500,000.00
of Capital Expenditures of Tripos Receptor Research Limited), for
the preceding twelve (12) month period, calculated as of the last
day of each fiscal quarter, beginning June 30, 1999, shall not
exceed $1,500,000.
Default.
Events of Default.
Any one or more of the following shall constitute an event of
default (an "Event of Default") under this Agreement:
Failure to Pay Principal or Interest.
Failure of Borrower to pay any principal of the Loans when
due or interest accrued thereon.
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.
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).
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.
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.
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.
Acceleration of Other Indebtedness.
Any Obligation of a Covered Person (other than the Loan
Obligations) for the payment of borrowed money in excess of
$100,000.00 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.
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.
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.
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 $100,000.00
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.
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 $100,000.00.
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.
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.
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.
Loss to Collateral.
Any loss, theft, damage or destruction of any item or items
of property occurs which either has or is reasonably likely
to have a Material Adverse Effect on any Covered Person.
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.
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.
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.
Rights and Remedies in the Event of Default.
Termination of Commitments.
Upon an Event of Default described in Section 17.1.9, 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.
Acceleration.
Upon an Event of Default described in Section 17.1.9, 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.
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.
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.
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 salable, (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).
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.
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:
Under Security Documents
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
Collateral Disposition
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.
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.
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.
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.
Reasonable 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.
Changes in Circumstances.
Compensation for Increased Costs and Reduced Returns; Capital
Adequacy.
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 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 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).
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.
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.
Limitations on Eurodollar Loans.
If on or prior to the first day of any Interest Period for any
Eurodollar Loan:
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
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.
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.
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:
Early Payment.
any payment, prepayment, or conversion of a Eurodollar Loan
for any reason (including, without limitation, the
acceleration of the Revolving Loans pursuant to the terms
hereof) on a date other than the last day of the Interest
Period for such Eurodollar Loan; or
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.
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:
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
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.
Taxes.
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.
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.
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.
General.
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.
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.
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.
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.
General Indemnity.
Indemnified Parties
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 breach of Section 12.10.2 or
Section 14.8 or as a consequence of any 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 occurring during or prior to the
Covered Person's ownership of such property.
Obligations Shall Survive
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.
Indemnities Unenforceable
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.
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.
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.
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.
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.
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.
Miscellaneous.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
CHOICE OF FORUM.
Subject only to the exception in the next sentence, Borrower,
Tripos Realty 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.
SERVICE OF PROCESS.
Each of Borrower and Tripos Realty hereby waive 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 and Tripos
Realty irrevocably appoint as their respective 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.
JURY TRIAL.
BORROWER, TRIPOS REALTY 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, TRIPOS REALTY 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.
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.
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.
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 (BORROWER) PROVIDE EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED BY YOUR (BORROWER'S) AGREEMENT WITH US
(CREDITOR), WE MAY PURCHASE INSURANCE AT YOUR (BORROWER'S)
EXPENSE TO PROTECT OUR INTERESTS IN YOUR (BORROWER'S)
COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR
(BORROWER'S) INTERESTS. THE COVERAGE THAT WE (CREDITOR)
PURCHASE(S) MAY NOT PAY ANY CLAIM THAT YOU (BORROWER) MAKE
OR ANY CLAIM THAT IS MADE AGAINST YOU (BORROWER) IN
CONNECTION WITH THE COLLATERAL. YOU (BORROWER) MAY LATER
CANCEL ANY INSURANCE PURCHASED BY US (CREDITOR), BUT ONLY
AFTER PROVIDING EVIDENCE THAT YOU (BORROWER) HAVE OBTAINED
INSURANCE AS REQUIRED BY OUR AGREEMENT. IF WE (CREDITOR)
PURCHASE INSURANCE FOR THE COLLATERAL, YOU (BORROWER) WILL
BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING
THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES WE
(CREDITOR) 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 (BORROWER'S) TOTAL OUTSTANDING BALANCE
OR OBLIGATION. THE COSTS OF THE INSURANCE MAY BE MORE THAN
THE COST OF INSURANCE YOU (BORROWER) MAY BE ABLE TO OBTAIN
ON YOUR (BORROWER'S) 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.
TRIPOS, INC.
By:___________________________
Print Name:____________________
Title:_________________________
Notice Address for Borrower and all Covered
Persons:
Tripos, Inc.
