EXHIBIT 4.2
CREDIT AGREEMENT
XXXXXX PHARMACEUTICALS, INC.
AND
MELLON BANK, N.A.
DECEMBER __, 1997
TABLE OF CONTENTS
PAGE(S)
ARTICLE I
DEFINITIONS................................ 1
SECTION 1.1 Defined Terms............................................. 1
SECTION 1.2 Other Definitional Provisions............................. 7
ARTICLE II
THE CREDIT................................ 7
SECTION 2.1 The Revolving Loans....................................... 7
(a) The Revolving Commitment.................................. 7
(b) Limitation on Revolving Loans............................. 8
(c) Making the Revolving Loans................................ 8
(d) Reduction of the Revolving Commitment..................... 8
(e) Revolving Note............................................ 8
SECTION 2.2 Repayment................................................. 9
(a) Mandatory Repayments...................................... 9
(b) Optional Payment.......................................... 9
SECTION 2.3 Interest Rate and Payment Dates........................... 9
(a) Payment................................................... 9
(b) Interest Rate............................................. 10
(c) Rate Periods.............................................. 10
(d) Interest After Maturity................................... 10
(e) Selection, Conversion or Renewal of Rate Options.......... 10
(f) Base Rate Fallback........................................ 11
SECTION 2.4 Closing Fees...............................................11
SECTION 2.5 Unused Commitment Fees.................................... 11
ARTICLE III
GENERAL PROVISIONS CONCERNING THE REVOLVING LOANS...................... 11
SECTION 3.1 Use of Proceeds........................................... 11
SECTION 3.2 Computation of Interest and Fees.......................... 12
(a) Calculations.............................................. 12
(b) Determination by Bank..................................... 12
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SECTION 3.3 Payments.................................................. 12
SECTION 3.4 Payment on Non-Business Days.............................. 12
SECTION 3.5 Reduced Return............................................ 12
SECTION 3.6 Indemnities and Losses.................................... 13
(a) Indemnities............................................... 13
(b) Funding Losses............................................ 13
SECTION 3.7 Requirements of Law....................................... 14
ARTICLE IV
CONDITIONS OF LENDING.......................... 15
SECTION 4.1 Conditions Precedent to Initial Revolving Loans........... 15
SECTION 4.2 Conditions Precedent to Each Borrowing.................... 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES..................... 17
SECTION 5.1 Representations and Warranties............................ 17
(a) Organization.............................................. 17
(b) Authorization............................................. 17
(c) Governmental Consents..................................... 17
(d) Validity.................................................. 17
(e) Financial Condition....................................... 17
(f) Litigation................................................ 18
(g) Employee Benefit Plans.................................... 18
(h) Disclosure................................................ 18
(i) Environmental Matters..................................... 18
(j) Employee Matters.......................................... 19
(k) Solvency.................................................. 19
(l) Title to Properties....................................... 19
(m) Tax Returns............................................... 19
(n) Compliance with Other Agreements and Applicable Laws...... 20
ARTICLE VI
COVENANTS................................. 20
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PAGE(S)
SECTION 6.1 Affirmative Covenants..................................... 20
(a) Financial Information..................................... 20
(b) Notices and Information................................... 21
(c) Corporate Existence, Etc.................................. 22
(d) Payment of Taxes and Claims............................... 22
(e) Maintenance of Properties; Insurance...................... 23
(f) Inspection................................................ 23
(g) Compliance with Laws Etc.................................. 23
(h) Hazardous Waste Studies................................... 23
SECTION 6.2 Negative Covenants........................................ 23
(a) Leverage Ratio............................................ 23
(b) Minimum Net Worth......................................... 24
(c) Liens Etc................................................. 24
(d) Debt...................................................... 24
(e) Consolidation, Merger or Dissolution...................... 24
(f) Loans, Investments, Secondary Liabilities................. 24
(g) Asset Sales............................................... 25
(h) Dividends................................................. 25
(i) Transactions with Affiliates.............................. 25
(j) Books and Records......................................... 25
(k) Restructure............................................... 25
ARTICLE VII
EVENTS OF DEFAULT............................ 26
SECTION 7.1 Events of Default......................................... 26
ARTICLE VIII
MISCELLANEOUS............................... 28
SECTION 8.1 Amendments, Etc........................................... 28
SECTION 8.2 Notices, Etc.............................................. 28
SECTION 8.3 No Waiver; Remedies....................................... 29
SECTION 8.4 Costs and Expenses........................................ 29
SECTION 8.5 Participations............................................ 29
SECTION 8.6 Effectiveness: Binding Effect............................. 29
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PAGE(S)
SECTION 8.7 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver.............................................. 30
SECTION 8.8 Waiver of Notices......................................... 31
SECTION 8.9 Entire Agreement.......................................... 31
SECTION 8.10 Separability of Provisions................................ 31
SECTION 8.11 Execution in Counterparts................................. 31
SCHEDULE 5.1(f) Litigation
SCHEDULE 5.1(i) Environmental Matters
SCHEDULE 5.1(m) Tax Returns
SCHEDULE 6.2(c) Permitted Liens
SCHEDULE 6.2(d)(iv) Permitted Debt
SCHEDULE 6.2(f)(vi) Permitted Investments
EXHIBIT A Revolving Note
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of December __, 1997, is entered into
between XXXXXX PHARMACEUTICALS, INC., a Nevada corporation ("BORROWER") and
MELLON BANK, N.A. ("BANK"). Borrower and Bank agree as follows:
ARTICLE I
DEFINITIONS
SECTION I.1 DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"ACQUISITION": The acquisition of any purchase or other acquisition by
an Obligor (directly or indirectly) of assets or securities of any other Person,
other than the purchase of inventory, equipment, or other assets in the ordinary
course of business.
"AGREEMENT": This Credit Agreement, as amended, supplemented or
modified from time to time.
"AVERAGE UNUSED PORTION OF REVOLVING COMMITMENT": as of the end of any
month, the Revolving Commitment, LESS the average daily balance of Revolving
Loans that were outstanding during the month just ended.
"BANK": As set forth in the introductory paragraph of this Agreement.
"BASE RATE": The interest rate per annum announced from time to time by
Bank as its Base Rate. The Base Rate may be greater or less than other interest
rates charged by Bank to other borrowers and is not solely based or dependent
upon the interest rate which Bank may charge any particular borrower or class of
borrowers. Information concerning the Base Rate may be obtained from Bank.
"BASE RATE OPTION": Has the meaning set forth in Section 2.3(b).
"BOA": Bank of America NT & SA.
"BORROWER": As set forth in the introductory paragraph of this
Agreement.
"BORROWING": As defined in Section 2.1(a).
"BUSINESS DAY": Any day on which Bank is open for business at the
location where the Note is payable unless otherwise stated.
"CHANGE OF CONTROL": Shall be deemed to have occurred at such times as
a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Act of 1934), becomes the "beneficial owner" (as defined in Rule
13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of more than fifty
percent (50%) of the total voting power of all classes of stock then outstanding
of Borrower normally entitled to vote in the election of directors.
"CLOSING FEE": Has the meaning set forth in Section 2.4.
"DEFAULT": A condition or event which, after notice or lapse of time or
both, would constitute an Event of Default if that condition or event were not
cured or removed within any applicable grace or cure period.
"DOLLARS AND $": Dollars in lawful currency of the United States of
America.
"EBITDA": as of the end of any fiscal quarter, the sum of Borrower's
consolidated net earnings (or loss), less the amount of any extraordinary gains,
and before interest expense, cash income taxes, depreciation, and amortization
for the four fiscal quarter period ended with such fiscal quarter, each as
determined in accordance with GAAP; it being understood that if Borrower
completes a Permitted Acquisition that involves the acquisition of a Person,
then (i) for the first fiscal quarter ended after the date of the consummation
of such Acquisition, EBITDA will be calculated by including the EBITDA of the
acquired Person for its prior four fiscal quarters, (ii) for the second fiscal
quarter ended after the date of the consummation of such Acquisition, EBITDA
will be calculated by including the EBITDA of the acquired Person for its prior
three fiscal quarters, (iii) for the third fiscal quarter ended after the date
of the consummation of such Acquisition, EBITDA will be calculated by including
the EBITDA of the acquired Person for its prior two fiscal quarters, (iv) for
the fourth fiscal quarter ended after the date of the consummation of such
Acquisition, EBITDA will be calculated by including the EBITDA of the acquired
Person for its immediately prior fiscal quarter, and (v) thereafter, EBITDA will
be calculated without adding any EBITDA of the acquired Person that predated the
Permitted Acquisition.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended to the date hereof and from time to time hereafter and any successor
statute.
"ERISA AFFILIATE": As applied to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which that Person
is a member and which is under common control within the meaning of Section
414(b) and (c) of the Internal Revenue Code.
"GAAP": Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession or any public commission having regulatory responsibility over
Borrower or any Subsidiary.
"GUARANTORS": Xxxxxx Laboratories, Inc., Circa Pharmaceuticals, Inc.,
Oclassen
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Pharmaceuticals, Inc., and Royce Laboratories, Inc.
