1
EXHIBIT 10.80
[EXECUTION COPY]
$42,000,000
CREDIT AGREEMENT,
dated as of February 18, 1998,
among
SELFCARE CONSUMER PRODUCTS, INC.,
as the Borrower,
SELFCARE, INC.,
as the Guarantor,
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders,
and
THE CHASE MANHATTAN BANK,
as the Agent for the Lenders.
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TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms ...............................................................................2
1.2. Use of Defined Terms .......................................................................29
1.3. Cross-References ...........................................................................29
1.4. Accounting and Financial Determinations ....................................................29
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES,
LETTERS OF CREDIT AND NOTES
2.1. Commitments ................................................................................30
2.1.1. Term Loan Commitment .......................................................................30
2.1.2. Revolving Loan Commitment ..................................................................30
2.1.3. Letter of Credit Commitment ................................................................30
2.2. Lenders Not Permitted or Required To Make Credit Extensions ................................30
2.2.1. Term Loans .................................................................................30
2.2.2. Revolving Loans and Letters of Credit ......................................................30
2.3. Reduction of the Commitment Amounts ........................................................31
2.4. Borrowing Procedure ........................................................................31
2.5. Continuation and Conversion Elections ......................................................31
2.6. Funding ....................................................................................32
2.7. Letters of Credit. .........................................................................32
2.7.1. Issuance Procedures ........................................................................32
2.7.2. Other Lenders' Participation ...............................................................33
2.7.3. Disbursements ..............................................................................33
2.7.4. Reimbursement ..............................................................................33
2.7.5. Deemed Disbursements .......................................................................33
2.7.6. Nature of Reimbursement Obligations ........................................................34
2.8. Notes ......................................................................................34
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments .................................................................35
3.1.1. Voluntary Prepayments ......................................................................35
3.1.2. Mandatory Repayments and Prepayments .......................................................35
3.2. Interest Provisions ........................................................................37
3.2.1. Rates ......................................................................................38
3.2.2. Post-Default Rates .........................................................................38
3.2.3. Payment Dates ..............................................................................39
3.3. Fees .......................................................................................39
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SECTION PAGE
3.3.1. Commitment Fee .............................................................................39
3.3.2. Letter of Credit Fee .......................................................................39
3.3.3. Agent's Fees, etc ..........................................................................40
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful .................................................................40
4.2. Deposits Unavailable .......................................................................40
4.3. Increased Costs, etc. ......................................................................40
4.4. Funding Losses .............................................................................41
4.5. Increased Capital Costs ....................................................................42
4.6. Taxes ......................................................................................42
4.7. Payments, Computations, etc. ...............................................................43
4.8. Sharing of Payments ........................................................................44
4.9. Setoff .....................................................................................44
4.10. Use of Proceeds ............................................................................44
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
5.1. Initial Credit Extension ...................................................................45
5.1.1. Resolutions, etc ...........................................................................45
5.1.2. Agreement ..................................................................................45
5.1.3. Delivery of Notes ..........................................................................45
5.1.4. Required Consents and Approvals ............................................................45
5.1.5. Consummation of the Acquisition ............................................................46
5.1.6. Collection Account Agreements ..............................................................46
5.1.7. Borrowing Base Certificate .................................................................46
5.1.8. Financial Information, etc .................................................................46
5.1.9. Consent to Assignment of Operational Agreement .............................................48
5.1.10. Guaranty ...................................................................................48
5.1.11. Pledged Property ...........................................................................48
5.1.12. UCC Search Results .........................................................................48
5.1.13. Security Agreements, Filings, etc ..........................................................48
5.1.14. Solvency Certificate .......................................................................49
5.1.15. Closing Date Certificate ...................................................................49
5.1.16. Reliance Letters ...........................................................................49
5.1.17. Evidence of Insurance ......................................................................49
5.1.18. Environmental Matters ......................................................................49
5.1.19. Payment of Outstanding Indebtedness, etc ...................................................49
5.1.20. Escrow Agreement ...........................................................................49
5.1.21. Tax Sharing Agreement ......................................................................50
5.1.22. Opinions of Counsel ........................................................................50
5.1.23. Bailee Waivers .............................................................................50
5.1.24. Agent's Closing Fees, Expenses, etc. .......................................................50
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SECTION PAGE
5.1.25. Other Closing Expenses .....................................................................50
5.2. All Credit Extensions ......................................................................50
5.2.1. Compliance with Warranties, No Default, etc ................................................50
5.2.2. Credit Extension Request, etc ..............................................................50
5.2.3. Satisfactory Legal Form ....................................................................51
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc. .........................................................................51
6.2. Due Authorization, Non-Contravention, etc. .................................................51
6.3. Government Approval, Regulation, etc. ......................................................52
6.4. Validity, etc. .............................................................................52
6.5. Financial Information ......................................................................52
6.6. No Material Adverse Change .................................................................52
6.7. Litigation, Labor Controversies, etc. ......................................................53
6.8. Subsidiaries ...............................................................................53
6.9. Ownership of Properties ....................................................................53
6.10. Taxes ......................................................................................53
6.11. Pension and Benefit Plans ..................................................................53
6.12. Environmental Warranties ...................................................................54
6.13. Inventory ..................................................................................55
6.14. Accuracy of Information ....................................................................55
6.15. Purchase Agreement .........................................................................56
6.16. Absence of Default .........................................................................56
6.17. Regulations G, U and X .....................................................................56
6.18. Government Regulation ......................................................................56
6.19. Solvency ...................................................................................56
6.20. Insurance. .................................................................................56
6.21. Senior Indebtedness, etc. ..................................................................57
6.22. Operational Agreements. ....................................................................57
ARTICLE VII
COVENANTS
7.1. Affirmative Covenants ......................................................................57
7.1.1. Financial Information, Reports, Notices, etc ...............................................57
7.1.2. Compliance with Laws, etc ..................................................................60
7.1.3. Maintenance of Properties ..................................................................60
7.1.4. Insurance ..................................................................................60
7.1.5. Books and Records; Accounts ................................................................62
7.1.6. Environmental Covenant .....................................................................62
7.1.7. Further Assurances .........................................................................63
7.1.8. As to Intellectual Property Collateral .....................................................64
7.1.9. Future Subsidiaries ........................................................................65
7.1.10. Rate Protection Agreements .................................................................66
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SECTION PAGE
7.1.11. Certain Post-Closing Covenants .............................................................66
7.1.12. Jmar Xxxx, Inc. ............................................................................67
7.2. Negative Covenants .........................................................................68
7.2.1. Business Activities ........................................................................68
7.2.2. Indebtedness ...............................................................................68
7.2.3. Liens ......................................................................................69
7.2.4. Financial Condition ........................................................................70
7.2.5. Investments ................................................................................71
7.2.6. Restricted Payments, etc ...................................................................72
7.2.7. Capital Expenditures, etc ..................................................................72
7.2.8. Take or Pay Contracts ......................................................................73
7.2.9. Consolidation, Merger, etc .................................................................73
7.2.10. Asset Dispositions, etc ....................................................................74
7.2.11. Modification of Certain Agreements .........................................................74
7.2.12. Transactions with Affiliates; Separate Existence ...........................................75
7.2.13. Negative Pledges, Restrictive Agreements, etc ..............................................76
7.2.14. Management Fees, Expenses, etc .............................................................77
7.2.15. Fiscal Year End ............................................................................77
7.2.16. Limitation on Sale and Leaseback Transactions...............................................77
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Listing of Events of Default ...............................................................77
8.1.1. Non-Payment of Obligations .................................................................77
8.1.2. Breach of Representations and Warranties ...................................................77
8.1.3. Non-Performance of Certain Covenants and Obligations .......................................77
8.1.4. Non-Performance of Other Covenants and Obligations .........................................78
8.1.5. Default On Other Indebtedness ..............................................................78
8.1.6. Judgments ..................................................................................78
8.1.7. Pension Plans ..............................................................................78
8.1.8. Control of Holdings and the Borrower .......................................................78
8.1.9. Bankruptcy, Insolvency, etc ................................................................79
8.1.10. Impairment of Security, etc ................................................................79
8.1.11. Subordinated Notes .........................................................................79
8.1.12. Non-Payment of Taxes .......................................................................79
8.2. Action if Bankruptcy Exists ................................................................80
8.3. Action if Other Event of Default Exists ....................................................80
8.4. Payments Upon Acceleration .................................................................80
ARTICLE IX
THE AGENT
9.1. Actions ....................................................................................81
9.2. Funding Reliance, etc. .....................................................................81
9.3. Exculpation ................................................................................81
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SECTION PAGE
9.4. Successor ..................................................................................82
9.5. Loans by Chase .............................................................................82
9.6. Credit Decisions ...........................................................................82
9.7. Copies, etc. ...............................................................................82
9.8. Certain Collateral Matters .................................................................82
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc. ..................................................................83
10.2. Notices ....................................................................................84
10.3. Payment of Costs and Expenses ..............................................................84
10.4. Indemnification ............................................................................85
10.5. Survival ...................................................................................86
10.6. Severability ...............................................................................86
10.7. Headings ...................................................................................86
10.8. Execution in Counterparts, Effectiveness, etc. .............................................86
10.9. Governing Law; Entire Agreement ............................................................86
10.10. Successors and Assigns .....................................................................87
10.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes ....................87
10.11.1. Assignments ................................................................................87
10.11.2. Participations .............................................................................88
10.11.3. Certain Other Provisions ...................................................................89
10.12. Other Transactions .........................................................................89
10.13. Guaranty of Holdings .......................................................................89
10.14. Forum Selection and Consent to Jurisdiction ................................................91
10.15. Waiver of Jury Trial, etc. .................................................................92
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SCHEDULES AND EXHIBITS
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages
SCHEDULE III - Administrative Information
EXHIBIT A - Form of Revolving Note
EXHIBIT B - Form of Term Note
EXHIBIT C-1 - Form of Borrowing Request
EXHIBIT C-2 - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Issuance Request
EXHIBIT E - Form of Borrowing Base Certificate
EXHIBIT F-1 - Form of Compliance Certificate
EXHIBIT F-2 - Form of Holdings' Compliance Certificate
EXHIBIT G - Form of Pledge Agreement
EXHIBIT H - Form of Security Agreement
EXHIBIT I - Form of Collection Account Agreement
EXHIBIT J - Form of Subsidiary Guaranty
EXHIBIT K - Form of Closing Date Certificate
EXHIBIT L - Form of Solvency Certificate
EXHIBIT M - Form of Lender Assignment Agreement
EXHIBIT N - Form of Escrow Agreement
EXHIBIT O - Form of Tax Sharing Agreement
EXHIBIT P-1 - Form of Legal Opinion of Counsel to Holdings and the Borrower
EXHIBIT P-2 - Form of Legal Opinion of Ohio Counsel to Jmar Xxxx, Inc.
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of February 18, 1998, among SELFCARE
CONSUMER PRODUCTS, INC., a Delaware corporation (the "Borrower"), SELFCARE,
INC., a Delaware corporation ("Holdings"), as guarantor, the various financial
institutions as are or may become parties hereto (collectively, the "Lenders"),
and THE CHASE MANHATTAN BANK ("Chase"), as agent (in such capacity, the "Agent")
for the Lenders.
W I T N E S S E T H:
WHEREAS, Holdings is engaged in the business of developing,
manufacturing and marketing health care products, including nutritionals and
self-test diagnostic products for the diabetes, women's health and infectious
disease markets;
WHEREAS, upon consummation of the Acquisition (such capitalized term
and all other capitalized terms used in these recitals without definition shall
have the meanings provided for in Article I hereto) the Borrower and its
Wholly-Owned Subsidiaries will be engaged in the business of developing and
marketing nutritional supplements and diabetes care products; and
WHEREAS, all the capital stock of the Borrower is owned by Holdings;
and
WHEREAS, the Borrower desires to obtain from the Lenders
(a) Term Loan Commitments pursuant to which Term Loans will be made by
the Lenders on the date of the initial Credit Extension in an aggregate
principal amount not to exceed $37,000,000; and
(b) Revolving Loan Commitments pursuant to which Revolving Loans will
be made by the Lenders from time and time in an aggregate principal amount at
any one time outstanding not to exceed $5,000,000 and Letters of Credit will be
issued by the Issuer from time to time in a maximum aggregate principal amount
at any one time outstanding not to exceed $1,000,000, provided that, in any
event, the aggregate outstanding principal amount of all Revolving Loans,
together with the aggregate amount of all Letter of Credit Outstandings, shall
not at any one time exceed the lesser of the Revolving Loan Commitment or the
Borrowing Base Amount in effect at such time; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitments and make such Loans to the Borrower and issue (or participate in)
Letters of Credit for the account of the Borrower;
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NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof):
"ACCOUNT" means any "account" (as that term is defined in Section 9-106 of the
U.C.C.) of any Person.
"ACCOUNT DEBTOR" is defined in clause (e) of the definition of "Eligible
Account".
"ACQUISITION" means the acquisition by the Borrower of all the capital stock of
Can-Am pursuant to the Purchase Agreement.
"ADJUSTED PERCENTAGE" means, (a) at a time when no Lender Default exists, for
each Lender such Lender's Percentage and (b) at a time when a Lender Default
exists (i) for each Lender that is a Defaulting Lender, zero and (ii) for each
Lender that is a Non-Defaulting Lender, the percentage determined by dividing an
amount equal to such Lender's Percentage of the Total Commitment Amount at such
time by the Adjusted Total Commitment Amount at such time, it being understood
that all references herein to Commitments and the Adjusted Total Commitment
Amount at a time when the Total Commitment Amount or Adjusted Total Commitment
Amount, as the case may be, has been terminated shall be references to the
Commitments or Adjusted Total Commitment Amount, as the case may be, in effect
immediately prior to such termination.
"ADJUSTED TOTAL COMMITMENT AMOUNT" means, at any time, the Total Commitment
Amount less the aggregate Commitments of all Defaulting Lenders.
"AFFILIATE" of any Person means any other Person which, directly or indirectly,
controls, is controlled by or is under common control with such Person
(excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 5% or more of the securities (on a fully diluted basis) or
other interests having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"AGENT" is defined in the preamble and includes each other Person as shall have
subsequently been appointed as the successor Agent pursuant to Section 9.4.
"AGREEMENT" means this Credit Agreement, as amended, supplemented, restated or
otherwise modified from time to time.
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"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% per annum, and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% per annum. "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Agent at it principal office
in New York City as its prime rate in effect at such time. "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and
(ii) Statutory Reserves and (b) the Assessment Rate. "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Agent from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. "Statutory Reserves" shall mean a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the maximum reserve percentage
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal, established by the Board and any other banking authority to which
the Agent is subject with respect to the Base CD Rate, for new negotiable non
personal time deposits in dollars of over $100,000 with maturities approximately
equal to three months. Statutory Reserves shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage. "Assessment
Rate" shall mean the annual assessment rate (net of refunds and rounded upwards,
if necessary, to the next 1/16 of 1%) estimated by the Agent to be payable by
the Agent to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made in
dollars at the Agent's domestic offices during the current calendar year.
"Federal Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it. If for any reason
the Agent shall have determined in a commercially reasonable manner (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate, or both, for any
reason, including, the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) or (c), or both, of the first sentence
of this definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"AMG" means AMG Medical Inc., a Canadian corporation.
"APPLICABLE MARGIN" means (a) with respect to the unpaid principal amount of
each Base Rate Loan, the applicable percentage set forth below in the column
entitled "Applicable Margin for Base Rate Loans"; and (b) with respect to the
unpaid principal amount of each LIBO Rate Loan, the applicable percentage set
forth below in the column entitled "Applicable Margin for LIBO Rate Loans":
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Applicable Applicable
Senior Funded Debt Margin For Margin For
to EBITDA Ratio Base Rate Loans LIBO Rate Loans
------------------- --------------- ---------------
A. Greater than 1.50% 3.00%
4.00:1.00
B. Equal to or less than 1.25% 2.75%
4.00:1.00 but greater than
3.50:1.00
C. Equal to or less than 1.00% 2.50%
3.50:1.00 but greater than
2.50:1.00
D. Equal to or less than .75% 2.25%
2.50:1.00 but greater than
2.00:1.00
E. Equal to or less than .50% 2.00%
2.00:1.00 but greater than
1.50:1.00
F. Equal to or less than .25% 1.75%
1.50:1.00
The Senior Funded Debt to EBITDA Ratio used to compute the Applicable Margin
shall be the Senior Funded Debt to EBITDA Ratio set forth in the Compliance
Certificate most recently delivered by the Borrower to the Agent pursuant to
clause (e) of Section 7.1.1, and changes in the Applicable Margin resulting from
a change in the Senior Funded Debt to EBITDA Ratio shall become effective upon
delivery by the Borrower to the Agent of a new Compliance Certificate pursuant
to clause (e) of Section 7.1.1; provided, however, that from and after the
Effective Date and until the earlier of the receipt by the Agent and the Lenders
of (i) the audited financial statements pursuant to clause (c) of Section 7.1.1
for the Borrower's 1998 Fiscal Year or (ii) audited financial statements for the
Borrower and Can-Am for each of their 1997 Fiscal Years (such financial
statements to be prepared by Xxxxxx Xxxxxxxx LLP or other independent public
accountants acceptable to the Agent in accordance with GAAP consistently applied
and free of any Impermissible Qualifications) the Applicable Margin shall equal
the Applicable Margin set forth in row C above unless the Compliance Certificate
most recently delivered by the Borrower to the Agent pursuant to clause (e) of
Section 7.1.1 indicates that the Applicable Margin should be greater, in which
case the Applicable Margin shall be the percentage indicated in rows A or B
above, as applicable. If the Borrower shall fail to deliver a Compliance
Certificate within 45 days after the end of any Fiscal Quarter as required
pursuant to clause (e) of Section 7.1.1, the Applicable Margin from and
including the 45th day after the end of such Fiscal Quarter to but not including
the date the Borrower delivers to the Agent a Compliance Certificate with
respect to such Fiscal Quarter shall conclusively be presumed to equal the
relevant Applicable Margin set forth at row A above. In addition, the Applicable
Margin shall be automatically increased to the Applicable Margin set forth in
row A above during all periods of time in which any Default or Event of Default
has occurred and is continuing.
"ASSESSMENT RATE" is defined in the definition of Alternate Base Rate.
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"AUTHORIZED OFFICER" means, relative to any Obligor, those of its officers whose
signatures and incumbency shall have been certified to the Agent and the Lenders
pursuant to Section 5.1.1.
"BASE CD RATE" is defined in the definition of Alternate Base Rate.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating interest rate
determined by reference to the Alternate Base Rate.
"BORROWER" is defined in the preamble.
"BORROWER SUBORDINATED NOTES" means collectively (a) the Promissory Note, dated
the date hereof, of the Borrower in favor of Holdings and in the original
principal amount of $2,000,000 and (b) the Subordinated Promissory Note, dated
the date hereof, of the Borrower in favor of Holdings and in the original
principal amount of $5,000,000, as amended, supplemented, restated or otherwise
modified from time to time in accordance with Section 7.2.11.
"BORROWING" means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period, made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.1.
"BORROWING BASE AMOUNT" means, at any time, the sum of
(a) 83% of the aggregate amount of all Eligible Accounts of the
Borrower at such time;
(b) 80% of the aggregate amount of all Eligible Accounts of Can-Am at
such time; and
(c) 50% of the aggregate amount of all Eligible Inventory at such time.
The Borrowing Base Amount shall initially be computed by the Borrower in each
Borrowing Base Certificate delivered from time to time to the Agent pursuant to
clause (i) of Section 7.1.1. The Agent shall have the right to review such
computations and if, in the Agent's reasonable judgment, such computations have
not been computed in accordance with the terms of this Agreement, the Agent
shall have the right to adjust such computations, such adjustment to be binding
on the Borrower absent manifest error.
"BORROWING BASE CERTIFICATE" means the Borrowing Base Certificate duly completed
and executed by the chief financial Authorized Officer of the Borrower,
substantially in the form of Exhibit E hereto, together with such changes
thereto as the Agent may from time to time reasonably request for the purpose of
monitoring the Borrower's compliance therewith.
"BORROWING REQUEST" means a Borrowing Request, duly executed by an Authorized
Officer of the Borrower, in substantially the form of Exhibit C-1 hereto.
"BUSINESS DAY" means
(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in New York, New York;
and
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(b) relative to the making, continuing, prepaying or repaying of any
LIBO Rate Loan, any day which is a Business Day described in clause (a) above
and which is also a day on which dealings in Dollars are carried on in the
interbank eurodollar market of the Agent's LIBOR Office.
"CAN-AM" means Can-Am Care Corporation, a New York corporation.
"CAPITAL EXPENDITURES" means, for any period, the sum (without duplication) of
(a) the aggregate amount of all expenditures of the Borrower and its
Subsidiaries for fixed or capital assets or additions to equipment (including
replacements and capitalized repairs) made during such period which, in
accordance with GAAP, would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities payments
during such period.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of the Borrower
or any of its Subsidiaries under any leasing or similar arrangement which, in
accordance with GAAP, would be classified as capitalized leases, and, for
purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year after
the date of issuance, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the date
of issuance and rated at least A-1 by Standard & Poor's Corporation or P-1 by
Xxxxx'x Investors Service, Inc., which is issued by
(i) a corporation (other than an Affiliate of any Obligor)
organized under the laws of any state of the United States or of the District of
Columbia, or
(ii) any Lender or any Affiliate thereof;
(c) any certificate of deposit or bankers acceptance, maturing not more
than one year after such time, which is issued by a Lender or a commercial
banking institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$1,000,000,000;
(d) any repurchase agreement entered into with any Lender (or other
commercial banking institution of the stature referred to in clause (c)) secured
by a fully perfected Lien in any obligation thereunder of the type described in
any of clauses (a) through (c), having a market value at the time such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation thereunder of such Lender or other commercial banking institution; or
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(e) any mutual fund or pooled investment vehicle rate Aa or better by
Xxxxx'x Investors Service, Inc. or AA or better by Standard and Poor's Rating
Group that is managed or otherwise controlled by Chase or its Affiliates and
invests principally in the type of obligations described above.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response Compensation, and
Liability Information System from time to time.
"CHANGE IN CONTROL"
(a) the failure at any time of the Investor Group to own beneficially,
on or prior to March 31, 2001, at least 3.5% of the issued and outstanding
shares of the common stock of Holdings (whether voting or non-voting), on a
fully diluted basis; provided, that if any member of the Investor Group ceases
to be employed by both Holdings and the Borrower, such minimum percentage
requirement shall be reduced by a fraction (calculated as a percentage), the
numerator of which equals the number of shares of common stock of Holdings owned
by such member of the Investor Group and the denominator of which equals the
total number of issued and outstanding shares of common stock of Holdings, on a
fully diluted basis, in each case as of the date such member of the Investor
Group ceases to be so employed;
(b) the failure of Holdings at any time to own beneficially 100% of the
issued and outstanding shares of common stock of the Borrower (whether voting or
non-voting), on a fully diluted basis, such shares to be held free and clear of
all Liens (other than Liens in favor of the Agent); or
(c) the failure of the Borrower at any time to own beneficially 100% of
the issued and outstanding shares of common stock of any of its Subsidiaries
(whether voting or non-voting), on a fully diluted basis, such shares to be held
free and clear of all Liens (other than Liens in favor of the Agent);
(d) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), excluding the Investor Group, shall become, or obtain rights (whether by
means or warrants, options or otherwise) to become, the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than 20% of the outstanding common stock of Holdings;
(e) the board of directors of Holdings shall cease to consist of a
majority of Continuing Directors;
(f) the failure of (i) Xxx Xxxxxxxxx, at any time, (ii) Xxxxxx Xxxxxxx,
at any time on or prior to February 28, 2002, or (iii) with respect Xxxxxxx X.
Xxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxx and Xxxx X. Xxxx, more than one of
such Persons at any time, to be employed by both Holdings and the Borrower in
the same or comparable positions as to which each of them were employed on the
date of the initial Credit Extension, having substantially the same
responsibilities and spending at the Borrower in his capacity as an employee in
such same or comparable position no less than the percentage of his total work
time as provided in the Holdings' consolidated budget for its 1998 Fiscal Year;
provided, however, that the failure of either Xxx Xxxxxxxxx or Xxxxxx Xxxxxxx to
be so employed shall not constitute a Change in Control if, within 120 days the
occurrence thereof, Xxx Xxxxxxxxx or Xxxxxx Xxxxxxx, as the case may be, is
replaced by a Person that is reasonably satisfactory to the Agent; or
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(g) any change in control (or similar event, however denominated) with
respect to Holdings, the Borrower or any Subsidiary thereof shall occur under
and as defined in any of the Holdings' Subordinated Notes or any other
agreement, note or document to which Holdings, the Borrower or any Subsidiary
thereof is a party in respect of any Indebtedness in an aggregate principal
amount of $1,000,000 or more.
"CHASE" is defined in the preamble.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" means the common stock of the Borrower and any assets of Holdings,
the Borrower or any of their Subsidiaries subject to a Lien pursuant to any Loan
Document.
"COMMITMENT" means, as the context may require, a Lender's Revolving Loan
Commitment, Term Loan Commitment or Letter of Credit Commitment.
"COMMITMENT AMOUNT" means, as the context may require, either the Revolving Loan
Commitment Amount or the Term Loan Commitment Amount.
"COMMITMENT TERMINATION DATE" means, as the context may require, either the
Revolving Loan Commitment Termination Date or the Term Loan Commitment
Termination Date.
"COMMITMENT TERMINATION EVENT" means
(a) the occurrence of any Default described in clauses (a) through (d)
of Section 8.1.9; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans to be due and payable
pursuant to Section 8.3, or
(ii) the giving of notice by the Agent, acting at the
direction of the Required Lenders, to the Borrower that the Commitments have
been terminated.
"COMMONLY CONTROLLED ENTITY" means an entity, whether or not incorporated, which
is under common control with Holdings or the Borrower within the meaning of
Section 4001 of ERISA or is a part of a group which includes Holdings or the
Borrower and which is created as a single employer under Section 414 of the
Code.
"COMPLIANCE CERTIFICATE" means a Compliance Certificate duly executed by the
chief financial Authorized Officer of the Borrower, substantially in the form of
Exhibit F-1 hereto or in such other form as may be acceptable to the Agent,
together with such changes thereto as the Agent may from time to time reasonably
request for the purpose of monitoring the Borrower's compliance with the
financial covenants contained herein.
"CONSOLIDATED DEBT" means the outstanding principal amount of all Indebtedness
of the Borrower and its Wholly-Owned Subsidiaries of the type referred to in
clause (a), (b) or (c) of the definition of
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"Indebtedness" and (without duplication) any Contingent Liability in respect of
any of the foregoing, it being understood and agreed that Consolidated Debt
shall include the Credit Extensions.
"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the indebtedness, obligation or any
other liability of any other Person (other than by endorsements of instruments
in the course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The principal amount of any
Person's obligation under any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the outstanding principal amount
(or maximum principal amount, if larger) of the debt, obligation or other
liability guaranteed thereby.
"CONTINUATION/CONVERSION NOTICE" means a Continuation/Conversion Notice duly
executed by an Authorized Officer of the Borrower, substantially in the form of
Exhibit C-2 hereto.
"CONTINUING DIRECTOR" means (a) any director of the board of directors of
Holdings on the date of the initial Credit Extension, (b) a director whose
nomination for election to the board of directors of Holdings is recommended by
at least 50% of the then Continuing Directors or (c) a director elected to the
board of directors of Holdings with the approval of the holders of at least 50%
of the voting common stock of Holdings held by members of the Investor Group.
"CREDIT EXTENSION" means, as the context may require,
(a) the making of a Loan by a Lender; or
(b) the issuance of any Letter of Credit, or the extension of any
Stated Expiry Date of any existing Letter of Credit, by an Issuer.
"CREDIT EXTENSION REQUEST" means, as the context may require, any Borrowing
Request or Issuance Request.
"DEBT SERVICE COVERAGE RATIO" means, for any period, the ratio of
(a) Net Cash Flow for such period;
to
(b) Debt Service Expense for such period;
"DEBT SERVICE EXPENSE" means, with respect to any period, the aggregate of all
regularly scheduled principal payments (whether or not such scheduled payments
are actually paid) of Funded Debt.
"DEFAULT" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"DEFAULTING LENDER" shall mean any Lender with respect to which a Lender Default
is in effect.
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"DISBURSEMENT" is defined in Section 2.7.3.
"DISBURSEMENT DATE" is defined in Section 2.7.3.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as Schedule
I, as it may be amended, supplemented or otherwise modified from time to time by
the Borrower with the consent of the Agent and the Required Lenders.
"DOLLAR" and the symbol "$" mean lawful money of the United States.
"DOMESTIC OFFICE" means, relative to any Lender, the office of such Lender
designated as such on Schedule III hereto or designated in a Lender Assignment
Agreement, or such other office of a Lender (or any successor or assign of such
Lender) within the United States as may be designated from time to time by
notice from such Lender to the Borrower and the Agent.
"DOMESTIC SUBSIDIARY" means each Subsidiary of Holdings or the Borrower that is
organized under the laws of any State of the United States of America or the
District of Columbia.
"EBITDA" means, for any period, the sum, without duplication, for such period,
of
(a) Net Income during such period;
plus
(b) the amount deducted, in determining Net Income, of all dividends
paid by the Borrower to Holdings to the extent permitted in the proviso of
Section 7.2.6 during such period ;
plus
(c) Interest Expense during such period;
plus
(d) the amount deducted, in determining Net Income, representing
amortization, depreciation of assets and other non-cash items properly deducted
or subtracted (if properly added) in determining Net Income of the Borrower and
its Wholly-Owned Subsidiaries during such period.
