Exhibit 10.1

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

This Amended and Restated Credit Agreement (the “Agreement”) is entered into
effective as of the 1st day of December, 2019, by and between Bioanalytical
Systems, Inc., an Indiana corporation (“Borrower”), and FIRST INTERNET BANK OF
INDIANA, an Indiana state bank (“Bank”).

 

Section 1.  Definitions.

 

Certain capitalized terms have the meanings set forth on Exhibit 1 hereto or in
the Security Agreement. All financial terms used in this Agreement but not
defined on Exhibit 1 or in the Security Agreement have the meanings given to
them by generally accepted accounting principles. All other undefined terms have
the meanings given to them in the Indiana Uniform Commercial Code.

 

Section 2.   Loans.

 

2.1.         Revolving Credit Loans. (a)  Subject to the terms and conditions of
this Agreement, Bank hereby extends or continues to extend to Borrower a
revolving line of credit facility (the “Facility”) under which Bank shall make
loans (the “Revolving Loans”) to Borrower at Borrower’s request from time to
time during the term of this Agreement in an aggregate amount not to exceed Five
Million and No/100 Dollars ($5,000,000.00). Borrower may, from time to time,
borrow, repay (without penalty or charge), and reborrow under the Facility,
provided that the principal amount of all Revolving Loans outstanding at any one
time under the Facility will not exceed the lesser of (i) Five Million and
No/100 Dollars ($5,000,000.00) and (ii) the Borrowing Base (the “Revolving Loan
Availability”). If the amount of Revolving Loans outstanding at any time under
the Facility exceeds the Revolving Loan Availability, Borrower will, upon
request, immediately pay the amount of such excess to Bank in cash. In the event
Borrower fails to pay such excess following any such request, Bank may, in its
discretion, setoff such amount against Borrower’s accounts at Bank, if any, and,
if such excess is not satisfied by such setoff, declare an Event of Default.

 

(b)          Borrower may request a Revolving Loan by written or telephone
notice to Bank. Bank will make Revolving Loans by crediting the amount thereof
to Borrower’s account at Bank, if any, or as otherwise directed by Borrower and
approved by Bank. Loan proceeds will be used for general business purposes.

 

(c)          On June 23, 2017, Borrower originally issued and delivered to Bank
a revolving note in the original principal amount of Two Million and No/100
Dollars ($2,000,000.00) (the “Original Note”), which Original Note has been
previously amended and is being further amended and restated as of December 1,
2019 in the maximum principal amount of Five Million and No/100 Dollars
($5,000,000.00) in the form attached hereto as Exhibit 2.1C (the “Revolving
Note”), bearing interest and repayable as specified in the Revolving Note.

 

(d)          The term of the Facility will expire on January 31, 2021, and the
Revolving Note will become payable in full on that date.

 

(e)          On the date hereof, Borrower shall pay to Bank, for Bank’s sole
account in immediately available funds, a non-refundable fee associated with the
Facility in the amount of Thirty Thousand and No/100 Dollars ($30,000.00).

 

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2.2          Term Loan. (a)  Subject to the terms and conditions hereof, Bank
shall continue a term loan (the “Term Loan”) originally made to Borrower on
June 23, 2017 in the aggregate amount of Four Million Five Hundred Thousand and
No/100 Dollars ($4,500,000.00). The unpaid principal balance, together with all
accrued but unpaid interest and reimbursable expenses, shall be payable in
accordance with the terms of the Term Loan as evidenced by a Term Loan Note (the
“Term Note”) issued by Borrower to Bank on June 23, 2017 with a final maturity
date of June 23, 2022, and otherwise in substantially the form of Exhibit 2.2.

 

(b)          The proceeds of the Term Loan refinanced Borrower’s debt with The
Huntington Bank and also were available for general business purposes.

 

(c)          Borrower shall have the right to prepay the principal of the Term
Loan in accordance with the provisions and prepayment penalties set forth in the
Term Note. Early principal payments will not, unless agreed to by Bank in
writing, relieve Borrower of Borrower’s obligation to continue to make regular
monthly payments required by the Term Note. Rather, early payments will reduce
the principal balance due and may result in Borrower’s making fewer payments.
Borrower agrees not to send Bank payments marked “paid in full”, “without
recourse” or similar language. If Borrower sends such a payment, Bank may accept
it without losing any of Bank’s rights under the Term Note, and Borrower will
remain obligated to pay any further amount owed to Bank.

 

2.3          Term Loan #2 (a)  Subject to the terms and conditions hereof, Bank
shall continue a term loan (the “Term Loan #2”) originally made to Borrower on
July 2, 2018 in the aggregate amount of Five Million Five Hundred Thousand and
No/100 Dollars ($5,500,000.00). The unpaid principal balance, together with all
accrued but unpaid interest and reimbursable expenses, shall be payable in
accordance with the terms of the Term Loan #2 as evidenced by a Term Loan Note
(the “Term Note #2”) issued by Borrower to Bank on July 2, 2018 with a final
maturity date of July 2, 2023, and otherwise in substantially the form of
Exhibit 2.3.

 

(b)          The proceeds of the Term Loan #2 supported the acquisition of
Seventh Wave Laboratories, LLC and also were available for general business
purposes.

 

(c)          Borrower shall have the right to prepay the principal of the Term
Loan #2 in accordance with the provisions and prepayment penalties set forth in
the Term Note #2. Early principal payments will not, unless agreed to by Bank in
writing, relieve Borrower of Borrower’s obligation to continue to make regular
monthly payments required by the Term Note #2. Rather, early payments will
reduce the principal balance due and may result in Borrower’s making fewer
payments. Borrower agrees not to send Bank payments marked “paid in full”,
“without recourse” or similar language. If Borrower sends such a payment, Bank
may accept it without losing any of Bank’s rights under the Term Note #2, and
Borrower will remain obligated to pay any further amount owed to Bank.

 

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2.4          Construction Loan. (a)  Subject to the terms and conditions hereof,
Bank shall continue a construction draw loan (the “Construction Loan”)
originally made to Borrower on September 28, 2018 in the aggregate amount not to
exceed the Maximum Amount. Subject to the terms of Section 2.6 set forth herein
and so long as no Event of Default has occurred, Borrower may obtain advances
under the Construction Loan until the Term-Out Date, at which time Borrower’s
right to obtain advances under the Construction Loan shall terminate and the
unpaid principal balance, together with all accrued but unpaid interest and
reimbursable expenses, shall be payable in accordance with the terms of that
certain Construction Loan Note issued by Borrower to Bank dated September 28,
2018, as amended, modified or restated from time to time (the “Construction Loan
Note”). The term of the Construction Loan shall expire on March 28, 2025 (the
“Construction Loan Maturity Date”), unless the Construction Loan is sooner paid
pursuant to the terms hereof.

 

(b)          The proceeds of the Construction Loan funded construction of an
11,300 square foot building expansion on Premises #2 (the “Project”).

 

(c)          Borrower shall have the right to prepay the principal of the
Construction Loan in accordance with the provisions and prepayment penalties set
forth in the Construction Loan Note. Early principal payments will not, unless
agreed to by Bank in writing, relieve Borrower of Borrower’s obligation to
continue to make regular monthly payments required by the Construction Loan
Note. Rather, early payments will reduce the principal balance due and may
result in Borrower’s making fewer payments. Borrower agrees not to send Bank
payments marked “paid in full”, “without recourse” or similar language. If
Borrower sends such a payment, Bank may accept it without losing any of Bank’s
rights under the Construction Loan Note, and Borrower will remain obligated to
pay any further amount owed to Bank.

 

2.5          Equipment Loan. (a)  Subject to the terms and conditions hereof,
Bank shall continue an equipment draw loan (the “Equipment Loan”) originally
made to Borrower on September 28, 2018 in the aggregate amount of One Million
Four Hundred Twenty-Nine Thousand Two Hundred Fifty and No/100 Dollars
($1,429,250.00). So long as no Event of Default has occurred, Borrower may
obtain advances under the Equipment Loan until the Term-Out Date, at which time
Borrower’s right to obtain advances under the Equipment Loan shall terminate and
the unpaid principal balance, together with all accrued but unpaid interest and
reimbursable expenses, shall be payable in accordance with the terms of that
certain Equipment Loan Note issued by Borrower to Bank dated September 28, 2018,
as amended, modified or restated from time to time (the “Equipment Loan Note”).
The term of the Equipment Loan shall expire on March 28, 2025 (the “Equipment
Loan Maturity Date”), unless the Equipment Loan is sooner paid pursuant to the
terms hereof.

 

(b)          The proceeds of the Equipment Loan will be used to fund equipment
needs for the Project.

 

(c)          Borrower shall have the right to prepay the principal of the
Equipment Loan in accordance with the provisions and prepayment penalties set
forth in the Equipment Loan Note. Early principal payments will not, unless
agreed to by Bank in writing, relieve Borrower of Borrower’s obligation to
continue to make regular monthly payments required by the Equipment Loan Note.
Rather, early payments will reduce the principal balance due and may result in
Borrower’s making fewer payments. Borrower agrees not to send Bank payments
marked “paid in full”, “without recourse” or similar language. If Borrower sends
such a payment, Bank may accept it without losing any of Bank’s rights under the
Equipment Loan Note, and Borrower will remain obligated to pay any further
amount owed to Bank.

 

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2.6          Disbursement Requirements

 

(a) General Disbursement Requirements. In addition to the requirements of
Section 2.6(b)-(c) hereof, all requests for disbursements of Construction Loan
proceeds, including payments to be made to the Contractor or pursuant to any
construction management agreement to be approved by the Bank pursuant to this
Agreement, shall be made in accordance with the following requirements. These
procedures are solely for the benefit of the Bank and do not constitute the Bank
as the agent of the Borrower. The Borrower has no right to rely on these
procedures for the protection of its interests. All disbursement requests shall
be submitted to the Bank shall include a standard AIA Document G702 and G703, or
such other form as shall be approved by the Bank, shall be approved by the
Inspecting Architect, shall be certified as accurate by the Contractor and the
Borrower, and shall indicate thereon the total cost of the Site Improvements
authorized by the Bank and commenced by the Borrower, the total value of work in
place or stored on Premises #2 for the Project, the total amounts previously
disbursed by category of work for the Project, the amounts for which
disbursement is then being requested and the cost of completing the Project.
Each request for disbursement shall be subject to approval by the Bank and,
following such approval, the Bank shall cause to be transferred by (i) direct
deposit to the Borrower’s account with the Bank, or (ii) to such other person or
entity as the Borrower may direct and as may be acceptable to the Bank, an
amount not to exceed the approved amount of disbursement. The funds shall be
either paid directly to the person or entity as directed by the Borrower or
transferred by direct deposit or check to the Borrower’s checking account within
not more than five (5) days following the date of approval of the disbursement
by the Bank. The Borrower shall be responsible for advising the Bank of any
delays in receiving any disbursement and shall allow the Bank a reasonable
opportunity to cure any defect or deficiency in such transfer. Each disbursement
request by the Borrower shall be deemed to be a request and consent to the
disbursement of Construction Loan proceeds up to the amount of such request,
plus any unpaid interest, fees and expenses, which may be then owed by the
Borrower, and each transfer of Construction Loan proceeds in accordance herewith
shall, as of the day of such transfer by the Bank, be deemed to be an authorized
disbursement of Construction Loan proceeds, thereby increasing the principal
balance due under the Construction Loan Note. Except for payment by the Bank of
Inspecting Architect’s fees, disbursements shall be made not more frequently
than monthly.

 

(b)          Requirements for Interim Disbursements. Unless waived in whole or
in part by the Bank or the Bank’s representative, the Borrower shall submit the
following items to the Bank prior to or together with each request for
disbursement of Construction Loan proceeds:

 

(i)           A current endorsement to the title commitment by the appropriate
title insurance company in which the title insurance company shall increase the
amount of the title insurance coverage to the total principal amount then
outstanding under the Construction Loan.

