EXHIBIT 10.1
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D & K HEALTHCARE RESOURCES, INC.,
XXXXXX DRUG CO.,
DIVERSIFIED HEALTHCARE, LLC, AND
MEDICAL & VACCINE PRODUCTS, INC.,
AS BORROWERS
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SIXTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated: March 28, 2003
$600,000,000
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FLEET CAPITAL CORPORATION
INDIVIDUALLY AND AS AGENT FOR EACH LENDER WHICH IS
OR BECOMES A PARTY HERETO,
BANK OF AMERICA, N.A. AND
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS CO-SYNDICATION AGENT,
JPMORGAN CHASE BANK AND
GENERAL ELECTRIC CAPITAL CORPORATION,
AS CO-DOCUMENTATION AGENT,
BANK ONE, NA,
CONGRESS FINANCIAL CORPORATION,
LASALLE BUSINESS CREDIT, LLC, AND
US BANK NATIONAL ASSOCIATION,
AS CO-AGENT,
FLEET SECURITIES, INC.
AS LEAD ARRANGER
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TABLE OF CONTENTS
Page
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SECTION 1. CREDIT FACILITY.................................................................................... 1
1.1. Loans............................................................................................. 2
1.2. Letters of Credit; LC Guaranties.................................................................. 4
1.3. All Loans to Constitute One Obligation; Joint and Several Liability............................... 5
1.4. Appointment of D&K as Borrower Representative..................................................... 5
SECTION 2. INTEREST, FEES AND CHARGES......................................................................... 6
2.1. Interest.......................................................................................... 6
2.2. Computation of Interest and Fees.................................................................. 7
2.3. Fee Letter........................................................................................ 7
2.4. Letter of Credit and LC Guaranty Fees............................................................. 7
2.5. Unused Line Fee................................................................................... 8
2.6. Reimbursement of Expenses......................................................................... 8
2.7. Audit Fees........................................................................................ 9
2.8. Bank Charges...................................................................................... 9
2.9. Collateral Protection Expenses; Appraisals........................................................ 9
2.10. Payment of Charges................................................................................ 9
2.11. No Deductions..................................................................................... 10
SECTION 3. LOAN ADMINISTRATION................................................................................ 10
3.1. Manner of Borrowing Revolving Credit Loans/LIBOR Option........................................... 10
3.2. Payments.......................................................................................... 13
3.3. Mandatory and Optional Prepayments................................................................ 14
3.4. Application of Payments and Collections........................................................... 14
3.5. All Loans to Constitute One Obligation............................................................ 15
3.6. Loan Account...................................................................................... 15
3.7. Statements of Account............................................................................. 16
3.8. Increased Costs................................................................................... 16
3.9. Sharing of Payments, Etc.......................................................................... 18
3.10. Effect On Prior Loans; Prior Loan and Security Agreement.......................................... 18
SECTION 4. TERM AND TERMINATION............................................................................... 19
4.1. Term of Agreement................................................................................. 19
4.2. Termination....................................................................................... 19
SECTION 5. SECURITY INTERESTS................................................................................. 20
5.1. Security Interest in Collateral................................................................... 20
5.2. Other Collateral.................................................................................. 21
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5.3. Lien Perfection; Further Assurances............................................................... 22
5.4. Lien on Realty.................................................................................... 22
SECTION 6. COLLATERAL ADMINISTRATION.......................................................................... 23
6.1. General........................................................................................... 23
6.2. Administration of Accounts........................................................................ 24
6.3. Administration of Inventory....................................................................... 26
6.4. Administration of Equipment....................................................................... 26
6.5. Payment of Charges................................................................................ 27
SECTION 7. REPRESENTATIONS AND WARRANTIES..................................................................... 27
7.1. General Representations and Warranties............................................................ 27
7.2. Continuous Nature of Representations and Warranties............................................... 34
7.3. Survival of Representations and Warranties........................................................ 35
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS................................................................ 35
8.1. Affirmative Covenants............................................................................. 35
8.2. Negative Covenants................................................................................ 39
8.3. Specific Financial Covenants...................................................................... 46
SECTION 9. CONDITIONS PRECEDENT............................................................................... 46
9.1. Documentation..................................................................................... 46
9.2. No Default........................................................................................ 47
9.3. Other Conditions.................................................................................. 47
9.4. Availability...................................................................................... 47
9.5. No Litigation..................................................................................... 47
9.6. Diligence and Appraisal........................................................................... 47
9.7. Material Adverse Effect........................................................................... 47
9.8. Fees.............................................................................................. 47
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.................................................. 48
10.1. Events of Default................................................................................. 48
10.2. Acceleration of the Obligations................................................................... 51
10.3. Other Remedies.................................................................................... 51
10.4. Set Off and Sharing of Payments................................................................... 53
10.5. Remedies Cumulative; No Waiver.................................................................... 53
SECTION 11. AGENT.............................................................................................. 54
11.1. Authorization and Action.......................................................................... 54
11.2. Agent's Reliance, Etc............................................................................. 54
11.3. Fleet and Affiliates.............................................................................. 55
11.4. Lender Credit Decision............................................................................ 55
11.5. Indemnification................................................................................... 56
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11.6. Rights and Remedies to be Exercised by Agent Only................................................. 56
11.7. Agency Provisions Relating to Collateral.......................................................... 56
11.8. Agent's Right to Purchase Commitments............................................................. 57
11.9. Right of Sale, Assignment, Participations......................................................... 57
11.10. Amendment......................................................................................... 60
11.11. Resignation of Agent; Appointment of Successor.................................................... 61
11.12. Audit and Examination Reports; Disclaimer by Lenders.............................................. 61
11.13. Syndication Agent/Documentation Agent/Co-Agent.................................................... 62
SECTION 12. MISCELLANEOUS...................................................................................... 62
12.1. Power of Attorney................................................................................. 62
12.2. Indemnity......................................................................................... 63
12.3. Sale of Interest.................................................................................. 64
12.4. Severability...................................................................................... 64
12.5. Successors and Assigns............................................................................ 64
12.6. Cumulative Effect; Conflict of Terms.............................................................. 64
12.7. Execution in Counterparts......................................................................... 64
12.8. Notice............................................................................................ 64
12.9. Consent........................................................................................... 65
12.10. Credit Inquiries.................................................................................. 66
12.11. Time of Essence................................................................................... 66
12.12. Entire Agreement.................................................................................. 66
12.13. Interpretation.................................................................................... 66
12.14. Intentionally Omitted............................................................................. 66
12.15. GOVERNING LAW; CONSENT TO FORUM................................................................... 66
12.16. WAIVERS BY BORROWERS.............................................................................. 67
12.17. Private Sale; Commercial Reasonableness........................................................... 68
12.18. Confidentiality................................................................................... 69
12.19. Advertisement..................................................................................... 69
SECTION 13. CROSS GUARANTY..................................................................................... 70
13.1. Cross-Guaranty.................................................................................... 70
13.2. Waivers by Borrowers.............................................................................. 71
13.3. Benefit of Guaranty............................................................................... 71
13.4. Waiver of Subrogation, Etc........................................................................ 71
13.5. Election of Remedies.............................................................................. 72
13.6. Limitation........................................................................................ 72
13.7. Contribution with Respect to Guaranty Obligations................................................. 73
13.8. Liability Cumulative.............................................................................. 74
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SIXTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SIXTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is
made as of this 28th day of March, 2003, by and among FLEET CAPITAL CORPORATION
("Fleet"), a Rhode Island corporation, individually as a Lender and as Agent
("Agent") for itself and each other financial institution which is or becomes a
party hereto (each such financial institution, including Fleet, is referred to
hereinafter individually as a "Lender" and collectively as the "Lenders"), the
LENDERS, D&K HEALTHCARE RESOURCES, INC., a Delaware corporation ("D&K"), XXXXXX
DRUG CO., a South Dakota corporation ("Xxxxxx"), DIVERSIFIED HEALTHCARE, LLC, a
Kentucky limited liability company ("DH") and MEDICAL & VACCINE PRODUCTS, INC.
d/b/a DEVICTORIA MEDICAL, a Puerto Rico corporation ("MVP"; D&K, Xxxxxx, XX and
MVP are sometimes hereafter referred to individually as "Borrower" and
collectively as "Borrowers").
RECITALS
WHEREAS, Borrowers and Agent, and certain of the Lenders
signatory hereto are parties to that certain Fifth Amended and Restated Loan and
Security Agreement (as supplemented, restated, amended or otherwise modified
from time to time, the "Prior Loan and Security Agreement"), dated as of
September 30, 2000, pursuant to which the Agent and the other Lenders party
thereto provided to Borrowers a revolving loan commitment of $200,000,000 (such
commitment being herein referred to as the "Prior Commitment" and the Loans and
Obligations outstanding pursuant thereto being herein referred to as the "Prior
Loans"); and
WHEREAS, Borrowers desire that Lenders increase the prior
revolving credit facility to Borrowers to $600,000,000 and extend the maturity
thereof and, Lenders are willing to provide Borrower with Loan Commitments in
that amount upon the terms and conditions set forth herein;
WHEREAS, capitalized terms used in this Agreement shall have
the meanings assigned to them in Appendix A, General Definitions. Accounting
terms not otherwise specifically defined herein shall be construed in accordance
with GAAP consistently applied. These Recitals shall be construed as part of the
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon
the representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a Total Credit Facility of up to $600,000,000
available upon Borrower Representative's request therefor, as follows:
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1.1. Loans.
1.1.1. Revolving Credit Loans. Each Lender agrees,
severally and not jointly, for so long as no Default or Event of
Default exists, to make Revolving Credit Loans in the aggregate to
Borrowers from time to time during the period from the date hereof to
but not including the last day of the Term, as requested by Borrower
Representative in the manner set forth in subsection 3.1.1 hereof, up
to a maximum principal amount at any time outstanding equal to the
lesser of (i) such Lender's Revolving Loan Commitment minus the product
of such Lender's Revolving Loan Percentage and the LC Amount minus the
product of such Lender's Revolving Loan Percentage and reserves, if any
and (ii) the product of such Lender's Revolving Loan Percentage and an
amount equal to the Borrowing Base at such time minus the product of
such Lender's Revolving Loan Percentage and the LC Amount minus the
product of such Lender's Revolving Loan Percentage and reserves, if
any. Agent shall have the right to establish reserves in such amounts,
and with respect to such matters, as Agent shall reasonably deem
necessary or appropriate in its reasonable credit judgment, against the
amount of Revolving Credit Loans which Borrower Representative may
otherwise request under this subsection 1.1.1 including without
limitation with respect to (i) price adjustments, damages, unearned
discounts, rebates, returned products or other matters for which credit
memoranda are issued in the ordinary course of any Borrower's business;
(ii) dilution related to Accounts; (iii) shrinkage, spoilage and
obsolescence of any Borrower's Inventory; (iv) slow moving Inventory;
(v) other sums chargeable against any Borrower's Loan Account as
Revolving Credit Loans under any section of this Agreement; (vi)
amounts owing by any Borrower to any Person to the extent secured by a
Lien on, or trust over, any Property of any Borrower other than
Permitted Liens; (vii) amounts owing by any Borrower in connection with
Product Obligations; and (viii) such other specific events, conditions
or contingencies as to which Agent, in its reasonable credit judgment,
determines reserves should be established from time to time hereunder.
The Revolving Credit Loans shall be repayable in accordance with the
terms of the Revolving Notes and shall be secured by all of the
Collateral.
1.1.2. Overadvances. Insofar as Borrower
Representative may request and Agent or Majority Lenders (as provided
below) may be willing in their sole and absolute discretion to make
Revolving Credit Loans to Borrowers at a time when the unpaid balance
of Revolving Credit Loans plus the sum of the LC Amount plus the amount
of LC Obligations that have not been reimbursed by Borrowers or funded
with a Revolving Credit Loan, plus reserves, exceeds, or would exceed,
with the making of any such Revolving Credit Loan, the Borrowing Base
(any such Loan or Loans being herein referred to individually as an
"Overadvance" and collectively, as "Overadvances"), Agent shall enter
such Overadvances as debits in the Loan Account. All Overadvances shall
be repaid on demand, shall be secured by the Collateral and shall bear
interest as provided in this Agreement for Revolving Credit Loans
generally. Any Overadvance made pursuant to the terms hereof shall be
made by all Lenders ratably in accordance with their respective
Revolving Loan
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Percentages. Overadvances in the aggregate amount of $5,000,000 or less
may, unless a Default or Event of Default has occurred and is
continuing, be made in the sole and absolute discretion of Agent.
Overadvances in an aggregate amount of more than $5,000,000 but less
than $10,000,000 may, unless a Default or an Event of Default has
occurred and is continuing, be made in the sole and absolute discretion
of Majority Lenders. Overadvances in an aggregate amount of $10,000,000
or more and Overadvances to be made after the occurrence and during the
continuation of a Default or an Event of Default shall require the
consent of all Lenders. The foregoing notwithstanding, in no event,
unless otherwise consented to by all Lenders, (w) shall any
Overadvances be outstanding for more than ninety (90) consecutive days,
(x) after all outstanding Overadvances have been repaid, shall Agent or
Lenders make any additional Overadvances unless thirty (30) days or
more have expired since the last date on which any Overadvances were
outstanding, (y) shall Overadvances be outstanding on more than one
hundred twenty (120) days within any one hundred eighty day (180)
period or (z) shall Agent make Revolving Credit Loans on behalf of
Lenders under this subsection 1.1.2 to the extent such Revolving Credit
Loans would cause a Lender's share of the Revolving Credit Loans to
exceed such Lender's Revolving Loan Commitment minus such Lender's
Revolving Loan Percentage of the LC Amount.
1.1.3. Use of Proceeds. The Revolving Credit Loans
shall be used solely for (i) the refinancing by Borrowers of their
obligations under the Prior Loan and Security Agreement held by Lenders
that do not become Lenders hereunder, (ii) the refinancing of all
obligations in connection with the $200,000,000 Securitization Conduit
Program dated as of August 7, 1998, as amended (the "Securitization"),
(iii) Borrowers' working capital and general corporate purposes in a
manner consistent with the provisions of this Agreement and all
applicable laws, and (iv) other purposes permitted under this
Agreement.
1.1.4. Swingline Loans. In order to reduce the
frequency of transfers of funds from Lenders to Agent for making
Revolving Credit Loans and for so long as no Default or Event of
Default exists, Agent shall be permitted (but not required) to make
Revolving Credit Loans to Borrowers upon request by Borrower
Representative (such Revolving Credit Loans to be designated as
"Swingline Loans"); provided that the aggregate amount of Swingline
Loans outstanding at any time will not (i) exceed $30,000,000; (ii)
when added to the principal amount of Agent's other Revolving Credit
Loans then outstanding plus Agent's Revolving Loan Percentage of the LC
Amount, exceed Agent's Revolving Loan Commitment; or (iii) when added
to the principal amount of all other Revolving Credit Loans then
outstanding plus the LC Amount, exceed the Borrowing Base. Within the
foregoing limits, Borrowers may borrow, repay and reborrow Swingline
Loans. All Swingline Loans shall be treated as Revolving Credit Loans
for purposes of this Agreement, except that (other than as set forth in
the next succeeding sentence) all principal and interest paid with
respect to Swingline Loans shall be for the sole account of Agent in
its capacity as the lender of Swingline Loans. Notwithstanding the
foregoing, not less frequently than once per
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month and not more than 2 Business Days after (1) Lenders receive
notice from Agent that a Swingline Loan has been advanced in respect of
a drawing under a Letter of Credit or LC Guaranty or (2) in any other
circumstance, demand is made by Agent during the continuance of an
Event of Default, each Lender shall irrevocably and unconditionally
purchase and receive from Agent, without recourse or warranty from
Agent, an undivided interest and participation in each Swingline Loan
to the extent of such Lender's Revolving Loan Percentage thereof, by
paying to Agent, in same day funds, an amount equal to such Lender's
Revolving Loan Percentage of such Swingline Loan.
1.1.5. Agent Loans. Upon the occurrence and during
the continuance of an Event of Default, Agent, in its sole discretion,
may make Revolving Credit Loans on behalf of Lenders, in an aggregate
amount not to exceed $5,000,000, if Agent, in its reasonable business
judgment, deems that such Revolving Credit Loans are necessary or
desirable (i) to protect all or any portion of the Collateral, (ii) to
enhance the likelihood, or maximize the amount of, repayment of the
Loans and the other Obligations, or (iii) to pay any other amount
chargeable to any Borrower pursuant to this Agreement, including
without limitation costs, fees and expenses as described in Sections
2.6 and 2.7 (hereinafter, "Agent Loans"); provided, that (a) in no
event shall the maximum principal amount of the Revolving Credit Loans
exceed the aggregate Revolving Loan Commitments and (b) Majority
Lenders may at any time revoke Agent's authorization to make Agent
Loans (any such revocation must be in writing and shall become
effective prospectively upon Agent's receipt thereof). Each Lender
shall be obligated to advance its Revolving Loan Percentage of each
Agent Loan. If Agent Loans are made pursuant to the preceding sentence,
then (a) the Borrowing Base shall be deemed increased by the amount of
such permitted Agent Loans, but only for so long as Agent allows such
Agent Loans to be outstanding, and (b) all Lenders that have committed
to make Revolving Credit Loans shall be bound to make, or permit to
remain outstanding, such Agent Loans based upon their Revolving Loan
Percentages in accordance with the terms of this Agreement.
1.2. Letters of Credit; LC Guaranties.
Agent agrees, for so long as no Default or Event of Default
exists and if requested by Borrower Representative, to (i) issue its, or cause
to be issued by Bank or another Affiliate of Agent, on the date requested by
Borrower Representative, Letters of Credit for the account of such Borrower or
(ii) execute LC Guaranties by which Agent, Bank, or another Affiliate of Agent,
on the date requested by Borrower Representative, shall guaranty the payment or
performance by such Borrower of its reimbursement obligations with respect to
letters of credit and letters of credit issued for such Borrower's account by
other Persons in support of such Borrower's obligations (other than obligations
for the repayment of Money Borrowed); provided that the LC Amount shall not
exceed $50,000,000 at any time. No Letter of Credit or LC Guaranty may have an
expiration date later than three (3) days prior to the last day of the Term.
Notwithstanding anything to the contrary contained herein, each Borrower,
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Agent and Lenders hereby agree that all LC Obligations and all obligations of
such Borrower relating thereto shall be satisfied by the prompt issuance of one
or more Revolving Credit Loans which such Borrower hereby acknowledges are
requested and Lenders hereby agree to fund. In the event that Revolving Credit
Loans are not, for any reason, promptly made to satisfy all then existing LC
Obligations, each Lender hereby agrees to pay to Agent, on demand, an amount
equal to such LC Obligations multiplied by such Lender's Revolving Loan
Percentage, and until so paid, such amount shall be secured by the Collateral
and shall bear interest and be payable at a fluctuating rate equal to the
Applicable Margin then in effect plus the Base Rate. Immediately upon the
issuance of a Letter of Credit or an LC Guaranty under this Agreement, each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received from Agent, without recourse or warranty, an undivided interest and
participation therein equal to such LC Obligations multiplied by such Lender's
Revolving Loan Percentage.
1.3. All Loans to Constitute One Obligation; Joint and
Several Liability.
All Loans and all other Obligations of the Borrowers,
including Product Obligations, hereunder shall constitute one general joint and
several obligation of Borrowers, and shall be secured by Agent's Lien (for the
benefit of Agent and Lenders) upon all of the Collateral, and by all other Liens
heretofore, now or at any time or times hereafter granted by any Borrower to
Agent, for itself as a Lender and on behalf of the Lenders.
1.4. Appointment of D&K as Borrower Representative.
Borrowers hereby appoint D&K ("Borrower Representative") as
their agent and attorney-in-fact to take any action, execute any document or
instrument, consent or agree to any modification or amendment hereto or waiver
of or departure from any of the terms hereof, to perform any Obligation of any
Borrower hereunder, and to give or receive any notice by or to any Borrower
hereunder. Without limiting the generality of the foregoing, Borrower
Representative may request Loans or incur any other Obligations for the account
of any Borrower, may elect on behalf of the Borrowers to have interest accrued
pursuant to Section 2.1.3 hereof, shall prepare and deliver to Agent all reports
concerning the Collateral and all financial statements required by this
Agreement, and each Borrower shall be fully bound by the statements and actions
of Borrower Representative acting as agent hereunder. Agent and Lenders shall be
entitled to rely absolutely and without duty of inquiry or investigation upon
any agreement, request, communication or other notice given by Borrower
Representative hereunder. Any notice given by Agent or any Lender to Borrower
Representative shall be deemed given to all Borrowers, whether or not this
Agreement specifically so provides. This appointment of Borrower Representative
shall be irrevocable, and Agent and Lenders shall have no duty to act in
accordance with any direction given by any other Borrower. This provision is
intended, among other things, to protect Agent against inconsistent directions
given by individual Borrowers.
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SECTION 2. INTEREST, FEES AND CHARGES
2.1. Interest.
2.1.1. Rates of Interest. Interest shall accrue on
all (but not a portion of) the principal amount of the Revolving Credit
Loans outstanding at the end of each day at a fluctuating rate per
annum equal to the Applicable Margin then in effect plus the Base Rate.
Said rate of interest shall increase or decrease by an amount equal to
any increase or decrease in the Base Rate, effective as of the opening
of business on the day that any such change in the Base Rate occurs. If
Borrower Representative exercises the LIBOR Option as provided in
Section 2.1.2, interest shall accrue on all (but not any portion) of
the principal amount of the Revolving Credit Loans outstanding at the
end of each day at a rate per annum equal to the Applicable Margin then
in effect plus LIBOR. Said rate of interest shall increase or decrease
by an amount equal to any increase or decrease in LIBOR, effective as
of the opening of business on the date that any such change in LIBOR
occurs.
2.1.2. LIBOR. Provided that as of the date of the
LIBOR Request no Default or Event of Default exists, Borrower
Representative may give Agent a LIBOR Request no later than 11:00 a.m.