"EFFECTIVE DATE" means the date this Agreement becomes effective pursuant to
Section 10.8.
"ELIGIBLE ACCOUNT" means, at any time of determination thereof, any Account of
the Borrower or Can-Am which the Agent, in its sole judgment, determines to be
eligible for the purpose of making Credit Extensions to the Borrower. In
addition, without limiting the Agent's discretion, no Account shall be as
Eligible Account unless each of the following requirements has been fulfilled to
the satisfaction of the Agent:
(a) the Borrower or Can-Am has lawful and absolute title to such
Account, free and clear of all Liens other than the Liens in favor of the Agent
for the benefit of the Lenders;
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(b) the Agent has a security interest in such Account, which security
interest is legal, valid, binding, perfected and first priority under the
U.C.C.; provided, however, that
(i) no Account as to which any United States federal or state
governmental agency or instrumentality is the Account Debtor may be an Eligible
Account, except to the extent the Borrower or Can-Am has complied with the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727; 41 U.S.C.
Section 15), by delivering to the Agent a notice of assignment in favor of the
Agent under such Act and in compliance with applicable provisions of 31 C.F.R.
Section 7-103.8 and 41 C.F.R. Section 1-30.7, or with similar state law; and
(ii) no Account as to which any other government or agency of
such government is the Account Debtor may be an Eligible Account;
(c) the Borrower or Can-Am has the full and unqualified right to assign
and grant a security interest in such Account to the Agent;
(d) such Account is payable in Dollars and, to the best knowledge of
the Borrower or Can-Am, is a legal, valid, binding and enforceable obligation of
the Person who is obligated under such Account (the "Account Debtor");
(e) such Account is not subject to any dispute, setoff, counterclaim or
other claim or defense on the part of the Account Debtor denying liability under
such Account, in whole or in part;
(f) such Account is evidenced by an invoice rendered to the Account
Debtor and evidences monetary obligations;
(g) such Account is a bona fide Account which arose in the ordinary
course of business, and with respect to which,
(i) in the case of an Account arising from the sale of goods,
such goods have been shipped or delivered to and not rejected by the Account
Debtor, such Account was created as a result of a sale on an absolute basis and
not on a consignment, approval or sale-and-return basis and all other actions
necessary to create a binding obligation on the part of the Account Debtor for
such Account have been taken, and
(ii) in the case of an Account relating to the sale of
services, such services have been performed or completed and accepted by the
Account Debtor and all other actions necessary to create a binding obligation on
the part of the Account Debtor have been taken;
(h) with respect to such Account, the Account Debtor is not
(i) an Affiliate, Subsidiary, officer, director or employee of
Holdings or any of its Subsidiaries (including the Borrower or Can-Am);
(ii) located in a jurisdiction other than the United States;
(iii) a domestic or foreign government or any agency,
department or instrumentality thereof (except to the extent clause (b) is
complied with); or
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(iv) the subject of any reorganization, bankruptcy,
receivership, custodianship or insolvency or any other condition of the type
described in clauses (a) through (d) of Section 8.1.9;
(i) all or any part of such Account is not outstanding more than 90
days past the original invoice date with respect thereto;
(j) such Account is not an Account owing by an Account Debtor (i) more
than 20% of the Accounts of which are more than 90 days past the original
invoice date therefor or (ii) whose Accounts comprise more than 20% of the
aggregate Accounts owing to the Borrower or Can-Am;
(k) payment with respect to such Account, if by check, has not been
returned for insufficient funds;
(l) such Account has not been placed with a lawyer or other agent for
collection;
(m) neither the Borrower, Can-Am nor any of their Subsidiaries is
indebted to such Account Debtor, unless the Borrower, Can-Am and the relevant
Subsidiary, on the one hand, and such Account Debtor, on the other hand, have
entered into an agreement whereby the Account Debtor is prohibited from
exercising any right of setoff with respect to the Accounts of the Borrower or
Can-Am;
(n) neither the Borrower nor Can-Am has not made any agreement with the
Account Debtor of such Account for any deduction therefrom, except a discount or
allowance allowed by the Borrower or Can-Am in the ordinary course of its
business;
(o) such Account complies with all material requirements of all
applicable laws, rules and regulations;
(p) such Account is not with respect to an Account Debtor located in
New Jersey, Minnesota or another State denying creditors access to its courts in
the absence of a Notice of Business Activities Report or other similar filing,
unless the Borrower or Can-Am, as the case may be, is duly qualified as a
foreign corporation in each such State or has duly filed and has a currently
effective Notice of Business Activities Report or other similar filing;
(q) to the best of the Borrower's or Can-Am's knowledge, there are no
facts, events or occurrences which in any material respect may impair the
validity or enforceability of such Account or may reduce materially the amount
payable thereunder as shown on the Borrower's or Can-Am's books and records; and
(r) neither the Borrower nor Can-Am has knowledge of any fact or
circumstance which could reasonably be expected to impair materially the
validity or collectibility of such Account or render it ineligible under the
criteria set forth in clauses (a) through (q) above.
"ELIGIBLE INVENTORY" means, at any time of determination thereof, any Inventory
of the Borrower or Can-Am which the Agent, in its sole judgment, determines to
be eligible for the purpose of making Credit Extensions to the Borrower. In
addition, without limiting the Agent's discretion, no Inventory shall be
Eligible Inventory unless it arose in the ordinary course of business of the
Borrower or Can-Am and each of the following requirements has been fulfilled to
the satisfaction of the Agent:
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(a) such Inventory is located in the United States on real property
that is either (i) owned by the Borrower or Can-Am, free and clear of any Liens
other than of the nature referred to in clauses (a) or (h) of Section 7.2.3 or
(ii) located in or with, as the case may be, a public warehouse or third party
described in Item 6.13(a) ("Inventory Location") of the Disclosure Schedule
attached hereto (provided that the Borrower or Can-Am shall have delivered to
the Agent or landlord or bailee waiver, as applicable, as required by in clause
(a) of Section 6.13);
(b) the Borrower or Can-Am has full and unqualified right to assign and
xxxxx x Xxxx in such Inventory to the Agent for the benefit of the Lenders;
(c) the Borrower or Can-Am has full and lawful title to such Inventory,
free and clear of all Liens, other than any Liens in favor of the Agent for the
benefit of the Lenders;
(d) the Agent has a security interest in such Inventory, which security
interest is legal, valid, binding, perfected and first priority under the
U.C.C.;
(e) none of such Inventory shall consist of
(i) items in the custody of third parties (other than the
Borrower or Can-Am) for processing or manufacture (except that up to $500,000 of
such Inventory may be held by manufacturers for processing if each such
manufacturer shall have delivered a bailee waiver as required by clause (a) of
Section 6.13);
(ii) items in the Borrower's or Can-Am's possession but
intended by the Borrower or Can-Am for return to the suppliers thereof;
(iii) items belonging to third parties (other than the
Borrower or Can-Am) that have been consigned to the Borrower or Can-Am or are
otherwise in the Borrower's or Can-Am's custody or possession; or
(iv) items in the Borrower's or Can-Am's custody and
possession on a sale-on-approval or sale-or-return basis or subject to any other
repurchase or return agreement;
(f) none of such Inventory is
(i) obsolete, unsalable, damaged or otherwise unfit for sale
or further processing in the ordinary course of the Borrower's or Can-Am's
business; or
(ii) a work in process.
"ENVIRONMENTAL CONSULTANT" is defined in clause (b) of Section 7.1.6.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local statutes,
laws, ordinances, codes, rules, regulations and guidelines (including consent
decrees and administrative orders) relating to public health and safety and
protection of the environment, preservation or reclamation of natural resources,
the Release of any Hazardous Material or to health and safety matters, including
CERCLA, the Resource Conservation and Recovery Act, the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Sections 1251
et seq., the Clean Air Act of 1970, 42 U.S.C. Sections 7401 et seq., the Toxic
Substances
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Control Act of 1976, 15 U.S.C. Sections 2601 et seq., the Occupational Safety
and Health Act of 1970, as amended, 29 U.S.C., Sections 651 et seq., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections
11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
Sections 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
Sections 5101 et seq., and any similar implementing state or local law, and all
amendments or regulations promulgated under any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA also refer to any successor sections.
"ESCROW ACCOUNT" means the escrow account maintained pursuant to the Escrow
Agreement.
"ESCROW AGREEMENT" means the Escrow Agreement executed and delivered pursuant to
Section 5.1.21, substantially in the form of Exhibit N hereto, as amended,
supplemented, restated and otherwise modified from time to time.
"EVENT OF DEFAULT" is defined in Section 8.1.
"EXCESS CASH FLOW" means, for any Fiscal Year of the Borrower, the sum for such
Fiscal Year of:
(a) Net Cash Flow;
minus
(b) all prepayments and repayments of Funded Debt (including the Term
Loans pursuant to Section 3.1.1 and clauses (b) and (d) of Section 3.1.2);
"EXCLUDED FOREIGN SUBSIDIARIES" means any Foreign Subsidiary the pledge of all
or any part of whose capital stock or other property or assets as Collateral, or
the guaranty of the Obligations by, would result in material adverse tax
consequences to Holdings or the Borrower, provided that for purposes of this
definition (a) the term "Foreign Subsidiary" shall not include any Subsidiary
(i) which is properly treated as a partnership or branch of Holdings or the
Borrower or a Domestic Subsidiary for United States federal income tax purposes
and (ii) the pledge of all of any part of whose capital stock or other property
or assets as Collateral, or the guaranty of the Obligations by, would not result
in material adverse tax consequences to Holdings or the Borrower and (b) any
determination as to whether a Subsidiary is an Excluded Foreign Subsidiary shall
be approved by the Agent.
"FEE LETTER" means the confidential fee letter, dated as of the date hereof,
from Chase, addressed to, and agreed and accepted by, the Borrower.
"FEDERAL FUNDS EFFECTIVE RATE" is defined in the definition of Alternate Base
Rate.
"FISCAL MONTH" means any month of a Fiscal Year.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
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"FISCAL YEAR" means any period of twelve consecutive calendar months ending on
December 31. References to a Fiscal Year with a number corresponding to any
calendar year (e.g., "Fiscal Year 1998") refer to the Fiscal Year ending during
such calendar year.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve System or any
successor thereto.
"FOREIGN SUBSIDIARY" means each Subsidiary of Holdings or the Borrower that is
not a Domestic Subsidiary.
"FUNDED DEBT" means Consolidated Debt which
(a) matures more than one year from the date of creation;
(b) matures within one year from the date of creation but is renewable
or extendible, at the sole option of the Borrower or any of its Wholly-Owned
Subsidiaries, to a date more than one year from such date; or
(c) arises under a revolving credit or similar agreement which
obligates the lender or lenders thereof to extend such Indebtedness for a period
of more than one year from such date, including, without limitation, all current
maturities and current sinking fund payments in respect of such Indebtedness
whether or not required to be paid within one year from the date of its creation
and, in the case of the Borrower, Indebtedness in respect of the Loans.
"GAAP" is defined in Section 1.4.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation and
Recovery Act;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any applicable federal,
state or local law, regulation, ordinance or requirement (including consent
decrees and administrative orders) relating to or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste,
substance or material, all as amended or hereafter amended.
"HEDGING OBLIGATIONS" means, with respect to any Person, all liabilities of such
Person under any Rate Protection Agreement.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"HOLDINGS" is defined in the preamble.
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"HOLDINGS' COMPLIANCE CERTIFICATE" means a Compliance Certificate duly executed
by the chief financial Authorized Officer of Holdings, substantially in the form
of Exhibit F-2 hereto or in such other form as may be acceptable to the Agent.
"HOLDINGS' CONSOLIDATED DEBT" means the outstanding principal amount of all
Indebtedness of Holdings and its Subsidiaries (other than the Borrower and its
Wholly-Owned Subsidiaries) of the type referred to in clauses (a), (b) or (c) of
the definition of "Indebtedness" and (without duplication) any Contingent
Liability in respect of the foregoing.
"HOLDINGS' CONSOLIDATED DEBT TO HOLDINGS' TOTAL CAPITAL RATIO" means, as of any
date of determination, the ratio of:
(a) Holdings' Consolidated Debt as of such date;
to
(b) (i) Holdings' Consolidated Debt as of such date;
plus
(ii) Holdings' Stockholders' Equity as of such date.
"HOLDINGS' EQUITY DOCUMENTS" means collectively the agreements identified in
Item 1.1 ("Holdings' Equity Documents") of the Disclosure Schedule, as each such
agreement referred to therein is amended, supplemented, restated or otherwise
modified from time to time in accordance with Section 7.2.11.
"HOLDINGS' FUNDED DEBT" means Holdings Consolidated Debt which
(a) matures more than one year from the date of creation;
(b) matures within one year from the date of creation but is renewable
or extendible, at the sole option of Holdings or any of its Subsidiaries (other
than the Borrower and its Wholly-Owned Subsidiaries), to a date more than one
year from such date; or
(c) arises under a revolving credit or similar agreement which
obligates the lender or lenders thereof to extend such Indebtedness during a
period of more than one year from such date, including, without limitation, all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation.
"HOLDINGS' STOCKHOLDERS' EQUITY" means, as of any date:
(a) the sum of all the assets of Holdings and its Subsidiaries (other
than the Borrower and its Wholly-Owned Subsidiaries);
minus
(b) the sum of all the liabilities of Holdings and its Subsidiaries
(other than the Borrower and its Wholly-Owned Subsidiaries).
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"HOLDINGS' SUBORDINATED NOTES" means collectively (a) each Non-Negotiable
Promissory Note, dated February 18, 1998, of Holdings and issued to each Seller
pursuant to the Purchase Agreement in the aggregate original principal amount of
$2,000,000, (b) each Subordinated Revenue Royalty Note, dated June 3, 1997, June
30, 1997 and July 30, 1997 of Holdings and issued pursuant to various
subscription agreements with the parties named therein in the aggregate original
principal amount of $7,500,000 and (c) each Senior Subordinated Convertible
Note, dated October 27, 1997, of Holdings and issued to Xxxxxxx Associates, L.P.
and Westgate International, L.P., as amended, supplemented, restated or
otherwise modified from time to time in accordance with Section 7.2.11.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or certification of
any independent public accountant as to any financial statement of any Obligor,
any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would require
an adjustment to such item the effect of which would be to cause such Obligor to
be in default of any of its obligations under Section 7.2.4.
"INCLUDING" means including without limiting the generality of any description
preceding such term, and, for purposes of this Agreement and each other Loan
Document, the parties hereto agree that the rule of contract interpretation to
the effect that where general words are followed by a specific listing of items,
the general words shall be given their widest meaning and shall not be limited
by an enumeration of specific matters.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money, including all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments (including, with respect to Holdings, the Holdings'
Subordinated Notes and, with respect to the Borrower, the Borrower Subordinated
Notes);
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's acceptances
issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
(d) net liabilities of such Person with respect to each Hedging
Obligation;
(e) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of property or
services, and indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in
recourse;
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(f) all obligations of such Person to purchase, redeem, retire or
otherwise acquire for value any capital stock (other than common stock) of such
Person;
(g) the liquidation value of any preferred capital stock of such Person
or its Subsidiaries held by any Person other than such Person and its
Wholly-Owned Subsidiaries; and
(h) all Contingent Liabilities of such Person in respect of any of the
foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.
"INDEMNIFIED LIABILITIES" is defined in Section 10.4.
"INDEMNIFIED PARTIES" is defined in Section 10.4.
"INDEPENDENT DIRECTOR" is defined in clause (a) of Section 7.1.11.
"INTELLECTUAL PROPERTY COLLATERAL" has the meaning provided for such term in the
Security Agreement.
"INTEREST COVERAGE RATIO" means, for any period, the ratio of:
(a) (i) EBITDA for such period,
less
(ii) the aggregate amount of Capital Expenditures incurred by
the Borrower and its Wholly-Owned Subsidiaries during such period in accordance
with Section 7.2.7;
to
(b) Interest Expense paid in cash for such period.
"INTEREST EXPENSE" means, for any period, the aggregate consolidated interest
expense of the Borrower and its Wholly-Owned Subsidiaries for such period, as
determined in accordance with GAAP, including, without duplication, the portion
of any Capitalized Lease Liabilities allocable to interest expense, all
commissions, discounts and other fees charged with respect to letters of credit
and bankers' acceptance financing, the amortization of debt discounts and the
net costs under Rate Protection Agreements, in each case paid or payable during
such period.
"INTEREST PERIOD" means, relative to any LIBO Rate Loan, the period beginning on
(and including) the date on which such LIBO Rate Loan is made or continued as,
or converted into, a LIBO Rate Loan pursuant to Section 2.4 or 2.5 and shall end
on (but exclude) the day which numerically corresponds to such date one, three
or six months thereafter, as the Borrower may select in its relevant notice
pursuant to Section 2.4 or 2.5; provided, however, that
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more than
four different dates;
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(b) if such Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next following Business Day
(unless such next following Business Day is the first Business Day of a calendar
week or month, as the case may be, in which case such Interest Period shall end
on the Business Day next preceding such numerically corresponding day);
(c) if there is no numerically corresponding day in such month, such
Interest Period shall end on the last Business Day of such month;
(d) the Borrower shall not be permitted to select, and there shall not
be applicable, any Interest Period that would be broken by reason of a mandatory
payment of Term Loans required pursuant to Section 3.1.2(b) or any Interest
Period for any Loan which would end later than the Stated Maturity Date for such
Loan; and
(e) prior to the Syndication Date, no Interest Period shall be in
excess of one month and on the Syndication Date the Interest Period for each
LIBO Rate Loan then outstanding shall be redetermined based upon the Interest
Period selected by the Borrower and communicated to the Agent as herein
provided.
"INVENTORY" means any "inventory" (as defined in Section 9-109(4) of the U.C.C.)
of any Person.
"INVERNESS" means Inverness Medical Limited, a corporation organized under the
laws of Scotland.
"INVESTOR GROUP" means collectively Xxx Xxxxxxxxx, Xxxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxxxx, Xxxxxxx X. Xxxx and Xxxxxx Xxxxxxx.
"INVESTMENT" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business);
(b) any Contingent Liability of such Person incurred in connection with
loans or advances described in clause (a); and
(c) any ownership or similar interest held by such Person in any other
Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"ISSUANCE REQUEST" means an Issuance Request, duly executed by an Authorized
Officer of the Borrower, in substantially the form of Exhibit D hereto.
"ISSUER" means Chase in its capacity as issuer of the Letters of Credit. At the
request of Chase, another Lender or an Affiliate of Chase may issue one or more
Letters of Credit hereunder.
"LENDER ASSIGNMENT AGREEMENT" means each Lender Assignment agreement in
substantially the form of Exhibit M hereto.
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"LENDER DEFAULT" shall mean (a) the refusal (which has not been retracted) of a
Lender to make available its portion of any Credit Extension or (b) a Lender
having notified in writing the Borrower and/or the Agent that it does not intend
to comply with its obligations under Section 2.1 or 2.2, in either case as a
result of any takeover of such Lender by any regulatory authority or agency.
"LENDERS" is defined in the preamble.
"LETTER OF CREDIT" is defined in clause (a) of Section 2.1.3.
"LETTER OF CREDIT OUTSTANDINGS" means, on any date, an amount equal to the sum
of
(a) the then aggregate amount which is undrawn and available under all
issued and outstanding Letters of Credit;
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LEVERAGE RATIO" means, for any period, the ratio of :
(a) Senior Funded Debt as of the last day of such period;
to
(b) Net Cash Flow for such period.
"LIBO RATE" is defined in Section 3.2.1.
"LIBO RATE LOAN" means a Loan bearing interest, at all times during an Interest
Period applicable to such Loan, at a fixed rate of interest determined by
reference to the LIBO Rate (Reserve Adjusted).
"LIBO RATE (RESERVE ADJUSTED)" is defined in Section 3.2.1.
"LIBOR OFFICE" means, relative to any Lender, the office of such Lender
designated as such on Schedule III hereto or designated in a Lender Assignment
Agreement, or such other office of a Lender that is designated from time to time
by notice from such Lender to the Borrower and the Agent, whether or not outside
the United States, which shall be making or maintaining LIBO Rate Loans of such
Lender hereunder.
"LIBOR RESERVE PERCENTAGE" is defined in Section 3.2.1.
"LIEN" means any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or otherwise), charge against
or interest in property to secure payment of a debt or performance of an
obligation or other priority or preferential arrangement of any kind or nature
whatsoever.
"LOAN" means, as the context may require, either a Revolving Loan or a Term
Loan.
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"LOAN DOCUMENT" means this Agreement, the Notes, the Letters of Credit, the Fee
Letter, the Security Agreement, the Pledge Agreement, the Subsidiary Guaranty,
the Escrow Agreement, any Rate Protection Agreement with a Lender, each Lender
Assignment Agreement and each other instrument or document executed and
delivered pursuant to or in connection with this Agreement and the other Loan
Documents.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (i) the
business, assets, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries, taken as a whole, (ii) the
ability of Holdings, the Borrower, or any other Obligor to perform or pay the
Obligations in accordance with the terms hereof or of any other Loan Document,
(iii) the Agent's security interest on any material portion of the Collateral or
the priority of such security interest or (iv) the validity or enforceability of
this Agreement or any of the other Loan Documents.
"MATERIAL ENVIRONMENTAL AMOUNT" means an amount payable by Holdings, the
Borrower or any of their Subsidiaries in excess of (a) $250,000, in the case of
the Borrower and its Wholly-Owned Subsidiaries, and (b) $1,000,000, in the case
of Holdings and its Subsidiaries (other than the Borrower and its Wholly-Owned
Subsidiaries), for remedial costs, compliance costs, compensatory damages,
punitive damages, fines, penalties or any combination thereof, in each case with
respect to Environmental Laws.
"MULTIEMPLOYER PLAN" means a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"MEMORANDUM" means the Selfcare Acquisition Corporation Information Memorandum,
dated October 22, 1997.
"NET CASH FLOW" means (without duplication), for any period
(a) (i) Net Income during such period;
plus
(ii) the amount deducted, in determining Net Income,
representing amortization and depreciation of assets of the Borrower and its
Wholly-Owned Subsidiaries during such period;
plus
(iii) the amount deducted, in determining Net Income, with
respect to all non-cash items during such period;
plus
(iv) the change (expressed as a positive number, in the event
of an increase, or a negative number, in the event of a decrease) in deferred
tax liabilities during such period;
plus
(v) the change (expressed as a negative number, in the event
of an increase, or a positive number, in the event of decrease) in deferred
taxes assets during such period;
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minus
(b) (i) the aggregate amount of Capital Expenditures incurred by
the Borrower and its Wholly-Owned Subsidiaries in accordance with Section 7.2.7
during such period;
plus
(ii) the amount added, in determining Net Income, with respect
to all non-cash items during such period.
"NET DEBT PROCEEDS" means, in the case of the issuance, placement or sale of any
Indebtedness of the type referred to in clause (a) of the definition thereof
(excluding, in the case of the Borrower and it Wholly-Owned Subsidiaries, the
Indebtedness permitted to be outstanding pursuant to Section 7.2.2 and, in the
case of Holdings and its Subsidiaries (other than the Borrower and it
Wholly-Owned Subsidiaries), intercompany Indebtedness of the nature referred to
in the last sentence of Section 7.2.2 and the refinancing of any Holdings'
Subordinated Note, provided that (i) the Agent has determined that (w) the
interest rate of the refinanced Indebtedness is lower than the interest rate on
the Indebtedness being refinanced, (x) the subordination provisions contained in
the refinanced Indebtedness are no less favorable in any respect to the Agent
and the Lenders than the subordination provisions contained in the Indebtedness
being refinanced, (y) none of the other terms in such refinanced Indebtedness
(including with respect to sinking funds, redemptions, fees, covenants and
defaults) are more restrictive to Holdings or less advantageous to the Agent and
the Lenders and (ii) no Default or Event of Default has occurred or is
continuing immediately prior to or after giving effect to any such refinancing;
provided, further, however, that to the extent the principal amount of the
refinanced Indebtedness exceeds the outstanding principal amount of the
Indebtedness being so refinanced immediately prior to the consummation of such
refinancing, such excess amount shall constitute Net Debt Proceeds), the sum of
(a) the gross cash proceeds received by Holdings, the Borrower or any
of their Subsidiaries, as the case may be, from such issuance, placement or sale
of permitted Indebtedness (including any cash payments received by way of
deferred payment of principal pursuant to a permitted promissory note or
installment receivable or otherwise, but only as and when received);
minus
(b) in connection with the issuance, placement or sale of such
permitted Indebtedness, all reasonable and customary fees and expenses and
underwriters' discounts and commissions actually paid by Holdings, the Borrower
or any of their Subsidiaries to Persons other than Holdings, the Borrower, any
of their Subsidiaries or any of their Affiliates.
"NET DISPOSITION PROCEEDS" means the sum of
(a) the gross cash proceeds received by Holdings, the Borrower or any
of their Subsidiaries, as the case may be, from any Permitted Disposition (other
than proceeds from any sale of inventory of Holdings, the Borrower or any of
their Subsidiaries in the ordinary course of their business), including any cash
payments received by way of a deferred payment of principal pursuant to a
permitted note or installment receivable or otherwise (including the sale of any
non-cash consideration received by Holdings or any of its Subsidiaries as
provided in the definition of "Permitted Disposition), but only when and as
received;
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minus
(b) (i) all reasonable and customary fees and expenses with respect to
legal, investment banking, brokerage, accounting and other professional fees
actually incurred by Holdings, the Borrower and their Subsidiaries in connection
with such Permitted Disposition which have not been paid to Holdings, the
Borrower, any of their Subsidiaries or any of their Affiliates and (ii) all
taxes actually paid or estimated by Holdings, the Borrower or any of their
Subsidiaries (in good faith) to be payable in cash in connection with such
Permitted Disposition; provided, however, that if, after the payment of all
taxes with respect to such Permitted Disposition, the amount of estimated taxes,
if any, pursuant to clause (ii) above exceeded the amount actually paid in cash
in respect of such Permitted Disposition, the aggregate amount of such excess
shall be immediately payable, pursuant to clause (c) of Section 3.1.2, as Net
Disposition Proceeds.
"NET INCOME" means, for any period, the sum of (a) all amounts (exclusive of all
amounts in respect of any extraordinary gains or losses) which, in accordance
with GAAP, would be included as net income on the consolidated statements of
income of the Borrower and its Wholly-Owned Subsidiaries at such time, minus (b)
the aggregate amount of dividends paid by the Borrower to Holdings during such
period to the extent permitted in the proviso of Section 7.2.6.
"NET INSURANCE PROCEEDS" means the insurance proceeds received by the Agent
pursuant to clause (d) of Section 7.1.4 and constituting "Net Insurance
Proceeds" as therein provided.
"NET SECURITIES PROCEEDS" means, in the case of the issuance, placement or sale
of equity securities or any obligations convertible into or exchangeable for, or
giving any Person a right, option or warrant to acquire such securities or such
convertible or exchangeable obligations (in each case whether pursuant to a
public or private offering), from and after the Effective Date, the sum of
(a) the gross cash proceeds received by Holdings, the Borrower or any
of their Subsidiaries, as the case may be, from such issuance, placement or sale
of equity securities or other obligations (including any cash payments received
by way of deferred payment of principal pursuant to a permitted promissory note
or installment receivable or otherwise, but only as and when received);
minus
(b) in connection with such issuance, placement or sale of such equity
securities, all reasonable and customary fees and expenses and underwriters'
discounts and commissions actually paid by Holdings, the Borrower or any of
their Subsidiaries to Persons other than Holdings, the Borrower, any of their
Subsidiaries or any of their Affiliates.
"NET TRANSACTION PROCEEDS" means the gross payments (whether in the form of
common stock of Holdings, cash or otherwise) received by Holdings or the
Borrower pursuant to the Purchase Agreement (including any payments received by
way of any adjustment to the purchase price provided for therein, but only when
and as received), minus the payments (whether in the form of common stock of
Holdings, cash or otherwise) paid by Holdings or the Borrower to the Sellers
pursuant to the Purchase Agreement, in each case as a result of purchase price
adjustments or indemnity payments thereunder; provided, that any Net Transaction
Proceeds that (a) is not in the form of cash and (b) if not converted into cash
would affect adversely the ability of the Borrower or Holdings to comply with
the applicable financial covenants contained in Section 7.2.4, the Borrower or
Holdings, as the case may be, shall promptly convert such
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non-cash Net Transaction Proceeds into cash on terms satisfactory to the Agent;
provided, however, that any Net Transaction Proceeds that is not in the form of
cash shall be held by the Agent as additional Collateral pursuant to the
Security Agreement.
"NON-DEFAULTING LENDER" shall mean each Lender other than a Defaulting Lender.
"NON-U.S. LENDER" is defined in Section 4.6.
"NOTE" means, as the context may require, either a Revolving Note or a Term
Note.
"OBLIGATIONS" means all obligations (monetary or otherwise) of Holdings, the
Borrower and each other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document, including principal, interest
(including post-default interest and interest accruing after the commencement of
any bankruptcy, insolvency or similar proceeding referred to in Section 8.1.9,
whether or not a claim for post-filing or post-petition interest is allowed in
any such proceeding), reimbursement obligations, fees, indemnities, costs and
expenses (including the fees and disbursements of counsel to the Agent and each
Lender required to be paid by the Borrower) that are owing under this Agreement
and the other Loan Documents, in each case whether now existing or hereafter
incurred, direct or indirect, absolute or contingent, and due or to become due.
"OBLIGOR" means Holdings, the Borrower or any other Person (other than the
Agent, any Issuer, or any Lender) obligated under any Loan Document.
