$15,000,000
REVOLVING CREDIT AGREEMENT
dated September 25, 1996
among
PDK LABS, INC. and
FUTUREBIOTICS, INC., as Co-Borrowers
and
THE CHASE MANHATTAN BANK, as Agent,
and
THE "BANKS" PARTY HERETO
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Defined Terms . . . . . . . . . . 1
Section 1.2. Use of Defined Terms . . . . . . 12
Section 1.3. Accounting Terms . . . . . . . . 13
ARTICLE 2. AMOUNT AND TERMS OF THE REVOLVING CREDIT LOANS . . 13
Section 2.1. Revolving Credit Loans . . . . . 13
Section 2.2. The Notes . . . . . . . . . . . . 13
Section 2.3. Notice of Borrowing; Minimum
Amounts . . . . . . . . . . . . . . 14
Section 2.4. Commitment Fee . . . . . . . . . 15
Section 2.5. Termination or Reduction of
Commitment; Acceleration of
Termination Date . . . . . . . . . 15
Section 2.6. Changes in Capital Requirements . 15
Section 2.7. Voluntary Prepayments .. . . . . 16
Section 2.8. Computation of Interest and Commitment
Fee; Payments . . . . . . . . . 16
Section 2.9. Inability to Determine Rate . . . 16
Section 2.10. Illegality . . . . . . . . . . . 16
Section 2.11. Requirements of Law . . . . . . . 17
Section 2.12. Indemnification . . . . . . . . . 17
Section 2.13. Use of Proceeds . . . . . . . . . 18
Section 2.14. Authorization to Debit Co-Borrowers'
Accounts . . . . . . . . . . . . . 18
Section 2.15. Default Interest . . . . . . . . 18
Section 2.16. Interest Adjustments . . . . . . 18
Section 2.17. Participations, Etc . . . . . . . 19
ARTICLE 3. CONDITIONS OF BORROWING . . . . . . . . . . . . . . 19
Section 3.1. Conditions of Initial Revolving Credit
Loan . . . . . . . . . . . . . . 19
Section 3.2. Additional Conditions Precedent . 23
ARTICLE 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 24
Section 4.1. Corporate Existence . . . . . . . 24
Section 4.2. Corporate Power and Authorization 24
Section 4.3. No Legal Bar to Loans . . . . . . 24
Section 4.4. No Material Litigation . . . . . 25
Section 4.5. No Default . . . . . . . . . . . 25
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Section 4.6. Ownership of Properties; Liens . 25
Section 4.7. Taxes . . . . . . . . . . . . . . 25
Section 4.8. Financial Condition . . . . . . . 25
Section 4.9. Filing of Statements and Reports 25
Section 4.10. ERISA . . . . . . . . . . . . . . 26
Section 4.11. Environmental Matters . . . . . . 26
Section 4.12. Licenses, Permits, etc. . . . . . 26
Section 4.13. Material Agreements . . . . . . . 26
Section 4.14. Margin Credit . . . . . . . . . . 26
Section 4.15. Use of Proceeds . . . . . . . . . 27
Section 4.16. Properties Affected . . . . . . . 27
Section 4.17. Guarantors . . . . . . . . . . . 27
Section 4.18. Subsidiaries . . . . . . . . . . 27
Section 4.19. Solvency . . . . . . . . . . . . 27
ARTICLE 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . 27
Section 5.1. Financial Statements . . . . . . 27
Section 5.2. Payment and Performance of
Obligations . . . . . . . . . . . 29
Section 5.3. Maintenance of Properties;
Insurance . . . . . . . . . . . . 29
Section 5.4. Notices . . . . . . . . . . . . . 30
Section 5.5. Conduct of Business and
Maintenance of Existence . . . . . 30
Section 5.6. Inspection of Property, Books and
Records . . . . . . . . . . . . . 30
Section 5.7. Hazardous Material . . . . . . . 30
Section 5.8. Subsidiary Guaranties . . . . . . 31
Section 5.9. Pension Funding . . . . . . . . . 31
ARTICLE 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 31
Section 6.1. Limitation on Indebtedness . . . 32
Section 6.2. Limitation on Liens . . . . . . . 32
Section 6.3. Limitation on Contingent
Obligations . . . . . . . . . . . 33
Section 6.4. Prohibition of Fundamental
Changes. . . . . . . . . . . . . . 33
Section 6.5. Limitation on Investments, Loans and
Advances . . . . . . . . . . . . 33
Section 6.6. Prohibition of Certain
Prepayments . . . . . . . . . . . 34
Section 6.7. Limitation on Leases . . . . . . 34
Section 6.8. Sale and Leaseback . . . . . . . 34
Section 6.9. Prohibitions Regarding Subordinated
Debt . . . . . . . . . . . . . . 34
Section 6.10. Maintenance of Consolidated
Indebtedness to Consolidated Tangible
Net Worth Ratio . . . . . . . . 35
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Section 6.11. Maintenance of Consolidated Coverage
Ratio . .. . . . . . . . . . . . . 35
Section 6.12. Consolidated Net Income . . . . . 35
Section 6.13. Maintenance of Consolidated Quick
Ratio . . . . . . . . . . . . . . 35
Section 6.14. Transactions with Affiliates . . 35
Section 6.15. Management . . . . . . . . . . . 35
Section 6.16. Change in Control . . . . . . . . 35
Section 6.17. Limitation on Capital
Expenditures . . . . . . . . . . . 35
Section 6.18. Limitation on Dividends and Stock
Acquisitions . . . . . . . . . . 35
ARTICLE 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 36
Section 7.1. Events of Default . . . . . . . . 36
Section 7.2. Remedies on Default . . . . . . . 38
ARTICLE 8. THE AGENT; RELATIONS AMONG BANKS . . . . . . . . . 38
Section 8.1. Appointment, Powers and Immunities of
Agent . . . . . . . . . . . . . . 38
Section 8.2 Reliance by Agent . . . . . . . . 39
Section 8.3 Defaults . . . . . . . . . . . . 39
Section 8.4 Rights of Agent as a Bank . . . . 39
Section 8.5 Indemnification of Agent . . . . 40
Section 8.6 Documents . . . . . . . . . . . . 40
Section 8.7 Non-Reliance on Agent and Other
Banks . . . . . . . . . . . . . . 40
Section 8.8 Failure of Agent to Act . . . . . 41
Section 8.9 Resignation or Removal of Agent . 41
Section 8.10 Amendments Concerning Agency
Function . . . . . . . . . . . . . 41
Section 8.11 Liability of Agent . . . . . . . 41
Section 8.12 Transfer of Agency Function . . . 41
Section 8.13 Non-Receipt of Funds by the Agent. 42
Section 8.14 Several Obligations and Rights of
Banks . . . . . . . . . . . . . . 42
Section 8.15 Pro Rata Treatment of Loans, Etc . 42
Section 8.16 Sharing of Payments Among Banks. . 42
ARTICLE 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 43
Section 9.1. Limited Role of Banks . . . . . . 43
Section 9.2. Choice of Law Construction . . . 43
Section 9.3. Consent to Jurisdiction . . . . 43
Section 9.4. WAIVER OF JURY TRIAL . . . . . . 43
Section 9.5. Notices . . . . . . . . . . . . 43
Section 9.6. Entire Agreement; No Waiver; Cumulative
Remedies; Amendments; Setoff . . 44
Section 9.7. Reference to Subsidiaries and
Guarantors . . . . . . . . . . . . 45
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Section 9.8. Joint and Several Obligations. . . 45
Section 9.9. Captions . . . . . . . . . . . . . 45
Section 9.10. Exhibits . . . . . . . . . . . . . 45
Section 9.11. Payment of Fees. . . . . . . . . . 45
Section 9.12. Survival of Agreements . . . . . . 46
Section 9.13. Successors and Assigns . . . . . . 46
Section 9.14. Interest . . . . . . . . . . . . . 46
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REVOLVING CREDIT AGREEMENT, dated as of September 25, 1996, among
PDK LABS INC., a New York corporation having its principal place of business at
000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("PDK"), FUTUREBIOTICS, INC., a
Delaware corporation having its principal place of business at 000 Xxxxxxxxx
Xxxx, Xxxxxxxxx, Xxx Xxxx ("Futurebiotics"; collectively with PDK, the "Co-
Borrowers"), each of the Banks which is a party hereto and THE CHASE MANHATTAN
BANK, a New York banking corporation having an office at 000 Xxxxx Xxxxxxx Xxxx,
Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000 ("Chase"), as agent for the Banks (in such
capacity, together with its successors in such capacity, the "Agent").
RECITALS:
WHEREAS, Chase has previously extended credit to Futurebiotics
pursuant to the Futurebiotics Credit Agreement and to PDK pursuant to the PDK
Credit Agreement; and
WHEREAS, the Co-Borrowers have requested the Banks to extend credit
hereunder to replace the existing revolving credit made available by Chase to
Futurebiotics and to PDK and, in that connection, the Co-Borrowers have agreed
to use the proceeds of the initial borrowings hereunder to repay such revolving
credit indebtedness; and
WHEREAS, the Banks are willing to extend such credit to the
Co-Borrowers, on a joint and several basis, on the terms and conditions set
forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
A1. DEFINITIONS
S1. Defined Terms. As used in this Agreement, the following terms
shall have the following meanings, unless the context otherwise requires:
"Accumulated Funding Deficiency" shall have the meaning set forth in
Section 302 of ERISA.
"Affiliate" shall mean, with respect to any Person, any Person which
(a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person; (b) is a partnership in which such Person is
a general partner; or (c) is
a limited liability company in which such Person is a member. For purposes of
this definition, "control" of a Person means the power, direct or indirect,
either (i) to vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (ii) to direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agreement" shall mean this Credit Agreement and any amendments or
supplements thereto.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/6 of 1%) equal to the greatest of:
(a) the Prime Rate in effect on such day;
(b) the Base CD Rate in effect on such day plus 1%;
and
(c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%.
For purposes of this definition:
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Agent as its prime rate in effect as its
principal office in New York City. The Prime Rate is not intended to be the
lowest rate of interest charged by the Agent in connection with extensions of
credit to debtors.
"Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is
one and the denominator of which is one minus the CD Reserve Percentage and
(b) the CD Assessment Rate.
"CD Assessment Rate" shall mean, for any day, the net annual
assessment rate (rounded upwards, if necessary, to the next 1/100 of 1%)
determined by the Agent to be payable on such day to the Federal Deposit
Insurance Corporation or any successor ("FDIC") for FDIC's insuring time
deposits made in Dollars at office of the Agent in the United States.
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"CD Reserve Percentage" shall mean, for any day, as applied to any
calculation of the Base CD Rate, that percentage (expressed as a decimal) which
is in effect on such day, as prescribed by the Board for determining the maximum
reserve required for a Depositary Institution (as defined in Regulation D of the
Board) in respect of new non-personal time deposits in Dollars having a maturity
of 30 days or more.
"Three-Month Secondary CD Rate" shall mean for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or if such rate is not so reported, the
average (rounded upwards to the nearest 1/100 of 1%) of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day or next preceding Business Day by the Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected by it.
"Federal Funds Effective Rate" shall mean, for any day, 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 on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
quotations, for the day, of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
If for any reason the Agent shall have determined (which determination shall be
conclusive absent clearly demonstrable error) that it is unable to ascertain the
Base CD Rate or the Federal Funds Effective Rate or both for any reason,
including the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms thereof, the Alternate Base Rate shall be
determined without regard to clause (b) or (c), or both, as appropriate, until
the circumstances giving rise to such inability
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no longer exist. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate shall be effective as of the opening of business on the date of such
change.
"Banks" means each of Chase and the other Banks, if any, signatory
hereto and each Bank which hereinafter becomes a "Bank" pursuant to the terms
hereof.
"Base Rate Loan" shall mean a Loan at such time as it is made or
maintained at a rate of interest based on the Alternate Base Rate.
"Board of Governors" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which the Agent is authorized to close under the laws of the State
of New York.
"Capital Expenditures" shall mean, for any Person, for a particular
period, the aggregate amount of any expenditures during such period (including
purchase money Liens) made 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.
"Capital Lease" shall mean all leases which have been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" means, with respect to each Bank, subject to the other
provisions of this Agreement, the obligation of such Bank to extend credit to
the Co-Borrowers hereunder in the following aggregate principal amounts, as
such amounts may be reduced or otherwise modified from time to time:
Bank Commitment
---- ----------
Chase $15,000,000
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"Commitment Proportion" shall mean with respect to each Bank, at the
time of determination, that portion that its Commitment bears to the Total
Commitment.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Co-Borrowers within the
meaning of Section 4001 of ERISA.
"Consolidated Coverage Ratio" shall mean, with respect to PDK and
its Subsidiaries, for any twelve month period, the ratio of (i) the sum of
Consolidated Net Income, tax expense, depreciation expense, amortization of
intangibles, other noncash charges and interest expense, minus any unfunded
Capital Expenditures, minus any cash dividends paid (common or preferred) as
permitted by this Agreement, minus any cash paid to purchase shares of the
Co-Borrowers' stock in accordance with Section 6.5(m) hereof minus cash taxes
paid, to (ii) the sum of interest expense during the preceding four fiscal
quarters plus installments of principal on all long term Consolidated
Indebtedness scheduled to be paid during the subsequent four fiscal quarters.
For purposes of this definition and the calculation of this ratio, long term
Consolidated Indebtedness shall include one-seventh (1/7) of the principal
amount outstanding under this revolving credit facility at the end of such
twelve month period.
"Consolidated Current Liabilities" shall mean, at a particular date,
all amounts which would, in conformity with GAAP, be included under current
liabilities on a consolidated balance sheet of PDK and its Subsidiaries as at
such date, including, without limitation, (a) all obligations payable on demand
or within one year after the date on which the determination is made and (b)
one-seventh (1/7) of the then outstanding principal amount hereunder.