1699 South Hanley Road
St. Louis, Missouri 63144-2913
Attention: John Yingling, Corporate Controller and
Treasurer
FAX No.: 314/647-8108
Confirming Telephone No: 314/647-1099
TRIPOS REALTY, LLC,
by its sole member,
TRIPOS, INC.
By:___________________________
Print Name:____________________
Title:_________________________
LASALLE NATIONAL BANK
By:______________________________
Print Name:_______________________
Title:____________________________
Notice Address for Lender:
LaSalle National Bank
One Metropolitan Square
211 North Broadway
St. Louis, Missouri 63102
Attention: Tom Harmon
FAX No.: 314/621-1612
Confirming Telephone No.: 314/613-1904
with a copy to:
Bryan Cave LLP
211 North Broadway, Suite 3600
St. Louis, Missouri 63102
Attention: John G. Boyle, Esq.
FAX No.: 314-259-2020
Confirming Telephone No.: 314-259-2165
EXHIBIT 2.1
GLOSSARY AND INDEX OF DEFINED TERMS
"Account Debtor" -- shall mean any Person who is or who may
become obligated to Borrower under, with respect to, or on
account of an Account.
"Accounts" -- shall have the meaning given to that term in the
UCC and, to the extent not included therein, shall also mean
all accounts, leases, contract rights, chattel paper,
general intangibles, choses in action and instruments,
including any Security Interest or other security interest
that secures or may secure any of the foregoing, plus all
books, invoices, documents and other records in any form
evidencing or relating to any of the foregoing, now owned or
hereafter acquired by Borrower.
"Adjusted Eurodollar Rate" -- the rate of interest defined in
Section 4.
"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 in excess
of ten percent (10%) 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.
"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).
"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 Base" -- shall mean as of any date of determination,
an amount equal to eighty five percent (85%) of the Net
Eligible Accounts plus forty percent (40%) of the Eligible
License Receivables, provided, however, that the amount of
such Eligible License Receivables does not exceed
$1,500,000.
"Borrowing Base Certificate" -- shall be in the form of Exhibit
7.2, or such other form as Lender may reasonably require
from time to time, together with such supporting information
as Lender may require from time to time.
"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, the Letter of
Credit Commitment or the Term Loan Commitments of Lender, or
when in the plural form "Commitments", the Revolving Loan
Commitment, the Letter of Credit Commitment and the Term
Loan Commitments.
"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 4.9.
"Disclosure Schedule" -- the disclosure schedule of Borrower
attached hereto as Exhibit 12.
"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.
"Eligible Accounts" -- shall mean all Accounts which according to
GAAP are deemed current other than: (a) Accounts created
from the sale of goods and services on non-standard terms
and/or that allow for payment to be made more than thirty
(30) days from date of sale (excluding Accounts generated
from token or other license contracts which may allow for
payment up to 365 days from the date of sale or from the
date of the balance sheet which forms the basis for the
applicable Borrowing Base Certificate); (b) Accounts unpaid
more than ninety (90) days from date of invoice; (c) all
Accounts of any Account Debtor if fifty percent (50%) or
more of the outstanding balance of such Accounts are unpaid
more than ninety (90) days from the date of invoice;
(d) Accounts for which the Account Debtor is an officer,
director, a 5% or more shareholder, member, employee,
parent, Subsidiary, or Affiliate (other than any Affiliate
with which Borrower and such Affiliate have entered into and
negotiated an arms length transaction) of, or has common 5%
or more shareholders, officers, directors or members with
Borrower; (e) consignment sales; (f) Accounts for which the
payment is or may be conditional; (g) Accounts for which the
Account Debtor is not a commercial or institutional entity
(which term includes, but is not limited to, private and
public universities, governmental agencies and research
institutes and centers) or is not a resident of the United
States or Canada; (h) Accounts with respect to which any
warranty or representation provided herein is not true and
correct; (i) Accounts which represent goods or services
purchased for a personal, family or household purpose; (j)
Accounts which represent goods used for demonstration
purposes or loaned by Borrower to another party; (k)
Accounts which are progress payment (before such progress
payment is properly billable to the customer) or barter;
(l) Accounts of the Borrower representing a sale to the
government of the United States of America or any
subdivision thereof: (1) unless, with respect to an Account
representing such a sale in excess of $100,000.00, the
Borrower has complied, to the satisfaction of the Lender,
with respect to the granting of a security interest in such
Account of the Borrower, with the Federal Assignment of
Claims Act or other similar applicable law, if applicable;
or (2) unless the Account representing such a sale is equal
to or less than $100,000.00 and the aggregate amount of all
such sales of $100,000.00 or less does not exceed
$500,000.00, (m) Accounts of the Borrower evidenced by
notes, chattel paper or other instruments (unless such
notes, chattel paper or other instruments have been
delivered to and are in the possession of Lender), (n)
Accounts of the Borrower owing by an account debtor which is
not solvent or is subject to any bankruptcy or insolvency
proceeding of any kind, (o) Accounts of the Borrower subject
to any Security Interest, other than a Permitted Security
Interest, (p) Accounts of the Borrower with respect to which
the applicable account debtor has disputed liability or made
any claim with respect thereto which are contingent or
subject to offset or counterclaim, in each case only to the
extent of such offset or counterclaim, and (r) any and all other
Accounts which Lender reasonably deems to be ineligible.