"GUARANTY": A general continuing guaranty executed and delivered by the
Guarantors respecting the obligations of Borrower owing to Bank.
"HOECHST": Hoechst Xxxxxx Xxxxxxx, Inc., a Delaware corporation.
"INTEREST RATE OPTIONS": Has the meaning set forth in Section 2.3(b).
"INTERNAL REVENUE CODE": The Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter and any successor statute.
"LIEN": Any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"LIBOR RATE OPTION": Has the meaning set forth in Section 2.3(b).
"LIBOR RATE": For any day for any proposed or existing Rate Segment
corresponding to a Rate Period shall mean the rate per annum determined by Bank
to be the rate per annum obtained by dividing (the resulting quotient to be
rounded upward to the nearest 1/16 of 1%) (A) the rate of interest (which shall
be the same for each day in such Rate Period) estimated in good faith by Bank in
accordance with its usual procedures (which determination shall be conclusive)
to be the average of the rates per annum for deposits in United States dollars
offered to major money center banks in the London interbank market at
approximately 11:00 a.m., London time, two London Business Days prior to the
first day of such Rate Period for delivery on the first day of such Rate Period
in amounts comparable to such Rate Segment (or, if there are no such comparable
amounts actively traded, the smallest amounts actively traded) and have
maturities comparable to such Rate Period by (B) a number equal to 1.00 minus
the Libor Rate Reserve Percentage for such day.
The "LIBOR RATE" also may be expressed by the following formula:
(average of rates offered to major
money banks in the London inter-
Libor Rate = BANK MARKET ESTIMATED BY BANK)
(1.00 - Libor Rate Reserve Percentage)
"LIBOR RATE RESERVE PERCENTAGE": For any day shall mean the percentage
(rounded upward to the nearest 1/16 of 1%), as determined in good faith by Bank
(which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including, without limitation,
supplemental, marginal and emergency requirements ) for member banks of the
Federal Reserve System with respect to eurocurrency funding (currently referred
to as "Eurocurrency Liabilities") of any maturity. Each Libor Rate shall be
adjusted automatically as of the effective date of any change in
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the Libor Rate Reserve Percentage.
"LOAN DOCUMENTS": This Agreement, the Note, the Guaranty, and each
other document required by Bank in connection with this Agreement and/or the
credit extended hereunder.
"LONDON BUSINESS DAY": A day for dealing in deposits in United States
dollars by and among banks in the London interbank market.
"MATERIAL ADVERSE CHANGE": A material adverse change in the business,
operations, results of operations, assets, liabilities, or condition (financial
or otherwise) of Borrower and the Guarantors, taken as a whole.
"MATURITY DATE": March 31, 1998.
"NET ISSUANCE PROCEEDS": cash proceeds received by Borrower or any of
its Subsidiaries in connection with their issuance (other than to Borrower) of
equity securities after the date of this Agreement, net of reasonable
out-of-pocket costs and expenses (including, underwriting discounts and
commissions) paid or incurred in connection therewith.
"NET WORTH": as of any date of determination, the result of (a)
Borrower's total consolidated stockholder's equity, MINUS (b) the amount of
minority interests held by Borrower or its Subsidiaries.
"NOTE": The Revolving Note.
"OBLIGOR": Borrower or any of the Guarantors.
"PBGC": The Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERMITTED ACQUISITIONS": (a) the Permitted Hoechst Acquisition, (b)
the Permitted Other Acquisitions, (c) the Permitted Rugby Group Acquisition, and
(d) the Permitted Xxxxxx Acquisitions.
"PERMITTED ACQUISITION CONDITIONS": (a) no Default or Event of Default
shall have occurred and be continuing or would result from the consummation of
the proposed Acquisition, (b) the assets being acquired, or the Person whose
securities are being acquired, are useful in or engaged in, as applicable, the
development, manufacture, or distribution of pharmaceutical products, (c)
Borrower has provided Bank with confirmation, supported by reasonably detailed
calculations that on a PRO FORMA basis (adjusted to eliminate expense items that
would not have been incurred and include income items that would have been
recognized, in each case, if the combination had been accomplished at the
beginning of the period) created by adding the historical financial statements
of Borrower and its Subsidiaries to the historical financial statements of the
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Person to be acquired (or the historical financial statements related to the
assets to be acquired) pursuant to the proposed Acquisition, Borrower and its
Subsidiaries would have been in compliance with the financial covenants in
Sections 6.2(a) and 6.2(b) of this Agreement as of the fiscal period ended
immediately prior to the proposed date of consummation of such proposed
Acquisition, (d) Borrower has provided Bank with copies of the definitive
purchase and sale documentation, and (e) in the case of the acquisition of
securities of a Person, such Person either executes and delivers a joinder to
the Guaranty or is merged with and into the Obligor that is making such
Acquisition, with such Obligor as the survivor of such merger.
"PERMITTED HOECHST ACQUISITION": The consummation of product
Acquisitions by one or more of the Obligors from Hoechst, so long as (a) the
Permitted Acquisition Conditions are satisfied in connection with each such
Acquisition, and (b) the aggregate consideration paid in connection with all
such Acquisitions does not exceed $90,000,000.
"PERMITTED OTHER ACQUISITIONS": The consummation of Acquisitions by one
or more of the Obligors, so long as (a) the Permitted Acquisition Conditions are
satisfied in connection with each such Acquisition, and (b) the aggregate
consideration paid in connection with all such Acquisitions does not exceed
$15,000,000.
"PERMITTED RUGBY GROUP ACQUISITION": The consummation of the
transactions contemplated by that certain Stock Purchase Agreement, dated August
25, 1997, among Hoechst, Borrower, and Marisub, Inc., so long as (a) the
Permitted Acquisition Conditions are satisfied in connection with such
Acquisition, and (b) the aggregate cash consideration paid in connection with
such Acquisition does not exceed $75,000,000 plus an "earn out" and royalties.
"PERMITTED XXXXXX ACQUISITIONS": The consummation of the transactions
contemplated by that certain Asset Purchase Agreement, dated September 30, 1997,
among Xxxxxx, Xxxxxx Laboratories, Inc., and SCS Pharmaceuticals, Inc.
"PERSON": An individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"PLAN": Any employee pension benefit plan maintained or contributed to
by Borrower or any ERISA Affiliate of Borrower and insured by the Pension
Benefit Guaranty Corporation under Title IV of ERISA.
"PORTION": "BASE RATE PORTION" shall mean at any time the part,
including the whole, of the unpaid principal amount of the Note bearing interest
at such time under the Base Rate Option, in accordance with the first sentence
of Section 2.3(d), or in accordance with Section 2.3(f) as applicable. "LIBOR
RATE PORTION" shall mean at any time, the part, including the whole, of the
unpaid principal amount of the Note bearing interest at such time under the
Libor Rate Option or in accordance with the second sentence of Section 2.3(d) as
applicable.
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"RATE PERIOD": As defined in Section 2.3(c).
"RATE SEGMENT": Of the Libor Rate Portion at any time shall mean the
entire principal amount of such Portion to which at such time there is
applicable a particular Rate Period beginning on a particular day and ending on
another particular day. (By definition, each Portion is at all times composed of
an integral number of discrete Rate Segments, each corresponding to a particular
Rate Period, and the sum of the principal amounts of all Rate Segments of a
particular Portion at any time equals the principal amount of such Portion at
such time).
"REGULATION G, T, U AND X": Regulations G, T, U and X, respectively,
promulgated by the Board of Governors of the Federal Reserve System, as amended
from time to time, and any successors thereto.
"REVOLVING COMMITMENT": The amount of $50,000,000, as such amount may
be reduced pursuant to Section 2.1(d).
"REVOLVING LOANS": As defined in Section 2.1(a).
"REVOLVING NOTE": As defined in Section 2.1(e).
"XXXXXX": X.X. Xxxxxx & Co., a Delaware corporation.
"SOLVENT": When used with respect to any Person, that as of the date as
to which the Person's solvency is to be measured:
(i) the fair saleable value of its assets is in excess of the
total amount of its liabilities (including contingent
liabilities) as they become absolute and matured;
(ii) it has sufficient capital to conduct its business; and
(iii) it is able to meet its debts as they mature (subject, in the
case of Obligors, to their ability to refinance their debt to
Bank and BOA at or before the time of the maturities thereof).
"STANDARD NOTICE": An irrevocable notice provided by Borrower to Bank
on a Business Day that is:
(i) received on or prior to the Business Day applicable to the
selection of, conversion to, or renewal of, the Base Rate
Option or prepayment of any Base Rate Portion; and
(ii) at least three London Business Days in advance in the case of
selection of, conversion to, or renewal of, the Libor Rate
Option or prepayment of any
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Libor Rate Portion.
Standard Notice must be provided no later than 11:00 a.m., California time, on
the last day permitted for such notice.
"SUBSIDIARY": A corporation of which shares of stock having ordinary
voting power (other than stock having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation are at the time owned, directly, or indirectly
through one or more intermediaries, or both, by Borrower.