"Consolidated Indebtedness" shall mean, at a particular date, the
aggregate amount for PDK and its Subsidiaries of (i) indebtedness or liability
for borrowed money; (ii) indebtedness for the deferred purchase price of
property or services (including trade obligations or trade letters of credit) ;
(iii) obligations of a lessee under Capital Leases; (iv) current liabilities in
respect of unfunded vested benefits under any Plan; (v) obligations under
stand-by letters of credit issued for the account of the Co-Borrowers, or either
of them, or any Subsidiary for purposes other than to support trade indebtedness
that would be included in clause
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(ii) above; (vi) obligations arising under acceptance facilities; (vii) all
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 Person, or otherwise to
assure a creditor against loss; (viii) obligations secured by any Lien on
property owned by the Co-Borrowers, or any of them, or any Subsidiary whether or
not the obligations have been assumed; and (ix) all other liabilities recorded
as such, or which should be recorded as such, on the consolidated financial
statements of PDK and its Subsidiaries in accordance with GAAP.
"Consolidated Intangibles" shall mean at a particular date, the
aggregate amount of all assets of PDK and its Subsidiaries, determined on a
consolidated basis at such date, that would be classified as intangible assets
in accordance with GAAP, but in any event including, without limitation,
customer lists, unamortized debt discount expense, unamortized organization and
reorganization expense, costs in excess of the net asset value of acquired
companies, patents, trade or service marks, franchises, trade names, goodwill
and the amount of any write-up in the book value of any assets resulting from
the revaluation (other than revaluations arising out of foreign currency
valuations in accordance with GAAP) thereof.
"Consolidated Liquid Assets" shall mean, at a particular date, all
amounts which would, in conformity with GAAP, be included under cash, marketable
securities and accounts receivable on a consolidated balance sheet of PDK and
its Subsidiaries at such date.
"Consolidated Net Income" shall mean, at a particular date, the
aggregate amount which would, in accordance with GAAP, be classified as
consolidated net income, after taxes, in a consolidated income statement of PDK
and its Subsidiaries as at such date.
"Consolidated Quick Ratio" shall mean the ratio of (i) Consolidated
Liquid Assets to (ii) Consolidated Current Liabilities.
"Consolidated Tangible Net Worth" shall mean, at any time
outstanding, the amount by which (i) the par value (or value stated on the
books) of all classes of the capital stock of PDK plus (or
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minus in the case of a deficit) the amount of the consolidated surplus, whether
capital or earned, of PDK and its Subsidiaries exceeds (ii) the sum of the
amount of Consolidated Intangibles, plus treasury stock, plus leasehold
improvements, plus loans and advances to officers, stockholders, and employees
of the Co-Borrowers or their Subsidiaries plus loans to, or Investments in any
other Person which is not a Guarantor. For the purposes of this definition,
Investments shall be deemed to include only those types of investments described
in Section 6.5(g), Section 6.5(h), Section 6.5(k) and Section 6.5(m) hereto.
"Consolidated Total Assets" shall mean, at a particular date, all
amounts which would, in conformity with GAAP, be included under total assets on
a consolidated balance sheet of a Co-Borrower and its Subsidiaries at such date.
"Consolidated Total Liabilities" shall mean, at a particular date,
all amounts which would, in conformity with GAAP, be included under total
liabilities on a consolidated balance sheet of a Co-Borrower and its
Subsidiaries at such date.
"Default" shall mean any of the events specified in Section 7.1
hereof, whether or not any requirement for the giving of notice or the lapse of
time or both or any other condition has been satisfied.
"Dollars" or "$" shall mean United States Dollars.
"ERISA" shall mean the Employee Retirement Income act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean 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" shall mean a Loan at such time as it is made or
maintained at a rate of interest based on the Eurodollar Rate.
"Eurodollar Rate" shall mean for each Interest Period the rate per
annum, adjusted as provided in the following sentence, at which U.S. dollar
deposits are offered to the Agent's Eurodollar lending office (the "Lending
Office") in the interbank eurodollar
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market in which such Lending Office customarily deals as at the relevant local
time of such Lending Office, two (2) Working Days prior to the first day of such
Interest Period for delivery on the first day of such Interest Period, for the
number of days in such Interest Period in an amount equal to, for each
Eurodollar Loan, the amount of such Eurodollar Loan which will be outstanding
during such Interest Period. The interest rate determined under this paragraph
shall be adjusted by dividing such interest rate by the number equal to 1.00
minus the Reserve Requirement. As used in this definition, "relevant local time"
shall mean 11:00 A.M. local time in London, England when the Lending Office
operates on London time or 10:00 A.M. New York time when the Lending Office
operates on New York time.
"Event of Default" shall mean any of the events specified in
Section 7.1 hereof, provided that any requirement for the giving of notice or
the lapse of time or both has been satisfied.
"Existing Term Loans" shall mean the existing term loans made by
Chase to PDK and evidenced by the Existing Term Notes.
"Existing Term Notes" shall mean the promissory notes of PDK in
favor of the Chase dated November 30, 1992, July 6, 1995 and March 28, 1996,
respectively, and evidencing the Existing Term Loans.
"Futurebiotics Credit Agreement" shall mean the Revolving Credit
Agreement dated as of December 13, 1994 by and between Futurebiotics and Chase
(formerly known as Chemical Bank), as amended by a First Amendment dated as of
February 27, 1995, a Second Amendment, dated as of July 6, 1995, a Third
Amendment, dated as of March 28, 1996 and a Fourth Amendment dated as of June
11, 1996.
"Futurebiotics Notes" shall mean the promissory notes of the
Co-Borrowers payable to the order of each Bank, in substantially the form of
Exhibit A-2 hereto, evidencing the indebtedness of the Co-Borrowers to such Bank
incurred in connection with Loans made for the benefit of Futurebiotics in
accordance with the terms hereof.
"Futurebiotics Sublimit" shall mean $4,000,000 or such lesser amount
as may be in effect from time to time hereunder.
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"GAAP" shall mean Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" shall mean 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
PDK and its Subsidiaries, 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
Co-Borrowers and the Banks 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 Agent, of the independent accountants selected by the
Co-Borrowers and approved by the Banks for the purpose of auditing the
periodic financial statements of the Co-Borrowers.
"Guarantor" or "Guarantors" shall mean PDI and all present and future
Subsidiaries of the Co-Borrowers and the Guarantors.
"Guarantor's Security Agreement" shall mean each Guarantor's Security
Agreement executed by a Guarantor in favor of the Agent for the benefit of the
Banks hereunder in substantially the form of Exhibit D annexed hereto.
"Guaranty" or "Guaranties" shall mean each guaranty executed and
delivered by a Guarantor hereunder in substantially the form of Exhibit C
annexed hereto.
"Hazardous Materials" shall mean, without limit, 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 9601
- 9 -
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.
"Insolvency" shall mean with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Insolvent" shall pertain to the condition of Insolvency.
"Interest Period" shall mean with respect to any Eurodollar Loan,
initially, the period commencing on the date of borrowing with respect to such
Eurodollar Loan and ending one, two or three months thereafter as selected by
the Company in its notice of borrowing as provided in Section 2.3 and
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan and ending one, two or three
months thereafter, as selected by the Company by irrevocable notice to the Agent
not less than three (3) Working Days prior to the last day of the then current
Interest Period with respect to such Eurodollar Loan; provided that:
(A) no Interest Period shall end later than the
Termination Date;
(B) if any Interest Period would end on a day
which is not a Working Day, that Interest Period shall be
extended to the next succeeding Working Day unless the
result of such extension would be to carry such Interest
Period into another calendar month in which event such
Interest Period shall end on the immediately preceding
Working Day; and
(C) any Interest Period that begins on the last Working
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Working
Day of a calendar month.
"Investment" shall mean 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
- 10 -
rendered in the ordinary course of business and payable in accordance with
customary trade terms in the ordinary course of business), to another Person,
and any 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.
"Letter of Credit Outstandings" shall mean the aggregate sum of the
amounts available to be drawn under letters of credit issued by the Banks for
the account of the Co-Borrowers and any Guarantor and the amounts of
unreimbursed drawings under such letters of credit.
"Lien" shall mean 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" shall mean one or more of the revolving credit
loans made by the Banks to the Co-Borrowers pursuant to Section 2.1 hereof and
shall include Base Rate Loans and Eurodollar Loans.
"Loan Documents" shall mean any and all of the Agreement, the Notes,
the Security Agreements, the Guaranties, the Guarantor's Security Agreements,
any agreements or documents referred to in Article 3 hereof and all other
documents and instruments executed in connection herewith.
"Material Adverse Change" shall mean, with respect to any Person,
(i) a material adverse change in the financial condition, business, operations,
properties, or assets of such Person or (ii) the occurrence of any event with
respect to such Person which could have a material adverse effect on the ability
of such Person to perform its obligations under the Loan Documents.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
- 11 -
"Notes" shall mean the Futurebiotics Notes and the PDK Notes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PDI" shall mean PDI Labs, Inc., a New York corporation having its
principal place of business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000.
"PDK Credit Agreement" shall mean the Amended and Restated Revolving
Credit Agreement, dated July 6, 1995 by and between PDK and Chase (formerly
known as Chemical Bank), as amended by a First Amendment, dated as of August 31,
1995, a Second Amendment, dated as of March 28, 1996 and a Third Amendment,
dated as of June 11, 1996.
"PDK Notes" shall mean the promissory notes of the Co-Borrowers
payable to the order of each Bank, in substantially the form of Exhibit A-1
annexed hereto, evidencing the indebtedness of the Co-Borrowers to such Bank
resulting from loans made by such Bank made for the benefit of PDK in accordance
with the terms hereof.
"PDK Sublimit" shall mean $11,000,000 or such lesser amount as may be
in effect from time to time hereunder.
"Permitted Acquisition" means the acquisition by the Co-Borrowers,
or either of them, of the stock or assets of any Person engaged in a similar
type of business as the Co-Borrowers (an "Eligible Business") provided that: (i)
after giving effect thereto, the nature and scope of the business of the
Co-Borrowers shall not have been materially changed; (ii) the Permitted
Acquisition Purchase Price of all such purchases shall not exceed $6,000,000 in
the aggregate during any fiscal year of the Co-Borrowers, and that the
Permitted Acquisition Purchase Price of any such acquisition does not exceed
$5,000,000 and that not more than $5,000,000 of the Permitted Acquisition
Purchase Price of all such acquisitions in the aggregate during any fiscal year
of the Borrower shall be paid in cash; (iii) prior to giving effect to such
acquisition, the Agent shall be provided with satisfactory evidence that such
acquisition shall not be a "hostile" acquisition or other "hostile"
transaction (i.e., such transactions shall have
- 12 -
been approved by the Board of Directors of the Eligible Business); or (iv) such
Eligible Business, in the case of a purchase of stock, shall be incorporated in
or organized under the laws of a State of the United States or, if such
acquisition is of assets, such assets shall be located in the United States. In
addition, no acquisition shall be a Permitted Acquisition hereunder unless on or
before the 30th day prior to the closing of such acquisition, the Agent shall
have been provided satisfactory evidence that:
(i) on a proforma basis, that the acquisition shall not (i) increase
by 100% or more the Consolidated Total Liabilities of the Co-Borrowers, or
either of them, and (ii) result in a leverage ratio as measured by Consolidated
Total Liabilities to Consolidated Total Assets (the "Leverage Ratio") higher
than 50% for PDK and its subsidiaries or for Futurebiotics and its Subsidiaries.
For purposes of this definition (x) Consolidated Total Liabilities shall include
all forms of Indebtedness reflected on a consolidated balance sheet of the
relevant entity and its Subsidiaries and claims including all Subordinated Debt
and non-perpetual preferred stock, which shall mean preferred stock that has a
maturity date and that can be redeemed at the option of the holder of the
instrument and (y) Consolidated Total Assets shall include intangible assets;
(ii) such acquisition shall not (A) result in a Leverage Ratio
higher than 75% for either Co-Borrower and its Subsidiaries and (B) cause 25% or
more of the Consolidated Total Liabilities of either Co-Borrower and its
Subsidiaries after the acquisition to be derived from past or present buyouts,
acquisitions or recapitalizations.
For purposes of clause (ii) (B) above, an acquisition shall be deemed to
result in more than 25% of the Consolidated Total Liabilities of a Co-Borrower
and its Subsidiaries to be derived from past or present buyouts, acquisitions or
recapitalizations if the total liabilities of the acquired entity plus the then
current balance of indebtedness, excluding trade payables, incurred or created
in connection with all prior acquisitions equals or exceeds 25% of the
Consolidated Total Liabilities of such Co-Borrower and its Subsidiaries.
"Permitted Acquisition Purchase Price" shall mean, with respect to
any Permitted Acquisition, collectively, without duplication, (i) all cash paid
by the Co-Borrowers or any of their
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Subsidiaries in connection with such Permitted Acquisition, including in respect
of transaction costs, fees and other expenses incurred by the Co-Borrowers or
any of their Subsidiaries in connection with such Permitted Acquisition, (ii)
all indebtedness created, and all indebtedness assumed, by the Co-Borrowers or
any of their Subsidiaries in connection with such Permitted Acquisition, (iii)
the value of all capital stock issued by the Co-Borrowers or any of their
Subsidiaries in connection with such Permitted Acquisition and (iv) any deferred
portion of the purchase price or any other costs paid by the Co-Borrowers or
any of their Subsidiaries in connection with such Permitted Acquisition,
including but not limited to consulting agreements and non-compete agreements.
"Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture, government authority or other entity
of whatever nature.
"Plan" shall mean at any particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Co-Borrowers, or either of
them, or a Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an employer as
defined in Section 3(5) of ERISA.
"Prohibited Transaction" shall mean 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" shall mean Regulation D of the Board of Governors, as
the same may be amended and in effect from time to time.
"Regulation G" shall mean Regulation G of the Board of Governors, as
the same may be amended and in effect from time to time.
"Regulation T" shall mean Regulation T of the Board of Governors, as
the same may be amended and in effect from time to time.
