EXHIBIT 10.1
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 10, 2006
Between
HearUSA, Inc.,
as Borrower,
and
SIEMENS HEARING INSTRUMENTS, INC.,
as Lender
----------
$26,000,000
----------
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.............................. 1
Section 1.01. Defined Terms........................................... 1
Section 1.02. Computation of Time Periods............................. 11
Section 1.03. Accounting Terms........................................ 11
Section 1.04. Certain Terms........................................... 11
ARTICLE II AMOUNTS AND TERMS OF THE LOAN................................ 12
Section 2.01. The Commitments and the Loans........................... 12
Section 2.02. Making the Loans........................................ 12
Section 2.03. Repayments.............................................. 13
Section 2.04. Optional Prepayments.................................... 15
Section 2.05. Mandatory Prepayment of Loans........................... 16
Section 2.06. Interest................................................ 16
Section 2.07. Illegality.............................................. 17
Section 2.08. Payments and Computations............................... 17
Section 2.09. Taxes................................................... 17
ARTICLE III CONDITIONS OF LENDING....................................... 18
Section 3.01. Conditions Precedent to the Loans Made on
the Closing Date........................................ 18
Section 3.02. Conditions Precedent to the Tranche B Loans and
post-Closing Date Tranche C Loans....................... 19
Section 3.03. Additional Conditions Precedent to Making All Loans..... 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................... 20
Section 4.01. Corporate Existence; Compliance with Law................ 20
Section 4.02. Corporate Power; Authorization;
Enforceable Obligations................................. 21
Section 4.03. Full Disclosure......................................... 21
Section 4.04. Financial Matters....................................... 21
Section 4.05. Litigation.............................................. 22
Section 4.06. Margin Regulation....................................... 22
Section 4.07. No Default.............................................. 23
Section 4.08. Investment Company Act.................................. 23
Section 4.09. Use of Proceeds......................................... 23
Section 4.10. Pari Passu Obligations.................................. 23
Section 4.11. Compliance with Agreements.............................. 23
Section 4.12. Acknowledgement of Outstanding Obligations.............. 23
ARTICLE V AFFIRMATIVE COVENANTS......................................... 24
Section 5.01. Compliance with Laws, Etc............................... 24
Section 5.02. Conduct of Business..................................... 24
Section 5.03. Preservation of Corporate Existence, Etc................ 24
i
Section 5.04. Access.................................................. 24
Section 5.05. Keeping of Books........................................ 25
Section 5.06. Application of Proceeds................................. 25
Section 5.07. Financial Statements.................................... 25
Section 5.08. Reporting Requirements.................................. 26
Section 5.09. Insurance............................................... 26
Section 5.10. Payment of Taxes and Claims............................. 26
Section 5.11. Compliance with Agreements.............................. 27
Section 5.12. Further Documents....................................... 27
Section 5.13. Repayment of Certain Indebtedness....................... 27
Section 5.14. Collateral Documents.................................... 27
ARTICLE VI NEGATIVE COVENANTS........................................... 27
Section 6.01. Liens, Etc.............................................. 27
Section 6.02. Indebtedness............................................ 29
Section 6.03. Mergers, Sale of Assets, Etc............................ 30
Section 6.04. Change in Nature of Business............................ 30
Section 6.05. Modification of Material Agreements..................... 30
Section 6.06. Cancellation of Indebtedness Owed to the Borrower....... 30
Section 6.07. Capital Structure....................................... 30
Section 6.08. Accounting Changes...................................... 31
Section 6.09. OFAC Compliance......................................... 31
Section 6.10. Investments in Other Persons............................ 31
ARTICLE VII EVENTS OF DEFAULT........................................... 31
Section 7.01. Events of Default....................................... 31
Section 7.02. Remedies................................................ 33
ARTICLE VIII MISCELLANEOUS.............................................. 33
Section 8.01. Amendments, Etc......................................... 33
Section 8.02. Notices................................................. 33
Section 8.03. No Waiver; Remedies..................................... 34
Section 8.04. Costs; Expenses; Indemnities............................ 34
Section 8.05. Right of Set-off........................................ 35
Section 8.06. Binding Effect.......................................... 36
Section 8.07. Governing Law........................................... 36
Section 8.08. Severability............................................ 36
Section 8.09. Submission to Jurisdiction; Service of Process.......... 36
Section 8.10. Waiver of Jury Trial.................................... 37
Section 8.11. Section Titles.......................................... 37
Section 8.12. Execution in Counterparts............................... 37
Section 8.13. Survival................................................ 37
Section 8.14. Entire Agreement........................................ 37
ii
EXHIBITS
Exhibit A-1 Form of Tranche A Note
Exhibit A-2 Form of Tranche B Note
Exhibit A-3 Form of Tranche C Note
Exhibit B Form of Notice of Borrowing
Exhibit C Security Agreement
SCHEDULES
Schedule I Acquisition Procedures and Requirements
Schedule 6.01(k) Existing Liens
Schedule 6.02(g) Certain Indebtedness
iii
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 10, 2006,
between HearUSA, Inc. (formerly HEARx, Ltd.), a Delaware corporation (the
"Borrower"), and Siemens Hearing Instruments, Inc., a Delaware corporation (the
"Lender"),
WITNESSETH:
WHEREAS, the Borrower and the Lender have been parties to a Credit
Agreement dated as of December 7, 2001, and subsequently amended (as amended,
the "Original Loan Agreement"), pursuant to which the Lender has made certain
loans to the Borrower (the "Original Loans") for the purposes specified in such
Original Loan Agreement, and to a Supply Agreement dated as of December 7, 2001,
and subsequently amended (as amended, the "Original Supply Agreement") pursuant
to which the Borrower and its Affiliates are purchasing hearing aids from Lender
and its Affiliates; and
WHEREAS, the Borrower has requested that Lender modify the terms of
the Original Loan Agreement and enter into certain financing arrangements with
the Borrower; and
WHEREAS, the parties now desire to fully amend and restate the
Original Loan Agreement by, among other things, reducing the total commitment
thereunder to $26 million and consolidating certain tranches; and
WHEREAS, Borrower and the Lender are desirous of extending their
relationship and entering into this Amended and Restated Credit Agreement
pursuant to which the Lender will make funds available to the Borrower for such
purposes and upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Borrower and the Lender are also extending their supplier
relationship and will be parties to an Amended and Restated Supply Agreement,
which will provide for the sale of hearing aids to the Borrower and its
Affiliates by the Lender or its Affiliates;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Acquisition Target" has the meaning specified in Schedule I hereto.
"Affiliate" means, as to any Person, any Subsidiary of such Person and
any other Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person and includes each officer or director or
general partner of such Person, and each Person who is the beneficial owner of
10% or more of any class of Voting Stock of such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Credit Agreement, together
with all Exhibits and Schedules hereto, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States government or any agency thereof, (b) certificates of deposit,
eurodollar time deposits, overnight bank deposits and bankers' acceptances of
any lender or by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (i) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (ii) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000, having maturities of one year or
less from the date of acquisition, (c) commercial paper of an issuer rated at
least "A-1" by Standard & Poors or "P-1" by Moody's, or carrying an equivalent
rating by a nationally recognized rating agency if both of Standard and Poors
and Moody's cease publishing ratings of investments, (d) shares of any money
market mutual fund that (i) has substantially all of its assets invested
continuously in the types of investments referred to in clause (a) above, (ii)
has net assets of not less than $500,000,000, and (iii) has the highest rating
obtainable from either S&P or Moody's; and (e) repurchase obligations of any
lender or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government.
"Change of Control" means (a) the sale, lease, transfer, conveyance or
other disposition of all or substantially all of the assets of the Borrower to
any "person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of
the Exchange Act any successor provision to either of the foregoing, including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act)
(except in connection with a liquidation or dissolution of the Borrower that
does not constitute a Change of Control under clause (b) below), (b) the
approval by the requisite shareholders of the Borrower of a plan of liquidation
or statutory dissolution (which shall not be construed to include a plan of
merger or consolidation) of the Borrower, or (c) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Borrower's Board of Directors (together with any new directors whose
election or appointment by such board or whose nomination for election by the
stockholders of the Borrower was approved by a vote of a majority of the
directors then still in office who were either directors at
2
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Borrower's Board of Directors then in office.
"Closing Date" means February 10, 2006.
"Collateral Documents" means the Amended and Restated Security
Agreement, and any other document or instrument executed and delivered by a
Person granting a Lien on any of its property to secure payment of the
Obligations.
"Commitments" means, collectively, the Tranche A Loan Commitment, the
Tranche B Loan Commitment and the Tranche C Loan Commitment.
"Consolidated Net Income" means, for any period with respect to any
specified Person or operations for which financial statements are prepared, the
Net Income of such Person or operations and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; provided that the
Net Income of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its shareholders.
"Current Assets" means, with respect to any Person at any date, the
total consolidated current assets of such Person and its Subsidiaries on a
consolidated basis at such date, determined in conformity with GAAP.
"Current Liabilities" means, with respect to any Person at any date,
the total consolidated current liabilities of such Person and its Subsidiaries
on a consolidated basis at such date, determined in conformity with GAAP.
"Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default.
"Dollars" and the sign "$" each mean the lawful money of the United
States of America.
"EBITDA" means, with respect to any Person or operations for which
financial statements are prepared, at any time, for the then most recently
completed four fiscal quarters of such Person or operations, the sum of the
following amounts (without duplication) in respect of such Person and its
Subsidiaries or such operations, determined on a consolidated basis in
accordance with GAAP:
(a) Consolidated Net Income for such period;
3
(b) all amounts deducted from net revenues in determining such
Consolidated Net Income for such period on account of (i) Interest Expense and
interest on the Loans and (ii) Taxes payable in respect of income of such
Person;
(c) all charges or deductions for depreciation or amortization for
such period to the extent deducted in determining Consolidated Net Income for
such period; and
(d) all non-recurring losses and all losses from investments recorded
using the equity method for such period to the extent deducted in determining
Consolidated Net Income for such period;
less the amount of all non-recurring gains and all gains from
investments recorded using the equity method for such period to the extent
included in determining Consolidated Net Income for such period.
"Environmental Laws" means all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
judicial or administrative order, consent decree or judgment relating to the
regulation and protection of human health, safety, the environment or natural
resources (including, without limitation, ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation).
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and all rules
and regulations from time to time promulgated thereunder.
"Event of Default" has the meaning specified in Section 7.01.