"TOTAL SENIOR DEBT": (i) indebtedness arising from the lending of money
by any Person to Borrower or its Subsidiaries, (ii) indebtedness, whether or not
in any such case arising from the lending by any Person of money to Borrower or
its Subsidiaries, (A) which is represented by notes payable or drafts accepted
that evidence extensions of credit, (B) which constitutes obligations evidenced
by bonds, debentures, notes, licensing agreements, or similar instruments, or
(C) upon which interest charges are customarily paid (other than accounts
payable) or that was issued or assumed as full or partial payment for property
or assets, and (iii) indebtedness that constitutes an obligation with respect to
a capital lease.
SECTION I.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in the Note or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Note, and any certificate or
other document made or delivered pursuant hereto, accounting terms not defined
in Section 1.1, and accounting terms partly defined in Section 1.1 to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
ARTICLE II
THE CREDIT
SECTION II.1 THE REVOLVING LOANS.
(a) THE REVOLVING COMMITMENT. Bank agrees, on the terms and
conditions hereinafter set forth, to make loans ("REVOLVING LOANS") to
Borrower from time to time during the period from the date hereof to up
to, but not including, the Maturity Date in an aggregate amount not to
exceed, at any one time outstanding, the Revolving
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Commitment, as such amount may be reduced pursuant to Section 2.1(d).
Each borrowing (a "BORROWING") of a Revolving Loan shall be in
a minimum amount of $1,000,000; provided that every selection of, conversion to,
or renewal of, the Libor Rate Option shall be in a minimum principal amount of
$1,000,000 or an integral multiple of $1,000,000 above such amount. Within the
limits of the Revolving Commitment and prior to the Maturity Date, Borrower may
borrow, repay pursuant to Section 2.2(b), and reborrow under this Section
2.1(a).
(b) LIMITATION ON REVOLVING LOANS. Bank shall have no
obligation to make Revolving Loans hereunder to the extent they would cause the
outstanding amount of Revolving Loans to exceed the Revolving Commitment.
(c) MAKING THE REVOLVING LOANS. Borrower may borrow under the
Revolving Commitment on any Business Day, provided that Borrower shall give Bank
a Standard Notice specifying (i) the amount of the proposed Borrowing, and (ii)
the requested date of the Borrowing. Upon satisfaction of the applicable
conditions set forth in Article IV, the proceeds of all such Revolving Loans
will then be made available to Borrower by Bank by crediting the account of
Borrower on the books of Bank, or as otherwise directed by Borrower.
The Standard Notice may be given in writing (including
facsimile transmission) signed by an authorized officer of Borrower or orally,
but if the Standard Notice is provided orally, Borrower shall confirm the oral
Standard Notice on the same day in writing (including facsimile transmission) no
later than 1:00 p.m., California time, and any conflict regarding a written or
oral notice and Bank's books and records applicable to the same Borrowing shall
be conclusively determined by Bank's books and records absent manifest error.
Bank shall not incur any liability to Borrower in acting upon any oral or
written notice of Borrowing which Bank believes in good faith to have been given
by a Person duly authorized to borrow on behalf of Borrower.
(d) REDUCTION OF THE REVOLVING COMMITMENT. Borrower shall have
the right, upon at least 2 Business Days prior written notice to Bank, to
terminate in whole or reduce in part the unused portion of the Revolving
Commitment, without premium or penalty, provided that each partial reduction
shall be in the aggregate amount of $5,000,000 or an integral multiple thereof
and that such reduction shall not reduce the Revolving Commitment to an amount
less than the amount of the Revolving Loans outstanding hereunder on the
effective date of the reduction. Such notice shall be irrevocable and such
reduction shall not be reinstated.
(e) REVOLVING NOTE. The Revolving Loans made by Bank pursuant
hereto shall be evidenced by a promissory note of Borrower, substantially in the
form of EXHIBIT A, with any appropriate insertions (the "REVOLVING NOTE"),
payable to the order of Bank and representing the obligation of Borrower to pay
the aggregate unpaid principal amount of all Revolving Loans made by Bank, with
interest thereon as prescribed in Section 2.3. Bank hereby is authorized to
record in its books and records and on any schedule annexed
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to the Revolving Note, the date and amount of each Revolving Loan made by Bank,
and the date and amount of each payment of principal thereof, and in the case of
Libor Rate Option Revolving Loans, the Libor Rate, the Libor Rate Portion, and
the Rate Period with respect thereto, and any such recordation shall constitute
PRIMA FACIE evidence of the accuracy of the information so recorded; provided
that failure by Bank to effect such recordation shall not affect Borrower's
obligations hereunder. Prior to the transfer of a Revolving Note, Bank shall
record such information on any schedule annexed to and forming a part of such
Revolving Note.
SECTION II.2 REPAYMENT.
(a) MANDATORY REPAYMENTS. The aggregate principal amount of
the Revolving Loans outstanding on the Maturity Date, together with accrued
interest thereon, shall be due and payable in full on the Maturity Date. If at
any time the aggregate outstanding Borrowings exceed the Revolving Commitment
then in effect, Borrower immediately shall repay the excess to Bank.
(b) OPTIONAL PAYMENT. Borrower shall have the right at its
option from time to time to prepay the Base Rate Portion in whole or in part
without premium or penalty. Borrower shall have no right to prepay any part of
the Libor Rate Portion at any time without the prior written consent of Bank
except that (i) Borrower may prepay any part of any Rate Segment at the
expiration of the Rate Period corresponding to such Rate Segment, and (ii)
Borrower may prepay any part of any other Rate Segment so long as Borrower also
makes payment to Bank of any amounts payable under Section 3.6(b) in connection
therewith. Prepayments shall be made by giving Bank written notice thereof
(which shall be irrevocable) by no later than 11:00 a.m. (California time) on
the proposed date of prepayment, specifying the date, amount, and type of
prepayment, and upon such date the amount so specified, accrued interest
thereon, and any amounts payable under Section 3.6(b) shall be due and payable.
SECTION II.3 INTEREST RATE AND PAYMENT DATES.
(a) PAYMENT. The principal balance of the Note shall be paid
in accordance with the terms set forth in the Note. Accrued interest on the Base
Rate Portion shall be due and payable on the last Business Day of each month
commencing on December 31, 1997. Interest on each Rate Segment of the Libor Rate
Portion which has a Rate Period shall be due and payable on the last day of the
corresponding Rate Period. After maturity of any part of a Note (by acceleration
or otherwise), interest on such part of the Note shall be due and payable ON
DEMAND.
(b) INTEREST RATE. The unpaid principal amount of the Note
shall bear interest for each day until due on one or more bases selected by
Borrower from among the interest rate options (the "INTEREST RATE OPTIONS") set
forth below. Borrower understands and agrees: (i) that Bank may from time to
time determine that the right of Borrower to select, convert to, or renew the
Libor Rate Option is not available, which availability shall not be unreasonably
withheld, (ii) that Borrower shall not have the right to select, convert
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to, or renew the Libor Rate Option at any time that a Default or Event of
Default has occurred and is continuing, and (iii) that subject to the provisions
hereof, Borrower may select any number of options to apply simultaneously to
different parts of the unpaid principal amount of the Note and may select any
number of Rate Segments to apply simultaneously to different parts of the Libor
Rate Portion.
AVAILABLE INTEREST RATE OPTIONS
BASE RATE OPTION: A rate per annum for each day equal to the Base Rate.
LIBOR RATE OPTION: A rate per annum for each day equal to the Libor Rate for
such day plus three quarters (0.75) of a percentage point.
(c) RATE PERIODS. At any time when Borrower selects, converts
to, or renews the Libor Rate Option, Borrower shall fix a period (the "RATE
PERIOD") which shall be one, two, or three weeks or one, two, or three months,
during which the Libor Rate Option shall apply to the corresponding Rate
Segment; PROVIDED, that Borrower may not elect a Rate Period that will end after
the Maturity Date. Bank's right to payment of principal and interest under the
Note shall in no way be affected by the fact that one or more Rate Periods may
be in effect.
(d) INTEREST AFTER MATURITY. Upon the occurrence and during
the continuation of an Event of Default, the principal amount of any part of the
Base Rate Portion shall bear interest for each day until paid (before and after
judgment) at a rate per annum (based on a year of 365 days and actual days
elapsed) which for each day shall be the greater of (a) 2% above the Base Rate
Option on the day such amount became due, and (b) 2% above the Base Rate Option,
such interest rate to change automatically from time to time effective as of the
effective date of each change in the Base Rate. Upon the occurrence and during
the continuation of an Event of Default, the principal amount of any part of the
Libor Rate Portion shall bear interest for each day until paid (before and after
judgment) (a) until the end of the applicable then current Rate Period at a rate
per annum 2% above the Libor Rate Option otherwise applicable to such part, and
(b) thereafter in accordance with the previous sentence.