"Regulation U" shall mean Regulation U of the Board of
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Governors, as the same may be amended and in effect from time to time.
"Regulation X" shall mean Regulation X of the Board of Governors, as
the same may be amended and in effect from time to time.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
the condition that such Plan is in reorganization within the meaning of such
term as used in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. Section 2615.
"Required Banks" shall mean, at any time, Banks having at least
66-2/3% of the total Commitments.
"Reserve Requirement" means, with respect to each Interest Period
for each Eurodollar Loan, the aggregate of the maximum rates (expressed as a
percentage and rounded upwards if necessary to the nearest 1/100th of 1%) of
reserve requirements current on the date two Working Days prior to the beginning
of such Interest Period (including, without limitation, basic, supplemental,
marginal and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other governmental authority having
jurisdiction with respect thereto), as now and/or from time to time hereafter in
effect, relating to reserve requirements prescribed for eurocurrency funding
maintained by a member bank of such system. Such reserve percentages shall
include, without limitation, those imposed under Regulation D. Eurodollar Loans
shall be deemed to constitute "eurocurrency liabilities" (as defined in
Regulation D) and, as such, shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
which may be available to any bank under Regulation D. The Reserve Requirement
shall be adjusted automatically on and as of the effective date of any change in
any such reserve percentage.
"Security Agreement" shall mean each security agreement executed by
a Co-Borrower in favor of the Agent for the benefit of the Banks hereunder
substantially in the form of Exhibit B annexed
- 15 -
hereto.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person on a particular
date, that on such date: (a) the fair saleable value of its assets is in
excess of the total amount of its liabilities, including, without limitation,
the reasonable expected amount of such Person's obligations with respect to
contingent liabilities, (b) the present fair saleable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its indebtedness as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur indebtedness or liabilities beyond such Person's ability to pay as
such indebtedness and liabilities mature and (d) such Person is not engaged in
business or a transaction for which such Person's property would constitute an
unreasonably small capital.
"Subordinated Debt" shall mean all indebtedness of a Person, the
repayment of which the obligee has agreed in writing, on terms approved in
advance by the Agent in writing, shall be subordinated in right of payment to
all indebtedness of such Person to the Banks.
"Subsidiary" shall mean with respect 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 of its Subsidiaries.
"Termination Date" shall mean the earlier of September 25, 1999 or
the date the Commitments may be terminated.
"Total Commitment" means, at any time, the aggregate of the
Commitments in effect from time to time.
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"Working Day" shall mean any day on which dealings in foreign
currencies and exchange between banks may be carried on in the places where the
Agent's eurodollar lending office is located and in New York.
S1. Use of Defined Terms. All terms defined in this Agreement shall
have the defined meanings when used in the Notes, the Loan Documents,
certificates, reports or other documents made or delivered pursuant to this
Agreement unless the context shall otherwise require.
S2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
A1. AMOUNT AND TERMS OF THE REVOLVING CREDIT LOANS
S1.
Revolving Credit Loans. Subject to the terms and conditions of this Agreement,
each of the Banks severally (but not jointly) agree to make Loans in Dollars to
the Co-Borrowers at any time and from time to time on or after the date hereof,
to and including the Termination Date, in an aggregate principal amount
outstanding at any one time up to but not exceeding its Commitment Proportion of
the difference between (i) the Total Commitments and (ii) the Letter of Credit
Outstandings. The Loans may be outstanding as Base Rate Loans or Eurodollar
Loans; provided, however, that during the occurrence and continuance of a
Default or an Event of Default, the Banks shall have no obligation to make
Eurodollar Loans. Subject to the foregoing limits, the Co-Borrowers may use the
Commitment by borrowing, repaying and reborrowing, all in accordance with the
terms and conditions of this Agreement. Notwithstanding the foregoing, in no
event shall the aggregate principal amount of Loans made available to PDK exceed
PDK Sublimit and in no event shall the aggregate principal amount of Loans made
available to Futurebiotics exceed the Futurebiotics Sublimit.
S2.
The Notes. The Loans made by each Bank for the benefit of PDK shall be
evidenced by a single promissory note in favor of such Bank substantially in the
form of Exhibit A-1 annexed hereto with appropriate insertions, duly executed
and completed by the Co-Borrowers. The Loans made by each Bank for the benefit
of Futurebiotics shall be evidenced by a single promissory note in favor of such
Bank substantially in the form of Exhibit A-2 annexed
- 17 -
hereto with appropriate insertions, duly executed and completed by the
Co-Borrowers. Each Bank is hereby authorized to record the date, type and amount
of each Loan, the date and amount of each payment of principal thereof, the
principal amount subject thereto and the interest rate and Interest Period with
respect thereto in the Bank's records and/or on schedules annexed to and
constituting a part of the Notes, and, absent manifest error, any such
recordation shall constitute conclusive evidence of the information so recorded;
provided, that the failure to make such recordation shall not in any way affect
the obligations of the Co-Borrowers to repay the Loans. The Notes (a) shall be
dated the date hereof, (b) be stated to mature on the Termination Date and (c)
bear interest on the unpaid principal amount thereof as follows:
(a)
Each Base Rate Loan shall bear interest on the unpaid principal amount thereof
at a rate per annum equal to the Alternate Base Rate. Interest on Base Rate
Loans shall be payable monthly on the first Business Day of each month
commencing on the first such date after a Base Rate Loan is made and upon
payment or prepayment in full of the unpaid principal amount thereof.
(b)
Each Eurodollar Loan shall bear interest on the unpaid principal amount thereof
at a rate per annum equal to 2% above the Eurodollar Rate. Interest on each
Eurodollar Loan shall be payable on the last day of each Interest Period
applicable thereto, and upon payment or prepayment in full of the unpaid
principal amount thereof. If applicable, interest on each Eurodollar Loan with
an Interest Period greater than one month shall also be payable on the first
Business Day of each month from the date of such Eurodollar Loan, and on the
first Business Day of each month thereafter.
(c)
The unpaid principal amount of all Base Rate Loans and Eurodollar Loans shall be
payable on the Termination Date. If all or a portion of any principal amount of
any loan shall not be paid when due (whether as stated, by acceleration or
otherwise), such loan, if a Eurodollar Loan, shall be converted to a Base Rate
Loan at the end of the relevant Interest Period applicable thereto, and any such
overdue principal amount shall bear interest at a rate per annum
- 18 -
which is 2% above the rate which would otherwise be applicable pursuant to the
terms of this Section 2.2.
S3.
Notice of Borrowing; Minimum Amounts. (a) The Co-Borrowers shall give the Agent
prior telephonic notice followed by written, telegraphic or tested telex
confirmation of the date, the borrowing option, the applicable Interest Period,
if any, and the amount of each borrowing pursuant to the Commitment at least by
11:00 a.m. (i) on the borrowing date of any Base Rate Loan, and (ii) at least
three (3) Working Days prior to the borrowing date of any Eurodollar Loan. Each
such notice, which shall be effective only upon receipt thereof by the Agent,
shall also include a certification, if form and substance satisfactory to the
Agent, indicating which of the Co-Borrowers will receive the proceeds of such
Loan. Notice of receipt of any such notice shall be provided by the Agent to
each Bank with reasonable promptness.
(b) Each Bank will make its share of each borrowing available to the
Agent by 12:00 p.m. on the date of such borrowing in immediately available
funds. Unless any applicable condition specified in Article 3 has not been
satisfied, the amounts so received by the Agent will be made available to the
Co-Borrowers by credit to an account of the Co-Borrowers maintained at the
Agent. All Loans requested by the Co-Borrowers to benefit PDK shall be credited
to an account of PDK maintained at the Agent and all Loans represented by the
Co-Borrowers to benefit Futurebiotics shall be credited to an account of
Futurebiotics maintained at the Agent.
(c) At least three (3) Working Days prior to the last day of any
Interest Period with respect to any Eurodollar Loan, the Co-Borrowers may give
the Agent notice of their election to continue such Eurodollar Loan, specifying
the resulting Interest Period. If the Co-Borrowers shall fail to give such
notice, any loan affected thereby shall be automatically converted to a Base
Rate Loan at the end of such Interest Period. Upon at least three (3) Working
Days' prior written notice, the Co-Borrowers may give the Agent notice of their
election to convert a Base Rate Loan to a Eurodollar Loan, specifying the
resulting Interest Period. Notice of receipt of any such notice shall be
provided by the Agent to the Banks with reasonable promptness. The Banks may,
but shall be under no obligation to, continue any Eurodollar Loan as such or to
convert any Base Rate Loan to a Eurodollar Loan, when any Default or Event of
Default has occurred and is continuing, but any such Eurodollar
- 19 -
Loan shall be automatically converted to a Base Rate Loan on the last day of the
Interest Period applicable thereto, and any such Base Rate Loan shall be
continued as a Base Rate Loan, as the case may be.
(d) Except for borrowings which exhaust the full remaining amount of
the Commitments, each borrowing of Base Rate Loans shall be in an amount at
least equal to $100,000 and, if greater, in integral multiples of $100,000 in
excess thereof, and each borrowing of Eurodollar Loans shall be in an amount at
least equal to $500,000, and, if greater, in integral multiples of $100,000 in
excess thereof.
S1.
Commitment Fee. The Co-Borrowers agree to pay to the Agent for the pro rata
account of each Bank a commitment fee for the period from and including the date
hereof to and including the Termination Date, computed at the rate of 1/4 of 1%
per annum on the average daily unused portion of the Total Commitments in effect
during the period for which payment is made. Such commitment fee shall be
payable on the last day of each March, June, September and December, and on the
Termination Date.
S2.
Termination or Reduction of Commitment; Acceleration of Termination Date. The
Co-Borrowers shall have the right, upon not less than three (3) Business Days
prior written notice to the Agent, to terminate the Commitment in whole at any
time or to reduce the Commitments in part from time to time, or to accelerate
the Termination Date, provided that (a) any reduction of the Commitments shall
be accompanied by prepayment, together with accrued interest on the amount so
prepaid and any payment required by Section 2.12(iv), to the extent, if any,
that the aggregate unpaid principal amount of the Note exceeds the Commitment as
then reduced, (b) any termination of the Commitments shall be accompanied by
payment in full of the unpaid principal amount of the Notes, together with
accrued interest thereon and any payment required by Section 2.12(iv), and the
payment of any commitment fee then accrued hereunder, (c) any acceleration of
the Termination Date shall be accompanied by the payment of any commitment fee
then accrued hereunder and any payment required by Section 2.12 (iv) and (d) any
partial reduction in the Commitments shall reduce the Futurebiotics Sublimit
and/or PDK Sublimit in such amounts as the Co-Borrowers' may elect in their
notice to the Agent. If the Co-
- 20 -
Borrowers do not specify a different allocation in the notice required to be
delivered to the Agent hereunder, any reduction in the Commitment shall be
applied to reduce the Futurebiotics Sublimit and PDK Sublimit proportionately.
Any partial reduction shall be in an aggregate principal amount of $50,000 or a
multiple thereof and shall reduce permanently the Commitments then in effect
hereunder. The Commitments, once reduced or terminated, shall not be increased
or reinstated, as the case may be.
S3.
Changes in Capital Requirements. If after the date hereof, any Bank shall have
determined that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof, by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then such
Bank shall notify the Agent and the Co-Borrowers of such event and within 15
days after such notice is delivered by such Bank hereunder, the Co-Borrowers
shall pay to the Agent for the benefit of such Bank such additional amount or
amounts as will compensate such Bank for such reduction.
1. Voluntary Prepayments. The Co-Borrowers may prepay any Base Rate Loan
without premium or penalty in whole at any time or in part from time to time,
and any Eurodollar Loan without premium or penalty in whole or in part on the
last day of any Interest Period applicable thereto. Eurodollar Loans may not be
prepaid during an Interest Period without the prior written consent of the
Agent. Partial prepayments of the Loans shall be in the principal amount of
$25,000 or multiples thereof if repayment is of a Base Rate Loan, and $250,000
or multiples thereof if repayment is of a Eurodollar Loan, together with payment
of accrued interest thereon to the date of the prepayment (and, if applicable,
the payment required by Section 2.12 (iv)). The Co-Borrowers shall give to the
Agent and each Bank at least three (3) Business Days prior written,
- 21 -
telegraphic or tested telex notice of any repayment or prepayment, specifying
the date and the amount thereof.
S1. Computation of Interest and Commitment Fee; Payments. Commitment fees, if
any, and interest shall be calculated on the basis of a 360 day year for the
actual days elapsed. Any change in the interest rate on the Notes resulting from
a change in the Base Rate shall become effective as of the opening of business
on the day on which such change in the Base Rate shall become effective. All
payments (including prepayments) by the Co-Borrowers on account of principal
and interest on the Loans and the commitment fee hereunder shall be made not
later than 10:00 a.m. on the date specified herein to the Agent for the benefit
of the Banks, at the Agent's office located at 000 Xxxxx Xxxxxxx Xxxx, Xxxxx
000, Xxxxxxxx, Xxx Xxxx 00000 in Dollars in immediately available funds. If any
payment on a Base Rate Loan 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 thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Working Day, the maturity thereof shall be
extended to the next succeeding Working Day unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Working Day.
S2. Inability to Determine Rate. If with respect to any Interest Period
pertaining to a Eurodollar Loan, the Agent determines that extraordinary
circumstances affecting the relevant market make it impracticable to ascertain
the interest rate applicable for such Interest Period, the Agent shall promptly
notify the Co-Borrowers and each Bank of such determination and no additional
Eurodollar Loans shall be made nor shall there be any conversions thereto until
such notice is withdrawn. If any Eurodollar Loan is outstanding on the date of
such notice and such notice has not been withdrawn on the last day of the then
current Interest Period applicable thereto, the Co-Borrowers may on the last day
of such Interest Period either convert such Eurodollar Loan to a Base Rate Loan
or prepay the outstanding principal balance thereof and accrued interest thereon
in full.