(Chicago, Illinois time) on the Business Day prior to the date on which
it elects to convert all (but not any portion) of the Revolving Credit
Loans from the Base Rate to LIBOR.
2.1.3. Default Rate of Interest. At the option of
Agent or the Majority Lenders, upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal
amount of all Loans shall bear interest at a rate per annum equal to
2.0% plus the interest rate otherwise applicable thereto (the "Default
Rate").
2.1.4. Maximum Interest. In no event whatsoever
shall the aggregate of all amounts deemed interest hereunder or under
the Notes and charged or collected pursuant to the terms of this
Agreement or pursuant to the Notes exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If any provisions of this
Agreement or the Notes are in contravention of any such law, such
provisions shall be deemed amended to conform thereto (the "Maximum
Rate"). If at any time, the amount of interest paid hereunder is
limited by the Maximum Rate, and the amount at which interest accrues
hereunder is subsequently below the Maximum Rate, the rate at which
interest accrues hereunder shall remain at the Maximum Rate, until such
time as the aggregate interest paid hereunder equals the amount of
interest that would have been paid had the Maximum Rate not applied.
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2.2. Computation of Interest and Fees.
Interest, Letter of Credit and LC Guaranty fees and Unused
Line Fees hereunder shall be calculated daily and shall be computed on the
actual number of days elapsed over a year of 360 days.
2.3. Fee Letter.
Borrowers shall pay to Agent and the Lead Arranger certain
fees and other amounts in accordance with the terms of the fee letter between
Borrowers and Agent dated February 5, 2003 (the "Fee Letter").
2.4. Letter of Credit and LC Guaranty Fees.
Borrowers shall pay to Agent:
(i) for standby Letters of Credit and LC
Guaranties of standby letters of credit, for the ratable
benefit of Lenders, a per annum fee equal to the Applicable
Margin then in effect for LIBOR Loans of the aggregate face
amount of such Letters of Credit and LC Guaranties outstanding
from time to time during the term of this Agreement, plus all
normal and customary charges associated with the issuance
thereof, which fees and charges shall be deemed fully earned
upon issuance of each such Letter of Credit or LC Guaranty,
shall be due and payable on the first Business Day of each
month and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason;
(ii) for documentary Letters of Credit and LC
Guaranties of documentary letters of credit, for the ratable
benefit of Lenders, a per annum fee equal to the Applicable
Margin then in effect for LIBOR Loans of the face amount of
each such Letter of Credit or LC Guaranty, payable upon the
issuance of such Letter of Credit or execution of such LC
Guaranty and an additional per annum fee equal to the
Applicable Margin then in effect for LIBOR Loans multiplied by
the face amount of such Letters of Credit or LC Guaranties
payable upon each renewal thereof and each extension thereof
plus all normal and customary charges associated with the
issuance and administration of each such Letter of Credit or
LC Guaranty (which fees and charges shall be fully earned upon
issuance, renewal or extension (as the case may be) of each
such Letter of Credit or LC Guaranty, shall be due and payable
on the first Business Day of each month, and shall not be
subject to rebate or proration upon the termination of this
Agreement for any reason); and
(iii) with respect to all Letters of Credit and LC
Guaranties, for the account of Agent only, a per annum
fronting fee equal to 0.125% of the aggregate face amount of
such Letters of Credit and LC Guaranties
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outstanding from time to time during the term of this
Agreement, which fronting fees shall be payable monthly in
arrears on the first Business Day of each month and shall not
be subject to rebate or proration upon the termination of this
Agreement for any reason.
2.5. Unused Line Fee.
Borrowers shall pay to Agent, for the ratable benefit of
Lenders, a fee (the "Unused Line Fee") equal to 0.375% per annum multiplied by
the average daily amount by which the Revolving Credit Maximum Amount exceeds
the sum of (i) the outstanding principal balance of the Revolving Credit Loans
(including Swingline Loans) plus (ii) the LC Amount. The Unused Line Fee shall
be payable monthly in arrears on the first day of each month hereafter.
2.6. Reimbursement of Expenses.
If, at any time or times regardless of whether or not an Event
of Default then exists, (i) Agent incurs out-of-pocket legal or accounting
expenses or any other costs or expenses in connection with (1) the negotiation
and preparation of this Agreement or any of the other Loan Documents (subject to
the terms of the Commitment Letter, dated March 3, 2003), any amendment of or
modification of this Agreement or any of the other Loan Documents, or any
syndication or attempted syndication of the Obligations (including, without
limitation, printing and distribution of materials to prospective Lenders and
all costs associated with bank meetings, but excluding any closing fees paid to
Lenders in connection therewith) or (2) the administration by Agent of this
Agreement or any of the other Loan Documents and the transactions contemplated
hereby and thereby; or (ii) Agent or any Lender incurs legal or accounting
expenses or any other costs or out-of-pocket expenses in connection with (1) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, any Lender, any Borrower or any other Person) relating to the Collateral,
this Agreement or any of the other Loan Documents or any Borrower's, any of its
Subsidiaries' or any Guarantor's affairs; (2) any attempt to enforce any rights
of Agent or any Lender against any Borrower or any other Person which may be
obligated to Agent or any Lender by virtue of this Agreement or any of the other
Loan Documents, including, without limitation, the Account Debtors; or (3) any
attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate
or otherwise dispose of or realize upon the Collateral to the extent permitted
by this Agreement; then all such legal and accounting expenses, other costs and
out of pocket expenses of Agent or any Lender, as applicable, shall be charged
to such Borrower; provided, that such Borrower shall not be responsible for such
costs and out-of-pocket expenses to the extent incurred because of the gross
negligence or willful misconduct of Agent or any Lender. All amounts chargeable
to Borrowers under this Section 2.6 shall be Obligations secured by all of the
Collateral, shall be payable on demand to Agent or such Lender, as the case may
be, and shall bear interest from the date such demand is made until paid in full
at the rate applicable to the Revolving Credit Loans from time to time.
Borrowers shall also reimburse Agent for expenses incurred by Agent in its
administration of the Collateral to the extent and in the manner provided in
Sections 2.9 and 2.10 hereof.
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2.7. Audit Fees.
Borrowers shall pay to Agent audit fees in accordance with
Agent's current schedule of fees in effect from time to time in connection with
audits of the books and records and Properties of Borrowers and their
Subsidiaries and such other matters as Agent shall deem appropriate in its
reasonable credit judgment, plus all out-of-pocket expenses incurred by Agent in
connection with such audits, whether such audits are conducted by employees of
Agent or by third parties hired by Agent; provided that so long as no Event of
Default has occurred and is continuing and except in connection with Permitted
Acquisitions, Borrowers shall not be liable for such audit fees incurred in
connection with more than two (2) such audits during any fiscal year. Such audit
fees and out-of-pocket expenses shall be payable on the first day of the month
following the date of issuance by Agent of a request for payment thereof to
Borrower Representative. Agent may, in its discretion, provide for the payment
of such amounts by making appropriate Revolving Credit Loans to Borrower
Representative and charging Borrowers' Loan Accounts therefor.
2.8. Bank Charges.
Borrowers shall pay to Agent, on demand, any and all fees,
costs or expenses which Agent or any Lender pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to any
Borrower or any other Person on behalf of any Borrower, by Agent or any Lender,
of proceeds of Loans made to any Borrower pursuant to this Agreement and (ii)
the depositing for collection by Agent or any Lender of any check or item of
payment received or delivered to Agent or any Lender on account of the
Obligations.
2.9. Collateral Protection Expenses; Appraisals.
All out-of-pocket expenses incurred in protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, and
any and all excise, property, sales, and use taxes imposed by any state,
federal, or local authority on any of the Collateral or in respect of the sale
thereof shall be borne and paid by Borrowers. If Borrowers fail to promptly pay
any portion thereof when due, Agent may, at its option, but shall not be
required to, pay the same and charge Borrowers therefor. In addition to annual
Appraisals of Inventory as herein provided and appraisals obtained in connection
with Permitted Acquisitions, from time to time, if Agent or any Lender
determines that obtaining appraisals is necessary in order for it to comply with
applicable laws or regulations, and at any time that a Default or an Event of
Default shall have occurred and be continuing, Agent may, at Borrowers' expense,
obtain appraisals from appraisers (who may be personnel of Agent), stating the
then current fair market value of all or any portion of the real estate or
personal property of any Borrower or any of its Subsidiaries, including without
limitation the Inventory of such Borrower and its Subsidiaries.
2.10. Payment of Charges.
All amounts chargeable to Borrowers under this Agreement shall
be Obligations secured by all of the Collateral, shall be, unless specifically
otherwise provided, payable on demand and shall bear interest from the date
demand was made or such amount is due, as
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applicable, until paid in full at the rate applicable to the Revolving Credit
Loan from time to time.
2.11. No Deductions.
Any and all payments or reimbursements made hereunder shall be
made free and clear of and without deduction for any and all taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto; excluding, however, the following: taxes imposed on the income of Agent
or any Lender or franchise taxes by the jurisdiction under the laws of which
Agent or any Lender is organized or doing business or any political subdivision
thereof and taxes imposed on its income by the jurisdiction of Agent's or such
Lender's applicable lending office or any political subdivision thereof or
franchise taxes (all such taxes, levies, imposts, deductions, charges or
withholdings and all liabilities with respect thereto excluding such taxes
imposed on net income, herein "Tax Liabilities"). If any Borrower shall be
required by law to deduct any such Tax Liabilities from or in respect of any sum
payable hereunder to Agent or any Lender, then the sum payable hereunder shall
be increased as may be necessary so that, after all required deductions are
made, Agent or such Lender receives an amount equal to the sum it would have
received had no such deductions been made.
SECTION 3. LOAN ADMINISTRATION.
3.1. Manner of Borrowing Revolving Credit Loans/LIBOR
Option.
Borrowings under the credit facility established
pursuant to Section 1 hereof shall be as follows:
3.1.1. Loan Requests. A request for a Revolving
Credit Loan shall be made, or shall be deemed to be made, in the
following manner: (a) Borrower Representative may give Agent notice of
its intention to borrow no later than 11:00 a.m. (Chicago, Illinois
time) on the proposed borrowing date, in which notice Borrower
Representative shall specify the amount of the proposed borrowing of a
Revolving Credit Loan (which shall be no less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof except in the case of
Swingline Loans (with respect to which there shall be no minimum
borrowing or integral amount)) and the proposed borrowing date, which
shall be a Business Day; provided, however, that no such request may be
made at a time when there exists a Default or an Event of Default; and
(b) the becoming due of any amount required to be paid under this
Agreement, or the Notes, whether as interest or for any other
Obligation, shall be deemed irrevocably to be a request for a Revolving
Credit Loan on the due date in the amount required to pay such interest
or other Obligation.
3.1.2. Disbursement. Each Borrower hereby
irrevocably authorizes Agent to disburse the proceeds of each Loan
requested, or deemed to be requested, pursuant to subsection 3.1.1 as
follows: (i) the proceeds of each Revolving Credit Loan requested under
subsection 3.1.1(a) shall be disbursed by Agent in lawful money of the
United States of America in immediately available funds, in the case of
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the initial borrowing, in accordance with the terms of the written
disbursement letter from Borrower Representative, and in the case of
each subsequent borrowing, by wire transfer to such bank account as may
be agreed upon by Borrower Representative and Agent from time to time
or elsewhere if pursuant to a written direction from Borrower
Representative; and (ii) the proceeds of each Revolving Credit Loan
deemed requested under subsection 3.1.1(b) shall be disbursed by Agent
by way of direct payment of the relevant interest or other Obligation.
If at any time any Loan is funded by Agent or Lenders in excess of the
amount requested or deemed requested by Borrower Representative, the
applicable Borrowers that received the proceeds of such Loan agree to
repay the excess to Agent immediately upon the earlier to occur of (a)
such Borrower's discovery of the error and (b) notice thereof to
Borrower Representative from Agent or any Lender.
3.1.3. Payment by Lenders. Agent shall give to each
Lender prompt written notice by facsimile of the receipt by Agent from
Borrower Representative of any request for a Revolving Credit Loan.
Each such notice shall specify the requested date and amount of such
Revolving Credit Loan and the amount of each Lender's advance
thereunder (in accordance with its applicable Revolving Loan
Percentage). Each Lender shall, not later than 1:00 p.m. (Chicago time)
on such requested date, wire to a bank designated by Agent the amount
of that Lender's Revolving Loan Percentage of the requested Revolving
Credit Loan. The failure of any Lender to make the Revolving Credit
Loans to be made by it shall not release any other Lender of its
obligations hereunder to make its Revolving Credit Loan. Neither Agent
nor any other Lender shall be responsible for the failure of any other
Lender to make the Revolving Credit Loan to be made by such other
Lender. The foregoing notwithstanding, Agent, in its sole discretion,
may from its own funds make a Revolving Credit Loan on behalf of any
Lender. In such event, the Lender on behalf of whom Agent made the
Revolving Credit Loan shall reimburse Agent for the amount of such
Revolving Credit Loan made on its behalf, on a weekly (or more
frequent, as determined by Agent in its sole discretion) basis. In all
events, Agent shall settle with Lenders all Revolving Credit Loans made
and payments received (excluding the Swingline Loans, which shall be
settled in accordance with Section 1.1.4, and interest which shall be
settled monthly), including fees, in accordance with each Lender's
Revolving Loan Percentage once per week or more frequently as
determined by Agent. On each settlement date, Agent will pay to each
Lender the net amount owing to such Lender in connection with such
settlement, including without limitation amounts relating to Loans,
fees, interest and other amounts payable hereunder. The entire amount
of interest attributable to such Revolving Credit Loan for the period
from the date on which such Revolving Credit Loan was made by Agent on
such Lender's behalf until Agent is reimbursed by such Lender, shall be
paid to Agent for its own account.
3.1.4. Authorization. Borrowers hereby irrevocably
authorize Agent, in Agent's sole discretion, to advance to Borrowers,
and to charge when due to Borrowers' Loan Account hereunder as a
Revolving Credit Loan, a sum sufficient to
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pay all interest accrued on the Obligations during the immediately
preceding month and to pay all fees, costs and expenses and other
Obligations at any time owed by Borrowers to Agent or any Lender
hereunder.
3.1.5. Letter of Credit and LC Guaranty Requests. A
request for a Letter of Credit or LC Guaranty shall be made in the
following manner: Borrower Representative may give Agent and Bank a
written notice of its request for the issuance of a Letter of Credit or
LC Guaranty, not later than 11:00 a.m. (Chicago, Illinois time), one
Business Day before the proposed issuance date thereof, in which notice
Borrower Representative shall specify the proposed issuer, issuance
date and format and wording for the Letter of Credit or LC Guaranty
being requested (which shall be satisfactory to Agent and the Person
being asked to issue such Letter of Credit or LC Guaranty); provided
that no such request may be made at a time when there exists a Default
or Event of Default. Such request shall be accompanied by an executed
application and reimbursement agreement in form and substance
satisfactory to Agent and the Person being asked to issue the Letter of
Credit or LC Guaranty, as well as any required resolutions.
3.1.6. Method of Making Requests. As an
accommodation to Borrowers, unless a Default or an Event of Default is
then in existence, (i) Agent shall permit telephonic or electronic
requests for Revolving Credit Loans to Agent, (ii) Agent and Bank may,
in their discretion, permit electronic transmittal of requests for
Letters of Credit and LC Guaranties to them, and (iii) Agent may, in
Agent's discretion, permit electronic transmittal of instructions,
authorizations, agreements or reports to Agent. Unless Borrower
Representative specifically directs Agent or Bank in writing not to
accept or act upon telephonic or electronic communications from
Borrower Representative, neither Agent nor Bank nor any Lender shall
have any liability to any Borrower for any loss or damage suffered by
such Borrower as a result of Agent's or Bank's honoring of any
requests, execution of any instructions, authorizations or agreements
or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Agent or Bank by
such Borrower, and neither Agent nor Bank shall have any duty to verify
the origin of any such communication or the authority of the Person
sending it. Each telephonic request for a Revolving Credit Loan, Letter
of Credit or LC Guaranty accepted by Agent and Bank, if applicable,
hereunder shall be promptly followed by a written confirmation of such
request from Borrower Representative to Lender and Bank, if applicable.
3.1.7. Inability to Make LIBOR Loans.
Notwithstanding any other provision hereof, if any applicable law,
treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any
Lender (for purposes of this subsection 3.1.7, the term "Lender" shall
include the office or branch where such Lender or any corporation or
bank then controlling such Lender makes or maintains any LIBOR Loans)
to make or maintain LIBOR Loans, or if Agent is unable to determine
LIBOR, or adverse or unusual conditions in, or
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changes in applicable law relating to, the London interbank market make
it, in the reasonable judgment of Agent, impracticable to fund therein
any of the Revolving Credit Loans as LIBOR Loans, or make the projected
LIBOR unreflective of the actual costs of funds therefor to any Lender,
the obligation of Agent and Lenders to provide the Revolving Credit
Loans at LIBOR or convert the Revolving Credit Loans from the Base Rate
to LIBOR hereunder shall forthwith be suspended during the pendency of
such circumstances and Borrowers shall, promptly upon request from
Agent, convert the Revolving Credit Loans to Base Rate Loans.
3.2. Payments.
Except where evidenced by notes or other instruments issued or
made by Borrowers to any Lender and accepted by such Lender specifically
containing payment instructions that are in conflict with this Section 3.2 (in
which case the conflicting provisions of said notes or other instruments shall
govern and control), the Obligations shall be payable as follows:
3.2.1. Principal. Principal on account of Revolving
Credit Loans shall be payable by Borrowers to Agent for the ratable
benefit of Lenders immediately upon the earliest of (i) the receipt by
Agent or Borrowers of any proceeds of any of the Collateral (except as
otherwise provided herein, including without limitation pursuant to
subsections 3.3.1 and 6.2.4) to the extent of said proceeds, subject to
Borrowers' rights to reborrow such amounts in compliance with
subsection 1.1.1 hereof; (ii) the occurrence of an Event of Default in
consequence of which Agent or Majority Lenders elect to accelerate the
maturity and payment of the Obligations, or (iii) termination of this
Agreement pursuant to Section 4 hereof; provided, however, that, if an
Overadvance shall exist at any time, Borrowers shall, on demand, repay
the Overadvance.
3.2.2. Interest. Interest shall be due and payable
on the earliest of (1) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of
the preceding month, (2) the occurrence of an Event of Default in
consequence of which Agent or Majority Lenders elect to accelerate the
maturity and payment of the Obligations or (3) termination of this
Agreement pursuant to Section 4 hereof.
3.2.3. Costs, Fees and Charges. Costs, fees and
charges payable pursuant to this Agreement shall be payable by
Borrowers to Agent, as and when provided in Section 2 or Section 3
hereof, as applicable, to Agent or a Lender, as applicable, or to any
other Person designated by Agent or such Lender in writing.
3.2.4. Other Obligations. The balance of the
Obligations requiring the payment of money, if any, shall be payable by
Borrowers to Agent for distribution to Lenders, as appropriate, as and
when provided in this Agreement, the Other Agreements or the Security
Documents, or on demand, whichever is later.
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3.3. Mandatory and Optional Prepayments.
3.3.1. Proceeds of Sale, Loss, Destruction or
Condemnation of Collateral. Except as provided in subsections 6.4.2 and
8.2.9, if any Borrower or any of its Subsidiaries sells any of the
Collateral or if any of the Collateral is lost, damaged or destroyed or
taken by condemnation, such Borrower shall, unless otherwise agreed by
Majority Lenders, pay to Agent for the ratable benefit of Lenders as
and when received by such Borrower or such Subsidiary and as a
mandatory prepayment of the Loans, as herein provided, a sum equal to
all proceeds (including insurance payments but net of costs and taxes
incurred in connection with such sale or event) received by such
Borrower or such Subsidiary from such sale, loss, damage, destruction
or condemnation. The applicable prepayments shall be applied to reduce
the outstanding principal balance of the Revolving Credit Loans, but
shall not permanently reduce the Revolving Loan Commitments.
3.3.2. Intentionally Omitted.
3.3.3. Other Proceeds. If any Borrower issues any
additional Indebtedness or obtains any additional equity in a manner
permitted under this Agreement or receives any tax refunds, indemnity
payments, or pension reversions, such Borrower shall pay to Agent for
the ratable benefit of Lenders, when and as received by such Borrower
and as a mandatory prepayment of the Obligations, a sum equal to 100%
of such proceeds to such Borrower. Any such prepayment shall be applied
to the Loans in the manner specified in subsection 3.3.1.
3.3.4. Optional Reductions of Revolving Loan
Commitments. Borrowers may, at their option from time to time upon not
less than 3 Business Days' prior written notice to Agent, terminate in
whole or permanently reduce ratably in part, the unused portion of the
Revolving Loan Commitments, provided, however, that each such partial
reduction shall be in an amount of $5,000,000 or integral multiples of
$1,000,000 in excess thereof, provided that Borrowers shall give Agent
at least 10 Business Days' notice of any such reduction in excess of
$100,000,000. Such reductions shall be without premium or penalty.
3.4. Application of Payments and Collections.
3.4.1. Collections. All items of payment received
by Agent by 12:00 noon, Chicago, Illinois, time, on any Business Day
shall be deemed received on that Business Day. All items of payment
received after 12:00 noon, Chicago, Illinois, time, on any Business Day
shall be deemed received on the following Business Day. If as the
result of collections of Accounts as authorized by subsection 6.2.4
hereof or otherwise, a credit balance exists in the Loan Account, such
credit balance shall not accrue interest in favor of Borrowers, but
shall be disbursed to Borrowers or otherwise at Borrower
Representative's direction in the manner set forth in subsection 3.1.2,
upon Borrower Representative's request at any time, so long as no
Default or
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Event of Default then exists. Agent may at its option, offset such
credit balance against any of the Obligations upon and during the
continuance of an Event of Default.