"OPERATIONAL AGREEMENTS" means collectively (a) the Exclusive Distribution
Agreement, dated October 2, 1994, between Sherwood Medical Company and Can-Am,
as amended by amendments one through four thereto, (b) the Management Services
Agreement, dated as of the date hereof, between Can-Am and AMG, (c) the Supply
Agreement, dated as of the date hereof, between Can-Am and AMG and (d) the
Manufacturing and Marketing Agreement, dated March 31, 1992, among X.X. Xxxxx
Company, Inc., Can-Am and AMG, as each of the foregoing may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with Section 7.2.11.
"ORGANIC DOCUMENT" means, relative to any Obligor, its articles of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock, as amended, supplemented, restated or otherwise modified from time to
time in accordance with Section 7.2.11.
"PARTICIPANT" is defined in Section 10.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding
to any or all of its functions under ERISA.
"PENSION PLAN" means any employee benefit plan which is covered by ERISA and in
respect of which Holdings, the Borrower or a Commonly Controlled Entity is (or,
if such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"PERCENTAGE" means, relative to any Lender, the percentage set forth opposite
the name of such Lender on Schedule II hereto or set forth in a duly executed
Lender Assignment Agreement, as such percentage
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may be adjusted from time to time pursuant to each Lender Assignment Agreement
executed and delivered by such Lender and its Assignee Lender pursuant to
Section 10.11.
"PERMITTED DISPOSITION" means any sale, lease, transfer or other disposition of
assets (including without limitation capital stock and receivables) of Holdings,
the Borrower or any of their Subsidiaries not otherwise permitted by clause (a)
or (c) of Section 7.2.10, provided that (a) the Borrower and each of its
Wholly-Owned Subsidiaries shall receive only cash consideration therefor, (b)
the aggregate fair market value of all such dispositions shall not exceed, in
the case of the Borrower and its Wholly-Owned Subsidiaries, $150,000 in any
Fiscal Year of the Borrower, (c) Holdings, the Borrower and each of their
Subsidiaries shall have received fair value therefor (d) both immediately before
and after giving effect to each such disposition no Default or Event of Default
shall have occurred and be continuing and (e) if Holdings or any of its
Subsidiaries receives non-cash consideration, such consideration shall be
subject to a valid, first priority security interest in favor of the Agent
pursuant to the Security Agreement or the Pledge Agreement, as the case may be,
and Holdings and each such Subsidiary shall have taken all actions reasonably
requested by the Agent to perfect its security interest in the same..
"PERMITTED ENCUMBRANCES" means Liens permitted under Section 7.2.3.
"PERMITTED BORROWER SUBORDINATED DEBT" means the Borrower Subordinated Notes and
all other Indebtedness of the Borrower that is subordinated in right of payment
to the Obligations on terms in form and substance satisfactory to the Agent.
"PERSON" means any natural person, corporation, partnership, firm, association,
trust, government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement executed and delivered pursuant to
Section 5.1.11, substantially in the form of Exhibit G hereto, as the same may
be amended, supplemented, amended and restated or otherwise modified from time
to time.
"PRIME RATE" is defined in the definition of Alternate Base Rate.
"PURCHASE AGREEMENT" means the Stock Purchase Agreement, dated as of the date
hereof, among the Borrower, Holdings, Can-Am and the Sellers, together with all
agreements annexed thereto or required to be delivered thereunder, as amended,
supplemented, restated or otherwise modified from time to time in accordance
with Section 7.2.11.
"QUARTERLY PAYMENT DATE" means the last day of each March, June, September and
December or, if any such day is not a Business Day, the next succeeding Business
Day.
"RATE PROTECTION AGREEMENT" means any interest rate cap agreement, interest rate
collar agreement or similar arrangement designed to protect a Person against
fluctuations in interest rates.
"REIMBURSEMENT OBLIGATION" is defined in Section 2.7.4.
"RELEASE" means a "release" or "threatened release" as such terms are defined in
CERCLA.
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"REPORTABLE EVENT" means any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg Section 2615.
"REQUIRED LENDERS" means, at the time any determination thereof is to be made,
Non-Defaulting Lenders holding more than 66 2/3% of the then aggregate unpaid
principal amount of the Notes and Letter of Credit Outstandings (excluding the
aggregate unpaid principal amount of Notes and Letter of Credit Outstandings
held by Defaulting Lenders) or, if no such principal amount or Letter of Credit
Outstandings are outstanding, Non-Defaulting Lenders having an aggregate
Adjusted Percentage of more than 66 2/3% of the Adjusted Total Commitment
Amount.
"RESOURCE CONSERVATION AND RECOVERY ACT" means collectively the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, as amended, 42 U.S.C. Sections 6901, et seq., as in
effect from time to time.
"REVOLVING LOAN" is defined in Section 2.1.2.
"REVOLVING LOAN COMMITMENT" means, relative to any Lender, such Lender's
obligation to make Revolving Loans pursuant to Section 2.1.2.
"REVOLVING LOAN COMMITMENT AMOUNT" means, on any date, $5,000,000, as such
amount is reduced from time to time pursuant to Section 2.3.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the earliest of
(a) February 18, 2002;
(b) the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.3; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Revolving
Loan Commitments shall terminate automatically and without any further action.
"REVOLVING NOTE" means a promissory note of the Borrower payable to any Lender,
in the form of Exhibit A hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Revolving
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"ROLLING PERIOD" means, as of any date of calculation, the immediately preceding
four Fiscal Quarters, provided, however, that prior to the first four Fiscal
Quarters following the date of the initial Credit Extension, (a) the Rolling
Period as of any date of calculation of the Senior Funded Debt to EBITDA Ratio
shall be based upon the number of full Fiscal Quarters since the date of the
initial Credit Extension, with such results to be annualized, and (b) the
Rolling Period with respect to any calculation pursuant to Section 7.2.4 shall
be based solely upon the actual number of full Fiscal Quarters since the date of
the initial Credit Extension.
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"SECURITY AGREEMENT" means the Security Agreement executed and delivered
pursuant to Section 5.1.13, substantially in the form of Exhibit H hereto,
together with the Security Agreement (Trademark), Security Agreement (Patent)
and Security Agreement (Copyright) related thereto, in each case as amended,
supplemented, restated or otherwise modified from time to time.
"SELLERS" mean collectively Xxxxx X. Xxxxxxxxxx, Xxxxxxxx Xxxxx, Xxxxxx Xxxxxxx
and the Cover Family Trust.
"SENIOR FUNDED DEBT" means Funded Debt less Permitted Borrower Subordinated
Debt.
"SENIOR FUNDED DEBT TO EBITDA RATIO" means, for any period, the ratio of:
(a) Senior Funded Debt as of the last day of such period;
to
(b) EBITDA for the Rolling Period ending as of the last day of such
period.
"SINGLE EMPLOYER PLAN" means any Pension Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"SOLVENT" means, when used with respect to any Person, that, as of any date of
determination, (a) the fair value of the assets of such Person, at a fair
valuation, will, as of such date, exceed the amount of all liabilities of such
Person, contingent or otherwise, as of such date, (b) the fair value of the
tangible and intangible assets of such Person, at a fair valuation, will, as of
such date, be greater than the amount the will be required to pay the liability
of such Person on its debts as such debts become absolute and matured, (c) such
Person will not have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (d) such Person will be able to pay its
debts as they mature. For purposes of this definition, (i) "debt" means
liability on a "claim," (ii) "claim" means any (x) right to payment, whether or
not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured, and (iii) all liabilities
with respect to any litigation shall be determined based upon the reasonably
anticipated liabilities with respect to such litigation after considering all
the relevant facts.
"STATED AMOUNT" of each Letter of Credit means the total amount available to be
drawn under such Letter of Credit upon the issuance thereof.
"STATED EXPIRY DATE" is defined in Section 2.7.1.
"STATED MATURITY DATE" means (a) with respect to the Revolving Loans, February
18, 2002, and (b) with respect to the Term Loans, December 31, 2003.
"STATUTORY RESERVES" is defined in the definition of Alternate Base Rate.
"SUBORDINATION PROVISIONS" is defined in Section 8.1.11.
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"SUBSIDIARY" means, with respect to any Person, (a) any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person or by
one or more Subsidiaries of such Person, or (b) any partnership, joint venture,
or other entity as to which such Person or one or more Subsidiaries owns more
than a 50% ownership, equity or similar interest or has power to direct or cause
the direction of management and policies, or the power to elect the managing
partner (or the equivalent), of such partnership, joint venture or other entity,
as the case may be.
"SUBSIDIARY GUARANTY" means the Guaranty (Subsidiary) executed and delivered
pursuant to clause (c) of Section 5.1.10, substantially in the form of Exhibit J
hereto, as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time.
"SYNDICATION DATE" means the earlier of (a) the date which is 180 days following
the date of the initial Credit Extension and (b) the date on which the Agent
notifies the Borrower that it has completed the syndication of the Commitments
and the entities selected in the syndication process become parties to this
Agreement.
"TAXES" is defined in Section 4.6.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement executed and delivered
pursuant to Section 5.1.21, substantially in the form of Exhibit O hereto, as
the same may be amended, supplemented, amended and restated or otherwise
modified from time to time in accordance with Section 7.2.11.
"TERM LOAN" is defined in Section 2.1.1.
"TERM LOAN COMMITMENT" means, relative to any Lender, such Lender's obligation
to make Term Loans pursuant to Section 2.1.1.
"TERM LOAN COMMITMENT AMOUNT" means, on any date prior to the Term Loan
Commitment Termination Date, $37,000,000.
"TERM LOAN COMMITMENT TERMINATION DATE" means the earlier of
(a) immediately after the making of the initial Credit Extension; or
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (a) or (b), the Term Loan
Commitments shall terminate automatically and without any further action.
"TERM NOTE" means a promissory note of the Borrower payable to any Lender, in
the form of Exhibit B hereto (as such promissory note may be amended, endorsed
or otherwise modified from time to time), evidencing the aggregate Indebtedness
of the Borrower to such Lender resulting from outstanding Term Loans, and also
means all other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
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"THREE MONTH SECONDARY CD RATE" is defined in the definition of Alternate Base
Rate.
"TOTAL COMMITMENT AMOUNT" means the sum, without duplication, of the Term Loan
Commitment Amount and the Revolving Loan Commitment Amount.
"TRANSFEREE" is defined in Section 10.11.3.
"TYPE" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as from time to time in effect in the
State of New York.
"UNITED STATES" or "U.S." means the United States of America, its fifty States
and the District of Columbia.
"WELFARE PLAN" means a "welfare plan" (as such term is defined in Section 3(1)
of ERISA), maintained by Holdings or the Borrower or for which Holdings or the
Borrower or any of their Subsidiaries has any contractual liability.
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary of Holdings or the Borrower of
which the securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity is, at the time any
determination is being made, owned, controlled or held by Holdings or the
Borrower, as the case may be, or one or more Wholly-Owned Subsidiaries of
Holdings or the Borrower, as the case may be.
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and each other
Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references in this
Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in clause (e) of
Section 5.1.8, in the case of the Borrower and its Wholly-Owned Subsidiaries,
and clause (a) of Section 5.1.8, in the case of Holdings and its Subsidiaries
(other than the Borrower and its Wholly-Owned Subsidiaries). In the event that
any "Accounting Change" (as defined below) shall occur and such change results
in a change in the method of calculation of financial covenants, standards or
terms in this Agreement, Holdings and the Borrower, as the case may be, and the
Agent shall enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating Holdings' and the Borrower's financial
condition shall be the same after such Accounting Changes as if such Accounting
Changes had
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not been made. Until such time as such an amendment shall have been executed and
delivered by Holdings, the Borrower, the Agent and the Required Lenders, all
financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred.
"Accounting Change" refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the Securities and Exchange Commission.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES,
LETTERS OF CREDIT AND NOTES
SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of this
Agreement (including Article V), each Lender severally agrees to make Loans
pursuant to the Commitments described in this Section 2.1.
SECTION 2.1.1. TERM LOAN COMMITMENT. On the Business Day the Acquisition is
consummated (but only if such date occurs prior to the Term Loan Commitment
Termination Date), each Lender agrees to make Loans (relative to such Lender,
its "Term Loans") to the Borrower equal to such Lender's Percentage of
$37,000,000. The Commitment of each Lender described in this Section 2.1.1 is
herein referred to as its "Term Loan Commitment". No amounts paid or prepaid
with respect to Term Loans may be reborrowed.
SECTION 2.1.2. REVOLVING LOAN COMMITMENT. From time to time on any Business Day
occurring prior to the Revolving Loan Commitment Termination Date, each Lender
agrees to make Loans (relative to such Lender, its "Revolving Loans") to the
Borrower equal to such Lender's Percentage of the aggregate amount of the
Borrowing of the Revolving Loans requested by the Borrower to be made on such
day. The Commitment of each Lender described in this Section 2.1.2 is herein
referred to as its "Revolving Loan Commitment". On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow the Revolving Loans.
SECTION 2.1.3. LETTER OF CREDIT COMMITMENT. From time to time on any Business
Day occurring prior to the Revolving Loan Commitment Termination Date, the
Issuer will
(a) issue one or more standby or documentary letters of credit
(relative to such Issuer, its "Letter of Credit") for the account of the
Borrower in Stated Amounts requested by the Borrower on such day with a Stated
Expiry Date; or
(b) extend the Stated Expiry Date of an existing Letter of Credit
previously issued hereunder to a date not later than the earlier of (i) two
Business Days prior to the Revolving Loan Commitment Termination Date and (ii)
one year from the date of such extension, in the case of any standby Letter of
Credit, and 90 days from the date of any such extension, in the case of any
documentary Letter of Credit.
SECTION 2.2. LENDERS NOT PERMITTED OR REQUIRED TO MAKE CREDIT EXTENSIONS. No
Lender shall be permitted or required to make any Loan, and no Issuer shall be
obligated to issue or extend any Letter of Credit, under any circumstance
described below in this Section 2.2.
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SECTION 2.2.1. TERM LOANS. No Borrowing of Term Loans shall be made if, after
giving effect thereto, the aggregate outstanding principal amount of all the
Term Loans (a) of all Lenders would exceed the Term Loan Commitment Amount or
(b) of such Lender would exceed such Lender's Percentage of the Term Loan
Commitment Amount.
SECTION 2.2.2. REVOLVING LOANS AND LETTERS OF CREDIT. No Borrowing of Revolving
Loans or issuance or extension of a Letter of Credit shall be made if, after
giving effect thereto,
(a) the aggregate outstanding principal amount of all the Revolving
Loans, together with the aggregate amount of all Letter of Credit Outstandings,
(i) of all the Lenders would exceed the lesser of (x) the Revolving
Loan Commitment Amount or (y) the Borrowing Base Amount; or (ii) of such Lender
would exceed the lesser of (x) such Lender's Percentage of the Revolving Loan
Commitment Amount or (y) such Lender's Percentage of the then existing Borrowing
Base Amount; or
(b) the aggregate amount of all Letter of Credit Outstandings would
exceed the lesser of (i) the Revolving Loan Commitment Amount or (ii)
$1,000,000.
SECTION 2.3. REDUCTION OF THE COMMITMENT AMOUNTS.
(a) Optional Reduction. The Borrower may, from time to time on any
Business Day after the date of the initial Credit Extension, voluntarily reduce
the unused amount of the Revolving Loan Commitment Amount; provided, however,
that all such reductions shall require at least one Business Days' prior notice
to the Agent and be permanent, and any partial reduction of the unused amount of
the Revolving Loan Commitment Amount shall be in a minimum amount of $500,000
and in integral multiples in excess thereof of $100,000.
(b) Mandatory Reduction. The Revolving Loan Commitment Amount shall be
permanently reduced by the aggregate amount resulting from the operation of
clauses (c)(iii)(B) and (C) of Section 3.1.2.
SECTION 2.4. BORROWING PROCEDURE.
(a) Borrowing Requests. By delivering a Borrowing Request to the Agent
on or before 12:00 p.m. (New York City time), on a Business Day, the Borrower
may from time to time irrevocably request that Base Rate Loans be made on the
next following Business Day or on another Business Day within five Business Days
of such Business Day, or that LIBO Rate Loans be made on any Business Day not
less than three nor more than five Business Days thereafter; provided, that no
Revolving Loan shall be made as a LIBO Rate Loan after the day that is one month
prior to the Revolving Loan Commitment Termination Date. All Base Rate Loans may
be in any minimum or multiple amount, all LIBO Rate Loans made prior to the
Syndication Date shall be in a minimum amount equal to the product of (i) the
number of Lenders on the date the relevant Borrowing Request is delivered to the
Agent multiplied by (ii) $500,000 and in integral multiples in excess thereof of
$100,000, and all LIBO Rate Loans from and after the Syndication Date shall be
made in a minimum amount equal to the product of (x) the number of Lenders on
the Syndicate Date multiplied by (y) $500,000 and in integral multiples in
excess thereof of $100,000. If the Borrower requests any LIBO Rate Loans on the
date of the initial Credit Extension it shall have executed an indemnity
agreement in form and substance satisfactory to the Agent. All the proceeds of
all Loans shall be used solely for the purposes described in Section 4.10.
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(b) Funding by Lenders. On the terms and subject to the conditions of
this Agreement, each Borrowing shall be made on the Business Day, specified in
such Borrowing Request. On or before 1:00 p.m. (New York City time) on such
Business Day each Lender shall deposit with the Agent same day funds in an
amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Agent shall specify from time to
time by notice to the Lenders. To the extent funds are received from the
Lenders, the Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its Borrowing
Request. No Lender's obligation to make any Loan shall be affected by any other
Lender's failure to make any Loan.
SECTION 2.5. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Agent on or before 12:00 a.m. (New York
City time) on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than one Business Day's notice in the case of Base Rate
Loans, or three Business Days' notice in the case of LIBO Rate Loans, and in
either case not more than five Business Days' notice, that all or any portion
(in an aggregate minimum amount with respect to continuations of or conversions
into LIBO Rate Loans, prior to the Syndication Date equal to the product of (i)
the number of Lenders on the date the relevant Continuation/ Conversion Notice
is delivered to the Agent multiplied by (ii) $500,000 and in integral multiples
in excess thereof of $100,000, and from and after the Syndication Date equal to
the product of (x) the number of Lenders on the Syndication Date multiplied by
(y) $500,000 and in integral multiples in excess thereof of $100,000) be, in the
case of Base Rate Loans, converted into LIBO Rate Loans or be, in the case of
LIBO Rate Loans, converted into Base Rate Loans or continued as LIBO Rate Loans
(in the absence of delivery of a Continuation/Conversion Notice with respect to
any LIBO Rate Loan at least three Business Days (but not more than five Business
Days) before the last day of the then current Interest Period with respect
thereto, such LIBO Rate Loan shall, on such last day, automatically convert to a
Base Rate Loan); provided, however, that (a) each such conversion or
continuation shall be prorated among the applicable outstanding Revolving Loans
of all Lenders, and (b) no portion of the outstanding principal amount of any
Revolving Loans may be continued as, or be converted into, LIBO Rate Loans when
any Default has occurred and is continuing, unless the Required Lenders
otherwise agree in writing and (c) no Loans may be continued as, or be converted
into, LIBO Rate Loans after the day that is one month prior to the Maturity Date
or Revolving Loan Commitment Termination Date, as the case may be.
SECTION 2.6. FUNDING. Each Lender may, if it so elects, fulfill its obligation
to make, continue or convert LIBO Rate Loans hereunder by causing one of its
foreign branches or Affiliates (or an international banking facility created by
such Lender) to make or maintain such LIBO Rate Loan; provided, however, that
such LIBO Rate Loan shall nonetheless be deemed to have been made and to be held
by such Lender, and the obligation of the Borrower to repay such LIBO Rate Loan
shall nevertheless be to such Lender for the account of such foreign branch,
Affiliate or international banking facility. In addition, the Borrower hereby
consents and agrees that, for purposes of any determination to be made for
purposes of Sections 4.1 through 4.5, it shall be conclusively assumed that each
Lender elected to fund all LIBO Rate Loans by purchasing Dollar deposits in its
LIBOR Office's interbank eurodollar market.
SECTION 2.7. LETTERS OF CREDIT. The Borrower may request, in accordance with the
terms hereof, the issuance of a Letter of Credit for its own account, in a form
reasonably acceptable to the Agent and the applicable Issuer, at any time and
from time to time while the Revolving Loan Commitment remains in effect.
SECTION 2.7.1. ISSUANCE PROCEDURES. By delivering to the Agent and the Issuer an
Issuance Request on or before 1:00 p.m., (New York City time) on a Business Day,
the Borrower may, from time to time
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irrevocably request, on not less than three nor more than five Business Days'
notice, that the Issuer issue, or extend the Stated Expiry Date of, as the case
may be, a Letter of Credit in such form as may be requested by the Borrower and
approved by the Issuer, such Letter of Credit to be used solely for the purposes
described in Section 4.10. Each Letter of Credit shall by its terms be stated to
expire on a date (its "Stated Expiry Date") no later than the earlier of (a) one
year from the date of issuance, in the case of any standby Letter of Credit, and
90 days from the date of any such issuance, in the case of any documentary
Letter of Credit,and (b) two Business Days prior to the Revolving Loan
Commitment Termination Date. The Issuer will make available to the beneficiary
thereof the original of each Letter of Credit which it issues hereunder. Unless
notified in writing by the Required Banks before it issues a Letter of Credit
that a Default or Event of Default exists, the Issuer may issue the requested
Letter of Credit in accordance with the Issuer's customary practices.
SECTION 2.7.2. OTHER LENDERS' PARTICIPATION. Upon the issuance of each Letter of
Credit issued by the Issuer pursuant hereto, and without further action, each
Lender (other than the Issuer) shall be deemed to have irrevocably and
unconditionally purchased (without recourse, representation or warranty), to the
extent of its Percentage, a participation interest in such Letter of Credit
(including the Contingent Liability and any Reimbursement Obligation with
respect thereto), and such Lender shall, to the extent of its Percentage, be
responsible for reimbursing promptly (and in any event within one Business Day
together with interest at the Federal Funds Effective Rate for each day until
reimbursement is made) the Issuer for Reimbursement Obligations which have not
been reimbursed by the Borrower in accordance with Section 2.7.4 or which have
been reimbursed by the Borrower but have been required to be returned or
disgorged by the Issuer. In addition, such Lender shall, to the extent of its
Percentage and so long as it shall have complied with its obligations under this
Sections 2.7.2 and 2.7.4, be entitled to receive a ratable portion of the Letter
of Credit fees payable pursuant to Section 3.3.2 with respect to each Letter of
Credit and of interest payable pursuant to Section 3.2 with respect to any
Reimbursement Obligation.
SECTION 2.7.3. DISBURSEMENTS. The Issuer will notify the Borrower and the Agent
promptly of the presentment for payment of any Letter of Credit issued by the
Issuer, together with notice of the date (the "Disbursement Date") such payment
shall be made (each such payment, a "Disbursement"). Subject to the terms and
provisions of such Letter of Credit and this Agreement, the Issuer shall make
such payment to the beneficiary (or its designee) of such Letter of Credit.
Prior to 11:00 a.m. (New York City time) on the first Business Day following the
Disbursement Date, the Borrower will reimburse the Agent, for the account of the
Issuer, for all amounts which the Issuer has disbursed under such Letter of
Credit, together with interest thereon at a rate per annum equal to the highest
rate per annum then in effect pursuant to Section 3.2 for the period from the
Disbursement Date through the date of such reimbursement.
SECTION 2.7.4. REIMBURSEMENT. The obligation (a "Reimbursement Obligation") of
the Borrower under Section 2.7.3 to reimburse the Issuer with respect to each
Disbursement (including interest thereon) and, upon the failure of the Borrower
to reimburse the Issuer (or if any reimbursement by the Borrower must be
returned or disgorged by the Issuer for any reason), each Lender's obligation
under Section 2.7.2 to reimburse the Issuer, shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower or such Lender, as the case may be, may
have or have had against the Issuer or any Lender, including any defense based
upon the failure of any Disbursement to conform to the terms of the applicable
Letter of Credit or any non-application or misapplication by the beneficiary of
the proceeds of such Letter of Credit; provided, however, that after paying in
full its Reimbursement Obligation hereunder, nothing herein shall adversely
affect the right of the Borrower or such Lender, as the case may be, to commence
any proceeding against
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the Issuer for any wrongful Disbursement made by the Issuer under a Letter of
Credit as a result of acts or omissions constituting gross negligence or wilful
misconduct on the part of such Issuer.
SECTION 2.7.5. DEEMED DISBURSEMENTS. Upon the occurrence and during the
continuation of any Default of the type described in Section 8.1.9 or, with
notice from the Agent, upon the occurrence and during the continuation of any
other Event of Default
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn and
available under all Letters of Credit issued and outstanding for the account of
the Borrower shall, without demand upon or notice to the Borrower, be deemed to
have been paid or disbursed by the Issuer under such Letters of Credit
(notwithstanding that such amount may not in fact have been so paid or
disbursed); and
(b) upon notification by the Agent to the Borrower of its obligations
under this Section, the Borrower shall be immediately obligated to reimburse the
Issuer for the amount deemed to have been so paid or disbursed by such Issuer.
Any amounts so payable by the Borrower pursuant to this Section shall
be deposited in cash with the Agent and held as collateral security for the
Obligations in connection with the Letters of Credit issued by the Issuers. In
the case of any such deemed disbursement resulting from the occurrence of a
Default or Event of Default, if such Default or Event of Default has been cured
or waived, the Agent shall return to the Borrower all amounts then on deposit
with the Agent pursuant to this Section which have not been applied to the
partial satisfaction of such Obligations.
SECTION 2.7.6. NATURE OF REIMBURSEMENT OBLIGATIONS. The Borrower and, to the
extent set forth in Section 2.7.2, each Lender shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by the beneficiary thereof.
Neither the Issuer (except to the extent a final judgment of a court of
competent jurisdiction has determined that the Issuer has acted with gross
negligence or willful misconduct), the Agent nor any Lender shall be responsible
for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Loan Document, any Letter of Credit or any document submitted by
any party in connection with the application for and issuance of a Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or the proceeds
thereof in whole or in part, which may prove to be invalid or ineffective for
any reason;
(c) failure of the beneficiary to comply fully with conditions required
in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise;
(e) any loss or delay in the transmission or otherwise of any document
or draft required in order to make a Disbursement under a Letter of Credit; or
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(f) any other act or omission to act or delay of any kind of the
Issuer, the Lenders, the Agent or any other Person or any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Issuer, the Agent or any Lender hereunder. In
furtherance and extension and not in limitation or derogation of any of the
foregoing, any action taken or omitted to be taken by an Issuer shall be binding
upon the Borrower and each such Lender, and shall not put such Issuer under any
resulting liability to the Borrower or any such Lender, as the case may be.
SECTION 2.8. NOTES. Each Lender's Loans under a Commitment shall be evidenced by
a Note payable to the order of such Lender in a maximum principal amount equal
to such Lender's Percentage of the original applicable Commitment Amount. The
Borrower hereby irrevocably authorizes each Lender to make (or cause to be made)
appropriate notations on the grid attached to such Lender's Notes (or on any
continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal of, and the interest rate
applicable to, the Loans evidenced thereby. Such notations shall be conclusive
and binding on the Borrower absent manifest error; provided, however, that the
failure of any Lender to make any such notations shall not limit or otherwise
affect any Obligations of the Borrower or any other Obligor.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in full the
unpaid principal amount of each Loan upon the Stated Maturity Date therefor and
pursuant to Sections 8.2 through 8.4. Prior thereto, repayments and prepayments
of Loans shall be made as set forth in this Section 3.1.
SECTION 3.1.1. VOLUNTARY PREPAYMENTS. Prior to the Stated Maturity Date, the
Borrower may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of the
Loans; provided, however, that
(a) any such prepayments shall be made pro rata among Loans of the same
Type and, if applicable, having the same Interest Period of all the Lenders; and
(b) all such voluntary prepayments shall require (i) at least one but
no more than five Business Days' prior notice, in the case of Base Rate Loans,
(ii) and at least at three but not more than five Business Days' prior notice,
in the case of LIBO Rate Loans, in each case to the Agent.
Each voluntary prepayment of Term Loans made pursuant to this Section
shall be applied, to the extent of such prepayment, pro rata to the scheduled
repayments of Term Loans set forth in clause (b) of Section 3.1.2. Each
prepayment of any Loans made pursuant to this Section shall be without premium
or penalty but subject to Section 4.4.
SECTION 3.1.2. MANDATORY REPAYMENTS AND PREPAYMENTS.
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(a) Revolving Loans. The Borrower shall, on each date when the sum of
(i) the aggregate outstanding principal amount of all Revolving Loans and (ii)
Letter of Credit Outstandings exceeds the lesser of (x) the Revolving Loan
Commitment Amount (as it may be reduced from time to time) or (y) the then
existing Borrowing Base Amount, make a mandatory prepayment of all Revolving
Loans in an amount equal to such excess.
(b) Term Loans. The Borrower shall, on each date set forth below, make
a scheduled repayment of the aggregate outstanding principal amount of all Term
Loans in the amount set forth opposite each such date:
AMOUNT OF REQUIRED
PAYMENT DATE PRINCIPAL PAYMENT
------------ -----------------
June 30, 1998 $ 1,433,333
September 30, 1998 $ 1,433,333
December 31, 1998 $ 1,433,334
March 31, 1999 $ 1,550,000
June 30, 1999 $ 1,550,000
September 30, 1999 $ 1,550,000
December 31, 1999 $ 1,550,000
March 31, 2000 $ 1,300,000
June 30, 2000 $ 1,300,000
September 30, 2000 $ 1,300,000
December 31, 2000 $ 1,300,000
March 31, 2001 $ 1,625,000
June 30, 2001 $ 1,625,000
September 30, 2001 $ 1,625,000
December 31, 2001 $ 1,625,000
March 31, 2002 $ 1,750,000
June 30, 2002 $ 1,750,000
September 30, 2002 $ 1,750,000
December 31, 2002 $ 1,750,000
March 31, 2003 $ 1,950,000
June 30, 2003 $ 1,950,000
September 30, 2003 $ 1,950,000
December 31, 2003 $ 1,950,000
(c) Mandatory Prepayments and Commitment Reductions from Certain
Sources.