S3. Illegality. Notwithstanding any other provisions of this Agreement, if
any law, regulation, treaty or directive or any
- 22 -
change therein or in the interpretation or application thereof, shall make it
unlawful for any Bank to make or maintain Eurodollar Loans as contemplated by
this Agreement, then (a) such Bank shall promptly notify the Agent thereof (with
a copy to the Co-Borrowers) and such Bank's obligation to make or maintain
Eurodollar Loans or convert Base Rate Loans to Eurodollar Loans shall forthwith
be suspended until such time as such Bank may again make and maintain such Loans
and (b) Loans then outstanding as Eurodollar Loans, if any, shall be converted
to Base Rate Loans on the last day of the Interest Period applicable thereto or
within such earlier period as required by law. The Co-Borrowers hereby agree to
promptly pay to the Agent for the benefit of the affected Bank, upon the demand
of such Bank through the Agent, any amounts required by Section 2.12(iv)
resulting from a prepayment of a Eurodollar Loan.
S4. Requirements of Law. In the event that any law, regulation, treaty or
directive or any change therein or in the interpretation or application thereof
or compliance by any Bank with any request or directive (whether or not having
the force of law) from any central bank or other governmental authority, agency
or instrumentality:
(i) does or shall subject such Bank to any tax of any kind
whatsoever with respect to this Agreement, its Commitment,
the Notes or any Loans made hereunder, or change the basis of
taxation of payments to such Bank of principal, commitment fee,
interest or any other amount payable hereunder (except for
changes in the rate of any tax presently imposed on such Bank);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or
for the account of, advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of such
Bank which are not otherwise included in the determination of
the Eurodollar Rate hereunder;
(iii) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank of
making, renewing or maintaining commitments, advances or extensions of credit to
the Co-Borrowers or to reduce any amount
- 23 -
receivable from the Co-Borrowers thereunder then, in any such case, the
Co-Borrowers shall promptly pay to the Agent for the account of each Bank, upon
the demand of such Bank through the Agent, any additional amounts necessary to
compensate such Bank for such additional cost or reduced amount receivable which
such Bank deems to be material as determined by such Bank with respect to this
Agreement, its Commitment, the Notes or the Loans made hereunder. If any Bank
becomes entitled to claim any additional amounts pursuant to this Section 2.11,
it shall promptly notify the Co-Borrowers and the Agent of the event by reason
of which it has become so entitled. A certificate setting forth calculations as
to any additional amounts payable pursuant to the foregoing sentence submitted
by such Bank to the Agent the Co-Borrowers shall be conclusive in the absence of
manifest error.
S1. Indemnification. The Co-Borrowers agree to indemnify each Bank (including,
without limitation, the Agent) and to hold each Bank harmless from any loss or
expense which such Bank may sustain or incur as a consequence of (i) default by
the Co-Borrowers in payment when due of the principal amount of or interest on
any Eurodollar Loan, (ii) default by the Co-Borrowers in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Co-Borrowers have
given a notice requesting the same in accordance with the provisions of this
Agreement, (iii) default by the Co-Borrowers in making any prepayment after the
Co-Borrowers have given a notice thereof in accordance with the provisions of
this Agreement, or (iv) the making of a prepayment of Eurodollar Loans on a day
which is not the last day of an Interest Period with respect thereto, including,
without limitation, in each case, any such loss (including lost profits) or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate the deposits from which such funds were obtained. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.
S2. Use of Proceeds. (a) No part of the proceeds of any borrowing hereunder
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. If requested by the
Agent, the Co-Borrowers will furnish to the Agent a statement in conformity
with the requirements of Federal Reserve Form U-1 referred to in Regulation U
and to the foregoing effect. No part of the proceeds of the Loans will be used
for any purpose which
- 24 -
violates, or which is inconsistent with, the provisions of Regulation G,
Regulation T, Regulation U or Regulation X.
(a) The proceeds of the Loans shall be used (i) to refinance all
obligations of the Co-Borrowers (other than the obligations of PDK with respect
to the Existing Term Loans), under the Futurebiotics Credit Agreement and PDK
Credit Agreement; and (ii) subject to the Futurebiotics Sublimit and PDK
Sublimit, to finance the ongoing working capital needs and capital expenditures
of the Co-Borrowers. The proceeds of the Loans shall not be used to finance
acquisitions.
S3. Authorization to Debit Co-Borrowers' Accounts. The Agent is hereby
authorized to debit any account of the Co-Borrowers or of either Co-Borrower
maintained with the Agent for (i) all scheduled payments of principal and/or
interest under the Notes, and (ii) the commitment fee and all other amounts due
hereunder; all such debits to be made on the days such payments are due in
accordance with the terms hereof.
S4. Default Interest. Upon the occurrence and during the continuation of a
Default, the Co-Borrowers shall pay interest on all amounts owing under the
Notes 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 and a year of 360
days) equal to 2% in excess of the interest rate otherwise in effect hereunder.
S5. Interest Adjustments. (a) If the provisions of this Agreement or the
Notes would at any time otherwise require payment by the Co-Borrowers to the
Agent for the benefit of the Banks 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 Banks shall not receive interest in
excess of such maximum amount. To the extent that, pursuant to the foregoing
sentence, the Banks shall receive interest payments hereunder or under the Notes
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 Banks hereunder and under the Notes for any subsequent period
shall be increased by such maximum amount of the Interest Deficit that may be so
added without causing the Banks to receive interest in excess of the maximum
amount then permitted by applicable law.
- 25 -
(a) To the extent permitted by law, the amount of the Interest
Deficit shall be treated as a prepayment penalty and paid in full at the time of
any optional prepayment by the Co-Borrowers to the Banks of all outstanding
Loans.
S6. Participations, Etc. Each Bank shall have the right at any time, with or
without notice to the Co-Borrowers, to sell, assign, transfer or negotiate all
or any part of its Notes or its Commitments or grant participations therein
to one or more banks (foreign or domestic, including an affiliate of any Bank),
insurance companies or other financial institutions, pension funds or mutual
funds. The Co-Borrowers and the Guarantors agree and consent to the Agent
providing financial and other information regarding their business and
operations to prospective purchasers or participants and further agree that to
the extent that any Bank should sell, assign, transfer or negotiate all or any
part of the Notes or the Commitment, such Bank shall be forever released and
discharged from its obligations under the Notes, the Commitment and this
Agreement to the extent same is sold, assigned, transferred or negotiated. Each
Bank shall have the right, at any time and from time to time, to pledge the
Notes to any Federal Reserve Bank. In the event that any Bank sells, assigns or
transfers all or any part of its Commitment hereunder to another bank, such
other bank shall be deemed to be a "Bank" for all purposes hereof and shall
execute such documents or instruments as are required by the Agent to give
effect to the provisions of this Section 2.17 including, without limitation, an
intercreditor agreement and a collateral agency agreement, in form and substance
satisfactory to the Agent.
A1. CONDITIONS OF BORROWING
S1. Conditions of Initial Revolving Credit Loan. The obligation of the Banks
to make the initial Loan hereunder shall be subject to the fulfillment of
the following conditions precedent:
(a) the Agent shall have received on or before the date hereof each
of the following, with copies for each Bank, each in form and substance
reasonably satisfactory to the Agent and its counsel:
(i) this Agreement and the Notes executed in favor of the Banks
duly executed by the Co-Borrowers;
- 26 -
(ii) a certificate of the Secretary of each of the Co-Borrowers
and each of the Guarantors, dated the Closing Date, attesting to all
corporate action taken by such entity, including resolutions of its
Board of Directors authorizing the execution, delivery and performance
of the Loan Documents and each other document to be delivered pursuant
to this Agreement, together with certified copies of the certificate
or articles of incorporation and the by-laws of each of the Co-
Borrowers and each of the Guarantors; and, such certificate shall
state that the resolutions and corporate documents thereby certified
have not been amended, modified, revoked or rescinded as of the date
of such certificate;
(iii) a certificate of the Secretary of each of the Co-Borrowers
and each of the Guarantors, dated the Closing Date, certifying the
names and true signatures of the officers of such entity authorized to
sign the Loan Documents and the other documents to be delivered by
such entity under this Agreement;
(iv) a certificate of a duly authorized officer of each of the
Co-Borrowers, dated the Closing Date, stating that the representations
and warranties in Article 4 are true and correct on such date as
though made on and as of such date and that no event has occurred and
is continuing which constitutes a Default or Event of Default;
(v) Security Agreements duly executed by each of the
Co-Borrowers and Guarantor's Security Agreements executed by each of
the Guarantors, together with (A) fully completed and executed
financing statements on Form UCC-1, in proper form for filing duly
filed under the Uniform Commercial Code in all jurisdictions necessary
or, in the reasonable discretion of the Agent, desirable to perfect
the security interests to be granted hereunder and under the Security
Agreements and the Guarantor's Security Agreements and (B) UCC search
results identifying all of the financing statements
- 27 -
on file with respect to each Co-Borrower and each Guarantor in all
jurisdictions referred to under clause (A) hereof, indicating that no
party claims an interest in any of the Collateral;
(vi) Guaranties, duly executed by each Guarantor;
(vii) a favorable opinion of counsel for the Co-Borrowers and
Guarantors, dated the Closing Date, in form and substance
satisfactory to the Agent and its counsel;
(viii) satisfactory evidence that the Co-Borrowers and the
Guarantors are duly organized, validly existing and in good standing
under the laws of their respective jurisdictions of incorporation and
each other jurisdiction where qualification is necessary;
(ix) audited consolidated balance sheet of PDK and its
Subsidiaries as of November 30, 1995, and consolidated income
statement and statement of cash flows of PDK and its Subsidiaries for
the fiscal year then ended, all prepared in accordance with GAAP,
together with the unqualified opinion thereon of Xxxxx Xxxxxxxxxx &
Co., LLP, independent certified public accountants, together with
corresponding management prepared consolidating financial statements
of PDK and its Subsidiaries, all prepared in accordance with GAAP
under the supervision of the chief financial officer of PDK, and
unaudited consolidated and consolidating balance sheets of PDK and its
Subsidiaries as at May 31, 1996, together with consolidated and
consolidating income statements and statements of cash flows of PDK
and its Subsidiaries, for the fiscal quarter ended May 31, 1996, and
for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, each prepared by or under the
supervision of the chief financial officer of PDK in accordance with
GAAP.
(x) an audited balance sheet of
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Futurebiotics as of November 30, 1995 and income statement and
statement of cash flows of Futurebiotics for the fiscal year then
ended, all prepared in accordance with GAAP, together with an
unqualified opinion thereon of Xxxxx Xxxxxxxxxx & Co., LLP,
independent certified public accountants and an unaudited balance
sheet of Futurebiotics as at May 31, 1996, together with an income
statement and statement of cash flows of Futurebiotics for the fiscal
quarter ended May 31, 1996 and for the period ending at the end of the
previous fiscal year and ending with the end of such quarter, each
prepared by or under the supervision of the chief financial officer of
Futurebiotics in accordance with GAAP;
(xi) certificates of insurance covering the Collateral and the
other assets and the business of the Co-Borrowers and the Guarantors,
which certificates shall designate the Agent as the "loss payee" and
as an "additional insured", in form and substance and in amounts and
with carriers satisfactory to the Agent in all respects;
(xii) evidence satisfactory to the Agent that the products
liability insurance referred to in Section 5.3 hereof is in full force
and effect on the date hereof;
(xiii) a complete copy of the supply agreement executed by and
between PDK and Futurebiotics, together with all amendments,
supplements or modifications thereof;
(xiv) for each of PDK and Futurebiotics, a summary accounts
receivable aging and a detailed aging for its 10 largest customers for
the most recent month then ended, in form and substance satisfactory
to the Agent;
(xv) landlord's waivers, in form and substance satisfactory to
the Agent, for each location leased by the Co-
- 29 -
Borrowers or the Guarantors, or any of them, where assets of the
Co-Borrowers or the Guarantors, or any of them, are located;
(xvi) a certified copy of the certificate of dissolution of C&C
Enterprises, Inc; and
(xvii) such other documents, instruments, approvals, opinions
and evidence as the Agent may reasonably require.
(b) the Co-Borrowers shall have paid or caused to be paid in full
all fees and expenses required to be paid hereunder or in connection herewith,
and including all fees and expenses of the Agent incurred in connection with the
preparation, execution and delivery of this Agreement and the other Facility
Documents and the consummation of the transactions contemplated thereby;
(c) the Co-Borrowers and the Guarantors shall have obtained all
consents, permits and approvals required in connection with the execution,
delivery and performance by the Co-Borrowers and the Guarantors of their
obligations hereunder and such consents, permits and approvals shall continue in
full force and effect;
(d) the Futurebiotics Credit Agreement shall have been terminated
and Chase shall be satisfied that the proceeds of the initial Loans hereunder
shall be applied to pay the obligations of Futurebiotics under the Futurebiotics
Credit Agreement in full;
(e) Chase and PDK shall have entered into an amendment to the PDK
Credit Agreement pursuant to which Chase's obligation to extend additional
credit to PDK shall be terminated and Chase shall be satisfied that the proceeds
of the initial Loans hereunder shall be applied to pay the obligations of PDK
under the PDK Credit Agreement (other than its obligations with respect to the
Existing Term Loans) in full;
(f) Chase and PDK shall have entered into an amendment to the
agreements giving rise to the Existing Term Loans pursuant to which PDK
reaffirms its duty to pay to Chase in full its obligations thereunder;
(g) the Agent shall be satisfied with the form and content of all
Schedules delivered by the Co-Borrowers pursuant to
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this Agreement or any document delivered in connection herewith;
(h) the Co-Borrowers shall provide reasonably satisfactory evidence
that none of them nor any Guarantor is in default with respect to any
contractual obligations to which it is a party, the effect of which may be
material and adverse to any Co-Borrower or any Guarantor, or to the ability of
any Co-Borrower or any Guarantor to perform its obligations hereunder or under
the other Loan Documents;
(i) results satisfactory to the Agent of all due diligence with
respect to the Co-Borrowers and the Guarantors including, without limitation,
trade checkings, customer checkings and litigation checkings and all due
diligence with respect to management of the Co-Borrowers and/or the Guarantors;
(j) receipt and satisfactory review by the Agent of (i) all material
loan documents or credit agreements entered into by any Co-Borrower or
Guarantor; (ii) all shareholder, and management agreements entered into by any
Co-Borrower or Guarantor; (iii) any employment agreement entered into by any Co-
Borrower or any Guarantor and any officer of any such entity; and (iv) all lease
agreements entered into by any Co-Borrower or Guarantor;
(k) copies of each of the Co-Borrowers' customer lists, certified by
the President or Chief Financial Officer of such Co-Borrower to be complete and
accurate as of a date reasonably acceptable to the Agent;
(l) since November 30, 1995, nothing shall have occurred which in
the Agent's sole judgment could, individually or in the aggregate, have a
material adverse effect upon (i) the rights and remedies of the Agent or the
Banks under this Agreement or the other Loan Documents; (ii) the ability of
any of the Co-Borrowers or the Guarantors to perform its obligations hereunder
or under any other Document; or (iii) the business, property, assets,
liabilities, condition (financial or otherwise), operations, results of
operations or prospects of any Co-Borrower or any Guarantor after giving effect
to the transactions contemplated hereby;
(m) the Agent and its counsel shall be satisfied in all respects
with their review of any litigation pending against the Co-Borrowers or any
Guarantor and shall have been provided with
- 31 -
a letter from the Co-Borrower's counsel describing the status of a litigation
captioned PDK Labs Inc. x. Xxxxx X. Xxxxx, which is pending in New York State
Court in Suffolk County; and
(n) all legal matters in connection with this financing shall be
reasonably satisfactory to the Agent and its counsel.