"Excess Cash Flow" means, with respect to any Person or operations for
which financial statements are prepared, at any time, for the then most recently
completed four fiscal quarters of such Person or operations, the sum of the
following amounts (without duplication) in respect of such Person and its
Subsidiaries or such operations, determined on a consolidated basis in
accordance with GAAP:
(a) Consolidated Net Income for such period;
(b) all amounts deducted from net revenues in determining such
Consolidated Net Income for such period on account of (i) Interest Expense and
interest on the Loans and (ii) Taxes payable in respect of income of such
Person;
(c) all charges or deductions for depreciation or amortization for
such period to the extent deducted in determining Consolidated Net Income for
such period;
(d) all non-recurring losses and all losses from investments recorded
using the equity method for such period to the extent deducted in determining
Consolidated Net Income for such period; and
4
(e) all charges or deductions for bad debts for such period to the
extent deducted in determining Consolidated Net Income for such period;
Less:
(f) the amount of all non-recurring gains and all gains from
investments recorded using the equity method for such period to the extent
included in determining Consolidated Net Income for such period;
(g) the amount of all credits or decreases in cost of products sold
for such period to the extent decreased in determining Consolidated Net Income
for such period, pursuant to Section 2.03(d) of this Credit Agreement; and
(h) scheduled and mandatory cash principal and interest payments on
Indebtedness made by Borrower or any of its Subsidiaries (other than the Loans)
during such period to the extent such other Indebtedness is permitted herein and
such payments are permitted to be made herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fiscal Quarter" means each of the three month periods ending on the
last Saturday during the months of March, June, September and December.
"Fixed Monthly Tranche C Payment" shall have the meaning set forth in
Section 2.03(c).
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Indebtedness" means, as to any Person: (a) indebtedness created,
issued, existing or incurred by such Person for borrowed money (whether by loan
or the issuance and sale of debt securities); (b) obligations of such Person to
pay the deferred purchase or acquisition price of property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within sixty (60) days from the date Borrower
receives statement for such goods or services and other than trade accounts
payable that are being contested in good faith, by proper proceedings, if
adequate reserves therefor have been established on the books of such Person in
conformity with GAAP; (c) Indebtedness of others secured by a Lien on the
property of such Person, whether or not the respective indebtedness so secured
has been assumed by such Person; (d) obligations of such Person in respect of
letters of credit or similar instruments issued
5
or accepted by banks and other financial institutions for the account of such
Person; (e) capital lease obligations of such Person; and (f) Indebtedness of
others guaranteed by such Person.
"Indemnified Matters" has the meaning specified in Section 8.04(b).
"Indemnitee" has the meaning specified in Section 8.04(b).
"Interest Expense" means, for any fiscal period, for any Person or
operations for which financial statements are prepared, all interest expense
calculated on a consolidated basis for such Person and its Subsidiaries or such
operations in respect of Indebtedness, including any commitment, standby, agency
or other fees charged in respect of the provision of any such Indebtedness, any
fee payable in respect of the issuance of any letter of credit or letter of
guarantee, the imputed interest component of any bankers' acceptance or other
security issued by any such Person or in respect of such operations, the
interest component under any capital lease or under any lease, or under any
interest rate protection agreement entered into by any such Person or in respect
of such operations, all as determined in accordance with GAAP.
"Investment" has the meaning specified in Section 6.12.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any indebtedness or other obligation, including, without limitation,
any conditional sale or other title retention agreement, the interest of a
lessor under a capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing, under the UCC or
comparable law of any jurisdiction, of any financing statement evidencing a
valid lien naming the owner of the asset to which such Lien relates as debtor.
"Loan Balance" means the then outstanding principal plus accrued and
unpaid interest in respect of the Tranche A Loan, Tranche B Loans or Tranche C
Loan, as the context shall specify.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Collateral Documents and each certificate, agreement or document executed by the
Borrower or any other Person (other than the Lender) and delivered to the Lender
in connection with or pursuant to any of the foregoing.
"Loans" means, collectively, the Tranche A Loan, the Tranche B Loans
and the Tranche C Loans.
"Material Adverse Change" means a material adverse change in any of
(a) the legality, validity or enforceability of any Loan Document, (b) the
ability of the Borrower to repay the Obligations or to perform its obligations
under any Loan Document, (c) the ability of the Lender to obtain recourse to any
of the collateral described in the Collateral Documents, or (d) the rights and
remedies of the Lender under any of the Loan Documents.
6
"Material Adverse Effect" means an effect that results in or causes,
or has a reasonable likelihood of resulting in or causing, a Material Adverse
Change.
"Maturity Date" means the fifth anniversary of the Closing Date.
"Minimum Purchase Percentage" has the meaning specified in Section
2.03(d)(i).
"Net Income (Loss)" means, for any Person for any period, the
aggregate of net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in conformity with GAAP.
"Notes" means, collectively, the Tranche A Note, the Tranche B Note
and the Tranche C Note.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Obligations" means the Loans, the Notes and all other advances,
debts, liabilities, obligations, covenants and duties owing by the Borrower to
the Lender or any Indemnitee, of every type and description, present or future,
whether or not evidenced by any note, guaranty or other instrument, arising
under this Agreement or under any other Loan Document, whether or not for the
payment of money, loan, guaranty, indemnification or in any other manner,
whether direct or indirect (including, without limitation, those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term "Obligations" includes, without
limitation, all interest, charges, expenses, fees, attorneys' fees and
disbursements and any other sum chargeable to the Borrower under this Agreement
or any other Loan Document.
"Other Taxes" has the meaning specified in Section 2.09(b).
"Permit" means any permit, approval, authorization, license, variance
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Liens" means Liens permitted under Section 6.01 of this
Agreement.
"Permitted Senior Indebtedness" means senior unsecured Indebtedness of
Borrower to non-Affiliates of the Borrower that satisfies each of the following
conditions:
(a) in the reasonable judgment of the Lender, the Borrower will be
able to service the Permitted Senior Indebtedness without substantially
jeopardizing the ability of the Borrower to pay all principal and interest on
its Indebtedness under reasonably adverse business circumstances;
(b) there are no sinking fund or mandatory payments or prepayments of
principal due in respect of such Permitted Senior Indebtedness prior to the
Maturity Date;
7
(c) after giving effect to the incurrence of such Permitted Senior
Indebtedness, the Borrower's ratio of (i) Total Debt to (ii) the sum of (A) its
Total Debt plus (B) its Stockholders' Equity shall be, on a pro forma basis,
equal to or greater than 2.5:1.0;
(d) after giving effect to the incurrence of such Permitted Senior
Indebtedness, the Borrower's ratio of EBITDA to the Borrower's aggregate
Interest Expense (including, without limitation, interest paid hereunder) shall
be, on a pro forma basis, equal to or greater than 3.0:1.0;
(e) the other terms and conditions of such Indebtedness, shall be, in
the Lender's reasonable judgment, at then prevailing market standards for
companies similarly situated.
For purposes of this definition, "pro forma" means, for any calculation, on the
basis of the most recently completed rolling four-Fiscal Quarter period, but
assuming the incurrence of the proposed Indebtedness on the first day of such
period.
"Permitted Subordinated Indebtedness" means subordinated unsecured
Indebtedness of the Borrower that satisfies each of the following conditions:
(a) the final maturity of such Permitted Subordinated Indebtedness is later
than the Maturity Date;
(b) there are no sinking fund or mandatory payments or prepayments of
principal due in respect of such Permitted Subordinated Indebtedness prior to
the Maturity Date; and
(c) the other terms and conditions of such Permitted Subordinated
Indebtedness shall be, in Lender's reasonable opinion, at then prevailing market
standards for companies similarly situated, including limited acceleration
rights, priority in bankruptcy to the Obligations, payover provisions and waiver
of defenses.
"Person" means an individual, partnership, corporation (including,
without limitation, a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other entity, or a
Governmental Authority.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by Citibank, N.A. as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.
"Required Tranche B Payment" shall have the meaning specified in
Section 2.03(b).
"Required Tranche C Quarterly Payment" shall have the meaning
specified in Section 2.03(c).
8
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and all federal, state and local laws, rules and regulations, including,
without limitation, federal, state or local securities, antitrust and licensing
laws, all health and safety laws, including, without limitation, Environmental
Laws, and ERISA, and all orders, judgments, decrees or other determinations of
any Governmental Authority or arbitrator, applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Responsible Officer" means, with respect to any Person, any of the
principal executive officers of such Person.
"Roll-In Acquisition" has the meaning specified in Schedule I hereto.
"Security Agreement" means the Amended and Restated Security Agreement
entered into between Lender and Borrower effective February 10, 2006, set out as
Exhibit C hereto, as such agreement may be amended, supplemented or modified
from time to time.
"Solvent" means, with respect to any Person, that the value of the
assets of such Person (at book value) is, on the date of determination, greater
than the total amount of liabilities (including, without limitation, contingent
and unliquidated liabilities) of such Person as of such date and that, as of
such date, such Person is able to pay all liabilities of such Person as such
liabilities mature and does not have unreasonably small capital. In computing
the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Stand-Alone Acquisition" has the meaning specified in Schedule I
hereto.
"Stock" means shares of capital stock, beneficial, membership or
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, limited liability company, partnership or
other entity, whether voting or non-voting, and includes, without limitation,
common stock and preferred stock.
"Stock Equivalents" means all securities convertible into or
exchangeable for Stock, and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other business entity of which an aggregate of 50% or more of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors, managers, trustees or other controlling persons, is, at the time,
directly or indirectly, owned or controlled by such Person and/or one or more
Subsidiaries of such Person (irrespective of whether, at the time, Stock of any
other class or classes of such entity shall have or might have voting power by
reason of the happening of any contingency).
"Supply Agreement" means, collectively, the Amended and Restated
Supply Agreement, dated as of February 10, 2006, between the Borrower and the
Lender, and any other
9
supply or similar agreement entered into by the Lender or any of its Affiliates
and the Borrower or any of its Affiliates for the provision of hearing aids by
the Lender or any of its Affiliates to the Borrower or any of its Affiliates, in
each case, as amended, restated, supplemented or otherwise modified from time to
time.
"Taxes" has the meaning specified in Section 2.09(a).
"Tranche A Loan" has the meaning specified in Section 2.01(a).
"Tranche A Loan Commitment" means the commitment of the Lender to make
the Tranche A Loan to the Borrower pursuant to Section 2.01(a) in an aggregate
principal amount not to exceed $2,239,851.
"Tranche A Loan Payment Date" has the meaning specified in Section
2.03(a).
