LOAN AGREEMENT
Dated as of December 30, 1998
DEL LABORATORIES, INC., a Delaware corporation, having its principal place
of business at 000 XXX Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Borrower"), DEL
PHARMACEUTICALS, INC., a Delaware corporation, having its principal place of
business at 000 XXX Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("DPI" or, a "Guarantor")
and THE CHASE MANHATTAN BANK, a New York banking corporation, having an office
at 000 Xxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000 (the "Bank")
hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted LIBOR Rate" means, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded, if not already a whole
multiple of 1/16th of one (.01%) percent to the nearest 1/16th of one (.01%)
percent) equal to the product of (a) the LIBOR Rate and (b) Statutory Reserves.
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"Affiliate" means, as to any Person (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
twenty (20%) percent or more of any class of voting stock of, or twenty (20%)
percent or more of the equity interest in, such Person; or (iii) a Person twenty
(20%) percent or more of the voting stock of which, or twenty (20%) or more of
the equity interest of which, is directly or indirectly beneficially owned or
held by such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agreement" means this Loan Agreement, as amended, supplemented or
modified from time to time.
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"Alternate Base Rate" means, for any day, the higher of (a) the Prime Rate
(computed on the basis of the actual number of days elapsed over a year of 360
days) in effect on such day or (b) the Federal Funds Effective Rate in effect on
such day plus one-half of one (1/2%) percent (computed on the basis of the
actual number of days elapsed over a year of 360 days). For purposes of this
Agreement any change in the Alternate Base Rate due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively. If for any reason the Bank shall have reasonably determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including, without
limitation, the inability or failure of the Bank to obtain sufficient bids or
publications in accordance with the terms thereof, the Alternate Base Rate shall
be determined without regard to clause (b) of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist.
"Alternate Base Rate Loan" means a Loan bearing interest at the Alternate
Base Rate in accordance with the provisions of Article II hereof.
"Applicable Margin" means the amount of basis points to be added to the
Adjusted LIBOR Rate as provided in Section 2.04 of
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this Agreement and as determined pursuant to Section 2.05 of this Agreement.
"Board of Governors" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City, provided that, if the relevant day relates
to a Eurodollar Loan, a Eurodollar Interest Period, or notice with respect to a
Eurodollar Loan, the term "Business Day" shall mean a day on which dealings in
dollar deposits are also carried on in the London interbank market and banks are
open for business in London.
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"Capital Expenditures" means as to any Person, the aggregate amount of any
expenditures (including purchase money debt and purchase money liens) by such
Person for assets (including fixed assets acquired under Capital Leases) which
it is contemplated will be used or usable in fiscal years subsequent to the year
of acquisition and that are required to be capitalized in accordance with GAAP.
"Capital Lease" means a lease which has been, or should be, in accordance
with GAAP, capitalized on the books of the lessee.
"Commitment" means the Bank's obligation to make Revolving Credit Loans to
the Borrower pursuant to the terms and subject to the conditions of this
Agreement.
"Consolidated Capital Expenditures" means, as to any Person, the aggregate
amount of the Capital Expenditures by such Person and its Consolidated
Subsidiaries, computed and consolidated in accordance with GAAP.
"Consolidated EBITDA" means, as to any Person, for any period, the EBITDA
of such Person and its Consolidated Subsidiaries, computed and consolidated in
accordance with GAAP.
"Consolidated Funded Debt" means, as to any Person, at any date, any Debt
of such Person and its Consolidated Subsidiaries which is (i) indebtedness or
liability for borrowed money having an original maturity of one (1) year or more
(including the current portion thereof) or which is extendable at the option of
the
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obligor to a date more than one year from the date of such extension, including,
in any event, all of the outstanding
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Revolving Credit Loans; (ii) indebtedness or liability for borrowed money under
lines of credit extended to such Person or any of its Consolidated Subsidiaries;
(iii) the deferred purchase price of property (excluding trade obligations);
(iv) obligations as a lessee under Capital Leases; (v) obligations to reimburse
a letter of credit issuer for draws under letters of credit; and (vi) all
liabilities under any preferred stock which, at the option of the holder or upon
the occurrence of one or more certain events, is redeemable by such holder, or
which, at the option of such holder is convertible into Debt.
"Consolidated Funded Debt (Applicable Margin)" means, as to any Person, at
any date, any Debt of such Person and its Consolidated Subsidiaries which is (i)
indebtedness or liability for borrowed money having an original maturity of one
(1) year or more (including the current portion thereof) or which is extendable
at the option of the obligor to a date more than one year from the date of such
extension, including, in any event, all of the outstanding Revolving Credit
Loans; (ii) indebtedness or liability for borrowed money under lines of credit
extended to such Person or any of its Consolidated Subsidiaries; (iii) the
deferred purchase price of property (excluding trade obligations); and (iv)
obligations as a lessee under Capital Leases.
"Consolidated Fixed Charge Ratio" means, as to the Borrower and its
Consolidated Subsidiaries, the ratio of (i) the sum of net
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income plus interest expense plus income tax expense for the period measured
plus depreciation expense plus amortization of intangible assets minus
Consolidated Unfunded Capital Expenditures minus Permitted Dividends paid in
cash during such period minus Permitted Stock Repurchases to (ii) the sum of the
current portion of
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Consolidated Funded Debt (excluding the principal amount of Revolving Credit
Loans and excluding Debt described in clauses (ii), (v) and (vi) of the
definition of "Consolidated Funded Debt") plus twenty (20%) percent of the
outstanding principal amount of Revolving Credit Loans plus interest expense.
The Consolidated Fixed Charge Coverage Ratio shall be tested quarterly, measured
for the four (4) fiscal quarters then ended, except for the current portion of
Consolidated Funded Debt, which shall be measured for the next succeeding four
(4) fiscal quarters.
"Consolidated Interest Coverage Ratio" means, as to any Person, for any
period, the ratio of (i) Consolidated EBITDA minus Consolidated Capital
Expenditures to (ii) consolidated interest expense.
"Consolidated Leverage Ratio" means, as to the Borrower and its
Consolidated Subsidiaries, the ratio of (i) Consolidated Total Unsubordinated
Liabilities to (ii) Consolidated Tangible Net Worth plus Consolidated
Subordinated Debt.
"Consolidated Subordinated Debt" means, as to any Person, all of the
Subordinated Debt of such Person and its Consolidated Subsidiaries, computed and
consolidated in accordance with GAAP.
"Consolidated Subsidiaries" means, as to any Person, those Subsidiaries of
such Person which are consolidated with such Person in the financial statements
delivered pursuant to Section 5.01(b).
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"Consolidated Tangible Net Worth" means, as to any Person, the excess of
(i) such Person's Consolidated Total Assets, less all intangible assets properly
classified as such in accordance with GAAP, including, but without limitation,
patents, patent rights, trademarks, trade names, franchises, copyrights,
licenses, permits and goodwill, over (ii) such Person's Consolidated Total
Liabilities.
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"Consolidated Total Assets" means, as to any Person, at any date, the
aggregate net book value of the assets of such Person and its Consolidated
Subsidiaries at such date, after all appropriate adjustments in accordance with
GAAP (including without limitation, reserves for doubtful receivables,
obsolescence, depreciation and amortization and excluding the amount of any
write-up or revaluation of any asset, other than those permitted under standard
cost accounting procedures), computed and consolidated in accordance with GAAP.
"Consolidated Total Liabilities" means, as to any Person, at any date, all
of the liabilities of such Person and its Consolidated Subsidiaries at such
date, including all items which, in accordance with GAAP would be included on
the liability side of the balance sheet (other than capital stock, treasury
stock, capital surplus and retained earnings) computed and consolidated in
accordance with GAAP.
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"Consolidated Total Unsubordinated Liabilities" means, as to any Person,
the excess of (i) such Person's Consolidated Total Liabilities over (ii) such
Person's Consolidated Subordinated Debt.
"Consolidated Unfunded Capital Expenditures" means, as to any Person, the
aggregate amount of the Unfunded Capital Expenditures by such Person and its
Consolidated Subsidiaries, computed and consolidated in accordance with GAAP.
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"Debt" means, as to any Person, all (i) indebtedness or liability of such
Person for borrowed money; (ii) indebtedness of such Person for the deferred
purchase price of property or services (including trade obligations); (iii)
obligations of such Person as a lessee under Capital Leases; (iv) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (v) obligations of such Person under letters of credit issued for the
account of such Person; (vi) obligations of such Person arising under acceptance
facilities; (vii) guaranties, endorsements (other than for collection or deposit
in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any other
Person, or otherwise to assure a creditor against loss; (viii) obligations
secured by any Lien on property owned by such Person whether or not the
obligations have been assumed; (ix) liabilities of such Person under any
preferred stock or other preferred equity instrument which, at the option of the
holder or upon the occurrence of one or more events, is redeemable by such
holder, or which, at the option of such holder is convertible into Debt; and (x)
all other liabilities recorded as such, or which should be recorded as such, on
such Person's financial statements in accordance with GAAP.
"Debt to EBITDA Ratio" means, as to the Borrower and its Consolidated
Subsidiaries for any period, the ratio of (i) Consolidated Funded Debt (as of
the last day of such period) to (ii) Consolidated EBITDA for such period. The
Debt to EBITDA Ratio
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shall be measured and tested at the end of each fiscal quarter and, in the case
of Consolidated EBITDA, for a period covering the four (4) fiscal quarters then
ended.
"Debt to EBITDA Ratio (Applicable Margin)" means, as to the Borrower and
its Consolidated Subsidiaries for any period, the ratio of (i) Consolidated
Funded Debt (Applicable Margin) (as of the last day of such period) to (ii)
Consolidated EBITDA for such period. The Debt to EBITDA Ratio
(Applicable Margin) shall be measured and tested at the end of each fiscal
quarter and, in the case of Consolidated EBITDA, for a period covering the four
(4) fiscal quarters then ended.
"Default" means any of the events specified in Section 6.01 of this
Agreement, whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
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"EBITDA" means, as to any Person, for any period, the sum of (i) net
income plus (ii) interest expense plus (iii) income tax expense plus (iv)
depreciation expense plus (v) amortization of intangible assets, all measured
and/or calculated for the four (4) fiscal quarters then ended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with any other Person would be treated, with such
Person, as a single employer under Section 4001 of ERISA.
"Eurodollar Loan" means a Loan bearing interest at a rate based on the
Adjusted LIBOR Rate in accordance with the provisions of Article II hereof.
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
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"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Bank from three (3) federal funds brokers
of recognized standing selected by it.
"Foreign Subsidiaries" means, with respect to the Borrower, those
Subsidiaries of the Borrower which are incorporated, formed or organized outside
of the United States.
"GAAP" means Generally Accepted Accounting Principles.
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"Generally Accepted Accounting Principles" means those generally accepted
accounting principles and practices which are recognized as such by the American
Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting principle or practice required to be changed by the
FASB (or other appropriate board or committee of the FASB) in order to continue
as a generally accepted accounting principle or practice may be so changed. Any
dispute or disagreement between the Borrower and the Bank relating to the
determination of Generally Accepted Accounting Principles shall, in the absence
of manifest error, be conclusively resolved for all purposes hereof by the
written opinion with respect thereto, delivered to the Bank, of the independent
accountants selected by the Borrower and reasonably satisfactory to the Bank for
the purpose of auditing the periodic financial statements of the Borrower.
"Guaranteeing Foreign Subsidiaries" means those Foreign Subsidiaries of
the Borrower required to become a Guarantor pursuant to Section 5.01(k) of this
Agreement.
"Guarantor" or Guarantors" means DPI, and any other Person required to
guarantee the obligations of the Borrower in accordance with Section 5.01(k) of
this Agreement.
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"Guaranty" or "Guaranties" means the guaranty or guaranties executed and
delivered by one or more Guarantors pursuant to Section 3.01(h) or Section 5.01
(k) of this Agreement.
"Hazardous Materials" includes, without limitation, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Sections 6901 et. seq.), and in the regulations
adopted and publications promulgated pursuant thereto, or any other federal,
state or local environmental law, ordinance, rule or regulation.
"Interest Determination Date" means the date on which an Alternate Base
Rate Loan is converted to a Eurodollar Loan and, in the case of a Eurodollar
Loan, the last day of the applicable Interest Period.
"Interest Payment Date" means (i) as to each Eurodollar Loan, the last
Business Day of each calendar quarter during the applicable Interest Period and
the last day of each Interest Period and (
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ii) as to each Alternate Base Rate Loan, the last Business Day of each
calendar quarter.
"Interest Period" means the period commencing on the date of any
Eurodollar Loan and ending on the numerically corresponding day in the calendar
month that is one, two, three, six or twelve months thereafter (subject to
availability), as the Borrower may elect (or, if there is no numerically
corresponding day, on the last Business Day of such month); provided, however,
(i) no Interest Period shall end later than the Maturity Date, (ii) if any
Interest Period would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
(iii) interest shall accrue from and including the first day of such Interest
Period to but excluding the date of payment of such interest pursuant to Section
2.04 and (iv) no Interest Period of particular duration may be selected by the
Borrower if the Bank determines, in its sole discretion, that Eurodollar Loans
with such maturities are not generally available.
"Investment" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in accordance with
customary trade terms in the ordinary course of business) and any
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purchase of (i) any security of another Person or (ii) any business or
undertaking of any Person or any commitment or option to make any such purchase,
or any other investment.