S2. Additional Conditions Precedent.
The obligation of the Banks to make any Loan shall be subject to the
further conditions precedent (which shall be in addition to, and shall not be
deemed to limit or modify, any of the other terms and conditions hereunder) that
on the date of such Loan, the Agent shall have received the following:
(a) a certificate executed by the Chief Financial Officer of each of
the Co-Borrowers, dated as of such date, stating that (i) the representations
and warranties contained in Article 4 hereof, which for purposes of this
Section, shall be deemed to relate to the Co-Borrowers and to each Subsidiary as
if each such Person were the subject of each such representation and warranty,
are true and correct in all material respects on and as of the date of such Loan
as though made on and as of such date (except when such representation or
warranty by its terms relates to the date hereof or another specific date); and
(ii) no Default or Event of Default has occurred and is continuing or would
result from any such Loan;
(b) a certificate executed by the Chief Financial Officer of each of
the Co-Borrowers, dated as of such date, in form and substance satisfactory to
the Agent stating that the Aggregate Outstandings after giving effect to the
proposed borrowing will not exceed the Commitment and demonstrating compliance,
after giving effect to the proposed borrowing, the aggregate principal balance
of loans made for the account of PDK shall not exceed PDK Sublimit and the
aggregate principal balance of loans made for the account of Futurebiotics shall
not exceed the Futurebiotics Sublimit;
(c) copies of all invoices, bills, contracts and paid receipts in
connection with any capital expenditure to be purchased, made or financed with
the proceeds of any Loan; and
(d) all other instruments and legal and corporate
- 32 -
proceedings in connection with the transactions contemplated by this Agreement
shall be satisfactory in form and substance to the Agent and its counsel, and
the Agent shall have received copies of all documents which it may have
reasonably requested in connection therewith.
A1. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Banks to enter into this
Agreement and to make the Loans herein provided for, the Co-Borrowers and the
Guarantors hereby represent and warrant that:
S1. Corporate Existence. Each of the Co-Borrowers and the Guarantors is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its 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 as a foreign corporation and in good standing under the laws of
each jurisdiction in which failure to so qualify or be in good standing could
result in a Material Adverse Change in such Co-Borrower or Guarantor.
S2. Corporate Power and Authorization. Each of the Co-Borrowers and the
Guarantors has the corporate power, authority and legal right to make, deliver
and perform the Loan Documents to which it is a party and, with respect to the
Co-Borrowers, to borrow hereunder and has taken all necessary corporate action
to authorize the borrowings hereunder and the Guaranties on the terms and
conditions of this Agreement, the Notes, and the Guaranties. No consent of any
other party (including stockholders of the Co-Borrowers or the Guarantors), and
no consent, license, approval or authorization of, or registration or
declaration with, any governmental authority, bureau or agency is required in
connection with the execution, delivery, performance, validity or enforceability
of the Loan Documents. The Loan Documents when delivered hereunder will have
been duly executed and delivered on behalf of the Co-Borrowers and the
Guarantors, as the case may be, and will be legal, valid and binding obligations
of the Co-Borrowers and the Guarantors, as the case may be, enforceable against
the Co-Borrowers or the Guarantors in accordance with their respective terms.
S3. No Legal Bar to Loans. The execution, delivery and performance of the
Loan Documents will not violate any provision of any existing law or regulation
or of any order or decree of any
- 33 -
court or governmental instrumentality, or of the certificates of incorporation
or by-laws of the Co-Borrowers, or either of them or any of the Guarantors, or
of any mortgage, indenture, contract or other agreement to which the
Co-Borrowers, or either of them, or any of the Guarantors is a party or by which
the Co-Borrowers, or either of them, or any of the Guarantors or any of their
property or assets may be bound, and will not result in the creation or
imposition of any Lien on any of its properties pursuant to the provisions of
such mortgage, indenture, contract or other agreement.
S4. No Material Litigation. Except as set forth on Schedule 4.4 hereto, no
litigation or administrative proceedings of or before any court, tribunal or
governmental body is presently pending, or, to the knowledge of the
Co-Borrowers, threatened against the Co-Borrowers, or either of them, or any of
the Guarantors or any of its or their properties or with respect to the Loan
Documents which, if adversely determined, could result in, in the opinion of the
Co-Borrowers, a Material Adverse Change in the Co-Borrowers, or either of them,
or any of the Guarantors.
S5. No Default. Except as set forth on Schedule 4.5 hereto, neither the
Co-Borrowers, nor either of them, nor any of the Guarantors is in default in any
material manner in the payment or performance of any of their obligations or in
the performance of any contract, agreement or other instrument to which any of
them is a party or by which any of them or any of their assets may be bound, and
no Default hereunder has occurred and is continuing.
S6. Ownership of Properties; Liens. Each of the Co-Borrowers and each of the
Guarantors has good and marketable title to all of their properties and assets,
real and personal, and none of such properties and assets are subject to any
Lien except as permitted in Section 6.2 hereof and except as set forth on
Schedule 4.6 hereto.
S7. Taxes. Each Co-Borrower and each of the Guarantors has filed or caused to
be filed all tax returns which to the knowledge of the Company are required to
be filed, and has paid all taxes shown to be due and payable on said returns or
on any assessments made against them (other than those being contested in good
faith by appropriate proceedings for which adequate reserves have been provided
on the books of such Co-Borrower or such Guarantor, as the case may be), and no
tax liens have been filed
- 34 -
and, to the best of the knowledge of the Co-Borrowers and the Guarantors, no
claims are being asserted with respect to any taxes.
S8. Financial Condition. The financial statements referred to in Section
3.1(ix) and (x) hereof heretofore furnished to the Agent, each present fairly
the financial condition of PDK and its Subsidiaries and Futurebiotics as at the
dates of said statements and the results of their operations for the periods
covered by such statements. All such financial statements have been prepared in
accordance with GAAP and since the date of the annual financial statement
mentioned above, there has been no Material Adverse Change in the Co-Borrowers,
or either of them, or any of the Guarantors from that shown by said statements
as of said date and since the date of the quarterly financial statements
mentioned above, there has been no material increase in liabilities of PDK and
its Subsidiaries or of Futurebiotics. Neither of the Co-Borrowers nor any of the
Guarantors has any material obligation, liability or commitment, direct or
contingent, which is not reflected in the foregoing financial statements (and
the related notes thereto) as of said dates.
S9. Filing of Statements and Reports. Each of the Co-Borrowers and each of
the Guarantors have filed copies of all material statements and reports which,
to the knowledge of the Co-Borrowers or the Guarantors, are required to be filed
with any governmental authority, agency, commission, board or bureau.
S10. ERISA. Each Co-Borrower and each of the Guarantors, 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 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 to terminate, or appoint a
trustee to administrate, a Plan, nor has the PBGC instituted any such
proceedings; none of the Co-Borrowers or the Guarantors, nor any ERISA
Affiliate has completely or partially withdrawn under Sections 4201 or 4204 of
ERISA from a Multiemployer Plan; each Co-Borrower and each of the Guarantors 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
- 35 -
ERISA for calculating the potential liability of each Co-Borrower and each of
the Guarantors or any ERISA Affiliate to PBGC or the Plan under Title IV of
ERISA; and none of the Co-Borrowers, nor any of the Guarantors nor any ERISA
Affiliate, or any of them, has incurred any liability to the PBGC under ERISA.
S11. Environmental Matters. Each Co-Borrower and each of the Guarantors are in
compliance with all federal, state or local laws, ordinances, rules, regulations
or policies governing Hazardous Materials and none of the Co-Borrowers nor any
of the Guarantors have used Hazardous Materials on, from, or affecting any
property now owned or occupied or hereafter owned or occupied by such
Co-Borrower or Guarantor 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 that to the best knowledge of the
Co-Borrowers and the Guarantors, 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.
S12. Licenses, Permits, etc. Each Co-Borrower and each of the Guarantors
possess all 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
none of the Co-Borrowers nor the Guarantors is in violation of any similar
rights of others.
S13. Material Agreements. None of the Co-Borrowers or the Guarantors 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 violation
of which could result in a Material Adverse Change in the Co-Borrowers, or
either of them, or any Guarantor.
S14. Margin Credit. The Co-Borrowers are not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within,the meaning of Regulation U), and no proceeds of any Loan will be used
to purchase or carry any
- 36 -
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 violate the provisions
of Regulation G, T, U or X.
S15. Use of Proceeds. The proceeds of each Loan shall be used for the purposes
set forth in Section 2.13 hereof.
S16. Properties Affected. Neither the business nor the properties of any
Co-Borrower or any 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 could result in a Material
Adverse Change in the Co-Borrowers, or either of them, or any Guarantor.
S17. Guarantors. The liability of each Guarantor as a result of the execution
of its Guaranty and the execution of this Agreement shall not cause the
liabilities (including contingent liabilities) of such Guarantor to exceed the
fair saleable value of its assets. Each Guarantor acknowledges it has derived or
expects to derive a financial or other advantage from the Loans obtained by the
Company from the Banks.
S18. Subsidiaries. As of the date hereof, the Guarantors are the only existing
Subsidiaries of the Co-Borrowers, other than C&C Enterprises, Inc., which has
assets having a value of not more than $1,000.
S19. Solvency. Without giving effect to any Guaranty executed in connection
with this Agreement, each of the Co-Borrowers, on both a stand-alone and
consolidated basis, and each of the Guarantors, is Solvent. After giving effect
to any such Guaranty, the Co-Borrowers and the Guarantors, taken as a whole, are
Solvent.
A1. AFFIRMATIVE COVENANTS
Each of the Co-Borrowers and each of the Guarantors hereby covenant
that so long as the Notes remain outstanding and unpaid or so long as the
Commitments remain unterminated, each Co-Borrower and each of the Guarantors
will, and shall cause any Subsidiary to, unless otherwise consented to in
writing by the Banks acting through the Agent:
S1. Financial Statements. Furnish to each Bank:
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(a) as soon as available, but in any event not later than 120
days after the close of each fiscal year of PDK, a copy of the annual audit
report for such fiscal year of PDK and its Subsidiaries, including therein the
consolidated and consolidating balance sheets of PDK and its Subsidiaries as at
the end of such fiscal year, and related consolidated and consolidating
statements of income and retained earnings of PDK and its Subsidiaries for such
fiscal year, setting forth in each case in comparative form the corresponding
figures for the preceding fiscal period, all in reasonable detail, prepared in
accordance with GAAP, such consolidated financial statements being certified by
independent certified public accountants of recognized standing selected by PDK
and acceptable to the Agent and each of the Banks and such consolidating
financial statements being prepared by the Chief Financial Officer of PDK;
(b) as soon as available, but in any event not later than 120
days after the close of each fiscal year of Futurebiotics, a copy of the annual
audit report for such fiscal year of Futurebiotics and its Subsidiaries,
including therein the consolidated and consolidating balance sheets of
Futurebiotics and its Subsidiaries as at the end of such fiscal year, and
related consolidated and consolidating statements of income and retained
earnings of Futurebiotics and its Subsidiaries for such fiscal year, setting
forth in each case in comparative form the corresponding figures for the
preceding fiscal period, all in reasonable detail, prepared in accordance with
GAAP, such consolidated financial statements being certified by independent
certified public accountants of recognized standing selected by Futurebiotics
and acceptable to the Agent and each of the Banks and such consolidating
financial statements being prepared by the Chief Financial Officer of
Futurebiotics;
(c) as soon as available, but in any event not later than 60
days after the end of each of the first three quarterly periods of each fiscal
year of PDK and of Futurebiotics, each such entity's 10Q reports for such fiscal
quarter;
(d) concurrently with the delivery of the financial statements
referred to in clauses (a), (b) and (c) above, a
- 38 -
certificate of the Chief Financial Officer of each of the Co-Borrowers stating
that, to the best of his knowledge, the Co-Borrowers during such period have
kept, observed, performed and fulfilled each and every covenant and condition
contained in this Agreement and in the Notes and that he has obtained no
knowledge of any Events of Default or Defaults hereunder except as specifically
indicated, with computations evidencing compliance with the covenants set
forth in Sections 6.10, 6.11, 6.12 and 6.13;
(e) promptly after the same are sent, copies of all financial
statements and reports which the Co-Borrowers, or either of them, send to their
stockholders, and promptly after the same are filed, copies of all financial
statements and reports which the Co-Borrowers, or either of them, may make to,
or file with, any governmental authority, agency, commission, board or bureau;
(f) as soon as possible and in any event within 30 days after
either Co-Borrower knows or has reason to know of the following events: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan or any withdrawal from, or the termination, Reorganization or Insolvency
of, any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC, the Co-Borrowers, or either of them, or any
Commonly Controlled Entity, or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan
the Co-Borrowers shall deliver to the Agent and each of the Banks a certificate
of the Chief Financial Officer of each of the Co-Borrowers setting forth the
details thereof and the action the Co-Borrowers or the Commonly Controlled
Entity proposes to take with respect thereto;
(g) within 30 days of the expiration date of each policy,
updated copies of all insurance coverage binders; and
(h) promptly upon receipt thereof, copies of any reports
submitted to any Co-Borrower or any Guarantor by independent certified public
accountants in connection with examination of the financial statements of either
Co-Borrower and their Subsidiaries made by such accountants;
- 39 -
(i) 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 Agent and the Banks pursuant to any other clause of this
Section 5.1;
(j) no later than 30 days after the end of each fiscal quarter
of each Co-Borrower, an accounts receivable aging schedule for each Co-Borrower,
in form and substance reasonably satisfactory to the Agent and each of the
Banks;
(k) annually, updated copies of each of the Co-Borrowers'
customer lists, certified by the President or Chief Financial Officer of such
Co-Borrower to be complete and accurate as of a date reasonably acceptable to
the Agent and each of the Banks;
(l) promptly, copies of all financial, legal or other
information and/or documentation as the Agent may require pertaining to any
Permitted Acquisitions involving a Permitted Acquisition Purchase Price in
excess of $2,000,000 in any one case or in the aggregate during any fiscal year
of the Co-Borrowers;
(m) concurrently with the delivery of the financial statements
referred to in clauses (a), (b) and (c) above, a status report, in form and
substance satisfactory to the Bank, on the litigation captioned PDK Labs Inc.