"Tranche A Note" means the promissory note of the Borrower payable to
the order of the Lender in an aggregate principal amount equal to the Tranche A
Loan, in substantially the form of Exhibit A-1, evidencing the aggregate
principal amount of the Tranche A Loan by the Lender to the Borrower.
"Tranche B Loan" has the meaning specified in Section 2.01(b).
"Tranche B Loan Commitment" means the option of the Lender to make the
Tranche B Loans to the Borrower pursuant to Section 2.01(b) in an aggregate
principal amount not to exceed $26,000,000 less any amounts outstanding under
the Tranche A Loan and Tranche C Loans.
"Tranche B Loan Payment Date" has the meaning specified in Section
2.03(b).
"Tranche B Note" means the promissory note of the Borrower payable to
the order of the Lender, in substantially the form of Exhibit A-2, evidencing
the aggregate principal amount of the Tranche B Loans by the Lender to the
Borrower.
"Tranche C Loan" has the meaning specified in Section 2.01(c).
"Tranche C Loan Commitment" means the commitment of the Lender to make
the Tranche C Loan to the borrower on the Closing Date in the principal amount
of $20,875,256 and the option of the Lender to make additional Tranche C Loans
to the Borrower pursuant to Section 2.01(c), all in an aggregate principal
amount not to exceed $26,000,000 less any amounts outstanding under the Tranche
A Loan and Tranche B Loan.
"Tranche C Loan Payment Date" has the meaning specified in Section
2.03(c).
"Tranche C Monthly Payment Date" shall have the meaning set forth in
Section 2.03(c).
10
"Tranche C Note" means the promissory note of the Borrower payable to
the order of the Lender in substantially the form of Exhibit A-3, evidencing the
aggregate principal amount of the Tranche C Loans by the Lender to the Borrower.
"Tranche C Quarterly Payment Date" shall have the meaning set forth in
Section 2.03(c).
"UCC" means the Uniform Commercial Code, as in effect in any
applicable jurisdiction.
"Voting Stock" means Stock or similar interests, of any class or
classes (however designated), the holders of which at the time entitled, as such
holders to vote for the election of a majority of the directors (or persons
performing similar functions) of the Person involved, whether or not the right
to so vote exists by reason of the happening of a contingency.
"Working Capital" means, for any Person at any date, the amount by
which the Current Assets of such Person at such date exceeds the Current
Liabilities of such Person at such date.
Section 1.02. Computation of Time Periods.
In this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding" and the
word "through" means "to and including".
Section 1.03. Accounting Terms.
All accounting terms not specifically defined herein shall be
construed in conformity with GAAP and all accounting determinations required to
be made pursuant hereto shall, unless expressly otherwise provided herein, be
made in conformity with GAAP.
Section 1.04. Certain Terms.
(a) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, and not to any particular
Article, Section, subsection or clause in this Agreement. References herein to
an Exhibit, Schedule, Article, Section, subsection or clause refer to the
appropriate Exhibit or Schedule to, or Article, Section, subsection or clause in
this Agreement.
(b) The term "Lender" includes its successors and assigns.
11
ARTICLE II
AMOUNTS AND TERMS OF THE LOAN
Section 2.01. The Commitments and the Loans.
(a) Tranche A Loan. On the terms and subject to the conditions
contained in this Agreement, the Lender agrees to make a single loan (the
"Tranche A Loan") to the Borrower, which Tranche A Loan (i) shall be made only
on the Closing Date, (ii) shall be repaid pursuant to the terms hereof, but once
repaid may not be reborrowed, and (iii) shall not exceed the amount of the
Tranche A Loan Commitment. The Tranche A Loan shall be evidenced by the Tranche
A Note.
(b) Tranche B Loans. On the terms and subject to the conditions
contained in this Agreement, the Lender agrees to make loans (each, a "Tranche B
Loan" and collectively, the "Tranche B Loans") to the Borrower, which Tranche B
Loans (i) may be made on the Closing Date and from time to time thereafter on
any Business Day up to thirty (30) days prior to the Maturity Date, (ii) shall
be repaid pursuant to the terms hereof, and once repaid may be reborrowed, and
(iii) shall not exceed, at any time outstanding, the amount of the Tranche B
Loan Commitment. The aggregate Tranche B Loans shall be evidenced by the Tranche
B Note.
(c) Tranche C Loans. On the terms and subject to the conditions
contained in this Agreement, the Lender agrees to make loan(s) (each, a "Tranche
C Loan" and collectively, the "Tranche C Loans") to the Borrower, which Tranche
C Loans (i) shall be made on the Closing Date and from time to time thereafter
on any Business Day up to thirty (30) days prior to the Maturity Date, (ii)
shall be repaid pursuant to the terms hereof, and once repaid may be reborrowed,
and (iii) shall not exceed the amount of the Tranche C Loan Commitment. The
Tranche C Loans shall be evidenced by the Tranche C Note.
(d) The Borrower may, from time to time, upon at least three Business
Days' prior notice to the Lender, terminate in whole or reduce in part the
unused portions of the Tranche B Loan Commitment or the Tranche C Loan
Commitment. Each partial reduction shall be in an amount of not less than
$250,000 or an integral multiple of $250,000 in excess thereof and shall reduce
permanently such Loan commitment then in effect.
(e) The Tranche A Loan Commitment shall terminate on the Closing Date.
The Tranche B Loan Commitment and the Tranche C Loan Commitment shall terminate
thirty (30) days prior to the Maturity Date.
Section 2.02. Making the Loans.
(a) Subject to the terms and conditions hereof, each Tranche B Loan
and Tranche C Loan shall be made on notice given by the Borrower to the Lender
by 11:00 A.M. (New York City time) on the third Business Day prior to date of
the proposed making of such Loan. Each such notice (a "Notice of Borrowing")
shall be substantially in the form of Exhibit B, specifying therein (i) the
proposed date for the making of such Loan, (ii) the amount
12
of Loans constituting the Tranche B Loan or the Tranche C Loan, and (iii) that
the Borrower has complied with the applicable terms and conditions of this
Section 2.02 and Article III.
(b) Each Tranche B Loan shall be in an amount equal to a portion of
the purchase price for the purchase or acquisition of Acquisition Targets, which
amount shall be determined in accordance with the guidelines set forth on
Schedule I.
(c) Each Tranche C Loan that lender determines to make after the
Closing Date shall be in an amount equal to a portion of the purchase price for
the purchase or acquisition of Acquisition Targets, which amount shall be
determined in accordance with the guidelines set forth on Schedule I.
(d) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. The Borrower shall indemnify the Lender against any loss, cost or
expense incurred by the Lender as a result of any failure to fulfill on or
before the date specified in such Notice of Borrowing for such proposed Loan,
the applicable conditions set forth in Article III, including, without
limitation, any loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by the Lender to fund the Loan, which, as a result of such failure, is
not made on such date.
Section 2.03. Repayments.
(a) Repayment of Tranche A Loan. On the 20th day after the last day of
each Fiscal Quarter after the Closing Date (a "Tranche A Loan Payment Date"),
commencing on the 20th day after the last day of the first Fiscal Quarter of
2006 and ending upon payment in full, subject to the provisions of Section
2.03(d) below, the Borrower shall pay the principal amount of the outstanding
Tranche A Loan in three installments of $730,000 each and a fourth installment
of the balance, plus in each instance accrued and unpaid interest as provided by
Section 2.06(a) (each such amount a "Required Tranche A Payment").
(b) Repayment of Tranche B Loans. On the 20th day after the last day
of each Fiscal Quarter after the Closing Date (a "Tranche B Loan Payment Date"),
commencing on the 20th day after the last day of the first Fiscal Quarter after
the first Tranche B Loan is made and ending on the Maturity Date, subject to the
provisions of Section 2.03(e) below, the Borrower shall pay down the principal
amount of the aggregate outstanding Tranche B Loans in an amount equal to (i)
for each Tranche B Loan for Roll-In Acquisitions, an amount equal to five
percent (5.0%) of the original amount of such Tranche B Loan, and (ii) for each
Tranche B Loan for Stand-Alone Acquisitions made after January 1, 2006, $65 per
hearing aid for all hearing aids purchased by Borrower from Lender during such
Fiscal Quarter on each such new "ship to" account for each such Stand-Alone
Acquisition; plus accrued and unpaid interest thereon as provided by Section
2.06(a) (such amounts the "Required Tranche B Payment").
(c) Repayment of Tranche C Loans. (i) On the first day of each month
commencing on the first day of March 2006 (a "Tranche C Monthly Payment Date")
the Borrower shall pay down the principal balance of the Tranche C Loans in an
amount of $130,000 (each such amount the "Fixed Monthly Tranche C Payment").
(ii) Additionally, on the 20th day
13
after the last day of each Fiscal Quarter commencing with the fourth quarter of
2006 (i.e., on January 20, 2007) and ending on the Maturity Date (a "Tranche C
Quarterly Payment Date"), subject to the provisions of Section 2.03(d) below,
the Borrower shall pay an amount equal to $730,000, plus accrued and unpaid
interest as provided by Section 2.06(b) (each such amount, the "Required Tranche
C Quarterly Payment").
(d) Self-Liquidating of Tranche A and Tranche C Loans. Notwithstanding
the provisions of Section 2.03(a) and (c), and provided that no Event of Default
exists, then:
(i) if, as of any Tranche A Loan Payment Date or Tranche C
Quarterly Payment Date (each a "Loan Payment Date"), the Borrower has
purchased pursuant to the Supply Agreement, on a cumulative basis from
May 1, 2001 through the applicable quarterly Loan Payment Date, 90% or
more of the total number of hearing aids purchased by the Borrower,
net of returns (such cumulative amount determined as a percentage, the
"Minimum Purchase Percentage"), the Borrower shall be deemed to have
repaid the Required Tranche A Payment or Required Quarterly Tranche C
Payment, as the case may be, on the applicable Loan Payment Date;
(ii) if the Borrower has purchased pursuant to the Supply
Agreement, on a cumulative basis from May 1, 2001 through the
applicable quarterly Tranche A Loan Payment Date or Tranche C
Quarterly Payment Date, eighty percent (80%) or more of the total
number of hearing aids purchased by the Borrower but less than ninety
percent (90%) of the total number of hearing aids purchased by the
Borrower in each of the two preceding consecutive Fiscal Quarters, the
Borrower shall be deemed to have paid an amount, on the applicable
quarterly Payment Date at the end of such second Fiscal Quarter equal
to the product of (i) the applicable Required Tranche A Payment or
Required Tranche C Quarterly Payment, times (ii) (A) 100% minus (B)
the difference of (1) the Minimum Purchase Percentage and (2) the
cumulative percentage of purchases of hearing aid products made by
Borrower under the Supply Agreement during such second Fiscal Quarter.