3.4.2. Apportionment, Application and Reversal of
Payments. Principal and interest payments shall be apportioned ratably
among Lenders (according to the unpaid principal balance of the Loans
to which such payments relate held by each Lender). All payments shall
be remitted to Agent and all such payments not relating to principal or
interest of specific Loans, or not constituting payment of specific
fees, and all proceeds of Accounts, or, except as provided in
subsection 3.3.1, other Collateral received by Agent, shall be applied,
ratably, subject to the provisions of this Agreement, first, to pay any
fees, indemnities, or expense reimbursements (other than amounts
related to Product Obligations) then due to Agent or Lenders from any
Borrower; second, to pay interest due from any Borrower in respect of
all Loans, including Swingline Loans and Agent Loans; third, to pay or
prepay principal of Swingline Loans and Agent Loans; fourth, to pay or
prepay principal of the Revolving Credit Loans (other than Swingline
Loans and Agent Loans) and unpaid reimbursement obligations in respect
of Letters of Credit; fifth, to pay an amount to Agent equal to all
outstanding Letters of Credit, LC Guaranties and Letter of Credit
Obligations to be held as cash Collateral for such Obligations; sixth,
to the payment of any other Obligation (other than amounts related to
Product Obligations) due to Agent or any Lender by any Borrower; and
seventh, to pay any principal, fees, indemnities or expense
reimbursements related to Product Obligations. After the occurrence and
during the continuance of an Event of Default, Agent shall have the
continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by
Agent or its agent against the Obligations, in such manner as Agent may
deem advisable (provided that principal, fees, indemnities and expense
reimbursements in connection with Product Obligations shall be paid
following the payment of all other Obligations), notwithstanding any
entry by Agent or any Lender upon any of its books and records.
3.5. All Loans to Constitute One Obligation.
The Loans and the LC Amounts shall constitute one general
Obligation of Borrowers, and shall be secured by Agent's Lien upon all of the
Collateral.
3.6. Loan Account.
Agent shall enter all Loans as debits to a loan account (the
"Loan Account") and shall also record in the Loan Account all payments made by
Borrowers on any Obligations and all proceeds of Collateral which are finally
paid to Agent, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers.
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3.7. Statements of Account.
Agent will account to Borrower Representative monthly with a
statement of Loans, charges and payments made pursuant to this Agreement during
the immediately preceding month, and such account rendered by Agent shall be
deemed final, binding and conclusive upon such Borrower absent demonstrable
error unless Agent is notified by Borrower Representative in writing to the
contrary within 60 days of the date each accounting is received by Borrower
Representative. Such notice shall only be deemed an objection to those items
specifically objected to therein.
3.8. Increased Costs.
3.8.1. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law) adopted or implemented after
the date of this Agreement and having general applicability to all
banks or finance companies within the jurisdiction in which any Lender
operates (excluding, for the avoidance of doubt, the effect of and
phasing in of capital requirements or other regulations or guidelines
passed prior to the date of this Agreement), or any interpretation or
application thereof by any governmental authority charged with the
interpretation or application thereof, or the compliance of such Lender
therewith, shall:
(i) (1) subject such Lender to any tax
with respect to this Agreement (other than (a) any tax based
on or measured by net income or otherwise in the nature of a
net income tax, including, without limitation, any franchise
tax or any similar tax based on capital, net worth or
comparable basis for measurement and (b) any tax collected by
a withholding on payments and which neither is computed by
reference to the net income of the payee nor is in the nature
of an advance collection of a tax based on or measured by the
net income of the payee) or (2) change the basis of taxation
of payments to such Lender of principal, fees, interest or any
other amount payable hereunder or under any Loan Documents
(other than in respect of (a) any tax based on or measured by
net income or otherwise in the nature of a net income tax,
including, without limitation, any franchise tax or any
similar tax based on capital, net worth or comparable basis
for measurement and (b) any tax collected by a withholding on
payments and which neither is computed by reference to the net
income of the payee nor is in the nature of an advance
collection of a tax based on or measured by the net income of
the payee);
(ii) impose, modify or hold applicable any reserve
(except any reserve taken into account in the determination of
the applicable LIBOR), special deposit, assessment or similar
requirement against assets held by, or deposits in or for the
account of, advances or loans by, or other credit extended by,
any office of such Lender, including (without limitation)
pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or
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(iii) impose on such Lender or the London
interbank market any other condition with respect to any Loan
Document;
and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing or maintaining Loans hereunder or the result
of any of the foregoing is to reduce the rate of return on such
Lender's capital as a consequence of its obligations hereunder, or the
result of any of the foregoing is to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of any of the
Loans, then, in any such case, Borrowers shall pay such Lender, upon
demand and certification not later than sixty (60) days following
Borrower Representative's receipt of notice of the imposition of such
increased costs, such additional amount as will compensate such Lender
for such additional cost or such reduction, as the case may be, to the
extent such Lender has not otherwise been compensated, with respect to
a particular Loan, for such increased cost as a result of an increase
in the Base Rate or the LIBOR. An officer of the applicable Lender
shall determine the amount of such additional cost or reduced amount
using reasonable averaging and attribution methods and shall certify
the amount of such additional cost or reduced amount to Borrower
Representative, which certification shall include a written explanation
of such additional cost or reduction to Borrowers. Such certification
shall be conclusive absent manifest error. If a Lender claims any
additional cost or reduced amount pursuant to this Section 3.8, then
such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different lending office or to
file any certificate or document reasonably requested by Borrower
Representative if the making of such designation or filing would avoid
the need for, or reduce the amount of, any such additional cost or
reduced amount and would not, in the sole discretion of such Lender, be
otherwise disadvantageous to such Lender. Any claims by a Lender for
compensation under this Section 3.8 shall be made upon Borrower
Representative no later than one hundred and eighty (180) days
following the adoption or implementation of any such law, rule,
regulation policy guidelines or directive.
3.8.2. Within thirty (30) days after receipt by
Borrower Representative of written notice and demand from any Lender
(an "Affected Lender") for payment of additional amounts or increased
costs as provided in Section 3.8.1, Borrower Representative may, at its
option, notify Agent and such Affected Lender of its intention to
replace the Affected Lender. So long as no Default or Event of Default
has occurred and is continuing, Borrower Representative, with the
consent of Agent, may obtain at Borrowers' expense, a replacement
Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to Agent. If
Borrowers obtain a Replacement Lender within ninety (90) days following
notice of their intention to do so, the Affected Lender must sell and
assign its Loans and Revolving Loan Commitments to such Replacement
Lender for an amount equal to the principal balance of all Loans held
by the Affected Lender and all accrued interest and fees with respect
thereto through the date of such sale and such assignment shall not
require the payment of an assignment fee to Agent; provided, that
Borrowers shall have reimbursed such Affected Lender for the additional
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amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment. Notwithstanding
the foregoing, Borrowers shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within 15 days following its
receipt of Borrowers' notice of intention to replace such Affected
Lender. Furthermore, if Borrowers give a notice of intention to replace
and do not so replace such Affected Lender within ninety (90) days
thereafter, Borrowers' rights under this Section 3.8.2 shall terminate
with respect to such Affected Lender and Borrowers shall promptly pay
all increased costs or additional amounts demanded by such Affected
Lender pursuant to Section 3.8.1.
3.9. Sharing of Payments, Etc.
If any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on
account of any Loan made by it in excess of its ratable share of payments on
account of Loans made by all Lenders, such Lender shall forthwith purchase from
each other Lender such participation in such Loan as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each other
Lender; provided, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lenders the
purchase price to the extent of such recovery, together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) 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. Borrowers agree
that any Lender so purchasing a participation from another Lender pursuant to
this Section 3.9 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of Borrowers
in the amount of such participation. Notwithstanding anything to the contrary
contained herein, all purchases and repayments to be made under this Section 3.9
shall be made through Agent.
3.10. Effect On Prior Loans; Prior Loan and Security
Agreement.
The Prior Loans and Liens securing payment thereof shall in
all respects be continuing, and this Agreement shall not be deemed to evidence
or result in a novation or repayment and reborrowing of the Prior Loans. This
Agreement shall supersede the Prior Loan and Security Agreement. From and after
the Closing Date, this Agreement shall govern the terms of the Prior Loans. To
the extent not replaced by Loan Documents dated as of the Closing Date, Loan
Documents executed in connection with the Prior Loan and Security Agreement
(other than any such Loan Document that is specifically terminated by the
parties thereto) shall continue to be effective, and all references in those
prior Loan Documents to the "Fifth Amended and Restated Loan and Security
Agreement", the "Loan Agreement or the "Agreement" shall be deemed to refer to
this Agreement without further amendment thereof.
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SECTION 4. TERM AND TERMINATION
4.1. Term of Agreement.
Subject to the right of Lenders to cease making Loans to
Borrowers during the continuance of any Default or Event of Default, this
Agreement shall be in effect for a period of four (4) years from the date
hereof, through and including March 28, 2007 (the "Term"), unless terminated as
provided in Section 4.2 hereof.
4.2. Termination.
4.2.1. Termination by Lenders. Agent may, and at
the direction of Majority Lenders shall, terminate this Agreement
without notice upon or after the occurrence and during the continuance
of an Event of Default.
4.2.2. Termination by Borrowers. Upon at least 30
days prior written notice to Agent and Lenders, Borrower
Representative, on behalf of Borrowers, may, at their option, terminate
this Agreement; provided, however, no such termination shall be
effective until Borrowers have paid or collateralized to Agent's
satisfaction all of the Obligations in immediately available funds, all
Letters of Credit and LC Guaranties have expired, terminated or have
been cash collateralized to Agent's satisfaction and Borrowers have
complied with Section 2.6. Any notice of termination given by Borrower
Representative shall be irrevocable unless all Lenders otherwise agree
in writing and no Lender shall have any obligation to make any Loans or
issue or procure any Letters of Credit or LC Guaranties on or after the
termination date stated in such notice. Borrowers may elect to
terminate this Agreement in its entirety only. No section of this
Agreement or type of Loan available hereunder may be terminated singly.
4.2.3. Effect of Termination. All of the
Obligations shall be immediately due and payable upon the earlier of
the (a) expiration of the Term and (b) the termination date stated in
any notice of termination of this Agreement. All undertakings,
agreements, covenants, warranties and representations of each Borrower
contained in the Loan Documents shall survive any such expiration or
termination, as applicable, and Agent shall retain its Liens in the
Collateral and Agent and each Lender shall retain all of its rights and
remedies under the Loan Documents notwithstanding such expiration or
termination, as applicable, until all Obligations have been discharged
or paid, in full, in immediately available funds, including, without
limitation, all Obligations under Section 2.6 resulting from such
expiration or termination, as applicable. Notwithstanding the foregoing
or the payment in full of the Obligations, Agent shall not be required
to terminate its Liens in the Collateral unless, with respect to any
loss or damage Agent may incur as a result of dishonored checks or
other items of payment received by Agent from any Borrower or any
Account Debtor and applied to the Obligations, Agent shall, at its
option, (i) have received a written agreement satisfactory to Agent,
executed by such Borrower and
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by any Person whose loans or other advances to such Borrower are used
in whole or in part to satisfy the Obligations, indemnifying Agent and
each Lender from any such loss or damage or (ii) have retained cash
Collateral or other Collateral for such period of time as Agent, in its
reasonable discretion, may deem necessary to protect Agent and each
Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1. Security Interest in Collateral.
To secure the prompt payment and performance to Agent and each
Lender of the Obligations, each Borrower hereby grants to Agent for the benefit
of itself and each Lender a continuing Lien upon all of such Borrower's assets,
including all of the following Property and interests in Property of such
Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) Accounts, including Health Care Insurance
Receivables;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all
rights with respect thereto, including, any and all licenses,
options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications, and any
substitutions, replacements, additions or model conversions of
any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
(ix) Financial Assets;
(x) Fixtures;
(xi) General Intangibles, including Payment
Intangibles and Software;
(xii) Goods (including all of its Equipment,
Fixtures and Inventory), and all accessions, additions,
attachments, improvements, substitutions and replacements
thereto and therefor;
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(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
(xvi) Investment Property;
(xvii) money (of every jurisdiction whatsoever);
(xviii) Letter-of-Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
(xxi) Software;
(xxii) Supporting Obligations;
(xxiii) Uncertificated Securities; and
(xxiv) to the extent not included in the foregoing,
all other personal property of any kind or description;
together with all books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer materials
and records and all records of purchases and sales of prescription drugs and
controlled substances required to be kept by the Federal or any state government
or agency thereof), writings, data bases, information and other property
relating to, used or useful in connection with, or evidencing, embodying,
incorporating, referring or pertaining to any of the foregoing, and all
Proceeds, products, offspring, rents, issues, profits and returns of and from
any of the foregoing; provided that to the extent that the provisions of any
lease or license of Computer Hardware and Software or Intellectual Property
expressly prohibit (which prohibition is enforceable under applicable law) any
assignment thereof, and the grant of a security interest therein, Agent will not
enforce its security interest in such Borrower's rights under such lease or
license (other than in respect of the Proceeds thereof) for so long as such
prohibition continues, it being understood that upon request of Agent, such
Borrower will in good faith use reasonable efforts to obtain consent for the
creation of a security interest in favor of Agent (and to Agent's enforcement of
such security interest) in Agent's rights under such lease or license.
5.2. Other Collateral.
5.2.1. Commercial Tort Claims. Each Borrower shall
promptly notify Agent in writing upon incurring or otherwise obtaining
a Commercial Tort Claim in excess of $1,000,000 after the Closing Date
against any third party and, upon request of Agent, promptly enter into
an amendment to this Agreement and do such other acts
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or things deemed appropriate by Agent to give Agent a security interest
in any such Commercial Tort Claim. Each Borrower represents and
warrants that as of the date of this Agreement, to its knowledge, it
does not possess any Commercial Tort Claims.
5.2.2. Other Collateral. Each Borrower shall
promptly notify Agent in writing upon acquiring or otherwise obtaining
any Collateral after the date hereof consisting of Deposit Accounts,
Investment Property, Letter-of-Credit Rights or Electronic Chattel
Paper and, upon the request of Agent, promptly execute such other
documents, and do such other acts or things deemed appropriate by Agent
to deliver to Agent control with respect to such Collateral; promptly
notify Agent in writing upon acquiring or otherwise obtaining any
Collateral after the date hereof consisting of Documents or Instruments
and, upon the request of Agent, will promptly execute such other
documents, and do such other acts or things deemed appropriate by Agent
to deliver to Agent possession of such Documents which are negotiable
and Instruments, and, with respect to nonnegotiable Documents, to have
such nonnegotiable Documents issued in the name of Agent; and with
respect to Collateral in the possession of a third party, other than
Certificated Securities and Goods covered by a Document, obtain an
acknowledgement from the third party that it is holding the Collateral
for the benefit of Agent.
5.3. Lien Perfection; Further Assurances.
Each Borrower shall execute such UCC-1 financing statements as
are required by the UCC and such other instruments, assignments or documents as
are necessary to perfect Agent's Lien upon any of the Collateral and shall take
such other action as may be required to perfect or to continue the perfection of
Agent's Lien upon the Collateral. Unless prohibited by applicable law, each
Borrower hereby authorizes Agent to execute and file any such financing
statement, including, without limitation, financing statements that indicate the
Collateral (i) as all assets of such Borrower or words of similar effect, or
(ii) as being of an equal or lesser scope, or with greater or lesser detail,
than as set forth in Section 5.1, on such Borrower's behalf. Each Borrower also
hereby ratifies its authorization for Agent to have filed in any jurisdiction
any like financing statements or amendments thereto if filed prior to the date
hereof. The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu thereof. At Agent's request, each Borrower shall
also promptly execute or cause to be executed and shall deliver to Agent any and
all documents, instruments and agreements deemed necessary by Agent, to give
effect to or carry out the terms or intent of the Loan Documents.
5.4. Lien on Realty.
The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by Mortgages upon all real
Property of Borrowers now or hereafter owned. Each Mortgage shall be executed by
the Borrowers in favor of Agent. Each Mortgage shall be duly recorded, at
Borrowers' expense, in each office where such recording is required to
constitute a fully perfected first Lien on the real Property covered thereby.
Borrowers shall
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deliver to Agent, at Borrowers' expense, mortgagee title insurance policies
issued by a title insurance company satisfactory to Agent, which policies shall
be in form and substance satisfactory to Agent and shall insure a valid first
Lien in favor of Agent, for the benefit of itself and the Lenders, on the
Property covered by each Mortgage, subject only to those exceptions reasonably
acceptable to Agent and its counsel. Borrowers shall deliver to Agent such other
documents, including, without limitation, as-built survey prints of the real
Property, as Agent and its counsel may request relating to the real Property
subject to the Mortgages.
SECTION 6. COLLATERAL ADMINISTRATION
6.1. General.
6.1.1. Location of Collateral. All Collateral,
other than Inventory in transit and motor vehicles, will at all times
be kept by Borrowers and their Subsidiaries at one or more of the
business locations set forth in Exhibit 6.1.1 hereto, as updated by
Borrowers providing prior written notice to Agent of any new location.
6.1.2. Insurance of Collateral. Each Borrower shall
maintain and pay for insurance upon all Collateral wherever located and
with respect to the business of such Borrower and each of its
Subsidiaries, covering casualty, hazard, public liability, workers'
compensation and such other risks in such amounts and with such
insurance companies as are reasonably satisfactory to Agent. Each
Borrower shall deliver certified copies of such policies to Agent as
promptly as practicable, with satisfactory lender's loss payable
endorsements, naming Agent as a loss payee, assignee or additional
insured, as appropriate, as its interest may appear, and showing only
such other loss payees, assignees and additional insureds as are
satisfactory to Agent. Each policy of insurance or endorsement shall
contain a clause requiring the insurer to give not less than 10 days'
prior written notice to Agent in the event of cancellation of the
policy for nonpayment of premium and not less than 30 days' prior
written notice to Agent in the event of cancellation of the policy for
any other reason whatsoever and a clause specifying that the interest
of Agent shall not be impaired or invalidated by any act or neglect of
any Borrower, any of its Subsidiaries or the owner of the Property or
by the occupation of the premises for purposes more hazardous than are
permitted by said policy. Borrower Representative agrees to deliver to
Agent, as promptly as rendered, true copies of all reports made in any
reporting forms to insurance companies. All proceeds of business
interruption insurance (if any) of any Borrower and its Subsidiaries
shall be remitted to Agent for application to the outstanding balance
of the Revolving Credit Loans.
Unless each Borrower provides Agent with evidence of the
insurance coverage required by this Agreement, Agent may purchase
insurance at such Borrower's expense to protect Agent's interests in
the Properties of such Borrower and its Subsidiaries. This insurance
may, but need not, protect the interests of such Borrower and its
Subsidiaries. The coverage that Agent purchases may not pay any claim
that such Borrower or any Subsidiary makes or any claim that is made
against such Borrower or any such
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Subsidiary in connection with said Property. Such Borrower may later
cancel any insurance purchased by Agent, but only after providing Agent
with evidence that such Borrower and its Subsidiaries have obtained
insurance as required by this Agreement. If Agent purchases insurance,
such Borrower will be responsible for the costs of that insurance,
including interest and any other charges Agent may impose in connection
with the placement of insurance, until the effective date of the
cancellation or expiration of the insurance. The costs of the insurance
may be added to the Obligations. The costs of the insurance may be more
than the cost of insurance that such Borrower and its Subsidiaries may
be able to obtain on their own.
6.1.3. Protection of Collateral. Neither Agent nor
any Lender shall be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto
(except for reasonable care in the custody thereof while any Collateral
is in Agent's or any Lender's actual possession) or for any diminution
in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same
shall be at Borrowers' sole risk.
6.2. Administration of Accounts.
6.2.1. Records, Schedules and Assignments of
Accounts. Each Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit to
Agent on such periodic basis as Agent shall request a sales and
collections report for the preceding period, in form consistent with
the reports currently prepared by such Borrower with respect to such
information. Concurrently with the delivery of the Borrowing Base
Certificate for the last week of each month described in subsection
8.1.4, or more frequently as requested by Agent, from and after the
date hereof, each Borrower shall deliver to Agent a detailed aged trial
balance of all of its Accounts, specifying the names, addresses, face
values, dates of invoices and due dates for each Account Debtor
obligated on an Account so listed ("Schedule of Accounts"), and upon
Agent's request therefor, copies of proof of delivery and the original
copy of all documents, including, without limitation, repayment
histories and present status reports relating to the Accounts so
scheduled and such other matters and information relating to the status
of then existing Accounts as Agent shall request. If requested by
Agent, each Borrower shall execute and deliver to Agent formal written
assignments of all of its Accounts weekly or daily, which shall include
all Accounts that have been created since the date of the last
assignment, together with copies of invoices or invoice registers
related thereto. No later than the fifteenth (15th) day of each month,
the Borrowers shall deliver to the Agent an aging report with respect
to accounts receivable and a listing of accounts payable, in each case
for the previous month.
6.2.2. Discounts, Allowances, Disputes. If any
Borrower grants any discounts, allowances or credits that are not shown
on the face of the invoice for the Account involved, such Borrower
shall report such discounts, allowances or credits, as the case may be,
to Agent as part of the next required Schedule of Accounts.
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6.2.3. Account Verification. Any of Agent's
officers, employees or agents shall have the right, at any time or
times hereafter, in the name of Agent, any designee of Agent or any
Borrower, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, electronic communication or
otherwise. Each Borrower shall cooperate fully with Agent in an effort
to facilitate and promptly conclude any such verification process;
provided that such Account verifications shall only be performed in
conjunction with semi-annual audits, or more frequently if (i) an Event
of Default has occurred and is continuing or (ii) in connection with
Permitted Acquisitions.
6.2.4. Maintenance of Dominion Account. Borrowers
shall maintain a Dominion Account or Accounts pursuant to lockbox and
blocked account arrangements reasonably acceptable to Agent with such
banks as may be selected by Borrowers and be acceptable to Agent.
Borrowers shall issue to any such banks an irrevocable letter of
instruction directing such banks to deposit all payments or other
remittances received in the lockbox and blocked accounts to the
Dominion Account for application on account of the Obligations as
provided in subsection 3.2.1. All funds deposited in any Dominion
Account shall immediately become the property of Agent, for the ratable
benefit of Lenders, and Borrowers shall obtain the agreement by such
banks in favor of Agent to waive any recoupment, setoff rights, and any
security interest in, or against, the funds so deposited. Agent assumes
no responsibility for such lockbox and blocked account arrangements,
including, without limitation, any claim of accord and satisfaction or
release with respect to deposits accepted by any bank thereunder.