(e) SELECTION, CONVERSION OR RENEWAL OF RATE OPTIONS. Subject
to the other provisions hereof, Borrower may select any Interest Rate Option to
apply to the borrowings evidenced by the Note. Subject to the other provisions
hereof, Borrower may convert any part of the unpaid principal amount of the Note
from any Interest Rate Option to the other Interest Rate Option: (a) at any time
with respect to the conversion from the Base Rate Option to the Libor Rate
Option, and (b) at the expiration of any Rate Period with respect to conversion
from or renewals of the Libor Rate Option as to the Rate Segment corresponding
to such expiring Rate Period (or at any other time, subject to Section 3.6(b)).
Whenever Borrower desires to select, convert, or renew the Libor Rate Option,
Borrower shall give Bank a Standard Notice thereof (which shall be irrevocable),
specifying the date, amount, and type of the proposed new Rate Option. If such
notice has been duly given, and if Bank approves the proposed selection,
conversion, or renewal, on
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and after the date specified in such notice, interest shall be calculated upon
the unpaid principal amount of the Note taking into account such selection,
conversion or renewal.
(f) BASE RATE FALLBACK. If any Rate Period expires, any part
of the Rate Segment corresponding to such Rate Period which has not been
converted or renewed in accordance with Section 2.3(e) hereof automatically
shall be converted to the Base Rate Option. If Borrower fails to select, or if
Bank fails to approve an Interest Rate Option to apply to the borrowings
evidenced by the Note, such borrowings shall be deemed to be at the Base Rate
Option. If at any time Bank shall have determined in good faith (which
determination shall be conclusive) that the accrual of interest at the Libor
Rate Option has been made unascertainable, impractical, or unlawful by
compliance by Bank in good faith with any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, order, injunction,
writ, decree or award of any government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality of
either, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic, or administration thereof by any official body charged with
the interpretation or administration thereof or with any request or directive of
any such event, the outstanding principal amount of the Note subject to the
Libor Rate Option shall accrue interest at the Base Rate Option and Borrower
shall not have the right to select the Libor Rate Option.
SECTION II.4 CLOSING FEE. On the date of the execution and delivery of
this Agreement, Borrower shall pay to Bank a closing fee ("CLOSING FEE") in an
amount equal to .05% times the Revolving Commitment.
SECTION II.5 UNUSED COMMITMENT FEES. On the last Business Day of each
month during the term of this Agreement, Borrower shall pay to Bank an unused
commitment fee in an amount equal to .20% per annum times the Average Unused
Portion of the Revolving Commitment; PROVIDED, HOWEVER, that the unused
commitment fee shall not begin to accrue until the date on which Bank has sent a
written notice to Borrower that each of the conditions precedent set forth in
Section 4.1 have been satisfied or waived.
ARTICLE III
GENERAL PROVISIONS CONCERNING THE REVOLVING LOANS
SECTION III.1 USE OF PROCEEDS. The proceeds of the Revolving Loans
hereunder shall be used by Borrower for its general working capital and
corporate purposes (including, without limitation, the financing of Permitted
Acquisitions), consistent with the terms and conditions hereof.
SECTION III.2 COMPUTATION OF INTEREST AND FEES.
(a) CALCULATIONS. Interest in respect of the Base Rate Option
Revolving Loans shall be calculated on the basis of a 365 day year for the
actual days elapsed. Any change in the interest rate on a Base Rate Revolving
Loan resulting from a change in the Base Rate shall become effective as of the
opening of business on the day on which such
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change in the Base Rate shall become effective. Interest in respect of the Libor
Rate Option Revolving Loans, and any fees payable hereunder, shall be calculated
on the basis of a 365 day year for the actual days elapsed.
(b) DETERMINATION BY BANK. Each determination of an interest
rate or fee by Bank pursuant to any provision of this Agreement shall be
conclusive and binding on Borrower in the absence of manifest error.
SECTION III.3 PAYMENTS. Borrower shall make each payment of principal,
interest, and fees hereunder and under the Note, without setoff or counterclaim,
not later than 11:00 a.m. (California time) on the day when due in lawful money
of the United States of America to Bank at the office of Bank designated in
writing in immediately available funds. Any interest not paid when due shall be
compounded and shall thereafter accrue interest at the rate then applicable to
the Base Rate Portion of Borrowings hereunder (and if no Base Rate Portion of
Borrowings is outstanding, then at the rate applicable to such Borrowings as if
outstanding under the Base Rate Option).
SECTION III.4 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder or under the Note shall be stated to be due on a day which is not
a Business Day, such payment may be made on the next succeeding Business Day,
and with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
SECTION III.5 REDUCED RETURN. If Bank shall have determined that any
applicable law, regulation, rule or regulatory requirement applicable to Bank
(collectively in this Section 3.5 "REQUIREMENT") regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any United States federal or state governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Bank's capital as a consequence of its Revolving Commitment and
obligations hereunder to a level below that which would have been achieved but
for such Requirement, change or compliance (taking into consideration Bank's
policies with respect to capital adequacy) by an amount deemed by Bank to be
material (which amount shall be determined by Bank's reasonable allocation of
the aggregate of such reductions resulting from such events), then from time to
time, within five Business Days after demand by Bank (including a calculation in
reasonable detail of such amount), Borrower shall pay to Bank such additional
amount or amounts as will compensate Bank for such reduction. Bank does not
currently have knowledge of any new Requirement or any pending change in any
existing Requirement that would result in such additional amounts being owed.
SECTION III.6 INDEMNITIES AND LOSSES.
(a) INDEMNITIES. Whether or not the transactions contemplated
hereby shall be consummated, Borrower agrees to indemnify, defend, and hold
Bank, and the
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shareholders, officers, directors, employees and agents of Bank
(each, an "INDEMNIFIED PERSON"), harmless from and against any and all claims,
liabilities, losses, damages, costs and expenses (whether or not any of the
foregoing Indemnified Persons is a party to any litigation), including, without
limitation, reasonable attorneys fees and costs (including, without limitation,
the reasonable estimate of the allocated cost of in-house legal counsel and
staff) and costs of investigation, document production, attendance at a
deposition, or other discovery, prior to the assumption of defense by Borrower,
with respect to or arising out of any proposed acquisition by Borrower or any of
its Subsidiaries of any Person or any securities (including a self-tender), this
Agreement or any use of proceeds hereunder, or any claim, demand, action or
cause of action being asserted against Borrower or any of its Subsidiaries
(collectively, the "INDEMNIFIED LIABILITIES"), provided that Borrower shall have
no obligation hereunder with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of, or violations of this Agreement by,
any such Indemnified Persons. If any claim is made, or any action, suit or
proceeding is brought, against any Indemnified Person of the type contemplated
by this Section, the Indemnified Person shall notify Borrower within thirty days
of Bank being notified in writing of the commencement of such action, suit or
proceeding, and Borrower will assume the defense of such action, suit or
proceeding, employing counsel selected by Borrower and reasonably satisfactory
to the Indemnified Person, and pay the fees and expenses of such counsel. This
covenant shall survive termination of this Agreement and payment of the
outstanding Note for a period of five years.
(b) FUNDING LOSSES. Borrower agrees to indemnify Bank and to
hold Bank harmless from any reasonable loss or expense including, but not
limited to, any such loss or expense arising from interest or fees payable by
Bank to lenders of funds obtained by it in order to maintain its Libor Rate
Option Revolving Loans hereunder, which Bank may sustain or incur as a
consequence of (i) payment, prepayment or conversion of any part of any Rate
Segment of the Libor Rate Portion on a day other than the last day of the
corresponding Rate Period (whether or not any such payment is pursuant to demand
by Bank under the Note and whether or not any such payment, prepayment or
conversion is consented to by Bank, unless Bank shall have expressly waived such
indemnity in writing); (ii) default by Borrower in making a conversion or
continuation after Borrower has given a notice thereof, (iii) default by
Borrower in making any payment after Borrower has given a notice of payment,
(iv) attempt by Borrower to revoke in whole or part any irrevocable notice given
pursuant to Section 2.3(e) hereof; or (v) breach of or default by any obligor in
the performance or observance of any covenant or condition in the Note, any
separate security, guarantee or suretyship agreement between Bank and any
obligor, or any other document executed and delivered to Bank by any Obligor in
connection with the indebtedness evidenced by the Note. If Bank sustains any
such loss or expense, it shall from time to time notify Borrower of the amount
reasonably determined in good faith by Bank (which determination shall be
conclusive) to be necessary to indemnify Bank for such loss or expense. Such
amount shall be due and payable by Borrower ON DEMAND (provided that Bank shall
give Borrower a written calculation of such amount in reasonable detail). This
covenant shall survive termination of this Agreement and payment of the
outstanding Note.