By way of example, if Borrower purchased 80% of its cumulative second
quarter requirements from Lender during any such period, then Borrower
will be deemed to have made a payment for the applicable Loan Payment
Date equal to 90% of such Required Tranche A Payment or Required
Tranche C Quarterly Payment; and
(iii) if the Borrower has not purchased pursuant to the Supply
Agreement, on a cumulative basis from May 1, 2001 through the
applicable Payment Date at least eighty percent (80%) of the total
number of hearing aids purchased by the Borrower, the Borrower shall
receive no credit against either the Required Tranche A Payment or the
Required Tranche C Quarterly Payment. For the avoidance of doubt, the
repayment credits provided in this Section 2.03(d) shall not apply to
or reduce the Fixed Monthly Tranche C Payment required under Section
2.03(c)(i).
14
Notwithstanding the foregoing, the Borrower shall make a balloon
payment of the outstanding principal amount of the Tranche C Loan, with all
accrued and unpaid interest, on the Maturity Date.
(e) Self-Liquidation of Tranche B Loans. Notwithstanding the
provisions of Section 2.03(b), and provided that no Event of Default exists,
then:
(i) if, as of any Tranche B Loan Payment Date, the Borrower has
purchased pursuant to the Supply Agreement, on a cumulative basis from
May 1, 2001 through the applicable Loan Payment Date the Minimum
Purchase Percentage, the Borrower shall be deemed to have repaid all
of the Required Tranche B Payments on the applicable Tranche B Loan
Payment Date;
(ii) if the Borrower has purchased pursuant to the Supply
Agreement, on a cumulative basis from May 1, 2001 through the
applicable Loan Payment Date, eighty percent (80%) or more of the
total number of hearing aids purchased by the Borrower but less than
the Minimum Purchase Percentage in each of the two preceding
consecutive Fiscal Quarters, the Borrower shall be deemed to have paid
an amount on the applicable quarterly Payment Date at the end of such
second Fiscal Quarter equal to the product of (i) the applicable
Required Tranche B Payment times (ii) (A) 100% minus (B) the
difference of (1) the Minimum Purchase Percentage and (2) the
cumulative percentage of purchases of hearing aid products made by
Borrower under the Supply Agreement during such second Fiscal Quarter.
By way of example, if Borrower purchased 80% of its cumulative second
Fiscal Quarter requirements from Lender during any such period, then
Borrower will be deemed to have made a payment for the applicable Loan
Payment Date equal to 90% of such Required Tranche B Payment on the
applicable Tranche B Loan Payment Date; and
(iii) if the Borrower has not purchased pursuant to the Supply
Agreement, on a cumulative basis from May 1, 2001 through the
applicable Payment Date at least eighty percent (80%) of the total
number of hearing aids purchased by the Borrower, the Borrower shall
receive no credit against the Required Tranche B Payment.
Notwithstanding the foregoing, the Borrower shall pay the outstanding principal
amount, if any, of the Tranche B Loans, with all accrued and unpaid interest, on
the Maturity Date.
Section 2.04. Optional Prepayments.
The Borrower may, upon at least three Business Days' prior irrevocable
written notice to the Lender stating the proposed date (which shall be a
Business Day) and aggregate principal amount of the prepayment, prepay the
outstanding principal amount of the Loans, in whole or in part, without premium
or penalty, together with accrued interest to the date of such prepayment on the
principal amount of the Loans prepaid; provided, however, that that each partial
prepayment shall be in an aggregate amount not less than $1,000,000 or integral
multiples
15
of $1,000,000 in excess thereof (or a lesser amount if such lesser amount
constitutes the entire outstanding principal balance of such Loan). Upon the
giving of such notice of prepayment, the principal amount of the Loans specified
to be prepaid, together with accrued interest thereon, shall become due and
payable on the date specified for such prepayment. All optional prepayments made
pursuant to this Section 2.04 shall be applied to the Loans so specified to
reduce the remaining installments thereof in the inverse order of their
maturities.
Section 2.05. Mandatory Prepayment of Loans.
(a) The Borrower shall forthwith prepay the Loan Balance of the
Tranche C Loans upon receipt by the Borrower or any of its Subsidiaries of the
net proceeds of any issuance of Stock or Stock Equivalents by the Borrower or
any of its Subsidiaries (other than the proceeds received by the Borrower in
connection with the exercise by any of the Borrower's or its Subsidiaries'
employees of any option issued pursuant to any of the Borrower's or its
Subsidiaries' stock option plans), in an amount equal to 25% of such net
proceeds.
(b) The Borrower shall prepay the Loan Balance of the Tranche C Loans,
within 120 days after the last day of each fiscal year, in an amount equal to
20% of Excess Cash Flow for such fiscal year.
Section 2.06. Interest.
(a) Each of the Tranche A Loan and Tranche B Loans shall accrue
interest at a rate per annum equal at all times to 10.0% and shall be payable on
the 20th day after the end of each Fiscal Quarter, subject to the deemed
payments credits as contemplated by Section 2.03(d) and (e), respectively. With
respect to the calculation of interest on the unpaid principal amount of the
Tranche B Loans, each Tranche B Loan shall be deemed to be made on the first day
of the Fiscal Quarter in which such Tranche B Loan is made.
(b) The parties acknowledge that interest shall not accrue on a
portion of the principal balance of the Tranche C Loan made on the Closing Date
and equal to $6,576,391. The remainder of the Tranche C Loan made on the Closing
Date shall accrue interest at a rate per annum equal at all times to the Prime
Rate plus 1.0% and shall be payable on the 20th day after the end of each Fiscal
Quarter, subject to the deemed payments credits as contemplated by Section
2.03(d). With respect to each Tranche C Loan made after the Closing Date,
Borrower agrees that such Loans shall accrue interest at a rate per annum equal
at all times to the Prime Rate plus 1.0% from the date deemed made until the
principal amount thereof shall be paid in full; however, such accrued interest
shall not be added to accrued interest which is paid as part of the current
interest in a Required Quarterly Tranche C Payment, but shall accrue and be
added to the principal amount of Tranche C (i.e., compounded) on each Tranche C
Quarterly Payment Date until paid in full. Each Tranche C Loan made after the
Closing Date shall be deemed to be made on the first day of the Fiscal Quarter
in which such Tranche C Loan is made.
16
Section 2.07. Illegality.
Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for the Lender to make or continue
the Loans, then, on notice thereof and demand therefor by the Lender to the
Borrower, (a) the obligation of the Lender to make or to continue the Loans
shall terminate and (b) the Borrower shall forthwith prepay in full the Loans
then outstanding, together with interest accrued thereon.
Section 2.08. Payments and Computations.
(a) The Borrower shall make each payment hereunder and under the Notes
not later than 11:00 A.M. (New York City time) on the day when due, in Dollars,
to the Lender at its address referred to in Section 8.02 in immediately
available funds without set-off or counterclaim. Payment received by the Lender
after 1:00 PM (New York City time) shall be deemed to be received on the next
Business Day.
(b) The Borrower hereby authorizes the Lender, if and to the extent
payment owed to the Lender is not made when due hereunder, to charge from time
to time against any or all of the Borrower's accounts with the Lender any amount
so due.
(c) All computations of interest hereunder shall be made by the Lender
on the basis of a year of 365/6 days and number of days elapsed.
(d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.
Section 2.09. Taxes.
(a) Any and all payments by the Borrower under each Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of the Lender taxes
measured by its net income, and franchise taxes imposed on it, by the
jurisdiction of the Lender's applicable lending office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder to the Lender (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including, without limitation, deductions applicable to additional sums payable
under this Section 2.09) the Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other authority in accordance with applicable law.
17
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made under any Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, any Loan Document (collectively, "Other Taxes").
(c) The Borrower will indemnify the Lender for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.09) paid by
the Lender and any liability (including, without limitation, for penalties,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date the Lender makes
written demand therefor, accompanied by reasonable supporting documentation and
calculations.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes, the Borrower will furnish to the Lender, at its address referred to in
Section 8.02, the original or a certified copy of a receipt evidencing payment
thereof.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.09 shall survive the payment in full of the other Obligations.
Lender agrees that, as promptly as practicable after the officer of Lender
responsible for administering its Loans becomes aware of the occurrence of an
event or the existence of a condition that would entitle Lender to receive
payments under this Section 2.09, it will, to the extent not inconsistent with
the internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts to (a) make, issue, fund or maintain its
applicable Commitments or Loans through another office of Lender, or (b) take
such other measures as Lender may deem reasonable, if as a result thereof the
circumstances which would cause the additional amounts which would otherwise be
required to be paid to Lender pursuant to this Section 2.09 would be reduced and
if, as determined by Lender in its reasonable discretion, the making, issuing,
funding or maintaining of such Commitments or Loans through such other office or
in accordance with such other measures, as the case may be, would not otherwise
adversely affect such Commitments or Loans or the interests of Lender.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01. Conditions Precedent to the Loans Made on the Closing Date.
The obligation of the Lender to make the Loans on the Closing Date is
subject to satisfaction of the conditions precedent that the Lender shall have
received, on the Closing Date, the following, each dated the Closing Date unless
otherwise indicated, in form and substance satisfactory to the Lender:
(a) The Notes, duly executed by the Borrower.
18
(b) The Supply Agreement, duly executed by the parties thereto.
(c) Copies of (i) the resolutions of the Board of Directors of the
Borrower approving each Loan Document to which it is a party, (ii) all documents
evidencing other necessary corporate action and required governmental and third
party approvals, licenses and consents with respect to each Loan Document and
the transactions contemplated thereby and (iii) a copy of the Certificate of
Incorporation and the By-laws of the Borrower certified by a Secretary or an
Assistant Secretary of the Borrower as being true and correct and in full force
and effect as of the Closing Date.
(d) A certificate of the Secretary of State of the state of
incorporation of the Borrower, attesting to the good standing of the Borrower.
(e) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of each officer of the
Borrower who has been authorized to execute and deliver any Loan Document or
other document required hereunder to be executed and delivered by or on behalf
of the Borrower.
(f) The Security Agreement amendment extending its terms to this
Credit Agreement, duly executed by the Borrower.