6.2.5. Collection of Accounts, Proceeds of
Collateral. Each Borrower agrees that all invoices rendered and other
requests made by such Borrower for payment in respect of Accounts shall
contain a written statement directing payment in respect of such
Accounts to be paid to a lockbox established pursuant to subsection
6.2.4. To expedite collection, each Borrower shall endeavor in the
first instance to make collection of its Accounts for Agent. All
remittances received by each Borrower on account of Accounts, together
with the proceeds of any other Collateral, shall be held as Agent's
property, for its benefit and the benefit of Lenders, by such Borrower
as trustee of an express trust for Agent's benefit and such Borrower
shall immediately deposit same in kind in the Dominion Account. Agent
retains the right at all times after the occurrence and during the
continuance of a Default or an Event of Default to notify Account
Debtors that a Borrower's Accounts have been assigned to Agent and to
collect such Borrower's Accounts directly in its own name, or in the
name of Agent's agent, and to charge the collection costs and expenses,
including attorneys' fees, to such Borrower.
6.2.6. Taxes. If an Account includes a charge for
any tax payable to any governmental taxing authority, Agent is
authorized, in its sole discretion, to pay the amount thereof to the
proper taxing authority for the account of any Borrower and to charge
such Borrower therefor, except for taxes that (i) are being actively
contested
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in good faith and by appropriate proceedings and with respect to which
such Borrower maintains reasonable reserves on its books therefor and
(ii) would not reasonably be expected to result in any Lien other than
a Permitted Lien. In no event shall Agent or any Lender be liable for
any taxes to any governmental taxing authority that may be due by any
Borrower.
6.3. Administration of Inventory.
6.3.1. Records and Reports of Inventory. Each
Borrower shall keep records of its Inventory which records shall be
complete and accurate in all material respects. Each Borrower shall
furnish to Agent Inventory reports concurrently with the delivery of
each Borrowing Base Certificate described in subsection 8.1.4 or more
frequently as reasonably requested by Agent, which reports will be in
such other format and detail as Agent shall request and shall include a
current list of all locations of such Borrower's Inventory. Each
Borrower shall conduct a physical inventory no less frequently than
annually and shall provide to Agent a report based on each such
physical inventory promptly thereafter, together with such supporting
information as Agent shall reasonably request. No Inventory will at any
time be misbranded or adulterated, and all Inventory shall bear all
labels and warnings required by all federal or state laws, rules and
regulations.
6.3.2. Inventory Appraisal. Within 60 days prior to
December 31, 2003, and within 60 days prior to each December 31st
thereafter, Borrower Representative, at Borrowers' sole cost and
expense, shall provide Agent with an Appraisal of the Inventory in form
and substance reasonably acceptable to Agent setting forth the Net
Orderly Liquidation Value of the Inventory.
6.4. Administration of Equipment.
6.4.1. Records and Schedules of Equipment. Each
Borrower shall keep records of its Equipment which shall be complete
and accurate in all material respects itemizing and describing the
kind, type, quality, quantity and book value of its Equipment and all
dispositions made in accordance with subsection 6.4.2 hereof, and upon
request of Agent such Borrower shall, and shall cause each of its
Subsidiaries to, furnish Agent with a current schedule containing the
foregoing information on at least an annual basis. Promptly after the
request therefor by Agent, each Borrower shall deliver to Agent any and
all evidence of ownership, if any, of any of its Equipment.
6.4.2. Dispositions of Equipment. No Borrower shall
or shall permit any of its Subsidiaries to sell, lease or otherwise
dispose of or transfer any of its respective Equipment or other fixed
assets or any part thereof without the prior written consent of Agent;
provided, however, that the foregoing restriction shall not apply, for
so long as no Default or Event of Default exists and is continuing, to
(i) dispositions of Equipment and other fixed assets which, in the
aggregate during
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any consecutive twelve-month period, have a fair market value or a book
value, which is $1,000,000 or less, provided that all proceeds thereof
are remitted to Agent for application to the Loans as provided in
subsection 3.3.1, or (ii) replacements of Equipment or other fixed
assets that are substantially worn, damaged or obsolete with Equipment
or other fixed assets of like kind, function and value which are useful
in the business of any Borrower or one of its Subsidiaries, provided
that the replacement Equipment or other fixed assets shall be acquired
within 90 days after any disposition of the Equipment or other fixed
assets that are to be replaced and the replacement Equipment or other
fixed assets shall be free and clear of Liens other than Permitted
Liens that are not Purchase Money Liens.
6.5. Payment of Charges.
All amounts chargeable to Borrowers under Section 6 hereof
shall be Obligations secured by all of the Collateral, shall be payable on
demand and shall bear interest from the date such advance was made until paid in
full at the rate applicable to the Revolving Credit Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1. General Representations and Warranties.
To induce Agent and each Lender to enter into this Agreement
and to make advances hereunder, Borrowers jointly and severally warrant,
represent and covenant to Agent and each Lender that:
7.1.1. Qualification. Each Borrower and each of its
Subsidiaries is a corporation, limited partnership or limited liability
company duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization. Each
Borrower and each of its Subsidiaries is duly qualified and is
authorized to do business and is in good standing as a foreign limited
liability company, limited partnership or corporation, as applicable,
in each state or jurisdiction listed on Exhibit 7.1.1 hereto and in all
other states and jurisdictions in which the failure of such Borrower or
any of its Subsidiaries to be so qualified could reasonably be expected
to have a Material Adverse Effect.
7.1.2. Power and Authority. Each Borrower and each
of its Subsidiaries is duly authorized and empowered to enter into,
execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party. The execution, delivery and
performance of this Agreement and each of the other Loan Documents have
been duly authorized by all necessary corporate or other relevant
action and do not and will not (i) require any consent or approval of
the shareholders or members, as applicable, of any Borrower or any of
the shareholders, partners or members, as the case may be, of any
Subsidiary of such Borrower; (ii) contravene any Borrower's or any of
its Subsidiaries' charter, articles or certificate of incorporation,
partnership agreement, certificate of formation, by-laws,
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limited liability agreement, operating agreement or other
organizational documents (as the case may be); (iii) violate, or cause
any Borrower or any of its Subsidiaries to be in default under, any
provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having
applicability to any Borrower or any of its Subsidiaries, the violation
of which could reasonably be expected to have a Material Adverse
Effect; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower or any of its Subsidiaries is a party
or by which it or its Properties may be bound or affected, the breach
of or default under which could reasonably be expected to have a
Material Adverse Effect; or (v) result in, or require, the creation or
imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired by any
Borrower or any of its Subsidiaries.
7.1.3. Legally Enforceable Agreement. This
Agreement is, and each of the other Loan Documents when delivered under
this Agreement will be, a legal, valid and binding obligation of each
Borrower and each of its Subsidiaries party thereto, enforceable
against it in accordance with its respective terms.
7.1.4. Capital Structure. Exhibit 7.1.4 hereto
states, as of the date hereof, (i) the correct name of each of the
Subsidiaries and Affiliates of each Borrower, its jurisdiction of
incorporation or organization and the percentage of its Voting Stock
owned by such Borrower, (ii) the name of each Borrower's and each of
its Subsidiaries' corporate or joint venture relationships and the
nature of the relationship, (iii) the number, nature and holder of all
outstanding Securities of each Borrower and the holder of Securities of
each Subsidiary of such Borrower and (iv) the number of authorized,
issued and treasury Securities of each Borrower. Each Borrower has good
title to all of the Securities it purports to own of each of such
Subsidiaries, free and clear in each case of any Lien other than
Permitted Liens. All such Securities have been duly issued and are
fully paid and non-assessable, except as set forth in Exhibit 7.1.4. As
of the date hereof, there are no outstanding options to purchase, or
any rights or warrants to subscribe for, or any commitments or
agreements to issue or sell any Securities or obligations convertible
into, or any powers of attorney relating to any Securities of any
Borrower or any of its Subsidiaries. Except as set forth on Exhibit
7.1.4, as of the date hereof, there are no outstanding agreements or
instruments binding upon any Borrower's or any of its Subsidiaries'
partners, members or shareholders, as the case may be, relating to the
ownership of its Securities.
7.1.5. Names; Organization. No Borrower or any of
its Subsidiaries has been known as or has used any legal, fictitious or
trade names except those listed on Exhibit 7.1.5 hereto. Except as set
forth on Exhibit 7.1.5, no Borrower or any of its Subsidiaries has been
the surviving entity of a merger or consolidation or has acquired all
or substantially all of the assets of any Person. Each Borrower's and
each of its Subsidiaries' state(s) of incorporation or organization,
Type of Organization and
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Organizational I.D. Number is set forth on Exhibit 7.1.5. The exact
legal name of each Borrower and each of its Subsidiaries is set forth
on Exhibit 7.1.5.
7.1.6. Business Locations; Agent for Process. Each
Borrower's and each of its Subsidiary's chief executive office,
location of books and records and other places of business are as
listed on Exhibit 6.1.1 hereto, as updated from time to time by such
Borrower in accordance with the provisions of subsection 6.1.1. During
the preceding one-year period, no Borrower or any of its Subsidiaries
has had an office, place of business or agent for service of process,
other than as listed on Exhibit 6.1.1. All tangible Collateral is and
will at all times be kept by each Borrower and its Subsidiaries in
accordance with subsection 6.1.1. Except as shown on Exhibit 6.1.1, as
of the date hereof, no Inventory is stored with a bailee, distributor,
warehouseman or similar party, nor is any Inventory consigned to any
Person.
7.1.7. Title to Properties; Priority of Liens. Each
Borrower and each of its Subsidiaries has good, indefeasible and
marketable title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its real Property, and good
title to all of the Collateral and all of its other Property, in each
case, free and clear of all Liens except Permitted Liens. Each Borrower
and each of its Subsidiaries has paid or discharged all lawful claims
which, if unpaid, might become a Lien against any of such Borrower's or
such Subsidiary's Properties that is not a Permitted Lien. The Liens
granted to Agent under Section 5 hereof are first priority Liens,
subject only to Permitted Liens.
7.1.8. Accounts. Agent may rely, in determining
which Accounts are Eligible Accounts, on all statements and
representations made by any Borrower with respect to any Account or
Accounts. With respect to each of the Accounts of each Borrower,
whether or not such Account is an Eligible Account, unless otherwise
disclosed to Agent in writing:
(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale
and delivery of goods or rendition of services by such
Borrower, in the ordinary course of its business and in
accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and
forming a part of the contract between such Borrower and the
Account Debtor;
(iii) It is for a liquidated amount maturing as
stated in the duplicate invoice covering such sale or
rendition of services, a copy of which has been furnished or
is available to Agent;
(iv) There are no facts, events or occurrences
which in any way impair the validity or enforceability of any
Accounts or tend to reduce the
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amount payable thereunder from the face amount of the invoice
and statements delivered or made available to Agent with
respect thereto;
(v) To the best of such Borrower's knowledge,
the Account Debtor thereunder (1) had the capacity to contract
at the time any contract or other document giving rise to the
Account was executed and (2) such Account Debtor is Solvent;
and
(vi) To the best of such Borrower's knowledge,
there are no proceedings or actions which are threatened or
pending against the Account Debtor thereunder which might
result in any material adverse change in such Account Debtor's
financial condition or the collectibility of such Account.
7.1.9. Equipment. The Equipment of each Borrower
and its Subsidiaries is in good operating condition and repair, and all
necessary replacements of and repairs thereto shall be made so that the
operating efficiency thereof shall be maintained and preserved,
reasonable wear and tear excepted. No Borrower or any of its
Subsidiaries will permit any Equipment to become affixed to any real
Property leased to such Borrower or any of its Subsidiaries so that an
interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a
landlord waiver or leasehold mortgage in favor of and in form
reasonably acceptable to Agent, and such Borrower will not permit any
of the Equipment of such Borrower or any of its Subsidiaries to become
an accession to any personal Property other than Equipment that is
subject to first priority (except for Permitted Liens) Liens in favor
of Agent.
7.1.10. Financial Statements; Fiscal Year. The
Consolidated and unaudited consolidating balance sheets of each
Borrower and its Subsidiaries (including the accounts of all
Subsidiaries of such Borrower and their respective Subsidiaries for the
respective periods during which a Subsidiary relationship existed) as
of February 28, 2003, and the related statements of income, changes in
shareholder's equity, and changes in financial position for the periods
ended on such dates, have been prepared in accordance with GAAP, and
present fairly in all material respects the financial positions of such
Borrower and such Subsidiaries, taken as a whole, at such dates and the
results of such Borrower's and such Persons' operations, taken as a
whole, for such periods. As of the date hereof, since December 31,
2002, there has been no material adverse change in the financial
position of each Borrower and such Subsidiaries, taken as a whole, as
reflected in the Consolidated balance sheet as of such date. As of the
date hereof, the fiscal year of each Borrower and each of its
Subsidiaries (other than PBI) ends on June 30 of each year.
7.1.11. Full Disclosure. The financial statements
referred to in subsection 7.1.10 hereof do not, nor does this Agreement
or any other written statement of any Borrower to Agent or any Lender
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained
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therein or herein not misleading. There is no fact which any Borrower
has failed to disclose to Agent or any Lender in writing which could
reasonably be expected to have a Material Adverse Effect.
7.1.12. Solvent Financial Condition. Each Borrower
and each of its Subsidiaries, is now and, after giving effect to the
initial Loans to be made and the initial Letters of Credit and LC
Guaranties to be issued hereunder and all related transactions, will
be, Solvent.
7.1.13. Surety Obligations. Except as permitted by
Section 8.2.3(ix) hereof, no Borrower or any of its Subsidiaries is
obligated as a surety or indemnitor under any surety or similar bond or
other contract issued or entered into or has entered into any agreement
to assure payment, performance or completion of performance of any
undertaking or obligation of any Person.
7.1.14. Taxes. D&K's federal tax identification
number is 00-0000000. Xxxxxx'x federal tax identification number is
00-0000000. DH's federal tax identification number is 00-00-0000000.
MVP's federal tax identification number is 00-0000000. The federal tax
identification numbers of each Borrower's Subsidiaries are shown on
Exhibit 7.1.14 hereto. Each Borrower and each of its Subsidiaries has
filed all federal, state and local tax returns and other reports
relating to taxes it is required by law to file, and has paid, or made
provision for the payment of, all taxes, assessments, fees, levies and
other governmental charges upon it, its income and Properties as and
when such taxes, assessments, fees, levies and charges are due and
payable, unless and to the extent any thereof are being actively
contested in good faith and by appropriate proceedings and such
Borrower and each of its Subsidiaries maintains reasonable reserves on
its books therefor. The provision for taxes on the books of each
Borrower and its Subsidiaries is adequate for all years not closed by
applicable statutes, and for the current fiscal year.
7.1.15. Brokers. Except as shown on Exhibit 7.1.15
hereto, there are no claims for brokerage commissions, finder's fees or
investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.16. Patents, Trademarks, Copyrights and
Licenses. Each Borrower and each of its Subsidiaries owns, possesses or
licenses or has the right to use all the patents, trademarks, service
marks, trade names, copyrights, licenses and other Intellectual
Property necessary for the present and planned future conduct of its
business without any known conflict with the rights of others, except
for such conflicts as could not reasonably be expected to have a
Material Adverse Effect. All such patents, trademarks, service marks,
tradenames, copyrights, licenses, and other similar rights are included
on Exhibit 7.1.16 hereto. No claim has been asserted to any Borrower or
any of its Subsidiaries which is currently pending that their use of
their Intellectual Property or the conduct of their business does or
may infringe upon the Intellectual Property rights of any third party.
To the knowledge of each
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Borrower and except as set forth on Exhibit 7.1.16 hereto, as of the
date hereof, no Person is engaging in any activity that infringes in
any material respect upon such Borrower's or any of its Subsidiaries'
material Intellectual Property. Except as set forth on Exhibit 7.1.16,
each Borrower's and each of its Subsidiaries' (i) material trademarks,
service marks, and copyrights are registered with the U.S. Patent and
Trademark Office or in the U.S. Copyright Office, as applicable and
(ii) material license agreements and similar arrangements relating to
its Inventory (1) permits, and does not restrict, the assignment by
such Borrower or any of its Subsidiaries to Agent, or any other Person
designated by Agent, of all of such Borrower's or such Subsidiary's, as
applicable, rights, title and interest pertaining to such license
agreement or such similar arrangement and (2) would permit the
continued use by such Borrower or such Subsidiary, or Agent or its
assignee, of such license agreement or such similar arrangement and the
right to sell Inventory subject to such license agreement for a period
of no less than 6 months after a default or breach of such agreement or
arrangement. The consummation and performance of the transactions and
actions contemplated by this Agreement and the other Loan Document,
including without limitation, the exercise by Agent of any of its
rights or remedies under Section 10, will not result in the termination
or impairment of any Borrower's or any of its Subsidiaries' ownership
or rights relating to its Intellectual Property, except for such
Intellectual Property rights the loss or impairment of which could not
reasonably be expected to have a Material Adverse Effect. Except as
listed on Exhibit 7.1.16 and except as could not reasonably be expected
to have a Material Adverse Effect, (i) no Borrower or any of its
Subsidiaries is in breach of, or default under, any term of any license
or sublicense with respect to any of its Intellectual Property and (ii)
to the knowledge of each Borrower, no other party to such license or
sublicense is in breach thereof or default thereunder, and such license
is valid and enforceable.
7.1.17. Governmental Consents. Each Borrower and
each of its Subsidiaries has, and is in good standing with respect to,
all governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections and franchises necessary to continue
to conduct its business as heretofore or proposed to be conducted by it
and to own or lease and operate its Properties as now owned or leased
by it, except where the failure to possess or so maintain such rights
could not reasonably be expected to have a Material Adverse Effect.
7.1.18. Compliance with Laws. Each Borrower and each
of its Subsidiaries has duly complied, and its Properties, business
operations and leaseholds are in compliance with, the provisions of all
federal, state and local laws, rules and regulations applicable to such
Borrower or such Subsidiary, as applicable, its Properties or the
conduct of its business, except for such non-compliance as could not
reasonably be expected to have a Material Adverse Effect, and there
have been no citations, notices or orders of noncompliance issued to
such Borrower or any of its Subsidiaries under any such law, rule or
regulation, except where such noncompliance could not reasonably be
expected to have a Material Adverse Effect. Each Borrower and each of
its Subsidiaries has established and maintains an adequate
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monitoring system to insure that it remains in compliance in all
material respects with all federal, state and local rules, laws and
regulations applicable to it. No Inventory produced by the Borrowers
has been produced in violation of the Fair Labor Standards Act (29
U.S.C. Section 201 et seq.), as amended.
7.1.19. Restrictions. No Borrower or any of its
Subsidiaries is a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than as set
forth on Exhibit 7.1.19 hereto, none of which prohibit the execution of
or compliance with this Agreement or the other Loan Documents by such
Borrower or any of its Subsidiaries, as applicable.
7.1.20. Litigation. Except as set forth on Exhibit
7.1.20 hereto, there are no actions, suits, proceedings or
investigations pending, or to the knowledge of any Borrower,
threatened, against or affecting such Borrower or any of its
Subsidiaries, or the business, operations, Properties, prospects,
profits or condition of such Borrower or any of its Subsidiaries which,
singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. No Borrower or any of its Subsidiaries is in
default with respect to any order, writ, injunction, judgment, decree
or rule of any court, governmental authority or arbitration board or
tribunal, which, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
7.1.21. No Defaults. No event has occurred and no
condition exists which would, upon or after the execution and delivery
of this Agreement or any Borrower's performance hereunder, constitute a
Default or an Event of Default. No Borrower or any of its Subsidiaries
is in default in (and no event has occurred and no condition exists
which constitutes, or which the passage of time or the giving of notice
or both would constitute, a default in) the payment of any Indebtedness
to any Person for Money Borrowed in excess of $500,000.
7.1.22. Leases. Exhibit 7.1.22 hereto is a complete
listing of all capitalized and operating personal property leases of
each Borrower and its Subsidiaries and all real property leases of each
Borrower and its Subsidiaries. Each Borrower and each of its
Subsidiaries is in full compliance with all of the terms of each of its
respective capitalized and operating leases, except where the failure
to so comply could not reasonably be expected to have a Material
Adverse Effect.
7.1.23. Pension Plans. Except as disclosed on
Exhibit 7.1.23 hereto, no Borrower or any of its Subsidiaries has any
Plan. Each Borrower and each of its Subsidiaries is in compliance with
the requirements of ERISA and the regulations promulgated thereunder
with respect to each Plan, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect. No fact
or situation that could reasonably be expected to result in a material
adverse change in the financial condition of any Borrower and its
Subsidiaries exists in connection with
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any Plan. No Borrower or any of its Subsidiaries has any withdrawal
liability in connection with a Multiemployer Plan.
7.1.24. Trade Relations. There exists no actual or,
to any Borrower's knowledge, threatened termination, cancellation or
limitation of, or any modification or change in, the business
relationship between such Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in
the aggregate are material to the business of such Borrower and its
Subsidiaries, or with any material supplier, except in each case, where
the same could not reasonably be expected to have a Material Adverse
Effect, and there exists no present condition or state of facts or
circumstances which would prevent such Borrower or any of its
Subsidiaries from conducting such business after the consummation of
the transactions contemplated by this Agreement in substantially the
same manner in which it has heretofore been conducted.
7.1.25. Labor Relations. Except as described on
Exhibit 7.1.25 hereto, as of the date hereof, no Borrower or any of its
Subsidiaries is a party to any collective bargaining agreement. There
are no material grievances, disputes or controversies with any union or
any other organization of any Borrower's or any of its Subsidiaries'
employees, or threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization,
except those that could not reasonably be expected to have a Material
Adverse Effect.