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SECTION III.7 REQUIREMENTS OF LAW. In the event that any law,
regulation, or directive applicable to Bank or any change therein or in the
interpretation or application thereof or compliance by Bank with any request or
directive (whether or not having the force of law) from any United States
federal or state central bank or other governmental authority, agency or
instrumentality:
(a) does or shall impose, modify or hold applicable any
reserve, assessment rate, special deposit, compulsory loan or other requirement
(collectively in this Section 3.7 "REQUIREMENTS") against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
Bank which are not otherwise included in the determination of any Libor Rate at
the last Borrowing, conversion or continuation date of a Revolving Loan;
(b) does or shall impose, modify, or hold applicable any of
the Requirements against the Revolving Commitment to extend credit;
(c) does or shall impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing, or maintaining its Revolving Commitment, or the Libor Rate
Option Revolving Loans or to reduce any amount receivable thereunder (which
increase or reduction shall be determined by Bank's reasonable allocation of the
aggregate of such cost increases or reduced amounts receivable resulting from
such events), then, in any such case, Borrower shall pay to Bank, within five
Business Days of its demand, any additional amounts necessary to compensate Bank
for such additional cost or reduced amount receivable as determined by Bank with
respect to Sections 3.5 and 3.6 of this Agreement (provided that Bank shall give
Borrower a written calculation of reasonable detail of such amounts). If Bank
becomes entitled to claim any additional amounts pursuant to this subsection, it
shall notify Borrower of the event by reason of which it has become so entitled.
Such notice shall contain a statement incorporating the calculation as to any
additional amounts payable pursuant to the foregoing sentence, and such
statement submitted by Bank to Borrower shall be conclusive in the absence of
manifest error. Bank does not currently have knowledge of any new Requirement or
any pending change in any existing Requirement that would result in such
additional amounts being owed.
ARTICLE IV
CONDITIONS OF LENDING
SECTION IV.1 CONDITIONS PRECEDENT TO INITIAL REVOLVING LOANS. The
obligation of Bank to make its initial Revolving Loan is subject to the
conditions precedent that:
(a) Bank shall have received on or before the day of the
initial Borrowing the following, each dated prior to or as of such day, in form
and substance satisfactory to Bank:
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(i) The Note issued by Borrower to the order of Bank;
(ii) Copies of the Articles of Incorporation of
Borrower, certified as of a recent date by the Secretary of State of its state
of formation or incorporation;
(iii) Copies of the Bylaws of Borrower, certified by
the Secretary or an Assistant Secretary of Borrower;
(iv) Copies of resolutions of the Board of Directors
of Borrower, in form and substance satisfactory to Bank, approving the Loan
Documents and the Borrowings hereunder;
(v) An incumbency certificate executed by the
Secretary or an Assistant Secretary of Borrower or equivalent document,
certifying the names and signatures of the officers of Borrower or other Persons
authorized to sign the Loan Documents and the other documents to be delivered
hereunder;
(vi) Executed originals of all Loan Documents;
(vii) A certificate executed by the Secretary or an
Assistant Secretary of Borrower indicating those officers of Borrower who are
authorized to make requests for Revolving Loans hereunder;
(b) All fees required to be paid at closing, including, but
not limited to, the Closing Fee, shall have been paid by Borrower to Bank;
(c) All factual information previously furnished by Borrower
to Bank shall be true and correct in all material respects;
(d) No Material Adverse Change has occurred since September
30, 1997;
(e) Bank shall have received an opinion of Borrower's counsel
in form and substance reasonably satisfactory to Bank;
(f) No action, suit, investigation or proceeding shall have
been pending or threatened in any court or before any arbitration or
governmental authority against Borrower or any of its Subsidiaries and that
reasonably could be expected to result in a Material Adverse Change or that is
pending against Bank or Borrower or any of its Subsidiaries and relates to the
loans contemplated hereunder;
(g) Borrower and its Subsidiaries are in compliance, in all
material respects, with any existing material financial obligations; and
(h) All corporate and legal proceedings and all instruments
and documents in connection with the transactions contemplated by this Agreement
shall be
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reasonably satisfactory in content, form and substance to Bank and its counsel,
and Bank and such counsel shall have received any and all further information
and documents which Bank or such counsel may reasonably have requested in
connection therewith, such documents where appropriate to be certified by proper
corporate or governmental authorities.
SECTION IV.2 CONDITIONS PRECEDENT TO EACH BORROWING. The obligation of
Bank to make a Revolving Loan on the occasion of each Borrowing (including the
initial Borrowing) shall be subject to the further conditions precedent that on
the date of such Borrowing (a) the following statements shall be true and Bank
shall have received the notice required by Section 2.1(c), which notice shall be
deemed to be a certification by Borrower that:
(i) The representations and warranties contained in Section 5.1 are
correct in all material respects on and as of the date of such Borrowing as
though made on and as of such date,
(ii) No event has occurred and is continuing, or would result from such
Borrowing, which constitutes a Default or an Event of Default, and
(iii) Nothing shall have occurred and Bank shall not have become aware
of any fact or condition not previously known, which Bank shall determine has,
or could reasonably be expected to result in a Material Adverse Change, and
(iv) All Loan Documents are in full force and effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION V.1 REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants as follows:
(a) ORGANIZATION. Borrower and its Subsidiaries are duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower and its Subsidiaries are (except, in
each case, where failure to comply with the foregoing would not result in a
Material Adverse Change) duly authorized, qualified and licensed in all
applicable jurisdictions, and under all applicable laws, regulations, ordinances
or orders of public authorities, to carry on its business in the locations and
in the manner presently conducted.
(b) AUTHORIZATION. The execution, delivery and performance by
Borrower of the Loan Documents, and the making of Borrowings hereunder, are
within Borrower's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) Borrower's charter, by-laws or other
organizational document or (ii) any material law or regulation (including
Regulations G, T, U and X) binding on or affecting
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Borrower or its properties, and will not constitute an event of default under
any material agreement to which Borrower is a party or by which its assets or
properties may be bound. The execution, delivery and performance by the
Guarantors of the Guaranty is within each of the Guarantor's corporate powers,
has been duly authorized by all necessary corporate action, does not contravene
(i) any Guarantor's charter, by-laws or other organizational document or (ii)
any material law or regulation (including Regulations G, T, U and X) binding on
or affecting any Guarantor or its properties, and will not constitute an event
of default under any material agreement to which any Guarantor is a party or by
which its assets or properties may be bound.
(c) GOVERNMENTAL CONSENTS. No authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body (except routine reports required pursuant to the Securities
Exchange Act of 1934, as amended (if such act is applicable to Borrower), which
reports will be made in the ordinary course of business) is required for the due
execution, delivery and performance by Borrower or the Guarantors of the Loan
Documents.
(d) VALIDITY. The Loan Documents to which they are parties are
the binding obligations of Borrower and the Guarantors, enforceable in
accordance with their respective terms; except in each case as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application and
equitable principles relating to or affecting creditors' rights.
(e) FINANCIAL CONDITION. The balance sheets of Borrower and
any of its consolidated Subsidiaries as at September 30, 1997 and the related
statements of income and retained earnings of Borrower and any of its
consolidated Subsidiaries, copies of which have been furnished to Bank, fairly
present the financial condition of Borrower and any of its consolidated
Subsidiaries as at such date and the results of the operations of Borrower and
any of its consolidated Subsidiaries for the period ended on such date, all
determined in accordance with GAAP (subject to the absence of footnotes and
normal year-end audit adjustments), consistently applied, and since September
30, 1997 there has not been a Material Adverse Change.
(f) LITIGATION. Except as set forth on SCHEDULE 5.1(F) hereto,
there is no known pending or threatened action or proceeding affecting Borrower
or any of its Subsidiaries before any court, governmental agency or arbitrator,
which may materially adversely affect the consolidated financial condition or
operations of Borrower and its Subsidiaries or which may result in a Material
Adverse Change.
(g) EMPLOYEE BENEFIT PLANS. Borrower and each of its ERISA
Affiliates has fulfilled its obligations, if any, under the minimum funding
standards of ERISA and the Internal Revenue Code with respect to each Plan and
is in compliance in all material respects with the applicable provisions of
ERISA and the Internal Revenue Code, and has not incurred any liability with
respect to any Plan under Title IV of ERISA. No reportable event has occurred
under Section 4043(b) of ERISA for which the PBGC requires 30 day notice. No
action by Borrower or of any ERISA Affiliate of Borrower to terminate or
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withdraw from any Plan has been taken and no notice of intent to terminate a
Plan has been filed under Section 4041 of ERISA. No proceeding has been
commenced with respect to a Plan under Section 4042 of ERISA, and no event has
occurred or condition exists which might constitute grounds for the commencement
of such a proceeding.
(h) DISCLOSURE. No representation or warranty of Borrower
contained in this Agreement or any other document, certificate or written
statement furnished to Bank by or on behalf of Borrower for use in connection
with the transactions contemplated by this Agreement contains any known untrue
statement of a material fact or omits to state a known material fact (known to
Borrower in the case of any document not furnished by it) necessary in order to
make the statements contained herein or therein not misleading. There is no fact
known to Borrower (other than matters of a general economic nature) which
materially adversely affects the business, operations, property, assets or
condition (financial or otherwise) of Borrower and any of its Subsidiaries,
taken as a whole, which has not been disclosed herein or in such other
documents, certificates and statements furnished to Bank for use in connection
with the transactions contemplated hereby.