(i) Borrower Mandatory Prepayments. The Borrower shall, and
shall cause each of its Wholly-Owned Subsidiaries, (A) on the date of receipt by
the Borrower or any such Subsidiary of any Net Transaction Proceeds, Net
Securities Proceeds, Net Debt Proceeds or Net Disposition Proceeds, (B) on the
dates specified in Section 7.1.4 with respect to Net Insurance Proceeds, and (C)
on the date of delivery of its audited financial statements pursuant to clause
(c) of Section 7.1.1 (and, in any event, on the date 90 days after the end of
each Fiscal Year of the Borrower), in the case of Excess Cash Flow, to apply (I)
100% of the Net Transaction Proceeds, Net Securities Proceeds, Net Debt
Proceeds, Net Disposition Proceeds and Net Insurance Proceeds; and (II) 50% of
all Excess Cash Flow for its
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immediately preceding Fiscal Year (beginning with Excess Cash Flow calculated
for the Fiscal Year of the Borrower ending December 31, 1998), in each case as
provided in clause (iii) below.
(ii) Holdings Mandatory Prepayments. Holdings shall, and shall
cause each of its Subsidiaries (other than the Borrower and its Wholly-Owned
Subsidiaries), (A) on the date of receipt of Holdings or any such Subsidiary of
any Net Transaction Proceeds, Net Securities Proceeds, Net Debt Proceeds or Net
Disposition Proceeds and (B) on the dates specified in Section 7.1.4 with
respect to Net Insurance Proceeds to apply (I) 100% of all Net Transaction
Proceeds; (II) until the sum of the aggregate principal amount of outstanding
Term Loans plus the Revolving Loan Commitment Amount is equal to or less than
$27,720,000, 25% of all Net Securities Proceeds in excess of $10,000,000 since
the Closing Date; (III) 25% of all Net Debt Proceeds (other than Net Debt
Proceeds (w) resulting from Indebtedness assumed in connection with the
acquisition of any property or asset by Holdings and its Subsidiaries (other
than the Borrower and its Wholly-Owned Subsidiaries) and was not incurred in
contemplation of such acquisition, (x) not more than $7,000,000 of Indebtedness
incurred by Inverness in connection with the working capital financing referred
to in clause (i)(ii) of Section 7.2.3 and (y) resulting form Indebtedness
incurred by Orgenics, Ltd. to the extent that Holdings has not, either directly
or indirectly, guaranteed or provided assets to secure the repayment thereof) in
excess of $10,000,000 since the Closing Date; (IV) 100% of all Net Disposition
Proceeds (other than Net Disposition Proceeds resulting from machinery and
equipment of Inverness subject to a sale and leaseback transaction referred to
in clause (i) of Section 7.2.3) in excess of $1,000,000 since the Closing Date;
and (V) 25% of the Net Insurance Proceeds, in the case of Holdings and its
Subsidiaries (other than the Borrower and its Wholly-Owned Subsidiaries), and
100% of the Net Insurance Proceeds, in the case of the Borrower and its
Wholly-Owned Subsidiaries, in each case as provided in clause (iii) below.
(iii) Application of Mandatory Prepayments. All amounts
required to be prepaid pursuant to this clause (c) shall be applied.
(A) first, make a mandatory prepayment of the Term
Loans, to be applied pro rata to the scheduled repayments of the Term
Loans set forth in clause (b); and
(B) second, if all the Term Loans have been paid in
full, make a mandatory prepayment of the Revolving Loans; and
(C) third, if all the Term Loans and Revolving Loans
have been paid in full, permanently reduce the Revolving Loan
Commitment Amount; and
(D) fourth, if all the Term Loans and Revolving Loans
have been paid in full and the Revolving Loan Commitment Amount has
been reduced to zero, cash collateralize all Letter of Credit
Outstandings on terms in form and substance satisfactory to the Agent.
The Borrower shall deliver to the Agent, at the time of each prepayment
required under this Section, (i) a certificate signed by its chief financial
Authorized Officer setting forth in reasonable detail the calculation of the
amount of such prepayment and (ii) to the extent practicable, at least one
Business Day prior written notice of such prepayment.
(d) Stated Maturity Date. On the Stated Maturity Date of the Term
Loans, the Borrower shall repay in full the aggregate outstanding principal
amount of the Term Loans. On the Stated Maturity Date
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of the Revolving Loans, the Borrower shall repay in full the aggregate
outstanding principal amount of the Revolving Loans then outstanding and all
Letters of Credit Outstandings.
(e) Acceleration. The Borrower shall, immediately upon any acceleration
of the Stated Maturity Date of any Loans or Letter of Credit Outstandings
pursuant to Section 8.2 or Section 8.3, repay all (or if only a portion is
accelerated thereunder, such portion of) the Loans then outstanding and Letter
of Credit Outstandings.
Each prepayment of any Loans made pursuant to this Section shall be made without
premium or penalty, except as specified herein, and applied first, to the
prepayment of Base Rate Loans and, second, to the prepayment of LIBO Rate Loans.
SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal amount
of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. RATES. Subject to Sections 2.4 and 2.5, the Borrower may elect,
pursuant to an appropriately delivered Borrowing Request or
Continuation/Conversion Notice, that Loans comprising a Borrowing accrue
interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate Loan,
equal to the sum of the Alternate Base Rate from time to time in effect plus the
Applicable Margin; and
(b) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate (Reserve
Adjusted) for such Interest Period plus the Applicable Margin.
The "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) -------------------------------
1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Agent on the basis of the LIBOR Reserve Percentage in
effect on, and the applicable rates furnished to and received by the Agent from
Chase, two Business Days before the first day of such Interest Period.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans, the rate
of interest equal to the average (rounded upwards, if necessary, to the nearest
1/16 of 1%) of the rates per annum at which Dollar deposits in immediately
available funds are offered to Chase's LIBOR Office in the London, England
interbank market at or about 11:00 a.m. (London, England time) two Business Days
prior to the beginning of such Interest Period for delivery on the first day of
such Interest Period, and in an amount approximately equal to the amount of
Chase's LIBO Rate Loan and for a period approximately equal to such Interest
Period.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO Rate
Loans, the reserve percentage (expressed as a decimal) equal to the maximum
aggregate reserve requirements (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any transitional
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adjustments or other scheduled changes in reserve requirements) specified under
regulations issued from time to time by the F.R.S. Board and then applicable to
assets or liabilities consisting of or including "Eurocurrency Liabilities", as
currently defined in Regulation D of the F.R.S. Board, having a term
approximately equal or comparable to such Interest Period. All LIBO Rate Loans
shall bear interest from and including the first day of the applicable Interest
Period to (but not including) the last day of such Interest Period at the
interest rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2. POST-DEFAULT RATES. Upon the occurrence and during the
continuation of any Default, or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the extent permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal to (a), in the case of Loans, the rate per
annum otherwise in effect plus a margin of 2% per annum and (b) in the case of
Letter of Credit Outstandings and other Obligations payable hereunder, interest
at a rate per annum equal to the rate applicable to Base Rate Loans plus 2%, in
each case, with respect to clauses (a) and (b), from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be payable,
without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Loan on the principal amount so paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the Effective Date;
(d) with respect to LIBO Rate Loans, on the last day of each applicable
Interest Period (and, if such Interest Period shall exceed 90 days, on the 90th
day of such Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO Rate Loans
on a day when interest would not otherwise have been payable pursuant to clause
(c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of which is
accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such
acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. FEES. The Borrower agrees to pay the fees set forth in this Section
3.3. All such fees shall be non-refundable.
SECTION 3.3.1. COMMITMENT FEE. The Borrower agrees to pay to the Agent, for the
pro rata account of each Lender of Revolving Loans, for the period (including
any portion thereof when the Revolving Loan Commitment is suspended by reason of
the Borrower's inability to satisfy any condition of Article V) commencing on
the Effective Date and continuing through the Revolving Loan Commitment
Termination Date, a commitment fee at the rate of .375% per annum on such
Lender's Percentage of the sum of the average daily unused portion of the
Revolving Loan Commitment Amount. Such commitment fees shall
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be payable by the Borrower in arrears on each Quarterly Payment Date, commencing
with the first Quarterly Payment Date following the Effective Date, and on the
Revolving Loan Commitment Termination Date.
SECTION 3.3.2. LETTER OF CREDIT FEE. The Borrower agrees to pay to the Agent,
for the pro rata account of the Issuer and each other Lender of Revolving Loans,
a Letter of Credit fee in an amount equal to the then Applicable Margin on LIBO
Rate Loans multiplied by the average daily Letter of Credit Outstandings of each
such Letter of Credit, such fees to be paid by the Borrower in arrears on each
Quarterly Payment Date (commencing with the first Quarterly Payment Date
following the Effective Date) and on the Revolving Loan Commitment Termination
Date. The Borrower further agrees to pay to the Issuer an issuance fee in an
amount equal to .125% per annum multiplied by the average daily Letter of Credit
Outstandings, such fee to be paid in arrears on each Quarterly Payment Date
(commencing with the first Quarterly Payment Date following the Effective Date)
and on the Revolving Loan Commitment Termination Date, (b) an amendment fee in
an amount to be specified by the Agent if any of the terms of any existing
Letter of Credit is amended or the Stated Expiry Date of any existing Letter of
Credit is extended and (c) all customary costs and expenses incurred by the
Issuer in connection with each Letter of Credit.
SECTION 3.3.3. AGENT'S FEES, ETC. The Borrower agrees to pay to the Agent, for
its own account, fees in the amounts, on the dates and in the manner set forth
in the Fee Letter.
ARTICLE II
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO RATE LENDING UNLAWFUL. If any Lender shall determine (which
determination shall, upon notice thereof to the Borrower and the Agent, be
conclusive and binding on the Borrower) that the introduction of or any change
in or in the interpretation of any law makes it unlawful, or any central bank or
other governmental authority asserts that it is unlawful, for such Lender to
make, continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate
Loan, the obligations of such Lender to make, continue, maintain or convert any
such LIBO Rate Loan shall, upon such determination, forthwith be suspended until
such Lender shall notify the Agent that the circumstances causing such
suspension no longer exist, and all outstanding LIBO Rate Loans shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
SECTION 4.2. DEPOSITS UNAVAILABLE. If the Agent shall have determined or been
instructed by the Required Lenders that
(a) Dollar certificates of deposit or Dollar deposits, as the case may
be, in the relevant amount and for the relevant Interest Period are not
available to Chase in its relevant market; or
(b) by reason of circumstances affecting Chase's relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBO Rate Loans,
then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue
any Loans as, or to convert any Loans into, LIBO Rate Loans shall forthwith be
suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
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SECTION 4.3. INCREASED COSTS, ETC. The Borrower agrees to reimburse each Lender
for any increase in the cost to such Lender of, or any reduction in the amount
of any sum receivable by such Lender in respect of, making, continuing or
maintaining (or of its obligation to make, continue or maintain) any Loans as,
or of converting (or of its obligation to convert) any Loans into, LIBO Rate
Loans (including but not limited to any imposition or effectiveness of reserve
requirements) that arise in connection with any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority. Such Lender shall promptly notify the Agent and the
Borrower in writing of the occurrence of any such event, such notice to state,
in reasonable detail, the reasons therefor and the additional amount required
fully to compensate such Lender for such increased cost or reduced amount. Such
additional amounts shall be paid by the Borrower directly to such Lender
promptly (and, in any event, within three Business Days of receipt of such
notice), and such notice shall, in the absence of manifest error, be conclusive
and binding on the Borrower.
(b) If at any time the introduction or effectiveness of or any change
in any applicable law, rule or regulation (including without limitation those
announced or published prior to the date of this Agreement), or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any request or directive by any such authority (whether or not having the
force of law) shall either (i) impose, modify or make applicable any reserve,
deposit, capital adequacy or similar requirement against letters of credit
issued, or participated in, by any Issuer or Lender, or (ii) impose on any
Issuer or Lender any other conditions affecting this Agreement or any Letter of
Credit, and the result of any of the foregoing is to increase the cost to any
Issuer or Lender of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by any Issuer or
Lender hereunder with respect to Letters of Credit, then, within ten days of the
receipt of the notice referred to below (which notice shall be given by the
respective Issuer or Lender promptly after it determines such increased cost or
reduction is applicable to Letters of Credit or its participation therein) to
the Borrower by the respective Issuer or Lender (a copy of which notice shall be
sent by such Issuer or Lender to the Agent), the Borrower shall pay to such
Issuer or Lender such additional amount or amounts as will compensate such
Issuer or Lender for such increased cost or reduction. A notice submitted to the
Borrower by such Issuer or Lender, setting forth in reasonable detail the
reasons therefor and the basis for the calculation of such additional amount or
amounts necessary to compensate such Issuer or Lender as aforesaid shall be
conclusive and binding on the Borrower absent manifest error.
SECTION 4.4. FUNDING LOSSES. In the event any Lender shall incur any loss or
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
as a result of
(a) any conversion or repayment or prepayment of the principal amount
of any LIBO Rate Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to Section 3.1 or
otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance with the
Borrowing Request therefor; or
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(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/Conversion Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Agent), the Borrower shall promptly (and, in any event, within three Business
Days of receipt of such notice) pay directly to such Lender such amount as will
(in the determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower. Such reimbursement shall include an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert, or continue to the last day of such Interest Period that would have
commenced on the date of such failure), in each case at the applicable rate of
interest for such Loans provided for herein over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market.
SECTION 4.5. INCREASED CAPITAL COSTS. If any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority affects or would affect the amount of capital required or
expected to be maintained by any Lender or any Person controlling such Lender,
and such Lender determines (in its sole and absolute discretion) that the rate
of return on its or such controlling Person's capital as a consequence of its
Commitments or the Loans made by such Lender or Letters of Credit issued or
participated in by such Lender or Issuer is reduced to a level below that which
such Lender, Issuing Bank or such controlling Person could have achieved but for
the occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender or Issuer to the Borrower, the Borrower shall
immediately pay directly to such Lender or Issuer additional amounts sufficient
to compensate such Lender or Issuer or such controlling Person for such
reduction in rate of return. A statement of such Lender or Issuing Bank as to
any such additional amount or amounts (including calculations thereof in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrower. In determining such amount, such Lender or Issuing Bank
may use any method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable.
SECTION 4.6. TAXES. All payments by the Borrower of principal of, and interest
on, the Loans and all other amounts payable hereunder shall be made free and
clear of and without deduction for any present or future income, excise, stamp
or franchise taxes and other taxes, fees, duties, withholdings or other charges
of any nature whatsoever imposed by any taxing authority, but excluding
franchise taxes and taxes imposed on or measured by any Lender's net income or
receipts by the jurisdiction under the laws of which each such Lender is
organized or any political subdivision thereof (such non-excluded items being
called "TAXES"). In the event that any withholding or deduction from any payment
to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
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(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such additional
amount or amounts as is necessary to ensure that the net amount actually
received by each Lender will equal the full amount such Lender would have
received had no such withholding or deduction been required (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses) arising therefrom or with respect thereto).
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such Person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had not such Taxes been asserted. A
certificate from any Lender as to the amount of such Taxes that are owing,
absent manifest error, shall be final, conclusive and binding for all purposes.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent for the account of the
respective Lenders the required receipts or other required documentary evidence,
the Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this Section 4.6, a distribution hereunder by the Agent or any
Lender to or for the account of any Lender shall be deemed a payment by the
Borrower.
If any Lender or the Agent receives a refund in respect of any Taxes as
to which the Borrower has paid amounts pursuant to this Section it shall, within
30 days from the date of such receipt, pay such refund to the Borrower (but only
to the extent of additional amounts paid by the Borrower under this Section with
respect to the Taxes giving rise to such refund), net of all reasonable
out-of-pocket expenses of (and all Taxes that may be imposed by virtue of the
receipt of such tax refund by) such Lender or the Agent and without interest
(other than interest, if any, paid by the relevant governmental authority with
respect to such refund); provided, however, that the Borrower, upon the request
of such Lender or the Agent, agrees to promptly repay the amount paid over to
the Borrower (plus penalties, interest or other charges) to such Lender or the
Agent in the event such Lender or the Agent is required to repay such refund to
such governmental authority.
Each Lender that is not a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States (or any jurisdiction thereof), or any estate or trust
that is subject to federal income taxation regardless of the source of its
income (a "Non-U.S. Lender"), shall deliver to the Borrower and the Agent two
copies of either U.S. Internal Revenue Service Form 1001 or Form 4224, or any
subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement. In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other
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provision of this Section 4.6, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this Section that such Non-U.S. Lender is not
legally able to deliver. In addition, nothing contained in this Section 4.6
shall require any Lender to make available any of its tax returns (or any other
information that it deems to be confidential or proprietary).
SECTION 4.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly provided,
all payments by the Borrower pursuant to or in respect of this Agreement, the
Notes, each Letter of Credit or any other Loan Document shall be made by the
Borrower to the Agent for the pro rata account of the Lenders entitled to
receive such payment. All such payments required to be made to the Agent shall
be made, without setoff, deduction or counterclaim, not later than 11:00 a.m.
(New York City time), on the date due, in same day or immediately available
funds, to such account as the Agent shall specify from time to time by notice to
the Borrower. Funds received after that time shall be deemed to have been
received by the Agent on the next succeeding Business Day. The Agent shall
promptly remit in same day funds to each Lender its share, if any, of such
payments received by the Agent for the account of such Lender. All interest and
fees shall be computed on the basis of the actual number of days (including the
first day but excluding the last day) occurring during the period for which such
interest or fee is payable over a year comprised of 360 days (or, in the case of
interest on Base Rate Loans, 365 days or, if appropriate, 366 days). Whenever
any payment to be made shall otherwise be due on a day which is not a Business
Day, such payment shall (except as otherwise required by clause (c) of the
definition of the term "Interest Period" with respect to LIBO Rate Loans) be
made on the next succeeding Business Day and such extension of time shall be
included in computing interest and fees, if any, in connection with such
payment. The Agent is authorized to charge any account maintained by the
Borrower with it for any Obligations owing to it or any of the Lenders.
SECTION 4.8. SHARING OF PAYMENTS. If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Sections
4.3, 4.4, 4.5 and 4.6) in excess of its pro rata share of payments pursuant to
Section 4.7, then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Credit Extensions made by
them (without recourse, representation or warranty) as shall be necessary to
cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender to
the purchase price to the ratable extent of such recovery together with an
amount equal to such selling Lender's ratable share (according to the proportion
of (a) the amount of such selling Lender's required repayment to the purchasing
Lender to (b) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered. The Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including pursuant
to Section 4.9) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 4.9. SETOFF. Each Lender shall, upon the occurrence of any Event of
Default and with the consent of the Required Lenders, have the right to
appropriate and apply to the payment of the Obligations
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owing to it (whether or not then due), and (as security for such Obligations)
the Borrower hereby grants to each Lender a continuing security interest in, any
and all balances, credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with such Lender; provided, however, that any such
appropriation and application shall be subject to the provisions of Section 4.8
(each Lender agreeing promptly to notify the Borrower and the Agent after any
such setoff and application made by such Lender; but the failure to give such
notice shall not affect the validity of such setoff and application). The rights
of each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable law or otherwise) which such
Lender may have.
SECTION 4.10. USE OF PROCEEDS. The Borrower shall (a) apply $32,000,000 of the
proceeds of the Term Loans to (i) pay its purchase price obligations in
connection with the Acquisition, (ii) pay the transaction costs and expenses
incurred by the Borrower in connection herewith and therewith and (iii) repay
the Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule and (b) deposit $5,000,000 of the proceeds of the Term Loans
into the Escrow Account. The proceeds from all other Credit Extensions shall be
applied (a) for working capital corporate purposes of the Borrower and (b) for
issuing Letters of Credit for working capital purposes of the Borrower, except
that the proceeds of any Revolving Loans made on the date of the initial Credit
Extension may also be applied by the Borrower, after the application of all the
Term Loans pursuant to clause (a) of the preceding sentence, to pay for those
matters referred to such clause (a). All the amounts on deposit in the Escrow
Account shall, if they are released to the Borrower as provided in the Escrow
Agreement, be applied to prepay the Subordinated Promissory Note in the
principal amount of $5,000,000, dated as of the date hereof, between the
Borrower, as payor, and Holdings, as payee, and, if they are not released to the
Borrower as provided in the Escrow Agreement, shall be applied to prepay the
Loans as provided in clause (c)(iii) of Section 3.1.2 (except that all such
prepayments of the Term Loans pursuant to clause (c)(iii)(A) of Section 3.1.2
shall be made in the inverse order of the scheduled repayments of the Term Loans
set forth in clause (b) of Section 3.1.2).
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. INITIAL CREDIT EXTENSION. The obligations of the Lenders and, if
applicable, the Issuer to fund the initial Credit Extension shall be subject to
the prior or concurrent fulfillment of each of the conditions precedent set
forth in this Section 5.1 to the satisfaction of the Agent.
SECTION 5.1.1. RESOLUTIONS, ETC. The Agent shall have received from Holdings,
the Borrower and each other Obligor a certificate, dated as of the date of the
initial Credit Extension, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and effect
authorizing the execution, delivery and performance of this Agreement, the Notes
and each other Loan Document to be executed by it;
(b) each Organic Document of the Holdings, the Borrower and each such
Obligor; and
(c) the incumbency and signatures of each officer of Holdings, the
Borrower and each such Obligor authorized to act with respect to this Agreement,
the Notes and each other Loan Document executed by it,
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upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary or Assistant Secretary of
Holdings, the Borrower or any such Obligor canceling or amending such prior
certificate.
SECTION 5.1.2. AGREEMENT. The Agent shall have received, with counterparts for
each Lender, this Agreement duly executed by each Lender, the Agent and an
Authorized Officer of Holdings and the Borrower.
SECTION 5.1.3. DELIVERY OF NOTES. The Agent shall have received, for the account
of each Lender entitled thereto, its Term Note and Revolving Note dated the date
of the initial Credit Extension and duly executed and delivered by an Authorized
Officer of the Borrower.
SECTION 5.1.4. REQUIRED CONSENTS AND APPROVALS. All required consents and
approvals shall have been obtained and be in full force and effect with respect
to the transactions contemplated hereby and the Acquisition from (a) all
relevant governmental authorities and regulatory bodies and (b) any other Person
whose consent or approval the Agent deems necessary or appropriate to effect the
transactions contemplated hereby and by the Acquisition. In addition, all
waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, shall have expired or been terminated, and all notices and filings
(including the relevant Notification and Request Forms) required to have been
delivered pursuant thereto shall have been duly prepared and delivered.
SECTION 5.1.5. CONSUMMATION OF THE ACQUISITION. The Agent shall have received
evidence satisfactory to it that the Purchase Agreement has not been amended,
modified or supplemented without the Lenders' prior written consent; that all
conditions precedent to the consummation of the transactions contemplated by the
Purchase Agreement have been fully satisfied or, with the prior written consent
of the Lenders, waived; that the Acquisition has been consummated in accordance
with all the terms of the Purchase Agreement; and the total purchase price for
the Acquisition shall not exceed $27,000,000 (subject to adjustment as provided
in Section 1(b) of the Acquisition Agreement), which shall be paid from no more
than $13,600,000 in cash, the Holdings' Subordinated Notes referred to in clause
(a) of the definition thereof in the amount of $2,000,000 and the remainder in
common stock of Holdings. In addition, the Borrower shall have delivered or
caused to be delivered to the Agent counterparts for each Lender of the
following (all of which shall be satisfactory to the Agent and each Lender):
(a) Resolutions. Resolutions of the Boards of Directors and
stockholders of each Seller that is a corporation, partnership or similar
entity, and Holdings and the Borrower, each certified by the Secretary or an
Assistant Secretary of each such Seller, Holdings and the Borrower, as the case
may be, duly adopted and in full force and effect on the date of the initial
Credit Extension, authorizing the execution, delivery and performance by each
such Seller, Holdings and the Borrower, as the case may be, of the Purchase
Agreement and all other agreements, documents and instruments being delivered in
connection therewith; and
(b) Certificates. A certificate from an Authorized Officer of the
Borrower to the effect that attached thereto are true and correct copies of the
Purchase Agreement (including all schedules and annexes thereto), each of the
agreements, documents, instruments, opinions, filings, consents and approvals
that have been executed, delivered, furnished or filed pursuant to the Purchase
Agreement and each Operational Agreement.
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SECTION 5.1.6. COLLECTION ACCOUNT AGREEMENTS. All bank accounts maintained by
Holdings, the Borrower or any of their Domestic Subsidiaries that is a party to
the Security Agreement at a financial institution other than the Agent or Fleet
National Bank shall be subject to a Collection Account Agreement in the form of
Exhibit I attached hereto or such other form as may be reasonably acceptable to
the Agent.
SECTION 5.1.7. BORROWING BASE CERTIFICATE. The Agent shall have received, with
counterparts for each Lender, an initial Borrowing Base Certificate from the
Borrower, dated the date of the initial Credit Extension and calculated as of a
recent date satisfactory to the Agent, duly executed and delivered by the chief
financial Authorized Officer of the Borrower. The Borrowing Base Certificate
shall evidence the ability of the Borrower to make Borrowings of Revolving Loans
in an aggregate principal amount of not less than $2,000,000.
SECTION 5.1.8. FINANCIAL INFORMATION, ETC. The Agent shall have received, with
counterparts for each Lender, each of the following (all of which shall be
satisfactory to the Agent and each Lender):
(a) (i) audited consolidated financial statements for Holdings and its
Subsidiaries for its 1995 and 1996 Fiscal Years, (ii) unaudited consolidating
financial statements for Holdings and its Subsidiaries for its 1996 Fiscal Year,
(iii) an audited balance sheet for its 1995 and 1996 Fiscal Years and (iv)
estimated income statements for its 1997 Fiscal Year, prepared in accordance
with GAAP consistently applied and, in the case of clauses (i) and (iii), free
of any Impermissible Qualification;
(b) quarterly consolidated and consolidating unaudited financial
statements for Holdings and its Subsidiaries (including the Borrower and its
Wholly-Owned Subsidiaries) for the nine month period ending September 30, 1997,
certified by the chief financial Authorized Officer of Holdings, prepared in
accordance with GAAP consistently applied and subject to year-end audit
adjustments and the addition of schedules and footnotes at year-end;
(c) with respect to Can-Am, reviewed financial statements for its 1995
and 1996 fiscal years and audited financial statements for its 1997 fiscal year,
in each case prepared in accordance with GAAP consistently applied and, in the
case of the audited financial statements for its 1997 fiscal year, free of any
Impermissible Qualification;
(d) (i) unaudited financial statements for Can-Am for the seven month
period ending December 31, 1997, certified by the chief financial officer of
Can-Am, prepared in accordance with GAAP consistently applied and subject to
year-end audit adjustments and the addition of schedules and footnotes at
year-end, and (ii) the management estimate of financial results for Can-Am for
the twelve month period ending December 31, 1997;
(e) with respect to the Borrower, (i) audited statements of net assets
sold by American Home Products' Xxxxxxxxx Xxxxx Health Care Division and certain
domestic vitamin supplements and consumer health care brands, as of November 30,
1995 and 1996, and related statements of net revenues in excess of direct
expenses and (ii) unaudited income statements for its 1997 Fiscal Year, such
financial statements having been prepared in accordance with GAAP consistently
applied;
(f) monthly unaudited income statements and year-end balance sheets for
the Women's Home Testing product line of Holdings for Holdings' 1997 Fiscal
Year;
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(g) (i) a pro forma balance sheet for the Borrower and its Wholly-Owned
Subsidiaries, including the Women's Home Testing product line of Holdings, and
(ii) a pro forma balance sheet for the Borrower and its Wholly-Owned
Subsidiaries, excluding the Women's Home Testing product line of Holdings, in
each case after giving effect to the consummation of the transactions
contemplated by this Agreement and the other Loan Documents and the consummation
of the Acquisition. Such pro forma balance sheets shall, among other things,
evidence that the Borrower and its Wholly-Owned Subsidiaries have a total
stockholders' equity (i.e., the sum of all assets of the Borrower and its
Wholly-Owned Subsidiaries minus the sum of all liabilities of the Borrower and
its Wholly-Owned Subsidiaries) of not less than $21,000,000;
(h) pro forma financial statements for the Borrower and its
Wholly-Owned Subsidiaries for the period from the Effective Date through
December 31, 2003, after giving effect to the transactions contemplated by this
Agreement and the other Loan Documents and the consummation of the Acquisition,
which financial statements (i) shall be prepared on a monthly basis for its
Fiscal Year ending December 31, 1998, on a quarterly basis for its Fiscal Year
1999 and on an annual basis thereafter and (ii) shall establish, on a pro forma
basis from the Effective Date through December 31, 2003, compliance with the
financial covenants contained in Section 7.2.4, together with a certification by
the chief financial Authorized Officer of the Borrower to the effect that such
pro forma statements have been prepared in good faith based upon assumptions
believed by him to be reasonable at the time such assumptions are made;
(i) a pro forma balance sheet for Holdings and its Subsidiaries (other
than the Borrower and its Wholly-Owned Subsidiaries) after giving effect to the
consummation of the transactions contemplated by this Agreement and the other
Loan Documents and the consummation of the Acquisition; and
(j) projections for Holdings and its Subsidiaries (other than the
Borrower and its Wholly-Owned Subsidiaries) for the period from the Effective
Date through December 31, 2003, after giving effect to the transactions
contemplated by this Agreement and the other Loan Documents and the consummation
of the Acquisition, which financial statements (i) shall be prepared quarterly
for its Fiscal Year ending December 31, 1998 and on an annual basis thereafter
and (ii) shall establish, on a pro forma basis from the Effective Date through
December 31, 2003, compliance with the financial covenants set forth in clause
(b) of Section 7.2.4, together with a certification by the chief financial
Authorized Officer of Holdings to the effect that such pro forma statements have
been prepared in good faith based upon assumptions believed by him to be
reasonable at the time such assumptions are made.