(g) A certificate, signed by a Responsible Officer of the Borrower,
stating that each of the conditions specified in Section 3.03 and Section 3.02,
if applicable, has been satisfied.
(h) An opinion letter of Borrower's counsel, in form and substance
reasonably satisfactory to Lender.
(i) Such additional documents, information and materials as the Lender
may reasonably request.
Section 3.02. Conditions Precedent to the Tranche B Loans and post-Closing
Date Tranche C Loans.
(a) Each of the conditions precedent set forth in Section 3.01 shall
have been satisfied.
(b) The purchase or acquisition of the related Acquisition Target
shall comply with the guidelines set forth on Schedule I.
Section 3.03. Additional Conditions Precedent to Making All Loans.
The obligation of the Lender to make any Loan (including the Loans to
be made on the Closing Date) is subject to the further conditions precedent
that:
(a) The following statements shall be true on the date of such Loan,
before and after giving effect to the making of such Loan and to the application
of the proceeds
19
therefrom (and the acceptance by the Borrower of the proceeds of such Loan shall
constitute a representation and warranty by the Borrower that on such date such
statements are true):
(i) The representations and warranties of the Borrower contained
in Article IV and in each of the other Loan Documents are true and
correct in all material respects on and as of such date as though made
on and as of such date;
(ii) No Default or Event of Default is continuing or will result
from the Loan being made on such date; and
(iii) All necessary governmental and material third party
approvals required to be obtained by the Borrower and its Subsidiaries
in connection with the transactions contemplated hereby and by each of
the other Loan Documents have been obtained and remain in full force
and effect.
(b) All costs and accrued and unpaid fees and expenses required to be
paid to the Lender on or before such date, to the extent then due and payable,
shall have been paid.
(c) The making of Loans on such date does not violate any Requirement
of Law and is not enjoined, temporarily, preliminarily or permanently.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower
represents and warrants to the Lender that:
Section 4.01. Corporate Existence; Compliance with Law.
The Borrower and each of its Subsidiaries (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where such
qualification is necessary, except for failures which in the aggregate have no
Material Adverse Effect; (c) has all requisite corporate power and authority and
the legal right to own, pledge, mortgage and operate its properties, to lease
the property it operates under lease and to conduct its business as now or
currently proposed to be conducted; (d) is in compliance with its Certificate of
Incorporation and By-laws; (e) is in compliance with all other applicable
Requirements of Law except for such non-compliances as in the aggregate have no
Material Adverse Effect; and (f) has all Permits or consents from or by, has
made all necessary filings with, and has given all necessary notices to, each
Governmental Authority having jurisdiction, to the extent required for such
ownership, operation and conduct, except for Permits or consents which can be
obtained by the taking of ministerial action to secure the grant or transfer
thereof or failures which in the aggregate have no Material Adverse Effect.
20
Section 4.02. Corporate Power; Authorization; Enforceable Obligations.
(a) The execution, delivery and performance by the Borrower of the
Loan Documents and the consummation of the transactions related to the
transactions contemplated hereby and thereby:
(i) are within such Person's corporate powers;
(ii) have been duly authorized by all necessary corporate action;
(iii) do not and will not (A) contravene such Person's
Certificate of Incorporation or By-laws or other comparable governing
documents, (B) violate any other applicable Requirement of Law
(including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System), or any order or decree of
any Governmental Authority or arbitrator, (C) conflict with or result
in the breach of, or constitute a default under, or result in or
permit the termination or acceleration of, any contractual obligation
of such Person, or (D) result in the creation or imposition of any
Lien upon any of the property of such Person, other than Liens for the
benefit of the Lender; and
(iv) do not require the consent of, authorization by, approval
of, notice to, or filing or registration with, any Governmental
Authority or any other Person, other than those which have been
obtained or made and copies of which have been or will be delivered to
the Lender pursuant to Section 3.01, and each of which on the Closing
Date and on each subsequent lending date will be in full force and
effect.
(b) This Agreement and the Supply Agreement have been, and each of the
other Loan Documents will be upon delivery thereof, duly executed and delivered
by the Borrower. This Agreement and the Supply Agreement are, and the other Loan
Documents will be, when delivered hereunder, the legal, valid and binding
obligation of the Borrower enforceable against it in accordance with its terms.
Section 4.03. Full Disclosure.
No written statement prepared or furnished by or on behalf of the
Borrower or any of its Affiliates in connection with any of the Loan Documents
or the consummation of the transactions contemplated thereby, and no financial
statement delivered pursuant hereto or thereto, contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
Section 4.04. Financial Matters.
(a) Each of the financial statements described below (copies of which
have heretofore been provided to the Lender), have been prepared in accordance
with GAAP consistently applied throughout the periods covered thereby, are
complete and correct in all material respects and present fairly the financial
condition and results from operations of the
21
entities and for the periods specified (subject in the case of interim
company-prepared statements to normal year-end adjustments and the absence of
footnotes):
(i) The consolidated balance sheet of the Borrower and its
Subsidiaries as of December 25, 2004, and the related consolidated
statements of income, retained earnings and cash flows of the Borrower
and its Subsidiaries for the fiscal year then ended, audited by BDO
Xxxxxxx, LLP, copies of which have been furnished to the Lender,
fairly present the consolidated financial condition of the Borrower
and its Subsidiaries as of and for such dates and the consolidated
results of the operations of the Borrower and its Subsidiaries for the
period ended on such dates, all in conformity with GAAP.
(ii) after the Closing Date, the annual and quarterly financial
statements provided in accordance with Sections 5.07(a) and 5.07(b).
(b) Since October 1, 2005, there has been no Material Adverse Change,
and there have been no events or developments that in the aggregate have had a
Material Adverse Effect.
(c) The Borrower is, and on a consolidated basis the Borrower and its
Subsidiaries are, Solvent.
Section 4.05. Litigation.
(a) The performance of any action by the Borrower or any of its
Subsidiaries required or contemplated by any of the Loan Documents is not
restrained or enjoined (either temporarily, preliminarily or permanently), and
no material adverse condition has been imposed by any Governmental Authority or
arbitrator upon any of such transactions.
(b) There are no pending or, to the knowledge of the Borrower,
threatened actions, investigations or proceedings affecting the Borrower or any
of its Subsidiaries before any court, arbitrator or other Governmental
Authority, other than those that in the aggregate, if adversely determined,
would have no Material Adverse Effect.
Section 4.06. Margin Regulation.
The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Loan will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock.
22
Section 4.07. No Default.
No Default or Event of Default has occurred and is continuing.
Section 4.08. Investment Company Act.
The Borrower is not an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company", as
such terms are defined in the Investment Company Act of 1940, as amended. The
making of the Loans by the Lender, the application of the proceeds and repayment
thereof by the Borrower and the consummation of the transactions contemplated by
the Loan Documents will not violate any provision of such Act or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
Section 4.09. Use of Proceeds.
(a) The proceeds of the Tranche A Loan will be used by the Borrower to
repay existing Indebtedness owed by the Borrower to the Lender under the
Original Loan Agreement.
(b) The proceeds of any Tranche B Loans shall be used by the Borrower
to pay a portion of the purchase price in connection with the purchase or
acquisition of Acquisition Targets.
(c) The proceeds of any Tranche C Loan shall be used by the Borrower
to repay existing Indebtedness owed by the Borrower to the Lender under the
Original Loan Agreement, and to pay a portion of the purchase price in
connection with the purchase or acquisition of Acquisition Targets.
Section 4.10. Pari Passu Obligations.
The Obligations constitute the direct, unconditional and general
obligations of the Borrower, and rank at least pari passu with all other
Indebtedness and other obligations of the Borrower.
Section 4.11. Compliance with Agreements.
The Borrower and each of its Subsidiaries is in compliance with all
material indentures, material agreements (including the Supply Agreement) and
other material instruments binding upon it or any of their respective property.
Section 4.12. Acknowledgement of Outstanding Obligations.
The Borrower acknowledges and agrees that, as of the Closing Date, the
sum of TWO MILLION TWO HUNDRED THIRTY-NINE THOUSAND EIGHT HUNDRED FIFTY-ONE
United States Dollars ($2,239,851) will be due and owing under the Tranche A
Loan, and the sum of TWENTY MILLION EIGHT HUNDRED SEVENTY-FIVE THOUSAND TWO
HUNDRED FIFTY-SIX United States Dollars ($20,875,256) will be due and owing
under the Tranche C Loan.
23
ARTICLE V
AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding, the Borrower agrees with the Lender that:
Section 5.01. Compliance with Laws, Etc.
The Borrower shall comply, and shall cause each of its Subsidiaries to
comply, in all material respects, with all Requirements of Law, contractual
obligations, commitments, instruments, licenses, permits and franchises,
including, without limitation, all Permits.
Section 5.02. Conduct of Business.
The Borrower shall (a) conduct, and shall cause each of its
Subsidiaries to conduct, its business in the ordinary course and consistent with
past practice, and (b) perform and observe, in all material respects, and cause
each of its Subsidiaries to perform and observe, in all material respects, all
the terms, covenants and conditions required to be performed and observed by it
under its contractual obligations, and do, and cause its Subsidiaries to do, all
things necessary to preserve and to keep unimpaired its rights under such
contractual obligations; provided, however, that the foregoing shall not require
Borrower nor any of its Subsidiaries to perform or observe any contractual
obligation the nonperformance or nonobservation of which would have no Material
Adverse Effect.
Section 5.03. Preservation of Corporate Existence, Etc.
The Borrower shall, and shall cause each of its Subsidiaries to,
preserve and maintain its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the foregoing shall not require Borrower
nor any of its Subsidiaries to preserve or maintain any rights or franchises
which are no longer used by Borrower or its Subsidiaries in the conduct of their
respective businesses or where the preservation or maintenance of such rights or
franchises is no longer economically feasible, in Borrower's reasonable
discretion.
Section 5.04. Access.
The Borrower shall, at any reasonable time and from time to time, with
reasonable prior notice permit the Lender or representatives thereof, to (a)
examine and make copies of and abstracts from the records and books of account
of the Borrower and each of its Subsidiaries, (b) visit the properties of the
Borrower and each of its Subsidiaries, (c) discuss the affairs, finances and
accounts of the Borrower and each of its Subsidiaries with any of their
respective officers or directors, and (d) communicate directly with the
Borrower's independent certified public accountants; provided that the Borrower
is present during such communications or has given its consent (such consent not
to be unreasonably withheld) for such communications to occur without the
presence of the Borrower. The Borrower shall authorize its independent certified
public accountants to disclose to the Lender any and all financial statements
and other information of any kind, including, without limitation, copies of any
management letter, or the
24
substance of any oral information that such accountants may have with respect to
the business, financial condition, results of operations or other affairs of the
Borrower or any of its Subsidiaries, subject to the Lender's agreement to
preserve the confidentiality of such information.