7.1.26. Environmental Matters. Except as described
on Exhibit 7.1.26 hereto, each Borrower and its Subsidiaries and/or
each property, operations and facility that any Borrower or any
Subsidiary may own, operate or control (i) is in compliance with, in
all material respects, all applicable Environmental Laws; (ii) is not
subject to any judicial or administrative proceeding or order alleging
the violation of any Environmental Law; (iii) has not received any
written notice (A) that it may be in violation of any Environmental
Law, (B) threatening the commencement of any proceeding relating to any
Adverse Environmental Condition, (C) alleging that it is or may be
responsible (in whole or in part) for any Adverse Environmental
Condition, or (D) ordering or directing any Borrower or any Subsidiary
to take any action or refrain from taking any action because of an
Adverse Environmental Condition; (iv) to the best of each Borrower's
knowledge, is not the subject of any federal, state or local
investigation evaluating whether any investigation, remedial action or
other response is needed to respond to an Adverse Environmental
Condition; and (v) has not filed any notice indicating or reporting any
Adverse Environmental Condition except for such notices or reports
required by Environmental Laws as a result of routine business
operations.
7.2. Continuous Nature of Representations and Warranties.
Each representation and warranty contained in this Agreement
and the other Loan Documents shall be continuous in nature and shall remain
accurate, complete and not
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misleading at all times during the term of this Agreement, except for changes in
the nature of any Borrower's or any of its Subsidiary's business or operations
that would render the information in any exhibit attached hereto or to any other
Loan Document either inaccurate, incomplete or misleading, so long as Majority
Lenders have consented to such changes or such changes are expressly permitted
by this Agreement. Without limiting the generality of the foregoing, each Loan
request made or deemed made pursuant to subsection 3.1.1 hereof, and each Letter
of Credit or LC Guaranty request made under subsection 3.1.5 hereof, shall
constitute the applicable Borrower's reaffirmation, as of the date of each such
Loan, Letter of Credit or LC Guaranty request, of each representation, warranty
or other statement made or furnished to Agent or any Lender by or on behalf of
such Borrower, any Subsidiary of such Borrower, or any Guarantor in this
Agreement, any of the other Loan Documents, or any instrument, certificate or
financial statement furnished in compliance with or in reference thereto.
7.3. Survival of Representations and Warranties.
All representations and warranties of each Borrower contained
in this Agreement or any of the other Loan Documents shall survive the
execution, delivery and acceptance thereof by Agent and each Lender and the
parties thereto and the closing of the transactions described therein or related
thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1. Affirmative Covenants.
During the Term, and thereafter for so long as there are any
Obligations outstanding, each Borrower covenants that, unless otherwise
consented to by Majority Lenders, in writing, it shall:
8.1.1. Visits and Inspections; Agent Meeting.
Permit representatives of Agent from time to time, as often as may be
reasonably requested, but only during normal business hours, to visit
and inspect the Properties of such Borrower and each of its
Subsidiaries, inspect, audit (solely with respect to audits, absent (i)
the occurrence of an Event of Default or (ii) Permitted Acquisitions,
not more than two (2) times in any fiscal year) and make extracts from
its books and records, and discuss with its officers, its employees and
its independent accountants, such Borrower's and each of its
Subsidiaries' business, assets, liabilities, financial condition,
business prospects and results of operations. Lenders may accompany
Agent on audits at such Lenders' expense.
8.1.2. Notices. Promptly notify Agent in writing of
the occurrence of any event or the existence of any fact which renders
any representation or warranty in this Agreement or any of the other
Loan Documents inaccurate, incomplete or misleading in any material
respect as of the date made or remade. In addition, each Borrower
agrees to provide Agent with prompt written notice of any change in the
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information disclosed in any Exhibit hereto, in each case after giving
effect to the materiality limits and Material Adverse Effect
qualifications contained therein.
8.1.3. Financial Statements. Keep, and cause each
of its Subsidiaries to keep, adequate records and books of account with
respect to its business activities in which proper entries are made in
accordance with customary accounting practices reflecting all its
financial transactions; and cause to be prepared and furnished to Agent
and each Lender, the following, all to be prepared in accordance with
GAAP applied on a consistent basis, unless such Borrower's certified
public accountants concur in any change therein and such change is
disclosed to Agent and is consistent with GAAP:
(i) not later than 90 days after the close of
each fiscal year of Borrowers, unqualified (except for a
qualification for a change in accounting principles with which
the accountant concurs) audited financial statements of
Borrowers and their Subsidiaries as of the end of such year,
on a Consolidated and unaudited consolidating basis, certified
by a firm of independent certified public accountants of
recognized standing selected by Borrowers but acceptable to
Agent and, within a reasonable time thereafter a copy of any
management letter issued in connection therewith.
(ii) not later than 30 days after the end of each
month hereafter, including the last month of Borrowers' fiscal
year, unaudited interim financial statements of Borrowers and
their Subsidiaries as of the end of such month and of the
portion of the fiscal year then elapsed, on a Consolidated and
unaudited consolidating basis, certified by the principal
financial officer of Borrowers as prepared in accordance with
GAAP but without footnotes and fairly presenting in all
material respects the financial position and results of
operations of Borrowers and their Subsidiaries for such month
and period subject only to changes from audit and year-end
adjustments and except that such statements need not contain
notes.
(iii) together with each delivery of financial
statements pursuant to clauses (i) and (ii) of this subsection
8.1.3, a management report (1) setting forth in comparative
form the corresponding figures for the corresponding periods
of the previous fiscal year and the corresponding figures from
the most recent Projections for the current fiscal year
delivered pursuant to subsection 8.1.7 and (2) identifying the
reasons for any significant variations. The information above
shall be presented in reasonable detail and shall be certified
by the chief financial officer of Borrowers to the effect that
such information fairly presents in all material respects the
results of operation and financial condition of Borrowers and
their Subsidiaries as at the dates and for the periods
indicated;
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(iv) promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements,
financial statements or reports which Borrowers have made
available to their Securities holders and copies of any
regular, periodic and special reports or registration
statements which Borrowers or any of their Subsidiaries files
with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or
any national securities exchange;
(v) upon request of Agent, copies of any annual
report to be filed with ERISA in connection with each Plan;
and
(vi) such other data and information (financial
and otherwise) as Agent or any Lender, from time to time, may
reasonably request, bearing upon or related to the Collateral
or Borrowers' or any of their Subsidiaries' financial
condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1.3, each Borrower shall forward to
Agent a copy of the accountants' letter to such Borrower's management that is
prepared in connection with such financial statements and also shall cause to be
prepared and shall furnish to Agent a certificate of the aforesaid certified
public accountants certifying to Agent that, based upon their examination of the
financial statements of such Borrower and its Subsidiaries performed in
connection with their examination of said financial statements, they are not
aware of any Default or Event of Default, or, if they are aware of such Default
or Event of Default, specifying the nature thereof. Concurrently with the
delivery of the financial statements described in paragraph (i) and (ii) of this
subsection 8.1.3, or more frequently if reasonably requested by Agent, each
Borrower shall cause to be prepared and furnished to Agent a Compliance
Certificate in the form of Exhibit 8.1.3 hereto executed by the chief financial
officer of Borrower (a "Compliance Certificate").
8.1.4. Borrowing Base Certificates. On or before
the second Business Day of each week from and after the date hereof,
Borrower Representative shall deliver to Agent, in form acceptable to
Agent, a Borrowing Base Certificate as of the last day of the
immediately preceding week, with such supporting materials as Agent
shall reasonably request. If any Borrower deems it advisable, or Agent
shall request, Borrower Representative shall execute and deliver to
Agent Borrowing Base Certificates more frequently than weekly.
8.1.5. Landlord, Processor and Storage Agreements.
Provide Agent with copies of all agreements between any Borrower or any
of its Subsidiaries and any landlord, processor, distributor,
warehouseman or consignee which owns any premises at which any
Collateral may, from time to time, be kept.
8.1.6. Guarantor Financial Statements. Deliver or
cause to be delivered to Agent financial statements, if any, for each
Guarantor (to the extent not consolidated with the financial statements
delivered to Agent under subsection 8.1.3)
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in form and substance satisfactory to Agent at such intervals and
covering such time periods as Agent may request.
8.1.7. Projections. As soon as possible, but no
later than 30 days after the close of each fiscal year of the
Borrowers, deliver to Agent monthly Projections for all Borrowers for
the following year on a Consolidated and consolidating basis.
8.1.8. Subsidiaries. Cause each Subsidiary of each
Borrower, whether now or hereafter in existence, promptly upon Agent's
request therefor, to execute and deliver to Agent a Guaranty Agreement
and a security agreement pursuant to which such Subsidiary guaranties
the payment of all Obligations and grants to Agent a first priority
Lien (subject only to Permitted Liens) on all of its Properties of the
types described in Section 5.1. Additionally, each Borrower shall
execute and deliver to Agent a pledge agreement pursuant to which such
Borrower grants to Agent a first priority Lien (subject only to
Permitted Liens) with respect to all of the issued and outstanding
Securities of each such Subsidiary and each Inactive Subsidiary.
8.1.9. Deposit and Brokerage Accounts. For each
deposit account or brokerage account that any Borrower at any time
opens or maintains, such Borrower shall, at Agent's request and option,
pursuant to an agreement in form and substance reasonably satisfactory
to Agent, cause the depository bank or securities intermediary, as
applicable, to agree to comply at any time with instructions from Agent
to such depository bank or securities intermediary, as applicable,
directing the disposition of funds from time to time credited to such
deposit or brokerage account, without further consent of such Borrower.
8.1.10. Interest Rate Protection. Within 30 days
following the Closing Date, Borrowers shall obtain and thereafter
maintain interest rate protection in form, on terms and with parties
acceptable to Agent for a notional amount of not less than $70,000,000.
8.1.11. Subordinations. Provide Agent with a debt
subordination agreement, in form and substance satisfactory to Agent,
executed by such Borrower and any Person who is an officer, director or
Affiliate of such Borrower to whom such Borrower is or hereafter
becomes indebted for Money Borrowed, subordinating in right of payment
and claim all of such Indebtedness and any future advances thereon to
the full and final payment and performance of the Obligations.
8.1.12. Further Assurances. Without limiting the
generality of the foregoing, if any of the Accounts, the face value of
which exceeds $10,000, arises out of a contract with the United States
of America, or any department, agency, subdivision or instrumentality
thereof, Borrowers shall promptly notify Agent thereof in writing and
shall execute any instruments and take any other action required or
requested by Agent to comply with the provisions of the Federal
Assignment of Claims Act.
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8.1.13. Centralized Inventory Purchasing.
Substantially all of the Borrowers' Inventory shall be ordered by D&K
and the invoices for such purchases shall be paid by D&K.
8.2. Negative Covenants.
During the Term, and thereafter for so long as there are any
Obligations outstanding, each Borrower covenants that, unless otherwise
consented to by Majority Lenders, in writing, it shall not:
8.2.1. Mergers; Consolidations; Acquisitions;
Structural Changes. Except as otherwise provided in this Section 8.2.1,
merge or consolidate, or permit any Subsidiary of such Borrower to
merge or consolidate, with any Person; nor change its or any of its
Subsidiaries' state of incorporation or organization, Type of
Organization or Organizational I.D. Number; nor change its or any of
its Subsidiaries' legal name; nor acquire, nor permit any of its
Subsidiaries to acquire, all or any substantial part of the Properties
of any Person. Notwithstanding the foregoing, D&K may acquire all or
substantially all of the assets or capital stock or ownership interest
of any Person (the "Target") (in each case, a "Permitted Acquisition")
subject to the satisfaction of each of the following conditions:
(i) Agent shall receive at least thirty (30)
Business Days' prior written notice of such proposed Permitted
Acquisition, which notice shall include a reasonably detailed
description of such proposed Permitted Acquisition;
(ii) such Permitted Acquisition shall only
involve assets located in the United States and comprising a
business, or those assets of a business, of a wholesale drug
or related service industry;
(iii) such Permitted Acquisition shall be
consensual and shall have been approved by the Target's board
of directors;
(iv) no additional Indebtedness, contingent
obligations or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of
Borrowers and Target after giving effect to such Permitted
Acquisition, except (A) Loans made hereunder, (B) ordinary
course trade payables and accrued expenses, and (C) financing
in favor of the Seller with respect to such Permitted
Acquisition so long as such financing consists of Approved
Seller Subordinated Financing;
(v) the sum of all amounts payable in connection
with all Permitted Acquisitions (including all transaction
costs and all Indebtedness and liabilities incurred or assumed
in connection therewith or otherwise reflected in a
consolidated balance sheet of Borrowers and Target) shall not
exceed $15,000,000 in the aggregate in any fiscal year of
Borrowers;
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(vi) the Target shall, for the trailing
twelve-month period preceding the date of the Permitted
Acquisition, have net earnings before interest expense, taxes,
and allowances for depreciation and amortization, all as
determined in accordance with GAAP, of greater than zero;
(vii) the business and assets acquired in such
Permitted Acquisition shall be free and clear of all Liens
(other than Permitted Liens);
(viii) at or prior to the closing of any Permitted
Acquisition, Agent, for the benefit of itself and the Lenders,
will be granted a first priority perfected Lien (subject to
Permitted Liens) in all assets acquired pursuant thereto or in
the assets and capital stock of the Target, as applicable, and
Borrowers and the Target shall have executed such documents
and taken such actions as may be required by Agent in
connection therewith, and if the Permitted Acquisition
involves the acquisition of stock or other ownership interest
of the Target, all documents, instruments and agreements
necessary or desirable to cause Target to be a Borrower
hereunder, including without limitation, amendments to this
Agreement, stock pledge agreements, and stock powers;
(ix) not less than ten (10) Business Days prior
to any such Permitted Acquisition, Borrower Representative
shall have delivered to Agent, in form and substance
satisfactory to Agent:
(A) a pro forma consolidated balance
sheet of Borrowers and their Subsidiaries (including
the Target) (the "Acquisition Pro Forma"), based on
the most recently delivered monthly financial
statements (pursuant to Section 8.1.3(ii)) and taking
into account such Permitted Acquisition and the
funding of all Loans in connection therewith;
(B) updated versions of the most
recently delivered Projections covering the current
fiscal year and the subsequent fiscal year of
Borrowers, commencing on the date of such Permitted
Acquisition and otherwise prepared in accordance with
the requirements of Section 8.1.3(iii) (the
"Acquisition Projections") and based upon historical
financial data of Borrowers and Target for the
current fiscal year, taking into account such
Permitted Acquisition; and
(C) a certificate from the chief
financial officer of each Borrower to the effect
that: (v) all of the requirements set forth herein
with respect to such Permitted Acquisition have been
satisfied; (w) each Borrower (after taking into
consideration all rights of contribution and
indemnity such Borrower has against other Borrowers
and each other Subsidiary of each Borrower) will be
Solvent upon the consummation of the Permitted
Acquisition; (x) the Acquisition Pro Forma fairly
presents the financial condition of Borrowers (on a
consolidated basis) as of the date hereof after
giving effect to the Permitted Acquisition; (y) the
Acquisition Projections are reasonable
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estimates of the future financial performance of
Borrowers subsequent to the date thereof based upon
the historical performance of Borrowers and the
Target and show that Borrowers shall continue to be
in compliance with the financial covenants set forth
in Section 8.3 thereafter; and (z) Borrowers have
completed their due diligence investigation with
respect to the Target and such Permitted Acquisition,
which investigation was conducted in a manner similar
to that which would have been conducted by a prudent
purchaser of a comparable business and the results of
which investigation were delivered to and reasonably
acceptable to Agent;
(x) on or prior to the date of such Permitted
Acquisition, Agent shall have received, in form and substance
satisfactory to Agent, copies of the acquisition agreement and
related agreements and instruments, and all opinions,
certificates, lien search results and other documents
reasonably requested by Agent;
(xi) at the time of such Permitted Acquisition
and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing; and
(xii) immediately following such Permitted
Acquisition, Borrowers shall have Availability of not less
than $50,000,000.
In addition to the foregoing, D&K may acquire 30% of the capital stock of PBI
not owned by D&K as of the Closing Date, subject to satisfaction of the
conditions set forth in clauses (viii) and (xi) above.
Notwithstanding the foregoing, the Accounts and Inventory of a Target (including
PBI) shall not be included in Eligible Accounts and Eligible Inventory without
(i) the completion of an audit of such Accounts and Inventory by Agent (Agent
agrees to use its reasonable best efforts to complete its audit of such Accounts
and Inventory prior to the date of closing with respect to any such Permitted
Acquisition), (ii) delivery of an appraisal of the Inventory to Agent, and (iii)
the prior written consent of Agent.
8.2.2. Loans. Make, or permit any Subsidiary of any
Borrower to make, any loans or other advances of money to any Person
except for (i) salary, travel advances, advances against commissions
and other similar advances in the ordinary course of business, (ii)
loans to Persons other than Borrowers not to exceed $1,000,000 to any
Person or $2,500,000 in the aggregate to all Persons, and (iii)
intercompany loans in the ordinary course of business, by a Borrower to
any other Borrower, provided that (a) each Borrower shall record all
intercompany transactions on its books and records in a manner
reasonably satisfactory to Agent, (b) each Borrower hereby agrees that
each obligation owed to another Borrower is subordinated in right of
payment to the Obligations, (c) at the time any such intercompany loan
or advance is made by any Borrower and after giving effect
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thereto, such Borrower shall be Solvent, and (d) no Default or Event of
Default would occur and be continuing after giving effect to any such
proposed intercompany loan.
8.2.3. Total Indebtedness. Create, incur, assume,
or suffer to exist, or permit any Subsidiary of such Borrower to
create, incur or suffer to exist, any Indebtedness, except:
(i) Obligations owing to Agent or any Lender
under this Agreement or any of the other Loan Documents;
(ii) Indebtedness, including without limitation
Subordinated Debt, existing on the date of this Agreement and
listed on Exhibit 8.2.3;
(iii) Permitted Purchase Money Indebtedness;
(iv) contingent liabilities arising out of
endorsements of checks and other negotiable instruments for
deposit or collection in the ordinary course of business;
(v) Guaranties of any Indebtedness permitted
hereunder;
(vi) Indebtedness in respect of intercompany
loans permitted under subsection 8.2.2(iii);
(vii) obligations to pay Rentals permitted by
subsection 8.2.18;
(viii) to the extent not included above, trade
payables, accruals and accounts payable in the ordinary course
of business (in each case to the extent not overdue) not for
Money Borrowed;
(ix) Indebtedness consisting of obligations of
any Borrower or any Subsidiary of any Borrower as a surety or
indemnitor under a surety or similar bond or other contract
issued or entered into, or under any other agreement assuring
payment, performance or completion of performance of any
undertaking of obligation of any Person, in an aggregate
amount at any time, which is not greater than $1,500,000;
(x) Approved Seller Subordinated Financing to
the extent permitted by Section 8.2.1(iv)(C); and
(xi) Indebtedness not included in paragraphs (i)
through (x) above which does not exceed at any time, in the
aggregate, the sum of $5,000,000.
8.2.4. Affiliate Transactions. Enter into, or be a
party to, or permit any Subsidiary of such Borrower to enter into or be
a party to, any transaction with any Affiliate of such Borrower or any
holder of any Securities of such Borrower or any Subsidiary of such
Borrower, including without limitation any transaction involving
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management, consulting or similar fees, except (i) in the ordinary
course of and pursuant to the reasonable requirements of such
Borrower's or such Subsidiary's business and upon fair and reasonable
terms which are fully disclosed to Agent and are no less favorable to
such Borrower or such Subsidiary than would be obtained in a comparable
arms-length transaction with a Person not an Affiliate or Security
holder of such Borrower, and (ii) as otherwise permitted under this
Agreement.
8.2.5. Limitation on Liens. Create or suffer to
exist, or permit any Subsidiary of such Borrower to create or suffer to
exist, any Lien upon any of its Property, income or profits, whether
now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Agent
for the benefit of Lenders;
(ii) Liens for taxes, assessments or governmental
charges (excluding any Lien imposed pursuant to any of the
provisions of ERISA) not yet due, or being contested in the
manner described in subsection 7.1.14 hereto, but only if in
Agent's judgment such Lien would not reasonably be expected to
adversely affect Agent's rights or the priority of Agent's
Lien on any Collateral;
(iii) Liens arising in the ordinary course of the
business of such Borrower or any of its Subsidiaries by
operation of law or regulation, but only if payment in respect
of any such Lien is not at the time required and such Liens do
not, in the aggregate, materially detract from the value of
the Property of such Borrower or any of its Subsidiaries or
materially impair the use thereof in the operation of the
business of such Borrower or any of its Subsidiaries;
(iv) Purchase Money Liens securing Permitted
Purchase Money Indebtedness;
(v) such other Liens as appear on Exhibit 8.2.5
hereto;
(vi) Liens incurred or deposits made in the
ordinary course of business in connection with (1) worker's
compensation, social security, unemployment insurance and
other like laws or (2) sales contracts, leases, statutory
obligations, work in progress advances and other similar
obligations not incurred in connection with the borrowing of
money or the payment of the deferred purchase price of
property;
(vii) reservations, covenants, zoning and other
land use regulations, title exceptions or encumbrances granted
in the ordinary course of business, affecting real Property
owned or leased by such Borrower or one of its Subsidiaries;
provided that such exceptions do not in the aggregate
materially
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interfere with the use of such Property in the ordinary course
of such Borrower's or such Subsidiary's business;
(viii) judgment Liens that do not give rise to an
Event of Default under subsection 10.1.15;
(ix) Liens securing intercompany loans permitted
under subsection 8.2.2(iii); and
(x) such other Liens as Majority Lenders may
hereafter approve in writing.
8.2.6. Payments and Amendments of Certain Debt.
(i) make or permit any Subsidiary of such
Borrower to make any payment of any part or all of any
Subordinated Debt or take any other action or omit to take any
other action in respect of any Subordinated Debt, except in
accordance with the Subordination Agreements relative thereto
or the subordination provisions thereof; or
(ii) amend or modify any agreement, instrument or
document evidencing or relating to any Subordinated Debt.