SECTION 5.1.9. CONSENT TO ASSIGNMENT OF OPERATIONAL AGREEMENTS. Each party
(other than the Borrower and its Wholly-Owned Subsidiaries) to an Operational
Agreement referred to in clauses (b) and (c) of the definition thereof shall
have executed a consent in substantially the form of Exhibit D to the Security
Agreement.
SECTION 5.1.10. GUARANTY. The Agent shall have received the Subsidiary Guaranty,
dated as of the date hereof and duly executed by each Subsidiary of Holdings and
the Borrower (other than any Excluded Foreign Subsidiary).
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SECTION 5.1.11. PLEDGED PROPERTY. The Agent shall have received:
(a) the Pledge Agreement, dated as of the date hereof, duly executed by
Holdings, the Borrower and each Subsidiary of Holdings and the Borrower (other
than any Excluded Foreign Subsidiary);
(b) the original certificates evidencing all of the issued and
outstanding shares of capital stock required to be pledged pursuant to the terms
of the Pledge Agreement (other than the outstanding shares of capital stock
which are required to be so pledged as provided in Section 7.1.11), which
certificates shall be accompanied by undated stock powers duly executed in blank
by each relevant pledgor; and
(c) the original promissory notes evidencing intercompany Indebtedness
required to be pledged pursuant to the terms of the Pledge Agreement, duly
endorsed in blank by each relevant pledgor in favor of the Agent.
SECTION 5.1.12. UCC SEARCH RESULTS. The Agent shall have received certified
copies of Uniform Commercial Code Requests for Information or Copies (Form
UCC-11), or a similar search report certified by a party acceptable to the
Agent, dated a date reasonably near (but prior to) the date of the initial
Credit Extension, listing all effective financing statements, tax liens and
judgment liens which name Holdings, the Borrower or any Subsidiary as the debtor
and which are filed in the jurisdictions in which filings are to be made
pursuant to this Agreement and the other Loan Documents, and in such other
jurisdictions as the Agent may reasonably request, together with copies of such
financing statements (none of which (other than financing statements filed
pursuant to the terms hereof in favor of the Agent, if such Form UCC-11 or
search report, as the case may be, is current enough to list such financing
statements) shall cover any of the Collateral).
SECTION 5.1.13. SECURITY AGREEMENTS, FILINGS, ETC. The Agent shall have received
the Security Agreement, dated as of the date hereof, duly executed by Holdings,
the Borrower and each Subsidiary of Holdings and the Borrower (other than Jmar
Xxxx, Inc. and each Excluded Foreign Subsidiary), together with duly completed
and executed U.C.C. financing statements naming Holdings, the Borrower and each
such Subsidiary, as the case may be, as the debtor and the Agent as the secured
party, to be filed under the U.C.C. of all jurisdictions as may be necessary or,
in the opinion of the Agent, desirable to perfect the first priority security
interest of the Agent pursuant to the Security Agreement, together with evidence
satisfactory to the Agent of the filing (or delivery for filing) of appropriate
trademark, copyright and patent security supplements.
SECTION 5.1.14. SOLVENCY CERTIFICATE. The Agent shall have received, with copies
for each Lender, a solvency certificate in substantially the form of Exhibit L
attached hereto, duly executed by the chief financial Authorized Officer of
Holdings dated the date of the initial Credit Extension and expressly permitting
the Agent and the Lenders to rely thereon.
SECTION 5.1.15. CLOSING DATE CERTIFICATE. The Agent shall have received, with
copies for each Lender, a Closing Date Certificate in substantially the form of
Exhibit K attached hereto, duly executed by the chief financial Authorized
Officer of Holdings and the Borrower and dated the date of the initial Credit
Extension, in which certificate Holdings and the Borrower shall agree and
acknowledge that the statements made therein shall be true and correct
representations and warranties of Holdings and the Borrower as of such date. All
documents and agreements appended to such Closing Date Certificate shall be in
form and substance satisfactory to the Agent and the Lenders.
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SECTION 5.1.16. RELIANCE LETTERS. The Agent shall have received reliance letters
or other satisfactory authorization in favor of the Agent and the Lenders from
legal counsel providing the opinions rendered in connection with the
Acquisition, to the effect that the Agent and the Lenders shall be entitled to
rely on such opinions, together with copies of such opinions.
SECTION 5.1.17. EVIDENCE OF INSURANCE. The Agent shall have received evidence of
the insurance coverage required to be maintained pursuant to Section 7.1.4,
which insurance shall have been reviewed by one or more of the Agent's risk
managers and be satisfactory to the same.
SECTION 5.1.18. ENVIRONMENTAL MATTERS. To the extent available, the Agent shall
have received, with copies for each Lender, a certificate signed by an
Authorized Officer and dated as of the date of the initial Credit Extension,
certifying true and correct copies of all environmental assessment reports with
respect to the Borrower, each of its Subsidiaries and their respective property,
all of the foregoing to be satisfactory to the Agent and each of the Lenders.
SECTION 5.1.19. PAYMENT OF OUTSTANDING INDEBTEDNESS, ETC. The Agent shall have
received satisfactory evidence that all the Indebtedness identified in Item
7.2.2(b) ("Indebtedness to be Paid") of the Disclosure Schedule, together with
all interest, all prepayment premiums and other amounts due and payable with
respect thereto, have been paid in full and all obligations with respect thereto
have been terminated, and that all Liens securing payment of any such
Indebtedness have been released. In addition, the Agent shall have received
termination agreements and Uniform Commercial Code Form UCC-3 termination
statements or other instruments as may be suitable or appropriate in connection
with the foregoing.
SECTION 5.1.20. ESCROW AGREEMENT. The Agent shall have received executed
counterparts of the Escrow Agreement, dated as of the date hereof, duly executed
by the Borrower.
SECTION 5.1.21. TAX SHARING AGREEMENT. The Agent shall have received copies for
each Lender of duly executed counterparts of the Tax Sharing Agreement, dated as
of the date hereof, duly executed by Holdings and the Borrower, and the Agent
and each Lender shall be satisfied with the terms of the Tax Sharing Agreement
and all tax matters relating to the Transaction, Holdings, the Borrower and
their Subsidiaries.
SECTION 5.1.22. OPINIONS OF COUNSEL. The Agent shall have received legal
opinions, dated the date of the initial Credit Extension and addressed to the
Agent and all the Lenders, from Xxxxx, Xxxx & Xxxxx LLP, counsel to Holdings and
the Borrower, and Ohio counsel to Jmar Xxxx, Inc., substantially in the form of
Exhibits P-1 and P-2 hereto.
SECTION 5.1.23. BAILEE WAIVERS. If any Inventory of Holdings, the Borrower or
any of their Subsidiaries is located in a public warehouse or other facility
under the control of a third Person, each such Person shall have executed a
bailee waiver that is satisfactory to the Agent.
SECTION 5.1.24. AGENT'S CLOSING FEES, EXPENSES, ETC. The Agent shall have
received for its own account, and for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to Sections 3.3
and, if then invoiced, 10.3.
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SECTION 5.1.25. OTHER CLOSING EXPENSES. The Agent shall have received a
breakdown, in reasonable detail, of all expensed and estimated fees and expenses
payable in connection with the Acquisition and the transactions contemplated
hereby, and the same shall be satisfactory to the Agent.
SECTION 5.2. ALL CREDIT EXTENSIONS. The obligation of each Lender and Issuer to
make any Credit Extension (including the initial Credit Extension) shall be
subject to the fulfillment of each of the conditions precedent set forth in this
Section 5.2 to the satisfaction of the Agent:
SECTION 5.2.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before and
after giving effect to any Credit Extension:
(a) the representations and warranties set forth in Article VI and in
the other Loan Documents shall be true and correct in all material respects with
the same effect as if then made (unless stated to relate solely to an earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date);
(b) the sum of the aggregate outstanding principal amount of all
Revolving Loans and aggregate amount of Letter of Credit Outstandings does not
exceed the lesser of (i) the Revolving Loan commitment Amount or (ii) the then
existing Borrowing Base Amount;
(c) the aggregate amount of Letter of Credit Outstandings does not
exceed the lesser of (i) the Revolving Loan Commitment Amount or (ii)
$1,000,000; and
(d) no Default or Event of Default shall have then occurred and be
continuing.
SECTION 5.2.2. CREDIT EXTENSION REQUEST, ETC. The Agent shall have
received a Borrowing Request, if Loans are being requested, or an Issuance
Request, if a Letter of Credit is being requested or extended, in each case as
herein provided. Each of the delivery of a Borrowing Request or Issuance Request
and the acceptance by the Borrower of the proceeds of such Credit Extension
shall constitute a representation and warranty by the Borrower that on the date
of such Credit Extension (both immediately before and after giving effect to
such Credit Extension and the application of the proceeds thereof) the
statements made in Section 5.2.1 are true and correct.
SECTION 5.2.3. SATISFACTORY LEGAL FORM. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Obligors shall be satisfactory in form and substance
to the Agent, the Lenders and their counsel, and the Agent, the Lenders and
their counsel shall have received all information, approvals, opinions,
documents or instruments as the Agent, the Lenders or their counsel may
reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, each Issuer and the Agent to
enter into this Agreement and to make Credit Extensions hereunder, Holdings and
the Borrower represents and warrants for itself (as applicable) to the Agent,
each Issuer and each Lender as set forth in this Article VI.
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SECTION 6.1. ORGANIZATION, ETC. Holdings, the Borrower and each of their
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business requires such qualification
(except where the failure to be so qualified would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect or impair in
any material respect the ability of the Agent to enforce its rights hereunder),
and has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement, the Notes and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business substantially
as currently conducted by it.
SECTION 6.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution, delivery
and performance by Holdings and the Borrower of this Agreement, the Notes and
each other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Obligor of each Loan Document executed or
to be executed by it, are within Holdings', the Borrower's and each such
Obligor's corporate powers, have been duly authorized by all necessary corporate
action, and do not
(a) contravene or result in a default under Holdings', the Borrower's
or any such Obligor's Organic Documents;
(b) contravene or result in a default under any law or governmental
regulation or court decree or order binding on Holdings, the Borrower or any
such Obligor;
(c) contravene (i) any material provision of any indenture, agreement
or other instrument to which Holdings, the Borrower or any such Obligor is a
party or by which any of them or any of their property is or may be bound or
(ii) be in conflict with, result in a breach of or constitute (along or with
notice or lapse of time or both) a default under, or give rise to any right to
accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other instrument; or
(d) result in, or require the creation or imposition of, any Lien on
Holdings', the Borrower's or any such Obligor's properties.
SECTION 6.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or other Person is required for
(a) the due execution, delivery or performance by Holdings, the
Borrower or any other Obligor of this Agreement, the Notes or any other Loan
Document to which it is a party;
(b) the grant by Holdings, the Borrower of the security interests,
pledges and Liens granted by the Loan Documents; or
(c) for the perfection of or the exercise by the Agent of its rights
and remedies under this Agreement or any other Loan Document.
SECTION 6.4. VALIDITY, ETC. This Agreement constitutes, and the Notes and each
other Loan Document executed by Holdings and the Borrower will, on the due
execution and delivery thereof, constitute, the
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legal, valid and binding obligations of Holdings and the Borrower enforceable in
accordance with their respective terms; and each Loan Document executed pursuant
hereto by each other Obligor will, on the due execution and delivery thereof by
such Obligor, be the legal, valid and binding obligation of such Obligor
enforceable in accordance with its terms, subject in each case to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally, and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law). Each of the Loan Documents which purports to create a security
interest creates a valid first priority registered or possessory security
interest in the Collateral subject thereto subject (in the case of
non-possessory security interests) only to Liens permitted by Section 7.2.3,
securing the payment of the Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest have been
duly taken (except with respect to the UCC-1 financing statements to be filed
pursuant to Section 5.1.13, which UCC-1 financing statements shall be filed
promptly following the date of the initial Credit Extension).
SECTION 6.5. FINANCIAL INFORMATION. The balance sheets and financial statements
of Holdings and the Borrower delivered pursuant to Section 5.1.8 and Section
7.1.1 have each been or will be, as the case may be, prepared in accordance with
GAAP consistently applied and do or will, as the case may be, present fairly the
financial condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended.
SECTION 6.6. NO MATERIAL ADVERSE CHANGE.
(a) There has been no material adverse change in the condition
(financial or otherwise), operations, assets, business, properties or prospects
of Holdings and its Subsidiaries (other than the Borrower and its Wholly-Owned
Subsidiaries), taken as a whole, since December 31, 1996, the Borrower since
December 31, 1997 and Can-Am since May 31, 1997, in each case as reflected in
the applicable financial statements delivered pursuant to Section 5.1.8.
(b) From and after the date of the initial Credit Extension, there has
been no material adverse change in the condition (financial or otherwise),
operations, assets, business, properties or prospects of Holdings and its
Subsidiaries, taken as a whole, or the Borrower and its Wholly-Owned
Subsidiaries, taken as a whole, as reflected in the pro forma balance sheet
delivered pursuant to clause (e) of Section 5.1.8.
SECTION 6.7. LITIGATION, LABOR CONTROVERSIES, ETC. There is no pending or, to
the knowledge of Holdings or the Borrower, threatened litigation, action,
proceeding or labor controversy affecting Holdings, the Borrower or any of their
Subsidiaries, or any of their respective properties, businesses, assets or
revenues, (a) with respect to this Agreement, the Notes or any other Loan
Document or (b) which could reasonably be expected to have a Material Adverse
Effect. The hours worked by and payments made to employees of Holdings, the
Borrower and their Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or other law dealing
with such matters. The consummation of the Acquisition will not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which the Borrower or any such Subsidiary
is bound.
SECTION 6.8. SUBSIDIARIES. As of the date of the initial Credit Extension, the
authorized capital stock or the other equity interests in Holdings, the
Borrower, their Subsidiaries and their Affiliates, including the holders
thereof, is set forth in Item 6.8 ("Initial Capitalization") of the Disclosure
Schedule, and Holdings will not have any additional Subsidiaries after the date
of the initial Credit Extension except to
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the extent that it has complied with Section 7.1.9. The Borrower will not
establish after the Effective Date (a) any additional Subsidiaries without (i)
obtaining the prior consent of the Agent and (ii) complying with Section 7.1.9
or (b) make any Investments in any other Person without complying with the
applicable terms of this Agreement. The shares of capital stock or other
ownership interests so indicated on the Disclosure Schedule are fully paid and
non-assessable and are owned by the Borrower, directly or indirectly, free and
clear of all Liens (other than Liens in favor of the Agent pursuant to the Loan
Documents).
SECTION 6.9. OWNERSHIP OF PROPERTIES. Holdings, the Borrower and each of their
Subsidiaries has good and marketable title to all of its properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges or claims (including infringement claims with respect to
patents, trademarks, copyrights and the like) except as permitted pursuant to
Section 7.2.3. Holdings, the Borrower and each of their Subsidiaries has
complied in all material respect with all obligations under all material leases
to which it is a party and all such leases are in full force and effect.
Holdings, the Borrower and each of their Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
SECTION 6.10. TAXES. Holdings, the Borrower and each of their Subsidiaries have
filed all tax returns and reports required by law to have been filed by it and
have paid all taxes and governmental charges thereby shown to be owing, except
any such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
SECTION 6.11. PENSION AND BENEFIT PLANS. Neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made with respect to any Pension Plan, and
each Pension Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single Employer Plan has
occurred, and no Lien in favor of the PBGC or a Pension Plan has arisen during
such five-year period. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Pension
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made, exceed the value of the assets of such Pension Plan
allocable to such accrued benefits by a material amount. Neither Holdings, the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan which has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither Holdings,
the Borrower nor any Commonly Controlled Entity would become subject to any
material liability under ERISA if the Borrower or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this representation is
made.
SECTION 6.12. ENVIRONMENTAL WARRANTIES. Except as set forth in Item 6.12
("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying groundwater) owned,
operated or leased by Holdings, the Borrower or any of their Subsidiaries have
been, and continue to be, owned, operated or leased by Holdings, the Borrower
and their Subsidiaries in compliance with all Environmental Laws, except for
such violations that, singly or in the aggregate, would not reasonably be
expected to result in a liability exceeding a Material Environmental Amount;
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(b) there have been no past, and there are no pending or threatened
(i) claims, complaints, notices or requests for information
received by Holdings, the Borrower or any of their Subsidiaries with respect to
any alleged violation of any Environmental Law that, singly or in the aggregate,
may reasonably be expected to result in a liability exceeding a Material
Environmental Amount; or
(ii) complaints, notices or inquiries to Holdings, the
Borrower or any of their Subsidiaries regarding potential liability under any
Environmental Law that, singly or in the aggregate, may reasonably be expected
to result in a liability exceeding a Material Environmental Amount;
(c) there have been no Releases of Hazardous Materials at, on or under
any property now or previously owned, operated or leased by Holdings, the
Borrower or any of their Subsidiaries that, singly or in the aggregate, has, or
may reasonably be expected to result in having, a liability exceeding a Material
Environmental Amount;
(d) Holdings, the Borrower and their Subsidiaries have been issued and
are in material compliance with all permits, certificates, approvals, licenses
and other authorizations relating to environmental matters and necessary or
desirable for their businesses;
(e) no property now or previously owned, operated or leased by
Holdings, the Borrower or any of their Subsidiaries is listed or (to the best of
their knowledge) proposed for listing on the National Priorities List pursuant
to CERCLA, on the CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or previously
owned or leased by Holdings, the Borrower or any of their Subsidiaries;
(g) neither Holdings, the Borrower nor any of their Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to any
location which is listed or (to the best of their knowledge) proposed for
listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on
any similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to claims against
Holdings, the Borrower or any such Subsidiary thereof for any remedial work,
damage to natural resources or personal injury (including claims under CERCLA)
which, singly or in the aggregate, may reasonably be expected to result in a
liability exceeding a Material Environmental Amount;
(h) there are no polychlorinated biphenyls or friable asbestos present
at any property now or previously owned, operated or leased by Holdings, the
Borrower or any of their Subsidiaries that, singly or in the aggregate, may
reasonably be expected to result in a liability exceeding a Material
Environmental Amount; and
(i) no conditions exist at, on or under any property now or previously
owned, operated or leased by Holdings, the Borrower or any of their Subsidiaries
which, with the passage of time, or the giving of notice or both, would give
rise to liability under any Environmental Law which would reasonably be expected
to have a Material Environmental Amount.
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SECTION 6.13. INVENTORY.
(a) All Inventory of Holdings, the Borrower and their Domestic
Subsidiaries are located on or is in transit to the premises described on Item
6.13(a) ("Inventory Locations") of the Disclosure Schedule, as such Item may
hereafter be supplemented from time to time. All Inventory located on any
property leased to Holdings, the Borrower or any of their Domestic Subsidiaries
or in or with, as the case may be, a public warehouse or other third party is
subject to a landlord or bailee waiver, as applicable, and appropriately
completed and filed UCC-1 financing statements, in each case to which the Agent
has confirmed to the Borrower is in form and substance acceptable to it.
(b) The Borrower shall at all times hereafter keep correct and accurate
records itemizing and describing generally the kind, type and quantity of
Inventory, the Borrower's cost therefor and daily withdrawals therefrom and
additions thereto, all of which records shall be available during the Borrower's
usual business hours at the request of the Agent.
SECTION 6.14. ACCURACY OF INFORMATION.
(a) All factual information heretofore or contemporaneously furnished
by or on behalf of Holdings, the Borrower, any of their Subsidiaries in writing
to the Agent or any Lender for purposes of or in connection with this Agreement
or any transaction contemplated hereby or by the Acquisition is, and all other
such factual information hereafter furnished by or on behalf of Holdings, the
Borrower, any of their Subsidiaries and any of their Affiliates to the Agent or
any Lender will be, true and accurate in every material respect (taken as a
whole) on the date as of which such information is dated or certified and, as to
information heretofore delivered, as of the date of the initial Credit
Extension, and such information does not, or shall not, as the case may be,
taken as a whole omit to state any material fact necessary to make such
information not misleading.
(b) All written information prepared by any consultant or professional
advisor on behalf of Holdings, the Borrower or any of its Subsidiaries which was
furnished to the Agent or any Lender in connection with the preparation,
execution and delivery of this Agreement (including, without limitation, the
Memorandum), has been reviewed by Holdings or the Borrower, as the case may be,
and nothing has come to the attention of Holdings or the Borrower in the context
of such review which would lead it to believe that such information or the
assumptions on which such information is based, taken as a whole (together with
the information referred to in clause (a)), is not true and correct in all
material respects or that such information, taken as a whole, omits to state any
material fact necessary to make such information not misleading in any material
respect.
(c) Insofar as any of the information described above includes
assumptions, estimates, projections or opinions, Holdings or the Borrower, as
the case may be, has reviewed such matters and nothing has come to the attention
of Holdings or the Borrower, as the case may be, in the context of such review
which would lead it to believe that such matters, taken as a whole, were not or
are not true and correct in all material respects or that such assumptions,
estimates, projections or opinions omit to state any material fact necessary to
make such assumptions, estimates, projections or opinions not reasonable or not
misleading in any material respect. All projections and estimates have been
prepared in good faith on the basis of reasonable assumptions and represent the
best estimate of future performance by the party supplying the same at the time
such assumptions were made.
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SECTION 6.15. PURCHASE AGREEMENT. All representations and warranties by Holdings
and the Borrower in the Purchase Agreement are true and correct in all material
respects as of the date hereof as if made on the date hereof and, to the best
knowledge of Holdings and the Borrower, all the representations and warranties
by the Sellers in the Purchase Agreement are true and correct in all material
respects as of the date of the initial Credit Extension.
SECTION 6.16. ABSENCE OF DEFAULT. Neither Holdings, the Borrower nor any of
their Subsidiaries is in default in the payment of (or in the performance of any
obligation applicable to) any Indebtedness, or in violation of any law or
governmental regulation or court decree or order in any material respect.
SECTION 6.17. REGULATIONS G, U AND X. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
"margin stock". None of the proceeds of any Loan or any Letter of Credit will be
used for the purpose of, or be made available by the Borrower or any of its
Subsidiaries in any manner to any other Person to enable or assist such Person
in, directly or indirectly purchasing or carrying "margin stock". Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section 6.17 with such meanings.
SECTION 6.18. GOVERNMENT REGULATION. Neither Holdings, the Borrower nor any of
their Subsidiaries is an "investment company" nor a "company controlled by an
investment company" within the meaning of the Investment Company Act of 1940, as
amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 6.19. SOLVENCY. Holdings and its Domestic Subsidiaries (other than the
Borrower and its Wholly-Owned Subsidiaries), taken as a whole, and the Borrower
and its Wholly-Owned Subsidiaries, taken as a whole, are, and after giving
effect to the Acquisition and the incurrence of all Indebtedness and obligations
being incurred in connection herewith and therewith pursuant to the Loan
Documents or otherwise will be, and will continue to be, Solvent.
SECTION 6.20. INSURANCE. Item 6.20 ("Insurance") of the Disclosure Schedule sets
forth a true, complete and correct description of all insurance maintained by
Holdings, the Borrower and their Subsidiaries as of the date of the initial
Credit Extension. As of such date, such insurance is in full force and effect
and all premiums have been duly paid.
SECTION 6.21. SENIOR INDEBTEDNESS, ETC. All principal of, and accrued interest
owing on, all the Credit Extensions and all other Obligations owing hereunder
and under the other Loan Documents are "Senior Indebtedness," "Senior Debt" and
"Superior Debt", as applicable, under the Holdings' Subordinated Notes and the
Borrower Subordinated Notes. Holdings and the Borrower have duly executed and
delivered each Holdings' Subordinated Note and the Borrower Subordinated Note,
as the case may be, and each such Note constitutes the legal, valid and binding
obligation of Holdings and the Borrower, as the case may be, enforceable against
Holdings and the Borrower, as the case may be, in accordance with its terms
subject, as to enforcement, only to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally. Holdings and the Borrower have delivered true and complete copies of
each Holdings' Subordinated Note and Borrower Subordinated Note, as the case may
be, to the Lenders, together with all amendments, waivers and other changes
thereto. Notwithstanding any bankruptcy, insolvency, reorganization, moratorium
or similar proceeding in respect of Holdings or
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the Borrower, at all times (i) the subordination provisions of each Holdings'
Subordinated Note and Borrower Subordinated Note will be enforceable against the
holders thereof by the Agent and the Lenders, (ii) all Obligations, including
the Obligations to pay principal of and interest on the Credit Extensions,
constitute "Senior Indebtedness", "Senior Debt" and "Superior Debt", as
applicable, as defined in each Holdings' Subordinated Note and Borrower
Subordinated Note, as applicable, and all such Obligations will be entitled to
the benefits of subordination created by the Holdings' Subordinated Notes and
(iii) all payments of principal of or interest on each Holdings' Subordinated
Note and Borrower Subordinated Note made by Holdings or the Borrower, as the
case may be, from the liquidation of its property will be subject to such
subordination provisions. At the time of the execution and delivery of each
Holdings' Subordinated Note and Borrower Subordinated Note, the same was duly
registered or qualified under all applicable United States Federal and state
securities laws or exempt therefrom. Holdings and the Borrower acknowledge that
each of the Agent and Lender is entering into this Agreement, and has extended
the Loans and other Credit Extensions, in reliance upon the subordination
provisions contained in each Holdings' Subordinated Note and Borrower
Subordinated Note and the representations and warranties made pursuant to this
Section.
SECTION 6.22. OPERATIONAL AGREEMENTS. The agreements identified in the
definition "Operational Agreements" are all material agreements, as of the date
of the initial Credit Extension, with respect to the Borrower or its
Subsidiaries relating to the provision of behalf of the Borrower or its
Subsidiaries of management, supply of product, distribution, marketing or
manufacturing services, which services the subject of such agreements could not
be readily replaced (without disrupting in any material respect the business or
operations of the Borrower or its Subsidiaries) within a reasonable period of
time by another Person providing such services at a price and quality reasonably
comparable to the price and quality such services are provided on the date of
the initial Credit Extension.
ARTICLE VII
COVENANTS
SECTION 7.1. AFFIRMATIVE COVENANTS. Holdings and the Borrower agree for itself
with the Agent, each Issuer and each Lender that, until all Commitments have
terminated and all Obligations have been paid in cash and performed in full,
Holdings and the Borrower will (to the extent applicable) perform the
obligations set forth in this Section 7.1.