Section 5.05. Keeping of Books.
The Borrower shall keep, and shall cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each such Subsidiary.
Section 5.06. Application of Proceeds.
The Borrower shall use the proceeds of the Loans as provided in
Section 4.09.
Section 5.07. Financial Statements.
The Borrower shall furnish to the Lender:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, an audited consolidated balance sheet
of the Borrower and its Subsidiaries as of the end of such year and the related
audited consolidated statements of income, retained earnings and cash flows of
the Borrower and its Subsidiaries for such fiscal year, all prepared in
conformity with GAAP and the independent auditor's report thereon without
qualification by BDO Xxxxxxx, LLP or other independent public accountants of
recognized national standing, together with a certificate of such accounting
firm stating that in the course of the regular audit of the consolidated
financial statements of the Borrower and its Subsidiaries, which audit was
conducted by such accounting firm in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge that a Default or
Event of Default has occurred and is continuing, or, if in the opinion of such
accounting firm, a Default or Event of Default (insofar as they relate to
accounting and auditing matters) has occurred and is continuing, a statement as
to the nature thereof.
(b) as soon as available and in any event within 75 days after the end
of each of the first three fiscal quarters of each fiscal year, a consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such quarter
and consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous fiscal year
and ending with the end of such fiscal quarter, all prepared in conformity with
GAAP (subject to normal year-end adjustments) and certified by the chief
financial officer of the Borrower as fairly presenting the financial condition
and results of operations of the Borrower and its Subsidiaries as of such date
and for such period, together with (i) a certificate of said officer stating
that no Default or Event of Default has occurred and is continuing or, if a
Default or an Event of Default has occurred and is continuing, a statement as to
the nature thereof and the action which the Borrower proposes to take with
respect thereto, and (ii) a written discussion and analysis by the management of
the Borrower of the financial statements furnished in respect of such fiscal
quarter.
25
Section 5.08. Reporting Requirements.
The Borrower shall furnish to the Lender:
(a) Promptly, and in any event within ten Business Days after receipt
of written notice of the commencement thereof, notice of all actions, suits and
proceedings before any domestic or foreign Governmental Authority or arbitrator,
affecting the Borrower or any of its Subsidiaries, except those which in the
aggregate, if adversely determined, would have no Material Adverse Effect;
(b) promptly and in any event within ten Business Days after the
Borrower becomes aware of the existence of (i) any Default or Event of Default,
(ii) any breach or non-performance of, or any default under, any contractual
obligation which is material to the business, prospects, operations or financial
condition of the Borrower and its Subsidiaries taken as one enterprise, or (iii)
any Material Adverse Change after the Closing Date or any event, development or
other circumstance which has any reasonable likelihood of causing or resulting
in a Material Adverse Change, telephonic notice in reasonable detail specifying
the nature of the Default, Event of Default, breach, non-performance, default,
event, development or circumstance, including, without limitation, the
anticipated effect thereof, which notice shall be promptly confirmed in writing
within five days;
(c) as soon as available and in any event within 30 days after the end
of each fiscal year, an update of the existing five year forecast of annual
purchases, sales, earnings, capital expenditures, working capital requirements
and projected cash flow results of the Borrower and its Subsidiaries on a
consolidated basis through the Maturity Date; and
(d) promptly such other information as the Lender may reasonably
request from time to time.
Section 5.09. Insurance.
The Borrower shall maintain or cause to be maintained with financially
sound and reputable insurers, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against loss or
damage of the kinds customarily insured against by reputable companies in the
same or similar businesses, such insurance to be of such types and in such
amounts (with such deductible amounts) as is customary for such companies under
similar circumstances, and furnish the Lender on request full information as to
all such insurance.
Section 5.10. Payment of Taxes and Claims.
The Borrower shall pay, and cause each of its Subsidiaries to pay, (a)
all Taxes, assessments and governmental charges imposed upon it or upon its
property, and (b) all genuine claims (including claims for labor, materials,
supplies or services) that might, if unpaid, become a Lien upon its property or
assets, unless, in each case, the validity or amount thereof is being contested
in good faith by appropriate proceedings and the Borrower or such Subsidiary has
maintained adequate reserves in accordance with GAAP with respect thereto or has
posted a bond in respect thereof satisfactory to the Lender.
26
Section 5.11. Compliance with Agreements.
The Borrower shall, and shall cause each of its Subsidiaries to, (i)
perform and observe all the terms, covenants and conditions required to be
performed and observed by it under its contractual obligations and (ii) do all
things necessary to preserve and keep unimpaired its rights under such
contractual obligations; provided, however, that the foregoing shall not require
Borrower nor any of its Subsidiaries to perform or observe any contractual
obligation the nonperformance or nonobservation of which would have no Material
Adverse Effect.
Section 5.12. Further Documents.
The Borrower shall, and shall cause each of its Subsidiaries to,
execute and deliver or to cause to be executed and delivered to the Lender from
time to time such consents and such other documents, instruments or agreements
as the Lender may reasonably request, that are, in the Lender's reasonable
judgment, necessary or desirable to obtain or preserve for the Lender the
benefit of the Loan Documents.
Section 5.13. Repayment of Certain Indebtedness.
Simultaneously with the borrowing thereof on the Closing Date, the
Borrower shall use the proceeds of the Tranche A Loan and Tranche C Loan to
permanently repay or prepay the Indebtedness outstanding under the Original Loan
Agreement.
Section 5.14. Collateral Documents.
The Borrower, at its sole cost and expense, shall take all actions
necessary or reasonably requested by the Lender to maintain each Collateral
Document in full force and effect and enforceable in accordance with its terms,
including (i) making filings and recordations, (ii) making payments of fees and
other charges, (iii) issuing, and if necessary, filing or recording supplemental
documentation, including continuation statements, (iv) discharging all claims or
other Liens (other than Liens permitted by Section 6.01) adversely affecting the
rights of the Lender in the Collateral, and (v) publishing or otherwise
delivering notice to third parties.
ARTICLE VI
NEGATIVE COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding, the Borrower agrees with the Lender that:
Section 6.01. Liens, Etc.
The Borrower shall not create or suffer to exist, and shall not permit
any of its Subsidiaries to create or suffer to exist, any Lien upon or with
respect to any of its or such Subsidiary's properties, whether now owned or
hereafter acquired, or assign any right to receive income, except for:
27
(a) Liens created pursuant to the Loan Documents;
(b) Purchase money Liens or purchase money security interests upon or
in any property acquired or held by the Borrower or any such Subsidiary of the
Borrower in the ordinary course of business to secure the purchase price of such
property or to secure Indebtedness incurred solely for the purpose of financing
the acquisition of such property (and any refinancings thereof), and Liens
existing on such property at the time of its acquisition (other than any such
Lien created in contemplation of such acquisition); provided, however, that the
aggregate principal amount of the Indebtedness secured by the Liens referred to
in this clause (b) and in clause (h) below shall not exceed $75,000,000 in the
aggregate at any time outstanding;
(c) Liens arising by operation of law (statutory or common) in favor
of materialmen, mechanics, warehousemen, carriers, lessors or other similar
Persons incurred by the Borrower or any such Subsidiary in the ordinary course
of business which secure its obligations to such Person; provided, however, that
(i) the Borrower or such Subsidiary is not in default with respect to such
payment obligation to such Person, unless the Borrower or such Subsidiary is in
good faith and by appropriate proceedings diligently contesting such obligation
and adequate provision is made for the payment thereof, and (ii) all such
defaults in the aggregate have no Material Adverse Effect;
(d) Liens (excluding environmental liens) securing taxes, assessments
or governmental charges or levies; provided, however, that (i) neither the
Borrower nor any such Subsidiary is in default in respect of any payment
obligation with respect thereto unless the Borrower or such Designated
Subsidiary is in good faith and by appropriate proceedings diligently contesting
such obligation and adequate provision is made for the payment thereof and (ii)
all such defaults in the aggregate have no Material Adverse Effect;
(e) Liens incurred or pledges and deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance,
old-age pensions and other social security benefits;
(f) Liens securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory obligations, surety
and appeal bonds and other obligations of like nature, incurred as an incident
to and in the ordinary course of business, and judgment liens; provided,
however, that all such Liens in the aggregate have no Material Adverse Effect;
(g) Zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or use
of the property or assets of the Borrower or any such Subsidiary or impair, in
any material manner, the use of such property for the purposes for which such
property is held by the Borrower or any such Subsidiary; and
(h) Liens to secure capitalized lease obligations; provided, however,
that: (i) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the cost
(including, without limitation, the cost of
28
construction) of the property subject thereto, (ii) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such cost, and (iii)
such Lien does not extend to or cover any other property other than such item of
property and any improvements on such item and (iv) the aggregate principal
amount of Indebtedness secured by the Liens referred to in this clause (h) and
in clause (b) above shall not exceed $75,000,000 in the aggregate at any time
outstanding.
(i) Any Liens to secure the performance of obligations in respect to
Permitted Senior Indebtedness.
(j) Any Liens to secure the performance of obligations in respect to
Permitted Subordinated Indebtedness.
(k) Those existing Liens set forth on Schedule 6.01(k).
Section 6.02. Indebtedness.
The Borrower shall not create or suffer to exist, or permit any of the
Subsidiaries to create or suffer to exist, any Indebtedness except:
(a) the Obligations;
(b) current liabilities in respect of taxes, assessments and
governmental charges or levies incurred, or claims for labor, materials,
inventory, services, supplies and rentals incurred, or for goods or services
purchased, in the ordinary course of business consistent with the past practice
of the Borrower and such Subsidiaries;
(c) Indebtedness incurred in connection with the purchase or
acquisition of Acquisition Targets completed in accordance with the procedures
set forth on Schedule I; provided that the terms and conditions of such
Indebtedness shall comply with the requirements set forth on Schedule I;
(d) Permitted Subordinated Indebtedness incurred by the Borrower;
(e) Permitted Senior Indebtedness incurred by the Borrower;
(f) Indebtedness secured by Permitted Liens;
(g) Indebtedness of any Subsidiary to Borrower or to any other
Subsidiary;
(h) Indebtedness which may be deemed to exist pursuant to any
guaranties, performance bonds, surety bonds, statutory, appeal or similar
obligations incurred in the ordinary course of business;
(i) extensions or renewals of Indebtedness set forth on Schedule
6.02(g);
(j) Indebtedness of Borrower to any Subsidiary incurred in the
ordinary course of business; and
29
(k) Indebtedness of Borrower existing on the Closing Date.