"Eligible License Receivable" -- means a long term receivable
from a customer under a non-cancelable license contract or
non-cancelable contract for the purchase of tokens in
connection with a license contract (each a "Non-cancelable
Contract"), which receivable has not yet been billed by
Borrower, to the extent that such receivable is not
otherwise included as an Eligible Account and such
receivable is payable in more than 365 days, but less than
730 days, from the date of the balance sheet which forms the
basis for the applicable Borrowing Base Certificate, other
than (a) Eligible License Receivables for which the Eligible
License Receivable Debtor is an officer, director, a 5% or
more shareholder, member, employee, parent, Subsidiary, or
Affiliate (other than any Affiliate with which Borrower and
such Affiliate have entered into and negotiated an arms
length transaction) of, or has common 5% or more
shareholders, officers, directors or members with Borrower;
(b) Eligible License Receivables for which the Eligible
License Receivable Debtor is not a commercial or
institutional entity (which term includes, but is not
limited to, private and public universities, governmental
agencies and research institutes and centers) or is not a
resident of the United States or Canada; (c) Eligible
License Receivables with respect to which any warranty or
representation provided herein is not true and correct; (d)
Eligible License Receivables which represent goods used for
demonstration purposes or loaned by Borrower to another
party; (e) Eligible License Receivables of the Borrower
representing a sale to the government of the United States
of America or any subdivision thereof: (1) unless, with
respect to an Eligible License Receivable representing such
a sale in excess of $100,000.00, the Borrower has complied,
to the satisfaction of the Lender, with respect to the
granting of a security interest in such Eligible License
Receivable of the Borrower, with the Federal Assignment of
Claims Act or other similar applicable law, if applicable;
or (2) unless the Eligible License Receivable representing
such a sale is equal to or less than $100,000.00 and the
aggregate amount of all such sales of $100,000.00 or less
does not exceed $500,000.00, (f) Eligible License
Receivables of the Borrower evidenced by notes, chattel
paper or other instruments (unless such notes, chattel paper
or other instruments have been delivered to and are in the
possession of Lender), (g) Eligible License Receivables of
the Borrower owing by an Eligible License Receivable debtor
which is not solvent or is subject to any bankruptcy or
insolvency proceeding of any kind, (h) Eligible License
Receivables of the Borrower subject to any Security
Interest, other than a Permitted Security Interest, (i)
Eligible License Receivables of the Borrower with respect to
which the applicable debtor has disputed liability or made
any claim with respect thereto which are contingent or
subject to offset or counterclaim, in each case only to the
extent of such offset or counterclaim, and (j) any and all
other Eligible License
Receivables which Lender reasonably deems to be ineligible.
"Eligible License Receivable Debtor" -- shall mean any Person who
is or who may become obligated to Borrower under, with
respect to, or on account of an Eligible License Receivable.
"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
redemption 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 interest rate per annum equal to the
quotient (rounded to the nearest 0.001%) of (i) the rate per
annum, as determined by Lender, as reported by the British
Bankers' Association in Bloomberg as the London interbank
offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days before the first day of
such Interest Period for a term comparable to such Interest
Period; provided, however, that if more than one rate is
reported by the British Bankers' Association in Bloomberg,
the applicable rate shall be the arithmetic mean of all such
rates (rounded upwards, if necessary, to the nearest 1/1000
of 1%), divided by (ii) a number equal to one minus the
decimal equivalent of the aggregate of the maximum rates
during such Interest Period of all Reserve Requirements.
"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 judgments are enforceable by or
within the territory of any of the foregoing.
"Guarantor" -- Tripos Realty.