SECTION 7.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. Holdings and the
Borrower will (to the extent applicable) furnish, or will cause to be furnished,
to each Lender and the Agent copies of the following financial statements,
reports, notices and information:
(a) as soon as available and in any event within 30 days after the end
of each of Fiscal Month of the Borrower, consolidated and consolidating
unaudited balance sheets of the Borrower and its consolidated Subsidiaries as of
the end of such Fiscal Month and its consolidated and consolidating unaudited
statements of earnings and cash flow of the Borrower and its consolidated
Subsidiaries for such Fiscal Month and for the period commencing at the end of
the previous Fiscal Year of the Borrower and ending with the end of such Fiscal
Month, together with (i) comparable information adjusted to reflect any changes
at the close of and for the corresponding Fiscal Month for the prior Fiscal Year
and for the corresponding portion of such Fiscal Year and (ii) a comparison of
such financial condition with the projections for the applicable period provided
under clause (j), in each case certified by the chief financial Authorized
Officer of the Borrower as fairly presenting the financial position of the
Borrower and its
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consolidated Subsidiaries as of the date thereof and for the period then ended,
subject to normal year-end adjustments and the addition of notes and schedules
at year-end;
(b) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower,
consolidated and consolidating unaudited balance sheets of the Borrower and its
consolidated Subsidiaries as of the end of such Fiscal Quarter and unaudited
consolidated and consolidating statements of earnings and cash flow of the
Borrower and its consolidated Subsidiaries for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year of the Borrower and
ending with the end of such Fiscal Quarter, together with (i) comparable
information adjusted to reflect any changes at the close of and for the
corresponding Fiscal Quarter for the prior Fiscal Year and for the corresponding
portion of such Fiscal Year and (ii) a comparison of such financial condition
with the projections for the applicable period provided under clause (j), in
each case certified by the chief financial Authorized Officer of the Borrower as
fairly presenting the financial position of the Borrower and its consolidated
Subsidiaries as of the date thereof and for the period then ended, subject to
normal year-end adjustments and the addition of notes and schedules at year-end;
(c) as soon as available and in any event within 90 days after the end
of each Fiscal Year of the Borrower, a copy of the annual audit report for such
Fiscal Year for the Borrower and its Subsidiaries, including therein
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and consolidated and
consolidating statements of earnings and consolidated statements of cash flow of
the Borrower and its Subsidiaries for such Fiscal Year, in each case certified
(without any Impermissible Qualification) in a manner acceptable to the Agent
and the Required Lenders by Xxxxxx Xxxxxxxx LLP or other independent public
accountants acceptable to the Agent and the Required Lenders, together with a
separate certificate (which may be limited to accounting matters and disclaim
any responsibility for legal interpretation) from such accountants containing a
computation of, and showing compliance with, each of the financial ratios and
restrictions contained in clause (a) of Section 7.2.4 and to the effect that, in
making the examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default or Event of Default that
has occurred and is continuing, or, if they have become aware of such Default or
Event of Default, describing such Default or Event of Default and the steps, if
any, being taken to cure it, and together with a certificate, executed by the
chief financial Authorized Officer of the Borrower, showing (in reasonable
detail and with appropriate calculations and computations in all respects
satisfactory to the Agent) the calculation of Excess Cash Flow; provided, that
the consolidating balance sheets and financial statements referred to above are
not required to be audited;
(d) concurrently with the delivery of the financial statements pursuant
to clauses (b) and (c), a certificate from the chief financial Authorized
Officer of the Borrower that, to the best of his knowledge, each Obligor during
the period covered by such financial statements has observed or performed all of
its covenants and other agreements contained in this Agreement and the other
Loan Documents required to be observed, performed or satisfied by it, and that
such Authorized Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate;
(e) as soon as available and in any event within 45 days after the end
of each Fiscal Quarter of the Borrower and Holdings, as the case may be, (a) a
Compliance Certificate executed by the chief financial Authorized Officer of the
Borrower and (b) a Holdings' Compliance Certificate executed by the chief
financial Authorized Officer of Holdings, showing in each case (in reasonable
detail and with appropriate calculations and computations in all respects
satisfactory to the Agent) compliance with the applicable financial covenants
set forth in Section 7.2.4 and otherwise herein;
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(f) as soon as possible and in any event within three Business Days
after the occurrence of each Default, a statement of an Authorized Officer of
the Holdings or the Borrower, as the case may be, setting forth details of such
Default and the action which Holdings or the Borrower has taken and proposes to
take with respect thereto;
(g) as soon as possible and in any event within three days after (i)
the occurrence of any adverse development with respect to any litigation,
action, proceeding, or labor controversy described in Section 6.7 or (ii) the
commencement of any labor controversy, litigation, action, proceeding of the
type described in Section 6.7, notice thereof by an Authorized Officer of
Holdings or the Borrower, as the case may be, and copies of all documentation
relating thereto;
(h) concurrently after the sending or filing thereof, copies of (i) all
reports and documents which Holdings, the Borrower or any of their Subsidiaries
sends to its security holders generally and (ii) all reports, financial
statements and registration statements which Holdings, the Borrower or any of
their Subsidiaries files with the Securities Commission or any securities
exchange, except that neither Holdings nor the Borrower shall be required to
deliver any of the foregoing which has previously been delivered hereunder;
(i) within 15 days after the end of each Fiscal Month of the Borrower,
a Borrowing Base Certificate calculated as of the last day of the immediately
preceding Fiscal Month, and executed by the chief financial Authorized Officer
of the Borrower;
(j) promptly when available and, in any event, within 30 days prior to
the last day of each Fiscal Year of the Borrower, a budget in form and scope
satisfactory to the Agent for the Borrower for its next succeeding Fiscal Year
(including monthly consolidated income statements and quarterly consolidated
balance sheets and cash flows) which projections shall be accompanied by a
certificate of the chief financial Authorized Officer of the Borrower stating
that such projections are based on reasonable estimates, information and
assumptions and that such Authorized Officer has no reason to believe that such
projections are incorrect or misleading in any material respect;
(k) concurrently with any delivery under clause (c), the final
management letter,if any, prepared by the independent public accountants who
prepared the delivered financial statements with respect to internal audit and
financial controls of the Borrower and its Subsidiaries;
(l) as soon as possible, all purchase price adjustments that are made
pursuant to the Purchase Agreement;
(m) within 15 days after the end of each Fiscal Month of the Borrower,
an aging schedule of Receivables and a schedule of Inventory designations, all
in a form that is satisfactory to the Agent;
(n) promptly after the receipt thereof, copies of any notice of
non-payment or underpayment of taxes or other governmental charges by Holdings'
or the Borrower that is received from any relevant governmental authority;
(o) promptly following the receipt, and concurrently with the delivery
of, all material notices under any Operational Agreement, any Borrower
Subordinated Note or any Holdings' Subordinated Note; and
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(p) such other information respecting the condition or operations,
financial or otherwise, of Holdings, the Borrower or any of their Subsidiaries
as any Lender through the Agent may from time to time reasonably request in
connection with the performance of their obligations hereunder, including, with
respect to the Borrower, establishing the eligibility of the Accounts comprising
the Eligible Accounts and the eligibility of the Inventory comprising the
Eligible Inventory included in each Borrowing Base Certificate delivered
pursuant to clause (i).
SECTION 7.1.2. COMPLIANCE WITH LAWS, ETC. Holdings and the Borrower will, and
will cause each of their Subsidiaries to, comply in all material respects with
all governmental rules and regulations and all other material applicable laws,
rules, regulations and orders, such compliance to include (without limitation):
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation in any jurisdiction where Holdings, the
Borrower or any of their Subsidiaries have assets or conduct business, except
where failure to maintain and preserve such existence or qualification which
would not reasonably be expected to have a Material Adverse Effect; and
(b) the payment, before the same become delinquent, of all (i) taxes,
assessments and governmental charges imposed upon it or upon its property and
(ii) all lawful claims for labor, materials and supplies or otherwise that, if
unpaid, could reasonably be expected to give rise to a Lien upon any of their
properties, except to the extent being diligently contested in good faith by
appropriate proceedings which suspend collection of the contested obligation,
tax, assessment or charge and enforcement of a Lien and for which adequate
reserves in accordance with GAAP shall have been set aside on its books.
SECTION 7.1.3. MAINTENANCE OF PROPERTIES. Holdings and the Borrower will, and
will cause each of their Subsidiaries to, maintain, preserve, protect and keep
its properties in good repair, working order and condition, and make necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
SECTION 7.1.4. INSURANCE.
(a) Holdings and the Borrower shall maintain, and shall cause each of
their Subsidiaries to maintain insurance policies and coverage with respect to
all their property and assets at least as expansive as set forth on Item 6.20
("Insurance") of the Disclosure Schedule and as may be required pursuant to
clause (g) of Section 7.1.11, and, in any event, to such extent and covering
such risks as is customary for companies in sound financial condition in the
same or similar businesses and operations and in the same or similar locations.
In addition, the Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain such other additional insurance coverage in such
amounts and with respect to such risks as the Agent or the Lenders may
reasonably request from time to time. All such insurance shall be provided (i)
by insurers authorized by Lloyds of London to underwrite such risks, (ii) by
insurers having an A.M. Best policyholders rating of not less than A or (iii) by
such other insurers as the Agent may approve in writing.
(b) All premiums on insurance policies required under this Section
shall be paid by Holdings or the Borrower, as applicable. All insurance policies
relating "key man" life insurance, business interruption and any loss or damage
sustained in respect of any item constituting a part of the Collateral shall
contain a loss payable endorsement, in form and substance satisfactory to the
Agent, in favor of the Agent. All insurance policies relating to general
liability, umbrella and excess insurance coverages shall
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contain an additional insured endorsement, in form and substance satisfactory to
the Agent, in favor of the Agent. All such insurance policies shall provide
that:
(i) neither Holdings, the Borrower, any of their Subsidiaries,
the Agent, the Issuers or any of the Lenders shall be a coinsurer thereunder;
and
(ii) such insurance shall not be affected by any unintentional
act or negligence or representation or warranty on the part of Holdings, the
Borrower or any of their Subsidiaries or other owner of the policy or the
property described in such policy.
All such insurance policies shall provide that the insurer shall, simultaneously
with the delivery to Holdings, the Borrower or any of their Subsidiaries of any
notice under such policy, deliver to the Agent a copy of such notice. All such
insurance policies and loss payable clauses shall provide that they may not be
cancelled, amended or terminated unless the Agent is given at least the same
number of days' notice that the insurance company which issued such policies is
required to give Holdings, the Borrower or any of their Subsidiaries, but in no
event less than 30 days' prior written notice.
(c) Holdings and the Borrower shall provide or cause to be provided to
the Agent and to its insurance consultant (or any agent, officer or employee of
the Agent) such other information relating to its insurance coverage as may be
reasonably requested by the Agent. The insurance consultant (through its
officers or employees) shall have the right to visit Holdings' and the
Borrower's offices, upon reasonable prior notice during usual business hours, to
inspect the insurance policies provided for herein. The reasonable fees, costs
and expenses of the insurance consultant shall be paid for by Holdings and the
Borrower, as the case may be.
(d) If no Default or Event of Default has occurred and is continuing,
Holdings, the Borrower and their Subsidiaries may, during the five Business Day
period following receipt by the Agent of any proceeds of insurance that has been
paid on account of the loss or damage to any Collateral, apply the same to
repair, restore or replace the asset or property on account of which such
proceeds of insurance were paid; provided, however, that in the case of the
Borrower and its Wholly-Owned Subsidiaries if such amount is $200,000 or greater
such proceeds may only be reinvested with the consent of the Agent. If Holdings
or the Borrower desire to so apply such insurance proceeds it shall notify the
Agent within five Business Days after receipt by the Agent of any such insurance
proceeds of its desire to do so and (i) described in reasonable detail the
nature of such loss or damage and (ii) include a statement that Holdings, the
Borrower or one or more of its Subsidiaries, as the case may be, has a
reasonable and good faith intention to apply such insurance proceeds within 60
days of its receipt to the repair, replacement or restoration of such lost or
damaged property. To the extent that Holdings or the Borrower does not send the
notice referred to in the preceding sentence, the relevant proceeds of insurance
shall constitute Net Insurance Proceeds and shall be applied by the Agent as
mandatory prepayment of the Loans pursuant to Section 3.1.2. In addition, to the
extent Holdings or the Borrower sends such notice but does not enter into a
binding agreement to apply such insurance proceeds for the repair, replacement
or restoration of such property or asset within 60 days after the receipt
thereof from the Agent, all of such unutilized insurance proceeds shall also
constitute Net Insurance Proceeds and be applied as a mandatory prepayment of
the Loans pursuant to Section 3.1.2. All proceeds of insurance paid on account
of the loss or damage to any Collateral of the Borrower or any of its
Wholly-Owned Subsidiaries in an amount exceeding $200,000 (unless the Agent
authorizes otherwise) or during the continuance of any Default or Event of
Default shall be retained by the Agent and immediately constitute Net Insurance
Proceeds to be applied as a mandatory prepayment of the Loans pursuant to
Section 3.1.2.
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(e) Following the occurrence and during the continuance of any Event of
Default, if Holdings, the Borrower or any of their Subsidiaries fail to maintain
any of the policies of insurance required by this Section the Agent may (but
shall not be required) at the cost and expense of Holdings, the Borrower and
their Subsidiaries to obtain and maintain such policies of insurance, pay the
related premiums and take such other action as it deems reasonably advisable.
SECTION 7.1.5. BOOKS AND RECORDS; ACCOUNTS.
(a) Holdings and the Borrower will, and will cause each of their
Subsidiaries to, keep books and records which accurately reflect all of its
business affairs and transactions.
(b) Holdings and the Borrower will, and will cause each of their
Subsidiaries to, permit the Agent and each Lender or any of their respective
representatives (including outside auditors), at reasonable times and intervals
and upon reasonable notice, to visit all of its offices, to discuss its
financial matters with its officers and independent public accountant (and
Holdings and the Borrower hereby authorize such independent public accountant to
discuss Holding's and the Borrower's financial matters with each Lender or its
representatives whether or not any representative of Holdings or the Borrower,
as the case may be, is present) and to examine (and, at the expense of the
Borrower, copy extracts from) and conduct audits of any of its inventory,
receivables, other assets and books or other corporate records (including
computer records).
(c) Holdings and the Borrower, as the case may be, shall pay any fees
of such independent public accountant incurred in connection with the Agent's or
(during the continuance of any Default or Event of Default) any Lender's
exercise of its rights pursuant to this Section. The Agent, in its sole
discretion and at the sole expense of Holdings and the Borrower, as the case may
be, may conduct such audits and examinations as the Agent reasonably deems
necessary or advisable.
SECTION 7.1.6. ENVIRONMENTAL COVENANT.
(a) Holdings and the Borrower will, and will cause each of their
Subsidiaries, lessees and other Persons occupying any of its properties to,
(i) use and operate all of its facilities and properties in
compliance with all Environmental Laws, keep all permits, approvals,
certificates, licenses and other authorizations relating to environmental
matters in effect and remain in compliance therewith, and handle all Hazardous
Materials in compliance with all applicable Environmental Laws, except where the
failure to do any of the foregoing would not, singly or in the aggregate,
reasonably be expected to result in a liability exceeding a Material Environment
Amount;
(ii) take all such actions as are necessary and appropriate so
that no liability with respect to the Environmental Laws may arise which could
reasonably be expected to result in a liability exceeding a Material Environment
Amount;
(iii) immediately notify the Agent and provide copies upon
receipt of all written claims, complaints, notices or inquiries relating to the
condition of its facilities and properties or compliance with Environmental
Laws, and shall promptly cure and have dismissed with prejudice to the
satisfaction of the Agent any actions and proceedings relating to compliance
with or liability pursuant to Environmental Laws
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which, singly or in the aggregate, could reasonably be expected to result in a
liability exceeding a Material Environment Amount;
(iv) provide such information and certifications which the
Agent may reasonably request from time to time to evidence compliance with this
Section 7.1.6.
(b) Prior to acquiring any ownership or leasehold interest in
real property, or other interest in any real property that could give rise to
Holdings, the Borrower or any of their Subsidiaries being found an owner,
operator or otherwise subject to potential liability under any Environmental
Law, Holdings and the Borrower shall (i) obtain a written report by a reputable
independent environmental consultant reasonably acceptable to the Agent (an
"Environmental Consultant") of the Environmental Consultant's assessment of the
presence or potential presence of significant levels of any Hazardous Material
on, in, under, or about such property, or of other conditions that could give
rise to a potentially significant liability under violations of any
Environmental Law relating to such acquisition, and notify the Agent of such
potential acquisition; and (ii) if requested by the Agent after learning of such
potential acquisition, provide such report to the Agent and afford the Agent a
reasonable opportunity to review and, if requested by the Agent, discuss such
report with the Environmental Consultant who prepared it and a knowledgeable
representative of Holdings or the Borrower, as the case may be. The Agent shall
have the right, but shall not have any duty, to obtain, review, or discuss any
such report.
(c) Promptly upon the Agent's request if there has occurred,
or the Agent reasonably anticipates the there may occur, an Event of Default,
permit an environmental consultant whom the Agent in its discretion designates,
subject to the approval of Holdings or the Borrower, as the case may be, which
shall not be unreasonably withheld or delayed, to perform an environmental
assessment on all real property owned or leased by Holdings, the Borrower or any
of their Subsidiaries (including, without limitation: reviewing documents;
interviewing knowledgeable persons; and sampling and analyzing soil, air,
surface water, groundwater, and/or other media in or about property owned or
leased by Holdings, the Borrower or any of their Subsidiaries, or on which
operations of Holdings, the Borrower or any of their Subsidiaries otherwise take
place.) Such environmental assessment shall be in form, scope and substance
reasonably satisfactory to the Agent, subject to the approval of Holdings or the
Borrower, as the case may be, which shall not be unreasonably withheld or
delayed. Holdings, the Borrower and each of their Subsidiaries shall cooperate
fully in the conduct of such environmental assessment, and shall therefor pay
the reasonable costs of such environmental assessment promptly following the
written demand therefor by the Agent. The Agent shall have the right, but not
the duty to obtain such environmental report.
SECTION 7.1.7. FURTHER ASSURANCES. Holdings and the Borrower agree that from
time to time, at the expense of Holdings or the Borrower, as the case may be,
they will, and will cause each of their Subsidiaries to, promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Agent may reasonably request, in
order to perfect and protect the assignments, security interests and Liens
granted or purported to be granted under the Loan Documents or to enable the
Agent to exercise and enforce its rights and remedies under this Agreement or
any other Loan Document with respect to any Collateral. Without limiting the
generality of the foregoing, Holdings and the Borrower will, and will cause each
of their Subsidiaries to,
(a) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as the Agent may request, in order to perfect and preserve the
assignments, security interests and Liens granted or purported to be granted
under the Loan Documents; and
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(b) furnish to the Agent, at the request of the Agent, an opinion of
counsel acceptable to the Required Lenders to the effect that all financing or
continuation statements have been filed, and all other action has been taken, to
perfect and validate continuously from the date hereof the assignments, security
interests and Liens granted under the Loan Documents; and
(c) furnish to the Agent, from time to time at the Agent's request,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest under the
Loan Documents, Holdings and the Borrower hereby authorize the Agent to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of Holdings, the
Borrower or any of their Subsidiaries where permitted by law. A carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
SECTION 7.1.8. AS TO INTELLECTUAL PROPERTY COLLATERAL.
(a) Holdings and the Borrower shall not, and shall not permit any of
their Subsidiaries, unless the Borrower shall reasonably and in good faith
determine (and notice of such determination shall have been delivered to the
Agent) that any of the Intellectual Property Collateral is of negligible
economic value to Holdings, the Borrower or any such Subsidiary, do any act, or
omit to do any act, whereby any of the Intellectual Property Collateral may
lapse or become abandoned or dedicated to the public or unenforceable.
(b) Holdings, the Borrower and each of their Subsidiaries shall notify
the Agent promptly if it knows, or has reason to know, that any application or
registration relating to any material item of the Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any foreign counterpart thereof or any
court) regarding Holding's, the Borrower's or any such Subsidiary's ownership of
any of the Intellectual Property Collateral, its right to register the same or
to keep and maintain and enforce the same.
(c) In no event shall Holdings, the Borrower or any of their
Subsidiaries file an application for the registration of any Intellectual
Property Collateral with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, unless it promptly informs the
Agent, and upon request of the Agent, executes and delivers any and all
agreements, instruments, documents and papers as the Agent may reasonably
request to evidence the Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of Holdings, the Borrower
and each of their Subsidiaries relating thereto or represented thereby.
(d) Holdings, the Borrower and each of their Subsidiaries shall take
all necessary steps, including in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue any application (and to obtain the relevant registration) filed with
respect to, and to maintain any registration of, the Intellectual Property
Collateral, including the filing of applications for
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renewal, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and taxes
(except to the extent that dedication, abandonment or invalidation is permitted
under the foregoing clauses (a), (b) and (c)).
SECTION 7.1.9. FUTURE SUBSIDIARIES. Upon any Person becoming, after the
Effective Date, either a direct or indirect Subsidiary of Holdings or the
Borrower, or upon Holdings or the Borrower acquiring additional capital stock of
any existing Subsidiary, Holdings or the Borrower, as the case may be, shall
notify the Agent of such acquisition and, on or prior to the consummation of
such acquisition,
(a) such Person shall, if it is not an Excluded Foreign Subsidiary and
not already a party to any of the following, become a party to the Subsidiary
Guaranty, the Pledge Agreement and the Security Agreement in a manner
satisfactory to the Agent and, if such Person maintains any bank accounts at a
financial institution other than the Agent, such Person shall be subject to a
Collection Account Agreement in the form of Exhibit I attached hereto;
(b) Holdings, the Borrower and each such Subsidiary that is not an
Excluded Foreign Subsidiary, shall, pursuant to the Pledge Agreement, pledge to
the Agent:
(i) all of the outstanding shares of such capital stock of
such Subsidiary owned directly by it (but, in the case of a Foreign Subsidiary,
not more than 66% of the capital stock of such Foreign Subsidiary shall be so
pledged), along with undated stock powers for such certificates, executed in
blank (or, if any such shares of capital stock are uncertificated, confirmation
and evidence satisfactory to the Agent that the security interest in such
uncertificated securities has been transferred to and perfected by the Agent in
accordance with the U.C.C. or any similar law which may be applicable); and
(ii) all notes evidencing intercompany Indebtedness in favor
of the Borrower and each such Subsidiary (which shall be in the form of Exhibit
A to the Pledge Agreement), as the case may be;
(c) the Agent shall have received from each such Subsidiary that is not
an Excluded Foreign Subsidiary certified copies of Uniform Commercial Code
Requests for Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agent, dated a date reasonably near (but
prior to) the date of any such Person becoming a direct or indirect Subsidiary
of Holdings or the Borrower, listing all effective financing statements, tax
liens and judgment liens which name such Person as the debtor and which are
filed in the jurisdictions in which filings are to be made pursuant to this
Agreement and the other Loan Documents, and in such other jurisdictions as the
Agent may reasonably request, together with copies of such financing statements
(none of which (other than financing statements filed pursuant to the terms
hereof in favor of the Agent, if such Form UCC-11 or search report, as the case
may be, is current enough to list such financing statements) shall cover any of
the Collateral); and
(d) the Agent shall have received from each such Subsidiary that is not
an Excluded Foreign Subsidiary, acknowledgment copies of properly filed U.C.C.
financing statements or such other evidence of filing or delivery for filing as
may be acceptable to the Agent, naming each such Subsidiary as the debtor and
the Agent as the secured party, filed under the U.C.C. of all jurisdictions as
may be necessary or, in the opinion of the Agent, desirable to perfect the first
priority security interest of the Agent of the assets of such Subsidiary that is
subject to the Security Agreement, together with evidence satisfactory to the
Agent of the filing (or delivery for filing) of appropriate trademark, copyright
and patent security supplements, together, in each case, with such opinions of
legal counsel for Holdings or the Borrower
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relating thereto, which legal opinions shall be in form and substance
satisfactory to the Agent. Holdings and the Borrower agree that if (i) any
Excluded Foreign Subsidiary is permitted to execute and deliver the Subsidiary
Guaranty, the Pledge Agreement or the Security Agreement or (ii) it is permitted
to pledge more than 66% of the capital stock of any Foreign Subsidiary, in any
such case without material adverse tax consequences which would result in such
Subsidiary being an Excluded Foreign Subsidiary, then the provisions of clauses
(a), (c), (d) and (e) of this Section 7.1.9 shall thereafter apply to such
Foreign Subsidiary and/or (as the case may be) the provisions of clause (b) of
this Section 7.1.9 shall thereafter apply to 100% of the capital stock of such
Foreign Subsidiary. Notwithstanding the foregoing, Holdings and its Subsidiaries
(other than the Borrower and its Wholly-Owned Subsidiaries) shall not be
required to subject any assets to a security interest in favor of the Agent if
it is already subject to a security interest in favor of a third Person as
provided in clause (i) (iii) of Section 7.2.4.
SECTION 7.1.10. RATE PROTECTION AGREEMENTS. All Rate Protection Agreements shall
be (a) with a counterparty that is a Lender or another Person that is reasonably
satisfactory to the Agent and (b) unsecured unless the counterparty is a Lender,
in which case the obligations under each such Rate Protection Agreement shall be
secured pro rata with all the other Obligations hereunder.
SECTION 7.1.11. CERTAIN POST-CLOSING COVENANTS.
(a) Not later than 30 days following the Effective Date (or such later
date as may be reasonably acceptable to the Agent) (i) there shall be named as a
member of the board of directors of the Borrower an Independent Director and
(ii) the Organic Documents of the Borrower shall have been amended, on terms
satisfactory to the Agent, to provide that, without the consent of the
Independent Director, the Borrower shall not file or subject itself to any
voluntary bankruptcy, reorganization, insolvency or similar proceeding, or
dissolve or wind-up its business, and provide that the Board of Directors of the
Borrower shall consist of two members. For purposes hereof, an "Independent
Director" means any individual who is not (i) at the time of his appointment as
an Independent Director and during the preceding five years a director, officer
or employee of, or a parent, child, spouse or sibling of any such Person, or a
supplier or customer of, Holdings, the Borrower, any of their Subsidiaries or
any of their Affiliates, or (ii) an individual that has a direct or indirect
relationship with Holdings, the Borrower, any of their Subsidiaries or any of
their Affiliates which would reasonably be expected to adversely influence the
judgement of such individual in carrying out his duties to the Borrower.
(b) Not later than 60 days following the Effective Date, 66% of the
capital stock of each Foreign Subsidiary of Holdings and the Borrower shall be
pledged to the Agent as provided in the Pledge Agreement; provided, however,
that (i) the capital stock of Cambridge Diagnostics Ireland, Limited and
Selfcare Europe, Ltd. shall not be required to be so pledged if Holdings
establishes, to the satisfaction of the Agent, that it is prohibited from
pledging such securities as a result of contractual restrictions existing prior
to the Effective Date that were not entered into in anticipation of the entering
into of this
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Agreement, and (ii) the capital stock of Selfhelp Israel, Ltd. shall not be
required to be so pledged until such capital stock is issued; provided further,
however, that the capital stock of such Subsidiaries referred to in clause (i)
shall be so pledged to the Agent promptly after any such contractual
restrictions is no longer effective.
(c) Not later than 45 days after the Effective Date the Borrower shall
have obtained "key-man" life insurance for Xxx Xxxxxxxxx and Xxxxxx Xxxxxxx in
an amount not less than $5,000,000 and $1,000,000, respectively, and such
insurance shall be assigned in favor of the Agent on terms in form and substance
satisfactory to the Agent.
(d) Not later than 30 days after the Effective Date Holdings and the
Borrower shall establish (for and on behalf of themselves and all of their
Domestic Subsidiaries) an operating account and cash management system on terms
in form and substance satisfactory to the Agent, such cash management system to
require, among other things, that all checks or other amounts that are payable
to Holdings, the Borrower or any of their Domestic Subsidiaries from Accounts or
as a result of the sale of any property or assets (including Inventory) or for
the provision of services shall be payable in the name of the Person to whom
such amounts are being paid on account of or, if not payable to such Person to
whom such amounts are being paid on account of, the Borrower on behalf of such
Person (subject to the requirement of clause (b) of Section 7.2.12 that the
books and records of Holdings, the Borrower and their Subsidiaries accurately
reflect all liabilities and assets (including receivables) of each such Person).
(e) Not later than 60 days after the Effective Date, the Borrower shall
have entered into, on terms and with a Person satisfactory to the Agent, a Rate
Protection Agreement providing for an interest rate cap with an aggregate
notional principal amount of not less than 50% of the aggregate principal amount
of Term Loans made on the date of the initial Credit Extension and with a term
of not less than three years from the date of the initial Credit Extension.
(f) If the aging schedule of Receivables and schedule of Inventory
designations required to be delivered pursuant to clause (m) of Section 7.1.1.
for the first Fiscal Month following the date of the initial Credit Extension is
not in a form satisfactory to the Agent, the Women's Home Testing product line
of Holdings shall be contributed, on terms in form and substance satisfactory to
the Agent, to the Borrower within 15 days thereafter.
(g) Not later than 180 days after the Effective Date, Can-Am shall be
insured under Holdings' insurance policies at least to the same extent as the
Borrower is so insured. In addition, not later than 30 days after the Effective
Date, Holdings and its Subsidiaries shall have obtained (i) additional insurance
coverage not otherwise specified in Item 6.20 ("Insurance") of the Disclosure
Schedule as the Agent may reasonably request, including product recall and
business interruption insurance, and (ii) a lenders loss payable endorsement in
favor of the Agent with respect to all Inventory and a loss payable endorsement
in favor of the Agent with respect to business income, in each case on terms
satisfactory to the Agent.
(h) Holdings and the Borrower shall use their best efforts to obtain,
not later than 120 days after the Effective Date, from Sherwood Medical Company
(or its successor company) an executed consent which in substance has the effect
of Exhibit D to the Security Agreement with respect to the Operational Agreement
referred to in clause (a) of the definition thereof.
(i) Not later than 30 days following the Effective Date, all of the
capital stock owned by Holdings of Jmar Xxxx, Inc. and Selfcare Technology Inc.
shall be pledged to the Agent as provided in
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the Pledge Agreement and there shall be delivered all those items referred to in
clause (b) of Section 7.1.9 and a satisfactory legal opinion regarding the same.
SECTION 7.1.12. JMAR XXXX, INC. If requested by the Agent, Holdings shall
promptly cause Jmar Xxxx, Inc. to become a party to the Security Agreement and
deliver all those items referred to in clauses (c) and (d) of Section 7.1.9 and
a satisfactory legal opinion regarding the same.
SECTION 7.2. NEGATIVE COVENANTS. Holdings and the Borrower agree for itself with
the Agent, each Issuer and each Lender that, until all Commitments have
terminated and all Obligations have been paid in cash and performed in full,
Holdings and the Borrower will (to the extent applicable) perform the
obligations set forth in this Section 7.2.
SECTION 7.2.1. BUSINESS ACTIVITIES. Holdings and the Borrower will not, and will
not permit any of their Subsidiaries to, engage in any business activity, except
those described in the first and second recitals and other activities reasonably
related thereto.