"LIBOR Rate" means the rate (rounded upwards, if not already a whole
multiple of 1/16th of one (1%) percent, to the next higher of 1/16th of one (1%)
percent) at which dollar deposits approximately equal in principal amount to the
requested Eurodollar Loan and for a maturity equal to the requested Interest
Period are offered in immediately available funds to the London office of the
Bank by leading banks in the London interbank market for Eurodollars at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period.
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"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"Loan" or Loans" means the Revolving Credit Loans or any or all of the
same as the context may require and includes Alternate Base Rate Loans and
Eurodollar Loans, as the context may require.
"Loan Documents" means this Agreement, the Note, the Guaranty and any
other document executed or delivered pursuant to this Agreement.
"Material Adverse Change" means, as to the Borrower alone, DPI alone, or
the Borrower and its Consolidated Subsidiaries taken as a whole, (i) a material
adverse change in the financial condition, business, operations, properties,
prospects or results of operations of the Borrower alone, DPI alone, or the
Borrower and its Consolidated Subsidiaries taken as a whole (provided that the
elimination of the inter-company payable between the Borrower and the Guarantor
shall not, by virtue of such elimination alone, be deemed a Material Adverse
Change in either the Borrower or the
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Guarantor) or (ii) any event or occurrence which could have a material adverse
effect on the ability of the Borrower alone, DPI alone, or the Borrower and its
Consolidated Subsidiaries taken as a whole to perform its or their obligations
under the Loan Documents.
"Maturity Date" means December 30, 2002.
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"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of ERISA
which covers employees of the Borrower or any ERISA Affiliate.
"Note" means the Revolving Credit Note.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means an acquisition of the stock or assets of
another Person (an "Acquisition") which meets the following criteria: (i) either
the Borrower, the Guarantor or a Subsidiary of the Borrower or the Guarantor is
the acquiror and the surviving entity, (ii) the proposed acquiree is in the same
general line of business as the Borrower, the Guarantor or such Subsidiary (or
the assets to be acquired are utilized in the same general line of business as
the Borrower, the Guarantor or such Subsidiary, including cosmetics, health and
beauty aids and over-the-counter pharmaceuticals), (iii) the Acquisition is to
be non-hostile in nature, (iv) prior to and immediately following the
Acquisition, there shall not have occurred a Default or an Event of Default,
including, without limitation, any breach of Section 5.02(r) of the Agreement
(v) all material third party consents and approvals necessary in connection with
the Acquisition shall have been obtained and copies of which shall have been
delivered to the Bank, (vi) evidence that such stock or assets are to be
purchased free and clear of any liens or encumbrances other than any liens or
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encumbrances permitted under this Agreement and, in the case of stock, free of
any restrictions other than those under federal and state securities laws; (vii)
if the proposed acquiree becomes a Subsidiary of either the Borrower or the
Guarantor (x) the Bank and its counsel shall be reasonably satisfied with all
issues relating to the validity and adequacy of consideration for such
Subsidiary to guaranty the obligations of the Borrower and (y) such Subsidiary
shall immediately execute and deliver its Guaranty of the Borrower's obligations
to the Bank in form and substances reasonably satisfactory to the Bank and its
counsel, (viii) evidence that the proposed acquiree is in compliance in all
material respects with all environmental, federal, state and local laws, rules
and regulations with respect to all real estate which is to be acquired by the
acquiror and (ix) the aggregate consideration to be paid by the acquiror
(including without limitation, cash, stock, transaction costs, guarantees and
other contingent obligations, assumed liabilities, compensation to be paid to
former shareholders of the acquiree pursuant to any employment agreements,
consulting agreements or non-compete agreements, fees, earn-out provisions, any
deferred portions of the purchase price or any other costs paid in connection
with the Acquisition, collectively, the "Consideration") does not exceed the
limits set forth in Section 5.02 (d) of this Agreement.
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In addition to all Permitted Acquisitions meeting the above criteria, the
Bank shall have received not less than ten (10) days prior to the closing of
said Permitted Acquisition, for its satisfactory review and approval, the
following: (i) draft and final copies of all documentation, including but not
limited to, purchase agreements, shareholder agreements, employment or
consulting agreements, non-compete agreements, related to the Permitted
Acquisition as may be reasonably required by the Bank (provided that if the
draft copies of such documentation are received at least ten (10) days prior to
the closing of the Permitted Acquisition, the final copies of such document
shall be submitted prior to such closing); (ii) financial statements of the
proposed acquiree for the prior three (3) fiscal years, if such financial
statements are available to the Borrower, the Guarantor or the Subsidiary making
such Permitted Acquisition; (iii) a pro-forma consolidated and consolidating
balance sheet (including contingent obligations) and income statement of the
Borrower and its Consolidated Subsidiaries (including the proposed acquiree)
which includes the effect of the Permitted Acquisition; (iv) a certificate of
notice, executed and delivered by the Borrower's chief financial officer, which
(a) confirms compliance in all respects with all of the terms and conditions set
forth in this definition of "Permitted Acquisitions", (b) includes the purchase
price and the types and amounts of other Consideration to be paid or incurred in
connection with the Permitted Acquisition and (c)
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calculates and demonstrates that based upon the most recent fiscal quarter
results of the Borrower and its Consolidated Subsidiaries, and after taking into
account on a pro forma basis the proposed Permitted Acquisition, the Borrower
shall remain in compliance with all of the covenants set forth in Article V of
this Agreement including, but without limitation, Section 5.03; evidence,
satisfactory to the Bank that all assets and/or stock acquired in connection
with the Permitted Acquisition have been acquired free and clear of all liens
and encumbrances and free and clear of any restrictions on transfer (other than
liens or encumbrances permitted under Section 5.02(a) of this Agreement; and (v)
(a) evidence that the Acquisition shall not double the Consolidated Total
Liabilities (including non-perpetual preferred stock) and shall not result in a
leverage ratio as measured by Consolidated Total Liabilities (including
preferred stock described in clause (ix) of the definition of "Debt") to
Consolidated Total Assets ( the "Leverage Ratio") higher than 50%; or (b)
evidence that the Acquisition shall not result in a Leverage Ratio higher than
75% and shall not cause 25% or more of the Consolidated Total Liabilities
(including preferred stock described in clause (ix) of the definition of "Debt")
after the Acquisition to be derived from past or present buyouts, acquisitions
or recapitalizations; and (vii) such other information, documentation,
information (financial or otherwise) or certificates as the Bank shall
reasonably request, all in form and substance reasonably satisfactory to the
Bank.
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"Permitted Dividends" means, with respect to the Borrower, the payment of
(i) any dividend payable in stock of the Borrower or (ii) cash dividends which,
in any fiscal year of the Borrower, do not exceed, in the aggregate, fifteen
(15%) percent of the Borrower's consolidated net income for such fiscal year.
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"Permitted Investments" means, (i) direct obligations of the United States
of America or any governmental agency thereof, or obligations guaranteed by the
United States of America, provided that such obligations mature within one year
from the date of acquisition thereof; (ii) time certificates of deposit having a
maturity of one year or less issued by any commercial bank organized and
existing under the laws of the United States or any state thereof and having
aggregate capital and surplus in excess of $500,000,000.00; (iii) money market
mutual funds having assets in excess of $2,500,000,000; (iv) commercial paper
rated not less than P-1 or A-1 or their equivalent by Xxxxx'x Investor Services,
Inc. or Standard & Poor's Corporation, respectively; (v) tax exempt securities
rated Prime 2 or better by Xxxxx'x Investor Services, Inc. or A-1 or better by
Standard & Poor's Corporation; (vi) loans or advances between the Borrower and a
Guarantor; (vii) deposits in, and other investments made available by, European
American Bank or The Merchants Bank of New York; (viii) investments in, or loans
or advances to, wholly owned domestic Subsidiaries, provided that any such
investment, loan or advance made after the date of this Agreement shall be made
only in a domestic Subsidiary which is a Guarantor; (ix) investments in, or
loans or advances to, Foreign Subsidiaries, provided any such single investment
(valued at cost), loan or advance shall not exceed $10,000,000.00 and all such
investments (valued at cost), loans and advances shall not exceed
$12,500,000.00; and (x) loans or advances to employees of
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the Borrower or a Guarantor which do not exceed $2,000,000.00 in the aggregate
at any time.
"Permitted Stock Repurchases" means, with respect to the Borrower, (i) the
repurchase, in open market transactions, and from sellers which are not
Affiliates of the Borrower, of the common stock of the Borrower, (ii) the
repurchase of common stock of the Borrower from employees, officers or directors
of the Borrower and (iii) the repurchase of common stock of the Borrower from
participants in the Del Laboratories, Inc. Employee Stock Ownership Trust (the
"ESOT") and from the ESOT, and from participants in the 1984 Stock Option Plan
or the 1994 Stock Plan.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity or a federal, state or
local government, or a political subdivision thereof or any agency of such
government or subdivision.
"Plan" means any employee benefit plan established, maintained, or to
which contributions have been made by the Borrower or any ERISA Affiliate.
"Prime Rate" means the rate per annum announced by the Bank from time to
time as its prime rate in effect at its principal office on a 360-day basis;
each change in the Prime Rate shall be effective on the date such change is
announced to become effective.
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"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from time
to time.
"Regulation D" means Regulation D of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation G" means Regulation G of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation T" means Regulation T of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors, as the same
may be amended and in effect from time to time.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Revolving Credit Loans" shall have the meaning assigned to such term in
Section 2.01 of this Agreement.
"Revolving Credit Note" means a promissory note of the Borrower payable to
the order of the Bank, in substantially the form of Exhibit A annexed hereto,
evidencing the aggregate indebtedness of the Borrower to the Bank resulting from
Revolving Credit Loans made by the Bank to the Borrower pursuant to this
Agreement.
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"Senior Notes" means those promissory notes, executed and delivered by the
Borrower and evidencing the loans made to the Borrower, in the original
principal amount of $40,000,000.00, pursuant to a loan agreement dated as of May
26, 1993, as amended through the date of this Agreement as the same or as such
loan agreement may be further amended, modified or extended from time to time.
"Statutory Reserves" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency, or supplemental reserves)
expressed as a decimal established by the Board of Governors or any other
banking authority to which the Bank is subject with respect to the Adjusted
LIBOR Rate for Eurocurrency Liabilities (as defined in Regulation D). Such
reserve percentages shall include, without limitation, those imposed under such
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or offsets
which may be available from time to time to the Bank under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
- 31 -
"Subordinated Debt" means Debt of any Person, the repayment of which the
obligee has agreed in writing, on terms which have been approved by the Bank in
advance in writing, shall be subordinate and junior to the rights of the Bank
with respect to Debt owing from such Person to the Bank.
"Subsidiary" means, as to any Person, any corporation, partnership or
joint venture whether now existing or hereafter organized or acquired (i) in the
case of a corporation, of which a majority of the securities having ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) are at the time owned by
such Person and/or one or more Subsidiaries of such Person or (ii) in the case
of a partnership or joint venture, of which a majority of the partnership or
other ownership interests are at the time owned by such Person and/or one or
more Subsidiaries of such Person.
"Unfunded Capital Expenditures" means Capital Expenditures financed other
than by the incurrence of Debt.
"Year 2000 Issue" means the risk of failure of computer software, hardware
and firmware systems and equipment containing embedded computer chips to
properly receive, transmit, process, manipulate, store, retrieve, re-transmit or
in any other way utilize data and information due to the occurrence of the year
2000 or the inclusion of dates on or after January 1, 2000.
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SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
SECTION 1.03. Accounting Terms. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under GAAP.
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ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. The Revolving Credit Loans. (a) The Bank agrees, on the date
of this Agreement, on the terms and conditions of this Agreement and in reliance
upon the representations and warranties set forth in this Agreement, to lend to
the Borrower prior to the Maturity Date such amounts as the Borrower may request
from time to time (individually, a "Revolving Credit Loan" or collectively, the
"Revolving Credit Loans"), which amounts may be borrowed, repaid and reborrowed,
provided, however, that the aggregate amount of such Revolving Credit Loans
outstanding at any one time shall not exceed TWENTY MILLION ($20,000,000.00)
DOLLARS (the "Commitment"), or such lesser amount of the Commitment as may be
reduced pursuant to Section 2.08 hereof. On the date of this Agreement, all
loans outstanding under the line of credit made available by the Bank to the
Borrower which bear interest at a rate based on the Adjusted Libor Rate shall be
deemed to be Revolving Credit Loans made under this Agreement.
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(b) Each Revolving Credit Loan shall be an Alternate Base Rate Loan or a
Eurodollar Loan (or a combination thereof) as the Borrower may request subject
to and in accordance with Section 2.02. The Bank may at its option make any
Eurodollar Loan by causing a foreign branch or affiliate to make such Loan,
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of the Revolving Credit
Note. Subject to the other provisions of this Agreement, Revolving Credit Loans
of more than one type may be outstanding at the same time, provided not more
than seven (7) Eurodollar Loans may be outstanding at the same time.
SECTION 2.02. Revolving Credit Loans; Notice, Continuation and Conversion.
(a) Each Revolving Credit Loan shall be (i) in the case of each Alternate
Base Rate Loan in the minimum principal amount of $250,000.00 and (ii) in the
case of each Eurodollar Loan in the minimum principal amount of $500,000.00 and
in increased integral multiples of $100,000.00 (except that, if any such
Alternate Base Rate Loan so requested shall exhaust the remaining available
Commitment, such Alternate Base Rate Loan may be in an amount equal to the
amount of the remaining available Commitment).