8.2.7. Distributions. Declare or make, or permit
any Subsidiary of Borrower to declare or make, any Distributions,
except for (a) dividends of Subsidiaries of Borrowers or Borrowers to
D&K, provided that D&K shall give Agent written notice describing the
amount of such dividend, (b) dividends payable by D&K; provided that no
Event of Default has occurred and is continuing as of the date any such
dividend is paid or would result after giving effect thereto, (c)
Distributions consisting of repurchases of D&K's common stock not to
exceed $15,000,000, in the aggregate in each fiscal year on or prior to
June 30, 2004; provided that no Event of Default has occurred and is
continuing as of the date of any such repurchase or would result after
giving effect thereto, and provided that Borrowers shall have
Availability of not less than $50,000,000 after giving effect thereto,
and (d) dividends payable by PBI to D&K and its other stockholders
consistent with past practices.
8.2.8. Intentionally Omitted.
8.2.9. Disposition of Assets. Sell, lease or
otherwise dispose of any of, or permit any Subsidiary of any Borrower
to sell, lease or otherwise dispose of any of, its Properties,
including any disposition of Property as part of a sale and leaseback
transaction, to or in favor of any Person, except for:
(i) sales of Inventory in the ordinary course of
business;
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(ii) transfers of Property to such Borrower by a
Subsidiary of such Borrower and transfer of Property between
Borrowers;
(iii) dispositions of Property that is
substantially worn, damaged, uneconomic or obsolete (subject
to subsection 6.4.2 hereof);
(iv) dispositions of investments described in
paragraphs (iv), (v), (vi) and (vii) of the definition of the
term "Restricted Investments";
(v) a sale of the capital stock or all or
substantially all of the assets of Jaron, Inc., a Florida
corporation; and
(vi) other dispositions expressly authorized by
this Agreement.
8.2.10. Securities of Subsidiaries. Permit any of
its Subsidiaries to issue any additional Securities except (i) to such
Borrower provided such Borrower immediately delivers such Securities to
Agent, for the benefit of the Lenders, and executes all necessary
documentation to pledge such Securities to Agent for the benefit of the
Lenders and (ii) for director's qualifying Securities.
8.2.11. Xxxx-and-Hold Sales, Etc. Make, or permit
any Subsidiary of such Borrower to make, a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval,
repurchase or return or consignment basis.
8.2.12. Restricted Investment. Make or have, or
permit any Subsidiary of any Borrower to make, any Restricted
Investments in excess of $5,000,000 in the aggregate.
8.2.13. Subsidiaries and Joint Ventures. Create,
acquire or otherwise suffer to exist, or permit any Subsidiary of such
Borrower to create, acquire or otherwise suffer to exist, any
Subsidiary or joint venture arrangement not in existence as of the date
hereof.
8.2.14. Tax Consolidation. File or consent to the
filing of any consolidated income tax return with any Person other than
D&K and PBI.
8.2.15. Organizational Documents. Agree to, or
suffer to occur, any amendment, supplement or addition to its or any of
its Subsidiaries' charter, articles or certificate of incorporation,
certificate of formation, limited partnership agreement, bylaws,
limited liability agreement, operating agreement or other
organizational documents (as the case may be), that would reasonably be
expected to have a Material Adverse Effect.
8.2.16. Fiscal Year End. Change, or permit any
Subsidiary of such Borrower to change, its fiscal year end, except that
PBI may change its fiscal year end to June 30 of each year.
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8.2.17. Negative Pledges. Enter into any agreement
limiting the ability of such Borrower or any of its Subsidiaries to
voluntarily create Liens upon any of its Property except as otherwise
provided herein.
8.2.18. Leases. Become, or permit any of its
Subsidiaries to become, a lessee under any operating lease (other than
a lease under which a Borrower or any of its Subsidiaries is lessor) of
Property if the aggregate Rentals payable during any current or future
period of 12 consecutive months under the lease in question and all
other leases under which Borrowers or any of their Subsidiaries is then
lessee would exceed $5,000,000. The term "Rentals" means, as of the
date of determination, all payments, which the lessee is required to
make by the terms of any lease.
8.2.19. Jaron. Permit Jaron, Inc., a Florida
corporation, to conduct any ongoing business activity or own any assets
with a fair market value in excess of $10,000 after June 1, 2003.
8.3. Specific Financial Covenants.
During the Term, and thereafter for so long as there are any
Obligations outstanding, each Borrower covenants that, unless otherwise
consented to by Majority Lenders, in writing, it shall comply with all of the
financial covenants set forth in Exhibit 8.3 hereto. If GAAP changes from the
basis used in preparing the audited financial statements delivered to Agent by
any Borrower on or before the Closing Date, Borrower Representative will provide
Agent with certificates demonstrating compliance with such financial covenants
and will include, at the election of Borrower Representative or upon the request
of Agent, calculations setting forth the adjustments necessary to demonstrate
how Borrowers are also in compliance with such financial covenants based upon
GAAP as in effect on the Closing Date.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any
of the other Loan Documents, and without affecting in any manner the rights of
Agent or any Lender under the other sections of this Agreement, no Lender shall
be required to make any Loan, nor shall Agent be required to or issue or procure
any Letter of Credit or LC Guaranty unless and until each of the following
conditions has been and continues to be satisfied:
9.1. Documentation.
Agent shall have received, in form and substance satisfactory
to Agent and its counsel, a duly executed copy of this Agreement and the other
Loan Documents, together with such additional documents, instruments, opinions
and certificates as Agent and its counsel shall require in connection therewith
from time to time, all in form and substance satisfactory to Agent and its
counsel.
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9.2. No Default.
No Default or Event of Default shall exist.
9.3. Other Conditions.
Each of the conditions precedent set forth in the Loan
Documents shall have been satisfied.
9.4. Availability.
Agent shall have determined that immediately after Lenders
have made the initial Loans and after Agent has issued or procured the initial
Letters of Credit and LC Guaranties contemplated hereby and after Borrowers have
paid (or, if accrued, treated as paid) all closing costs incurred in connection
with the transactions contemplated hereby, Availability shall not be less than
$75,000,000.
9.5. No Litigation.
No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.6. Diligence and Appraisal.
Agent shall have received an Appraisal and conducted an
examination of the Inventory, the form and substance of each shall be reasonably
satisfactory to Agent.
9.7. Material Adverse Effect.
As of the Closing Date, in the reasonable judgment of the
Agent, (a) since December 31, 2002, there has not been any material adverse
change in any Borrower's business, assets, financial condition, income or
prospects and no event or condition exists which would be reasonably likely to
result in any Material Adverse Effect; and (b) since December 31, 2002, there
has not been a material adverse change or material disruption in the financial
banking or capital markets, which would have a material adverse effect on the
syndication of the Loan Commitments.
9.8. Fees.
Borrowers shall have paid those fees due and payable on the
Closing Date as specified in the Fee Letter.
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SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1. Events of Default.
The occurrence of one or more of the following events shall
constitute an "Event of Default":
10.1.1. Payment of Obligations. Borrowers shall fail
to pay any of the Obligations hereunder or under any Note on the due
date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise).
10.1.2. Misrepresentations. Any representation,
warranty or other statement made or furnished to Agent or any Lender by
or on behalf of any Borrower, any Subsidiary of any Borrower or any
Guarantor in this Agreement, any of the other Loan Documents or any
instrument, certificate or financial statement furnished in compliance
with or in reference thereto proves to have been false or misleading in
any material respect when made, furnished or reaffirmed pursuant to
Section 7.2 hereof.
10.1.3. Breach of Specific Covenants. Any Borrower
shall fail or neglect to perform, keep or observe any covenant
contained in Section or subsection 5.2, 5.3, 5.4, 6.1.1, 6.1.2, 6.2.4,
6.2.5, 8.1.1, 8.1.2, 8.1.4 (provided that, no more than two (2) times
during each fiscal year, the Borrowers may fail to timely deliver the
required Borrowing Base Certificate; provided that, in such instances,
such delivery shall occur no later than two (2) Business Days following
the date due), 8.1.9, 8.1.10, 8.2 or 8.3 hereof on the date that such
Borrower is required to perform, keep or observe such covenant or shall
fail or neglect to perform, keep or observe any covenant contained in
Section 8.1.3 or 8.1.7 hereof within 5 days following the date on which
such Borrower is required to perform, keep or observe such covenant.
10.1.4. Breach of Other Covenants. Any Borrower
shall fail or neglect to perform, keep or observe any covenant
contained in this Agreement (other than a covenant which is dealt with
specifically elsewhere in Section 10.1 hereof) and the breach of such
other covenant is not cured to Agent's satisfaction within 30 days
after the sooner to occur of such Borrower's receipt of notice of such
breach from Agent or the date on which such failure or neglect first
becomes known to any officer of such Borrower.
10.1.5. Default Under Security Documents or Other
Agreements. Any event of default shall occur under, or any Borrower,
any of its Subsidiaries or any other Guarantor shall default in the
performance or observance of any term, covenant, condition or agreement
contained in, any of the Security Documents, or the Other Agreements
and such default shall continue beyond any applicable grace period.
10.1.6. Other Defaults. There shall occur any
default or event of default on the part of any Borrower, any Subsidiary
of any Borrower or any other Guarantor under any agreement, document or
instrument to which such Borrower,
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such Subsidiary of such Borrower or such Guarantor is a party or by
which such Borrower, such Subsidiary of such Borrower or such Guarantor
or any of its Property is bound, evidencing or relating to any
Indebtedness (other than the Obligations) with an outstanding principal
balance in excess of $500,000, if the payment or maturity of such
Indebtedness is or could be accelerated in consequence of such event of
default or demand for payment of such Indebtedness is made or could be
made in accordance with the terms thereof.
10.1.7. Uninsured Losses. Any material loss, theft,
damage or destruction of any portion of the Collateral having a fair
market value of $1,000,000, in the aggregate, if not fully covered
(subject to such deductibles and self-insurance retentions as Agent
shall have permitted) by insurance.
10.1.8. Insolvency and Related Proceedings. Any
Borrower, any Subsidiary of any Borrower or any other Guarantor shall
cease to be Solvent or shall suffer the appointment of a receiver,
trustee, custodian or similar fiduciary, or shall make an assignment
for the benefit of creditors, or any petition for an order for relief
shall be filed by or against any Borrower, any Subsidiary of any
Borrower or any other Guarantor under U.S. federal bankruptcy laws (if
against any Borrower, any Subsidiary of any Borrower or any other
Guarantor the continuation of such proceeding for more than 60 days),
or any Borrower, any Subsidiary of any Borrower or any other Guarantor
shall make any offer of settlement, extension or composition to their
respective unsecured creditors generally.
10.1.9. Business Disruption; Condemnation. There
shall occur a cessation of a substantial part of the business of any
Borrower for a period which materially adversely affects such
Borrower's capacity to continue its business on a profitable basis; or
any Borrower shall suffer the loss or revocation of any material
license or permit now held or hereafter acquired by such Borrower which
is necessary to the continued or lawful operation of its business; or
any Borrower shall be enjoined, restrained or in any way prevented by
court, governmental or administrative order from conducting all or any
material part of its business affairs; or any material lease or
agreement pursuant to which any Borrower leases, uses or occupies any
Property shall be canceled or terminated prior to the expiration of its
stated term, except any such lease or agreement the cancellation or
termination of which could not reasonably be expected to have a
Material Adverse Effect; or any material portion of the Collateral
shall be taken through condemnation or the value of such Property shall
be impaired through condemnation.
10.1.10. Change of Ownership. (a) any Person or group
of Persons (within the meaning of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934,) of 30% or more of the issued and
outstanding shares of capital Stock of D&K having the right to vote for
the election of directors of D&K under ordinary circumstances;
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(b) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board
of directors of D&K (together with any new directors whose election by
the board of directors of D&K or whose nomination for election by the
stockholders of D&K was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office;
(c) D & K shall cease to own and control, beneficially and of record
100% of the issued and outstanding Securities and Voting Stock of the
other Borrowers or (d) each Borrower (other than D & K) shall cease to
own and control, beneficially and of record (directly or indirectly),
100% of the issued and outstanding Securities and Voting Stock of each
of its Subsidiaries.
10.1.11. ERISA. A Reportable Event shall occur which,
in Agent's or the Majority Lenders' determination, constitutes grounds
for the termination by the Pension Benefit Guaranty Corporation of any
Plan or for the appointment by the appropriate United States district
court of a trustee for any Plan, or any Plan shall be terminated or any
such trustee shall be requested or appointed, or if any Borrower, any
Subsidiary of any Borrower or any other Guarantor is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from such Borrower's, such Subsidiary's or
such Guarantor's complete or partial withdrawal from such Plan and any
such event could reasonably be expected to have a Material Adverse
Effect.
10.1.12. Challenge to Agreement. Any Borrower, any
Subsidiary of any Borrower or any other Guarantor, or any Affiliate of
any of them, shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement or any of
the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Agent.
10.1.13. Repudiation of or Default Under Guaranty
Agreement. Any Guarantor shall revoke or attempt to revoke the Guaranty
Agreement signed by such Guarantor, or shall repudiate such Guarantor's
liability thereunder or shall be in default under the terms thereof.
10.1.14. Criminal Forfeiture. Any Borrower, any
Subsidiary of any Borrower or any other Guarantor shall be criminally
indicted or convicted under any law that could lead to a forfeiture of
any Property of such Borrower, any Subsidiary of such Borrower or any
other Guarantor.
10.1.15. Judgments. Any money judgments, writ of
attachment or similar processes (collectively, "Judgments") are issued
or rendered against any Borrower, any Subsidiary of any Borrower or any
other Guarantor, or any of their respective Property (i) in the case of
money Judgments, in an amount of $1,000,000 or more for all such
Judgments, in the aggregate, in each case in excess of any
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applicable insurance or other contractual indemnity from a third party
satisfactory to Agent with respect to which the insurer has admitted
liability, and (ii) in the case of non-monetary Judgments, such
Judgment or Judgments (in the aggregate) could reasonably be expected
to have a Material Adverse Effect, in the case of clauses (i) and (ii)
above, which Judgment is not stayed, released or discharged within 60
days.
10.2. Acceleration of the Obligations.
Upon or at any time after the occurrence and during the
continuance of an Event of Default, (i) the Revolving Loan Commitments shall, at
the option of Agent or Majority Lenders be terminated and/or (ii) Agent may, or
at the direction of Majority Lenders shall, declare all or any portion of the
Obligations at once due and payable without presentment, demand protest or
further notice by Agent or any Lender, and Borrowers shall forthwith pay to
Agent, the full amount of such Obligations, provided, that upon the occurrence
of an Event of Default specified in subsection 10.1.8 hereof, the Revolving Loan
Commitments shall automatically be terminated and all of the Obligations shall
become automatically due and payable, in each case without declaration, notice
or demand by Agent or any Lender. In connection with any Letter of Credit issued
or guaranteed pursuant to this Agreement, Borrowers shall deliver to Agent cash
collateral in an amount equal to 105% of the LC Amount to be held interest-free
by Agent in the aggregate maximum amount of all Letters of Credit and LC
Guaranties then issued and outstanding. If Borrowers fail to so deliver such
cash collateral, Agent may sell Collateral pursuant to this Agreement and hold
the proceeds thereof as cash collateral.
10.3. Other Remedies.
Upon the occurrence and during the continuance of an Event of
Default, Agent shall have and may exercise from time to time the following other
rights and remedies:
10.3.1. All of the rights and remedies of a secured
party under the UCC or under other applicable law, and all other legal
and equitable rights to which Agent or Lenders may be entitled, all of
which rights and remedies shall be cumulative and shall be in addition
to any other rights or remedies contained in this Agreement or any of
the other Loan Documents, and none of which shall be exclusive.
10.3.2. The right to take immediate possession of
the Collateral, and to (i) require Borrowers and each of their
Subsidiaries to assemble the Collateral, at Borrowers' expense, and
make it available to Agent at a place designated by Agent which is
reasonably convenient to both parties, and (ii) enter any premises
where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the
Property of any Borrower or any Subsidiary of any Borrower, such
Borrower agrees not to charge, or permit any of its Subsidiaries to
charge, Agent for storage thereof).
10.3.3. The right to sell or otherwise dispose of
all or any Collateral in its then condition, or after any further
manufacturing or processing thereof, at public
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or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Agent, in its sole
discretion, may deem advisable. Agent may, at Agent's option, disclaim
any and all warranties regarding the Collateral in connection with any
such sale. Each Borrower agrees that 10 days' written notice to
Borrower Representative of any public or private sale or other
disposition of Collateral shall be reasonable notice thereof, and such
sale shall be at such locations as Agent may designate in said notice.
Agent shall have the right to conduct such sales on any Borrower's or
any of its Subsidiaries' premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable
law. Agent shall have the right to sell, lease or otherwise dispose of
the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Agent, on behalf of Lenders, may purchase all
or any part of the Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of such purchase price, may
set off the amount of such price against the Obligations. The proceeds
realized from the sale of any Collateral may be applied, after allowing
2 Business Days for collection, first to the costs, expenses and
attorneys' fees incurred by Agent in collecting the Obligations
(excluding those associated with Product Obligations to the extent
Agent can reasonably allocate such costs, expenses and attorneys' fees
to the Product Obligations), in enforcing the rights of Agent and
Lenders under the Loan Documents and in collecting, retaking,
completing, protecting, removing, storing, advertising for sale,
selling and delivering any Collateral; second to the interest and fees
due upon any of the Obligations (excluding Product Obligations); third,
to the principal of the Obligations (excluding Product Obligations);
and fourth, to the principal, interest and fees of Product Obligations
(including, without limitation, all costs, expenses and attorneys' fees
incurred by Agent in collecting the Product Obligations and not
previously paid). If any deficiency shall arise, each Borrower and each
Guarantor shall remain jointly and severally liable to Agent and
Lenders therefor. In the event of a sale of Collateral on credit terms,
the Borrowers' Obligations shall be reduced only to the extent that
Agent receives cash payment in respect of such credit sale.
10.3.4. Agent is hereby granted a license or other
right to use, without charge, each Borrower's and each of its
Subsidiary's Intellectual Property, including, without limitation, all
labels, patents, copyrights, licenses, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any Property
of a similar nature, as it pertains to the Collateral, in completing,
advertising for sale and selling any Collateral and each Borrower's and
each of its Subsidiary's rights under all licenses and all franchise
agreements shall inure to Agent's benefit.
10.3.5. Agent may, at its option, require any
Borrower to deposit with Agent funds equal to 105% of the LC Amount
and, if such Borrower fails to promptly make such deposit, Agent may
advance such amount as a Revolving Credit Loan (whether or not an
Overadvance is created thereby). Each such Revolving Credit Loan shall
be secured by all of the Collateral. Any such deposit or advance shall
be held by Agent as a reserve to fund future payments on such LC
Guaranties and future drawings against such Letters of Credit. At such
time as all LC Guaranties
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have been paid or terminated and all Letters of Credit have been drawn
upon or expired, any amounts remaining in such reserve shall be applied
against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to the applicable Borrower.
10.4. Set Off and Sharing of Payments.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default, each Lender is hereby authorized by
Borrowers at any time or from time to time, with prior written consent of Agent
and with reasonably prompt subsequent notice to Borrower Representative (any
prior or contemporaneous notice to Borrower Representative being hereby
expressly waived) to set off and to appropriate and to apply any and all (i)
balances held by such Lender at any of its offices for the account of any
Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to any Borrower or its Subsidiaries), and (ii) other property at any
time held or owing by such Lender to or for the credit or for the account of any
Borrower or any of its Subsidiaries, against and on account of any of the
Obligations. Any Lender exercising a right to set off shall, to the extent the
amount of any such set off exceeds its Revolving Loan Percentage of the amount
set off, purchase for cash (and the other Lenders shall sell) interests in each
such other Lender's pro rata share of the Obligations as would be necessary to
cause such Lender to share such excess with each other Lender in accordance with
their respective Revolving Loan Percentages. Each Borrower agrees, to the
fullest extent permitted by law, that any Lender may exercise its right to set
off with respect to amounts in excess of its pro rata share of the Obligations
and upon doing so shall deliver such excess to Agent for the benefit of all
Lenders in accordance with the Revolving Loan Percentages.
10.5. Remedies Cumulative; No Waiver.
All covenants, conditions, provisions, warranties, guaranties,
indemnities, and other undertakings of each Borrower contained in this Agreement
and the other Loan Documents, or in any document referred to herein or contained
in any agreement supplementary hereto or in any schedule or in any guaranty
given to Agent or any Lender or contained in any agreement between any Lender
and any Borrower or between Agent and any Borrower heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of any
Borrower herein contained. The failure or delay of Agent or any Lender to
require strict performance by any Borrower of any provision of this Agreement or
to exercise or enforce any rights, Liens, powers, or remedies hereunder or under
any of the aforesaid agreements or other documents or security or Collateral
shall not operate as a waiver of such performance, Liens, rights, powers and
remedies, but all such requirements, Liens, rights, powers, and remedies shall
continue in full force and effect until all Loans and other Obligations owing or
to become owing from any Borrower to Agent and each Lender have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and
representations of any Borrower contained in this Agreement or any of the other
Loan Documents and no Default or Event of Default by any Borrower under this
Agreement or any other Loan Documents shall be deemed to have
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been suspended or waived by Lenders, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Agent and directed to such Borrower.
SECTION 11. AGENT
11.1. Authorization and Action.
Each Lender hereby appoints and authorizes Agent to take such
action on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. Each Lender
hereby acknowledges that Agent shall not have by reason of this Agreement
assumed a fiduciary relationship in respect of any Lender. In performing its
functions and duties under this Agreement, Agent shall act solely as agent of
Lenders and shall not assume, or be deemed to have assumed, any obligation
toward, or relationship of agency or trust with or for, Borrowers. As to any
matters not expressly provided for by this Agreement and the other Loan
Documents (including without limitation enforcement and collection of the
Notes), Agent may, but shall not be required to, exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders, whenever such instruction shall be requested by Agent or
required hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders; provided,
that Agent shall be fully justified in failing or refusing to take any action
which exposes Agent to any liability or which is contrary to this Agreement, the
other Loan Documents or applicable law, unless Agent is indemnified to its
satisfaction by the other Lenders against any and all liability and expense
which it may incur by reason of taking or continuing to take any such action. If
Agent seeks the consent or approval of the Majority Lenders (or a greater or
lesser number of Lenders as required in this Agreement), with respect to any
action hereunder, Agent shall send notice thereof to each Lender and shall
notify each Lender at any time that the Majority Lenders (or such greater or
lesser number of Lenders) have instructed Agent to act or refrain from acting
pursuant hereto.