SECTION 7.2.2. INDEBTEDNESS. The Borrower will not, and will not permit any of
its Wholly-Owned Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Credit Extensions and other
Obligations;
(b) until the date of the initial Credit Extension, Indebtedness
identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure
Schedule;
(c) Indebtedness identified in Item 7.2.2(c) ("Ongoing Indebtedness")
of the Disclosure Schedule;
(d) unsecured Indebtedness in an aggregate principal amount not to
exceed $250,000 at any time outstanding that is incurred in the ordinary course
of business (including open accounts extended by suppliers on normal trade terms
in connection with purchases of goods and services, but excluding the
Indebtedness of the nature referred to in clause (a) of the definition thereof
and Contingent Liabilities with respect thereto);
(e) Indebtedness in respect of the Capitalized Lease Liabilities to the
extent permitted by Section 7.2.7;
(f) Indebtedness in respect of any Rate Protection Agreement entered
into pursuant to Section 7.1.11(e);
(g) Indebtedness (i) of any Wholly-Owned Subsidiary of the Borrower
owing to the Borrower or any other Subsidiary of the Borrower or (ii) of the
Borrower owing to any of its Wholly-Owned Subsidiaries, which Indebtedness
(A) shall be evidenced by one or more promissory notes duly
executed and delivered to the Agent (each such promissory note to be in
substantially the form of Attachment II to the Pledge Agreement); and
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(B) shall not be forgiven or otherwise discharged for any
consideration other than payment in full in cash, unless the Agent and the
Required Lenders otherwise consent;
(h) Permitted Borrower Subordinated Debt;
provided, however, that no Indebtedness otherwise permitted by clauses (c) and
(f) shall be permitted if, immediately before or after giving effect to the
incurrence thereof, any Default or Event of Default shall have occurred and be
continuing. In addition, (x) all intercompany Indebtedness between Holdings and
its Subsidiaries (other than any Excluded Foreign Subsidiary that is an obligee
thereunder) shall be evidenced by one or more promissory notes duly executed and
delivered to the Agent (each such promissory note to be in substantially the
form of Attachment II to the Pledge Agreement), and shall not be forgiven or
otherwise discharged for any consideration other than the payment in full in
cash, unless the Agent otherwise consents and (y) Holdings shall not have any
Contingent Liability with respect to any Consolidated Debt other than the Loans
and Letters of Credit and the Indebtedness identified in Item 7.2.2(z)
("Holdings' Contingent Liabilities") of the Disclosure Schedule.
SECTION 7.2.3. LIENS. Neither Holdings nor the Borrower will, nor will either of
them permit any of their Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon any of their property, revenues or assets, whether now owned
or hereafter acquired, except:
(a) Liens securing payment of the Obligations, granted pursuant to any
Loan Document;
(b) in the case of the Borrower and its Wholly-Owned Subsidiaries only,
Liens granted to secure payment of the Indebtedness permitted pursuant to clause
(d) of Section 7.2.2, provided that (i) each such Lien covers only those assets
acquired with the proceeds of such Indebtedness, (ii) each such Lien attaches to
the relevant property concurrently with the acquisition thereof and (iii) the
principal amount of such Indebtedness does not exceed 85% of the lesser of the
cost or fair market value of the relevant property; and, in the case of Holdings
and its Subsidiaries (other than the Borrower and its Wholly-Owned
Subsidiaries), Liens granted to secure payment of the type of Indebtedness
referred to in clause (d) of Section 7.2.2, provided that (i) each such Lien
covers only those assets acquired with the proceeds of such Indebtedness and
(ii) each such Lien attaches to the relevant property concurrently with the
acquisition thereof;
(c) Liens existing on the Effective Date and disclosed on Item 7.2.3(c)
("Existing Liens") of the Disclosure Schedule, provided that such Liens do not
spread to cover any additional property or assets after the Effective Date;
(d) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or being diligently contested in good faith by
appropriate proceedings which suspends enforcements of such Liens and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books;
(e) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue or
being diligently contested in good faith by appropriate proceedings which
suspends enforcements of such Liens and for which adequate reserves in
accordance with GAAP shall have been set aside on its books;
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(f) Liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(g) judgment Liens in existence less than 10 days after the entry
thereof or with respect to which execution has been stayed or the payment of
which is covered in full (subject to a customary deductible) by insurance
maintained with insurance companies in accordance with the terms of Section
7.1.4; and
(h) easements, rights-of-way, zoning and similar restrictions and other
similar encumbrances or title defects which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of the Borrower or its Subsidiaries; and
(i) in the case of Holdings and its Subsidiaries (other than the
Borrower and its Wholly-Owned Subsidiaries), (i) Liens on machinery and
equipment of Inverness, the subject of a sale-leaseback transaction, which Liens
are in favor of the lender of the lessor thereof that is financing the same,
(ii) Liens on the inventory and accounts receivable of Inverness which is
security for any lender providing working capital financing to Inverness and
(iii) Liens on assets acquired by Holdings or any such Subsidiary; provided that
no such Liens shall be incurred at any time when any Default or Event of Default
has occurred and is continuing.
SECTION 7.2.4. FINANCIAL CONDITION. The Borrower will be subject to the
financial covenants set forth in clause (a) and Holdings will be subject to the
financial covenant set forth in clause (b).
(a) Borrower Financial Covenants. The Borrower will not permit:
(i) Interest Coverage Ratio. Its Interest Coverage Ratio
(beginning with its Fiscal Quarter ending June 30, 1998) for the Rolling Period
ending on each date set forth below to be less than the ratio set forth below
opposite each such date:
Date Minimum Interest Coverage Ratio
---- -------------------------------
June 30, 1998 2.50 : 1.00
September 30, 1998 2.75 : 1.00
December 31, 1998 2.75 : 1.00
March 31, 1999 3.00 : 1.00
June 30, 1999 3.25 : 1.00
September 30, 1999 and each 3.50 : 1.00
Fiscal Quarter thereafter
(ii) Debt Service Coverage Ratio. Its Debt Service Coverage
Ratio (beginning with its Fiscal Quarter ending June 30, 1998) for the Rolling
Period ending on each date set forth below to be less than the ratio set forth
below opposite each such date:
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Minimum Debt Service
Date Coverage Ratio
---- --------------
June 30, 1998 and each 1.25 : 1.00
Fiscal Quarter thereafter until
and including June 30, 1999
September 30, 1999 and each 1.30 : 1.00
Fiscal Quarter thereafter
(iii) Leverage Ratio. Its Leverage Ratio (beginning with its
Fiscal Quarter ending March 31, 1999) for the Rolling Period ending on each date
set forth below to be greater than the ratio set forth opposite each such date:
Date Maximum Leverage Ratio
---- ----------------------
March 31, 1999 5.00 : 1.00
June 30, 1999 4.50 : 1.00
September 30, 1999 4.00 : 1.00
December 31, 1999 and each 3.50 : 1.00
Fiscal Quarter thereafter until
and including September 30, 2001
December 31, 2001 and each 3.00 : 1.00
Fiscal Quarter thereafter
(iv) Minimum EBITDA. Its EBITDA (beginning with its Fiscal
Quarter ending March 31, 1998) for the period beginning from the Effective Date
and ending on each date set forth below to be less than the amount set forth
below opposite each date set forth below:
Date Minimum EBITDA
---- --------------
March 31, 1998 $ 500,000
June 30, 1998 $ 2,900,000
September 30, 1998 $ 5,600,000
December 31, 1998 $ 8,475,000
(b) Holdings Financial Covenant. Holdings will not permit its Holdings'
Consolidated Debt to Holdings' Total Capital Ratio on the last day of each
Fiscal Quarter (beginning with its Fiscal Quarter ending June 30, 1998) to
exceed 80%.
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SECTION 7.2.5. INVESTMENTS. The Borrower will not, and will not permit any of
its Subsidiaries to, make, incur, assume or suffer to exist any Investment in
any other Person, except:
(a) Investments existing on the Effective Date and identified in Item
7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Capital Expenditures
pursuant to Section 7.2.7; and
(d) Investments by the Borrower in Subsidiaries permitted by Section
6.8 comprising the equity ownership and initial approved capitalization of such
Subsidiaries;
provided, however, that any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment" may
continue to be held notwithstanding that such Investment if made thereafter
would not comply with such requirements.
SECTION 7.2.6. RESTRICTED PAYMENTS, ETC.
(a) The Borrower will not (notwithstanding the terms of any Organic
Document) declare, pay or make any dividend or distribution (in cash, property
or obligations) on any shares of any class of capital stock (now or hereafter
outstanding) of the Borrower or on any warrants, options or other rights with
respect to any shares of any class of capital stock now or hereafter outstanding
of the Borrower (other than dividends or distributions payable in its common
stock or warrants to purchase its common stock or split-ups or reclassifications
of its stock into additional or other shares of its common stock) or apply, or
permit any of its Subsidiaries to apply, any of its funds, property or assets to
the purchase, redemption, sinking fund or other retirement of, or agree or
permit any of its Subsidiaries to purchase or redeem, any shares of any class of
capital stock (now or hereafter outstanding) of the Borrower, or warrants,
options or other rights with respect to any shares of any class of capital stock
(now or hereafter outstanding) of the Borrower;
(b) Neither Holdings nor the Borrower will, nor will they permit any of
their Subsidiaries to (notwithstanding the terms of any Borrower Subordinated
Note, and other Permitted Borrower Subordinated Debt or any Holdings'
Subordinated Note), to pay, prepay of repay any principal of or make any payment
of interest on, or redeem, purchase, set aside any funds for or defease (in each
case whether pursuant to any optional or mandatory provision with respect
thereto), or give any notice of redemption for, or purchase or otherwise
acquire, any Borrower Subordinated Note, any other Permitted Borrower
Subordinated Debt or any Holdings' Subordinated Note; and
(c) the Borrower will not, and will not permit any of its Subsidiaries
to, make any deposit for any of the foregoing purposes;
provided, however,
(i) the Borrower may, after the Agent has received
satisfactory evidence that $15,500,000 of net operating losses of Holdings have
been used to reduce the Borrower's taxable income, pay dividends to Holdings in
accordance with the terms of the Tax Sharing Agreement; provided that no such
dividend
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shall be paid if any Default or Event of Default shall have occurred and be
continuing or result therefrom; and
(ii) Holdings may, subject to the subordination provisions
contained in each Holdings' Subordinated Note, repay amounts owing with respect
thereto;
(iii) Holdings may, subject to the terms of the Escrow
Agreement, repay from amounts held on deposit pursuant to the Escrow Agreement
the Holdings' Subordinated Note referred to in clause (a) of the definition
thereof; and
(iv) Holdings may refinance any Holdings' Subordinated Note to
the extent permitted in the parenthetical contained in the definition of "Net
Debt Proceeds."
SECTION 7.2.7. CAPITAL EXPENDITURES, ETC. The Borrower will not, and will not
permit any of its Wholly-Owned Subsidiaries to, make or commit to make Capital
Expenditures in any Fiscal Year, except Capital Expenditures which do not
aggregate in any Fiscal Year in excess of the amount set forth opposite each
Fiscal Year below:
Fiscal Year Amount
----------- ------
1998 $250,000
1999 $250,000
2000 $250,000
2001 $250,000
2002 $250,000
2003 $275,000;
provided, however, that no such Capital Expenditure shall be made if any Default
or Event of Default shall have occurred and be continuing immediately prior to
or after giving effect to the making of any such Capital Expenditure, except
that during the continuance of any Default or Event of Default other than those
described in Section 8.1.1 or 8.1.9 the Borrower may make Capital Expenditures
in an aggregate amount not exceeding $75,000 if the Agent approves the making of
the same (such approval not to be unreasonably withheld if the Borrower
establishes, to the reasonable satisfaction of the Agent, that making such
Capital Expenditures are necessary in order for the Borrower to maintain its
ongoing operations).
SECTION 7.2.8. TAKE OR PAY CONTRACTS. Except as identified in Item 7.2.8 ("Take
or Pay Contracts") of the Disclosure Schedule and contracts requiring aggregate
payments during any Fiscal Year of the Borrower in an amount not exceeding
$250,000, the Borrower will not, and will not permit any of its Wholly-Owned
Subsidiaries to, enter into or be a party to any arrangement for the purchase of
materials, supplies, other property or services if such arrangement by its
express terms requires that payment be made by the Borrower or such Subsidiary
regardless of whether such materials, supplies, other property or services are
delivered or furnished to it.
SECTION 7.2.9. CONSOLIDATION, MERGER, ETC. Holdings and the Borrower will not,
and will not permit any of their Subsidiaries to, liquidate or dissolve,
consolidate or amalgamate with, or merge into or with, any other corporation, or
purchase, lease or otherwise acquire (in each case in one transaction or series
of transactions) all or any substantial part of the assets or stock of any
Person (or of any division thereof), other than
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(a) the consummation of the Acquisition;
(b) any Wholly-Owned Subsidiary of the Borrower (other than Can-Am) may
liquidate or dissolve voluntarily into, and may merge with and into, the
Borrower or any other Wholly-Owned Subsidiary of the Borrower, and the assets or
stock of any Wholly-Owned Subsidiary of the Borrower may be purchased or
otherwise acquired by the Borrower or any other Wholly-Owned Subsidiary of the
Borrower;
(c) any Wholly-Owned Subsidiary of Holdings (other than the Borrower
and its Wholly-Owned Subsidiaries) may liquidate or dissolve voluntarily into,
or may merge with and into, Holdings or any other Wholly-Owned Subsidiary of
Holdings (other than the Borrower and its Wholly-Owned Subsidiaries), and the
assets or stock of any Wholly-Owned Subsidiary of Holdings (other than the
Borrower and its Wholly-Owned Subsidiaries) may be purchased by Holdings or any
other Wholly-Owned Subsidiary of Holdings (other than the Borrower and its
Wholly-Owned Subsidiaries); and
(d) Holdings or any of its Subsidiaries (other than the Borrower and
its Wholly-Owned Subsidiaries) may merge into or with, or purchase, lease or
otherwise acquire all or any substantial part of the assets or stock of any
Person if (i) no Default or Event of Default results therefrom, (ii) in the case
of any merger Holdings or any such Subsidiary is either the surviving
corporation or, if it is not the surviving corporation, the corporation
surviving such merger assumes all the Obligations on terms satisfactory to the
Agent and (iii) prior to the occurrence of any such transaction Holdings
establishes on a pro forma basis compliance with the financial covenant
contained in clause (b) of Section 7.2.4.
SECTION 7.2.10. ASSET DISPOSITIONS, ETC. Holdings and the Borrower will not, and
will not permit any of their Subsidiaries to, sell, transfer, lease, contribute
or otherwise convey or dispose of, or grant options, warrants or other rights
with respect to (in each case in one transaction or series of transactions), all
or any part of its assets (including accounts receivable and capital stock) to
any Person, except
(a) if such sale, transfer, lease, contribution or conveyance is of
Inventory in the ordinary course of its business;
(b) if such disposition is a Permitted Disposition; or
(c) if such assets are worn out or obsolete and are sold in the
ordinary course of business.
SECTION 7.2.11. MODIFICATION OF CERTAIN AGREEMENTS.
(a) Neither Holdings, the Borrower nor any of their
Subsidiaries will consent to any amendment, supplement or other modification of
any of the terms or provisions contained in, or applicable to, any of their
Organic Documents, the Purchase Agreement, any Operational Agreement, any
Holdings' Subordinated Note, any Holdings' Equity Document, any Borrower
Subordinated Note, any agreement evidencing other Permitted Borrower
Subordinated Debt or the Tax Sharing Agreement which
(i) is contrary to the terms of this Agreement or any other
Loan Document (it being understood and agreed that any change to the Organic
Documents of the Borrower or any of its Wholly-Owned Subsidiaries with respect
to those matters required to be included therein pursuant to clause (a) of
Section 7.1.11 (after they are included therein) are prohibited),
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(ii) may reasonably be expected to be adverse to the rights,
interests or privileges of the Agent or the Lenders pursuant to the Loan
Documents or their ability to enforce the same or
(iii) results in the imposition or expansion in any material
respect of any restriction or burden on Holdings, the Borrower or any of their
Subsidiaries (it being understood and agreed that any such determination shall
be made in the discretion of the Agent and (A) any such amendment, supplement or
modification to the subordination provisions contained in the Holdings'
Subordinated Notes, the Borrower Subordinated Notes or any other Permitted
Borrower Subordinated Debt, or (B) any increase in the amount of, or any change
(other than a deferral) of the date for payment of, or any increased rate with
respect to, any redemption, fee, interest rate, principal repayment or other
payment (including payments required to be made by the Borrower under the Tax
Sharing Agreement) or sinking fund provisions, or (C) any amendment, supplement
or modification to any remedial or default provisions or covenant restrictions
and related definitions that result in any of the same being more onerous on
Holdings, the Borrower, or any of their Subsidiaries, shall in any event require
the consent of the Required Lenders). Holdings or the Borrower, as the case may
be, will, prior to entering into any amendment, addition or other modification
of any of the foregoing documents deliver to the Agent (with copies for each
Lender) reasonably in advance (and, in any event, within 10 Business Days) of
the execution thereof, any final or execution form copy of amendments,
supplements, additions or other modifications to such documents, and agrees not
to take any such action with respect to any such documents, in contravention of
the terms hereof.
(b) Neither the Borrower nor any of its Subsidiaries shall terminate
any Operational Agreement referred to in clauses (a) through (c) of the
definition thereof without obtaining the prior consent of the Agent.
SECTION 7.2.12. TRANSACTIONS WITH AFFILIATES; SEPARATE EXISTENCE.
(a) Except as identified in Item 7.2.12(a) ("Transaction with
Affiliates") of the Disclosure Schedule, the Borrower will not, and will not
permit any of its Wholly-Owned Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with, any of its other Affiliates
unless such arrangement or contract (a) is otherwise permitted by this
Agreement, (b) is in the ordinary course of business of the Borrower and (c) is
on fair and reasonable terms and is an arrangement or contract of the kind which
would be entered into by a prudent Person in the position of the Borrower or
such Subsidiary with a Person which is not one of its Affiliates. Without
limiting the foregoing, any distribution by Can-Am of generic test strips on
behalf of Holdings shall be done by Can-Am so that it earns a gross profit
margin of not less than 35%, except if such distribution arrangements result in
a loss to Holdings (in which case such gross profit margin shall be reduced to a
gross profit margin percentage which will not result in a loss to Holdings).
(b) Neither the Borrower nor any of its Wholly-Owned Subsidiaries will
(i) fail to conduct business correspondence in its own name and maintain
appropriate and separate books, records and financial statements; (ii) suffer
any limitation on the authority of its own directors and officers to conduct its
business and affairs in accordance with their independent business judgment, or
authorize or suffer any representative of Holdings or any of its other
Subsidiaries to act on its behalf with respect to any matter (other than matters
customarily delegated to others under powers of attorney) for which a
corporation's own directors and officers would customarily be responsible; (iii)
fail to (A) maintain physical possession of all its books and records, (B)
maintain capitalization adequate for the conduct of its business, (C) account
for and manage its liabilities separately from those of Holdings and its other
Subsidiaries,
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including, without limitation, payment of all payroll and other administrative
expenses and taxes from its own assets (provided that to the extent (x) any
director, officer, employee, consultant or agent for the Borrower or any of its
Wholly-Owned Subsidiaries is also a director, officer, employee, consultant or
agent of Holdings or any of its other Subsidiaries, the Borrower and Holdings
will reasonably allocate between themselves the costs for such services on a
basis which reasonably reflects the actual value of such services rendered or
(y) Holdings and its other Subsidiaries, on the one hand, and the Borrower and
its Wholly-Owned Subsidiaries, on the other hand, use an integrated accounting
system the separate assets (including Receivables) and liabilities of each such
Person shall be accurately and fully recorded therein so that they are readily
identifiable and all payments are, promptly after the receipt thereof, properly
segregated and allocated among each such Person), (D) segregate and identify
separately all of its money and assets from those of Holdings and its other
Subsidiaries (including, but not limited to, maintaining separate bank accounts
in its own name and accurate and complete accounting records), and (E) maintain
offices through which its business is conducted separate from those of Holdings
(provided that to the extent that the Borrower or any of its Wholly-Owned
Subsidiaries, on the one hand, and Holdings and its other Subsidiaries, on the
other hand, have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs and expenses among them, and each such
entity shall bear its fair share of such costs and expenses and each such office
shall be conspicuously identified as the office of such entity); (iv) commingle
its money (except on a temporary basis as part of the collection process,
provided that such monies are promptly segregated thereafter) or other assets
with those of Holdings or any of its other Subsidiaries or use its funds for
other than the Borrower's or any such Wholly-Owned Subsidiaries's uses; (v) fail
to (A) maintain its books, financial statements, accounting records and other
business documents and records separate from those of Holdings and its other
Subsidiaries (provided that to the extent Holdings and its other Subsidiaries,
on the one hand, and the Borrower and its Wholly-Owned Subsidiaries, on the
other hand, use an integrated accounting system the separate assets (including
Receivables) and liabilities of each such Person shall be accurately and fully
recorded therein so that they can be readily identifiable and all payments are,
promptly after the receipt thereof, properly segregated and allocated among each
such Person); (B) act solely in its legal name and through its own authorized
officers and agents (provided that to the extent any officer or agent for the
Borrower and its Wholly-Owned Subsidiaries is also an officer or agent of
Holdings or any of its other Subsidiaries, the Borrower and Holdings shall
reasonably allocate between themselves the costs for such services on a basis
which reasonably reflects the actual value of such services rendered), (C)
separately manage its assets and liabilities from those of Holdings and its
other Subsidiaries and pay its own liabilities, including all administrative
expenses, from its own separate assets (provided that, to the extent the
employees of the Borrower and its Wholly-Owned Subsidiaries participate in
pension, insurance and other benefit plans of Holdings or any Affiliate thereof,
the Borrower and its Wholly-Owned Subsidiaries will reimburse Holdings or such
Affiliate, as the case may be, for an appropriate share of the costs thereof),
(E) pay from its assets all obligations and Indebtedness of any kind incurred by
it and (F) abide by all corporate legal formalities, including the maintenance
of current corporate records; (vi) assume the liabilities of the Holdings or any
Affiliate thereof; (vii) be involved in the day-to-day management of the
Holdings or any of its other Subsidiaries or permit Holdings or any of its other
Subsidiaries to be involved in the day-to-day management of the Borrower or any
of its Wholly-Owned Subsidiaries (except to the extent that the same Person is
acting as an officer or employee of Holdings or its other Subsidiaries, on the
one hand, and the Borrower and its Wholly-Owned Subsidiaries, on the other hand,
in which case Holdings and Borrower will reasonably allocate between themselves
the costs of any such services on a basis which reasonably reflects the actual
value of such services rendered); (viii) make any advances to Holdings or any of
its other Subsidiaries unless made for good and sound business reasons; (ix)
have insufficient officers and personnel to conduct its business and operations;
(x) fail to disclose in a note to the financial statements of Holdings the
existence as separate corporations the Borrower and each of its Wholly-Owned
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Subsidiaries; (xi) fail to have an Independent Director on its Board of
Directors and make the appropriate amendments to its Organic Documents from and
after 30 days following the Effective Date as provided in clause (a) of Section
7.1.11; (xii) fail to operate their business so that their separate assets and
liabilities cannot be readily identified or allocated; or (xiii) fail to
promptly correct any known misunderstanding or misinterpretation with respect to
any of the foregoing.
SECTION 7.2.13. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. Holdings and the
Borrower will not, and will not permit any of their Subsidiaries to, enter into
any agreement (excluding this Agreement and any other Loan Document)
prohibiting:
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, or the ability of
Holdings, the Borrower or any other Obligor to amend or otherwise modify this
Agreement or any other Loan Document; or
(b) the ability of any Subsidiary (other than the Borrower or any
Wholly-Owned Subsidiary of the Borrower) of Holdings or Wholly-Owned Subsidiary
of the Borrower to make any payments, directly or indirectly, to Holdings, the
Borrower, or any of its Wholly-Owned Subsidiaries as the case may be, by way of
dividends, advances, repayments of loans or advances, reimbursements of
management and other intercompany charges, expenses and accruals or other
returns on investments, or any other agreement or arrangement which restricts
the ability of any such Subsidiary to make any payment, directly or indirectly,
to the Borrower.
SECTION 7.2.14. MANAGEMENT FEES, EXPENSES, ETC. The Borrower will not, and will
not permit any of its Wholly-Owned Subsidiaries to,
(a) pay management, advisory, consulting or other similar fees, other
than
(i) fees payable to the Lenders or any of their Affiliates;
and
(ii) fees payable to non-Affiliate consultants engaged on
arm's-length basis as approved by the President of the Borrower; or
(b) reimburse employees or any Affiliates for any expenses unless the
same shall be otherwise permitted hereunder and shall be reasonable and
documented in reasonable detail.
SECTION 7.2.15. FISCAL YEAR END. Neither Holdings, the Borrower nor any of their
Subsidiaries shall have a Fiscal Year ending on any date other than December
31st.
SECTION 7.2.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Borrower will
not, and will not permit any of its Wholly-Owned Subsidiaries to, enter into any
arrangement with any Person whereby in a substantially contemporaneous
transaction the Borrower or any of its Wholly-Owned Subsidiaries sells all or
substantially all of its right, title and interest in an asset and, in
connection therewith, acquires or leases back the right to use such asset.
ARTICLE VIII
EVENTS OF DEFAULT
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SECTION 8.1. LISTING OF EVENTS OF DEFAULT. Each of the following events or
occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1. NON-PAYMENT OF OBLIGATIONS. The Borrower shall default in the
payment or prepayment when due of any monetary Obligation hereunder or under any
other Loan Document (including, without limitation, any principal of, or
interest on, any Loan, any Reimbursement Obligation, any fees or any other
amounts payable hereunder or thereunder).
SECTION 8.1.2. BREACH OF REPRESENTATIONS AND WARRANTIES. Any representation or
warranty of Holdings, the Borrower or any other Obligor made or deemed to be
made hereunder or in any other Loan Document executed by it or any other writing
or certificate furnished by or on behalf of Holdings, the Borrower or any other
Obligor to the Agent or any Lender for the purposes of or in connection with
this Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made in any
material respect.
SECTION 8.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS. Holdings or
the Borrower shall default in the due performance and observance of any of its
obligations under clause (e) of Section 7.1.1 or Sections 4.10, 7.1.9, 7.1.11 or
7.2.
SECTION 8.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. Any Obligor
shall default in the due performance and observance of any other agreement
contained herein or in any other Loan Document (other than items covered by
Section 8.1.3) executed by it, and such default shall continue unremedied for a
period of 30 days after Holdings or the Borrower has actual knowledge thereof or
notice thereof shall have been given to the Borrower by the Agent or any Lender.
SECTION 8.1.5. DEFAULT ON OTHER INDEBTEDNESS. A default shall occur in the
payment when due, whether by acceleration or otherwise, of any Holdings'
Subordinated Note, Borrower Subordinated Note, any other Permitted Borrower
Subordinated Debt or any other Indebtedness (other than Indebtedness described
in Section 8.1.1) of Holdings, the Borrower or any other Obligor having a
principal amount, individually or in the aggregate, in excess of $100,000, or a
default shall occur in the performance or observance of any obligation or
condition with respect to any such Note or such other Indebtedness if the effect
of such default is to accelerate the maturity of any such Note or other
Indebtedness or such default shall continue unremedied for any applicable period
of time sufficient to permit the holder or holders of any such Note or other
Indebtedness, or any trustee or agent for such holders, to cause any such Note
or other Indebtedness to become due and payable prior to its expressed maturity.
SECTION 8.1.6. JUDGMENTS. Any judgment or order for the payment of money (not
paid or fully covered by insurance maintained in accordance with the
requirements of this Agreement and as to which the relevant insurance company
has acknowledged coverage) in excess of $100,000 shall be rendered against
Holdings, the Borrower or any other Obligor and either
(a) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order; or
(b) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal,
bond or otherwise, shall not be in effect.
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SECTION 8.1.7. PENSION PLANS. Any of the following events shall occur with
respect to any Pension Plan:
(a) any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Pension Plan,
(b) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Pension Plan or any Lien
in favor of the PBGC shall arise on the assets of Holdings, the Borrower or any
Commonly Controlled Entity, (c) a Reportable Event shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Pension Plan for purposes of Title IV of ERISA, (d) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (e)
Holdings, the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any liability on
connection with a withdrawal from, or the insolvency or reorganization of, a
Multiemployer Plan or (f) any other event or condition shall occur or exist with
respect to a Pension Plan; and in each case in clauses (a) through (f) above,
such event or condition, together with all other such events or conditions, if
any, could reasonably be expected to result in a liability exceeding $100,000.
SECTION 8.1.8. CONTROL OF HOLDINGS AND THE BORROWER. Any Change in Control shall
occur.
SECTION 8.1.9. BANKRUPTCY, INSOLVENCY, ETC. Holdings, the Borrower or any other
Obligor shall
(a) generally fail to pay debts as they become due, or admit in writing
its inability to pay debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator, or other custodian for Holdings, the Borrower
or any other Obligor or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence, permit
or suffer to exist the involuntary appointment of a trustee, receiver,
sequestrator or other custodian for Holdings, the Borrower or any other Obligor
or for a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged within 30
days;
(d) permit or suffer to exist the involuntary commencement of, or
voluntarily commence, any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency laws, or permit or suffer
to exist the involuntary commencement of, or voluntarily commence, any
dissolution, winding up or liquidation proceeding, in each case, by or against
Holdings, the Borrower or any other Obligor, provided that if not commenced by
Holdings, the Borrower or any other Obligor such proceeding shall be consented
to or acquiesced in by Holdings, the Borrower or any other Obligor, or shall
result in the entry of an order for relief or shall remain for thirty days
undismissed; or
(e) take any corporate action authorizing, or in furtherance of, any of
the foregoing.
SECTION 8.1.10. IMPAIRMENT OF SECURITY, ETC. Without the consent of the Lenders,
any Loan Document, or any Lien granted thereunder, shall (except in accordance
with its terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of
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Holdings, the Borrower or any Obligor party thereto; Holdings, the Borrower, any
other Obligor or any other Person shall, directly or indirectly, contest in any
manner such effectiveness, validity, binding nature or enforceability; or any
Lien securing any Obligation shall, in whole or in part, cease to be a perfected
first registered priority Lien.