 

(ii)          Such certificates by the Contractor and the Borrower as shall be
requested by the Bank.

 

(iii)         Disbursement requests on Form AIA G702 and AIA G703 and
photocopies of all bills and invoices from all contractors, subcontractors,
suppliers and materialmen requesting payment.

 

(iv)         Lien waivers from the Contractor with respect to disbursements as
set forth in Section 2.6(b)(iii) and from all contractors, subcontractors,
suppliers and materialmen (“Subcontractors”) with contracts over $25,000.00 with
respect to the immediately prior disbursements.

 

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(v)          A revised and updated Cost Breakdown reflecting the effects of
approved change orders (not to exceed $25,000 without Bank’s consent), detailing
the amount of any costs savings or overruns, and indicating the amount, if any,
of additional equity required from the Borrower to maintain a loan-to-value of
not greater than eighty-five percent (85%).

 

(vi)         The Borrower shall submit monthly and before each disbursement of
Construction Loan proceeds the revised budgets of the Project indicating all
amounts previously spent and projected to be spent for Site Improvements and
Building, proceeds received, interest, architectural fees, engineering fees,
legal fees, accounting fees, commitment fees, title insurance, inspection fees,
recording fees, and release fees through the termination of the Project
certified by the authorized representative of the Borrower, in form and
substance acceptable to the Bank, including that such budgets and cash flow
projections have been prepared on a basis consistent with those previously
provided to the Bank and that the assumptions upon which they were prepared are
reasonable and have not been changed from previous submissions except as
indicated therein.

 

(vii)        The Inspecting Architect shall have physically inspected the
Project and approved the disbursement request.

 

(viii)       If the Borrower shall not have included any interest, fees or
expenses then payable to the Bank or for which the Bank shall require immediate
reimbursement, the Borrower shall so indicate to the Bank and shall pay such
amount to the Bank and if not paid when due and after any applicable cure
period, the Bank is authorized to disburse such interest to itself and add such
amount to the principal outstanding hereunder.

 

(c)          Requirements For Final Disbursement. In addition to the
requirements set forth hereinabove for interim disbursements, the following
conditions shall be satisfied and the following additional items shall be
required for the final disbursement of Construction Loan proceeds:

 

(i)           The Project shall be substantially completed in accordance with
the provisions set forth herein and shall be ready for use in the Borrower’s
business. Substantial completion of the Site Improvements shall be evidenced by
such proof as the Bank may in its reasonable discretion require, which proof
shall include, but not be limited to, the following:

 

(a)           Inspection by a representative or agent of the Bank and
certification of completion by the Inspecting Architect;

 

(b)          An affidavit by the Contractor certifying that construction of the
Site Improvements and Building has been completed in accordance with the Plans
and Specifications previously approved by Bank and all governmental authorities,
that the Contractor has been (or will be with proceeds of the final
disbursement) paid in full for such work, that all subcontractors, laborers,
materialmen and suppliers of labor or material to the Project at the request of
the Contractor have been paid in full and that no such person or entity claims
or has a right to claim a valid mechanic’s or materialmen’s lien on Premises #2
or any part thereof, and containing such other customary representations as the
Bank shall deem reasonably appropriate;

 

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(c)          An updated as-built survey showing that all Site Improvements and
Building are complete and indicating all easements, rights-of-way and all other
encumbrances and exceptions. Such as-built survey shall be accompanied by a
certificate from the surveyor indicating compliance with the ALTA Minimum
Standard Detail Requirements. Such certificate shall be addressed to the
Borrower, the Bank and the appropriate title company;

 

(d)          Original waivers of lien from the Contractor and from all
subcontractors who will receive any of such proceeds;

 

(e)           Satisfactory evidence of connection of all public utilities to the
Project; and

 

(f)           An affidavit by the Borrower certifying that to its knowledge
construction of the Site Improvements and the Building is substantially complete
in all material respects and has been performed in accordance with the plans and
specifications previously approved by all governmental authorities, that all
necessary occupancy, drainage and zoning licenses, certificates, approvals
and/or permits have been issued, that all contractors and suppliers for the
Project have been (or will be with proceeds of the final disbursement) fully
paid and no one has currently filed or has a right to file a valid mechanic’s or
materialmen’s lien on the Project or any part thereof, that there are no liens
or encumbrances on all or any part of the Project other than those in favor of
the Bank or those which have been approved in writing by the Bank, that all
utilities are provided by governmental or public utility entities and have been
connected to the Building, as appropriate, that Premises #2 is not located in a
flood hazard area, that Premises #2 is not in violation of federal or state law
provisions regarding the removal of hazardous waste from Premises #2, and
certifying to all other customary matters which may reasonably be requested by
the Bank.

 

(ii)          The appropriate title company shall issue a final endorsement to
its policy, agreeing to delete all standard exceptions, including survey
exceptions, from its final title insurance policy, and including a 3.1 zoning
endorsement thereto. The title insurance commitment shall indicate that there
are no recorded liens or encumbrances on or security interests in Premises #2 or
the Borrower’s interest in Premises #2 or any collateral defined in this
Agreement other than (i) utility easements, (ii) any items that have been
approved by the Bank, and (iii) any other items permitted under the Loan
Documents.

 

2.7          Term Loan #3. (a)  Subject to the terms and conditions hereof, Bank
shall continue a term loan (the “Term Loan #3”) originally made to Borrower on
May 1, 2019 in the aggregate amount of One Million Two Hundred Seventy Thousand
Six Hundred Forty-Six and 10/100 Dollars ($1,270,646.10). The unpaid principal
balance, together with all accrued but unpaid interest and reimbursable
expenses, shall be payable in accordance with the terms of the Term Loan #3 as
evidenced by a Term Loan Note (the “Term Note #3”) issued by Borrower to Bank on
May 1, 2019 with a final maturity date of November 1, 2025, and otherwise in
substantially the form of Exhibit 2.7.

 

(b)          The proceeds of the Term Loan #3 supported the acquisition of the
assets of Smithers Avanza Toxicology Services LLC and also were available for
general business purposes.

 

(c)          Borrower shall have the right to prepay the principal of the Term
Loan #3 in accordance with the provisions and prepayment penalties set forth in
the Term Note #3. Early principal payments will not, unless agreed to by Bank in
writing, relieve Borrower of Borrower’s obligation to continue to make regular
monthly payments required by the Term Note #3. Rather, early payments will
reduce the principal balance due and may result in Borrower’s making fewer
payments. Borrower agrees not to send Bank payments marked “paid in full”,
“without recourse” or similar language. If Borrower sends such a payment, Bank
may accept it without losing any of Bank’s rights under the Term Note #3, and
Borrower will remain obligated to pay any further amount owed to Bank.

 

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2.8          Capex Line of Credit. (a)  Subject to the terms and conditions
hereof, Bank shall continue an equipment draw loan (the “Capex Line of Credit”)
originally made to Borrower on May 1, 2019 in the aggregate amount of One
Million One Hundred Thousand and No/100 Dollars ($1,100,000.00). So long as no
Event of Default has occurred, Borrower may obtain advances under the Equipment
Loan until December 1, 2019, at which time Borrower’s right to obtain advances
under the Capex Line of Credit shall terminate. The unpaid principal balance,
together with all accrued but unpaid interest and reimbursable expenses, shall
be payable in accordance with the terms of that certain Capex Line of Credit
Note issued by Borrower to Bank on May 1, 2019, as amended, modified or restated
from time to time (the “Capex Line of Credit Note”), in substantially the form
of Exhibit 2.8. The term of the Capex Line of Credit shall expire on June 30,
2020 (the “Capex Line of Credit Maturity Date”), unless the Capex Line of Credit
is sooner paid pursuant to the terms hereof.

 

(b)          The proceeds of the Capex Line of Credit will be used to fund
equipment needs of the Borrower and its Consolidated Subsidiaries.

 

(c)          Borrower shall have the right to prepay the principal of the Capex
Line of Credit in accordance with the provisions and prepayment penalties set
forth in the Capex Line of Credit Note. Early principal payments will not,
unless agreed to by Bank in writing, relieve Borrower of Borrower’s obligation
to continue to make regular monthly payments required by the Capex Line of
Credit Note. Rather, early payments will reduce the principal balance due and
may result in Borrower’s making fewer payments. Borrower agrees not to send Bank
payments marked “paid in full”, “without recourse” or similar language. If
Borrower sends such a payment, Bank may accept it without losing any of Bank’s
rights under the Capex Line of Credit Note, and Borrower will remain obligated
to pay any further amount owed to Bank.

 

2.9       Term Loan #4.      (a)  Subject to the terms and conditions hereof,
Bank shall make to Borrower a term loan (the “Term Loan #4”) on the date hereof
in an aggregate amount of One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00). The unpaid principal balance, together with all accrued but
unpaid interest and reimbursable expenses, shall be payable in accordance with
the terms of the Term Loan #4 as evidenced by a Term Loan Note (the “Term Note
#4”) to be issued by Borrower to Bank dated on the date hereof with a final
maturity date of June 1, 2025, and otherwise in substantially the form of
Exhibit 2.9.

 

(b)          The proceeds of the Term Loan #4 will be used to support the
acquisition of the assets of PreClinical Research Services, Inc. and for general
business purposes.

 

(c)          Borrower shall have the right to prepay the principal of the Term
Loan #4 in accordance with the provisions and prepayment penalties set forth in
the Term Note #4. Early principal payments will not, unless agreed to by Bank in
writing, relieve Borrower of Borrower’s obligation to continue to make regular
monthly payments required by the Term Note #4. Rather, early payments will
reduce the principal balance due and may result in Borrower’s making fewer
payments. Borrower agrees not to send Bank payments marked “paid in full”,
“without recourse” or similar language. If Borrower sends such a payment, Bank
may accept it without losing any of Bank’s rights under the Term Note #4, and
Borrower will remain obligated to pay any further amount owed to Bank.

 

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(d)          On the date hereof, Borrower shall pay to Bank, for Bank’s sole
account in immediately available funds, a non-refundable fee associated with the
Term Loan #4 in the amount of Fifteen Thousand and No/100 Dollars ($15,000.00).

 

2.10     Term Loan #5.      (a)  Subject to the terms and conditions hereof,
Bank shall make to Borrower a term loan (the “Term Loan #5”) on the date hereof
in an aggregate amount not to exceed the lesser of (i) One Million Nine Hundred
Thirty-Nine Thousand and No/100 Dollars ($1,939,000.00), or (ii) eighty percent
(80%) of the appraised value of the Premises #3 (as defined herein). The unpaid
principal balance, together with all accrued but unpaid interest and
reimbursable expenses, shall be payable in accordance with the terms of the Term
Loan #5 as evidenced by a Term Loan Note (the “Term Note #5”) to be issued by
Borrower to Bank dated on the date hereof with a final maturity date of
December 1, 2024, and otherwise in substantially the form of Exhibit 2.10.

 

(b)          The proceeds of the Term Loan #5 will be used to support the
acquisition of certain real property located at 1512 Webster Court, Fort
Collins, Colorado, consisting of 1.69 acres (the “Premises #3”) and all
improvements thereon, and for general business purposes.

 

(c)          Borrower shall have the right to prepay the principal of the Term
Loan #4 in accordance with the provisions and prepayment penalties set forth in
the Term Note #4. Early principal payments will not, unless agreed to by Bank in
writing, relieve Borrower of Borrower’s obligation to continue to make regular
monthly payments required by the Term Note #4. Rather, early payments will
reduce the principal balance due and may result in Borrower’s making fewer
payments. Borrower agrees not to send Bank payments marked “paid in full”,
“without recourse” or similar language. If Borrower sends such a payment, Bank
may accept it without losing any of Bank’s rights under the Term Note #4, and
Borrower will remain obligated to pay any further amount owed to Bank.