Section 6.03. Mergers, Sale of Assets, Etc.
The Borrower shall not, other than in the ordinary course of its
business, and shall not permit any of its Subsidiaries to, (a) merge with any
Person, (b) consolidate with any Person or (c) sell, lease, transfer or
otherwise dispose of, whether in one transaction or in a series of transactions
all or substantially all of its assets.
Section 6.04. Change in Nature of Business.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, make any material change in the nature or conduct of its business as carried
on at the date hereof.
Section 6.05. Modification of Material Agreements.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, alter, amend, modify, rescind, terminate or waive any of their respective
rights under, or fail to comply in all material respects with, any of its
material contractual obligations; provided, however, that, with respect to any
contractual obligation, the Borrower shall not be deemed in default of this
Section if all such alterations, amendments, modifications, rescissions,
terminations, waivers or failures in the aggregate have no Material Adverse
Effect; and provided, further, that in the event of any breach or event of
default by a Person other than the Borrower or any of its Subsidiaries, the
Borrower shall promptly notify the Lender of any such breach or event of default
and take all such action as may be reasonably necessary in order to endeavor to
avoid having such breach or event of default have a Material Adverse Effect.
Section 6.06. Cancellation of Indebtedness Owed to the Borrower.
The Borrower shall not cancel, or permit any of its Subsidiaries to
cancel, any claim or material Indebtedness owed to it except for adequate
consideration and in the ordinary course of business; provided that Indebtedness
not exceeding $100,000 shall not be deemed to be "material" for purposes hereof
and provided, further, that neither the Borrower nor its Subsidiaries shall
cancel claims or material Indebtedness more than one time in any Fiscal Quarter
and provided further that the foregoing shall not in any way limit the
Borrower's or its Subsidiaries' ability to negotiate and effect adjustments to
trade accounts receivable or other customer payables, including the granting of
credits, rebates and adjustments, in the ordinary course of business.
Section 6.07. Capital Structure.
The Borrower shall not make, and shall not permit any of its
Subsidiaries to make, any change in its capital structure (including, without
limitation, in the terms of its outstanding Stock) or amend its Certificate of
Incorporation or By-laws other than for amendments which in the aggregate have
no Material Adverse Effect.
30
Section 6.08. Accounting Changes.
The Borrower shall not make, nor permit any of its Subsidiaries to
make, any change in accounting treatment and reporting practices or tax
reporting treatment, except as required by GAAP or law and disclosed to the
Lender.
Section 6.09. OFAC Compliance.
The Borrower shall not enter into contracts or otherwise do business
with any Person whose name appears on any of the various lists maintained by the
Office of Foreign Asset Control of the United States Department of Treasury.
Section 6.10. Investments in Other Persons.
The Borrower shall not, directly or indirectly, make or permit any of
its Subsidiaries to make, any loan or advance to any Person, or purchase or
otherwise acquire, or permit any of its Subsidiaries to purchase or otherwise
acquire, any Stock, Stock Equivalents, other equity interests, obligations or
other securities of, or any assets constituting the purchase of a business or
line of business, or make, or permit any of its Subsidiaries to make, any
capital contribution to, or otherwise invest in, any Person (including, without
limitation, any Subsidiary of the Borrower) (any such transaction being an
"Investment"), except (a) Investments in Cash Equivalents, (b) in the ordinary
course of the Borrower's business, and (c) unless as is otherwise permitted or
provided for in this Agreement.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default.
Each of the following events shall be an "Event of Default":
(a) The Borrower shall fail to pay any principal (including, without
limitation, mandatory prepayments of principal) of, or interest on, the Loans,
any other amount due hereunder or under the other Loan Documents or any other
Obligations hereunder when the same becomes due and payable; or
(b) Any representation or warranty made or deemed made by the Borrower
in any Loan Document or by the Borrower (or any of its officers) in connection
with any Loan Document shall prove to have been materially incorrect when made
or deemed made; or
(c) (i) The Borrower or any of its Subsidiaries shall fail to perform
or observe any term, covenant or agreement contained in Articles V or VI, or
(ii) the Borrower or any of its Subsidiaries shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement or in any
other Loan Document if such failure under this clause (ii) shall remain
31
unremedied for 30 days after the earlier of the date on which (A) a Responsible
Officer of the Borrower becomes aware of such failure or (B) written notice
thereof shall have been given to the Borrower by the Lender; or
(d) The Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Indebtedness of the Borrower or any
such Subsidiary having a principal amount of $100,000 or more (excluding
indebtedness evidenced by the Notes), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure to pay continues for a period of 45 days; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness; or any such Indebtedness shall become or be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), or the Borrower or any of its Subsidiaries shall be
required to repurchase or offer to repurchase such Indebtedness, prior to the
stated maturity thereof; or
(e) The Borrower or any of its Subsidiaries shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors, or any proceeding shall be instituted by or against any
the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a custodian,
receiver, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceedings instituted against the
Borrower or any of its Subsidiaries (but not instituted by it), either such
proceedings shall remain undismissed or unstayed for a period of 30 days or any
of the actions sought in such proceedings shall occur; or the Borrower or any of
its Subsidiaries shall take any corporate action to authorize any of the actions
set forth above in this subsection (e); or
(f) One or more judgments or order for the payment of money in excess
of $100,000 in the aggregate to the extent not fully covered by insurance shall
be rendered against the Borrower or any of its Subsidiaries and either (i)
enforcement proceedings shall have been commenced by any creditor upon any such
judgment or order, or (ii) there shall be any period of 10 consecutive days
during which a stay of enforcement of any such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(g) The Borrower shall be in default under the Supply Agreement beyond
any grace or cure period specified therein, or the Supply Agreement shall be
cancelled, terminated, revoked or rescinded in accordance with the terms thereof
other than due to the (i) breach thereof by the Lender, (ii) mutual agreement of
the parties thereto or (iii) the expiration of the term thereof, or any action
at law, suit or in equity or other legal proceeding to cancel, revoke or rescind
the Supply Agreement shall be commenced by or on behalf of the Borrower, or any
court or any other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment, order, decree
or ruling to the effect that, the Supply Agreement is illegal, invalid or
unenforceable in any material respect in accordance with the terms thereof; or
32
(h) There shall occur a Change of Control.
Section 7.02. Remedies.
If there shall occur and be continuing any Event of Default, the
Lender may (a) by notice to the Borrower, cancel the Commitments and declare the
obligation of the Lender to make the Loans to be terminated, whereupon the same
shall forthwith be canceled and terminated; and (b) by notice to the Borrower,
declare the Loans, all interest thereon and all other amounts and Obligations
payable under this Agreement to be forthwith due and payable, whereupon the
Notes, all such interest and all such amounts and Obligations shall become and
be forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided, however, that upon the occurrence of the Event of Default specified in
subparagraph 7.01(e), (i) the Commitments shall automatically be canceled and
the obligation of the Lender to make the Loans shall automatically be terminated
and (ii) the Loans, all such interest and all such amounts and Obligations shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower. In addition to the remedies set forth above, the Lender may
exercise any remedies provided by applicable law or in equity.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Amendments, Etc.
No amendment or waiver of any provision of this Agreement nor consent
to any departure by the Borrower therefrom shall in any event be effective
unless the same shall be in writing and signed by the Lender and the Borrower,
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 8.02. Notices.
Except as otherwise provided herein, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(i) if to the Borrower:
HearUSA, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxxx, XX 00000
Attention: President
Telecopy No. (000) 000-0000
33
With a copy to:
XxXxxx Xxxxxx, Esq.
Xxxxx Xxxx LLP
000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy No. (000) 000-0000
(ii) if to the Lender:
Siemens Hearing Instruments, Inc.
00 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
Telecopy No. (000) 000-0000
With a copy to:
Xxxxx Xxxxx, Esq.
c/o Siemens Medical Solutions USA, Inc.
Legal Department
00 Xxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
Section 8.03. No Waiver; Remedies.
No failure on the part of the Lender to exercise, and no delay in
exercising, and no course of dealing with respect to, any right hereunder or
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law or in
equity.
Section 8.04. Costs; Expenses; Indemnities.
(a) Each of the parties hereto shall bear its own expenses (including,
without limitation, fees and expenses of the counsel, accountants, appraisers,
consultants or industry experts or other experts) incurred by it in connection
with the preparation, negotiation, execution, delivery, administration,
modification and amendment of this Agreement, each of the other Loan Documents
and each of the other documents to be delivered hereunder and thereunder and the
transactions contemplated hereby and thereby.
34
(b) The Borrower agrees to indemnify and hold harmless the Lender and
its Affiliates, and the directors, officers, employees, agents, attorneys,
consultants and advisors of or to any of the foregoing (each of the foregoing
being an "Indemnitee") from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits, costs,
disbursements and expenses of any kind or nature (including, without limitation,
fees and disbursements of counsel to any such Indemnitee) which may be imposed
on, incurred by or asserted against any such Indemnitee in connection with or
arising out of any investigation, litigation or proceeding, whether or not any
such Indemnitee is a party thereto, whether direct, indirect, or consequential
and whether based on any federal, state or local law or other statutory
regulation, securities or commercial law or regulation, or under common law or
in equity, or on contract, tort or otherwise, in any manner relating to or
arising out of this Agreement, any other Loan Document, any Obligation, or any
act, event or transaction related or attendant to any thereof, (collectively,
the "Indemnified Matters"); provided, however, that the Borrower shall not have
any obligation under this Section 8.04(b) to an Indemnitee with respect to any
Indemnified Matter caused by or resulting from the gross negligence or willful
misconduct of that Indemnitee.
(c) The Borrower, at the request of any Indemnitee, shall have the
obligation to defend against such investigation, litigation or proceeding, and
the Borrower, in any event, may participate in the defense thereof with legal
counsel of the Borrower's choice. In the event that such Indemnitee requests the
Borrower to defend against such investigation, litigation or proceeding, the
Borrower shall promptly do so, and such Indemnitee shall have the right to have
legal counsel of its choice participate in such defense, and all costs and
expenses of such counsel shall be borne by the Borrower. No action taken by
legal counsel chosen by such Indemnitee in defending against any such
investigation, litigation or proceeding, shall vitiate or in any way impair the
Borrower's obligation and duty hereunder to indemnify and hold harmless such
Indemnitee.