11.2. Agent's Reliance, Etc.
Neither Agent, any Affiliate of Agent, nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, Agent: (i) may treat each Lender party hereto as the holder of
Obligations until Agent receives written notice of the assignment or transfer of
such Lender's portion of the Obligations signed by such Lender and in form
reasonably satisfactory to Agent; (ii) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, (iii) makes
no warranties
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or representations to any Lender and shall not be responsible to any Lender for
any recitals, statements, warranties or representations made in or in connection
with this Agreement or any other Loan Documents; (iv) shall not have any duty
beyond Agent's customary practices in respect of loans in which Agent is the
only lender, to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of Borrowers, to inspect the property (including the books
and records) of Borrowers, to monitor the financial condition of Borrowers or to
ascertain the existence or possible existence or continuation of any Default or
Event of Default; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be liable to any
Lender for any action taken, or inaction, by Agent upon the instructions of
Majority Lenders pursuant to Section 11.1 hereof or refraining to take any
action pending such instructions; (vii) shall not be liable for any
apportionment or distributions of payments made by it in good faith pursuant to
Section 3 hereof; (viii) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate, message or other instrument or writing (which may be by telephone,
facsimile, telegram, cable or telex) believed in good faith by it to be genuine
and signed or sent by the proper party or parties; and (ix) may assume that no
Event of Default has occurred and is continuing, unless Agent has actual
knowledge of the Event of Default, has received notice from Borrower
Representative or any Borrower's independent certified public accountants
stating the nature of the Event of Default, or has received notice from a Lender
stating the nature of the Event of Default and that such Lender considers the
Event of Default to have occurred and to be continuing. In the event any
apportionment or distribution described in clause (vii) above is determined to
have been made in error, the sole recourse of any Person to whom payment was due
but not made shall be to recover from the recipients of such payments any
payment in excess of the amount to which they are determined to have been
entitled.
11.3. Fleet and Affiliates.
With respect to its commitment hereunder to make Loans, Fleet
shall have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Agent; and the terms "Lender," "Lenders" or "Majority Lenders" shall, unless
otherwise expressly indicated, include Fleet in its individual capacity as a
Lender. Fleet and its Affiliates may lend money to, and generally engage in any
kind of business with any Borrower and any Person who may do business with or
own Securities of any Borrower all as if Fleet were not Agent and without any
duty to account therefor to any other Lender.
11.4. Lender Credit Decision.
Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based on the financial
statements referred to herein and such other documents and information as it has
deemed appropriate, made its own credit
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analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. Agent shall not have any duty or
responsibility, either initially or on an ongoing basis, to provide any Lender
with any credit or other similar information regarding any Borrower.
11.5. Indemnification.
Lenders agree to indemnify Agent (to the extent not reimbursed
by Borrowers), in accordance with their respective Aggregate Percentages, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent under this Agreement; provided
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse Agent
promptly upon demand for its ratable share, as set forth above, of any
out-of-pocket expenses (including attorneys' fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiation, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Borrowers. The
obligations of Lenders under this Section 11.5 shall survive the payment in full
of all Obligations and the termination of this Agreement. If after payment and
distribution of any amount by Agent to Lenders, any Lender or any other Person,
including any Borrower, any creditor of any Borrower, a liquidator,
administrator or trustee in bankruptcy, recovers from Agent any amount found to
have been wrongfully paid to Agent or disbursed by Agent to Lenders, then
Lenders, in accordance with their respective Aggregate Percentages, shall
reimburse Agent for all such amounts.
11.6. Rights and Remedies to be Exercised by Agent Only.
Each Lender agrees that, except as set forth in Section 10.4,
no Lender shall have any right individually (i) to realize upon the security
created by this Agreement or any other Loan Document, (ii) to enforce any
provision of this Agreement or any other Loan Document, or (iii) to make demand
of any Borrower under this Agreement or any other Loan Document.
11.7. Agency Provisions Relating to Collateral.
Each Lender authorizes and ratifies Agent's entry into this
Agreement and the Security Documents for the benefit of Lenders. Each Lender
agrees that any action taken by Agent with respect to the Collateral in
accordance with the provisions of this Agreement or the Security Documents, and
the exercise by Agent of the powers set forth herein or therein,
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together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all Lenders. Agent is hereby authorized on behalf of
all Lenders, without the necessity of any notice to or further consent from any
Lender to take any action with respect to any Collateral or the Loan Documents
which may be necessary to perfect and maintain perfected Agent's Liens upon the
Collateral, for its benefit and the ratable benefit of Lenders. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to release any
Lien granted to or held by Agent upon any Collateral (i) upon termination of the
Agreement and payment and satisfaction of all Obligations; or (ii) constituting
property being sold or disposed of if Borrower Representative certifies to Agent
that the sale or disposition is made in compliance with subsection 8.2.9 hereof
(and Agent may rely conclusively on any such certificate, without further
inquiry); or (iii) constituting property in which any Borrower owned no interest
at the time the Lien was granted or at any time thereafter; or (iv) in
connection with any foreclosure sale or other disposition of Collateral after
the occurrence and during the continuation of an Event of Default or (v) if
approved, authorized or ratified in writing by Agent at the direction of all
Lenders. Upon request by Agent at any time, Lenders will confirm in writing
Agent's authority to release particular types or items of Collateral pursuant
hereto. Agent shall have no obligation whatsoever to any Lender or to any other
Person to assure that the Collateral exists or is owned by any Borrower or is
cared for, protected or insured or has been encumbered or that the Liens granted
to Agent herein or pursuant to the Security Documents have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of its rights, authorities and powers granted or available to
Agent in this Section 11.7 or in any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate, in its
sole discretion, but consistent with the provisions of this Agreement, including
given Agent's own interest in the Collateral as a Lender and that Agent shall
have no duty or liability whatsoever to any Lender.
11.8. Agent's Right to Purchase Commitments.
Agent shall have the right, but shall not be obligated, at any
time upon written notice to any Lender and with the consent of such Lender,
which may be granted or withheld in such Lender's sole discretion, to purchase
for Agent's own account all of such Lender's interests in this Agreement, the
other Loan Documents and the Obligations, for the face amount of the outstanding
Obligations owed to such Lender, including without limitation all accrued and
unpaid interest and fees.
11.9. Right of Sale, Assignment, Participations.
Borrowers hereby consent to any Lender's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
this Agreement and any of the other Loan Documents, or of any portion hereof or
thereof, including, without limitation, such Lender's rights, title, interests,
remedies, powers, and duties hereunder or thereunder subject to the terms and
conditions set forth below:
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11.9.1. Sales, Assignments. Each Lender hereby
agrees that, with respect to any sale or assignment (i) no such sale or
assignment shall be for an amount of less than $5,000,000 and
$1,000,000 increments in excess of $5,000,000 or, if less, the entire
remaining Revolving Loan Commitment of such Lender, (ii) each such sale
or assignment shall be made on terms and conditions which are customary
in the industry at the time of the transaction, (iii) Agent and, in the
absence of a Default or Event of Default, each Borrower, must consent,
such consent not to be unreasonably withheld, to each such assignment
to a bank or lending institution that is not a Lender to this Agreement
(or an Affiliate of a Lender to this Agreement), (iv) the assigning
Lender or assignee Lender shall pay to Agent a processing and
recordation fee of $3,500 and any out-of-pocket attorneys' fees and
expenses incurred by Agent in connection with any such sale or
assignment (excluding sales or assignments by any Lender to an
Affiliate of such Lender) and (v) Agent, the assigning Lender and the
assignee Lender shall each have executed and delivered an Assignment
and Acceptance Agreement. After such sale or assignment has been
consummated (x) the assignee Lender thereupon shall become a "Lender"
for all purposes of this Agreement and (y) the assigning Lender shall
have no further liability for funding the portion of Revolving Loan
Commitments assumed by such other Lender.
11.9.2. Participations. Any Lender may grant
participations in its extensions of credit hereunder to any other
Lender or other lending institution (a "Participant"), provided that
(i) no such participation shall be for an amount of less than
$5,000,000 and $1,000,000 increments in excess of $5,000,000, (ii) no
Participant shall thereby acquire any direct rights under this
Agreement, (iii) no Participant shall be granted any right to consent
to any amendment, except to the extent any of the same pertain to (1)
reducing the aggregate principal amount of, or interest rate on, or
fees applicable to, any Loan or (2) extending the final stated maturity
of any Loan or the stated maturity of any portion of any payment of
principal of, or interest or fees applicable to, any of the Loans;
provided, that the rights described in this subclause (2) shall not be
deemed to include the right to consent to any amendment with respect to
or which has the effect of requiring any mandatory prepayment of any
portion of any Loan or any amendment or waiver of any Default or Event
of Default, (iv) no sale of a participation in extensions of credit
shall in any manner relieve the originating Lender of its obligations
hereunder, (v) the originating Lender shall remain solely responsible
for the performance of such obligations, (vi) Borrowers and Agent shall
continue to deal solely and directly with the originating Lender in
connection with the originating Lender's rights and obligations under
this Agreement and the other Loan Documents, (vii) in no event shall
any financial institution purchasing the participation grant a
participation in its participation interest in the Loans without the
prior written consent of Agent, and, in the absence of a Default or an
Event of Default, Borrowers, which consents shall not unreasonably be
withheld and (viii) all amounts payable by any Borrower hereunder shall
be determined as if the originating Lender had not sold any such
participation.
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11.9.3. Certain Agreements of Borrowers. Each
Borrower agrees that (i) it will use its best efforts to assist and
cooperate with each Lender in any manner reasonably requested by such
Lender to effect the sale of participation in or assignments of any of
the Loan Documents or any portion thereof or interest therein,
including, without limitation, assisting in the preparation of
appropriate disclosure documents and making members of management
available at reasonable times to meet with and answer questions of
potential assignees and Participants; and (ii) subject to the
provisions of Section 12.18 hereof, such Lender may disclose credit
information regarding any Borrower to any potential Participant or
assignee.
11.9.4. Non U.S. Resident Transferees. If, pursuant
to this Section 11.9, any interest in this Agreement or any Loans 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 and as a
condition precedent to the effectiveness of such transfer, to (i)
represent to the transferor Lender (for the benefit of the transferor
Lender, Agent, and Borrowers) that under applicable law and treaties no
taxes will be required to be withheld by Agent, Borrowers or the
transferor Lender with respect to any payments to be made to such
transferee in respect of the interest so transferred, (ii) furnish to
the transferor Lender, Agent and Borrower Representative either United
States Internal Revenue Service Form W-8BEN or United States Internal
Revenue Service Form W-8ECI (wherein such transferee claims entitlement
to complete exemption from United States federal withholding tax on all
interest payments hereunder), and (iii) agree (for the benefit of the
transferor Lender, Agent and Borrowers) to provide the transferor
Lender, Agent and Borrower Representative a new Form W-8BEN or Form
W-8ECI upon the obsolescence of any previously delivered form and
comparable statements in accordance with applicable United States laws
and regulations and amendments duly executed and completed by such
transferee, and to comply from time to time with all applicable United
States laws and regulations with regard to such withholding tax
exemption.
11.9.5. Special Purpose Funding Vehicles.
Notwithstanding anything to the contrary contained herein, any Lender
(a "Granting Lender") may grant to a special purpose funding vehicle (a
"SPC"), identified as such in writing from time to time by the Granting
Lender to the Agent and the Borrowers, the option to provide to the
Borrowers all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrowers pursuant to this
Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan, and (ii) if an SPC elects not
to exercise such option or otherwise fails to provide all or any part
of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Revolving Loan Commitment of the Granting Lender to
the same extent, and as if, such Loan were made by such Granting
Lender. Each party hereto hereby agrees that no SPC shall be liable for
any indemnity or similar payment obligation under this
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Agreement (all liability for which shall remain with the Granting
Lender). In addition, notwithstanding anything to the contrary
contained in this subsection 11.9.5, any SPC may (i) with notice to,
but without the prior written consent of, the Borrowers and the Agent
and without paying any processing fee therefore, assign all or a
portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by the Borrowers and the Agent)
providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Loans and (ii) disclose on
a confidential basis any non-public information relating to its Loans
to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC. This
subsection 11.9.5 may not be amended without he written consent of the
SPC.
11.10. Amendment.
No amendment or waiver of any provision of this Agreement or
any other Loan Document (including without limitation any Note), nor consent to
any departure by any Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Majority Lenders and Borrowers,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, that no amendment,
waiver or consent shall be effective, unless (i) in writing and signed by each
Lender, do any of the following: (1) increase or decrease (except with respect
to participation and assignments permitted by Section 11.9 hereof) the aggregate
Loan Commitments, or any Lender's Revolving Loan Commitment, (2) reduce the
principal of, or interest on, any amount payable hereunder or under any Note,
other than those payable only to Fleet in its capacity as Agent, which may be
reduced by Fleet unilaterally, (3) increase or decrease any interest rate, the
Unused Line Fee, or other fees (to the extent payable to Lenders generally)
payable hereunder, (4) postpone any date fixed for any payment of principal of,
or interest on, any amounts payable hereunder or under any Note or any fees
payable hereunder to the Lenders generally, other than those payable only to
Fleet in its capacity as Agent, which may be postponed by Fleet unilaterally,
(5) increase any percentage contained in the definition of the term Borrowing
Base, (6) reduce the number of Lenders that shall be required for Lenders or any
of them to take any action hereunder, (7) release or discharge any Person liable
for the performance of any obligations of any Borrower hereunder or under any of
the Loan Documents, (8) amend any provision of this Agreement that requires the
consent of all Lenders or consent to or waive any breach thereof, (9) amend the
definition of the term "Majority Lenders", (10) amend this Section 11.10, (11)
release any substantial portion of the Collateral, unless otherwise permitted
pursuant to Section 11.7 hereof;, or (12) increase the amount set forth in
section 1.1.4(i), or (ii) in writing and signed by Agent in addition to the
Lenders required above to affect the rights or duties of Agent under this
Agreement, any Note or any other Loan Document. If a fee is to be paid by any
Borrower in connection with any waiver or amendment hereunder, the agreement
evidencing such amendment or waiver may, at the discretion of Agent (but shall
not be required to), provide that only Lenders executing such agreement by a
specified date may share in such fee (and in such case, such fee shall be
divided among the applicable Lenders on a pro rata basis without including the
interests of any Lenders who have not timely executed such
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agreement); provided that Agent has timely delivered to all Lenders a final
draft of the proposed amendment.
11.11. Resignation of Agent; Appointment of Successor.
Agent may resign as Agent by giving not less than thirty (30)
days' prior written notice to Lenders and Borrowers. If Agent shall resign under
this Agreement, then, (i) subject to the consent of Borrowers (which consent
shall not be unreasonably withheld and which consent shall not be required
during any period in which a Default or an Event of Default exists), Majority
Lenders shall appoint from among Lenders a successor agent for Lenders or (ii)
if a successor agent shall not be so appointed and approved within the thirty
(30) day period following Agent's notice to Lenders and Borrowers of its
resignation, then Agent shall appoint a successor agent from among the Lenders
who shall serve as Agent until such time as Majority Lenders appoint a successor
agent, subject to Borrowers' consent as set forth above. Upon its appointment,
such successor agent shall succeed to the rights, powers and duties of Agent and
the term "Agent" shall mean such successor effective upon its appointment, and
the former Agent's rights, powers and duties as Agent shall be terminated
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement. After the resignation of any Agent hereunder,
the provisions of this Section 11 shall inure to the benefit of such former
Agent and such former Agent shall not by reason of such resignation be deemed to
be released from liability for any actions taken or not taken by it while it was
an Agent under this Agreement.
11.12. Audit and Examination Reports; Disclaimer by Lenders.
By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each audit or
examination report (each a "Report" and collectively, "Reports")
prepared by or on behalf of Agent;
(b) expressly agrees and acknowledges that Agent (i) does
not make any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information contained in
any Report;
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific
information regarding Borrowers and will rely significantly upon
Borrowers' books and records, as well as on representations of
Borrowers' personnel;
(d) agrees to keep all Reports confidential and strictly
for its internal use, and not to distribute except to its assignees and
participants, or use any Report in any other manner, in accordance with
the provisions of Section 12.18; and
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(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to
hold Agent and any such other Lender preparing a Report harmless from
any action the indemnifying Lender may take or conclusion the
indemnifying Lender may reach or draw from any Report in connection
with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend
and hold Agent and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs,
expenses and other amounts (including attorney's fees and expenses)
incurred by Agent and any such other Lender preparing a Report as the
direct or indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender.
11.13. Syndication Agent/Documentation Agent/Co-Agent.
No Person holding the title of Syndication Agent,
Documentation Agent, Co-Agent or any similar title shall have any rights,
powers, duties or responsibilities in such capacity and no rights, powers,
duties or responsibilities shall be read into this Agreement or any other Loan
Document or otherwise exist on behalf of or against such entity, in its capacity
as such.
SECTION 12. MISCELLANEOUS
12.1. Power of Attorney.
Each Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as such
Borrower's true and lawful attorney (and agent-in-fact), solely with respect to
the matters set forth in this Section 12.1, and Agent, or Agent's agent, may,
without notice to such Borrower and in such Borrower's or Agent's name, but at
the cost and expense of such Borrower:
12.1.1. At such time or times as Agent or said
agent, in its sole discretion, may determine, endorse such Borrower's
name on any checks, notes, acceptances, drafts, money orders or any
other evidence of payment or proceeds of the Collateral which come into
the possession of Agent or under Agent's control.
12.1.2. At such time or times upon or after the
occurrence and during the continuance of an Event of Default (provided
that the occurrence of an Event of Default shall not be required with
respect to clauses (iv), (vi), (viii) and (ix) below), as Agent or its
agent in its sole discretion may determine: (i) demand payment of the
Accounts from the Account Debtors, enforce payment of the Accounts by
legal proceedings or otherwise, and generally exercise all of such
Borrower's rights and remedies with respect to the collection of the
Accounts; (ii) settle, adjust, compromise, discharge or release any of
the Accounts or other Collateral or any legal
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proceedings brought to collect any of the Accounts or other Collateral;
(iii) sell or assign any of the Accounts and other Collateral upon such
terms, for such amounts and at such time or times as Agent deems
advisable, and at Agent's option, with all warranties regarding the
Collateral disclaimed; (iv) take control, in any manner, of any item of
payment or proceeds relating to any Collateral; (v) prepare, file and
sign such Borrower's name to a proof of claim in bankruptcy or similar
document against any Account Debtor or to any notice of lien,
assignment or satisfaction of lien or similar document in connection
with any of the Collateral; (vi) receive, open and dispose of all mail
addressed to such Borrower and notify postal authorities to change the
address for delivery thereof to such address as Agent may designate;
(vii) endorse the name of such Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to
the account of Agent on account of the Obligations; (viii) endorse the
name of such Borrower upon any chattel paper, document, instrument,
invoice, freight xxxx, xxxx of lading or similar document or agreement
relating to the Accounts, Inventory and any other Collateral; (ix) use
such Borrower's stationery and sign the name of such Borrower to
verifications of the Accounts and notices thereof to Account Debtors;
(x) use the information recorded on or contained in any data processing
equipment and Computer Hardware and Software relating to the Accounts,
Inventory, Equipment and any other Collateral; (xi) make and adjust
claims under policies of insurance; and (xii) do all other acts and
things necessary, in Agent's determination, to fulfill such Borrower's
obligations under this Agreement.
The power of attorney granted hereby shall constitute a power
coupled with an interest and shall be irrevocable.
12.2. Indemnity.
Borrowers hereby agree, jointly and severally, to indemnify
Agent and each Lender (and each of their Affiliates) and hold Agent and each
Lender (and each of their Affiliates) harmless from and against any liability,
loss, damage, suit, action or proceeding ever suffered or incurred by any such
Person (including reasonable attorneys fees and legal expenses) as the result of
any Borrower's failure to observe, perform or discharge such Borrower's duties
hereunder or arising out of or relating to this Agreement, the Loan Documents,
or the transactions contemplated hereby (except those resulting from the gross
negligence or intentional misconduct of any such Person). In addition, Borrowers
shall, jointly and severally, defend Agent and each Lender (and each of their
Affiliates) against and save it harmless from all claims of any Person with
respect to the Collateral (except those resulting from the gross negligence or
intentional misconduct of any such Person). Without limiting the generality of
the foregoing, these indemnities shall extend to any claims asserted against
Agent or any Lender (and each of their Affiliates) by any Person under any
Environmental Laws by reason of any Borrower's or any other Person's failure to
comply with laws applicable to solid or hazardous waste materials or other toxic
substances. Notwithstanding any contrary provision in this Agreement, the
obligation of Borrowers under this Section 12.2 shall survive the payment in
full of the Obligations and the termination of this Agreement.
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12.3. Sale of Interest.
No Borrower may sell, assign or transfer any interest in this
Agreement, any of the other Loan Documents, or any of the Obligations, or any
portion thereof, including, without limitation, any Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder.
12.4. Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
12.5. Successors and Assigns.
This Agreement, the Other Agreements and the Security
Documents shall be binding upon and inure to the benefit of the successors and
assigns of Borrowers, Agent and each Lender permitted under Section 11.9 hereof.
12.6. Cumulative Effect; Conflict of Terms.
The provisions of the Other Agreements and the Security
Documents are hereby made cumulative with the provisions of this Agreement.