 

(d)          On the date hereof, Borrower shall pay to Bank, for Bank’s sole
account in immediately available funds, a non-refundable fee associated with the
Term Loan #5 in the amount of Fourteen Thousand Five Hundred and No/100 Dollars
($14,500.00).

 

2.11     Capex Line of Credit Loan #2.      (a)  Subject to the terms and
conditions hereof, Bank shall continue an equipment draw loan (the “Capex Line
of Credit #2”) originally made to Borrower on December 1, 2019 in the aggregate
amount of Three Million and No/100 Dollars ($3,000,000.00). So long as no Event
of Default has occurred, Borrower may obtain advances under the Capex Line of
Credit #2 until December 31, 2020, at which time Borrower’s right to obtain
advances under the Capex Line of Credit shall terminate. The unpaid principal
balance, together with all accrued but unpaid interest and reimbursable
expenses, shall be payable in accordance with the terms of that certain Capex
Line of Credit Note issued by Borrower to Bank on December 1, 2019, as amended,
modified or restated from time to time (the “Capex Line of Credit Note #2”), in
substantially the form of Exhibit 2.11. The term of the Capex Line of Credit #2
shall expire on December 31, 2020 (the “Capex Line of Credit #2 Maturity Date”),
unless the Capex Line of Credit #2 is sooner paid pursuant to the terms hereof.

 

(b)          The proceeds of the Capex Line of Credit #2 will be used to fund
equipment needs of the Borrower and its Consolidated Subsidiaries.

 

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(c)          Borrower shall have the right to prepay the principal of the Capex
Line of Credit #2 in accordance with the provisions and prepayment penalties set
forth in the Capex Line of Credit Note #2. Early principal payments will not,
unless agreed to by Bank in writing, relieve Borrower of Borrower’s obligation
to continue to make regular monthly payments required by the Capex Line of
Credit Note #2. Rather, early payments will reduce the principal balance due and
may result in Borrower’s making fewer payments. Borrower agrees not to send Bank
payments marked “paid in full”, “without recourse” or similar language. If
Borrower sends such a payment, Bank may accept it without losing any of Bank’s
rights under the Capex Line of Credit Note #2, and Borrower will remain
obligated to pay any further amount owed to Bank.

 

(d)          On the date hereof, Borrower shall pay to Bank, for Bank’s sole
account in immediately available funds, a non-refundable fee associated with the
Capex Line of Credit #2 in the amount of Thirty Thousand and No/100 Dollars
($30,000.00).

 

Section 3.              Representations And Warranties.

 

Borrower, to its knowledge, hereby warrants and represents to Bank the
following:

 

3.1.         Organization and Qualification. Borrower is a duly organized and
validly existing corporation in good standing under the laws of the State of
Indiana, has the necessary corporate power and authority to carry on its
business and to enter into and perform this Agreement, the Notes and the other
Loan Documents, is qualified and licensed to do business in each jurisdiction in
which the failure to have such qualification would have a materially adverse
effect on the Borrower. All information provided to Bank with respect to
Borrower and its operations is true and correct in all material respects.

 

3.2.         Due Authorization. The execution, delivery and performance by
Borrower of this Agreement, the Security Agreement, the Notes and the other Loan
Documents have been duly authorized by all necessary corporate action of
Borrower, and will not contravene any law or any governmental rule or order
binding on Borrower, or the Articles of Incorporation or By-Laws of Borrower,
nor violate any agreement or instrument by which Borrower is bound nor result in
the creation of a Lien on any assets of Borrower except the Lien granted to Bank
herein. Borrower has duly executed and delivered this Agreement, the Security
Agreement, the Mortgage, the Notes and the other Loan Documents and they are
valid and binding obligations of Borrower enforceable according to their
respective terms except as limited by equitable principles and by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally. No
notice to or consent by any governmental body is needed in connection with this
transaction.

 

3.3.         Litigation. Except as disclosed on Exhibit 3.3 attached, there are
no suits or proceedings pending or overtly threatened in writing against
Borrower or its assets, and no proceedings before any governmental body are
pending or overtly threatened in writing against Borrower, which in any case, if
adversely determined, would have a material adverse effect on Borrower.

 

3.4.         Margin Stock. No part of the Loans will be used to purchase or
carry, or to reduce or retire or refinance any credit incurred to purchase or
carry, any margin stock (within the meaning of Regulations U and X of the Board
of Governors of the Federal Reserve System) or to extend credit to others for
the purpose of purchasing or carrying any margin stock.

 

9

 

 

3.5.         Licenses, etc. Borrower has obtained any and all licenses, permits,
franchises, governmental authorizations, patents, trademarks, copyrights or
other rights necessary for the ownership of its properties and the conduct of
its business, except to the extent the failure to have obtained any of the
foregoing would not result in a material adverse effect on Borrower. Borrower
possesses adequate licenses, patents, patent applications, copyrights,
trademarks, trademark applications, and trade names to continue to conduct its
business as heretofore conducted by it, without any conflict with the rights of
any other person or entity. All of the foregoing are in full force and effect
and none of the foregoing are in known conflict with the rights of others.

 

3.6.         Laws and Taxes. Borrower is in compliance in all material respects
with all laws, regulations, rulings, orders, injunctions, decrees, conditions or
other requirements applicable to or imposed upon Borrower by any law or by any
governmental authority, court or agency. Borrower has filed all required tax
returns and reports that are now required to be filed by it in connection with
any federal, state and local tax, duty or charge levied, assessed or imposed
upon Borrower or its assets, including unemployment, social security, and real
estate taxes, except where the failure to file such tax returns or reports would
not reasonably be expected to have a material adverse effect on Borrower.
Borrower has paid all taxes which are now due and payable, other than any such
taxes as are being contested by Borrower in good faith and by appropriate
proceedings and for which adequate reserves have been set aside on Borrower's
books to the extent required by GAAP. Except as disclosed in Exhibit 3.6
attached, no taxing authority has asserted or assessed any additional tax
liabilities against Borrower which are outstanding on the date of this
Agreement, and Borrower has not filed for any extension of time for the payment
of any tax or the filing of any tax return or report.

 

3.7.         Financial Condition. All historical financial information relating
to Borrower which has been or may hereafter be delivered by Borrower or on its
behalf to Bank is or when delivered will be true and correct in all material
respects and, in all material respects, has been or will be prepared in
accordance with consistently applied sound accounting principles. Borrower has
no material obligations or liabilities of any kind not disclosed in that
financial information, and, since the submission of the most recent financial
information to Bank, there has been no material adverse change in the financial
condition of Borrower nor has Borrower suffered any damage, destruction or loss
which has adversely affected its business or assets.

 

3.8.         Title. Borrower has good and marketable title to, or the right to
use under valid leases, the assets reflected on the most recent balance sheet
submitted to Bank, free and clear from all liens and encumbrances of any kind,
except for: (a) liens securing (i) current taxes and assessments not yet due and
payable or (ii) taxes being contested by Borrower in good faith and by
appropriate proceedings for which adequate reserves have been set aside on
Borrower's books to the extent required by generally accepted accounting
principles, (b) liens and encumbrances, if any, reflected or noted on such
balance sheet or notes thereto, (c) assets disposed of in the ordinary course of
business, (d) any security interests, pledges, assignments or mortgages granted
to Bank to secure the repayment or performance of the Obligations,
(e) non-consensual statutory liens (other than liens securing the payment of
taxes) arising in the ordinary course of Borrower’s business (including such
liens in favor of landlords, warehousemen and mechanics and similar liens) to
the extent such liens secure Indebtedness or other obligations relating to
claims or liabilities which are being contested in good faith by appropriate
proceedings, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which adequate reserves have been set
aside on its books in accordance with GAAP, (f) zoning restrictions, easements,
licenses, covenants and other restrictions affecting the use of real property
which do not interfere in any material respect with the use of such real
property or ordinary conduct of the business of Borrower thereon or materially
impair the value of the real property which may be subject thereto, (g) purchase
money security interests in equipment (including capital leases), (h) pledges
and deposits of cash by Borrower in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types of
social security benefits, and (i) liens and encumbrances as disclosed on
Exhibit 3.8 attached hereto (collectively, the “Permitted Liens”).

 

10

 

 

3.9.         Defaults. Except as specifically disclosed in writing to Bank,
Borrower is in compliance in all material respects with all material agreements
applicable to it and there does not now exist any default or violation by
Borrower of or under any of the terms, conditions or obligations of (a) its
Articles of Incorporation or By-Laws, or (b) any indenture, mortgage, deed of
trust, franchise, permit, contract, agreement or other instrument to which
Borrower is a party or by which it is bound, which would have a material adverse
effect on Borrower and the Guarantor taken as a whole, and the consummation of
the transactions contemplated by this Agreement will not result in such default
or violation.

 

3.10.       Environmental Laws. (a)  Borrower has obtained all material permits,
licenses and other authorizations or approvals which are required under
Environmental Laws and except as disclosed in Exhibit 3.10 attached, Borrower is
in compliance in all material respects with all terms and conditions of the
required permits, licenses, authorizations and approvals, and is also in
compliance in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws.

 

(b)          None of Borrower's executive officers is aware of, and Borrower has
not received written notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
reasonably be expected to interfere with or prevent compliance or continued
compliance, in any material respect, with Environmental Laws, or may reasonably
be expected to give rise to any material common law or legal liability, or
otherwise form the basis of any material claim, action, demand, suit,
proceeding, hearing, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or industrial,
toxic or hazardous substance or waste.

 

(c)          There is no civil, criminal or administrative action suit, demand,
claim, hearing, notice or demand letter, notice of violation, investigation or
proceeding pending or overtly threatened in writing against Borrower, relating
in any way to Environmental Laws.

 

3.11.       Subsidiaries and Partnerships. Borrower has no subsidiaries other
than Entity Guarantor and is not a party to any partnership agreement or joint
venture agreement.

 

3.12.       ERISA. To Borrower's knowledge, Borrower and all individuals or
entities along with Borrower that would be treated as a single employer under
ERISA or the Internal Revenue Code of 1986, as amended (an “ERISA Affiliate”),
are in compliance with all of their obligations to contribute to any “employee
benefit plan” as that term is defined in Section 3(3) of ERISA and any
regulations promulgated thereunder from time to time. To Borrower's knowledge,
Borrower and each of its ERISA Affiliates are in compliance, in all material
respects, with ERISA, and there exists no event described in
Section 4043(b) thereof (“Reportable Event”).

 

11

 

 

3.13        USA Patriot Act. Borrower represents and warrants that neither
Borrower nor any of its affiliates is a country, individual or entity named on
the Specifically Designated National and Blocked Persons (SDN) list issued by
the Office of Foreign Asset Control of the Department of the Treasury of the
United States of America.

 

Section 4.              Affirmative Covenants.

 

4.1.         Books and Records. Borrower will maintain proper books of account
and records and enter therein complete and accurate entries and records of all
of its transactions in accordance with GAAP and give representatives of Bank
access thereto at least once in each calendar year, with such access to be
granted upon reasonable prior notice and during ordinary business hours. During
such examination bank may examine, copy and make abstracts from any such books
and records and such other information which might be helpful to Bank in
evaluating the status of the Loans. All inspections not taking place during the
existence of an Event of Default shall be at Bank’s expense. At least once
annually, Borrower will give Bank reasonable access upon reasonable prior notice
to the Collateral and the other property securing the Obligations for the
purpose of performing examinations thereof and to verify its condition or
existence.

 

4.2.         Financial Statements. Borrower will maintain a standard and modern
system for accounting and, so long as any of the Obligations remains unpaid,
will furnish to Bank:

 

(a)          As soon as publically available in regulatory filings with the
Securities and Exchange Commission, the Form 10-K consolidated financial
statements of Borrower and its subsidiaries as of the last day of and for the
fiscal year then ended.

 

(b)          Not later than December 31st of each year, commencing December 31,
2019, an audited balance sheet, operating statement, and cash flow statement for
Borrower (prepared in accordance with GAAP consistently applied unless otherwise
specifically noted therein), together with an annual budget for Borrower and
updated certificate of insurance.