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(b) The Borrower shall give the Bank irrevocable written, telex, telephonic
(immediately confirmed in writing) or facsimile notice (i) at least three (3)
Business Days prior to each Revolving Credit Loan comprised in whole or in part
of one or more Eurodollar Loans (subject to availability, including, without
limitation, the conditions set forth in (c) below) or (ii) prior to 11:00 a.m.
on the day of each Revolving Credit Loan consisting solely of an Alternate Base
Rate Loan. Such notice shall specify the date of such borrowing, the amount
thereof and whether such Loan is to be (or what portion or portions thereof are
to be) an Alternate Base Rate Loan or a Eurodollar Loan and, if such Loan or any
portion thereof is to consist of one or more Eurodollar Loans, the principal
amounts thereof and Interest Period or Interest Periods with respect thereto. If
no election as to the Interest Period is specified in such notice with respect
to any Eurodollar Loan, the Borrower shall be deemed to have selected an
Interest Period of one month's duration and if a Eurodollar Loan is requested
when such Loans are not available, the Borrower shall be deemed to have
requested an Alternate Base Rate Loan.
(c) The Borrower shall have the right, on such notice to the Bank as is
required pursuant to (b) above, (i) to continue any Eurodollar Loan or a portion
thereof into a subsequent Interest Period (subject to availability) or (ii) to
convert an Alternate Base Rate Loan into a Eurodollar Loan (subject to
availability) subject to the following:
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(1) if an Event of Default shall have occurred and be continuing at
the time of any proposed conversion or continuation only Alternate Base Rate
Loans shall be available;
(2) in the case of a continuation or conversion of fewer than all
Loans, the aggregate principal amount of each Eurodollar Loan continued or into
which a Loan is converted shall be in the minimum principal amount of
$500,000.00 and in increased integral multiples of $100,000.00;
(3) each continuation or conversion of a Eurodollar Loan shall be
effected by the new Loan replacing the Loan (or portion thereof) being continued
or converted;
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(4) if the new Loan made as a result of a continuation or conversion
shall be a Eurodollar Loan, the first Interest Period with respect thereto shall
commence on the date of continuation or conversion;
(5) each request for a Eurodollar Loan which shall fail to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month and each request for a Eurodollar Loan made when such Loans
are not available shall be deemed to be a request for an Alternate Base Rate
Loan; and
(6) in the event that the Borrower shall not give notice to continue
a Eurodollar Loan as provided above, such Loan shall automatically be converted
into an Alternate Base Rate Loan at the expiration of the then current Interest
Period.
SECTION 2.03. Revolving Credit Note. Each Revolving Credit Loan shall be
evidenced by the Revolving Credit Note of the Borrower. The Revolving Credit
Note shall be dated the date hereof and be in the principal amount of
$20,000,000.00, and shall mature on the Maturity Date, at which time the entire
outstanding principal balance and all interest thereon shall be due and payable
and the Commitment shall be terminated. The Revolving Credit Note shall be
entitled to the benefits and subject to the provisions of this Agreement.
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At the time of the making of each Revolving Credit Loan and at the time of
each payment of principal thereon, the holder of the Revolving Credit Note is
hereby authorized by the Borrower to make a notation on the schedule annexed to
the Revolving Credit Note of the date and amount, and the type and Interest
Period of the Revolving Credit Loan or payment, as the case may be. Failure to
make a notation with respect to any Revolving Credit Loan shall not limit or
otherwise affect the obligation of the Borrower hereunder or under the Revolving
Credit Note with respect to such Revolving Credit Loan, and any payment of
principal on the Revolving Credit Note by the Borrower shall not be affected by
the failure to make a notation thereof on said schedule.
SECTION 2.04. Payment of Interest on the Revolving Credit Note.
(a) In the case of an Alternate Base Rate Loan, interest shall be payable
at a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the Alternate Base Rate. Such interest shall
be payable on each Interest Payment Date, commencing with the first Interest
Payment Date after the date of such Alternate Base Rate Loan, on each Interest
Determination Date and on the Maturity Date. Any change in the rate of interest
on the Revolving Credit Note due to a change in the Alternate Base Rate shall
take effect as of the date of such change in the Alternate Base Rate.
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(b) In the case of a Eurodollar Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the Adjusted LIBOR Rate plus the Applicable Margin.
Such interest shall be payable on each Interest Payment Date, commencing with
the first Interest Payment Date after the date of such Eurodollar Loan, on each
Interest Determination Date and on the Maturity Date. In the event Eurodollar
Loans are available, the Bank shall determine the rate of interest applicable to
each requested Eurodollar Loan for each Interest Period at 11:00 a.m., New York
City time, or as soon as practicable thereafter, two (2) Business Days prior to
the commencement of such Interest Period and shall notify the Borrower of the
rate of interest so determined. Such determination shall be conclusive absent
manifest error.
SECTION 2.05. Applicable Margin The Applicable Margin for Revolving Credit
Loans shall be determined on the basis of the Borrower's Debt to EBITDA Ratio
(Applicable Margin), as calculated based on the Borrower's consolidated
financial statements for its most recent fiscal year or quarter. The Bank shall
determine the Applicable Margin within five (5) Business Days after it has
received the financial statements of the Borrower as required by Section
5.01(b)(i) or (ii), as applicable. The Bank shall promptly notify the Borrower
of such determination, which shall be conclusive, in the absence of manifest
error. The Applicable Margin shall be determined as follows:
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(i) The initial Applicable Margin shall be 85 basis points and shall be
applicable until five (5) Business Days after delivery of the Borrower's
consolidated financial statements for its fiscal year ending December 31, 1998
pursuant to Section 5.01(b) hereof.
Beginning five (5) Business Days after delivery of the Borrower's
consolidated financial statements for the fiscal year ending December 31, 1998,
and for each fiscal year or quarter thereafter:
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(ii) If the Borrower's Debt to EBITDA Ratio (Applicable Margin) as of the
end of such fiscal year or quarter is equal to or less than 1.50 to 1.00, the
Applicable Margin shall be 70 basis points.
(iii) If the Borrower's Debt to EBITDA Ratio (Applicable Margin) as of the
end of such fiscal year or quarter is greater than 1.50 to 1.00 but equal to or
less than 2.00 to 1.00, the Applicable Margin shall be 85 basis points.
(iv) If the Borrower's Debt to EBITDA Ratio (Applicable Margin) as of the
end of such fiscal year or quarter is greater than 2.00 to 1.00, but equal to or
less than 2.25 to 1.00, the Applicable Margin shall be 100 basis points.
(v) If the Borrower's Debt to EBITDA Ratio (Applicable Margin) as of the
end of such fiscal year or quarter is greater than 2.25 to 1.00, but equal to or
less than 2.50 to 1.00, the Applicable Margin shall be 125 basis points.
(vi) If the Borrower's Debt to EBITDA Ratio (Applicable Margin) as of the
end of such fiscal year or quarter is greater than 2.50 to 1.00, the Applicable
Margin shall be 150 basis points.
The Applicable Margin for any Eurodollar Loan shall change during the term
of such Eurodollar Loan as a result of this Section 2.05.
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In the event that the Borrower fails to deliver any financial statements
and the related certificate on the due date therefor set forth in Section
5.01(b)(i) or (ii) hereof, unless an Event of Default is declared as a result of
such failure, the Applicable Margin shall be 150 basis points until the Borrower
delivers all required financial statements and certificates at which time the
Applicable Margin shall be redetermined as provided for in this Section 2.05.
Upon the occurrence and during the continuance of a Default or an Event of
Default the Applicable Margin may, as a result of changes in the Borrower's Debt
to EBITDA Ratio (Applicable Margin), increase but will not decrease.
SECTION 2.06 Use of Proceeds. The proceeds of the Revolving Credit Loans
shall be used by the Borrower (i) to refinance (subject to the last sentence of
Section 2.01(a) of this Agreement) existing Debt owing to the Bank, (ii) to
refinance Debt owing to European American Bank, (iii) for working capital, (iv)
to fund Capital Expenditures, (v) to finance Permitted Acquisitions or (vi) for
general corporate purposes, including the repurchase of the Borrower's common
stock. No part of the proceeds of any Loan may be used for any purpose that
directly or indirectly violates or is inconsistent with, the provisions or
Regulations G, T, U or X.
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SECTION 2.07. Commitment Fee. (a) The Borrower agrees to pay to the Bank
from the date of this Agreement and for so long as the Commitment remains
outstanding, on the last Business Day of each calendar quarter, a commitment fee
computed at the rate set forth below, based on the Borrower's Debt to EBITDA
Ratio (Applicable Margin) (computed on the basis of the actual number of days
elapsed over 360 days) on the average daily unused amount of the Commitment,
such commitment fee being payable for the calendar quarter, or part thereof,
preceding the payment date.
(b) The commitment fee shall be determined on the basis of the Borrower's
Debt to EBITDA Ratio (Applicable Margin), as calculated based on the Borrower's
consolidated financial statements for its most recent fiscal year or quarter.
The Bank shall determine the commitment fee within five (5) Business Days after
it has received the financial statements of the Borrower as required by Section
5.01(b)(i) or (ii), as applicable. The Bank shall promptly notify the Borrower
of such determination, which shall be conclusive, in the absence of manifest
error. The commitment fee shall be determined as follows:
(i) The initial commitment fee shall be 12.5 basis points and shall be
applicable until five (5) Business Days after delivery of the Borrower's
consolidated financial statements for its fiscal year ending December 31, 1998
pursuant to Section 5.01(b) hereof.
Beginning five (5) Business Days after delivery of the Borrower's
consolidated financial statements for the fiscal year
- 44 -
ending December 31, 1998, and for each fiscal year or quarter thereafter:
(ii) If the Borrower's Debt to EBITDA Ratio (Applicable Margin) as of the
end of such fiscal year or quarter is equal to or less than 2.25 to 1.00, the
commitment fee shall be 12.5 basis points.
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(iii) If the Borrower's Debt to EBITDA Ratio (Applicable Margin) as of the
end of such fiscal year or quarter is greater than 2.25 to 1.00, the commitment
fee shall be 25 basis points.
In the event that the Borrower fails to deliver any financial statements
and the related certificate on the due date therefor set forth in Section
5.01(b)(i) or (ii) hereof, the commitment fee shall be 25 basis points until the
Borrower delivers all required financial statements and certificates at which
time the commitment fee shall be redetermined as provided for in this Section
2.07.
Upon the occurrence and during the continuance of a Default or an Event of
Default the commitment fee may, as a result of changes in the Borrower's Debt to
EBITDA Ratio (Applicable Margin), increase but will not decrease.
SECTION 2.08. Reduction of Commitment. Upon at least three (3) Business
Days' written notice, the Borrower may irrevocably elect to have the unused
Commitment terminated in whole or reduced in part provided, however, that any
such partial reduction shall be in a minimum amount of $1,000,000.00, or whole
multiples thereof. The Commitment, once terminated or reduced, shall not be
reinstated without the express written approval of the Bank.
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SECTION 2.09. Prepayment. (a) The Borrower shall have the right at any
time and from time to time to prepay any Alternate Base Rate Loan, in whole or
in part, without premium or penalty on the same day on which telephonic notice
is given to the Bank (immediately confirmed in writing) of such prepayment
provided, however, that each such prepayment shall be on a Business Day and
shall be in a minimum principal amount of $250,000.00
(b) The Borrower shall have the right at any time and from time to time,
subject to the provisions of this Agreement, to prepay any Eurodollar Loan, in
whole or in part, on three (3) Business Days' prior irrevocable written notice
to the Bank, provided, however, that (i) each such prepayment shall be on a
Business Day and shall be in a minimum principal amount of $500,000.00 and in
increased integral multiples of $100,000.00 and (ii) each such prepayment shall
be subject to the provisions of Section 2.10 of this Agreement.
(c) The notice of prepayment under this Section 2.09 shall set forth the
prepayment date and the principal amount of the Loan being prepaid and shall be
irrevocable and shall commit the Borrower to prepay such Loan by the amount and
on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2.09 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans by the Borrower. In the absence of such
specification, amounts being
- 47 -
prepaid shall be applied first to any Alternate Base Rate Loan then outstanding
and then to Eurodollar Loans in the order of the expiration of their respective
Interest Periods.
SECTION 2.10. Reimbursement by Borrower.
- 48 -
The Borrower shall reimburse the Bank upon the Bank's demand for any loss,
cost or expense incurred or to be incurred by it (in the Bank's sole
determination) as a result of any prepayment or conversion (whether voluntarily
or by acceleration) of any Eurodollar Loan other than on the last day of the
Interest Period for such Loan, or if the Borrower fails to borrow the Eurodollar
Loan (or is not able to borrow because of a Default or an Event of Default or
for any other reason hereunder) after having given the irrevocable notice of
borrowing required by this Agreement. Such reimbursement shall include, but not
be limited to, any loss, cost or expense incurred by the Bank in obtaining,
liquidating or redeploying any funds used or to be used in making or maintaining
the Eurodollar Loan.