(i) ENVIRIONMENTAL MATTERS. Except as set forth in SCHEDULE
5.1(I) hereto, neither Borrower nor any Subsidiary, nor any of their respective
officers, employees, representatives or agents, nor, to the best of their
knowledge, any other person, has treated, stored, processed, discharged,
spilled, or otherwise disposed of any substance defined as hazardous or toxic by
any applicable federal, state or local law, rule, regulation, order or
directive, or any waste or by-product thereof, at any real property or any other
facility owned, leased or used by Borrower or any Subsidiary, in violation of
any applicable statutes, regulations, ordinances or directives of any
governmental authority or court, which violations reasonably may result in
uninsured liability to Borrower or any Subsidiary or any of their respective
officers, employees, representatives, agents or shareholders in an uninsured
amount exceeding $5,000,000 for all such violations; and the unresolved
violations set forth in said Schedule 5.1(i) will not result in liability to
Borrower or any Subsidiary or any of their respective officers, employees,
representatives, agents or shareholders in an amount exceeding $5,000,000 for
all such unresolved violations. Except as set forth in said Schedule, no
employee or other person has made a claim or demand in writing against Borrower
or any Subsidiary based on alleged damage to health caused by any such hazardous
or toxic substance or by any waste or by-product thereof, other than claims,
demand or charges which have been settled or satisfied; and the unsatisfied
claims or demands against Borrower or any Subsidiary set forth in said Schedule
5.1(i) will not result in uninsured liability to Borrower or any Subsidiary or
any of their respective officers, employees, representatives, agents or
shareholders in an amount exceeding $5,000,000 in excess of reserves on the
books of Borrower for all such unsatisfied claims or demands. Except as set
forth in said Schedule 5.1(i), neither Borrower nor any Subsidiary has been
charged in writing by any governmental authority with improperly using,
handling, storing, discharging or disposing of any such hazardous or toxic
substance or waste or by-product thereof or with causing or permitting any
pollution of any body of water, other than claims, demand or charges which have
been settled or satisfied; and the outstanding related charges set forth in said
Schedule 5.1(i) will not result in uninsured liability to Borrower or any
Subsidiary or any of their respective
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officers, employees, representatives, agents or shareholders in an amount
exceeding $5,000,000 for all such outstanding charges.
(j) EMPLOYEE MATTERS. There is no known strike or work
stoppage in existence or threatened involving Borrower or any of its
Subsidiaries that may materially adversely affect the consolidated financial
condition or operations of Borrower and its Subsidiaries taken as a whole or
that reasonably could be expected to result in a Material Adverse Change.
(k) SOLVENCY. Borrower and the Guarantors, taken as a whole,
are Solvent.
(l) TITLE TO PROPERTIES. Borrower and each of its Subsidiaries
has good and marketable title to (or a valid leasehold or license in) all of its
material properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those as are permitted
under Section 6.2(c) hereof.
(m) TAX RETURNS. Except as set forth on SCHEDULE 5.1(M)
hereto, Borrower and its Subsidiaries has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it (including any automatic or granted extensions). All information in
such tax returns, reports and declarations is complete and accurate in all
material respects. Borrower and each of its Subsidiaries has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower or
its Subsidiaries and with respect to which adequate reserves have been set aside
on its books. Adequate provision has been made for the payment of all accrued
and unpaid Federal, State, county, local, foreign and other taxes whether or not
yet due and payable and whether or not disputed.
(n) COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.
Neither Borrower nor any of its Subsidiaries is in default in any material
respect under, or in violation in any material respect of any of the terms of,
any agreement, contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound, the loss of which
reasonably could be expected to result in a Material Adverse Change, and
Borrower and each of its Subsidiaries is in compliance in all material respects
with all applicable provisions of laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, State or local governmental
authority, except for those the failure to comply with which reasonably could
not be expected to result in a Material Adverse Change.
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ARTICLE VI
COVENANTS
SECTION VI.1 AFFIRMATIVE COVENANTS. So long as any Note shall remain
unpaid or Bank shall have any Revolving Commitment hereunder, Borrower will,
unless Bank shall otherwise consent in writing:
(a) FINANCIAL INFORMATION. Furnish to Bank:
(i) as soon as available, but in any event within 90
days after the end of each fiscal year of Borrower, (1) a copy of
Borrower's consolidated balance sheet of itself and its consolidated
Subsidiaries as at the end of each fiscal year and the related
consolidated statements of income and retained earnings (or comparable
statement) employed in the business and changes in financial position
and cash flow for such year, setting forth in each case in comparative
form the figures for the previous year, accompanied by an unqualified
report and opinion thereon of independent certified public accountants
acceptable to Bank, and, if prepared, such accountants' letter to
management, and (2) a copy of Borrower prepared consolidating balance
sheet and income statements prepared in connection with the statement
provided in subpart (1) above;
(ii) as soon as available, but in any event within 45
days after the end of each fiscal quarter, Borrower's unaudited
consolidated (and consolidating balance sheets of itself and any
consolidated Subsidiaries) as at the end of such period and the related
unaudited consolidated and consolidating statements of income and
retained earnings, certified by a duly authorized officer of Borrower
as being fairly stated in all material respects subject to year end
adjustments; all such financial statements to be complete and correct
in all material respects and to be prepared in accordance with GAAP
applied consistently throughout the periods reflected therein (except
as disclosed therein);
(iii) (a) together with each delivery of financial
statements of Borrower and any of its Subsidiaries pursuant to
subdivision (i) above, a certificate, executed by Borrower's chairman
of the board (if an officer) or its president or one of its vice
presidents or by its chief financial officer stating that the signers
have reviewed the terms of this Agreement and have made, or caused to
be made under their supervision, a review in reasonable detail of the
transactions and condition of Borrower and any of its Subsidiaries
during the accounting period covered by such financial statements and
that such review has not disclosed the existence during or at the end
of such accounting period, and that the signers do not have knowledge
of the existence as at the date of such certificate, of any condition
or event that constitutes a Default or an Event of Default, or, if any
such condition or event existed or exists, specifying the nature and
period of existence thereof and what action Borrower has taken, is
taking and proposes to take with respect thereto; and (b) together with
each delivery of financial statements of Borrower and any of its
Subsidiaries pursuant to subdivision (i) and (ii) above, a certificate
demonstrating in
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reasonable detail compliance during and at the end of the applicable accounting
periods with the restrictions contained in Section 6.2 hereof; and
(iv) Any other report as Bank may reasonably request
from time to time.
(b) NOTICES AND INFORMATION. Deliver to Bank:
(i) promptly upon the Chief Executive Officer, the
Vice President-Finance, or the Director of Finance of Borrower
obtaining knowledge (a) of any condition or event which constitutes a
Default or an Event of Default, (b) that any Person has given any
notice to Borrower or any Subsidiary of Borrower or taken any other
action with respect to a claimed default or event or condition of the
type referred to in Section 7.1(e), (c) of the institution of any
litigation involving an alleged uninsured liability (including possible
forfeiture of property) of Borrower or any of its Subsidiaries equal to
or greater than $5,000,000 or any adverse determination in any
litigation involving a potential uninsured liability of Borrower or any
of its Subsidiaries equal to or greater than $5,000,000 or (d) of a
Material Adverse Change, an officers' certificate specifying the nature
and period of existence of any such condition or event, or specifying
the notice given or action taken by such holder or Person and the
nature of such claimed default, Event of Default, Default, event or
condition, and what action Borrower has taken, is taking and proposes
to take with respect thereto;
(ii) promptly upon becoming aware of the occurrence
of or forthcoming occurrence of (a) any reportable event under Section
4043(b) of ERISA for which the PBGC requires 30 day notice, (b) any
action by Borrower or any ERISA Affiliate of Borrower to terminate or
withdraw from a Plan or the filing of any notice of intent to terminate
under Section 4041 of ERISA, (c) any notice of noncompliance made with
respect to a Plan under Section 4041(b) of ERISA, and (d) the
commencement of any proceeding with respect to a Plan under Section
4042 of ERISA;
(iii) promptly, and in any event within 10 days after
receipt thereof, a copy of any material notice, summons, citation,
directive, letter or other form of communication from the FDA, the DEA,
or any other governmental authority or court in any way concerning any
allegedly unlawful action or omission on the part of Borrower or its
Subsidiaries in connection with the manufacture, storage, or sale of
products or the operation of Borrower's or its Subsidiaries'
businesses; and
(iv) promptly upon Bank's request, such other
statements, budgets, forecasts or reports as to Borrower and its
Subsidiaries as Bank reasonably may request.
(c) CORPORATE EXISTENCE, ETC. At all times preserve and keep
in full force and effect its and its Subsidiaries' corporate existence and
rights and franchises material to
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its business and those of each of its Subsidiaries; PROVIDED, HOWEVER, that the
corporate existence of any such Subsidiary that is not a Guarantor may be
terminated if such termination is in the best interest of Borrower and is not
materially disadvantageous to the holder of any Note.