 

(c)          Within forty-five (45) days after the end of each of the first
three fiscal quarters of each fiscal year, commencing with the quarter ending
December 31, 2019, Borrower shall provide interim internally-prepared
consolidated financial statements of Borrower and its subsidiaries, including
but not limited to, the financial statements required to be filed with the SEC
as part of Borrower's Form 10-Q report, an AR aging report, an AP aging report
and a backlog report;

 

(d)         Within forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year, and within one hundred twenty (120) days of
the end of each fiscal year, commencing with the fiscal year ending
September 30, 2019, Borrower will provide a compliance certificate in form
satisfactory to Bank;

 

(e)          Within twenty (20) days after the end of each calendar month in
which the borrowing under the Facility at the end of such calendar month equals
or exceeds $1.00, a Borrowing Base Certificate with supporting Accounts
Receivable Invoice Data Aging, Accounts Payable Aging, and backlog report in a
format acceptable to Bank;

 

12

 

 

 

(f)          Such other financial information reasonably requested by the Bank
from time to time.

 

4.3.          Condition and Repair. Borrower will maintain its assets in good
repair and working order, except for ordinary wear and tear and obsolescence and
will make all appropriate repairs and replacements thereof.

 

4.4.          Insurance. Borrower will insure its properties and business
against loss or damage of the kinds and in the amounts customarily insured
against by companies of similar size with established reputations engaged in the
same or similar business as Borrower, and as otherwise required pursuant to the
terms of the Security Agreement. All such policies will (a) be issued by
financially sound and reputable insurers, (b) name Bank as an additional insured
and, where applicable, as loss payee and mortgagee under a lender loss payable
endorsement satisfactory to Bank, and (c) Borrower will make commercially
reasonable efforts to cause such policy to provide for not less than thirty (30)
days written notice to Bank before such policy is altered or canceled all of
which will be evidenced by such certificates, declarations or other
documentation satisfactory to Bank in Bank’s sole discretion and delivered to
Bank by Borrower on the date of execution of this Agreement.

 

4.5.          Taxes. Borrower will pay when due all taxes, assessments and other
governmental charges imposed upon it or its assets, franchises, business, income
or profits before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which by law might be a lien or charge upon any of its
assets, provided that (unless any material item or property would be lost,
forfeited or materially damaged as a result thereof) no such charge or claim
need be paid if it is being diligently contested in good faith, if Bank is
notified in advance of such contest and if Borrower establishes an adequate
reserve or other appropriate provision required by GAAP.

 

4.6.          Existence; Business. Borrower will (a) maintain its existence,
(b) engage primarily in business of the same general character as that now
conducted, and (c) refrain from entering into any lines of business
substantially different from the business or activities in which Borrower is
presently engaged.

 

4.7.          Compliance with Laws. Borrower will comply in all material
respects with all federal, state and local laws, regulations and orders
applicable to Borrower or its assets including but not limited to all
Environmental Laws, in all respects material to Borrower's business or assets
and will promptly, but in any event within seven (7) calendar days, notify Bank
of any violation of any rule, regulation, statute, ordinance, order or law
relating to the public health or the environment and of any complaint or
notifications received by Borrower relating to any environmental or safety and
health rule, regulation, statute, ordinance or law.

 

4.8.          Notice of Default. Borrower will, within seven (7) calendar days
of its knowledge thereof, give written notice to Bank of (a) the occurrence of
any Event of Default, and (b) the occurrence of any event or the existence of
any condition which would prohibit Borrower from continuing to make the
representations set forth in this Agreement.

 

 13 

 

 

4.9.          Costs. Borrower will pay to Bank its reasonable fees, costs and
expenses, including, without limitation, reasonable attorneys’ fees, other
professionals’ fees, appraisal fees, environmental assessment fees, expert fees,
court costs, litigation and other expense (collectively, “Costs”) incurred or
paid by Bank in connection with administering and enforcing the Loans and the
Loan Documents and the defense, preservation and protection of Bank’s rights and
remedies thereunder, including without limitation, its security interest in the
Collateral or any other property pledged to secure the Loans, whether incurred
in bankruptcy, insolvency, foreclosure or other litigation or proceedings or
otherwise. The Costs will be due and payable within five (5) days of written
demand by Bank. If Borrower fails to pay the Costs upon such demand, Bank is
entitled to exercise any remedies set forth herein for nonpayment and may
disburse such sums as an advance under the Revolving Loan. Thereafter, the Costs
will bear interest from the date incurred or disbursed at the rate set forth in
the Notes. This provision will survive the termination of this Agreement and/or
the repayment of any amounts due or the performance of any Obligation.

 

4.10          Other Amounts Deemed Loans. If Borrower fails to pay any tax,
assessment, governmental charge or levy or to maintain insurance within the time
permitted or required by this Agreement, or to discharge any Lien prohibited
hereby, or to comply with any other Obligation, Bank may, but shall not be
obligated to, pay, satisfy, discharge or bond the same for the account of
Borrower, and to the extent permitted by law and at the option of Bank, all
monies so paid by Bank on behalf of Borrower will be deemed Loans and
Obligations.

 

4.11          Depository. Borrower shall maintain its primary deposit accounts
with the Bank.

 

4.12          Life Insurance. Borrower shall, not later than March 1, 2019,
obtain a life insurance policy or policies on the life of Robert Leasure, Jr. in
an aggregate amount not less than Five Million and No/100 Dollars
($5,000,000.00), provide Bank with an assignment of such life insurance policy
as collateral for all obligations of Borrower now existing or hereafter arising
in favor of Bank, and maintain such life insurance policy while any Obligations
of the Borrower exist under this Agreement.

 

Section 5.               Negative Covenants.

 

5.1.          Indebtedness. Without the written consent of Bank, Borrower will
not incur, create, assume or permit to exist any additional Indebtedness for
borrowed money (other than the Obligations) or Indebtedness on account of
deposits, advances or progress payments under contracts, notes, bonds,
debentures or similar obligations or other indebtedness evidenced by notes,
bonds, debentures, capitalized leases or similar obligations except
(a) Indebtedness not in excess of $100,000 at any one time outstanding,
(b) purchase money Indebtedness (including capital leases) to the extent secured
by purchase money security interests in equipment (including capital leases)
and, upon the prior written consent of Bank, purchase money mortgages on real
property so long as such security interests and mortgages do not apply to any
property of Borrower other than the equipment or real property so acquired, and
the Indebtedness secured thereby does not exceed the cost of the equipment or
real property so acquired, as the case may be, (c) Indebtedness in the form of
deposits or advances from customers pursuant to contracts (including purchaser
orders) for services to be performed by Borrower in the ordinary course of
business, and (d) other Indebtedness approved in writing by the Bank; provided
that any liabilities related to lease obligations existing as of December 1,
2019 that are required to be recorded in connection with Borrower’s adoption of
Accounting Standards Codification Topic 842, Leases shall not be prohibited by
this Section 5.1 regardless of whether or not they are considered to be
Indebtedness hereunder.

 

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5.2.          Prepayments. Borrower will not voluntarily prepay any Indebtedness
owing by Borrower prior to one month in advance of the stated maturity date
thereof other than (i) the Obligations and (ii) Indebtedness to trade creditors
where the prepayment will result in a discount on the amount due.

 

5.3.          Leases. Borrower will not enter into any lease of real property,
as lessee, without prior written approval by Bank.

 

5.4.          Restricted Payments. Borrower will not purchase or redeem any
shares of the capital stock of Borrower or declare or pay any dividends thereon
or make any other distributions to shareholders, except for dividends payable
entirely in capital stock and stock repurchases in compliance with benefit plans
in existence or hereafter adopted by Borrower.

 

5.5.          Pledge or Encumbrance of Assets. Other than the Permitted Liens,
Borrower will not create, incur, assume or permit to exist, arise or attach any
Lien in any present or future asset, except for (i) Liens to Bank; (ii) purchase
money security interests securing Indebtedness permitted pursuant to
Section 5.1; (iii) any Lien or deposit with any governmental agency required or
permitted to qualify Borrower to conduct business or exercise any privilege,
franchise or license, or to maintain self-insurance or to obtain the benefits of
or secure obligations under any law pertaining to worker's compensation,
unemployment insurance, old age pensions, social security or similar matters, or
to obtain any stay or discharge in any legal or administrative proceedings, or
any similar lien or deposit arising in the ordinary course of business;
(iv) Liens for taxes and governmental charges which are not yet due or which are
being contested in good faith and by appropriate proceedings and for which
appropriate reserves have been established to the extent required by GAAP; and
(v) Liens imposed by law which secure amounts not at the time due and payable.

 

5.6.          Guarantees and Loans. Borrower will not enter into any direct or
indirect guarantees other than (a) by endorsement of checks for deposit, and
(b) guarantees in favor of Bank. Borrower will not, other than in the ordinary
course of business, make any advance or loan, including, without limitation,
loans and advances to employees of Borrower.

 

5.7.          Merger; Disposition of Assets. Without the prior written consent
of Bank, which consent shall not be unreasonably withheld, Borrower will not
(a) change its capital structure, (b) merge or consolidate with any company,
(c) amend or change its Articles of Incorporation or By-Laws without the Bank’s
consent, or (d) sell, transfer or otherwise dispose of all or any substantial
part of its assets, whether now owned or hereafter acquired.

 

5.8.          Transactions with Affiliates. Without the prior written consent of
Bank, which consent shall not be unreasonably withheld, Borrower will not
(a) directly or indirectly issue any guarantee for the benefit of any of its
Affiliates, other than guarantees of the obligations of Entity Guarantors to
customers or suppliers in the ordinary course of business not to exceed $500,000
in the aggregate, (b) directly or indirectly make any loans or advances to or
investments in any of its Affiliates other than Entity Guarantor, (c) enter into
any transaction with any of its Affiliates, other than transactions entered into
on an arm’s length basis in the normal course of Borrower’s business, or
(d) divert (or permit anyone to divert) any of its business opportunities to any
Affiliate or any other corporate or business entity in which Borrower or its
members or members of its Board of Directors holds a direct or indirect
interest, other than Entity Guarantor.

 

5.9.          Government Regulation. Borrower shall not (a) be or become subject
at any time to any law, regulation or list of any government agency (including,
without limitation, the U.S. Office of Foreign Asset Control list) that
prohibits or limits Bank from making any advance or extension of credit to
Borrower or from otherwise conducting business with Borrower, or (b) fail to
provide documentary and other evidence of Borrower’s identity as may be
requested by Bank at any time to enable Bank to verify Borrower’s identity or to
comply with any applicable law or regulation, including, without limitation,
Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

 15 

 

 

5.10 .       Financial Covenants.

 

(a) Borrower shall not permit the Fixed Charge Coverage Ratio, tested quarterly
and measured on a trailing twelve (12) month basis, to be less than the
following each quarter ending:

 

(i)          1.15 to 1.0 at September 30, 2019;

(ii)         1.25 to 1.0 at December 31, 2019; and each quarter thereafter;

 

(b)  Beginning March 31, 2020, Borrower shall not permit the Cash Flow Leverage
Ratio, tested at the end of each fiscal quarter ending as follows:

 

(i)          as of March 31, 2020, to exceed 5.00 to 1.00;

(ii)         as of June 30, 2020, to exceed 4.50 to 1.00;

(iii)        as of September 30, 2020, to exceed 4.25 to 1.00;

(iv)        as of December 31, 2020 and each quarter thereafter, to exceed 4.00
to 1.00.

 

The Financial Covenants set forth in this Section 5.10 shall be calculated
excluding the effects of Borrower’s adoption of Accounting Standards
Codification Topic 842, Leases.

 

Section 6.               Events of Default and Remedies.