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SECTION 2.11. Statutory Reserves. It is understood that the cost to the
Bank of making or maintaining Eurodollar Loans may fluctuate as a result of the
applicability of, or change in, Statutory Reserves. The Borrower agrees to pay
to the Bank from time to time, as provided in Section 2.12 below, such amounts
as shall be necessary to compensate the Bank for the portion of the cost of
making or maintaining any Eurodollar Loans made by it resulting from any such
Statutory Reserves, or change therein, it being understood that the rates of
interest applicable to Eurodollar Loans hereunder have been determined on the
basis of Statutory Reserves in effect at the time of determination of the
Adjusted LIBOR Rate, and that such rate does not reflect costs imposed on the
Bank in connection with any change to such Statutory Reserves. It is agreed
that, for purposes of this paragraph, the Eurodollar Loans made hereunder shall
be deemed to constitute Eurocurrency Liabilities as defined in Regulation D and
to be subject to the reserve requirements of Regulation D without benefit or
credit of proration, exemptions or offsets which might otherwise be available to
the Bank from time to time under Regulation D.
SECTION 2.12. Increased Costs. If, after the date of this Agreement, the
adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(i) subjects the Bank to any tax with respect to its Commitment, the
Loans, the Note or on any amount paid or to be paid
- 50 -
under or pursuant to this Agreement, the Commitment, the Loans or the Note
(other than any tax measured by or based upon the overall net income of the
Bank);
(ii) changes the basis of taxation of payments to the Bank of any
amounts payable hereunder (other than any tax measured by or based upon the
overall net income of the Bank);
(iii) imposes, modifies or deems applicable any reserve, capital
adequacy or deposit requirements against any assets held by, deposits with or
for the account of, or loans made by, the Bank; or
- 51 -
(iv) imposes on the Bank any other condition affecting its
Commitment, the Loans, the Note or this Agreement; and the result of any of the
foregoing is to increase the cost to the Bank of maintaining this Agreement or
the Commitment or making the Loans, or to reduce the amount of any payment
(whether of principal, interest or otherwise) receivable by the Bank or to
require the Bank to make any payment on or calculated by reference to the gross
amount of any sum received by it, in each case by an amount which the Bank in
its reasonable judgment deems material, then and in any such case:
(a) the Bank shall promptly advise the Borrower of such event,
together with the date thereof, the amount of such increased cost or
reduction or payment and the way in which such amount has been calculated;
and
(b) the Borrower shall pay to the Bank, within ten (10) days after
the advice referred to in subsection (a) hereinabove, such an amount or
amounts as will compensate the Bank for such additional cost, reduction or
payment for so long as the same shall remain in effect.
The determination of the Bank as to additional amounts payable
pursuant to this Section 2.12 shall be conclusive evidence of such amounts
absent manifest error.
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SECTION 2.13. Capital Adequacy. If the Bank shall have determined that the
applicability of any law, rule, regulation or guideline, or the adoption after
the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the interpretation
or administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank (or any lending office of the Bank) or the
Bank's holding company 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 the Bank's capital or on the capital of the Bank's holding company, if any,
as a consequence of its obligations hereunder to a level below that which the
Bank or the Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration the Bank's policies and the
policies of the Bank's holding company with respect to capital adequacy) by an
amount reasonably deemed by the Bank to be material, then and in any such case:
(a) the Bank shall promptly advise the Borrower of such event,
together with the date thereof, the amount of such reduction and the way
in which such amount has been calculated; and
- 53 -
(b) the Borrower shall pay to the Bank, within ten (10) days after
the advice referred to in subsection (a) hereinabove, such an amount or
amounts as will compensate the Bank for such reduction for so long as the
same shall remain in effect.
The determination of the Bank as to additional amounts payable
pursuant to this Section 2.13 shall be conclusive evidence of such amounts
absent manifest error.
SECTION 2.14. Change in Legality. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in law, rule, regulation, guideline or order, or in the interpretation
thereof by any governmental authority charged with the administration thereof,
shall make it unlawful for the Bank to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by written notice to the Borrower, the Bank may:
(i) declare that Eurodollar Loans will not thereafter be made
hereunder, whereupon the Borrower shall be prohibited from requesting such
Eurodollar Loans hereunder unless such declaration is subsequently
withdrawn; and
(ii) require that, subject to the provisions of Section 2.10, all
outstanding Eurodollar Loans made by it be converted to an Alternate Base
Rate Loan, whereupon all of such Eurodollar Loans shall be automatically
converted to an
- 54 -
Alternate Base Rate Loan as of the effective date of such notice as
provided in paragraph (b) below.
(b) For purposes of this Section 2.14, a notice to the Borrower by
the Bank pursuant to paragraph (a) above shall be effective, for the purposes of
paragraph (a) above, if lawful, and if any Eurodollar Loans shall then be
outstanding, on the last day of the then current Interest Period; otherwise,
such notice shall be effective on the date of receipt by the Borrower.
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SECTION 2.15. Indemnity. The Borrower will indemnify the Bank against any
loss or expense which the Bank may sustain or incur as a consequence of any
default in payment or prepayment of the principal amount of any Eurodollar Loan
or any part thereof or interest accrued thereon, as and when due and payable (at
the due date thereof, by notice of prepayment or otherwise), or the occurrence
of any Event of Default, including but not limited to any loss or expense
sustained or incurred in liquidating or employing deposits from third parties
acquired to affect or maintain such Eurodollar Loan or any part thereof. When
claiming under this Section 2.15, the Bank shall provide to the Borrower a
statement, signed by an officer of the Bank, explaining the amount of any such
loss or expense (including the calculation of such amount), which statement
shall, in the absence of manifest error, be conclusive with respect to the
parties hereto.
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SECTION 2.16. Change in LIBOR; Availability of Rates. In the event, and on
each occasion, that, on the day the interest rate for any Eurodollar Loan is to
be determined, the Bank shall have reasonably determined (which determination,
absent manifest error, shall be conclusive and binding upon the Borrower) that
dollar deposits in the amount of the principal amount of the requested
Eurodollar Loan are not generally available in the London interbank market, or
that the rate at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to the Bank of making or maintaining the
principal amount of such Eurodollar Loan during such Interest Period, such
Eurodollar Loan shall be unavailable. The Bank shall, as soon as practicable
thereafter, given written, telex or telephonic notice of such determination of
unavailability to the Borrower. Any request by the Borrower for an unavailable
Eurodollar Loan shall be deemed to have been a request for an Alternate Base
Rate Loan. After such notice shall have been given and until the Bank shall have
notified the Borrower that the circumstances giving rise to such notice no
longer exist, each subsequent request for an unavailable Eurodollar Loan shall
be deemed to be a request for an Alternate Base Rate Loan.
SECTION 2.17. Authorization to Debit Borrower's Account. The Bank is
hereby authorized to debit the Borrower's account maintained with the Bank for
(i) all scheduled payments of principal and/or interest under the Note, and (ii)
the commitment fee and all other amounts due hereunder; all such debits to be
made
- 57 -
on the days such payments are due in accordance with the terms hereof.
- 58 -
SECTION 2.18. Late Charges, Default Interest. (a) If the Borrower shall
default in the payment of any principal installment of or interest on any Loan
or any other amount becoming due hereunder, the Borrower shall pay interest, to
the extent permitted by law, on such defaulted amount up to the date of actual
payment (after as well as before judgment) at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 360 days) equal to (i)
the amount of principal, interest, fees and/or other amounts due (the "Past Due
Amount") times (ii) two (2%) percent in excess of the interest rate otherwise in
effect with respect to the type of Loan in connection with which the required
payments have not been made, or, if no such interest rate is in effect, two (2%)
percent in excess of the Alternate Base Rate, times (ii) the number of days the
Past Due Amount is delinquent.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Borrower shall pay interest on all amounts owing under the Note and
this Agreement (after as well as before judgment) at a rate per annum (computed
on the basis of the actual number of days elapsed over a year of 360 days) equal
to two (2%) percent in excess of the interest rate otherwise in effect
hereunder.
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SECTION 2.19. Payments. All payments by the Borrower hereunder or under
the Note shall be made in Dollars in immediately available funds at the office
of the Bank by 12:00 noon, New York City time on the date on which such payment
shall be due. Interest on the Note shall accrue from and including the date of
each Loan to but excluding the date on which such Loan is paid in full or
refinanced with a Loan of a different type.
SECTION 2.20. Interest Adjustments. (a) If the provisions of this
Agreement or the Note would at any time otherwise require payment by the
Borrower to the Bank of any amount of interest in excess of the maximum amount
then permitted by applicable law the interest payments shall be reduced to the
extent necessary so that the Bank shall not receive interest in excess of such
maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank
shall receive interest payments hereunder or under the Note in an amount less
than the amount otherwise provided, such deficit (hereinafter called the
"Interest Deficit") will cumulate and will be carried forward (without interest)
until the termination of this Agreement. Interest otherwise payable to the Bank
hereunder and under the Note for any subsequent period shall be increased by
such maximum amount of the Interest Deficit that may be so added without causing
the Bank to receive interest in excess of the maximum amount then permitted by
applicable law.
(b) The amount of the Interest Deficit on the Maturity Date shall be
cancelled and not paid.
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SECTION 2.21. Participations, Etc. The Bank shall have the right at any
time, to sell, assign, transfer or negotiate all or any part of the Note or the
Commitment or grant participations therein to one or more banks (foreign or
domestic, including an affiliate of the Bank), insurance companies or other
financial institutions, pension funds or mutual funds, provided that (i) any
such sale, assignment, transfer or negotiation shall be with the consent of the
Borrower, such consent not to be unreasonably withheld or delayed and provided
further that the Borrower's consent shall not be required if any Default or
Event of Default has occurred and is continuing and (ii) as long as no Default
or Event of Default has occurred and is continuing, the Bank agrees to retain at
least fifty one (51%) percent of the Commitment and outstanding Loans. The
Borrower and the Guarantor agree and consent to the Bank providing financial and
other information regarding their business and operations to prospective
purchasers or participants (provided that such prospective purchasers or
participants shall agree in writing to be bound by the provisions of Section
7.09 hereof prior to receiving any information regarding the Borrower or any of
its Subsidiaries) and further agree that to the extent that the Bank should
sell, assign, transfer or negotiate all or any part of the Note or the
Commitment, the Bank shall be forever released and discharged from its
obligations under the
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Note, the Commitment and this Agreement to the extent same is sold,
assigned, transferred or negotiated. Nothing herein shall be read or construed
as prohibiting or otherwise limiting the ability or right of the Bank to pledge
any Note to a Federal Reserve Bank.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Initial Revolving
Credit Loan. The obligation of the Bank to make the initial Revolving Credit
Loan contemplated by this Agreement is subject to the condition precedent that
the Bank shall have received from the Borrower and the Guarantor the following,
in form and substance satisfactory to the Bank and its counsel:
(a) The Revolving Credit Note duly executed and payable to the order of
the Bank.
(b) Certified (as of the date of this Agreement) copies of the resolutions
of the Board of Directors of the Borrower authorizing the Loans and authorizing
and approving this Agreement and the other Loan Documents and the execution,
delivery and performance thereof and certified copies of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to this Agreement and the other Loan Documents.
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(c) Certified (as of the date of this Agreement) copies of the resolutions
of the Board of Directors and the shareholders of the Guarantor, authorizing and
approving this Agreement, its Guaranty and any other Loan Document applicable to
the Guarantor, and the execution, delivery and performance thereof and certified
copies of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement, its Guaranty and
the other Loan Documents.
(d) A certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of the Borrower certifying: (i) the names and true
signatures of the officer or officers of the Borrower authorized to sign this
Agreement, the Revolving Credit Note and the other Loan Documents to be
delivered hereunder on behalf of the Borrower; and (ii) a copy of the Borrower's
by-laws as complete and correct on the date of this Agreement.
(e) A Certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of the Guarantor certifying (i) the names and true
signatures of the officer or officers of the Guarantor authorized to sign this
Agreement, its Guaranty and any other Loan Documents to be delivered hereunder
on behalf of the Guarantor; (ii) a copy of the Guarantor's by-laws as complete
and correct on the date of this Agreement; and (iii) the stock ownership of the
Guarantor.
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(f) Copies of the certificate of incorporation and all amendments thereto
of the Borrower and the Guarantor, certified in each case by the Secretary of
State (or equivalent officer) of the state of incorporation of the Borrower and
the Guarantor and a certificate of existence and good standing with respect to
the Borrower and the Guarantor from the Secretary of State (or equivalent
officer) of the state of incorporation of the Borrower and the Guarantor and
from the Secretary of State (or equivalent officer) of any state in which the
Borrower or the Guarantor is authorized to do business.
(g) An opinion of X'Xxxxxxxx, Graev and Karabell, LLP, counsel for the
Borrower and the Guarantor as to certain matters referred to in Article IV
hereof and as to such other matters as the Bank or its counsel may reasonably
request.
(h) From the Guarantor, an executed Guaranty.
(i) Evidence that the Borrower and the Guarantor maintain adequate
casualty and liability insurance, with financially sound and reputable insurance
companies or associations, in such amounts and covering such risks as are
usually carried by companies engaged in similar businesses and owning properties
and doing business in the same general areas in which the Borrower and the
Guarantor operate.
(j) Receipt and satisfactory review by the Bank of all credit agreements
and other similar agreements described in Section 4.01(t) of this Agreement.
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(k) Receipt and satisfactory review by the Bank of an amendment,
modification or waiver of applicable provisions of the agreements relating to
the Senior Notes which allow for this Agreement and the transactions
contemplated hereby.