x. Xxxxx X. Xxxxx, which is pending in New York State Supreme Court in Suffolk
County; and
(n) promptly, such additional financial and other information
as the Agent may from time to time reasonably request including, without
limitation, copies of all material shareholders agreements, consulting
agreements, management agreements, employment agreements, noncompete agreements,
employee benefit plans, stock option plans or voting trust agreements relating
to the Co-Borrowers, or either of them.
S2. Payment and Performance of Obligations. Perform and comply with each of
the provisions of each and every agreement of which the failure to perform or
comply could result in a Material Adverse Change in the Co-Borrowers, or either
of them, or any of
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the Guarantors. Pay and discharge, and cause the Guarantors to pay and
discharge, at or before maturity all of their respective obligations and
liabilities, including without limitation tax liabilities, except where the same
may be contested in good faith, and maintain, in accordance with GAAP,
appropriate reserves for the accrual of any of the same.
S3. Maintenance of Properties; Insurance. Keep, and cause the Guarantors to
keep, all properties useful and necessary in the business of the Co-Borrowers
and the Guarantors in good working order and condition; maintain, and cause the
Guarantors to maintain, with financially sound and reputable insurance
companies, insurance on all their properties in such amounts as are proper in
accordance with sound business practices against such risks as are usually
insured against in the same general area and by companies engaged in the same or
a similar business, including but without limitation, product liability
insurance in an aggregate amount not less than $5,000,000 for the Co-Borrowers
at any time, such insurance to be in form and substance satisfactory to the
Agent and each of the Banks; pay, and cause the Guarantors to pay, all insurance
premiums, and, upon written request, any other information as to the insurance
carried.
S4. Notices. Promptly give notice in writing to the Agent of (a) the
occurrence of any Default under this Agreement or of any default under any
material instrument or other agreement of any Co-Borrower or any Guarantor,
(b) any litigation, proceeding, investigation or dispute which may exist at any
time between any Co-Borrower or any Guarantor and any governmental regulatory
body which could result in a Material Adverse Change in the Co-Borrowers, or
either of them, or any of the Guarantors, (c) all litigation and proceedings
affecting the Co-Borrowers, or either of them, or any of the Guarantors in which
the amount involved is $50,000 in excess of applicable insurance coverage or in
which injunctive or similar relief is sought, (d) any of the Co-Borrowers or
Guarantors establishing or contributing to any Plan and (e) any change in the
management of the Co-Borrowers, the Guarantors or any of them.
S5. Conduct of Business and Maintenance of Existence. Continue, and cause the
Guarantors to continue, to engage in business of the same general type as now
conducted by the Co-Borrowers and the Guarantors, and preserve, renew and keep
in full force and effect their corporate existence and take all reasonable
action to
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maintain their rights, privileges and franchises necessary or desirable in the
normal conduct of business; provided that nothing herein contained shall prevent
any of the Co-Borrowers or any Guarantor from discontinuing a part of its
business which is not a substantial part of the business of such entity if such
discontinuance is, in the opinion of the Board of Directors of such entity, in
the interest of such entity, and not disadvantageous to the Banks.
S6. Inspection of Property, Books and Records. Permit, and cause the
Guarantors to permit, any representatives of the Agent to (a) visit and inspect
any of their respective properties, (b) conduct an environmental audit of any of
their respective properties and (c) examine and make abstracts from any of the
books and records of any Co-Borrower and any Guarantor at any reasonable time
during normal business hours and as often as may reasonably be desired.
S7. Hazardous Material. None of the Co-Borrowers or the Guarantors shall
cause or permit any property owned or occupied by the Co-Borrowers or the
Guarantors 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 any such entity cause or permit, as a result of any intentional or
unintentional act or omission on the part of such entity or any tenant or
subtenant, a release of Hazardous Materials onto any property owned or occupied
by any such entity or onto any other property. Each of the Co-Borrowers and the
Guarantors shall comply with all applicable federal, state and local laws,
ordinances, rules and regulations, whenever and by whomever triggered, and shall
obtain and comply with, any and all approvals, registrations or permits required
thereunder. Each of the Co-Borrowers and the Guarantors shall execute any
documentation required by any Bank in connection with the covenants contained
herein. The Co-Borrowers and the Guarantors shall indemnify each Bank
(including, without limitation, the Agent) against any liability, loss, cost,
damage or expense (including, without limitation, reasonable attorneys' fees)
arising from (a) the imposition or recording of a Lien by any local, state, or
federal governments or governmental agency or authority pursuant to any federal,
state or local statute or regulation relating to Hazardous Materials or the
removal thereof; (b) claims of any private parties regarding violations of laws
regulating Hazardous Materials; and
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(c) costs and expenses (including, without limitation, reasonable attorneys'
fees and fees incidental to the securing of repayment of such costs and
expenses) incurred by the Agent in connection with the removal of any such Lien
or in connection with compliance by the Agent or any such entity with any
statute, regulation or order regulating Hazardous Materials.
S8. Subsidiary Guaranties. Cause any Subsidiary of any Co-Borrower or any
Guarantor hereafter formed to execute and deliver to the Agent, for the benefit
of the Banks, a Guaranty substantially in the form of Exhibit C hereto and to
execute a Guarantor's Security Agreement substantially in the form of Exhibit D
hereto, pursuant to which it shall grant to the Agent, for the benefit of the
Banks, a lien upon all of its personal property in order to secure its
obligations under its guaranty.
S9. Pension Funding. Comply with the following and cause each ERISA
Affiliate of the Co-Borrowers or any Guarantor to comply with the following:
(i) engage solely in transactions which would not subject any
of such entities to either a civil penalty assessed 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;
(ii) make full payment when due of all amounts which, under
the provisions of any Plan or ERISA, such Co-Borrower, Guarantor or
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 to any Multiemployer Plan that such Co-Borrower,
Guarantor or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining
thereto; or
- 43 -
(v) not take any action regarding any Plan which could
result in the occurrence of a Prohibited Transaction.
S10. Dissolution of C&C Enterprises, Inc. Cause to be dissolved, within 90
days of the date hereof, C&C Enterprises, Inc., and furnish a certified copy of
the certificate of dissolution to the Agent.
A1. NEGATIVE COVENANTS
Each Co-Borrower and each of the Guarantors hereby covenant that so
long as the Notes remain outstanding and unpaid or so long as the Commitments
remain unterminated, neither the Co-Borrowers, nor any of them, nor any of the
Guarantors will, nor will they permit any Subsidiary to, directly or indirectly,
without the prior written consent of the Banks acting through the Agent:
S1. Limitation on Indebtedness. Create, incur, assume or suffer to exist, any
Consolidated Indebtedness, except (a) the Notes and letters of credit issued by
the Agent in connection herewith; (b) accounts payable (other than for borrowed
money) incurred in the ordinary course of business as presently conducted,
provided that the same shall not be overdue or, if overdue, are being contested
in good faith and by appropriate proceedings; (c) indebtedness between
Co-Borrowers or Guarantors and between a Guarantor and a Co-Borrower; (d) other
indebtedness owing by the Co-Borrowers or the Guarantors on the date of this
Agreement and which was reflected in the balance sheet referred to in Section
4.8 hereof provided same is not extended, renewed or refinanced; (e)
Subordinated Debt; (f) indebtedness which constitutes the deferred purchase
price of any property or assets, not in excess of $250,000 in any fiscal year of
the Co-Borrowers (computed on a non-cumulative basis), (g) purchase money
indebtedness incurred to finance specific Capital Expenditures, subject to the
limitations of Section 6.2(g) of this Agreement with respect to purchase money
mortgages and purchase money security interests; and (h) indebtedness resulting
from notes issued by the Co-Borrowers or either of them in connection with and
subject to the limitations of Section 6.5(g) of this Agreement, provided,
however, that said indebtedness shall not exceed $6,000,000 in the aggregate at
any time.
S2. Limitation on Liens. Create, incur, assume or suffer
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to exist, any Lien of any kind upon any of their property or assets, income or
profits, whether now owned or hereafter acquired, except (a) the Liens existing
as of the date of this Agreement referred to in the financial statements
referred to in Section 4.8 hereof, provided, however, that such Liens are not
spread to cover other or additional indebtedness or property of any Co-Borrower
or Guarantor; (b) Liens for taxes not yet due or which are being contested in
good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of a Co-Borrower or Guarantor, as the case
may be, in accordance with GAAP; (c) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business for sums which are not overdue for a period of more than 45 days or
which are being contested in good faith and by appropriate proceedings; (d)
pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; (e) deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business; (f)
easements, rights-of-way, restrictions and other similar encumbrances incurred
in the ordinary course of business which, in the aggregate, are not substantial
in amount, and which do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of any Co-Borrower or any Guarantor; (g) Liens covering real or personal
property in existence at the time of acquisition thereof by a Co-Borrower or a
Guarantor, and purchase money mortgages and purchase money security interests
(including the Lien or retained security title of a conditional vendor) covering
real or personal property hereafter acquired by a Co-Borrower or a Guarantor in
the ordinary course of business, provided such Lien shall not exceed 100% of the
purchase price of the property so encumbered and no such Lien covers, or is
extended to cover, any other property owned by a Co-Borrower or a Guarantor; (h)
Liens in favor of the Agent; and (i) Liens granted in connection with Section
6.1(i), provided, however, that said Liens are granted solely on customer lists
hereafter acquired by the Co-Borrowers and do not exceed a value of $6,000,000
in the aggregate during the term of this Agreement.
S3. Limitation on Contingent Obligations. Assume, guarantee, indorse or
otherwise in any way be or become responsible or liable for the obligations of
any Person (all such transactions
- 45 -
being herein called "guarantees"), whether by agreement to purchase or
repurchase obligations, or by agreement to supply funds for the purpose of
paying, or enabling such entity to pay, any obligations (whether through
purchasing stock, making a loan, advance or capital contributions or by means or
agreeing to maintain or cause such Person to maintain, a minimum working capital
or net worth of any such Person, or otherwise) in an aggregate amount exceeding
$1,000,000, provided, however, that the aggregate amount permitted under this
Section 6.3 and Section 6.5(h) and (k) of this Agreement shall not exceed
$2,000,000 with respect to any one Person and $2,500,000 in the aggregate at any
time, except (a) guarantees by endorsement of instruments for deposit or
collection in the ordinary course of business, and (b) guarantees in respect of
indebtedness of Subsidiaries, provided that the indebtedness in respect of which
such guarantees are given is permitted by subsection 6.1 hereof; and guarantees
in favor of the Banks.
S4. Prohibition of Fundamental Changes. Enter into any transaction of merger
or consolidation or liquidate or dissolve itself (or suffer any liquidation or
dissolution) or convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of related transactions, all or a substantial part of
its property, business, or assets, including its accounts receivable, or stock
or securities convertible into stock of any Subsidiary, or make any material
change in the present method of conducting business, except that: (a) any
Guarantor may be merged into, or consolidated with, a Co-Borrower (provided that
the Co-Borrower shall be the continuing or surviving corporation) or with any
one or more Guarantors and (b) any Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to the Co-Borrowers.