 

6.1.          Events of Default. Any of the following events will be an event of
default (“Event of Default”):

 

(a)any representation or warranty made by Borrower herein or in any of the Loan
Documents is materially incorrect when made or reaffirmed; provided, however,
upon notice from Bank to Borrower of such materially incorrect representation or
warranty, Borrower shall have a thirty (30) day grace period to cause such
representation to be true and accurate; or

 

(b)Borrower fails to pay within 5 days of when due any principal or interest on
any Obligation; or

 

(c)Borrower fails to observe or perform any covenant, condition or agreement
herein (other than as provided in Subsection 6.1(b)) above) or in any other Loan
Document and fails to cure such default within thirty (30) days of the
occurrence thereof. Notwithstanding the foregoing, no such cure period shall
apply to any failure to maintain insurance, or any breach in any negative
covenant set forth in Section 5 hereof; or

 

(d)a court enters a decree or order for relief with respect to Borrower in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law then in effect, or appoints a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of Borrower or for any
substantial part of its respective property, or orders the wind-up or
liquidation of its affairs; or a petition initiating an involuntary case under
any such bankruptcy, insolvency or similar law is filed and is pending for sixty
(60) days without dismissal; or

 

 16 

 

 

(e)Borrower commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law in effect, or makes any general assignment for
the benefit of creditors, or fails generally to pay its debts as such debts
become due, or takes company action in furtherance of any of the foregoing; or

 

(f)Borrower defaults under the terms of any Indebtedness or lease involving
total payment obligations of Borrower in excess of $100,000, and such default
gives any creditor or lessor the right to accelerate the maturity of any such
indebtedness or lease payments which right is not contested by Borrower or is
determined by any court of competent jurisdiction to be valid; or

 

(g)final non-appealable and uninsured judgment of the payment of money in excess
of $100,000 is rendered against Borrower and remains undischarged for sixty (60)
days during which execution is not effectively stayed; or

 

(h)an Event of Default occurs under any Loan Document; or

 

(i)the dissolution or liquidation of Borrower or any Entity Guarantor; or

 

(j)the commencement of any foreclosure proceedings, proceedings in aid of
execution, attachment actions, levies against, or the filing by any taxing
authority of a lien against any of the Collateral or any property securing the
repayment of any of the Obligations, which, in each case, remains undismissed
for thirty (30) days; or

 

(k)the loss, theft or substantial damage to a material portion of the Collateral
or any property securing the repayment of the Obligations if the result of such
occurrence will likely result in, in Bank’s reasonable judgment, the failure or
inability of Borrower to continue substantially normal operation of its business
within thirty (30) days of the date of such occurrence; or

 

(l)(i) the validity or effectiveness of any of the Loan Documents or its
transfer, grant, pledge, mortgage or assignment by the party executing such Loan
Document is impaired by the Borrower or any Guarantor; (ii) any Borrower or
Guarantor executing any of the Loan Documents asserts that any of such Loan
Documents is not a legal, valid and binding obligation of the party thereto
enforceable in accordance with its terms; or (iii) the security interest or Lien
purporting to be created by any of the Loan Documents, due to any act of the
Borrower or any Guarantor, ceases to be a valid, perfected lien subject to no
other liens other than Permitted Liens; or

 

(m)(i) a Reportable Event (as defined in ERISA) occurs with respect to any
employee benefit plan maintained by Borrower for its employees and such
Reportable Event (as defined in ERISA) is likely to have a material adverse
effect on Borrower; provided that no Event of Default shall occur if the
Reportable Event is caused solely by a decrease in employment; or (ii) a trustee
is appointed by a United States District Court to administer any employee
benefit plan; or (iii) the Pension Benefit Guaranty Corporation institutes
proceedings to terminate any of Borrower’s employee benefit plans; or

 

 17 

 

 

(n)other than Permitted Liens, the filing of any lien or charge against any of
the Collateral for any amount in excess of $100,000, which is not removed to the
satisfaction of Bank within a period of sixty (60) days thereafter; or

 

(o)the abandonment by Borrower of all or any material part of the Collateral.

 

6.2.          Remedies. If any Default occurs, Bank may cease advancing money
hereunder. If any Event of Default occurs, Bank may (i) declare by providing
written notice to Borrower, all Obligations to be immediately due and payable,
whereupon such Obligations will immediately become due and payable,
(ii) exercise any and all rights and remedies provided by applicable law and the
Loan Documents, (iii) proceed to realize upon the Collateral or any property
securing the Obligations, including, without limitation, causing all or any part
of the Collateral to be transferred or registered in its name or in the name of
any other person, firm or corporation, with or without designation of the
capacity of such nominee, all without presentment, demand, protest or notice of
any kind, each of which are hereby expressly waived by Borrower. Borrower shall
be liable for any deficiency remaining after disposition of any Collateral, and
waives all valuation and appraisement laws.

 

6.3.          Setoff. If any Event of Default has occurred, Bank is authorized,
without notice to Borrower, to offset and apply to all or any part of the
Obligations all monies, credits and other property of any nature whatsoever of
Borrower now or at any time hereafter in the possession of, in transit to or
from, under the control or custody of, or on deposit with (whether held by
Borrower individually or jointly with another party) Bank, including but not
limited to certificates of deposit.

 

6.4.          Default Rate. After the occurrence of an Event of Default, all
amounts of principal outstanding as of the date of the occurrence of such Event
of Default will accrue interest at the Default Rate, in Bank’s sole discretion,
without notice to Borrower. This provision does not constitute a waiver of any
Events of Default or an agreement by Bank to permit any late payments
whatsoever.

 

6.5.          Late Payment Fee. If any payment of principal is not paid when due
(whether at maturity, by acceleration or otherwise after the expiration of any
applicable notice, grace and cure periods), Borrower agrees to pay to Bank a
late payment fee equal to five percent (5%) of the payment amount then due.

 

6.6.          No Remedy Exclusive. No remedy set forth herein is exclusive of
any other available remedy or remedies, but each is cumulative and in addition
to every other remedy available under this Agreement, the Loan Documents or as
may be now or hereafter existing at law, in equity or by statute. Borrower
waives any requirement of marshaling of assets which may be secured by any of
the Loan Documents.

 

6.7.          Effect of Termination. The termination of this Agreement will not
affect any rights of either party or any obligation of either party to the
other, arising prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights created or Obligations incurred prior to such termination
have been fully disposed of, concluded or liquidated. The security interest,
lien and rights granted to Bank hereunder and under the Loan Documents will
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that no Loans are outstanding to Borrower, until all of
the Obligations, have been paid in full.

 

 18 

 

 

Section 7.               Conditions Precedent.

 

7.1.          Conditions to Initial Loans. Bank will have no obligation to make
or advance any Loan until Borrower has delivered to Bank at or before the
closing date, in form and substance satisfactory to Bank:

 

(a)          Executed version of the Term Note #4.

 

(b)          Executed version of the Term Note #5.

 

(c)          Executed version of the Capex Loan Note #2.

 

(d)          Executed version of the Revolving Note.

 

(c)          Executed version of this Agreement.

 

(d)          A Certificate of Borrower, together with all attachments thereto.

 

(e)          A Certificate of Entity Guarantor (Bronco Research), together with
all attachments thereto.

 

(f)           A Certificate of Entity Guarantor (BAS Evanville, Inc.), together
with all attachments thereto.

 

(g)          A Certificate of Entity Guarantor (Seventh Wave Indiana), together
with all attachments thereto.

 

(h)          A Certificate of Entity Guarantor (BASi Gaithersburg), together
with all attachments thereto.

 

(i)           A Guaranty Agreement executed by Bronco Research.

 

(j)           An Amended and Restated Guaranty executed by BAS Evansville, Inc.

 

(k)          An Amended and Restated Guaranty executed by Seventh Wave Indiana.

 

(l)           An Amended and Restated Guaranty executed by BASi Gaithersburg.

 

(m)         An executed version of the Security Agreement for Bronco Research.

 

(n)          An executed version of the Amended and Restated Security Agreement
for Borrower, together with a Grant of Security Interest in Trademarks and Grant
of Security Interest in Copyrights.

 

 19 

 

 

(o)          An executed version of the Amended and Restated Security Agreement
for BAS Evansville, Inc.

 

(p)          An executed version of the Amended and Restated Security Agreement
for Seventh Wave Indiana.

 

(q)          An executed version of the Amended and Restated Security Agreement
for BASi Gaithersburg.

 

(r)           Deed of Trust, executed by Bronco Research, related to Premises
#3.

 

(s)          Grantor’s Affidavit, executed by Bronco Research, related to
Premises #3.

 

(t)           Fourth Modification of Mortgage (Premises #1) executed by
Borrower.

 

(u)          Second Modification of Amended and Restated Mortgage (Premises #2),
executed by BAS Evansville, Inc.

 

(v)          Sixth Amended and Restated Environmental Indemnity Agreement
executed by Borrower and Entity Guarantors.

 

(w)         Executed version of the Assignment of Life Insurance ($5,000,000).

 

(x)           Executed version of the Subordination Agreement executed by Bronco
Research, Bank, and Pre-Clinical Research Services, Inc.

 

(y)          Patriot Act compliance certification executed by Bronco Research.

 

(z)           All appropriate financing statements (Form UCC-1).

 

(aa)          UCC searches, insurance certificates, notices or other documents
which Bank may require to reflect, perfect or protect Bank’s first and/or second
priority lien, as applicable, in the Collateral and all other property pledged
to secure the Obligations and to fully consummate this transaction.

 

(bb)          All requisite releases of liens, termination statements and
satisfactions necessary to release all liens and encumbrances against the
Collateral and any other property pledged to secure the Loans and all requisite
waivers and subordination agreements, in a form satisfactory to Bank, to be
executed and delivered by Borrower’s landlords, lenders, and mortgagees which
are necessary to grant Bank a first lien in the Collateral, including but not
limited to all business assets of Borrower and each Entity Guarantor.

 

(cc)          Proof of insurance with respect to the Borrower, its assets and
the Real Estate and in a form reasonably satisfactory to Bank:

 

(dd)          Commercial general public liability insurance in such an amount
and with such deductibles as are customary for similar borrowers;

 

 20 

 

 

(ii)          Flood Insurance if the Real Estate is located in an area
designated as a special flood hazard area by any governmental authority having
jurisdiction over the Real Estate; and

 

(iii)         Such other insurance coverages as ordinarily insured against by
other borrowers with such liabilities or such properties in similar businesses.

 

All policies of insurance required to be maintained by Borrower shall be issued
by companies reasonably satisfactory to Bank and shall have coverages and
endorsements and be written for such amounts in accordance with the above . All
policies of insurance shall (x) name Bank as mortgagee, lender loss payable or
additional insured, as the case may require, and (y) provide that the policies
may not be canceled or modified without thirty days (or, in the case of
non-payment of premiums, 10 days) prior written notice to Bank.

 

(ee)        Two (2) copies of a survey (the “Survey”) or plat for Premises #3,
reasonably acceptable to Bank.

 

(ff)          An ALTA Loan Policy of Title Insurance issued by the Title Company
insuring that the Mortgage of Premises #3 will be a prior first lien upon the
fee simple title to the Real Estate, subject to no liens, claims, exceptions or
encumbrances except the Permitted Encumbrances (as defined in the Mortgage) and
containing such endorsements as may be reasonably required by Bank based upon
its review of the Title Policy and Survey.

 

(gg)        Opinion letter from counsel for Borrower and Entity Guarantor in a
form reasonably satisfactory to Bank covering customary matters;

 

(hh)        Appraisals prepared by an appraiser or appraisers satisfactory to
Bank and indicating that the fair market value of the Premises #3, collectively,
is not less than Two Million One Hundred Sixty Thousand and No/100 Dollars
($2,160,000.00) for the Premises #3 Building, and not less than Three Hundred
Twenty-Five Thousand and No/100 Dollars ($325,000.00) for the Premises #3 Lot.

 

(ii)          Such other assignments, certificates, opinions and other
documents, instruments and information affecting or relating to Bank's interest
in the Collateral securing the Loan as Bank may reasonably require.