(l) Reduction of the line of credit from the Bank to the Borrower from
$15,000,000.00 of availability to $10,000,000.00 of availability.
(m) Receipt and satisfactory review by the Bank of the management prepared
consolidating financial statements of the Borrower and its Consolidated
Subsidiaries for the nine month period ended September 30, 1998.
(n) Receipt and satisfactory review by the Bank of the management letter
issued in connection with the audit of the Borrower's consolidated financial
statements for the year ended December 31, 1997.
(o) The following statements shall be true and the Bank shall have
received a certificate signed by the President or the Chief Financial Officer of
the Borrower dated the date hereof, stating that:
(i) The representations and warranties contained in Article IV of
this Agreement and in the Loan Documents are true and correct in all material
respects on and as of such date, except for those relating to an earlier date,
which shall remain true and correct as of such earlier date; and
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(ii) No Default or Event of Default has occurred and is continuing,
or would result from the making of the initial Revolving Credit Loan.
(p) Receipt by the Bank of the remaining balance ($50,000.00) of its
facility fee.
(q) All schedules, documents, certificates and other information provided
to the Bank pursuant to or in connection with this Agreement shall be reasonably
satisfactory to the Bank and its counsel in all respects.
(r) All legal matters incident to this Agreement and the transactions
contemplated hereby shall be satisfactory to Cullen and Xxxxxx, counsel to the
Bank.
(s) Receipt by the Bank of such other approvals, opinions or documents as
the Bank or its counsel may reasonably request.
(t) Payment by the Borrower of the reasonable fees and expenses of counsel
to the Bank.
SECTION 3.02. Conditions Precedent to All Revolving Credit Loans. The
obligation of the Bank to make each Revolving Credit Loan (including the initial
Revolving Credit Loan) shall be subject to the further condition precedent that
on the date of such Revolving Credit Loan:
(a) The following statements shall be true and the Bank shall have
received a certificate signed by the President or the Chief Financial Officer of
the Borrower dated the date of such Revolving Credit Loan, stating that:
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(i) The representations and warranties contained in Article IV of
this Agreement and in the Loan Documents are true and correct in all material
respects on and as of such date as though made on and as of such date except for
those that relate to an earlier date which shall remain true and correct as of
such earlier date; and
(ii) No Default or Event of Default has occurred and is continuing,
or would result from such Revolving Credit Loan.
(b) The Bank shall have received such other approvals, opinions or
documents as the Bank may reasonably request.
SECTION 3.03. Conditions Precedent to Revolving Credit Loans Used to Fund
Permitted Acquisitions. The obligation of the Bank to make each Revolving Credit
Loan the proceeds of which are to be used, in whole or in part, to fund a
Permitted Acquisition, shall be subject to the further condition precedent that
on the date of such Revolving Credit Loan;
(a) The Bank shall have received evidence, satisfactory to the Bank, that
all conditions and qualifications set forth in the definition of "Permitted
Acquisition" shall have been met, provided, however, for any Permitted
Acquisition, the Consideration for which does not exceed $5,000,000.00, the
Borrower shall not be required to deliver the documents referred to in the
second paragraph of the definition of "Permitted Acquisition" but shall instead
deliver to the Bank a summary of such Permitted Acquisition
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with calculations evidencing continued compliance with the provisions of Section
5.03 of this Agreement.
(b) Subject to the provisions of Section 5.01 (k) of this Agreement, the
Bank shall have received the Guaranty of any new Subsidiary formed and/or
acquired as a result of the Permitted Acquisition.
(c) The Bank shall have received and satisfactorily reviewed evidence that
no Default or Event of Default shall occur as a result of the Permitted
Acquisition, including, without limitation, evidence of compliance with Section
5.02(r) of this Agreement.
(d) The Bank shall have received and satisfactorily reviewed all consents
and approvals from third parties necessary for the Permitted Acquisition.
(e) The following statements shall be true and the Bank shall have
received a certificate signed by the President or the Chief Financial Officer of
the Borrower dated the date of such Revolving Credit Loan, stating that (i) the
representations and warranties contained in Article IV of this Agreement and in
the Loan Documents are true and correct in all material respects on and as of
such date as though made on and as of such date except for those that relate to
an earlier date, which shall remain true and correct as of such earlier date;
(ii) no Default or Event of Default has occurred and is continuing, or would
result from such Revolving Credit Loan or such Permitted Acquisition; and (iii)
all of the covenants set forth in Section 5.03 of this Agreement shall be
complied with immediately before and following the Permitted Acquisition, with
calculations evidencing such compliance.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. On the date hereof and, on
each date that the Borrower requests a Revolving Credit Loan, the Borrower and
the Guarantor each represent and warrant as follows:
(a) Subsidiaries. On the date hereof, the only Subsidiaries of the
Borrower or the Guarantor are those set forth on Schedule 4.01(a) annexed
hereto, which Schedule accurately sets forth with respect to each such
Subsidiary, its name and address, any other addresses at which it conducts
business, its state of incorporation and each other jurisdiction in which it is
qualified to do business and the identity and share holdings of its
stockholders. Except as set forth on Schedule 4.01(a), all of the issued and
outstanding shares of each Subsidiary which are owned by the Borrower or the
Guarantor are owned by the Borrower or the Guarantor free and clear of any
mortgage, pledge, lien or encumbrance, other than Liens permitted by Section
5.02(a) of this Agreement. Except as set forth on Schedule 4.01(a) and except
for options granted under the 1984 Stock Option Plan or the 1994 Stock Plan,
there are no outstanding warrants, options, contracts or commitments of any kind
entitling any Person to purchase or otherwise acquire any shares of common or
capital stock or other equity interest of the Borrower, the
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Guarantor or any Subsidiary of the Borrower or the Guarantor, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of the common or capital stock of the Borrower, the Guarantor or any
Subsidiary of the Borrower or the Guarantor.
(b) Organization; Good Standing. The Borrower, the Guarantor and each
Subsidiary of the Borrower or the Guarantor are each a corporation duly
incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each has the corporate power to
own its assets and to transact the business in which it is presently engaged and
is duly qualified and is in good standing in all other jurisdictions where the
failure to so qualify would be reasonably likely to result in a Material Adverse
Change.
(c) Loan Documents; No Consents or Violations. The execution, delivery and
performance by the Borrower and the Guarantor of the Loan Documents to which
they are a party are within the Borrower's and the Guarantor's corporate power
and have been duly authorized by all necessary corporate action and do not and
will not (i) require any consent or approval of the stockholders of the Borrower
or the Guarantor (other than those previously obtained and appropriate evidence
of which has been delivered to the Bank); (ii) do not contravene the Borrower's
or the Guarantor's certificate of incorporation, charter or by-laws; (iii)
violate any provision of or any law, rule, regulation, contractual restriction,
order, writ, judgment, injunction, or decree, determination or award binding on
or affecting the Borrower or the Guarantor; (iv) result in a breach
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of or constitute a default under any indenture or loan or credit agreement, or
any other material agreement, lease or instrument to which the Borrower or the
Guarantor is a party or by which it or its properties may be bound or affected;
and (v) result in, or require, the creation or imposition of any Lien upon or
with respect to any of the properties now owned or hereafter acquired by the
Borrower or the Guarantor.
(d) Authorization. No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower or the
Guarantor of any Loan Document to which it is a party, except authorizations,
approvals, actions, notices or filings which have been obtained, taken or made,
as the case may be.
(e) Validity and Enforceability. The Loan Documents, when delivered
hereunder, will have been duly executed and delivered on behalf of the Borrower
and the Guarantor, as the case may be, and will be legal, valid and binding
obligations of the Borrower and the Guarantor, as the case may be, enforceable
against the Borrower or the Guarantor in accordance with their respective terms.
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(f) Financial Statements. The consolidated financial statements of the
Borrower and its Consolidated Subsidiaries for the fiscal year ended December
31, 1997, and for the nine (9) month period ended September 30, 1998 copies of
each of which have been furnished to the Bank, (i) fairly present in all
material respects the financial condition of the Borrower and its Consolidated
Subsidiaries as at such dates and the results of operations of the Borrower and
its Consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP, subject, in the case of the interim financial statements,
to year end adjustments and the absence of footnotes, (ii) between December 31,
1997 and the date of this Agreement there has been (x) no material increase in
the consolidated liabilities of the Borrower and its Consolidated Subsidiaries,
other than increases in liabilities resulting solely from increased borrowings
under the Borrower's existing lines of credit and (y) no Material Adverse Change
and (iii) except as disclosed on such financial statements or the notes thereto,
there are no undisclosed liabilities of the Borrower or any of its Consolidated
Subsidiaries, contingent or otherwise required to be disclosed therein.
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(g) Litigation. There is no pending or to the Borrower's or the
Guarantor's knowledge, threatened action, proceeding or investigation affecting
the Borrower, the Guarantor or any Subsidiary of the Borrower or the Guarantor,
before any court, governmental agency or arbitrator, which would either in one
case or in the aggregate, be reasonably likely to result in a Material Adverse
Change.
(h) Taxes. The Borrower, the Guarantor and each Subsidiary of the Borrower
or the Guarantor have filed all federal, state and local tax returns required to
be filed and have paid all taxes, assessments and governmental charges and
levies thereon to be due, including interest and penalties, unless and only to
the extent that (i) such taxes are being contested in good faith and by
appropriate proceedings by the Borrower, the Guarantor or any such Subsidiary,
as the case may be; (ii) there are adequate reserves therefor in accordance with
GAAP entered on the books of the Borrower, the Guarantor or any such Subsidiary;
and (iii) no enforcement proceedings against the Borrower, the Guarantor or any
such Subsidiary have been commenced.
(i) Licenses, etc. The Borrower, the Guarantor and each Subsidiary of the
Borrower or the Guarantor possess, or has the right to use, all material
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
or rights thereto, to conduct their respective businesses substantially as now
conducted and as presently proposed to be conducted, and neither the Borrower,
the Guarantor nor any such Subsidiary are in violation of any similar rights of
others.
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(j) No Adverse Agreements. Neither the Borrower, nor the Guarantor nor any
Subsidiary of the Borrower or the Guarantor is a party to any indenture, loan or
credit agreement or any other agreement, lease or instrument or subject to any
charter or corporate restriction, the default or breach of which would be
reasonably likely to result in a Material Adverse Change. All material
agreements to which the Borrower, the Guarantor, or any Subsidiary of the
Borrower or the Guarantor is a party are in full force and effect and neither
the Borrower, the Guarantor nor any such Subsidiary are in default of any such
agreement.
(k) Margin Stock. The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation G, T, U or X), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or in any other way which will cause
the Borrower to violate the provisions of Regulations G, T, U or X.
(l) Compliance with Laws. The Borrower, the Guarantor and each Subsidiary
of the Borrower or the Guarantor are in all material respects in compliance with
all federal and state laws and regulations in all jurisdictions where the
failure to comply with such laws or regulations would be reasonably likely to
result in a Material Adverse Change.
(m) ERISA. The Borrower, the Guarantor, each Subsidiary of the Borrower or
the Guarantor and each ERISA Affiliate are in compliance in all material
respects with all applicable provisions of ERISA. Neither a Reportable Event nor
a Prohibited Transaction
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has occurred and is continuing with respect to any Plan; no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan, nor has the PBGC instituted any such proceedings;
neither the Borrower, the Guarantor, any Subsidiary of the Borrower or the
Guarantor, nor any ERISA Affiliate has completely or partially withdrawn under
Sections 4201 or 4204 of ERISA from a Multiemployer Plan; the Borrower, the
Guarantor, each Subsidiary of the Borrower or the Guarantor and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to all of their Plans and the present fair market value of all Plan assets
exceeds the present value of all vested benefits under each Plan, as determined
on the most recent valuation date of the Plan in accordance with the provisions
of ERISA for calculating the potential liability of the Borrower, the Guarantor,
any such Subsidiary or any ERISA Affiliate to PBGC or the Plan under Title IV of
ERISA; and neither the Borrower, the Guarantor, any such Subsidiary nor any
ERISA Affiliate has incurred any liability to the PBGC under ERISA.
(n) Hazardous Materials. The Borrower, the Guarantor and each Subsidiary
of the Borrower or the Guarantor are in compliance in all material respects with
all federal, state or local laws, ordinances, rules, regulations or policies
governing Hazardous Materials and neither the Borrower, the Guarantor nor any
such Subsidiary has used Hazardous Materials on, from, or affecting any property
now owned or occupied or hereafter owned or occupied by
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the Borrower, the Guarantor or any such Subsidiary in any manner which violates
federal, state or local laws, ordinances, rules, regulations or policies
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials, and, to the Borrower's,
the Guarantor's and such Subsidiaries' knowledge, no prior owner of any such
property or any tenant, subtenant, prior tenant or prior subtenant have used
Hazardous Materials on, from or affecting such property in any manner which
violates federal, state or local laws, ordinances, rules, regulations, or
policies governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials.
(o) Use of Proceeds. The proceeds of the Revolving Credit Loans shall be
used exclusively for the purposes set forth in Sections 2.06 hereof.
(p) Title to Assets; No Liens. The Borrower and the Guarantor have good
and marketable title to all of their properties and assets, subject only to the
Liens permitted by Section 5.02(a) of this Agreement.