(d) The Borrower agrees that any indemnification or other protection
provided to any Indemnitee pursuant to this Agreement (including, without
limitation, pursuant to this Section 8.04) or any other Loan Document shall (i)
survive payment of the Obligations and (ii) inure to the benefit of any Person
who was at any time an Indemnitee under this Agreement or any other Loan
Document.
Section 8.05. Right of Set-off.
Upon the occurrence and during the continuance of any Event of Default
the Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Lender to or for the credit or the
account of the Borrower against any and all of the Obligations now or hereafter
existing whether or not the Lender shall have made any demand under this
Agreement, the Notes or any other Loan Document and although such Obligations
may be unmatured. The Lender agrees promptly to notify the Borrower after any
such set-off and application made by the Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section are in addition to the
other rights and remedies (including, without limitation, other rights of
set-off) which the Lender may have.
35
Section 8.06. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights or delegate its
obligations hereunder or any interest herein without the prior written consent
of the Lender.
Section 8.07. Governing Law.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 and
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
Section 8.08. Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 8.09. Submission to Jurisdiction; Service of Process.
(a) Any legal action or proceeding with respect to this Agreement or
the Notes or any other Loan Document may be brought in the courts of the State
of New York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, each of the Borrower and
the Lender hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The parties
hereto hereby irrevocably waive any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
conveniens, which any of them may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.
(b) Each of the Borrower and the Lender irrevocably consents to the
service of process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Borrower, or the Lender, as the case may be, at its
address provided herein.
(c) Nothing contained in this Section 8.09 shall affect the right of
the Lender or any holder of the Notes to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against the
Borrower in any other jurisdiction.
36
Section 8.10. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY
HERETO.
Section 8.11. Section Titles.
The Section titles contained in this Agreement are and shall be
without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto.
Section 8.12. Execution in Counterparts.
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original, and both of which taken together
shall constitute one and the same agreement.
Section 8.13. Survival.
The representations and warranties of the Borrower contained in each
of the Loan Documents shall survive the execution and delivery of the Loan
Documents and the making of the Loans.
Section 8.14. Entire Agreement.
This Agreement, together with the Exhibits and Schedules hereto and all of the
other Loan Documents and all certificates and documents delivered hereunder or
thereunder, embody the entire agreement of the parties and supersedes all prior
agreements and understandings, either oral or written, relating to the subject
matter hereof.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
HearUSA, Inc., Borrower
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive Officer
SIEMENS HEARING INSTRUMENTS, INC., as
Lender
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President & CEO
38
EXHIBIT A-1
FORM OF TRANCHE A NOTE
U.S. $2,239,851 Dated: February 10, 2006
FOR VALUE RECEIVED, the undersigned, HearUSA, Inc., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of SIEMENS
HEARING INSTRUMENTS, INC. (the "Lender") the principal sum of TWO MILLION TWO
HUNDRED THIRTY-NINE THOUSAND EIGHT HUNDRED FIFTY-ONE United States Dollars
($2,239,851), or, if less, the aggregate unpaid principal amount of the Tranche
A Term Loan (as defined in the Credit Agreement referred to below) of the Lender
to the Borrower, payable at such times, and in such amounts, as are specified in
the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount
of the Tranche A Loan from the date made until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Lender at the Wachovia Bank of North Carolina, in
Atlanta GA (or such other bank as may be deemed by Lender), in immediately
available funds. The Tranche A Loan made by the Lender to the Borrower, and all
payments made on account of the principal thereof, shall be recorded by the
Lender and, prior to any transfer hereof, endorsed on this Tranche A Note.
This Note is the Tranche A Note referred to in, and is entitled to the
benefits of, the Credit Agreement, dated as of February 10, 2006 (said
agreement, as it may be amended, supplemented or otherwise modified from time to
time, being the "Credit Agreement"), between the Borrower and the Lender, and
the other Loan Documents referred to therein and entered into pursuant thereto.
The Credit Agreement, among other things, (a) provides for the making of the
Tranche A Loan by the Lender to the Borrower in an aggregate amount not to
exceed at any time outstanding the United States Dollar amount first above
mentioned (as the same may be adjusted pursuant to the terms of the Credit
Agreement), the indebtedness of the Borrower resulting from such Tranche A Loan
being evidenced by this Tranche A Note, and (b) contains provisions for
acceleration of the maturity of the unpaid principal amount of this Tranche A
Note upon the happening of certain stated events and also for prepayments on
account of the principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower.
A-1-1
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 and 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
HearUSA, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0-0
XXXXXXX X-0
FORM OF TRANCHE B NOTE
U.S. $26,000,000 Dated: February 10, 2006
FOR VALUE RECEIVED, the undersigned, HearUSA, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of SIEMENS
HEARING INSTRUMENTS, INC. (the "Lender") the principal sum of TWENTY-SIX MILLION
United States Dollars ($26,000,000), or, if less, the aggregate unpaid principal
amount of the Tranche B Loan (as defined in the Credit Agreement referred to
below) of the Lender to the Borrower, payable at such times, and in such
amounts, as are specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount
of the Tranche B Loan from the date made until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Lender at the Wachovia Bank of North Carolina, in
Atlanta, GA (or such other bank as may be deemed by Lender), in immediately
available funds. Lender shall record in its books and records the date and
amount of all payments made under this note. Lender's books and records of the
Tranche B Loan shall be conclusive evidence of the amounts outstanding under
this Note in the absence of manifest error.
This Note is the Tranche B Note referred to in, and is entitled to the
benefits of, the Credit Agreement, dated as of February 10, 2006 (said
agreement, as it may be amended, supplemented or otherwise modified from time to
time, being the "Credit Agreement"), between the Borrower and the Lender, and
the other Loan Documents referred to therein and entered into pursuant thereto.
The Credit Agreement, among other things, (a) provides for the making of the
Tranche B Loan by the Lender to the Borrower in an aggregate amount not to
exceed at any time outstanding the United States Dollar amount first above
mentioned (as the same may be adjusted pursuant to the terms of the Credit
Agreement), the indebtedness of the Borrower resulting from such Tranche B Loan
being evidenced by this Tranche B Note, and (b) contains provisions for
acceleration of the maturity of the unpaid principal amount of this Tranche B
Note upon the happening of certain stated events and also for prepayments on
account of the principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower.
A-2-3
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 and 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
HearUSA, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0-0
XXXXXXX X-0
FORM OF TRANCHE C NOTE
U.S. $26,000,000 Dated: February 10, 2006
FOR VALUE RECEIVED, the undersigned, HearUSA, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of SIEMENS
HEARING INSTRUMENTS, INC. (the "Lender") the principal sum of TWENTY-SIX MILLION
United States Dollars ($26,000,000), or, if less, the aggregate unpaid principal
amount of the Tranche C Loan (as defined in the Credit Agreement referred to
below) of the Lender to the Borrower, payable at such times, and in such
amounts, as are specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount
of the Tranche C Loan from the date made until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Lender at the Wachovia Bank of North Carolina, in
Atlanta, GA (or such other bank as may be deemed by Lender), in immediately
available funds. Lender shall record in its books and records the date and
amount of all payments made under this note. Lender's books and records of the
Tranche C Loan shall be conclusive evidence of the amounts outstanding under
this Note in the absence of manifest error
This Note is the Tranche C Note referred to in, and is entitled to the
benefits of, the Credit Agreement, dated as of February 10, 2006 (said
agreement, as it may be amended, supplemented or otherwise modified from time to
time, being the "Credit Agreement"), between the Borrower and the Lender, and
the other Loan Documents referred to therein and entered into pursuant thereto.
The Credit Agreement, among other things, (a) provides for the making of the
Tranche C Loan by the Lender to the Borrower in an aggregate amount not to
exceed at any time outstanding the United States Dollar amount first above
mentioned (as the same may be adjusted pursuant to the terms of the Credit
Agreement), the indebtedness of the Borrower resulting from such Tranche C Loan
being evidenced by this Tranche C Note, and (b) contains provisions for
acceleration of the maturity of the unpaid principal amount of this Tranche C
Note upon the happening of certain stated events and also for prepayments on
account of the principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower.
A-3-5
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 and 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
HearUSA, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A-1-6
EXHIBIT B
FORM OF
NOTICE OF BORROWING
[____________ __], 20__
Siemens Hearing Instruments, Inc.
00 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: [____________]
Re: HearUSA, Inc.
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of
February 10, 2006 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), by and between the
undersigned and Siemens Hearing Instruments, Inc. (the "Lender"). Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to
such terms in the Credit Agreement.
The undersigned hereby gives you notice, irrevocably, pursuant to
[Section 2.02(b)/2.02(c)] of the Credit Agreement that the undersigned hereby
requests a [Tranche B Loan/Tranche C Loan] under the Credit Agreement, and in
that connection sets forth below the information relating to such [Tranche B
Loan/Tranche C Loan] (the "Proposed Borrowing") as required by Section 2.02 of
the Credit Agreement:
(a) The Business Day of the Proposed Borrowing is [________ __],
200[_] (the "Borrowing Date").
(b) The aggregate amount of the [Tranche B Loan/Tranche C Loan] is
$[__________].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the Borrowing Date, before and
after giving effect thereto and to the application of the proceeds
therefrom:
(a) The representations and warranties of the Borrower contained in Article
IV of the Credit Agreement and in each of the other Loan Documents are true and
correct in all material respects on and as of the Borrowing Date;
(b) No Default or Event of Default is continuing or will result from the
Proposed Borrowing;
(c) All necessary governmental and material third party approvals required
to be obtained by the Borrower and its Subsidiaries in connection with the
Proposed Borrowing and
B-1
the transactions contemplated thereby and by each of the other Loan Documents
have been obtained and remain in full force and effect;
(d) All costs and accrued and unpaid fees and expenses (including, without
limitation, legal fees and expenses) required to be paid to the Lender on or
before the Borrowing Date, to the extent then due and payable, have been paid;
(e) The making of the Loan on such date does not violate any Requirement of
Law and is not enjoined, temporarily, preliminarily or permanently; and
(f) The terms of the purchase or acquisition and the Acquisition Target to
which the [Tranche B Loan/Tranche C Loan] relates meets the guidelines set forth
on Schedule I to the Credit Agreement.
Very truly yours,
HearUSA, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
B-2