 

Section 8.               Miscellaneous Provisions.

 

8.1.          Miscellaneous. This Agreement, the exhibits and the other Loan
Documents are the complete agreement of the parties hereto and supersede all
previous understandings relating to the subject matter hereof. This Agreement
may be amended only in writing signed by the party against whom enforcement of
the amendment is sought. This Agreement may be executed in counterparts. If any
part of this Agreement is held invalid, illegal or unenforceable, the remainder
of this Agreement will not in any way be affected. This Agreement is and is
intended to be a continuing agreement and will remain in full force and effect
until the Loans are finally and irrevocably paid in full and terminated.

 

8.2.          Waiver by Borrower. Borrower waives notice of non-payment, demand,
presentment, protest or notice of protest of any Accounts or other Collateral,
and all other notices (except those notices specifically provided for in this
Agreement); consents to any renewals or extensions of time of payment thereof;
and generally waives any and all suretyship defenses and defenses in the nature
thereof.

 

 21 

 

 

8.3.          Binding Effect. This Agreement will be binding upon and inure to
the benefit of the respective legal representatives, successors and assigns of
the parties hereto; however, Borrower may not assign or transfer any of its
rights or delegate any of its Obligations under this Agreement or any of the
Loan Documents, by operation of law or otherwise. Bank (and any subsequent
assignee) may, upon prior notice to Borrower, transfer and assign any of its
rights or delegate any of its duties under this Agreement or may transfer or
assign partial interests or participation in the Loans to other persons. Bank
may disclose to all prospective and actual assignees and participants all
financial, business and other information about Borrower which Bank may possess
at any time; provided that any such prospective or actual assignees or
participants agree in writing prior to any such disclosure to be bound by the
provisions of Section 8.13 of this Agreement.

 

8.4.          Subsidiaries. If Borrower has any additional Subsidiaries at any
time during the term of this Agreement, the term “Borrower” in each
representation, warranty and covenant herein will mean “Borrower” and each
Subsidiary individually and in the aggregate, and Borrower will cause each
Subsidiary to be in compliance therewith.

 

8.5.          Security. The Obligations are secured as provided in this
Agreement, the Security Agreements, the Mortgages, and the Loan Documents and in
each other document or agreement which by its terms secures the repayment or
performance of the Obligations.

 

8.6.          Survival. All representations, warranties, covenants and
agreements made by Borrower herein and in the Loan Documents will survive the
execution and delivery of this Agreement, the Loan Documents and the issuance of
the Notes.

 

8.7.          Delay or Omission. No delay or omission on the part of Bank in
exercising any right, remedy or power arising from any Event of Default will
impair any such right, remedy or power or any other right remedy or power or be
considered a waiver or any right, remedy or power or any Event of Default nor
will the action or omission to act by Bank upon the occurrence of any Event of
Default impair any right, remedy or power arising as a result thereof or affect
any subsequent Event of Default of the same or different nature.

 

8.8.          Notices. Any notices under or pursuant to this Agreement will be
deemed duly sent when delivered in hand when deposited in the U.S. mail postage
prepaid, or sent by overnight courier addressed as follows:

 

To Borrower:Bioanalytical Systems, Inc.

2701 Kent Avenue

West Lafayette, Indiana 47906

Attention: Chief Financial Officer

 

 22 

 

 

With a copy to (which shall not constitute notice):

 

Ice Miller LLP

One American Square, 29th Floor

Indianapolis, Indiana 46282

Attention: Stephen J. Hackman, Esq.

 

To Bank:First Internet Bank of Indiana

11201 USA Parkway

Fishers, Indiana 46037

Attention: Trina McWilliams

 

With a copy to (which shall not constitute notice):

 

Krieg DeVault LLP

12800 North Meridian Street, Suite 300

Carmel, Indiana 46032

Attention: Nicole Finelli, Esq.

 

Either party may change such address by sending written notice of the change to
the other party.

 

8.9.          No Partnership. Nothing contained herein or in any of the Loan
Documents is intended to create or will be construed to create any partnership,
joint venture or other relationship between Bank and Borrower other than as
expressly set forth herein or therein and will not create any joint venture,
partnership or other relationship.

 

8.10.        Indemnification. If after receipt of any payment of all or part of
the Obligations, Bank is for any reason compelled to surrender such payment to
any person or entity, because such payment is determined to be void or voidable
as a preference, impermissible setoff, or diversion of trust funds, or for any
other reason, this Agreement will continue in full force and effect and Borrower
will be liable to, and will indemnify, save and hold Bank, its officers,
directors, attorneys, and employees harmless of and from the amount of such
payment surrendered. The provisions of this Section will be and remain effective
notwithstanding any contrary action which may have been taken by Bank in
reliance on such payment, and any such contrary action so taken will be without
prejudice to Bank’s rights under this Agreement and will be deemed to have been
conditioned upon such payment becoming final, indefeasible and irrevocable. In
addition, Borrower will indemnify, defend, save and hold Bank, its officers,
directors, attorneys and employees harmless of, from and against all claims,
demands, liabilities, judgments, losses, damages, costs and expenses, joint or
several (including all accounting fees and attorneys’ fees reasonably incurred),
that Bank or any such indemnified party may incur arising out of this Agreement,
any of the Loan Documents or any act taken by Bank hereunder provided such
action is either permitted or authorized under the Loan Documents and/or
applicable law except for the illegal activities, willful misconduct or gross
negligence of such indemnified party. The provisions of this Section will
survive the termination of this Agreement.

 

 23 

 

 

8.11.        Depository Account Acknowledgment. Borrower and Bank severally,
each for itself, acknowledges and agrees that, except as provided herein with
respect to Borrower’s obligation to maintain depository account(s)  (if any)
with Bank, the extension(s) of credit provided for herein are neither
conditioned upon nor have the interest rates and fees therefor been set based
upon Borrower’s agreement to purchase any other product or service from Bank.
Further, Borrower and Bank severally, each for itself, acknowledges and agrees
that Bank has not offered these extension(s) of credit or offered to reduce the
interest rate(s) or fee(s) therefor except as provided herein.

 

8.12.        Governing Law; Jurisdiction. This Agreement, the Notes and the
other Loan Documents will be governed by the domestic laws of the State of
Indiana. Borrower agrees that the state and federal courts in Marion
County, Indiana, or any other court in which Bank initiates proceedings have
exclusive jurisdiction over all matters arising out of this Agreement, and that
service of process in any such proceeding will be effective if mailed to
Borrower at its address described in the Notices section of this Agreement. BANK
AND BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT
OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

8.13.        Confidentiality.

 

(a)          Bank shall keep confidential, in accordance with its customary
procedures for handling confidential information and safe and sound lending
practices and consistent with its practices with respect to its own confidential
information, any non-public written information supplied to it by Borrower
pursuant to this Agreement; provided, that, nothing contained herein shall limit
the disclosure of any such information: (i) to the extent required by statute,
rule, regulation, subpoena or court order, (ii) to bank examiners and other
regulators, auditors and/or accountants, in connection with any litigation to
which Bank is a party, or (iii) to counsel for Bank.

 

(b)          In the event that Bank receives a request or demand to disclose any
confidential information pursuant to any subpoena or court order, Bank agrees
(i) to the extent permitted by applicable law, Bank will promptly notify
Borrower of such request so that Borrower may seek a protective order or other
appropriate relief or remedy and (ii) if disclosure of such information is
required, disclose such information and, subject to reimbursement by Borrower of
Bank’s expenses, cooperate with Borrower in the reasonable efforts to obtain an
order or other reliable assurance that confidential treatment will be accorded
to such portion of the disclosed information which Borrower so designates.

 

(c)          In no event shall this Section 8.13 or any other provision of this
Agreement be deemed: (i) to apply to or restrict disclosure of information that
has been or is made public by Borrower or any third party or otherwise becomes
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Bank on a non-confidential basis from a person other
than Borrower or a person Bank has actual knowledge has provided such
information to Bank in violation of a binding agreement regarding the
confidentiality of such information with Borrower or its subsidiaries, and
(iii) to require Bank to return any materials furnished by Borrower to Bank. The
obligations of Bank under this Section 8.13 shall supersede and replace the
obligations of Bank under any confidentiality letter signed prior to the date
hereof.

 

8.14.        Amendment and Restatement. This Amended and Restated Credit
Agreement completely amends in its entirety that certain Credit Agreement dated
as of June 23, 2017 executed by Bioanalytical Systems, Inc. and Bank.
Notwithstanding the foregoing, any collateral or security interests securing the
obligations set forth in the Credit Agreement shall continue to secure the
Obligations set forth in this Amended and Restated Credit Agreement, as the same
may be amended, modified, or restated from time to time, until such time as such
collateral or security interest is expressly terminated or released by Bank.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK – SIGNATURE PAGE FOLLOWS]

 

 24 

 

 

[SIGNATURE PAGE – CREDIT AGREEMENT]

 

IN WITNESS WHEREOF, Borrower and Bank have executed this Agreement by their duly
authorized officers as of the date first above written.

 

  Bioanalytical Systems, Inc.               By:   /s/ Robert Leasure, Jr.    
Robert Leasure, Jr., President               FIRST INTERNET BANK OF INDIANA    
          By: /s/ Katrina McWilliams     Katrina McWilliams, Vice President

 

 

 

 

EXHIBITS

TO

CREDIT AGREEMENT

BETWEEN

Bioanalytical Systems, Inc.

AND

FIRST INTERNET BANK OF INDIANA

 

Exhibit 1 - Definitions Exhibit 2.1 - Revolving Note Exhibit 2.2 - Term Note
Exhibit 2.3 - Term Note #2 Exhibit 2.7 - Term Note #3 Exhibit 2.8 - Capex Note
Exhibit 2.9 - Term Note #4 Exhibit 2.10 - Term Note #5 Exhibit 2.11 - Capex Note
#2 Exhibit 3.3 - Litigation Disclosure Exhibit 3.6 - Laws and Taxes Disclosure
Exhibit 3.8 - Permitted Liens Exhibit 3.10 - Environmental Disclosure

 

 

 

 

EXHIBIT 1

 

DEFINITIONS

 

·“Account Debtor” means the party which is obligated on or under any Account.

 

·“Adjusted EBITDA” means for the applicable Test Period, the sum of in total for
Bioanalytical Systems, Inc. and its Consolidated Subsidiaries (without
duplication): (a) EBITDA; plus to the extent included in the determination of
EBITDA of for the applicable Test Period (b) non-cash losses during the
applicable Test Period; plus (c) Approved Transaction Costs; plus (d) Run-rate
Cost Savings & Synergies; plus, (e) non-cash stock compensation expense during
the applicable Test Period; plus (f) Approved Non-Recurring Expenses; plus
(g) such additional add-backs during the applicable Test Period, if any,
permitted by Bank in its sole discretion; and minus to the extent included in
the determination of EBITDA for the applicable Test Period, any
(i) extraordinary or non-recurring income or gains and (ii) any gain arising
from the sale of capital assets.

 

·“Advance” means any disbursement of proceeds of the Construction Loan,
Equipment Loan, Capex Loan, or Capex Loan #2, as applicable.

 

·“Affiliates” shall mean any entity which is 10% owned by Borrower, or Entity
Guarantor.

 

·“Approved Non-Recurring Expenses” means for the applicable Test Period: (a) up
to $390,000 for rent expense paid on its St. Louis location upon the purchase
date of such St. Louis location; and (b) up to $250,000 for rent expense paid on
its Fort Collins location upon the purchase date of such Fort Collins location.
The non-recurring expense shall be calculated on a Pro Forma basis as though it
had been realized on the first day of the applicable test period for which
Adjusted EBITDA is being determined, net of the amount of actual benefits
realized during such period as approved by Bank.

