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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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On February 28, 2008, the Company and ProCath (together, the “Borrowers”) entered into the Loan Agreement with Keltic, pursuant to which
the Borrowers may borrow (i) an aggregate amount of $1,500,000 under a revolving loan (the “Revolving Loan”), and (ii) $1,500,000 under a term loan (the “Term Loan”).
The outstanding principal amount of the Revolving Loan bears interest at the applicable Revolving Loan Interest Rate. The Revolving Loan Interest Rate
means the per annum rate equal to the greater of: (a) the prime rate published in The Wall Street Journal from time to time plus 175 basis points (1.75%) or (b) eight percent (8.00%). Interest on the Revolving Loan is payable by the
Borrowers monthly in arrears on the first day of each month, commencing on April 1, 2008, on the average daily unpaid principal amount of the Revolving Loan. On and after the occurrence of an Event of Default (as defined in the Loan Agreement),
interest on the Revolving Loan may accrue at a rate which is three and one-half percent (3.5%) per annum above the Revolving Loan Interest Rate and will be payable upon demand from Keltic. The maturity date of the Revolving Loan is
February 28, 2011.
The outstanding principal amount of the Term Loan bears interest at the applicable Term Loan Interest Rate. The
Term Loan Interest Rate means the per annum rate equal to the greater of: (a) the prime rate published in The Wall Street Journal from time to time plus 200 basis points (2.00%) or (b) eight and one-quarter percent (8.25%). The
Borrowers will repay the principal amount of the Term Loan in sixty (60) consecutive equal monthly installments, each in the amount of $25,000, commencing April 1, 2008, and payable on the first day of each month thereafter through and
including February 28, 2011, at which time all other sums payable under the Term Loan are also due and owing, unless the term of the Revolving Loan is
extended beyond February 28, 2011, in which case the Borrowers will continue to repay the Term Loan in consecutive equal monthly installments through and including March 1, 2013, at which time all other sums payable under the Term Loan shall be due
and owing. In addition, all principal, interest and all other amounts due under the Term Loan may be accelerated at the sole option of Keltic in the event that the Revolving Loan is terminated (whether by Lender or by Borrowers). Interest on the
Term Loan is payable by the Borrowers monthly in arrears on the first day of each month, commencing on April 1, 2008, on the outstanding unpaid principal amount of the Term Loan. On and after the occurrence of an Event of Default (as defined in
the Loan Agreement), interest on the Term Loan may accrue at a rate which is three and one-half percent (3.5%) per annum above the Term Loan Interest Rate and will be payable upon demand from Keltic.
The Borrowers may not prepay the Revolving Loan, except as otherwise contemplated by the Loan Agreement. The Revolving Loan and the Term Loan are secured
by a first lien on all assets of the Company and certain real property owned by ProCath. In connection with the transactions contemplated under the Loan Agreement, the Borrowers executed a Revolving Note (the “Revolving Note”), a Term Note
(the “Term Note”) and a General Security Agreement (the “General Security Agreement”). In addition, each Borrower executed a Patent Security Agreement (together, the “Patent Security Agreements”) and the Company
executed a Trademark and Tradename Security Agreement (the “Trademark Security Agreement”) and a Copyright Security Agreement (the “Copyright Security Agreement”) in favor of Keltic. The Revolving Note, Term Note, General
Security Agreement, Patent Security Agreements, Trademark Security Agreement and Copyright Security Agreement (together with the Loan Agreement and the Mortgage (as defined below), the “Loan Documents”) are being filed as Exhibits 10.3,
10.4, 10.5, 10.6, 10.7, 10.8 and 10.9, respectively, to this Current Report on Form 8-K.
In connection with the transactions contemplated
under the Loan Agreement, ProCath also executed a Mortgage and Security Agreement (the “Mortgage”) in favor of Keltic for certain property located in the Township of West Berlin, New Jersey. The Mortgage contained a written consent by the
Company to all terms and conditions of the Mortgage and a subordination of its rights to occupy the mortgaged premises. The preceding description of the Mortgage is qualified in its entirety by the Mortgage, which is being filed as Exhibit 10.10 to
this Current Report on Form 8-K.
Pursuant to the Loan Agreement, upon any Event of Default (as defined in the Loan Agreement), Keltic may
terminate the Loan Agreement without prior notice or demand to either Borrower and may demand payment in full of all amounts outstanding under the Loan Agreement. Each Loan Document contains Events of Default which are defined in such Loan Document.
Events of Default under any Loan Document will constitute an Event of Default under each other Loan Document.
The preceding description of
the Loan Agreement is qualified by its entirety by the Loan Agreement filed as Exhibit 10.1 hereto.