SECTION 8.1.11. SUBORDINATED NOTES. The subordination provisions relating to any
Holdings' Subordinated Note, Borrower Subordinated Note or any other Permitted
Borrower Subordinated Debt (collectively "the "Subordination Provisions") shall
fail to be enforceable by the Agent, any Lender or any Issuer which has not
effectively waived the benefits thereof, or the principal or interest on any
Loan, Reimbursement Obligation or other Obligation shall fail to constitute
"Senior Indebtedness, "Senior Debt," "Superior Debt" (as defined in each
Holdings' Subordinated Note and Borrower Subordinated Note, as the case may be);
Holdings, the Borrower or any of their Affiliates shall, directly or indirectly,
disavow or contest in any manner (i) the effectiveness, validity or
enforceability of any of the Subordination Provisions, (ii) that any of such
Subordination Provisions exist for the benefit of the Agent, each Issuer and the
Lenders or (iii) that all payments of principal or interest with respect to the
Holdings' Subordinated Notes, the Borrower Subordinated Notes or any other
Permitted Borrower Subordinated Debt made by Holdings or the Borrower, as the
case may be, or realized from the liquidation of any property of Holdings or the
Borrower, as the case may be, shall be subject to any of such Subordination
Provisions.
SECTION 8.1.12. NON-PAYMENT OF TAXES. Holdings shall have failed to pay when due
any taxes or other governmental charges in excess of $100,000, except any such
taxes or other governmental charges which are being diligently contested by it
in good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 8.2. ACTION IF BANKRUPTCY EXISTS. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand.
SECTION 8.3. ACTION IF OTHER EVENT OF DEFAULT EXISTS. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare all or any portion of the outstanding principal
amount of the Loans and other Obligations to be due and payable and/or the
Commitments (if not theretofore terminated) to be terminated, whereupon the full
unpaid amount of such Loans and other Obligations which shall be so declared due
and payable shall be and become immediately due and payable, without further
notice, demand or presentment, and/or, as the case may be, the Commitments shall
terminate.
SECTION 8.4. PAYMENTS UPON ACCELERATION. After the occurrence and during the
continuance of an Event of Default and the acceleration of the Obligations
pursuant to Sections 8.2 or 8.3, the Agent shall apply all payments in respect
of the Obligations and all proceeds of Collateral to the Obligations in the
following order:
(a) first, to pay Obligations in respect of any expense reimbursements
or indemnities then due to the Agent, including, without limitation, fees and
expenses referred to in Sections 10.3 and 10.4;
(b) second, to pay Obligations in respect of any expense reimbursements
or indemnities then due to the Lenders and the Issuer;
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(c) third, to pay Obligations in respect of any fees then due to the
Agent, the Lenders and the Issuer;
(d) fourth, to pay interest due in respect of the Loans and Letters of
Credit;
(e) fifth, to pay the principal outstanding with respect to the Loans
and cash collateralize, on terms satisfactory to the Agent, the Letter of Credit
Obligations; and
(f) sixth, to the payment of all other Obligations;
provided, however, if sufficient funds are not available to fund all payments to
be made in respect of any of the Obligations described in any of the foregoing
clauses (a) through (f), the available funds being applied with respect to any
such Obligations referred to in any one of such clauses shall be allocated to
the payment of such Obligations ratably, based on the proportion of the Agent's,
each Lender's and the Issuer's interest in the aggregate outstanding Obligations
described in such clauses.
ARTICLE IX
THE AGENT
SECTION 9.1. ACTIONS. Each Lender hereby appoints Chase as Agent under and for
purposes of this Agreement, the Notes and each other Loan Document. Each Lender
authorizes the Agent to act on behalf of such Lender under this Agreement, the
Notes and each other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will comply, except as otherwise
provided in this Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity
shall survive any termination of this Agreement) the Agent, pro rata according
to such Lender's original percentage of the Term Loans and Revolving Loan
Commitments hereunder, from and against any and all liabilities, obligations,
losses, damages, claims, costs or expenses of any kind or nature whatsoever
which may at any time be imposed on, incurred by, or asserted against, the Agent
in any way relating to or arising out of this Agreement, the Notes and any other
Loan Document, including reasonable attorneys' fees, and as to which the Agent
is not reimbursed by the Borrower; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the gross
negligence or wilful misconduct of the Agent. The Agent shall not be required to
take any action hereunder, under the Notes or under any other Loan Document, or
to prosecute or defend any suit in respect of this Agreement, the Notes or any
other Loan Document, unless it is indemnified hereunder to its satisfaction. If
any indemnity in favor of the Agent shall be or become, in the determination of
the Agent, inadequate, the Agent may call for additional indemnification from
the Lenders and cease to do the acts indemnified against hereunder until such
additional indemnity is given.
SECTION 9.2. FUNDING RELIANCE, ETC. Unless the Agent shall have been notified by
telephone, confirmed in writing, by any Lender by 5:00 p.m. (New York City
time), on the day prior to a Borrowing that such Lender will not make available
the amount which would constitute its Percentage of such Borrowing on the date
specified therefor, the Agent may assume that such Lender has made such amount
available to the Agent and, in reliance upon such assumption, make available to
the Borrower a
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corresponding amount. If and to the extent that such Lender shall not have made
such amount available to the Agent, such Lender and the Borrower severally agree
to repay the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date the Agent made such amount
available to the Borrower to the date such amount is repaid to the Agent at the
interest rate applicable at the time to Loans comprising such Borrowing.
SECTION 9.3. EXCULPATION. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable to any Lender for any action taken or
omitted to be taken by it under this Agreement or any other Loan Document, or in
connection herewith or therewith, except for its own wilful misconduct or
negligence, nor be responsible for any recitals or warranties herein or therein,
nor for the effectiveness, enforceability, validity or due execution of this
Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under any other Loan Document. Any
such inquiry which may be made by the Agent shall not obligate it to make any
further inquiry or to take any action. The Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which the Agent believes to be genuine and to
have been presented by a proper Person.
SECTION 9.4. SUCCESSOR. The Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrower and all the Lenders. If no
successor Agent shall have been appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
(a) appoint a successor Agent, which shall be one of the Lenders or a commercial
banking or finance institution organized under the laws of the U.S. (or any
State thereof) or a U.S. branch or agency of a commercial banking institution,
and having a combined capital and surplus of at least $250,000,000 or (b)
designate the Lenders to perform the Agent's responsibilities. The successor
Agent shall be entitled to receive from the retiring Agent such documents of
transfer and assignment as such successor Agent may reasonably request, and
shall thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder as the Agent, the provisions of
(a) this Article IX shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under this Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to inure to its
benefit.
SECTION 9.5. LOANS BY CHASE. Chase shall have the same rights and powers with
respect to (a) the Loans and Letters of Credit made by it or any of its
Affiliates, and (b) the Notes held by it or any of its Affiliates as any other
Lender and may exercise the same as if it were not the Agent. Chase and each of
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of business with Holdings, the Borrower or any Subsidiary or Affiliate
thereof as if it were not the Agent hereunder.
SECTION 9.6. CREDIT DECISIONS. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will,
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independently of the Agent and each other Lender, and based on such other
documents, information and investigations as it shall deem appropriate at any
time, continue to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available to it under
this Agreement or any other Loan Document.
SECTION 9.7. COPIES, ETC. The Agent shall give prompt notice to each Lender of
each notice or request given to the Agent by Holdings or the Borrower and
required to be delivered to the Lenders pursuant to the terms of this Agreement
(unless concurrently delivered to the Lenders by Holdings or the Borrower, as
the case may be). The Agent will distribute to each Lender each document or
instrument received for its account and copies of all other communications
received by the Agent from Holdings or the Borrower for distribution to the
Lenders by the Agent in accordance with the terms of this Agreement.
SECTION 9.8. CERTAIN COLLATERAL MATTERS.
(a) The Agent is authorized on behalf of all the Lenders, without the
necessity of any notice to or further consent from the Lenders, from time to
time to take any action with respect to any Collateral or the Loan Documents
which may be necessary to perfect and maintain perfected the security interest
in and Liens upon the Collateral granted pursuant to the Loan Documents.
(b) Each Lender agrees that no Lender shall have any right individually
to seek to realize upon the security granted by any Loan Document, it being
understood and agreed that such rights and remedies may be exercised solely by
the Agent for the benefit of the Lenders.
(c) The Lenders irrevocably authorize the Agent, at its option and in
its discretion, to release any security interest or Lien granted to or held by
the Agent upon any Collateral (i) upon termination of the Commitments and
payment in full of all Loans and all other Obligations payable under this
Agreement and under any other Loan Document; (ii) constituting property sold or
to be sold or disposed of as part of or in connection with any disposition
permitted hereunder; (iii) constituting property in which Holdings, the Borrower
or any Subsidiary thereof owned no interest at the time the security interest
and/or Lien was granted or at any time thereafter; (iv) constituting property
leased to Holdings, the Borrower or any Subsidiary thereof under a lease which
has expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by Holdings,
the Borrower or such Subsidiary to be, renewed or extended; (v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the Indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by the Required Lenders or, if required by Section 10.1,
each Lender. Upon request by the Agent at any time, the Lenders will confirm in
writing the Agent's authority to release particular types or items of collateral
pursuant to this Section 9.8.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement and of
each other Loan Document may from time to time be amended, modified or waived,
if such amendment, modification or waiver is in writing and consented to by
Holdings, the Borrower and the Agent (acting only at the direction or with the
authority of the Required Lenders); provided, however, that no such amendment,
modification or waiver which would:
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(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders shall be effective unless
consented to by each Lender;
(b) modify this Section 10.1, change the definition of "Required
Lenders", increase any Commitment Amount or the Percentage of any Lender, reduce
any fees described in Article III, change the time for payment of fees to the
Lenders described in Article III, or release all or any substantial part of the
Collateral except as otherwise specifically provided in any Loan Document, shall
be made without the consent of any Lender affected thereby;
(c) extend the due date for, or reduce the amount of, any scheduled
repayment or prepayment under clause (b), (c) or (d) of Section 3.1.2 of
principal of, or interest on, any Loan or Reimbursement Obligation (or reduce
the principal amount of or rate of interest on any Loan or Reimbursement
Obligation), change the schedule of reductions to the Commitments provided for
in Section 2.3(b) or extend any Commitment Termination Date without the consent
of the holder of that Note evidencing such Loan;
(d) amend, modify or waive any condition set forth in Section 5.2 to
the making of any Credit Extension;
(e) increase the Stated Amount of any Letter of Credit unless consented
to by each Issuer; or
(f) affect adversely the interests, rights or obligations of the Agent
in its capacity as Agent or the Issuer in its capacity as Issuer, without the
consent of the Agent or the Issuer, as the case may be.
No failure or delay on the part of the Agent, any Lender or the holder
of any Note in exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder. The
remedies provided in this Agreement are cumulative, and not exclusive of
remedies provided by law.
SECTION 10.2. NOTICES. All notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in writing
and addressed, delivered or transmitted to such party at its address or telecopy
number set forth on Schedule III hereto (or set forth in a Lender Assignment
Agreement) or at such other address or telecopy number as may be designated by
such party in a notice to the other parties given in accordance with this
Section 10.2. Any notice, if mailed and properly addressed with postage prepaid,
shall be deemed given three Business Days after posting; any notice, if sent by
prepaid overnight express shall be deemed delivered on the next Business Day;
any notice, if transmitted by telecopy, shall be deemed given when sent, with
confirmation of receipt; any notice, if transmitted by hand, shall be deemed
received when delivered. Any Borrowing Request or Continuation/Conversion Notice
delivered to the Agent by facsimile shall be confirmed by the prompt delivery of
the original thereof to the Agent (except that no such confirmation shall be
required with respect to any Borrowing Request, unless requested by the Agent,
to the extent that the proceeds therefrom
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are requested to be disbursed to the Borrower's controlled disbursement account
maintained with the Agent).
SECTION 10.3. PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to pay on
demand all reasonable expenses of the Agent (including, without limitation, the
fees and out-of-pocket expenses of counsel to the Agent, including the allocated
fees and expenses of in-house counsel, and consultants, if any, who may be
retained in connection with the transactions contemplated hereby by the Agent)
in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and exhibits, and
any amendments, waivers, consents, supplements or other modifications to this
Agreement or any other Loan Document as may from time to time hereafter be
required, and the Lenders' and the Agent's consideration of their rights and
remedies hereunder or in connection herewith from time to time whether or not
the transactions contemplated hereby or thereby are consummated;
(b) the filing, recording, refiling or rerecording of the Pledge
Agreement, the Security Agreement (and any supplements thereto) and any other
security instruments executed in connection with the transactions contemplated
hereby and/or U.C.C. financing statements relating thereto, and all amendments,
supplements and modifications to any thereof and all other documents or
instruments of further assurance required to be filed or recorded or refiled or
rerecorded by the terms hereof or, the Pledge Agreement or the Security
Agreement or such other documents; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document;
The Borrower further agrees to pay, and to save the Agent, the Issuer and the
Lenders harmless from all liability for, any stamp or other taxes which may be
payable in connection with the execution or delivery of this Agreement, the
borrowings hereunder, or the issuance of the Notes or any other Loan Documents.
The Borrower also agrees to reimburse the Agent, each Issuer and each Lender
upon demand for all reasonable expenses (including, without limitation, the fees
and out-of-pocket expenses of counsel to the Agent and each Lender, including
the allocated fees and expenses of in-house counsel and consultants, if any, who
may be retained by such persons) incurred by the Agent or each such Issuer or
Lender in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations. The Borrower further agrees to reimburse the
Agent on demand for all administration, audit and monitoring expenses incurred
in connection with the Eligible Accounts and Eligible Inventory and
determinations in respect thereof.
SECTION 10.4. INDEMNIFICATION. In consideration of the execution and delivery of
this Agreement by each Lender and the extension of the Commitments, the Borrower
and Holdings jointly and severally indemnify, exonerate and hold the Agent, the
Issuers and each Lender and each of their respective officers, directors,
employees and agents (collectively, the "Indemnified Parties") free and harmless
from and against any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to
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(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or with any Letter of
Credit;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties (including any action brought by
or on behalf of the Borrower as the result of any determination by the Required
Lenders pursuant to Article V not to fund any Borrowing);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its Subsidiaries
of all or any portion of the stock or assets of any Person, whether or not the
Agent or any Lender is party thereto;
(d) Environmental Laws relating to Holdings, the Borrower or any of
their Subsidiaries, including the assertion of any lien thereunder;
(e) the presence on or under, or the discharge, emission, spill or
disposal from, any real property owned or leased by Holdings, the Borrower or
any of their Subsidiaries or into or upon any land or the atmosphere, of any
Hazardous Material where a source of the Hazardous Material is such real
property (including, without limitation, (A) the costs of defending and or
counterclaiming or claiming over against third parties in respect of any action
or matter; and (B) any cost, liability or damage arising out of a settlement of
any action entered into by the Lender);
(f) in complying with or otherwise in connection with any order,
consent, decree, settlement, judgement or verdict arising from the deposit,
storage, disposal, burial, dumping, injection, spilling, leaking, or other
placement or release in, on or from any real property owned or leased by
Holdings, the Borrower or any of their Subsidiaries of any Hazardous Material
(including without limitation any order under the Environmental Laws to clean-up
or decommission), whether or not such deposit, storage, disposal, burial,
dumping, injecting, spillage, leaking or other placement or release in, on or
from any such real property of any Hazardous Material:
(i) results by, through or under property owned or leased by
Holdings or the Borrower; or
(ii) occurred with Holdings' or the Borrower's knowledge and
consent; or
(iii) occurred before or after the Effective Date;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct as determined by a final judgment of a court of
competent jurisdiction. If and to the extent that the foregoing undertaking may
be unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
SECTION 10.5. SURVIVAL. The obligation, as applicable, of Holdings and the
Borrower under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations
of the Lenders under Section 9.1, shall in each case survive any termination of
this Agreement, the payment in full of all the Obligations and the termination
of all the Commitments. The representations and warranties made by each Obligor
in this Agreement and
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in each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION 10.6. SEVERABILITY. Any provision of this Agreement or any other Loan
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 10.7. HEADINGS. The various headings of this Agreement and of each other
Loan Document are inserted for convenience only and shall not affect the meaning
or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 10.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This Agreement may
be executed by the parties hereto in several counterparts, each of which shall
be executed by the Borrower and the Agent and be deemed to be an original and
all of which shall constitute together but one and the same agreement. This
Agreement shall become effective when counterparts hereof executed on behalf of
the Borrower and each initial Lender (or notice thereof satisfactory to the
Agent) shall have been received by the Agent and notice thereof shall have been
given by the Agent to the Borrower and each Lender.
SECTION 10.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT AND THE NOTES
SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. This Agreement, the Notes and the other Loan Documents
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any prior agreements, written or oral, with
respect thereto.
SECTION 10.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that:
(a) neither Holdings nor the Borrower may assign or transfer its rights
or obligations hereunder without the prior written consent of the Agent and all
Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to Section 10.11.
SECTION 10.11. SALE AND TRANSFER OF LOANS AND NOTES; PARTICIPATIONS IN LOANS AND
NOTES. Each Lender may assign, or sell participations in, its Loans and
Commitments to one or more other Persons in accordance with this Section 10.11.
SECTION 10.11.1. ASSIGNMENTS.
(a) Any Lender, with the written consent of the Borrower and the Agent
(which consent, in the case of the Borrower, shall not to be unreasonably
withheld or delayed and shall not, in any event, be required if any Default or
Event of Default shall have occurred and be continuing), may at any time assign
and delegate all or any fraction of such Lender's Loans, Commitments and Letter
of Credit participations to one or more commercial banks or other financial
institutions, and with notice to the Borrower and the Agent, but without the
consent of the Borrower or the Agent, may assign and delegate to any of its
Affiliates or to any other Lender (each Person described in either of the
foregoing clauses as the Person to whom such assignment and delegation is to be
made being hereinafter referred to as an "Assignee
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Lender"), all or any fraction of such Lender's total Loans, Commitments and
Letter of Credit participations (which assignment and delegation shall be of a
constant, and not a varying, percentage of all the assigning Lender's Loans and
Commitments) in a minimum aggregate amount of $5,000,000 (or, if less, the total
of such Lender's Commitment Amount and aggregate principal amount of Loans
outstanding); provided, however, that the Borrower, each other Obligor and the
Agent shall be entitled to continue to deal solely and directly with such Lender
in connection with the interests so assigned and delegated to an Assignee Lender
until
(i) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrower and the Agent by
such Lender and such Assignee Lender;
(ii) such Assignee Lender shall have executed and delivered to
the Borrower and the Agent a Lender Assignment Agreement, accepted by the Agent;
and
(iii) the processing fees described below shall have been
paid.
From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Borrower shall execute and
deliver to the Agent (for delivery to the relevant Assignee Lender) new Notes
evidencing such Assignee Lender's assigned Loans and Commitments and, if the
assignor Lender has retained Loans and Commitments hereunder, replacement Notes
in the principal amount of the Loans and Commitments retained by the assignor
Lender hereunder (such Notes to be in exchange for, but not in payment of, those
Notes then held by such assignor Lender). Each such Note shall be dated the date
of the predecessor Notes. The assignor Lender shall xxxx the predecessor Notes
"exchanged" and deliver them to the Borrower. Accrued interest on that part of
the predecessor Notes evidenced by the new Notes, and accrued fees, shall be
paid as provided in the Lender Assignment Agreement. Accrued interest on that
part of the predecessor Notes evidenced by the replacement Notes shall be paid
to the assignor Lender. Accrued interest and accrued fees shall be paid at the
same time or times provided in the predecessor Notes and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Agent upon delivery of any Lender Assignment Agreement in the amount of $3,500.
Any attempted assignment and delegation not made in accordance with this Section
10.11.1 shall be null and void. The terms of this clause (a) shall not apply to
the original syndication of the Commitments by Chase.
(b) Notwithstanding clause (a), any Lender may assign and pledge all or
any portion of its Loans and Notes and other rights to a Federal Reserve Bank as
collateral security; provided, however, that no such assignment under this
clause (b) shall release the assignor Lender from any of its obligations
hereunder.
SECTION 10.11.2. PARTICIPATIONS.
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(a) Any Lender may at any time without the consent of the Borrower or
the Agent (but with prior written notice to the Borrower and the Agent) sell to
one or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests in
any of the Loans, Commitments, or other interests of such Lender hereunder;
provided, however, that
(i) no participation contemplated in this Section 10.11.2
shall relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(ii) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
(iii) the Borrower and each other Obligor and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and each of the other Loan
Documents;
(iv) no Participant, unless such Participant is an Affiliate
of such Lender, or is itself a Lender, shall be entitled to require such Lender
to take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of the
type described in clause (b) or (c) of Section 10.1; and
(v) the Borrower shall not be required to pay any amount under
clause (b) of this Section 10.11.2 that is greater than the amount which it
would have been required to pay had no participating interest been sold.
(b) The Borrower acknowledges and agrees that each Participant, for
purposes of Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, shall be considered a
Lender.
SECTION 10.11.3. CERTAIN OTHER PROVISIONS.
(a) The Borrower authorizes each Lender to disclose to any participant
or assignee (each, a "Transferee") and any prospective Transferee any and all
financial and other information in such Lender's possession concerning the
Borrower which has been delivered to such Lender by the Borrower pursuant to or
in connection with this Agreement or which has been delivered to such Lender by
the Borrower in connection with such Lender's credit evaluation of the Borrower
prior to entering into this Agreement.
(b) If, pursuant to this Section 10.11.3, any interest in this
Agreement or any Loan or Note is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United States or any
State thereof, the transferor Lender shall cause such Transferee (other than any
Participant), and may cause any Participant, concurrently with the effectiveness
of such transfer, (i) to represent to the transferor Lender (for the benefit of
the transferor Lender, the Agent and the Borrower) that under applicable law and
treaties, except as disclosed by such Transferee, no taxes will be required to
be withheld by the Agent, the Borrower or the transferor Lender with respect to
any payments to be made to such Transferee in respect of the Loans, (ii) to
furnish to the transferor Lender, the Agent and the Borrower either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Transferee claims entitlement to whole or partial exemption from
U.S. federal withholding tax on all interest payments hereunder) and (iii) to
agree (for the benefit of the transferor Lender, the
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Agent and the Borrower) to provide the transferor Lender, the Agent and the
Borrower a new Form 4224 or Form 1001 upon the obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S. laws and regulations
with regard to such withholding tax exemption.
SECTION 10.12. OTHER TRANSACTIONS. Nothing contained herein shall preclude
either the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13. GUARANTY OF HOLDINGS.
(a) Guaranty. Holdings unconditionally and irrevocably guarantees the
full and prompt payment when due, whether at stated maturity, by acceleration or
otherwise (including, without limitation, all amounts which would have become
due but for the operation of the automatic stay under Section 362(a) of the
Federal Bankruptcy Code, 11 U.S.C. 362(a)), of all Obligations, whether for
principal, interest, fees, expenses or otherwise, and including any and all
costs and expenses (including reasonable attorney costs) incurred by the Agent
or any Lender in enforcing any of their respective rights with respect thereto.
The foregoing guaranty constitutes a guaranty of payment when due and not merely
of collection, and Holdings specifically agrees that it shall not be necessary
or required that the Agent or any Lender exercise any right, assert any claim or
demand or enforce any remedy whatsoever against any Borrower or any other
Obligor before or as a condition to the obligations of Holdings hereunder.
(b) Acceleration of Guaranty. Holdings and agrees that (i) in the event
that the Borrower or any other Obligor is subject to any proceeding of the
nature referred to in Section 8.1.9, or (ii) upon notice of acceleration of the
Obligations from the Agent pursuant to Section 8.3, and if any such event shall
occur at a time when any of the Obligations may not then be due and payable,
Holdings will pay to the Lenders forthwith the full amount which would be
payable hereunder by Holdings if all the Obligations were then due and payable.
(c) Guaranty Absolute. The guaranty pursuant to this Section 10.13 is a
continuing, absolute, unconditional and irrevocable guarantee of payment and
shall remain in full force and effect until all the Obligations have been
indefeasibly paid in full in cash and all Commitments shall have permanently
terminated. Holdings guarantees that the Obligations will be paid strictly in
accordance with the terms of each agreement under which they arise, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or any of the Lenders
with respect thereto. The liability of each of Holdings under this Section 10.13
shall be absolute and unconditional irrespective of:
(i) any lack of validity, legality or enforceability of this
Agreement, the Notes, any other Loan Document, or any other agreement or
instrument relating to any thereof;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any compromise, renewal,
extension, acceleration or release with respect thereto, or any other amendment
or waiver of or any consent to departure from this Agreement, the Notes or any
other Loan Document;
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(iii) any addition, exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Obligations;
(iv) the failure of the Agent or any Lender
(A) to assert any claim or demand or to enforce any
right or remedy against Holdings, the Borrower, any other Obligor or
any other Person (including any other guarantor) under the provisions
of this Agreement, any Note, any other Loan Document or otherwise, or
(B) to exercise any right or remedy against any other
guarantor of, or Collateral securing, any of the Obligations;
(v) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of this
Agreement, any Note or any other Loan Document;
(vi) any defense, set-off or counterclaim which may at any
time be available to or be asserted by Holdings, the Borrower or any other
Obligor against the Agent or any Lender;
(vii) any reduction, limitation, impairment or termination of
the Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and Holdings
hereby waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any other
event or occurrence affecting, the Obligations or otherwise; or
(viii) any other circumstance which might otherwise constitute
a defense available to, or a legal or equitable discharge of, the Borrower, any
other Obligor or Holdings.
(d) Reinstatement, etc. Holdings agrees that its guaranty hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must otherwise be restored by the Agent or any Lender, upon the Borrower or any
other Obligor being subject to any proceeding of the nature referred to in
Section 8.1.9 or otherwise, all as though such payment had not been made.
(e) Waiver. Holdings hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and this
guaranty, and any requirement that the Agent or any Lender protect, secure,
perfect or insure any Lien on any of the Collateral or other property or exhaust
any right or take any action against the Borrower, any other Obligor or any
other Person (including any other guarantor) or any Collateral securing the
Obligations.
(f) Waiver of Subrogation. Holdings hereby irrevocably waives any claim
or other rights which it may now or hereafter acquire against the Borrower or
any other Obligor that arise from the existence, payment, performance or
enforcement of its obligations under its guaranty hereunder, including any right
of subrogation, reimbursement, exoneration or indemnification, any right to
participate in any claim or remedy of the Agent or any Lender against the
Borrower or any other Obligor or any Collateral which the Agent or any Lender
now has or hereafter acquires, whether or not such claim, remedy or right arises
in equity, or under contract, statute or common law, including the right to take
or receive from the
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Borrower or any other Obligor, directly or indirectly, in cash or other property
or by set-off or in any manner, payment or security on account of such claim or
other rights. If any amount shall be paid to the Borrower in violation of the
preceding sentence and the Obligations shall not have been paid in cash in full
and the Commitments have not been permanently terminated, such amount shall be
deemed to have been paid to Holdings for the benefit of, and held in trust for,
the Lenders, and shall forthwith be paid to the Agent on behalf of the Lenders
to be credited and applied against the Obligations, whether matured or
unmatured. Holdings acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Agreement and that
the waiver set forth in this Section is knowingly made in contemplation of such
benefits.
SECTION 10.14. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS, HOLDINGS OR THE
BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE FEDERAL OR STATE
COURTS OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. HOLDINGS AND THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURTS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
HOLDINGS AND THE BORROWER FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. HOLDINGS AND THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
HOLDINGS OR THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, HOLDINGS AND THE BORROWER
HEREBY IRREVOCABLY WAIVE SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.15. WAIVER OF JURY TRIAL, ETC. THE AGENT, THE LENDERS, HOLDINGS AND
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS, HOLDINGS OR THE BORROWER.
HOLDINGS AND THE BORROWER ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
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EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT
AND EACH SUCH OTHER LOAN DOCUMENT. IN NO EVENT SHALL ANY LENDER OR THE AGENT BE
LIABLE FOR ANY CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED IN CONNECTION HEREWITH
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SELFCARE CONSUMER PRODUCTS, INC.
By:________________________________
Name:
Title:
SELFCARE, INC.
By:_______________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as the Agent
By:________________________________
Name:
Title:
LENDERS
THE CHASE MANHATTAN BANK
By:________________________________
Name:
Title:
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SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 1.1 Holdings' Equity Documents.
ITEM 6.8 Initial Capitalization.
ITEM 6.12 Environmental Matters.
ITEM 6.13(a) Inventory Locations.
ITEM 6.20 Insurance.
ITEM 7.2.2(b) Indebtedness to be Paid.
ITEM 7.2.2(c) Ongoing Indebtedness.
ITEM 7.2.2(z) Holdings' Contingent Liabilities.
ITEM 7.2.3(c) Existing Liens.
ITEM 7.2.5(a) Ongoing Investments.
ITEM 7.2.8 Take or Pay Contracts.
ITEM 7.2.12(a) Transactions with Affiliates.
104
SCHEDULE II
PERCENTAGES
Lender Revolving Loan Commitment Term Loan Commitment
------ ------------------------- --------------------
The Chase Manhattan Bank 100% 100%
----------------------------------------------------------------------------------------------------------------
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105
SCHEDULE III
ADMINISTRATIVE INFORMATION
BORROWER AND HOLDINGS
Selfcare, Inc.
Selfcare Consumer Products, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopier No.: 000-000-0000
Attention: Xxxxxxx Xxxx
AGENT
The Chase Manhattan Bank
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
LENDERS
1. The Chase Manhattan Bank
Domestic Office
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Credit Executive
LIBOR Office
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Credit Executive
Administrative Information
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Credit Executive