(q) Casualties, etc. Neither the business nor the properties of the
Borrower, the Guarantor nor any Subsidiary of the Borrower or the Guarantor are
affected by any fire, explosion, accident, strike, hail, earthquake, embargo,
act of God or of the public enemy, or other casualty (whether or not covered by
insurance), which would be reasonably likely to result, in any one case or in
the aggregate, in a Material Adverse Change.
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(r) Solvency. (i) The fair value of the assets of (x) the Borrower and its
Consolidated Subsidiaries, on a consolidated basis and (y) DPI alone, exceeds,
in each case, their debts and liabilities (subordinated, contingent or
otherwise); (ii) the present fair saleable value of the property of (x) the
Borrower and its Consolidated Subsidiaries, on a consolidated basis and (y) DPI
alone, is, in each case, greater than the amount required to pay the probable
liability of their debts and other liabilities (subordinated, contingent or
otherwise) as such debts and other liabilities mature; (iii) (x) the Borrower
and its Consolidated Subsidiaries, on a consolidated basis, (y) the Borrower
alone and (z) DPI alone, are, in each case, able to pay their debts and
liabilities (subordinated, contingent or otherwise) as such debts and
liabilities mature; and (iv) (x) the Borrower and its Consolidated Subsidiaries,
on a consolidated basis, (y) the Borrower alone and (z) DPI alone, do not have,
in each case, unreasonably small capital to conduct the businesses in which they
are engaged; and (v) DPI has a positive net worth.
(s) Financial Advantage. The Guarantor acknowledges it has derived or
expects to derive a financial or other advantage from the Loans obtained by the
Borrower from the Bank.
(t) Credit Agreements, etc. Schedule 4.01(t) is a complete and correct
list of all credit agreements, indentures, purchase agreements, guaranties,
Capital Leases, and other agreements and arrangements presently in effect
providing for or relating to
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extensions of credit (including agreements and arrangements for the issuance of
letters of credit or for acceptance financing) in the principal amount of
$50,000.00 or more and in respect of which the Borrower or the Guarantor are in
any manner directly or contingently obligated, and the maximum principal or face
amounts of the credit in question, outstanding or to be outstanding, are
correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule.
(u) Year 2000 Issue. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Borrower's and the
Guarantor's computer systems or of the computer systems of any Subsidiary of the
Borrower or the Guarantor and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which the
Borrower's, the Guarantor's or any such Subsidiary's systems interface) and the
testing of all such systems and equipment, as so reprogrammed, will be
substantially completed by June 30,1999. The cost to the Borrower, the Guarantor
and any such Subsidiary of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Borrower and the Guarantor
(including, without limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in a Default or be reasonably likely to
result in a Material Adverse Change in the Borrower or the Guarantor or any such
Subsidiary.
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Except for such of the reprogramming referred to in the preceding sentence as
may be necessary, the computer and management information systems of the
Borrower, the Guarantor and each Subsidiary of the Borrower or the Guarantor are
and, with ordinary course upgrading and maintenance, will be reasonably likely
to continue for the term of this Agreement to be, sufficient to permit the
Borrower, the Guarantor and each such Subsidiary to conduct its business without
Material Adverse Change.
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ARTICLE V
COVENANTS OF THE BORROWER AND THE GUARANTOR
SECTION 5.01. Affirmative Covenants. So long as any amount shall remain
outstanding under the Revolving Credit Note, or so long as the Commitment shall
remain in effect, the Borrower and the Guarantor will, unless the Bank shall
otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary of the
Borrower or the Guarantor to comply, in all material respects with all
applicable laws, rules, regulations and orders, where the failure to so comply
would be reasonably likely to result in a Material Adverse Change.
(b) Reporting Requirements. Furnish to the Bank: (i) Annual Financial
Statements. As soon as available and in any event within one hundred and five
(105) days after the end of each fiscal year of the Borrower, a copy of the
audited consolidated and unaudited consolidating (such consolidating statements
to be prepared by management of the Borrower) financial statements of the
Borrower and its Consolidated Subsidiaries for such year, including balance
sheets with related statements of income and retained earnings and statements of
cash flows, all in reasonable detail and setting forth in comparative form the
figures for the previous fiscal year, together with an unqualified opinion,
prepared by independent certified public accountants selected by the Borrower
and reasonably satisfactory to the Bank, all such financial statements to be
prepared in accordance with GAAP.
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(ii) Quarterly Financial Statements. As soon as available and in any event
within sixty (60) days after the end of each of the first three fiscal quarters
of each fiscal year of the Borrower, a copy of the consolidated and
consolidating financial statements of the Borrower and its Consolidated
Subsidiaries for such quarter, including balance sheets with related statements
of income and retained earnings and statements of cash flows, all in reasonable
detail and setting forth in comparative form the figures for the comparable
quarter for the previous fiscal year, all such financial statements to be
prepared by management of the Borrower in accordance with GAAP.
(iii) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or the Guarantor by independent certified
public accountants in connection with the examination of the financial
statements of the Borrower and the Guarantor made by such accountants.
(iv) Certificate of No Default. Simultaneously with the delivery of the
financial statements referred to in Section 5.01(b)(i) and (ii), a certificate
of the President or the Chief Financial Officer of the Borrower, (1) certifying
that no Default or Event of Default has occurred and is continuing, or if a
Default or Event of Default has occurred and is continuing, a statement as to
the nature thereof and the action which is proposed to be taken with respect
thereto; and (2) with computations demonstrating compliance with the covenants
contained in Section 5.03.
(v) Accountants' Report. Simultaneously with the delivery of the annual
financial statements referred to in Section 5.01(b)(i),
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a certificate of the independent certified public accountants who audited such
statements to the effect that, in making the examination necessary for the audit
of such statements, they have obtained no knowledge of any condition or event
which constitutes a Default or Event of Default, or if such accountants shall
have obtained knowledge of any such condition or event, specify in such
certificate each such condition or event of which they have knowledge and the
nature and status thereof.
(vi) Notice of Litigation. Promptly after the commencement thereof, notice
of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower, the Guarantor or any Subsidiary of the Borrower
or the Guarantor which, if determined adversely to the Borrower, the Guarantor
or any such Subsidiary would be reasonably likely to result in a Material
Adverse Change.
(vii) Notice of Defaults and Events of Default. As soon as possible and in
any event within five (5) days after the occurrence of each Default or Event of
Default, a written notice setting forth the details of such Default or Event of
Default and the action which is proposed to be taken by the Borrower with
respect thereto.
(viii) ERISA Reports. Promptly after the filing or receiving thereof,
copies of all reports, including annual reports, and notices which the Borrower,
or any Subsidiary of the Borrower or the Guarantor, files with or receives from
the PBGC, the Internal Revenue Service or the U.S. Department of Labor under
ERISA; and as soon as possible after the Borrower, the Guarantor or any such
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Subsidiary knows or has reason to know that any Reportable Event or Prohibited
Transaction has occurred with respect to any Plan or that the PBGC or the
Borrower, the Guarantor or any such Subsidiary has instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, the Borrower or the
Guarantor will deliver to the Bank a certificate of the President or the Chief
Financial Officer of the Borrower or the Guarantor setting forth details as to
such Reportable Event or Prohibited Transaction or Plan termination and the
action the Borrower or the Guarantor proposes to take with respect thereto;
(ix) Environmental Notices. Promptly after the receipt thereof, a copy of
any claim, summons, charge or other notice to the Borrower, the Guarantor or any
Subsidiary of the Borrower or the Guarantor regarding compliance (or failure to
comply) with any federal, state or local laws governing Hazardous Materials.
(x) Material Adverse Change. Promptly, upon the occurrence thereof, notice
of a Material Adverse Change.
(xi) Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other party pursuant to the
terms of any indenture, loan, or credit or similar agreement and not otherwise
required to be furnished to the Bank pursuant to any other clause of this
Section 5.01(b).
(xii) Proxy Statements, Etc. Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports which the
Borrower, the Guarantor or any
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Subsidiary of the Borrower or the Guarantor sends to its stockholders, and
copies of all regular, periodic, and special reports, and all registration
statements which the Borrower or the Guarantor or any such Subsidiary files with
the Securities and Exchange Commission or any governmental authority which may
be substituted therefor, or with any national securities exchange.
(xiii) Notice of Affiliates. Promptly after any Person becomes an
Affiliate of the Borrower or the Guarantor (other than if such Person becomes an
Affiliate solely by virtue of a member of management of the Borrower making an
investment in such Person), notice to the Bank of such Affiliate, provided that
this clause (xiii) shall not require the Borrower to advise the Bank of any
changes in officers or directors of the Borrower.
(xiv) General Information. Such other information respecting the condition
or operations, financial or otherwise, of the Borrower, the Guarantor or any
Subsidiary of the Borrower or the Guarantor as the Bank may from time to time
reasonably request.
(c) Taxes. Pay and discharge, and cause each Subsidiary of the
Borrower or the Guarantor to pay and discharge, all taxes, assessments and
governmental charges upon it or them, its or their income and its or their
properties prior to the dates on which penalties are attached thereto, unless
and only to the extent that (i) such taxes shall be contested in good faith and
by appropriate proceedings by the Borrower, the Guarantor or any such
Subsidiary, as the case may be; (ii) there be adequate reserves therefor in
accordance with GAAP entered on the books of the Borrower, the
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Guarantor or any such Subsidiary; and (iii) no enforcement proceedings against
the Borrower, the Guarantor or any such Subsidiary have been commenced.
(d) Corporate Existence. Preserve and maintain, and cause each Subsidiary
of the Borrower or the Guarantor to preserve and maintain, their corporate
existence and good standing in the jurisdiction of their incorporation and the
rights, privileges and franchises of the Borrower, the Guarantor and each such
Subsidiary in each case where failure to so preserve or maintain would be
reasonably likely to result in a Material Adverse Change.
(e) Maintenance of Properties and Insurance. (i) Keep, and cause each
Subsidiary of the Borrower and the Guarantor to keep, the respective properties
and assets (tangible or intangible) that are useful and necessary in its
business, in good working order and condition, reasonable wear and tear
excepted; and (ii) maintain, and cause any such Subsidiary to maintain,
insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in similar businesses and owning properties and doing business
in the same general areas in which the Borrower, the Guarantor and any such
Subsidiary may operate.
(f) Books of Record and Account. Keep, and cause each Subsidiary of the
Borrower and the Guarantor to keep, adequate records and proper books of record
and account in which complete entries will be made in a manner to enable the
preparation of financial statements in accordance with GAAP, reflecting all
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financial transactions of the Borrower, the Guarantor, and any such Subsidiary.
(g) Visitation. At any reasonable time, and from time to time, and upon
prior notice, and, provided no Default or Event of Default then exists, not more
often than once during any calendar year, permit the Bank or any agents or
representatives thereof, to examine and make copies of and abstracts from the
financial and accounting books and records of, and visit the properties of, the
Borrower, the Guarantor or any Subsidiary of the Borrower or the Guarantor to
discuss the affairs, finances and accounts of the Borrower, the Guarantor or any
such Subsidiary with any of the respective officers or directors of the
Borrower, the Guarantor or any such Subsidiary or the Borrower's, the
Guarantor's or such Subsidiary's independent accountants.
(h) Performance and Compliance with Other Agreements. Perform and comply
in all material respects, and cause each Subsidiary of the Borrower or the
Guarantor to perform and comply in all material respects, with each of the
provisions of each and every agreement the failure to perform or comply with
which would be reasonably likely to result in a Material Adverse Change.
(i) Pension Funding. Comply in all material respects, and cause each
Subsidiary of the Borrower or the Guarantor to comply in all material respects,
with the following and cause each ERISA Affiliate of the Borrower, the Guarantor
or any such Subsidiary to comply with the following:
(i) engage solely in transactions which would not subject any of such
entities to either a civil penalty assessed
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pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Internal Revenue Code in either case in an amount in excess of
$25,000.00;
(ii) make full payment when due of all amounts which, under the
provisions of any Plan or ERISA, the Borrower, the Guarantor, any such
Subsidiary or any ERISA Affiliate of any of same is required to pay as
contributions thereto;
(iii) all applicable provisions of the Internal Revenue Code and the
regulations promulgated thereunder, including but not limited to Section
412 thereof, and all applicable rules, regulations and interpretations of
the Accounting Principles Board and the Financial Accounting Standards
Board;
(iv) not fail to make any payments in an aggregate amount greater
than $25,000.00 to any Multiemployer Plan that the Borrower, the
Guarantor, any such Subsidiary or any ERISA Affiliate may be required to
make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(v) not take any action regarding any Plan which could result in the
occurrence of a Prohibited Transaction.
(j) Licenses. Maintain at all times, and cause each Subsidiary of the
Borrower or the Guarantor to maintain at all times, all licenses or permits
necessary to the conduct of its business or as may be required by any
governmental agency or instrumentality thereof.
(k) New Subsidiaries. (a) Cause any Subsidiary (other than a Foreign
Subsidiary) of the Borrower or the Guarantor formed after
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the date of this Agreement to become a Guarantor and to become a party to this
Agreement as a Guarantor.
(b) Cause any Foreign Subsidiary which, in the reasonable
determination of the Borrower and its professional advisors, if it became a
Guaranteeing Foreign Subsidiary would not result in adverse tax consequences to
the Borrower, to become a Guarantor and to become a party to this Agreement as a
Guarantor.