S5. Limitation on Investments, Loans and Advances. Make or suffer to exist
any advances or loans to, or Investments (by way of transfers of property,
contributions to capital, acquisitions of stock, or securities or evidences of
indebtedness, acquisitions of businesses or acquisitions of assets other than in
the ordinary course of business, or otherwise), in, any Person except (a)
Investments in certificates of deposit issued by any domestic commercial bank
with a capital and surplus of at least $250,000,000 provided, however, that such
certificates of deposit shall have a maturity of one year or less from the date
of purchase; (b) investments in direct obligations of the United States of
America or any agency thereof, or marketable obligations directly and fully
guaranteed by the United States of America, provided, however, that
- 46 -
any such obligations shall have a maturity of five years or less from the date
of acquisition; (c) investments in money market mutual funds having assets in
excess of $2,500,000,000; (d) investments in commercial paper or medium term
notes, provided, however, that any such commercial paper or medium term notes
shall have a maturity of three years or less from the date of acquisition and
shall be rated at least "A-1" or the equivalent thereof by Standard & Poors
Corporation (or has a similar rating by any similar organization which rates
commercial paper or medium term notes); (e) investments in repurchase
obligations with a term of not more than seven days for underlying securities of
the type described in clause (b); (f) stock or obligations issued in settlement
of claims against any other Person by reason of any event of bankruptcy or
composition or readjustment of debt or reorganization of any debtor of any
Co-Borrower, any Guarantor or any Subsidiary; (g) Permitted Acquisitions; (h)
loans and advances to any other Person not to exceed $2,500,000, provided,
however, that the aggregate amount permitted under this Section 6.5(h) and
6.5(k) and Section 6.3 of this Agreement shall not exceed $2,000,000 with
respect to any one Person and $2,500,000 in the aggregate at any time; (i) loans
or advances to a Guarantor; (j) purchases of securities publicly traded on a
national exchange in an aggregate amount not to exceed $250,000; (k) any other
Investments in any Person(s) not to exceed $2,000,000, provided, however, that
the aggregate amount permitted under this Section 6.5(k) and 6.5(h) and
Section 6.3 of this Agreement shall not exceed $2,000,000 with respect to any
one Person and $2,500,000 in the aggregate at any time; (l) tax exempt
securities rated A or better by Standard & Poors or Xxxxx'x Investors Service;
and (m) purchases by either Co-Borrower of shares of such Co-Borrowers' capital
stock, provided that prior to and immediately following such purchases, there
shall exist no Default or Event of Default under Agreement or any related Loan
Documents and provided that the aggregate consideration paid for such purchases
on a consolidated basis shall not exceed $1,000,000 in any fiscal year or
$2,000,000 during the term of this Agreement.
S6. Prohibition of Certain Prepayments. Make any prepayment of principal of
any debt, with a maturity of more than one year, for borrowed money (except the
Notes and the Existing Term Notes) or for the deferred purchase price of
property or services, except (i) at the stated maturity of such debt, (ii) as
required by mandatory prepayment provisions relating thereto (subject to any
subordination provisions applicable thereto), and
- 47 -
(iii) with respect to existing loans made by Chase to the Co-Borrowers, or
either of them, according to the terms of said loans.
S7. Limitation on Leases. Enter into any agreement, or be or become liable
under any agreement, for the lease, hire or use of any personal property (other
than the presently outstanding leases described on Schedule 6.7 hereof
provided that such leases are not amended, modified or supplemented) which would
cause the aggregate maximum amount of all obligations of the Co-Borrowers and
the Guarantors pursuant to such agreements in any fiscal year of the
Co-Borrowers to exceed $750,000. This provision shall not apply to Capital
Leases.
S8. Sale and Leaseback. Enter into any arrangement with any person whereby
any Co-Borrower or Guarantor shall sell or transfer any property, real or
personal, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property which such Co-Borrower or Guarantor intends to
use for substantially the same purpose or purposes as the property being sold or
transferred.
S9. Prohibitions Regarding Subordinated Debt. Make any optional prepayment of,
or purchase, redeem or otherwise acquire, or amend any provision pertaining to
the subordination or the terms of payment of, any Subordinated Debt.
S10. 0 Maintenance of Consolidated Indebtedness to Consolidated Tangible Net
Worth Ratio. Permit the ratio of Consolidated Indebtedness to Consolidated
Tangible Net Worth to exceed 1.0 to 1.0 at any time.
S11. Maintenance of Consolidated Coverage Ratio. Permit the Consolidated
Coverage Ratio to fall below 1.25 to 1.00 at any time.
S12. Consolidated Net Income. Permit Consolidated Net Income to be less than
$250,000 for any consecutive four quarterly period.
S13. Maintenance of Consolidated Quick Ratio. Permit the Consolidated Quick
Ratio to fall below 1.35 to 1.00 at any time.
S14. Transactions with Affiliates. Enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the
rendering of any service, with any Affiliate, except in the ordinary course of
business and pursuant to the
- 48 -
reasonable requirements of a Co-Borrower's or a Guarantor's business and upon
fair and reasonable terms no less favorable to such Co-Borrower or such
Guarantor than it would obtain in a comparable arm's length transaction with a
Person not an Affiliate.
S15. Management. Fail to retain Xxxxxxx X. Xxxxxxxx in a reasonably active
full time capacity in the management of the Co-Borrowers.
S16. Change in Control. At any time from the date hereof (i) a majority of the
members of the Board of Directors of PDK have been elected, having been
nominated other than by the management or preceding Board of Directors or (ii)
PDK shall fail or cease to maintain the voting control of such classes of voting
stock of Futurebiotics which at all times will entitle the holder thereof to
elect a majority of the members of the Board of Directors of Futurebiotics.
S17. Limitation on Capital Expenditures. Make any Capital Expenditures
(excluding Capital Expenditures resulting from acquisitions of property, plant
and equipment described in Section 6.5(g) of this Agreement) including purchase
money indebtedness if, after giving effect thereto, the aggregate amount of such
expenditures by PDK and its Subsidiaries would exceed (i) $2,750,000 during the
Co-Borrowers' fiscal year ending November 30, 1996 or (ii) $2,000,000 during any
fiscal year thereafter.
S18. Limitation on Dividends and Stock Acquisitions. Declare or pay any
dividends or make any other distribution (whether in cash or property) on any
shares of its capital stock now or hereafter outstanding, or except as permitted
under Section 6.5 (m) hereof, purchase, redeem, retire or otherwise acquire for
value any shares of its capital stock or warrants or, options therefor now or
hereafter outstanding (all such dividends, distributions, purchases and other
actions being hereinafter collectively called "Stock Payments", except that (a)
a Subsidiary may make Stock Payments to the Co-Borrowers, or either of them; (b)
the Co-Borrowers may declare stock splits and pay dividends payable solely in
shares of any class of their capital stock; and (c) PDK may declare or pay
dividends on its preferred stock in an aggregate amount not to exceed $362,000
in the aggregate in each fiscal year of PDK.
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A1. EVENTS OF DEFAULT
S1. Events of Default. Any of the following events shall be an "Event of
Default":
(a) failure by the Co-Borrowers to pay the principal of or any
installment of the principal of the Notes when due, or failure to
pay any interest on the Notes or any commitment fee or any other
amount owing hereunder or under the Loan Documents within five days
after any such interest or commitment fee becomes due;
(b) if any representation or warranty made by the Co-Borrowers
or any Guarantor in this Agreement, any other Loan Document or in any
certificate, financial or other statement furnished at any time under
or in connection with this Agreement shall prove to have been untrue
or misleading in any material respect;
(c) default by the Co-Borrowers, or any of them, or any
Guarantor in an observance or performance of any of the covenants or
agreements contained in Section 6 of this Agreement, in any other Loan
Document or in any other document delivered to Agent or the Banks in
connection herewith;
(d) default by the Co-Borrowers, or any of them, or any
Guarantor in the observance or performance of any other covenant or
agreement contained in this Agreement, and the continuance of the same
for 30 days after the earlier of (i) the Co-Borrowers having knowledge
of such default or (ii) notice of such default being given to the
Co-Borrowers by the Agent;
(e) if the Co-Borrowers, or any of them, or any Guarantor shall
(i) default in the payment of principal or interest on the Existing
Term Loans; (ii) default in the payment of principal or interest on
any obligation in excess of $100,000 for borrowed money (other than
the Notes), or for the deferred purchase price of property, beyond the
period of grace, if any, provided with respect thereto; or (iii)
default in the performance or observance of any other term, condition
or agreement contained in any such obligation or in any agreement
relating thereto if the effect thereof is to cause, or permit the
holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such
- 50 -
obligation to become due prior to its stated maturity;
(f) (i) the Co-Borrowers, or either of them, any Guarantor or
any of their Subsidiaries shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its property, or the Company, any Guarantor or any
of their Subsidiaries shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against the
Co-Borrowers, or either of them, any Guarantor or any of their
Subsidiaries any case, proceeding or other action of a nature referred
to in clause (i) above or seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its property, which case, proceeding or other action (x)
results in the entry of an order for relief or (y) remains
undismissed, undischarged or unbonded for a period of 60 days; or
(iii) the Co-Borrowers, or either of them, any Guarantor or any of
their Subsidiaries shall take any action indicating its consent to,
approval of, or acquiescence in, or in furtherance of, any of the acts
set forth in clause (i) or (ii) above; or (iv) the Co-Borrowers, or
either of them, any Guarantor or any of their Subsidiaries shall
generally not, or shall be unable to, pay its debts as they become due
or shall admit in writing its inability to pay its debts;
(g) (i) any Person shall engage in any "prohibited transaction"
(as defined in Section 406 or ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the
- 51 -
reasonable opinion of the Banks, likely to result in the termination
of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v)
the Co-Borrowers, or either of them, or any Commonly Controlled
Entity shall, or is, in the reasonable opinion of the Banks, likely
to, incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could subject the Co-Borrowers, or either of them, or any of the
Guarantors or any of their Subsidiaries to any tax, penalty or other
liabilities in the aggregate material in relation to the business,
operations, property or financial or other condition of the Co-
Borrowers, or either of them, or any of the Guarantors or any of their
Subsidiaries;
(h) default by any Co-Borrower or Guarantor in the performance
of the terms of any Loan Documents to which such entity is a party or
if any Loan Documents shall cease to be in full force and effect or
shall be declared to be null and void, or the validity or
enforceability of any Loan Document shall be contested by any such
Co-Borrower or Guarantor or such party shall deny that it has any
further liability to the Banks, or any of them, with respect thereto;
(i) final judgment for payment of money in excess of $100,000
shall be rendered against the Co-Borrowers, or either of them, any
Guarantor or any Subsidiary, and the same shall remain undischarged
for a period of 30 days during which execution of such judgment shall
not be effectively stayed; or
(j) any Material Adverse Change shall occur.
S2. Remedies on Default. Upon the occurrence and continuance of an Event of
Default, the Agent may, upon request of the Required Banks, by notice to the
Co-Borrowers, (i) terminate the Commitment, (ii) declare the Notes, all interest
thereon and all other amounts payable under this Agreement to be forth with due
and payable, whereupon the Notes, 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
Co-Borrowers and (iii)
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proceed to enforce the rights of the Agent and the Banks 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 Agent and the Banks may have by reason of the occurrence of any
Event of Default hereunder or under any Loan Document, provided, however, that
upon the occurrence of an Event of Default referred to in Section 7.1(f) the
Commitment shall be automatically terminated, the Notes, 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 Co-Borrowers. Any amounts collected
pursuant to action taken under this Section 7.2 shall be applied first, to the
payment of any costs incurred by the Agent, acting on behalf of any of the
Banks, in taking such action, including but without limitation reasonable
attorneys fees, second, to the payment of the accrued interest on the Notes, and
third, to the payment of the unpaid principal of the Notes.
A2.THE AGENT; RELATIONS AMONG BANKS
Section 8.1. Appointment, Powers and Immunities of Agent. Each
Bank hereby irrevocably (but subject to removal by the Required Banks pursuant
to Section 8.9) appoints and authorizes the Agent to act as its agent hereunder
and under any other Loan Document with such powers as are specifically delegated
to the Agent by the terms of this Agreement and any other Loan Document,
together with such other powers as are reasonably incidental thereto. The Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement and any other Loan Document, and shall not by reason of this
Agreement be a trustee for any Bank. The Agent shall not be responsible to the
Banks for any recitals, statements, representations or warranties made by the
Co-Borrowers, or any officer or official of the Co-Borrowers, or any other
Person contained in this Agreement or any other Loan Document, or in any
certificate or other document or instrument referred to or provided for in, or
received by any of them under, this Agreement or any other Loan Document, or for
the value, legality, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or any
- 53 -
other document or instrument referred to or provided for herein or therein, or
for the failure by the Co-Borrowers to perform any of their obligations
hereunder or thereunder. The Agent may employ agents and attorneys-in-fact and
shall not be responsible, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither the Agent nor any
of its directors, officers, employees or agents shall be liable or responsible
for any action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith, except for its or
their own gross negligence or willful misconduct. The Co-Borrowers shall pay any
fee agreed upon with respect to the Agent's services hereunder as set forth in a
letter from the Agent to the Co-Borrowers dated the date hereof.
Section 8.2 Reliance by Agent. The Agent shall be entitled to
rely upon any certification, notice or other communication (including any
thereof by telephone, telefax, telex, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. The Agent may
deem and treat each Bank as the holder of the Loans made by it for all purposes
hereof unless and until a notice of the assignment or transfer thereof
satisfactory to the Agent signed by such Bank shall have been furnished to the
Agent but the Agent shall not be required to deal with any Person who has
acquired a participation in any Loan from a Bank. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by the Required Banks, and such
instructions of the Banks and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks and any other holder of all or any
portion of any Loan.
Section 8.3 Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or Event of Default (other than the
non-payment of principal of or interest or fees on the Loans to the extent the
same is required to be paid to the Agent for the account of the Banks) unless
the Agent has received notice from a Bank or the Co-Borrowers specifying such
Default or Event of Default. In the event that the Agent receives such a notice
of the occurrence of a Default or Event of Default, the
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Agent shall give prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Agent shall (subject to Section
8.8) take such action with respect to such Default or Event of Default which is
continuing as shall be directed by the Required Banks; provided that, unless and
until the Agent shall have received such directions, the Agent may take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the Banks;
and provided further that the Agent shall not be required to take any such
action which it determines to be contrary to law.
Section 8.4 Rights of Agent as a Bank. With respect to its
Commitment and the Loans made by it, the Agent in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise indicates, include the
Agent in its capacity as a Bank. The Agent or any Bank and their respective
affiliates may (without having to account therefor to any other Bank) accept
deposits from, lend money to (on a secured or unsecured basis), and generally
engage in any kind of banking, trust or other business with, the Co-Borrowers or
the Guarantors (and any of their affiliates). In the case of the Agent, it may
do so as if it were not acting as the Agent, and the Agent may accept fees and
other consideration from the Co-Borrowers or the Guarantors for services in
connection with this Agreement or otherwise without having to account for the
same to the Banks. Although the Agent or a Bank or their respective affiliates
may in the course of such relationships and relationships with other Persons
acquire information about the Co-Borrowers or the Guarantors or affiliates and
such other Persons neither the Agent nor such Bank shall have any duty to
disclose such information to the other Banks.