 

·“Approved Transaction Costs” means for each applicable Test Period: (a) up to
$520,000 of expense incurred during the Test Period related to the acquisition
of Smithers Avanza Toxicology Services LLC, as approved by Bank through June 30,
2020, and (b) up to $450,000 of expense incurred during the Test Period related
to the acquisition of PreClinical Research Services, Inc. as approved by Bank
through September 30, 2020.

 

·“Architect” means any architect engaged for the Project.

 

·“BASi Gaithersburg” means BASi Gaithersburg LLC, an Indiana limited liability
company.

 

·“Borrowing Base” means an amount equal to 80% of the Eligible Accounts.

 

·“Bronco Research” means Bronco Research Services, LLC.

 

·“Building” means the buildings and other improvements to be constructed on
Premises #2 as part of the Project.

 

 1-1 

 

 

·“Capital Expenditures” for the applicable Test Period are defined as
expenditures made and capitalized during the applicable Test Period by
Bioanalytical Systems, Inc. and its Consolidated Subsidiaries for property,
plant, equipment, and other fixed assets (including any such expenditures by way
of acquisition or by way of incurrence or assumption of Debt or other
obligations, to the extent reflected as plant, property, equipment or other
fixed assets), research and development or other long-term assets; provided that
expenses made for research and development are later capitalized pursuant to a
change in accounting treatment shall be excluded from the calculation, plus
(i) deposits made in the applicable Test Period in connection with property,
plant, and equipment; less deposits of a prior period included in calculation
above, less (ii) net cash proceeds of asset dispositions received during the
applicable Test Period which are permitted to reinvest pursuant to the Credit
Agreement and are included in expenditures made and capitalized above.

 

·“Capex Loan” has the meaning assigned to that term in Section 2.8 of the
Agreement.

 

·“Capex Loan Note” has the meaning assigned to that term in Section 2.8 of the
Agreement.

 

·“Capex Loan #2” has the meaning assigned to that term in Section 2.11 of the
Agreement.

 

·“Capex Loan Note #2” has the meaning assigned to that term in Section 2.11 of
the Agreement.

 

“Cash Flow Leverage Ratio” means for the applicable Test Period the ratio
resulting from dividing : (i) an amount equal to (a) Total Funded Debt as of the
last day of such applicable test period, minus (b) unrestricted cash up to
$2,500.000 by (ii) Adjusted EBITDA.

 

·“Collateral” shall mean the “collateral” as defined in the Security Agreement,
together with the Real Estate.

 

·“Consolidated Subsidiaries” means the Entity Guarantors and any other
subsidiaries of Borrower consolidated for financial reporting purposes.

 

·“Construction Amount” means the means the amount, in the aggregate, incurred
from time to time by the Borrower in connection with the construction of the
Project, including, without limitation, amounts payable to suppliers,
materialmen, laborers, engineers and the Contractor.

 

·“Construction Loan” has the meaning assigned to that term in Section 2.4 of the
Agreement.

 

·“Construction Loan Note” has the meaning assigned to that term in Section 2.4
of the Agreement.

 

·“Construction Loan Maturity Date” has the meaning assigned to that term in
Section 2.4 of the Agreement.

 

·“Contractor” means the general contractor engaged for the Project.

 

·“Default” or “default” means a default (without regard to grace or cure
periods) under any contract or agreement that with the passage of time could
mature into an Event of Default.

 

·“Default Rate” means four percent (4%) in excess of the interest rate otherwise
in effect under amounts outstanding under the Notes. In no event will the
interest rate accruing under such Notes be increased to be in excess of the
maximum interest rate permitted by applicable state or federal usury laws then
in effect.

 

 1-2 

 

 

“EBITDA” means for the applicable Test Period the sum in total for Bioanalytical
Systems, Inc. and its Consolidated Subsidiaries (without duplication) of:
(i) income before income taxes, plus (ii) interest expense, plus
(iii) amortization expense, plus (iv) depreciation expense, in each case for the
applicable Test Period, calculated on a consolidated basis in accordance with
GAAP.

 

·“Eligible Account” means an Account (as defined in the Uniform Commercial Code)
owing to the Borrower or any Entity Guarantor (exclusive of any Account owing to
an Affiliate that is not an Entity Guarantor) from an Account Debtor which meets
each of the following requirements:

 

(a)            it arises from the sale or lease of goods or the rendering of
services which have been earned or billed in accordance with signed contracts by
the Borrower or any Entity Guarantor; and if it arises from the sale or lease of
goods, (i) such goods comply with such Account Debtor’s specifications (if any)
and have been delivered to such Account Debtor and (ii) the Borrower or any
Entity Guarantor has possession of, or if requested by the Bank has delivered to
the Bank, delivery receipts evidencing such delivery;

 

(b)            it (i) is subject to a perfected, first priority Lien in favor of
the Bank and (ii) is not subject to any other assignment, claim or Lien;

 

(c)            it is a valid, legally enforceable and unconditional obligation
of the Account Debtor with respect thereto, and is not subject to the
fulfillment of any condition whatsoever or any counterclaim, setoff, reduction
(collectively, “contra accounts”) or any credit, allowance, discount, rebate or
adjustment by the Account Debtor with respect thereto, or to any claim by such
Account Debtor denying liability thereunder in whole or in part and the Account
Debtor has not refused to accept and/or has not returned or offered to return
any of the goods or services which are the subject of such Account;

 

(d)           there is no bankruptcy, insolvency or liquidation proceeding
pending by or against the Account Debtor with respect thereto;

 

(e)            the Account Debtor with respect thereto is a resident or citizen
of, and is located within, the United States, unless the sale of goods or
services giving rise to such Account is on letter of credit, banker’s acceptance
or other credit support terms reasonably satisfactory to the Bank;

 

(f)            it is not an Account arising from a “sale on approval,” “sale or
return,” “consignment” or “bill and hold” or subject to any other repurchase or
return agreement;

 

(g)           it is not an Account with respect to which possession and/or
control of the goods sold giving rise thereto is held, maintained or retained by
the Borrower or any Entity Guarantor (or by any agent or custodian of the
Borrower or any Entity Guarantor) for the account of or subject to further
and/or future direction from the Account Debtor with respect thereto;

 

(h)           it arises in the ordinary course of business of the Borrower or
any Entity Guarantor;

 

(i)             if the Account Debtor is the United States or any department,
agency or instrumentality thereof, the Borrower or any Entity Guarantor has
assigned its right to payment of such Account to the Bank pursuant to the
Assignment of Claims Act of 1940, and evidence (satisfactory to the Bank) of
such assignment has been delivered to the Bank;

 

 1-3 

 

 

(j)             if the Borrower or any Entity Guarantor maintains a credit limit
for an Account Debtor, the aggregate dollar amount of Accounts due from such
Account Debtor, including such Account, does not exceed such credit limit;

 

(k)            if the Account is evidenced by chattel paper or an instrument,
the originals of such chattel paper or instrument shall have been endorsed
and/or assigned and delivered to the Bank or, in the case of electronic chattel
paper, shall be in the control of the Bank, in each case in a manner
satisfactory to the Bank;

 

(l)            such Account is evidenced by an invoice delivered to the related
Account Debtor and is not more than (i) ninety (90) days past the original
invoice date thereof, according to the original terms of sale;

 

(m)            it is not an Account with respect to an Account Debtor that is
located in any jurisdiction which has adopted a statute or other requirement
with respect to which any Person that obtains business from within such
jurisdiction must file a notice of business activities report or make any other
required filings in a timely manner in order to enforce its claims in such
jurisdiction’s courts unless (i) such notice of business activities report has
been duly and timely filed or the Borrower or any Entity Guarantor is exempt
from filing such report and has provided the Bank with satisfactory evidence of
such exemption or (ii) the failure to make such filings may be cured
retroactively by the Borrower or any Entity Guarantor for a nominal fee;

 

(n)            the Account Debtor with respect thereto is not an Affiliate of
the Borrower or any Entity Guarantor; and

 

(o)            it is not owed by an Account Debtor with respect to which 15% or
more of the aggregate amount of outstanding Accounts owed at such time by such
Account Debtor is classified as ineligible under clause (l) of this definition.

 

An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account. Further, with respect to any Account, if the Bank at any time
hereafter determines in its reasonable discretion that the prospect of payment
or performance by the Account Debtor with respect thereto is materially impaired
for any reason whatsoever, such Account after written notice of such
determination is given to the Borrower shall cease to be an Eligible Account.

 

·“Entity Guarantors” means BAS Evansville, Inc., Seventh Wave Indiana, BASi
Gaithersburg and Bronco Research.

 

·“Environmental Laws” means all federal, state, local and foreign laws relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial toxic or hazardous substances or wastes
into the environment (including without limitation ambient air, surface water,
ground water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes, and any and all regulations, codes, plans, orders, decrees,
judgments, injunctions, notices or demand letters issued, entered promulgated or
approved thereunder.

 

·“Environmental Reports” has the  meaning set forth on Exhibit 3.10.

 

·“Equipment Loan” has the meaning assigned to that term in Section 2.5 of the
Agreement.

 

·“Equipment Loan Note” has the meaning assigned to that term in Section 2.5 of
the Agreement.

 

 1-4 

 

 

·“Equipment Loan Maturity Date” has the meaning assigned to that term in
Section 2.5 of the Agreement.

 

·“ERISA” means the Federal Employee Retirement Income Security Act of 1974.

 

·“Event(s) of Default” will have the meaning set forth in Section 6.1 of the
Agreement.

 

·“Facility” will have the meaning set forth in Section 2.1 of the Agreement.

 

·“Fixed Charge Coverage Ratio” means for the applicable Test Period, the ratio
resulting from dividing (i) Adjusted EBITDA minus (a) Unfunded Capital
Expenditures (excluding those unfunded capital expenditures related to the
Evansville building expansion costs of up to $400,000 incurred during the fiscal
quarter ending September 30, 2019, as approved by Bank), minus (b) the aggregate
amount of cash payments of income taxes for such Test Period by (ii) Fixed
Charges for such Test Period.

 

“Fixed Charges” means in accordance with GAAP for the applicable Test Period the
sum in total for Bioanalytical Systems, Inc. and its Consolidated Subsidiaries
(without duplication) of: (a) the aggregate cash payments of interest made for
such period, including interest paid on the Obligations, including subordinated
debt, the interest portion of all payments in respect of capital lease
obligations, and any other cash payments of interest on any other Indebtedness
for such period; plus (b) the aggregate principal amount of Indebtedness which
was paid during such applicable test period, including under the Obligations and
Subordinated Debt; and plus (c) the principal portion of the aggregate amount of
payments in respect of capital lease obligations.

 

·“GAAP” means generally accepted accounting principles as in effect from time to
time.

 

·“Guarantors” means the Entity Guarantors and any additional guarantor added
from time to time, collectively.

 

·“Indebtedness” means (a) all items (except items of capital surplus, of general
contingency reserves or of retained earnings, deferred income taxes, and amount
attributable to minority interests, if any) which in accordance with GAAP would
be included in determining total liabilities on a consolidated basis as shown on
the liability side of a balance sheet as at the date as of which Indebtedness is
to be determined, (b) all indebtedness secured by any mortgage, pledge, lien or
conditional sale or other title retention agreement to which any property or
asset owned or held is subject, whether or not the indebtedness secured thereby
will have been assumed (excluding non-capitalized leases which may amount to
title retention agreements but including capitalized leases), and (c) all
indebtedness of others which Borrower or any Subsidiary or any Affiliate has
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), discounted or sold with recourse or
agreed (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or in respect of which Borrower or any Subsidiary has agreed to apply
or advance funds (whether by way of loan, stock purchase, capital contribution
or otherwise) or otherwise to become directly or indirectly liable.

 

·“Initial Closing” means the date of the first Advance of the Construction Loan.

 

 1-5 

 

 

·“Inspecting Architect” means such architect, architectural firm or project
inspector as the Bank may designate from time to time.

 

·“knowledge” means to the actual knowledge of any of the executive officers of
Borrower or Entity Guarantor, as the context requires.