(l) Existing Subsidiaries. Not later than March 31, 1999, the Borrower
shall advise the Bank whether it shall dissolve one or more of the domestic
Subsidiaries (other than DPI) listed on Schedule 4.01(a); and (i) as to those
Subsidiaries it elects to dissolve, it shall dissolve such Subsidiaries, and
give notice to the Bank of such dissolution, not later than April 30, 1999; or
(ii) as to those Subsidiaries it elects not to dissolve, it shall deliver to the
Bank, in form and substance reasonably satisfactory to the Bank and its counsel,
the following with respect to each such Subsidiary:
(1) an agreement pursuant to which such Subsidiary becomes a party to, and bound
by, this Agreement as a Guarantor;
(2) a Guaranty substantially in the form of the Guaranty delivered by DPI;
(3) a Secretary's certificate complying in form and substance, together with all
exhibits, similar to the Secretary's Certificate being delivered by DPI on the
date of this Agreement; and
(4) an opinion of counsel (which may be in house counsel to the Borrower) to
each such Subsidiary substantially similar to the
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opinion being delivered with respect to DPI on the date of this Agreement.
(m) Additional Covenant. Not later than March 15, 1999 the Borrower will
deliver to the Bank the documentation required by Section 3.01(k) of this
Agreement.
SECTION 5.02. Negative Covenants. So long as any amount shall remain
outstanding under the Revolving Credit Note or so long as the Commitment shall
remain in effect, neither the Borrower nor the Guarantor will, without the
written consent of the Bank:
(a) Liens, Etc. Create, incur, assume or suffer to exist, any Lien, upon
or with respect to any of its properties, now owned or hereafter acquired,
except:
(i) Liens in favor of the Bank;
(ii) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(iii) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due or which are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established;
(iv) Liens under workers' compensation, unemployment insurance,
Social Security, or similar legislation;
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(v) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(vi) Liens described in Schedule 5.02(a), provided that no such Liens
shall be renewed, extended or refinanced;
(vii) Judgment and other similar Liens arising in connection with
court proceedings (other than those described in Section 6.01(f)), provided the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(viii) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
Borrower's or the Guarantor's occupation, use and enjoyment of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto;
(ix) Purchase money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition, or
a Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease, provided that:
(1) Any property subject to any of the foregoing is acquired
by the Borrower or the Guarantor in the ordinary course
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of its respective business (or in connection with a Permitted Acquisition and
the Lien is otherwise permitted hereunder) and the Lien on any such property is
created contemporaneously with such acquisition;
(2) The obligation secured by any Lien so created, assumed, or
existing shall not exceed one hundred (100%) percent of lesser of cost or fair
market value of the property acquired as of the time of the Borrower or the
Guarantor acquiring the same;
(3) Each such Lien shall attach only to the property so
acquired and fixed improvements thereon; and
(4) The obligation secured by such Lien is permitted by the
provisions of Section 5.02(b) and the related expenditure is permitted by the
provisions of Section 5.03(c).
(b) Debt. Create, incur, assume, or suffer to exist, any Debt, except:
(i) Debt of the Borrower under this Agreement or the Note or any
other Debt of the Borrower or the Guarantor owing to the Bank;
(ii) Debt described in Schedule 5.02(b), provided that no such Debt
shall be renewed, extended or refinanced;
(iii) Subordinated Debt;
(iv) Accounts payable to trade creditors for goods or services and
current operating liabilities (other than for borrowed money), in each case
incurred and paid in the ordinary course of business;
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(v) Debt in respect of letters of credit issued for the account of
the Borrower or the Guarantor in an aggregate outstanding face amount at any
time of up to $5,000,000.00;
(vi) Debt of the Borrower or any Corporate Guarantor secured by
purchase money Liens permitted by Section 5.02(a)(ix);
(vii) Debt evidenced by the Senior Notes; and
(viii) Any other Debt not described in clauses (i) through (vii)
above which is incurred under one or more unsecured lines of credit in an
aggregate principal amount of not more than $18,000,000.00, provided that the
Borrower has no such Debt outstanding for at least thirty (30) consecutive days
during each rolling twelve (12) month period, measured from the date of this
Agreement.
(c) Intentionally Omitted.
(d) Merger. Merge into, or consolidate with or into, or have merged into
it, any Person; and, for the purpose of this subsection (d), the acquisition or
sale by the Borrower or the Guarantor by lease, purchase or otherwise, of all,
or substantially all, of the common stock or the assets of any Person or of it
shall be deemed a merger of such Person with the Borrower or the Guarantor,
provided that (i) the Borrower and the Guarantor may make Permitted
Acquisitions, but further provided that the Consideration (as defined in the
definition of "Permitted Acquisition") does not exceed (x) $25,000,000.00 for
any Permitted Acquisition or (y) $50,000,000.00 for all Permitted Acquisitions
made during the term of this Agreement, (ii) the Borrower may merge with the
Guarantor,
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provided the Borrower is the surviving entity and (iii) any Guarantor may merge
with any other Guarantor.
(e) Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise
dispose of any of its assets, (including a saleleaseback transaction) with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business; (ii) the sale or other disposition of assets no longer used or useful
in the conduct of its business; (iii) the sale of the Borrower's facility in
Plainview, New York; (iv) sales or other dispositions of any other assets which
do not exceed, in any fiscal year, $3,000,000.00 (valued at the sales price of
such assets); and (iv) sales of assets between the Borrower and a Guarantor or
between Guarantors.
(f) Investments, Etc. Make any Investment other than Permitted
Investments.
(g) Transactions With Affiliates. Except for transactions with the current
Chief Executive Officer of the Borrower, and except as otherwise expressly
permitted by this Agreement or except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's, the Guarantor's or a
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or the Guarantor or the Subsidiary than would be obtained in a
comparable arm's length transaction with a Person not an Affiliate, enter into
any transaction, including, without limitation, the purchase, sale, or exchange
of property or the rendering of any service, with any Affiliate.
(h) Prepayment of Outstanding Debt. Pay, in whole or in part, any
outstanding Debt (other than (i) Debt owing to the Bank, (ii)
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scheduled payments of principal and/or interest on any other Debt including,
without limitation, the Senior Notes and (iii) accounts payable and other trade
payables) of the Borrower or the Guarantor, which by its terms is not then due
and payable.
(i) Guarantees. Guaranty, or in any other way become directly or
contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the endorsement of negotiable instruments
for deposit in the ordinary course of business; (ii) guarantees existing on the
date hereof and set forth in Schedule 5.02(i) annexed hereto; or (iii)
guarantees of any Debt permitted under Section 5.02(b) of this Agreement.
(j) Change of Business. Materially alter the nature of its business.
(k) Fiscal Year. Change the ending date of its fiscal year from December
31.
(l) Losses. Incur a net loss for any fiscal year.
(m) Accounting Policies. Change any accounting policies, except as
permitted by GAAP.
(n) Dividends, Etc. Declare or pay any dividends, purchase, redeem, retire
or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such,
whether in cash, assets, or in obligations of the Borrower or the Guarantor; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of any shares of
its capital stock; or make any other distribution by
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reduction of capital or otherwise in respect of any share of its capital stock,
except, provided no Default or Event of Default has occurred and is continuing
(i) Permitted Dividends or (ii) Permitted Stock Repurchases funded in cash and
which do not exceed $10,000,000.00 in the aggregate in any fiscal year.
(o) Change in Control. (a) Permit any Person or "group" (within the
meaning of Section 13(d)-3 under the Securities Exchange Act of 1934 and the
rules of the Securities and Exchange Commission as in effect on the date
hereof), other than the current management of the Borrower, to own more than
fifty (50%) percent of the outstanding voting securities of the Borrower. (b)
Permit any nominees other than nominees nominated by the existing board of
directors of the Borrower to hold a majority of the seats on the board of
directors of the Borrower.
(p) Intentionally Omitted.
(q) Hazardous Material. The Borrower, the Guarantor and each Subsidiary of
the Borrower or the Guarantor shall not cause or permit any property owned or
occupied by the Borrower, the Guarantor or any such Subsidiary to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in compliance with all
applicable federal, state and local laws or regulations; nor shall the Borrower,
the Guarantor or any such Subsidiary cause or permit, as a result of any
intentional or unintentional act or omission on the part of the Borrower, the
Guarantor or any such Subsidiary or any tenant or subtenant, a release of
Hazardous Materials onto any property owned or occupied
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by the Borrower, the Guarantor or any such Subsidiary or onto any other
property; nor shall the Borrower, the Guarantor and each such Subsidiary fail to
comply with all applicable federal, state and local laws, ordinances, rules and
regulations, whenever and by whomever triggered, nor fail to obtain and comply
with, any and all approvals, registrations or permits required thereunder. The
Borrower and the Guarantor shall execute any documentation required by the Bank
in connection with the representations, warranties and covenants contained in
this paragraph and Section 4.01 of this Agreement.
(r) Limitations on Consolidated Foreign Assets and Revenues. (a) Have more
than fifteen (15%) percent of the consolidated assets or revenues of the
Borrower and its Consolidated Subsidiaries be located in, or derived from,
locations other than the United States.
(b) Have more than ten (10%) percent of the consolidated assets or
revenues of the Borrower and its Consolidated Subsidiaries be held by, or
produced by, any Foreign Subsidiary.
SECTION 5.03. Financial Requirements. So long as any amount shall remain
outstanding under the Revolving Credit Note or so long as the Commitment shall
remain in effect:
(a) Minimum Consolidated Tangible Net Worth. The Borrower will maintain at
all times Consolidated Tangible Net Worth of not less than (i) $35,000,000.00
from the date of this Agreement until December 30, 1999; and (ii) beginning on
December 31, 1999 until December 30, 2000 and on each succeeding December 31
through the
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succeeding December 30, the sum of (x) thirty (30%) of the consolidated net
income of the Borrower for the fiscal year ending such December 31 plus (y) the
required (in accordance with this Section 5.03(a)) level of Consolidated
Tangible Net Worth as of the preceding December 31.
(b) Consolidated Capital Expenditures. The Borrower will not make
Consolidated Capital Expenditures in excess of $15,000,000.00 in the aggregate
during any fiscal year of the Borrower.
(c) Consolidated Leverage Ratio. The Borrower will maintain at all times a
Consolidated Leverage Ratio (tested quarterly) of not greater than 3.00 to 1.00.
(d) Consolidated Interest Coverage Ratio. The Borrower will maintain at
all times a Consolidated Interest Coverage Ratio of not less than 3.00 to 1.00.
(e) Consolidated Fixed Charge Ratio. The Borrower will maintain at all
times a Consolidated Fixed Charge Ratio of not less than 1.25 to 1.00.
(f) Debt to EBITDA Ratio. The Borrower will maintain at all times a Debt
to EBITDA Ratio of not greater than 2.75 to 1.00.
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ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("Events
of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any installment of principal
of the Revolving Credit Note when due or (ii) any interest, fees or other
amounts owed in connection with this Agreement within five (5) days of when such
payment is due; or
(b) Any representation or warranty made by the Borrower or the
Guarantor herein or in the Loan Documents or which is contained in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(c) The Borrower or the Guarantor shall (i) fail to perform or
observe any term, covenant or agreement contained in Sections 5.01(a), (c), (e),
(f), (h), (i) or (j) of this Agreement for twenty (20) days after such
performance or observation is required, or (ii) fail to perform or observe any
other term, covenant, or agreement contained in this Agreement in any other Loan
Document (other than the Note) on its part to be performed or observed; or
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(d) The Borrower, the Guarantor, or any Subsidiary of the Borrower
or the Guarantor shall fail to pay any Debt or Debts, or principal installments
thereon, which Debt or Debts are in the aggregate principal amount of
$500,000.00 or more (excluding Debt evidenced by the Note) of the Borrower, the
Guarantor or any such Subsidiary (as the case may be), or any interest or
premium thereon, 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 Debt; or any other default under any agreement or instrument
relating to any such Debt, or any other event shall occur and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
or
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(e) The Borrower, the Guarantor or any Subsidiary of the Borrower or
the Guarantor shall generally not pay its Debts as such Debts become due, or
shall admit in writing its inability to pay its Debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower, the Guarantor or any such Subsidiary
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its Debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property and if instituted against the
Borrower, the Guarantor or any such Subsidiary shall remain undismissed for a
period of 60 days; or the Borrower, the Guarantor or any such Subsidiary shall
take any action to authorize any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order or combination of judgments or orders for
the payment of money, in excess of $500,000.00 in the aggregate, which sum shall
not be subject to full, complete and effective insurance coverage (subject to
deductibles), shall be rendered against the Borrower, the Guarantor or any
Subsidiary of the Borrower or the Guarantor and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 30 consecutive days during which a
stay of enforcement of such
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judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(g) The Guarantor shall fail to perform or observe any term or
provision of its Guaranty or any representation or warranty made by the
Guarantor (or any of its officers) in connection with the Guarantor's Guaranty
shall prove to have been incorrect in any material respect when made; or
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(h) Any of the following events occur or exist with respect to the
Borrower, the Guarantor, any Subsidiary of the Borrower or the Guarantor, or any
ERISA Affiliate: (i) any Prohibited Transaction involving any Plan; (ii) any
Reportable Event with respect to any Plan; (iii) the filing under Section 4041
of ERISA of a notice of intent to terminate any Plan or the termination of any
Plan; (iv) any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the termination
of, or for the appointment of a trustee to administer, any Plan, or the
institution of the PBGC of any such proceedings; (v) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization insolvency, or termination of any Multiemployer Plan; and in each
case above, such event or condition, together with all other events or
conditions, if any, could in the opinion of the Bank subject the Borrower, the
Guarantor, any such Subsidiary or any ERISA Affiliate to any tax, penalty, or
other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceeds or may exceed $250,000.00;
or
(i) This Agreement or any other Loan Document, at any time after its
execution and delivery and for any reason, ceases to be in full force and effect
or shall be declared to be null and void, or the validity or enforceability of
any document or instrument delivered pursuant to this Agreement shall be
contested by the Borrower, the Guarantor or any party to such document or
instrument or the Borrower, the Guarantor or any party to such
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document or instrument shall deny that it has any or further liability or
obligation under any such document or instrument; or
(j) An event of default specified in any Loan Document other than
this Agreement shall have occurred and be continuing.