(d) PAYMENT OF TAXES AND CLAIMS. Pay, and cause each of its
Subsidiaries to pay, all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
franchises, business, income or property before any penalty or interest accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by law have or may become a lien upon any of its properties or assets,
prior to the time when any penalty or fine shall be incurred with respect
thereto; provided that no such charge or claim need be paid if being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor.
(e) MAINTENANCE OF PROPERTIES: INSURANCE. Maintain or cause to
be maintained in good repair, working order and condition all material
properties used or useful in the business of Borrower and its Subsidiaries and
from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof. Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations. Borrower will
comply with any other insurance requirement set forth in any other Loan Document
and, upon the request of Bank, deliver to Bank a copy of each insurance policy,
or, if permitted by Bank, a certificate of insurance listing all insurance in
force.
(f) INSPECTION. Permit any authorized representatives
designated by Bank to visit and inspect any of the properties of Borrower or any
of its Subsidiaries, including its and their financial and accounting records,
and to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and accounts with its and their officers, all upon prior
notice and at such reasonable times during normal business hours and as often as
reasonably may be requested.
(g) COMPLIANCE WITH LAWS ETC Exercise, and cause each of its
Subsidiaries to exercise, all due diligence in order to comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, including, without limitation, all rules and regulations
of public utility commissions or similar regulatory authorities, and all
environmental laws, rules, regulations and orders, noncompliance with which
reasonably could be expected to result in a Material Adverse Change.
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(h) HAZARDOUS WASTE STUDIES. Promptly, and in any event within
thirty days after submission, provide Bank with copies of all such
investigations, studies, samplings and testings as may be requested by any
governmental or regulatory authority relative to any substance defined as
hazardous or toxic by any applicable federal, state or local law, rule,
regulation, order or directive, or any waste or by-product thereof, at or
affecting any real property or any facility owned, leased or used by Borrower or
any Subsidiary.
SECTION VI.2 NEGATIVE COVENANTS. So long as any Note shall remain
unpaid or Bank shall have any Revolving Commitment hereunder, Borrower will not,
without the written consent of Bank:
(a) LEVERAGE RATION. At the end of any fiscal quarter of
Borrower, permit the ratio of Total Senior Debt to EBITDA, to be greater than
3.00:1.00.
(b) MINIMUM NET WORTH. At the end of any fiscal quarter of
Borrower, permit Net Worth to be less than $468,000,000 plus (i) 100% of the
amount by which Borrower's Net Worth is increased by virtue of the consummation
of the Permitted Rugby Group Acquisition, plus (ii) 75% of Borrower's
consolidated net income (net loss to have no effect and shall not be a
deduction) for each fiscal quarter ended on or after December 31, 1997, plus
(iii) 100% of any Net Issuance Proceeds received by Borrower or its
Subsidiaries.
(c) LIENS ETC. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien upon or with respect to any
of its properties, whether now owned or hereafter acquired, or assign, or permit
any of its Subsidiaries to assign, any right to receive income, in each case to
secure any indebtedness of any Person other than (i) Liens in favor of Bank;
(ii) Liens reflected on SCHEDULE 6.2(C) hereto; (iii) purchase money Liens upon
or in any personal property acquired or held by Borrower or any Subsidiary in
the ordinary course of business to secure the purchase price of such property or
to secure purchase money financing incurred solely for the purpose of financing
the acquisition of rights in or use of such property; and (iv) Liens for taxes,
assessments or other governmental charges or levies not yet due or thereafter
payable without penalty, or Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business for sums
not overdue, or any such Liens being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books (but only if such Liens do not,
individually or in the aggregate, result in a Materially Adverse Change or
materially adversely affect the rights of Bank); (v) Liens incurred in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance or other forms of governmental insurance or benefits, or
to secure performance of statutory obligations, leases and contracts (other than
for borrowed money) entered into in the ordinary course of business or to
secured obligations on surety or appeal bonds; and (vi) judgment Liens in
existence less than 30 days after the entry thereof or with respect to which
execution has been stayed or the payment of which is covered in full (subject to
a customary deductible) by insurance.
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(d) DEBT. Create, incur, assume or permit to exist, or permit
any Subsidiary to create , incur, assume or permit to exist, any direct or
contingent indebtedness, liabilities or lease obligations (other than those to
Bank), or become liable for the debts of others without Bank's written consent,
except for (i) acquiring goods, supplies or merchandise on normal trade credit,
(ii) endorsing negotiable instruments received in the usual course of business,
(iii) obtaining surety bonds in the usual course of business, (iv) the
indebtedness of Borrower set forth on SCHEDULE 6.2(D)(IV) attached hereto, (v)
additional indebtedness in an aggregate amount not to exceed $10,000,000 at any
one time outstanding, (vi) unsecured indebtedness owing to BOA in an aggregate
amount not to exceed $110,000,000 at any one time outstanding, and (vii)
unsecured long term indebtedness in an aggregate amount not to exceed
$175,000,000, so long as the proceeds are used to repay the credit facilities
provided by Bank and BOA, and (viii) guarantees by Borrower of the obligations
of its Subsidiaries in a principal amount not in excess of $2,500,000.
(e) CONSOLIDATION, MERGER OR DISSOLUTION. Except for Permitted
Acquisitions, (i) consolidate with or merge into any other corporation or
entity, (ii) wind up, liquidate or dissolve, or (iii) agree to do any of the
foregoing.
(f) LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make or permit
to remain outstanding, or permit any Subsidiary to make or permit to remain
outstanding, any loan or advance to, or guarantee, induce or otherwise become
contingently liable, directly or indirectly (except as permitted by Section
6.2(d), in connection with the obligations, stock or dividends of, or own,
purchase or acquire any stock, obligations or securities of or any other
interest in, or make any capital contribution to, any other Person, except that
Borrower and its Subsidiaries may:
(i) own, purchase or acquire certificates of deposit
issued by Bank, BOA, or any other commercial bank having combined
assets in excess of $500,000,000 ("Qualified Banks"), repurchase
agreements entered into with Qualified Banks, commercial paper issued
by issuers rated Moody's P-1, corporate bonds issued by issuers rated
Moody's A or better, municipal bonds rated Xxxxx'x XX or better, direct
obligations of the United States of America or its agencies,
obligations guaranteed by the United States of America, or shares of
mutual funds or other investment funds that invest solely in one or
more of the foregoing;
(ii) continue to own the existing capital stock of
Borrower's Subsidiaries ;
(iii) endorse negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business;
(iv) allow Borrower's Subsidiaries to make or permit
to remain outstanding advances from Borrower's Subsidiaries to
Borrower;
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(v) make or permit to remain outstanding loans and
advances to any of its officers, employees, directors and shareholders
or enter into or permit to remain outstanding guarantees in connection
with the obligations of any of its officers, directors and
shareholders, in an aggregate amount for all such loans, advances and
guarantees not exceeding $1,000,000 outstanding at any one time;
(vi) continue to own those investments existing on
the date of this Agreement that are described on SCHEDULE 6.2(F)(VI);
(vii) make the Permitted Acquisitions; and
(viii) make additional investments in an aggregate
amount not to exceed $5,000,000.
(g) ASSET SALES. Convey, sell, lease, transfer or otherwise
dispose of, or permit any Subsidiary to convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
part of its or any of its Subsidiary's business, property or fixed assets
outside the ordinary course of business, whether now owned or hereafter
acquired.
(h) DIVIDENDS. Authorize, declare or pay any dividends.
(i) TRANSACTIONS WITH AFFILIATES. Neither Borrower nor any of
its Subsidiaries shall enter into any transaction for the purchase, sale or
exchange of property or the rendering of any service to or by any affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or its Subsidiary's business and upon fair and reasonable terms no
less favorable to Borrower or its Subsidiary than Borrower or its Subsidiary
would obtain in a comparable arm's length transaction with an unaffiliated
person.
(j) BOOKS AND RECORDS. Borrower will keep proper books of
record and account in which full, true and correct entries in conformity with
GAAP and all requirements of applicable law shall be made of all dealings and
transactions in relation to their businesses and activities.
(k) RESTRUCTURE. Make any change in the principal nature of
the Obligors' business operations (taken as a whole), or the date of Borrower's
fiscal year.