 

·“Lien” means any security interest, mortgage, pledge, assignment, lien or other
encumbrance of any kind, including interests of vendors or lessors under
conditional sale contracts and capitalized leases.

 

·“Loan Documents” means this Agreement, the Notes, the Security Agreement, the
Mortgage, and every other document or agreement executed by any party
evidencing, guarantying or securing any of the Obligations; and “Loan Document”
means any one of the Loan Documents.

 

·“Loans” means the Term Loan, Term Loan #2, Term Loan #3, Capex Line of Credit,
Construction Loan, Equipment Loan, and the Revolving Loans.

 

·“Maximum Amount” means the maximum amount available under the Construction
Loan, which is the lesser of (a) Four Million Four Hundred Forty-Five Thousand
and No/100 Dollars ($4,445,000.00), and (b) eighty-five percent (85%) of the
Project’s “as complete” appraised value as determined by a state licensed
certified general appraiser engaged by Bank (and whose value determination is
concurred with by Bank’s designated review appraiser).

 

·“Mortgage(s)” means individually or collectively as the context requires,
(i) the Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture
Filing, executed by Borrower, creating a first lien on Premises #1, securing the
Term Loan, (ii) the Mortgage, Security Agreement, Assignment of Rents and Leases
and Fixture Filing, executed by BAS Evansville, Inc., creating a first lien on
Premises #2, securing the Term Loan, (iii) the Mortgage, Security Agreement,
Assignment of Rents and Leases and Fixture Filing, executed by Borrower,
creating a second lien on Premises #1, securing the Facility, and (iv) the
Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing,
executed by BAS Evansville, Inc., creating a second lien on Premises #2,
securing the Facility; and (v) the Deed of Trust, executed by Bronco Research,
creating a first lien on Premises #3, securing Term Loan #5.

 

·“Notes” means the Term Note, Term Note #2, Term Note #3, Term Note #4, Term
Note #5, Construction Loan Note, Equipment Loan Note, Capex Loan Note, Capex
Loan Note #2, and Revolving Note, together with any renewals, amendments,
restatements and extensions thereof.

 

·“Obligations” means all loans, advances, indebtedness, liabilities and
obligations of Bioanalytical Systems, Inc. and its Consolidated Subsidiaries
(without duplication)owed to Bank and/or the affiliates of Bank of every kind
and description whether now existing or hereafter arising, and whether direct or
indirect, primary or as guarantor or surety, absolute or contingent, liquidated
or unliquidated, matured or unmatured, whether or not secured by additional
collateral, in each case arising under this Agreement, the Notes and the other
Loan Documents, including without limitation all obligations to perform or
forbear from performing acts and all reasonable expenses and reasonable
attorneys’ fees incurred by Bank and any affiliate of Bank under this Agreement
or any other document or instrument related to any of the foregoing.

 

 1-6 

 

 

·“Permitted Liens” has the meaning assigned thereto as set forth in Section 3.8
of the Agreement.

 

·“Person” means any individual, corporation, firm, enterprise, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company or other entity of any kind, or any
government or political subdivision or any agency, department or instrumentality
thereof.

 

·“Premises #1” means the real estate and improvements located at 2701 Kent
Avenue, West Lafayette, Indiana, owned by Borrower, and more particularly
described in the Mortgage executed by Borrower in favor of Bank.

 

·“Premises #2” means the real estate and improvements located at 10424 Middle
Mount Vernon Road, Evansville, Indiana, owned by BAS Evansville, Inc., and more
particularly described in the Mortgage executed by BAS Evansville, Inc. in favor
of Bank.

 

·“Premises #3” means the real estate and improvements located at 1512 Webster
Court, Fort Collins, Colorado, consisting of a building (“Premises #3 Building”)
and a vacant lot (“Premises #3 Lot”), owned by Bronco Research, and more
particularly described in the Deed of Trust executed by Bronco Research in favor
of Bank.

 

·“Project” has the meaning assigned to that term in Section 2.4 of the
Agreement.

 

·“Real Estate” means individually or collectively as the context requires,
Premises #1, Premises #2, and Premises #3.

 

·“Revolving Loans” has the meaning assigned to that term in Section 2.1 of the
Agreement.

 

·“Revolving Note” has the meaning assigned to that term in Section 2.1 of the
Agreement.

 

·“Run-rate Cost-Savings & Synergies” means the amount of "run rate" cost
savings, operating expense reductions and synergies related to the acquisition
of certain assets of Smithers Avanza Toxicology Services LLC projected by the
Borrower in good faith to result from actions taken or expected to be taken
within 12 months after the closing date of such acquisition.  The "run rate"
cost savings, operating expense reductions and synergies shall be:

 

(a)            calculated on a pro forma basis as though such "run rate" cost
savings, operating expense reductions and synergies had been realized on the
first day of the period for which consolidated EBITDA is being determined, net
of the amount of actual benefits realized during such period.

 

(b)            reasonably identifiable and factually supportable (in the good
faith determination of the Borrower); and

 

(c)            in any Test Period equal to the lesser of $560,000 or 15% of
consolidated trailing 12 month period EBITDA, calculated before giving effect
thereto, for such Test Period determined on a pro forma basis.

 

 1-7 

 

 

·“Security Agreement” means, individually or collectively as the context
requires, (i) the Amended and Restated Security Agreement and Perfection
Certificate dated as of the date hereof between Borrower and Bank, securing the
Obligations, (ii) the Amended and Restated Security Agreement and Perfection
Certificate dated as of the date hereof between Bank and BAS Evansville, Inc.,
securing its Guaranty of the Obligations, (iii) the Amended and Restated
Security Agreement and Perfection Certificate dated as of the date hereof
between Bank and Seventh Wave Indiana, securing its Guaranty of the Obligations,
(iv) Amended and Restated Security Agreement and Perfection Certificate dated as
of the date hereof between Bank and BASi Gaithersburg, securing its Guaranty of
the Obligations, (v) the Security Agreement and Perfection Certificate dated as
of the date hereof between Bank and Bronco Research securing its Guaranty of the
Obligations, and (vi) the Amended and Restated Grant of Security Interest in
Trademarks dated as of the date hereof executed by Borrower, securing the
Obligations, and (vii) the Amended and Restated Grant of Security Interest in
Copyrights dated as of the date hereof executed by Borrower, securing the
Obligations.

 

·“Seventh Wave Indiana” means Seventh Wave Laboratories LLC, an Indiana limited
liability company, f/k/a Cardinal Laboratories LLC.

 

·“Site Improvements” means all improvements and appurtenances to Premises #2 and
the Building hereafter constructed as part of the Project.

 

·“Subordinated Debt” means any Indebtedness of Borrower that is subordinated to
the full, final and irrevocable payment of the Obligations in form and substance
acceptable to Bank.

 

·“Subsidiary” means any corporation of which Borrower directly or indirectly
owns or controls at the time outstanding stock having under ordinary
circumstances (not depending on the happening of a contingency) voting power to
elect a majority of the board of directors of said corporation.

 

·“Term Loan” has the meaning assigned to that term in Section 2.2 of the
Agreement.

 

·“Term Note” has the meaning assigned to that term in Section 2.2 of the
Agreement.

 

·“Term Loan #2” has the meaning assigned to that term in Section 2.3 of the
Agreement.

 

·“Term Note #2” has the meaning assigned to that term in Section 2.3 of the
Agreement.

 

·“Term Loan #3” has the meaning assigned to that term in Section 2.7 of the
Agreement.

 

·“Term Loan Note #3” has the meaning assigned to that term in Section 2.7 of the
Agreement

 

·“Term Loan #4” has the meaning assigned to that term in Section 2.9 of the
Agreement.

 

·“Term Note #4” has the meaning assigned to that term in Section 2.9 of the
Agreement.

 

·“Term Loan #5” has the meaning assigned to that term in Section 2.10 of the
Agreement.

 

·“Term Note #5” has the meaning assigned to that term in Section 2.10 of the
Agreement.

 

·“Term-Out Date” means March 28, 2020.

 

·“Test Period” means each 12 month period ending at the end of each fiscal
quarter. The first Test Period shall be the Test Period ending on December 31,
2019.

 

 1-8 

 

 

·“Title Company” means First American Title Insurance Company (related to
Premises #1 and Premisese #2) or Land Title Guarantee Company (related to
Premises #3), as applicable.

 

·“Total Funded Debt” means for the applicable Test Period, the sum in total for
Bioanalytical Systems, Inc. and its Consolidated Subsidiaries (without
duplication) the aggregate principal amount of indebtedness as of the last day
of such applicable test period, determined in accordance with GAAP, consisting
of: (a) indebtedness for borrowed money, (b) unreimbursed obligations in respect
of drawn letters of credit, (c) obligations in respect of capitalized leases,
(d) obligations in respect of purchase money debt, and (e) debt obligations
evidenced by bonds, debentures, promissory notes, loan agreements or similar
instruments (including subordinated debt).

 

·“Transaction Costs” means all transaction fees, charges, and other amounts
related to the Transactions and any Permitted Acquisitions (including, without
limitation, any financing fees, merger and acquisition fees, legal fees and
expenses, due diligence fees or any other fees and expenses in connection
therewith), in each case to the extent paid within six (6) months of the closing
of the Facility or such Permitted Acquisition, as applicable, and approved by
the Bank in its reasonable discretion.

 

“Unfunded Capital Expenditures” shall equal the sum of Capital Expenditures
excluding funds borrowed under the Construction Loan, Equipment Loan, Capex
Loan, Capex Loan #2, or for certain Capital Expenditures greater than $200,000
for single equipment purchases as approved by Bank. For purposes of calculating
Unfunded Capital Expenditures, Capital Expenditures will be derived from the
Statement of Cash Flows of the Company and its Subsidiaries for such applicable
Test Period.

 

“Unrestricted Cash” means the sum in total for Bioanalytical Systems, Inc. and
its Consolidated Subsidiaries (without duplication) cash or cash equivalents
that would not appear as “restricted” on a consolidated balance sheet of
Bioanalytical Systems, Inc as of the last day of such applicable test period.

 

 1-9 

 

 

EXHIBIT 2.1B

 

Form of Revolving Note

 

 

 

 

EXHIBIT 2.2

 

Form of Term Note

 

 

 

 

EXHIBIT 2.3

 

Form of Term Note #2

 

 

 

 

EXHIBIT 2.7

 

Form of Term Note #3

 

 

 

 

EXHIBIT 2.8

 

Form of Capex Note

 

 

 

 

EXHIBIT 2.9

 

Form of Term Note #4

 

 

 

 

EXHIBIT 2.10

 

Form of Term Note #5

 

 

 

 

EXHIBIT 2.11

 

Form of Capex Note #2

 

 

 

 

EXHIBIT 3.3

 

Litigation Disclosure

 

None

 

 

 

 

EXHIBIT 3.6

 

Laws and Taxes Disclosure

 

None

 

 

 

 

EXHIBIT 3.8

 

Permitted Liens

 

None

 

 20 

 

 

EXHIBIT 3.10

 

Environmental Disclosure

 

Any disclosure or recognized environmental condition set forth in:

 

Phase I Environmental Site Assessment of Bioanalytical Systems, Inc. dated
March 6, 2015;

 

Limited Microbial Evaluation Report for Bioanalytical Systems, Inc., dated
March 5, 2015;

 

Asbestos Pre-Renovation Report for Bioanalytical Systems, Inc., dated March 3,
2015;

 

Report 2041 Prepared for Site Location Bioanalytical Systems, Inc., 2700 Kent
Avenue, West Lafayette, Indiana, by PHASE I Environmental Engineering, dated
October 11, 2002; and

 

Report 2032 Prepared for Site Location Bioanalytical Systems, Inc., 1024 Middle
Mount Vernon Road, Mount Vernon, Indiana, by PHASE I Environmental Engineering,
dated October 11, 2002;

 

(collectively, the “Environmental Reports”).

 

 21