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SECTION 6.02. Remedies on Default. Upon the occurrence and
continuance of an Event of Default the Bank may by notice to the Borrower, (i)
terminate the Commitment, (ii) declare the Revolving Credit Note, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Commitment shall be terminated, the Revolving Credit
Note, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower and (ii) proceed to
enforce its rights whether by suit in equity or by action at law, whether for
specific performance of any covenant or agreement contained in this Agreement or
any Loan Document, or in aid of the exercise of any power granted in either this
Agreement or any Loan Document or proceed to obtain judgment or any other relief
whatsoever appropriate to the enforcement of its rights, or proceed to enforce
any other legal or equitable right which the Bank may have by reason of the
occurrence of any Event of Default hereunder or under any Loan Document,
provided, however, upon the occurrence of an Event of Default referred to in
Section 6.01(e), the Commitment shall be immediately terminated, the Revolving
Credit Note, all interest thereon and all other amounts payable under this
Agreement shall be immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower. Any amounts collected pursuant to action taken under this
Section 6.02 shall be applied to the
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payment of, first, any costs incurred by the Bank in taking such action,
including, but without limitation, reasonable attorneys fees and expenses,
second, to payment of the accrued but unpaid interest on the Revolving Credit
Note, and third, to payment of the unpaid principal of the Revolving Credit
Note.
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or reserved to
the Bank hereunder or in any Loan Document is intended to be exclusive of any
other available remedy, but each and every such remedy shall be cumulative and
in addition to every other remedy given under this Agreement or any Loan
Document or now or hereafter existing at law or in equity. No delay or omission
to exercise any right or power accruing upon any Event of Default shall impair
any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Bank to exercise any remedy reserved
to it in this Article VI, it shall not be necessary to give any notice, other
than such notice as may be herein expressly required in this Agreement or in any
Loan Document.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment, modification, termination or
waiver of any provision of any Loan Document to which the Borrower or the
Guarantor is a party, nor consent to any departure by the Borrower or the
Guarantor from any provision of any Loan Document to which it is a party, shall
in any event be effective unless the same shall be in writing and signed by the
Bank and the Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 7.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic communication) and
mailed, telegraphed, sent by facsimile or delivered, if to the Borrower or the
Guarantor, at the address of the Borrower or Guarantor, as the case may be, set
forth at the beginning of this Agreement and if to the Bank, at the address of
the Bank set forth at the beginning of this Agreement to the attention of Del
Laboratories, Inc. Account Officer, or, as to each party, at such other address
as shall be designated by such party in a written notice complying as to
delivery with the terms of this Section 7.02 to the other parties. All such
notices and communications shall be effective upon the earlier of (i) actual
receipt or (ii) (a) three Business Days after deposit in the United States Mail,
(b) upon transmission when sent by telecopy or other
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similar facsimile transmission (with such telecopy or facsimile promptly
confirmed by delivery of a copy as otherwise provided herein), (c) one Business
Day after deposit with a reputable overnight courier or (d) when delivered, by
hand delivery.
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SECTION 7.03. No Waiver, Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right, power or remedy under any Loan
Document, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
the Loan Documents are cumulative and not exclusive of any remedies provided by
law.
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SECTION 7.04. Costs, Expenses and Taxes. The Borrower agrees to pay on
demand all reasonable costs and expenses of the Bank in connection with the
preparation, execution, delivery and administration of this Agreement, the
Revolving Credit Note and any other Loan Documents, including, without
limitation, the reasonable fees and expenses of counsel for the Bank with
respect thereto (provided that such fees (excluding expenses) of counsel to the
Bank shall not exceed, absent unanticipated delays and unforeseeable issues,
$15,000.00) and with respect to advising the Bank as to its rights and
responsibilities under this Agreement, and all costs and expenses, if any
(including reasonable counsel fees and expenses), in connection with the
enforcement of this Agreement, the Revolving Credit Note and any other Loan
Documents. The Borrower and the Guarantor shall, jointly and severally, at all
times, protect, indemnify, defend and save harmless the Bank from and against
any and all claims, actions, suits and other legal proceedings, and liabilities,
obligations, losses, damages, penalties, judgments, costs, expenses or
disbursements which the Bank may, at any time, sustain or incur by reason of or
in consequence of or arising out of the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby except as
hereinafter provided. The Borrower and the Guarantor acknowledge that it is the
intention of the parties hereto that this Agreement shall be construed and
applied to protect and indemnify the Bank against any and all risks involved in
the execution and delivery of this Agreement and the
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consummation of the transactions contemplated hereby, all of which risks are
hereby assumed by the Borrower and the Guarantor, including, without limitation,
any and all risks of the acts or omissions, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority,
provided that neither the Borrower nor the Guarantor shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Bank's
gross negligence or willful misconduct. The provisions of this Section 7.04
shall survive the payment of the Note and the termination of this Agreement.
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SECTION 7.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank,
Chase Securities, Inc. or any other affiliate of the Bank to or for the credit
or the account of the Borrower or the Guarantor against any and all of the
obligations of the Borrower or the Guarantor now or hereafter existing under
this Agreement, the Revolving Credit Note and the other Loan Documents,
irrespective of whether or not the Bank shall have made any demand under this
Agreement, the Revolving Credit Note or such other Loan Documents and although
such obligations may be unmatured. The rights of the Bank under this Section are
in addition to all other rights and remedies (including, without limitation,
other rights of set-off) which the Bank may have.
SECTION 7.06. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower, the Guarantor and the Bank and
thereafter it shall be binding upon and inure to the benefit of the Borrower,
the Guarantor and the Bank and their respective successors and assigns, except
that neither the Borrower nor the Guarantor shall have any right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
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SECTION 7.07. Further Assurances. The Borrower and the Guarantor agree at
any time and from time to time at its expense, upon the reasonable request of
the Bank or its counsel, to promptly execute, deliver, or obtain or cause to be
executed, delivered or obtained any and all further instruments and documents
and to take or cause to be taken all such other action the Bank may deem
desirable in obtaining the full benefits of, this Agreement or any other Loan
Document.
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SECTION 7.08. Section Headings, Severability, Entire Agreement. Section
and subsection headings have been inserted herein for convenience only and shall
not be construed as part of this Agreement. Every provision of this Agreement
and each Loan Document is intended to be severable; if any term or provision of
this Agreement, any Loan Document, or any other document delivered in connection
herewith shall be invalid, illegal or unenforceable for any reason whatsoever,
the validity, legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired thereby. All exhibits and
schedules to this Agreement shall be annexed hereto and shall be deemed to be
part of this Agreement. This Agreement and the exhibits and schedules attached
hereto embody the entire Agreement and understanding between the Borrower, the
Guarantor and the Bank and supersede all prior agreements and understandings
relating to the subject matter hereof.
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SECTION 7.09. Confidentiality. The Bank and each of its assignees and
participants agree to use commercially reasonable efforts (reasonably equivalent
to the efforts the Bank or such assignee or participant applies to maintaining
the confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Borrower or
any of its Subsidiaries, except that the Bank and any assignee or participant
may disclose such information (a) to Persons employed or engaged by the Bank or
such assignee or participant in evaluating, approving, structuring or
administering this Agreement, the Loans or the Commitment; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 7.09 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any governmental authority or reasonably
believed by the Bank or such assignee or participant to be compelled by any
court decree, subpoena or legal or administrative order or process; (d) as, in
the opinion of the Bank's or such assignee's or participant's counsel, required
by law; (e) in connection with the exercise of any right or remedy under the
Loan Documents or in connection with any litigation to which the Bank or such
assignee or participant is a party arising in connection with any Loan Document;
or (f) which ceases to be confidential through no fault of Bank or such assignee
or participant.
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SECTION 7.10. Governing Law. This Agreement, the Revolving Credit
Note and all other Loan Documents shall be governed by, and construed in
accordance with, the laws of the State of New York.
SECTION 7.11. Waiver of Jury Trial. The Borrower, the Guarantor and the
Bank waive all rights to trial by jury on any cause of action directly or
indirectly involving the terms, covenants or conditions of this Agreement or any
Loan Document.
SECTION 7.12. Execution in Counterparts. 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.
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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.
DEL LABORATORIES, INC.
By________________________________
Name: Xxxx Xxxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
DEL PHARMACEUTICALS, INC.
By________________________________
Name: Xxxx Xxxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
THE CHASE MANHATTAN BANK
By________________________________
Name: Xxxxxxxxxxx X. Xxxxxxxxxx
Title: Vice President
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SCHEDULE 4.01(a)
Subsidiaries
STATE OF INCORPORATION IDENTITY AND
AND EACH STATE IN WHICH PERCENTAGE OF
SUBSIDIARY'S NAME IT IS QUALIFIED TO DO OWNERSHIP OF
AND ADDRESS BUSINESS EACH SHAREHOLDER
----------------- ----------------------- ----------------
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SCHEDULE 4.01 (t)
Credit Agreements
Nature of Amount of Liens Securing
Creditor Agreement Credit Credit
-------- --------- ------ ------
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SCHEDULE 5.02(a)
Liens
Creditor Amount Property Subject to Lien
-------- ------ ------------------------
See Schedule 4.01(t)
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SCHEDULE 5.02(b)
Debt
Creditor Amount
-------- ------
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SCHEDULE 5.02(i)
Guaranties
Description of All Guaranties:
None
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EXHIBIT A
REVOLVING CREDIT NOTE
$20,000,000.00 Garden City, New York
December 30, 1998
FOR VALUE RECEIVED, on the Maturity Date, DEL LABORATORIES, INC., a
Delaware corporation, having its principal place of business at 000 XXX Xxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 (the "Borrower"), promises to pay to the order of THE
CHASE MANHATTAN BANK (the "Bank") at its office located at 000 Xxxxx Xxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000, the principal sum of the lesser of:
(a) TWENTY MILLION ($20,000,000.00) DOLLARS; or (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by Bank to Borrower pursuant
to the Agreement (as defined below).
Borrower shall pay interest on the unpaid principal balance of this Note
from time to time outstanding, at said office, at the rates of interest, at the
times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in lawful
money of the United States of America in immediately available funds. Except as
otherwise provided in the Agreement, if a payment becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
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Borrower hereby authorizes Bank to enter from time to time the amount of
each Loan to Borrower and the amount of each payment on a Loan on the schedule
annexed hereto and made a part hereof. Failure of Bank to record such
information on such schedule shall not in any way effect the obligation of
Borrower to pay any amount due under this Note.
This Note is the Revolving Credit Note referred to in that certain Loan
Agreement among Borrower, Del Pharmaceuticals, Inc., and Bank of even date
herewith (the "Agreement"), as such Agreement may be amended from time to time,
and is subject to prepayment and its maturity is subject to acceleration upon
the terms contained in said Agreement. All capitalized terms used in this Note
and not defined herein shall have the meanings given them in the Agreement.
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If any action or proceeding be commenced to collect this Note or enforce
any of its provisions, Borrower further agrees to pay all reasonable costs and
expenses of such action or proceeding and attorneys' fees and expenses and
further expressly waives any and every right to interpose any counterclaim in
any such action or proceeding. Borrower hereby submits to the jurisdiction of
the Supreme Court of the State of New York and agrees with Bank that personal
jurisdiction over Borrower shall rest with the Supreme Court of the State of New
York for purposes of any action on or related to this Note, the liabilities
hereunder, or the enforcement of either or all of the same. Borrower hereby
waives personal service by manual delivery and agrees that service of process
may be made by pre-paid certified mail directed to the Borrower at the
Borrower's address set forth above or at such other address as may be designated
in writing by the Borrower to Bank in accordance with Section 7.02 of the
Agreement, and that upon mailing of such process such service be effective with
the same effect as though personally served. Borrower hereby expressly waives
any and every right to a trial by jury in any action on or related to this Note,
the liabilities hereunder or the enforcement of either or all of the same.
Subject to the provisions of the Agreement, Bank may transfer this Note to
the permitted transferee or transferees, who shall thereupon become vested with
all the powers and rights above given to Bank in respect thereto, and Bank shall
thereafter be forever relieved and fully discharged from any liability or
responsibility in the matter. The failure of any holder of this Note to insist
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upon strict performance of each and/or all of the terms and conditions hereof
shall not be construed or deemed to be a waiver of any such term or condition.
Borrower and all endorsers and guarantors hereof waive presentment and
demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the laws
of the State of New York.
DEL LABORATORIES, INC.
By:______________________________________
Name: Xxxx Xxxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
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Schedule of Revolving Credit Loans
Amount of
Principal Unpaid Name of
Amount of Paid or Principal Person Making
Date Loan Prepaid Balance Notation
------ --------- --------- --------- -------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
____________________________________________________
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