ARTICLE VII
EVENTS OF DEFAULT
SECTION VII.1 EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) Borrower shall fail to pay (i) any installment of
principal hereunder when due or declared due, or (ii) any installment of
interest or any other amount payable
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hereunder within five Business Days of the date when due or declared due; or
(b) Any representation or warranty made by Borrower herein or
by Borrower (or any of its officers) in connection with the Loan Documents shall
prove to have been incorrect in any material respect when made; or
(c)(i) Borrower shall fail or neglect to perform, keep, or
observe any covenant contained in Section 6.2 on the date that Borrower is
required to perform, keep, or observe such covenant; or (ii) Borrower shall fail
or neglect to perform, keep, or observe any covenant contained in this Agreement
(exclusive of a default covered by another subsection of this Section 7.1) on
the date that Borrower is required to perform, keep, or observe such covenant,
and the breach of such covenant is not cured to Lender's satisfaction within
thirty days of such breach; or
(d) Borrower or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in any Loan Document other
than this Agreement and such default shall not have been remedied or waived
within any applicable grace period; or
(e) (i) Borrower or any Guarantor shall (A) fail to pay any
principal of, or premium or interest on, any indebtedness, the aggregate
outstanding principal amount of which is at least $5,000,000 (excluding
indebtedness evidenced by the Note), when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such indebtedness, or (B) fail to perform or observe
any term, covenant or condition on its part to be performed or observed under
any agreement or instrument relating to any such indebtedness or material to the
performance, business, property, assets, condition (financing or otherwise) or
prospects of Borrower and any Guarantor taken as a whole, when required to be
performed or observed, and such failure shall continue after the applicable
grace period, if any, specified in such agreement or instrument; or
(f) (i) Borrower or any Guarantor shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or Borrower or any of
its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Borrower or any Guarantor
any case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unhanded for a period
of forty five days; or (iii) there shall be commenced against Borrower or any of
its Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of
-26-
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty days from the entry thereof; or (iv) Borrower or any
Guarantor shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i), (ii)
and (iii) above; or (v) Borrower or any Guarantor shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) One or more judgments or decrees shall be entered against
Borrower or any Guarantor involving in the aggregate a liability (not paid or
fully covered by insurance or reserves) equal to or greater than $5,000,000 and
all such judgments or decrees shall not have been vacated, discharged, or stayed
or bonded pending appeal within sixty days from the entry thereof; or
(h) Any guaranty, if any, for any reason other than
satisfaction in full of all obligations of Borrower under the Loan Documents,
ceases to be in full force and effect or is declared null and void, or any
guarantor denies that it has any further liability under such guaranty or gives
notice to such effect and any such cessation, declaration or denial shall not
have been rescinded, and such guarantee reaffirmed, to the satisfaction of Bank
within thirty days after Borrower knows of such development; or
(i) The occurrence of any one or more of the following events
with respect to Borrower or any ERISA Affiliate of Borrower provided such event
or events could reasonably be expected, in the judgment of Bank, to subject
Borrower or any ERISA Affiliate of Borrower to any tax, penalty or liability (or
any combination of the foregoing) which, in the aggregate, could have a material
adverse effect on the financial condition of Borrower or any Guarantor with
respect to a Plan: (A) a reportable event shall occur with respect to a Plan
which is, in the reasonable judgment of Bank, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, or (B) any Plan
termination (or commencement of proceedings to terminate a Plan) or the full or
partial withdrawal from a Plan by Borrower or any ERISA Affiliate of Borrower;
or
(j) There shall be instituted against Borrower or any
Guarantor, any proceeding for which forfeiture of any property is a potential
penalty and such proceeding remains undismissed, undischarged or unbonded for a
period of thirty days from the date Borrower knows of such proceeding; or
(k) A Change of Control shall have occurred; or
(l) Any governmental authority takes action that Bank
reasonably believes materially adversely affects the Obligors' financial
condition taken as a whole or ability to perform obligations under the Loan
Documents.
Then, (i) upon the occurrence of any Event of Default
described in clause (f) above, the Revolving Commitment immediately shall
terminate and all Revolving Loans hereunder with accrued interest thereon, and
all other amounts owing under the
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Loan Documents automatically shall become due and payable, and (ii) upon the
occurrence of any other Event of Default, Bank may, by notice to Borrower,
declare the Revolving Commitment to be terminated forthwith, whereupon the
Revolving Commitment shall immediately terminate; and, by notice to Borrower,
declare the Revolving Loans hereunder, with accrued interest thereon, and all
other amounts owing under the Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable. Bank shall have all
rights, powers and remedies available under each of the Loan Documents, or
accorded by law. All rights, powers and remedies of Bank in connection with each
of the Loan Documents may be exercised at any time by Bank and from time to time
after the occurrence of an Event of Default, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by law
or equity. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
Notwithstanding any other provision of this Agreement, including Section 8.2,
notices to Borrower under this Section shall be communicated in writing
(including facsimile transmissions).
ARTICLE VIII
MISCELLANEOUS
SECTION VIII.1 AMENDMENTS, ETC. No amendment or waiver of any provision
of the Loan Documents nor consent to any departure by Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by Bank
and Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION VIII.2 NOTICES, ETC. Except as otherwise set forth in this
Agreement, all notices and other communications provided for hereunder shall be
in writing (including facsimile communication) and mailed or sent by facsimile
or delivered, if to Borrower, at its address set forth on the signature page
hereof; and if to Bank, at its address set forth on the signature page hereof;
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party. All such notices and communications
shall be effective when sent by facsimile, or three days after such notice or
communication is deposited in the mails, except that notices and communications
to Bank pursuant to Article II or VII shall not be effective until received by
Bank.
SECTION VIII.3 NO WAIVER: REMEDIES. No failure on the part of either
party hereto to exercise, and no delay in exercising, any right under any of the
Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any of the Loan Documents preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or in equity. Nothing contained in this Agreement is, or shall in the future be
deemed to constitute, a waiver of any right, remedy, power, or protection
available to Bank in any law (including without limitation the common law), or
in equity, now or in the future, whether or not such right, remedy, power, or
protection is express
-28-
herein.
SECTION VIII.4 COSTS AND EXPENSES. Borrower shall pay to Bank
immediately upon demand the full amount of all reasonable costs and expenses,
including reasonable attorneys fees (to include outside counsel fees and all
allocated costs of Bank's in-house counsel), incurred by Bank in connection with
(a) the negotiation and preparation of this Agreement and each other of the Loan
Documents, and the preparation of any amendments and waivers hereto and thereto,
(b) the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents (including, without
limitation, in appellate, bankruptcy, insolvency, liquidation, reorganization,
moratorium or other similar proceedings) or the restructuring of the Loan
Documents, and (c) the prosecution or defense of any action in any way related
to any of the Loan Documents, including, without limitation, any action for
declaratory relief.
SECTION VIII.5 PARTICIPATIONS. Bank may sell, assign, transfer,
negotiate or grant participations to other financial institutions in all or part
of the obligations of Borrower outstanding under the Loan Documents, provided
that any such sale, assignment, transfer, negotiation or participation shall be
in compliance with the applicable federal and state securities laws and shall
not increase the liability of Borrower hereunder; and provided further that any
assignee or transferee agrees to be bound by the terms and conditions of this
Agreement. Bank may, in connection with any actual or proposed assignment or
participation, disclose to the actual or proposed assignee or participant, any
information relating to Borrower or any of its Subsidiaries.
SECTION VIII.6 EFFECTIVENESS; BINDING EFFECT. This Agreement shall
become effective when it shall have been executed and delivered by Borrower and
Bank and thereafter shall be binding upon and inure to the benefit of Borrower,
Bank and their respective successors and assigns, except that Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of Bank.
SECTION VIII.7 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY
TRIAL WAIVER
(a) The validity, interpretation and enforcement of this
Agreement and the other Loan Documents and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the laws of the State of California.
(b) Borrower and Bank irrevocably consent and submit to the
non-exclusive jurisdiction of the state courts of the County of Los Angeles and
the United States District Court for the Central District of California and
waive any objection based on venue or FORUM NON CONVENIENS with respect to any
action instituted therein arising under this Agreement or any of the other Loan
Documents or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Loan
Documents or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
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otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above.
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five days after the same shall have been so deposited in the U.S. mails, or, at
Bank's option, by service upon Borrower in any other manner provided under the
rules of any such courts. Within thirty days after such service, Borrower shall
appear in answer to such process, failing which Borrower shall be deemed in
default and judgment may be entered by Bank against Borrower for the amount of
the claim and other relief requested.
(d) BORROWER AND BANK EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR (2) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER AND BANK EACH HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR BANK MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Bank shall not have any liability to Borrower (whether in
tort, contract, equity or otherwise) for losses suffered by Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Bank, that the losses were the
result of acts or omissions constituting gross negligence or willful misconduct.
In any such litigation, Bank shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement.
SECTION VIII.8 WAIVER OF NOTICES. Borrower hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the obligations, and any and all other demands and notices of
any kind or nature whatsoever with respect to the obligations and this
Agreement, except such as are expressly provided for herein. No notice to or
demand on Borrower which Bank may elect to give shall entitle Borrower to any
other or further notice or demand in the same, similar or other circumstances.
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SECTION VIII.9 ENTIRE AGREEMENT. This Agreement with Exhibits and
Schedules and the other Loan Documents embody the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
SECTION VIII.10. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION VIII.11. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MELLON BANK, X.X. XXXXXX PHARMACEUTICALS, INC.
By:__________________________ By:________________________________________
Name: Xxxxx X. Xxxxx Name: Xxxxx Xxxx, Ph.D.
Title: Vice President Title: Chief Executive Officer and
Chairman
Address: Address:
Western Region 000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxx 00000
000 Xxxxx Xxxx Xxxxxx Attention: Xxxxx Xxxx, Ph.D.
Xxx Xxxxxxx, Xxxxxxxxxx 00000 Chief Executive Officer and
Attention: Xxxxx X. Xxxxx Chairman
Vice President
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