"Guaranty" -- the unconditional guaranty of the Loan Obligations
by Guarantor, dated as of even date herewith and in the form
of Exhibit 8.5 attached hereto.
"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) to make any payment or contribution to a
Multi-Employer Plan; (vi) that is evidenced by a note, bond,
debenture or similar instrument; (vii) under any conditional
sale agreement or title retention agreement; or (viii) 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
endorsement 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 4.5.
"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.
Notwithstanding anything set forth herein to the contrary,
the term "Investment" shall not include loans to employees
of Borrower that do not exceed an aggregate amount of
$100,000.
"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.
"Loans" -- the Term Loans and Revolving Loans
"Loan Documents" -- this Agreement, the Notes, letter of credit
applications and reimbursement agreements, the Deed of
Trust, the Security Agreement, the Guaranty, and all other
agreements, certificates, documents, instruments and other
writings executed in connection herewith or in connection
with the Notes, Deed of Trust or the Security Agreement.
"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 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.
"LOC Obligations" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then
outstanding, assuming compliance with all requirements for
drawings referred to in such Letters of Credit plus (ii) the
aggregate amount of all drawings under Letters of Credit
honored by the Lender but not theretofore reimbursed by the
Borrower.
"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.
"Mortgaged Property" - the property of Tripos Realty located at
1699 South Hanley Road in St. Louis, Missouri, as more fully
described on Schedule A to this Exhibit.
"Multi-employer Plan" -- a Pension Benefit Plan which is a multi-
employer plan as defined in Section 4001(a)(3) of ERISA.
"Net Eligible Accounts" -- the face amount of Eligible Accounts
less any and all returns, discounts (which may, at Lender's
option, be calculated on shortest terms), credits, rebates,
allowances, or excise taxes (other than sales taxes) of any
nature at any time issued, owing, claimed by Account
Debtors, granted, outstanding, or payable in connection with
such Accounts at such time.
"Notes" -- the Revolving Note and the Term Notes.
"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 15.3 to incur, assume, or allow
to exist.
"Permitted Indirect Obligations" -- Indirect Obligations that the
Covered Persons are permitted under Section 15.9 to create,
incur, assume, or allow to exist.
"Permitted Investments" -- Investments that the Covered Persons
are permitted under Section 15.2 to make in other Persons.
"Permitted Security Interests" -- Security Interests that the
Covered Persons are permitted under Section 15.4 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 Loans" -- 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" - April 30, 2002, unless, in the
Lender's sole discretion, such date is otherwise extended in
writing by an amendment to this Agreement for a period not
to exceed three (3) years from the initial Revolving Loan
Maturity Date.
"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
real or personal 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.
"Term Loan A" -- the term loan to Borrower in the amount of
$4,000,000.
"Term Loan A Note" -- the note delivered to Lender as required by
Section 3.3.3 to evidence Borrower's obligation to repay
Term Loan A.
"Term Loan B" -- the term loan to Borrower in the amount of
$3,320,000.
"Term Loan B Note" -- the note delivered to Lender as required by
Section 3.4.3 to evidence Borrower's and Tripos Realty's
obligation to repay Term Loan B.
"Term Loan Notes" -- the Term Loan A Note and the Term Loan B
Note.
"Term Loans" -- Term Loan A and Term Loan B.
"Term Loan A Commitment" -- the commitment of Lender to make the
Term Loan A as provided in Sections 3.3.
"Term Loan B Commitment" -- the commitment of Lender to make the
Term Loan B as provided in Sections 3.4.
"Term Loan Commitments" -- the commitment of Lender to make the
Term Loans as provided in Sections 3.3 and 3.4.
"Term Loan Maturity Date" -- April 30, 2002.
"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.
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 860
<SECURITIES> 0
<RECEIVABLES> 9349
<ALLOWANCES> 115
<INVENTORY> 2068
<CURRENT-ASSETS> 13500
<PP&E> 20940
<DEPRECIATION> 6927
<TOTAL-ASSETS> 35383
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0
0
<COMMON> 33
<OTHER-SE> 17755
<TOTAL-LIABILITY-AND-EQUITY> 35383
<SALES> 12278
<TOTAL-REVENUES> 12278
<CGS> 3346
<TOTAL-COSTS> 3346
<OTHER-EXPENSES> 11556
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 229
<INCOME-PRETAX> (2676)
<INCOME-TAX> (1017)
<INCOME-CONTINUING> (1659)
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<CHANGES> 0
<NET-INCOME> (1659)
<EPS-BASIC> (0.51)
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