Section 8.5 Indemnification of Agent. The Banks agree to
indemnify the Agent (to the extent not reimbursed under Section 2.12 or under
the applicable provisions of the Loan Documents, but without limiting the
obligations of the Co-Borrowers under Section 2.12 or such provisions) ratably
in accordance with the aggregate unpaid principal amount of the Loans made by
the Banks (without giving effect to any participation, in all or any portion of
such Loans, sold by them to any other Person) (or, if no Loans are at the time
outstanding, ratably in accordance with their respective Commitments), for any
and all liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement, any other Loan Document or any other documents contemplated by or
referred to herein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the Co-Borrowers
are obligated to pay under Sections 2.12 or otherwise or under the applicable
provisions of any other Loan Document but excluding, unless a Default or Event
of Default has occurred, normal administrative costs and expenses incidental to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents or instruments; provided
that no Bank shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the party to be indemnified.
Section 8.6 Documents. The Agent will forward to each Bank,
promptly after the Agent's receipt thereof, a copy of each report, notice or
other document required by this Agreement or any other Facility Document to be
delivered to the Agent for such Bank.
Section 8.7 Non-Reliance on Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Co-Borrowers and the Guarantors and decision
to enter into this Agreement and that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any other Loan Document. The Agent shall not be required to keep itself informed
as to the performance or observance by the Co-Borrowers or the Guarantors of
this Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Co-Borrowers or the Guarantors. Except for notices, reports and other documents
and information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Co-Borrowers or the Guarantors (or any of their
affiliates) which may come into the possession of the Agent or of its
affiliates. The Agent shall not
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be required to file this Agreement, any other Loan Document or any document or
instrument referred to herein or therein, for record or give notice of this
Agreement, any other Facility Document or any document or instrument referred to
herein or therein, to anyone.
Section 8.8 Failure of Agent to Act. Except for action
expressly required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall have received
further assurances (which may include cash collateral) of the indemnification
obligations of the Banks under Section 8.5 in respect of any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.
Section 8.9 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving written notice thereof at least ten Business Days
prior thereto to the Banks and the Co-Borrowers, the Agent may be removed at any
time with cause by the Required Banks and the Agent may be removed at any time
without cause by the Required Banks if with the prior written consent of the
Co-Borrowers; provided that the Co-Borrowers and the other Banks shall be
promptly notified thereof. Upon any such resignation or removal, the Required
Banks shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a Bank. The Required Banks or the retiring Agent, as the case may be,
shall upon the appointment of a successor Agent promptly so notify the
Co-Borrowers and the other Banks. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article 8 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent.
Section 8.10 Amendments Concerning Agency Function. The Agent
shall not be bound by any waiver, amendment, supplement
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or modification of this Agreement or any other Loan Document which affects its
duties hereunder or thereunder unless it shall have given its prior consent
thereto.
Section 8.11 Liability of Agent. The Agent shall not have any
liabilities or responsibilities to the Co-Borrowers on account of the failure of
any Bank to perform its obligations hereunder or to any Bank on account of the
failure of the Borrower to perform its obligations hereunder or under any other
Loan Document.
Section 8.12 Transfer of Agency Function. Without the consent
of the Co-Borrowers or any Bank, the Agent may at any time or from time to time
transfer its functions as Agent hereunder to any of its offices wherever
located, provided that the Agent shall promptly notify the Co-Borrowers and the
Banks thereof.
Section 8.13 Non-Receipt of Funds by the Agent. Unless the
Agent shall have been notified by a Bank or the Co-Borrowers (either one as
appropriate being the "Payor") prior to the date on which such Bank is to make
payment hereunder to the Agent of the proceeds of a Loan or the Co-Borrowers are
to make payment to the Agent, as the case may be (either such payment being a
"Required Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Agent, the Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient on such date and, if the Payor has not in fact made the
Required Payment to the Agent, the recipient of such payment shall, on demand,
repay to the Agent the amount made available to it together with interest
thereon for the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such day (when the Agent recovers such
amount from a Bank) or equal to the rate of interest applicable to such Loan
(when the Agent recovers such amount from the Co-Borrowers) and, if such
recipient shall fail to make such payment promptly, the Agent shall be entitled
to recover such amount, on demand, from the Payor, with interest as aforesaid.
Section 8.14 Several Obligations and Rights of Banks. The
failure of any Bank to make any Loan to be made by it on the date specified
therefor shall not relieve any other Bank of its
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obligation to make its Loan on such date, but no Bank shall be responsible for
the failure of any other Bank to make a Loan to be made by such other Bank. The
amounts payable at any time hereunder to each Bank shall be a separate and
independent debt, and each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement, and it shall not be necessary for any
other Bank to be joined as an additional party in any proceeding for such
purpose.
Section 8.15 Pro Rata Treatment of Loans, Etc. Except to the
extent otherwise provided: (a) each borrowing shall be made from the Banks, each
reduction or termination of the amount of the Commitments shall be applied to
the Commitments of the Banks, and each payment of the fees shall be made by and
held for the account of the Banks, pro rata in accordance with their respective
Commitment Proportions; (b) each prepayment and payment of principal of or
interest on Loans of a particular type and a particular Interest Period shall be
made to the Agent for the account of the Banks holding Loans of such type and
Interest Period pro rata in accordance with the respective unpaid principal
amounts of such Loans of such Interest Period held by such Banks.
Section 8.16 Sharing of Payments Among Banks. If a Bank shall
obtain payment of any principal of or interest on any Loan made by it through
the exercise of any right of setoff, banker's lien, counterclaim, or by any
other means, it shall promptly purchase from the other Banks a participation in
the Loans made by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share the benefit of such payment (net of any expenses which may be
incurred by such Bank in obtaining or preserving such benefit) pro rata in
accordance with the unpaid principal and interest on the Loans held by each of
them. To such end the Banks shall make appropriate adjustments among themselves
(by the resale of any such participation sold or otherwise) if such payment is
rescinded or must otherwise be restored. The Co-Borrowers agree that any Bank so
purchasing a participation in the Loans made by other Banks may exercise all
rights of setoff, banker's lien, counterclaim or similar rights with respect to
such participation. Nothing contained herein shall require any Bank to exercise
any such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness of
the Co-Borrowers.
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A1. MISCELLANEOUS
S1. Limited Role of Banks. The relationship between the Co-Borrowers and the
Banks shall be solely that of borrower and lender, respectively. Neither the
Agent nor the Banks shall have any fiduciary responsibilities to the
Co-Borrowers and no joint venture exists between the Co-Borrowers and the
Agent or any of the Banks. The Co-Borrowers, the Agent and the Agent or the
Banks each hereby severally acknowledge that there are no representations,
warranties, covenants, undertakings or agreements by the parties hereto as to
the Loan Documents except as specifically provided herein and therein.
S2. Choice of Law Construction. The Loan Documents (other than those
containing a contrary express choice of law provision) shall be construed in
accordance with the internal laws (and not the law of conflicts) of the State of
New York. If any provision of the Loan Documents shall be or become
unenforceable or illegal under any law, the other provisions shall remain in
full force and effect.
S3. Consent to Jurisdiction. (a) The Co-Borrowers and the Guarantors hereby
irrevocably submit to the non-exclusive jurisdiction of any United States
federal or New York state court sitting in New York City in any action or
proceedings arising out of or relating to any Loan Documents and the
Co-Borrowers and the Guarantors hereby irrevocably agree that all claims in
respect of such action or proceeding may be heard and determined in any such
court and irrevocably waives any objection it may now or hereinafter have as to
the venue of any such action or proceeding brought in such a court or the fact
that such court is an inconvenient forum.
(a) The Co-Borrowers and the Guarantors irrevocably and
unconditionally consent to the service of process in any such action or
proceeding in any of the aforesaid courts by the mailing of copies of such
process to it, by certified or registered mail at its address specified in
Section 8.5.
S4. WAIVER OF JURY TRIAL. THE CO-BORROWERS, THE GUARANTORS, THE AGENT AND THE
BANKS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
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S5. Notices. All notices, requests and demands to or upon the respective
parties hereto shall be deemed to have been given or made when deposited to the
mail, postage prepaid, in the case of telegraphic notice, when delivered to the
telegraph company, or in the case of tested telex, upon confirmation of receipt,
addressed as set forth below or to such other address as may be hereafter
designated in writing by the respective parties hereto:
The Agent: The Chase Manhattan Bank
000 Xxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: PDK Labs Inc. Account Officer
The Banks: With respect to each Bank, at the
address specified on the signature pages
hereto.
The Co-Borrowers or the Guarantors:
PDK LABS INC.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
with a copy to: Xxxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
S1. Entire Agreement; No Waiver; Cumulative Remedies; Amendments; Setoff.
a) This Agreement and the other Loan Documents constitute, the entire
agreement among the parties hereto and thereto as to the subject matter hereof
and thereof and supersede any previous agreement, oral or written, as to such
subject matter.
(a) No failure to exercise and to delay in exercising, on the
part of the Agent or any of the Banks or the Co-Borrowers, any right, power or
privilege hereunder or under the Notes, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any
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other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law. No modification or waiver
of any provision of this Agreement, or the Notes, nor consent to any departure
by the Co-Borrowers or the Guarantors from the provisions hereof or thereof,
shall be effective unless the same shall be in writing from the Agent and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which it is given. No notice to the Co-Borrowers or the
Guarantors shall entitle the Co-Borrowers or the Guarantors to any other or
further notice in other or similar circumstances unless expressly provided for
herein. No course of dealing between the Co-Borrowers or the Guarantors and the
Agent or any of the Banks shall operate as a waiver of any of the rights of the
Agent or any Bank under this Agreement.
(b) In addition to any rights or remedies of the Agent or any
Bank provided by law, upon the occurrence of any Event of Default, the Agent and
each of the Banks are hereby authorized without notice to the Co-Borrowers or
the Guarantors to setoff and appropriate and apply all deposits (general and
special) and other indebtedness at any time held or owing by the Agent or any
Bank to or for the credit or the account of the Co-Borrowers, the Guarantors,
or any of them, against and on account of all obligations, liabilities and
claims of the Co-Borrowers or the Guarantors to any Bank, and in such amounts as
the Agent or such Bank may elect, although such obligations, liabilities and
claims may be contingent or unmatured.
S1. Reference to Subsidiaries and Guarantors. If the Co-Borrowers have no
Subsidiaries and/or if there are no Guarantors, then the provisions of this
Agreement relating to Subsidiaries and/or Guarantors shall be deemed surplusage
without affecting the applicability of the provisions of this Agreement to the
Co-Borrowers alone.
S2. Joint and Several Obligations. Each of the Co-Borrowers acknowledges and
agrees that all obligations of the Co-Borrowers, or any of them, for the
payment or performance of any obligations hereunder shall be joint and several
obligations of all Co-Borrowers.
S3. Captions. The captions of the various sections and
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subsections of this Agreement have been inserted only for the purposes of
convenience, and shall not be deemed in any manner to modify, explain, enlarge
or restrict any of the provisions of this Agreement.
S4. Exhibits. All Exhibits and all Schedules annexed hereto shall constitute
integral parts of this Agreement.
S5. Payment of Fees. (a) The Co-Borrowers agree to pay or reimburse the Agent
and each of the Banks for all of their reasonable costs and expenses incurred,
in connection with the preparation and execution of this Agreement and any
subsequent amendment, supplement or modification of the Loan Documents
including, without limitation, the fees and disbursements of counsel to the
Agent up to a maximum of $23,000 plus disbursements and, in the case of internal
counsel, allocated costs of such internal counsel. The Agent shall request such
payment or reimbursement in writing.
(a) The Co-Borrowers agree to pay all reasonable costs and
expenses of the Agent and each of the Banks in enforcing or preserving any of
the rights and remedies available to them under this Agreement, the Notes, or
under any other Loan Documents, instruments or writings executed and delivered
to the Agent or any Bank in connection herewith including, without limitation,
reasonable legal fees, costs and disbursements.
S6. Survival of Agreements. All agreements, representations and warranties
made herein and in any certificates delivered pursuant hereto shall survive the
execution and delivery of this Agreement, the Notes, and the making and renewal
of loans hereunder, and shall continue in full force and effect until the
indebtedness of the Co-Borrowers under the Notes has been paid in full.
S7. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Co-Borrowers, the Guarantors, the Agent and the Banks and
their respective successors and assigns, except that the Co-Borrowers and the
Guarantors may not transfer or assign any of its rights or interests hereunder
without the prior written consent of the Banks, acting through the Agent.
S8. Interest. Anything in this Agreement or in the Notes to the contrary
notwithstanding, the Banks shall not charge, take or
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receive, and the Co-Borrowers shall not be obligated to pay interest in excess
of the maximum rate from time to time permitted by applicable law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
THE CO-BORROWERS:
PDK LABS INC.
By: /s/ Xxxxxxx Xxxxxxxx
_____________________________
Xxxxxxx Xxxxxxxx
President
FUTUREBIOTICS, INC.
By: /s/ Xxxxxxxx Xxxxxxxx
_____________________________
Xxxxxxxx Xxxxxxxx
President
THE GUARANTOR:
PDI LABS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
______________________________
Xxxxxxx Xxxxxxxx
President
THE AGENT:
THE CHASE MANHATTAN BANK
By: /s/ Xxxxx X. Xxxxxxxx
____________________________
Xxxxx X. Xxxxxxxx
Vice President
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THE BANKS:
THE CHASE MANHATTAN BANK
By: /s/ Xxxxx X. Xxxxxxxx
____________________________
Xxxxx X. Xxxxxxxx
Vice President
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