Except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
12.7. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
12.8. Notice.
Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing, return
receipt requested, by personal delivery against receipt, by overnight courier or
by facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given, delivered or received immediately when
delivered against receipt, one Business Day after deposit with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
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If to Agent: Fleet Capital Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Loan Administration Manager
Facsimile No.:(000) 000-0000
With a copy to: Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
If to Borrowers: c/o D & K Healthcare Resources, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx
Senior Vice President & CFO
Facsimile No.: (000) 000-0000
With a copy to: c/o D & K Healthcare Resources, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Vice President, Secretary and
General Counsel
Facsimile No.: (000) 000-0000
Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent or a Lender pursuant to subsection 3.1.1 or
4.2.2 hereof shall not be effective until received by Agent or such Lender.
12.9. Consent.
Whenever Agent's, Majority Lenders' or all Lenders' consent is
required to be obtained under this Agreement, any of the Other Agreements or any
of the Security Documents as a condition to any action, inaction, condition or
event, except as otherwise specifically
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provided herein, Agent, Majority Lenders or all Lenders, as applicable, shall be
authorized to give or withhold such consent in their sole and absolute
discretion and to condition its consent upon the giving of additional Collateral
security for the Obligations, the payment of money or any other matter.
12.10. Credit Inquiries.
Borrowers hereby authorizes and permits Agent and each Lender
to respond to usual and customary credit inquiries from third parties concerning
Borrowers or any of their Subsidiaries.
12.11. Time of Essence.
Time is of the essence of this Agreement, the Other Agreements
and the Security Documents.
12.12. Entire Agreement.
This Agreement and the other Loan Documents, together with all
other instruments, agreements and certificates executed by the parties in
connection therewith or with reference thereto, embody the entire understanding
and agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.
12.13. Interpretation.
No provision of this Agreement or any of the other Loan
Documents shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or dictated such
provision.
12.14. Intentionally Omitted.
12.15. GOVERNING LAW; CONSENT TO FORUM.
THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED IN
AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN
ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN
THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN UPON SUCH
COLLATERAL AND THE ENFORCEMENT OF AGENT'S OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM
OR INCONSISTENT WITH THE LAWS OF ILLINOIS.
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AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY
PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER, AGENT
OR ANY LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT
OF XXXX COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY
BORROWER ON THE ONE HAND AND AGENT OR ANY LENDER ON THE OTHER HAND PERTAINING TO
THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES
ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT
AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWER REPRESENTATIVE AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
SUCH BORROWER'S ACTUAL RECEIPT THEREOF OR 5 DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY
LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
12.16. WAIVERS BY BORROWERS.
EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH
AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH ANY BORROWER MAY IN ANY WAY BE
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LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN
THIS REGARD; (iii) NOTICE PRIOR TO AGENT'S TAKING POSSESSION OR CONTROL OF THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING AGENT TO EXERCISE ANY OF AGENT'S REMEDIES; (iv) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF AND
(vi) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND EACH LENDER'S ENTERING INTO
THIS AGREEMENT AND THAT AGENT AND EACH LENDER IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. EACH BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.17. Private Sale; Commercial Reasonableness.
The Borrowers acknowledge that a significant portion of the Collateral consists
of prescription drugs and controlled substances that are subject to applicable
federal and state regulations which, among other things, restrict the right to
sell and purchase such drugs and controlled substances to certain licensed or
otherwise authorized Persons. In view of these restrictions on the ability to
sell and purchase such Collateral, the Borrowers acknowledge that a public sale
of such Collateral under the UCC would be legally impossible or otherwise
impractical. Accordingly, the Borrowers agree that a private sale of any such
Collateral, and any other Collateral sold in connection therewith, shall not be
deemed a commercially unreasonable sale under the UCC by virtue of the Agent
selling, or offering to sell, such Collateral only to Persons who are licensed
or otherwise authorized to purchase such Collateral. The Borrowers further
recognize that, in connection with the disposition of such Collateral subject to
federal and state regulations, the Agent may incur additional costs and expenses
such as, by way of example and not as a limitation, obtaining certain federal
and state licenses or other authorizations to permit the Agent to sell or
purchase such Collateral, retaining the services of auctioneers or other persons
licensed or otherwise authorized to dispose of such Collateral, retaining legal
counsel and experts in the area of prescription drugs and controlled substances
to advise Agent on the disposition of such Collateral, and verifying that any
purchasers of such Collateral are licensed or otherwise authorized to acquire
such Collateral. Any such reasonable additional costs and expenses incurred by
the Agent shall be added to the Obligations and be payable on demand and shall
not affect the commercial reasonableness of any such sale. Borrowers hereby
agree to cooperate with any such sale to the extent reasonably requested by
Agent.
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12.18. Confidentiality.
Agent and Lenders agree to take and to cause its Affiliates to
take normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
Borrowers and provided to them by the Borrower Representative, Borrowers or any
Subsidiary, under this Agreement or any other Loan Document, and neither Agent
nor any Lender shall use any such information other than in connection with or
in enforcement of this Agreement and the other Loan Documents or in connection
with other business now or hereafter existing or contemplated with the Borrowers
or any Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by Agent,
or (ii) was or becomes available on a non-confidential basis from a source other
than the Borrowers, provided that such source is not bound by a confidentiality
agreement with the Borrowers or any Subsidiary known to Agent or such Lender;
provided, however, that Agent or any Lender may disclose such information (i) at
the request or pursuant to any requirement of any governmental authority to
which Agent or such Lender is subject or in connection with an examination of
Agent or such Lender by any such authority; (ii) pursuant to subpoena or other
court process, provided that Agent shall use reasonable efforts to provide prior
notice of such disclosure to Borrowers; (iii) when required to do so in
accordance with the provisions of any applicable requirement of law; (iv) to the
extent reasonably required in connection with any litigation or proceeding to
which Agent or such Lender or any of their respective Affiliates may be party;
(v) to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Loan Document; (vi) to Agent's or any
Lender's independent auditors and other professional advisors; (vii) to any
participant or assignee, actual or potential, provided that such Person agrees
in writing to keep such information confidential to the same extent required of
the Agent and Lenders hereunder; (viii) as to Agent or any Lender or any of
their respective Affiliates, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrowers or any
Subsidiary is party or is deemed a party with Agent, any Lender, or any of their
respective Affiliates; and (ix) to the Affiliates of Agent or any Lender.
12.19. Advertisement.
Agent, following consultation with the Borrowers, may publish
the name of any Borrower and the amount of the credit facility provided
hereunder in any "tombstone" or comparable advertisement which Agent elects to
publish.
12.20. Tax Shelter Regulations.
The Borrowers intend to treat the Loans and/or Letters of
Credit and related transactions as being a "reportable transaction" (within the
meaning of Treasury Regulation Section 1.6011-4). In the event the Borrowers
determine to take any action inconsistent with such intention, it will promptly
notify the Agent thereof. Accordingly, the Borrowers acknowledge that one or
more of the Lenders may treat its Loans and/or its interest in Swing Line Loans
and/or Letters of Credit as part of a transaction that is subject to Treasury
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Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will
maintain the lists and other records required by such Treasury Regulation.
Promptly after the Borrowers have notified the Agent of any intention by the
Borrowers to treat the Loans and/or Letters of Credit and related transactions
as being a "reportable transaction" (within the meaning of Treasury Regulation
Section 1.6011-4), Borrowers shall deliver to Agent a duly completed copy of IRS
Form 8886 or any successor form.
Notwithstanding anything herein to the contrary, confidential
information shall not include, and the Agent and each Lender may disclose
without limitation of any kind, any information with respect to the "tax
treatment" and "tax structure" (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Agent or such Lender relating to such tax treatment and tax
structure; provided that with respect to any document or similar item that in
either case contains information concerning the tax treatment or tax structure
of the transaction as well as other information, this sentence shall only apply
to such portions of the document or similar item that relate to the tax
treatment or tax structure of the Loans, Letters of Credit and transactions
contemplated hereby. In addition, the Agent may disclose to any agency or
organization that assigns standard identification numbers to loan facilities
such basic information describing the facilities provided hereunder as is
necessary to assign unique identifiers (and, if requested, supply a copy of this
Agreement), it being understood that the Person to whom such disclosure is made
will be informed of the confidential nature of such information and instructed
to make available to the public only such information as such person normally
makes available in the course of its business of assigning identification
numbers.
SECTION 13. CROSS GUARANTY
13.1. Cross-Guaranty.
Each Borrower hereby agrees that such Borrower is jointly and
severally liable for, and hereby absolutely and unconditionally guarantees to
Agent and Lenders and their respective successors and assigns, the full and
prompt payment (whether at stated maturity, by acceleration or otherwise) and
performance of, all Obligations owed or hereafter owing to Agent and Lenders by
each other Borrower. Each Borrower agrees that its guaranty obligation hereunder
is a continuing guaranty of payment (in cash) and performance and not of
collection, that its obligations under this Section 13 shall not be discharged
until payment and performance, in full, of the Obligations has occurred, and
that its obligations under this Section 13 shall be absolute and unconditional,
irrespective of, and unaffected by:
13.1.1. The genuineness, validity, regularity,
enforceability or any future amendment of, or change in, this
Agreement, any other Loan Document or any other agreement, document or
instrument to which any Borrower is or may become a party;
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13.1.2. The absence of any action to enforce this
Agreement (including this Section 13) or any other Loan Document or the
waiver or consent by Agent and Lenders with respect to any of the
provisions thereof;
13.1.3. The existence, value or condition of, or
failure to perfect its Lien against, any security for the Obligations
or any action, or the absence of any action, by Agent and Lenders in
respect thereof (including the release of any such security);
13.1.4. The insolvency of any Borrower; or
13.1.5. Any other action or circumstances that might
otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor.
Each Borrower shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations guaranteed
hereunder.
13.2. Waivers by Borrowers.
Each Borrower expressly waives all rights it may have now or
in the future under any statute, or at common law, or at law or in equity, or
otherwise, to compel Agent or Lenders to marshal assets or to proceed in respect
of the Obligations guaranteed hereunder against any other Borrower, any other
party or against any security for the payment and performance of the Obligations
before proceeding against, or as a condition to proceeding against, such
Borrower. It is agreed among each Borrower, Agent and Lenders that the foregoing
waivers are of the essence of the transaction contemplated by this Agreement and
the other Loan Documents and that, but for the provisions of this Section 13 and
such waivers, Agent and Lenders would decline to enter into this Agreement.
13.3. Benefit of Guaranty.
Each Borrower agrees that the provisions of this Section 13
are for the benefit of Agent and Lenders and their respective successors,
transferees, endorsees and assigns, and nothing herein contained shall impair,
as between any other Borrower and Agent or Lenders, the obligations of such
other Borrower under the Loan Documents.
13.4. Waiver of Subrogation, Etc.
Notwithstanding anything to the contrary in this Agreement or
in any other Loan Document, and except as set forth in Section 13.7, each
Borrower hereby expressly and irrevocably waives any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations have been paid in full in cash.
Each Borrower acknowledges and agrees that this waiver is intended to benefit
Agent and Lenders and shall not limit or otherwise affect such Borrower's
liability hereunder or the enforceability of this Section 13, and that Agent,
Lenders and their respective successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 12.3.
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13.5. Election of Remedies.
If Agent or any Lender may, under applicable law, proceed to
realize its benefits under any of the Loan Documents giving Agent or such Lender
a Lien upon any Collateral, whether owned by any Borrower or by any other
Person, either by judicial foreclosure or by non-judicial sale or enforcement,
Agent or any Lender may, at its sole option, determine which of its remedies or
rights it may pursue without affecting any of its rights and remedies under this
Section 13. If, in the exercise of any of its rights and remedies, Agent or any
Lender shall forfeit any of its rights or remedies, including its right to enter
a deficiency judgment against any Borrower or any other Person, whether because
of any applicable laws pertaining to "election of remedies" or the like, each
Borrower hereby consents to such action by Agent or such Lender and waives any
claim based upon such action, even if such action by Agent or such Lender shall
result in a full or partial loss of any rights of subrogation that each Borrower
might otherwise have had but for such action by Agent or such Lender. Any
election of remedies that results in the denial or impairment of the right of
Agent or any Lender to seek a deficiency judgment against any Borrower shall not
impair any other Borrower's obligation to pay the full amount of the
Obligations. In the event Agent or any Lender shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or the Loan Documents,
Agent or such Lender may bid all or less than the amount of the Obligations and
the amount of such bid need not be paid by Agent or such Lender but shall be
credited against the Obligations. The amount of the successful bid at any such
sale, whether Agent, Lender or any other party is the successful bidder, shall
be conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 13, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Agent or any Lender might otherwise be entitled but for such
bidding at any such sale.
13.6. Limitation.
Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 13 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
hereunder) shall be limited to an amount not to exceed as of any date of
determination the greater of:
13.6.1. The net amount of all Loans advanced to any
other Borrower under this Agreement and then re-loaned or otherwise
transferred to, or for the benefit of, such Borrower; and
13.6.2. The amount that could be claimed by Agent
and Lenders from such Borrower under this Section 13 without rendering
such claim voidable or avoidable under Section 548 of Chapter 11 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law after taking into account, among other things,
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such Borrower's right of contribution and indemnification from each
other Borrower under Section 13.7.
13.7. Contribution with Respect to Guaranty Obligations.
13.7.1. To the extent that any Borrower shall make a
payment under this Section 13 of all or any of the Obligations (other
than Loans made to that Borrower for which it is primarily liable) (a
"Guarantor Payment") that, taking into account all other Guarantor
Payments then previously or concurrently made by any other Borrower,
exceeds the amount that such Borrower would otherwise have paid if each
Borrower had paid the aggregate Obligations satisfied by such Guarantor
Payment in the same proportion that such Borrower's "Allocable Amount"
(as defined below) (as determined immediately prior to such Guarantor
Payment) bore to the aggregate Allocable Amounts of each Borrower as
determined immediately prior to the making of such Guarantor Payment,
then, following indefeasible payment in full in cash of the Obligations
and termination of the Loan Commitments, such Borrower shall be
entitled to receive contribution and indemnification payments from, and
be reimbursed by, each other Borrower for the amount of such excess,
pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment.
13.7.2. As of any date of determination, the
"Allocable Amount" of any Borrower shall be equal to the maximum amount
of the claim that could then be recovered from such Borrower under this
Section 13 without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
13.7.3. This Section 13.7 is intended only to define
the relative rights of Borrowers and nothing set forth in this Section
13.7 is intended to or shall impair the obligations of Borrowers,
jointly and severally, to pay any amounts as and when the same shall
become due and payable in accordance with the terms of this Agreement,
including Section 13.1. Nothing contained in this Section 13.7 shall
limit the liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
13.7.4. The parties hereto acknowledge that the
rights of contribution and indemnification hereunder shall constitute
assets of the Borrower to which such contribution and indemnification
is owing.
13.7.5. The rights of the indemnifying Borrowers
against other Borrowers under this Section 13.7 shall only be
exercisable upon the full and indefeasible payment in cash of the
Obligations and the termination of the Loan Commitments.
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13.8. Liability Cumulative.
The liability of Borrowers under this Section 13 is in
addition to and shall be cumulative with all liabilities of each Borrower to
Agent and Lenders under this Agreement and the other Loan Documents to which
such Borrower is a party or in respect of any Obligations or obligation of the
other Borrowers, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed on
the day and year specified at the beginning of this Agreement.
D&K HEALTHCARE RESOURCES, INC.
By /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Title Senior V.P. and CFO
XXXXXX DRUG CO.
By /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Title VP
DIVERSIFIED HEALTHCARE, LLC
By /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Title VP
MEDICAL & VACCINE PRODUCTS, INC.
d/b/a DEVICTORIA MEDICAL
By Xxxxxx X. Xxxxxx
------------------------------------------------
Title VP
S-1
FLEET CAPITAL CORPORATION,
as Agent and as a Lender
By /s/ Xxxxxx Xxxxxxxxxx
------------------------------------------------
Title Senior VP
S-2
JPMORGAN CHASE BANK
/s/ Xxxx X. Xxxxxxxxx
---------------------
By: Xxxx X. Xxxxxxxxx
Title: Vice President
S-3
KEY BANK, N.A.
/s/ Xxxx XxXxxxxxxx
--------------------
By: Xxxx XxXxxxxxxx
Title: Sr. Vice President
S-4
UNION BANK OF CALIFORNIA, N.A.
/s/ Xxxx X. Xxxxx
-----------------
By: Xxxx X. Xxxxx
Title: Vice President
S-5
BANK OF AMERICA, N.A.
/s/ Xxxxx X. Xxxxxx
-------------------
By: Xxxxx X. Xxxxxx
Title: Vice President
S-6
WASHINGTON MUTUAL BANK
/s/ Xxxxxxx Xxxxxx
------------------
By: Xxxxxxx Xxxxxx
Title: Vice President
S-7
GENERAL ELECTRIC CAPITAL CORPORATION
/s/ Xxxxxx X. Xxxxxxx
----------------------
By: Xxxxxx X. Xxxxxxx
Title: Duly Authorized Signatory
S-8
NATIONAL CITY COMMERCIAL FINANCE, INC.
/s/ Xxxxxxxxx X. Xxxxx
----------------------
By: Xxxxxxxxx X. Xxxxx
Title: Senior Vice President
S-9
LASALLE BUSINESS CREDIT, LLC
/s/ Xxxx X. Xxxxxxx
-------------------
By: Xxxx X. Xxxxxxx
Title: First Vice President
S-10
UNION PLANTERS BANK, N.A.
/s/ Xxxx X. Xxxxxxxxx
---------------------
By: Xxxx X. Xxxxxxxxx
Title: Vice President
S-11
WHITEHALL BUSINESS CREDIT CORPORATION
/s/ Xxxx Xxxxxx
---------------
By: Xxxx Xxxxxx
Title: Assistant Vice President
S-12
FIFTH THIRD BANK, INDIANA
/s/ Xxxxx Xxxxxxx
-----------------
By: Xxxxx Xxxxxxx
Title: Vice President
S-13
SIEMENS FINANCIAL SERVICES, INC.
/s/ Xxxxx Xxxxxx
----------------
By: Xxxxx Xxxxxx
Title: Vice President Credit
S-14
ORIX FINANCIAL SERVICES, INC.
/s/ Xxxxxx Xxxxx-Xxxxx
-----------------------
By: Xxxxxx Xxxxx-Xxxxx
Title: Vice President
S-15
FOOTHILL CAPITAL CORPORATION
/s/ Xxx Xxxxx
-------------
By: Xxx Xxxxx
Title: Senior Vice President
S-16
CONGRESS FINANCIAL CORPORATION
(CENTRAL)
/s/ Xxxxxxx X. Xxxxxxx
----------------------
By: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
S-17
PNC BANK NA
/s/ Xxxxx X. Xxxxxx
--------------------
By: Xxxxx X. Xxxxxx
Title: Vice President
S-18
BANK ONE, NA
/s/ Xxxxx X. Xxxxxx
-------------------
By: Xxxxx X. Xxxxxx
Title: Associate Director
S-19
TRANSAMERICA BUSINESS CAPITAL
CORPORATION
/s/ Xxx Xxxxxx
--------------
By: Xxx Xxxxxx
Title: Vice President
S-20
THE PROVIDENT BANK
/s/ Xxxxxx X. Xxxxxx
--------------------
By: Xxxxxx X. Xxxxxx
Title: Vice President, Midwest Regional Manager
S-21
THE CIT GROUP/BUSINESS CREDIT, INC.
/s/ Xxxx Xxxxxxxxx
------------------
By: Xxxx Xxxxxxxxx
Title: Vice President
S-22
U.S. BANK NATIONAL ASSOCIATION
/s/ Xxxx Xxxxxxxxxx
-------------------
By: Xxxx Xxxxxxxxxx
Title: Vice President
S-23
FIRST BANK
/s/ Xxxxx Xxxxxxx
-----------------
By: Xxxxx Xxxxxxx
Title: Vice President
S-24
APPENDIX A
GENERAL DEFINITIONS
When used in the Sixth Amended and Restated Loan and Security
Agreement dated as of March 28, 2003, by and among Fleet Capital Corporation,
individually and as Agent, the other financial institutions which are or become
parties thereto, D&K Healthcare Resources, Inc., Xxxxxx Drug Co., Diversified
Healthcare, LLC and Medical & Vaccine Products, Inc. (d/b/a Devictoria Medical),
(a) the terms Account, Certificated Security, Chattel Paper, Commercial Tort
Claims, Deposit Account, Document, Electronic Chattel Paper, Equipment,
Financial Asset, Fixture, General Intangibles, Goods, Health Care Insurance
Receivables, Instruments, Inventory, Investment Property, Letter-of-Credit
Rights, Payment Intangibles, Proceeds, Security, Security Entitlement, Software,
Supporting Obligations and Uncertificated Security have the respective meanings
assigned thereto under the UCC; (b) all terms reflecting Collateral having the
meanings assigned thereto under the UCC shall be deemed to mean such Property,
whether now owned or hereafter created or acquired by any Borrower or in which
any Borrower now has or hereafter acquires any interest; (c) capitalized terms
which are not otherwise defined have the respective meanings assigned thereto in
said Sixth Amended and Restated Loan and Security Agreement and Exhibit 8.3
thereto; and (d) the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):
Account Debtor - any Person who is or may become obligated
under or on account of any Account, Contract Right, Chattel Paper or
General Intangible.
Adjusted Net Earnings from Operations - has the meaning
ascribed to it in Exhibit 8.3 hereto.
Adverse Environmental Condition - (i) any release, spill,
emission, leaking, pumping, injection, presence, deposit, abandonment,
disposal, discharge, dispersal, emission, leaching or migration in,
into, on, or emanating from the indoor or outdoor environment
(including, without limitation, the air, ground, water, groundwater, or
any surface) of any substance, chemical, material, pollutant, hazardous
material, gas, odor or audible noise related to the conduct of a
Borrower's or any of its Subsidiaries' businesses; (ii) any complaint,
citation, notice of violation, request for information, claim, demand
order by any governmental authority or any person for the personal
injury, property damage, damage to the environment, or adverse effect
on the environmental resulting from (i) above; and (iii) the violation,
or alleged violation of, or liability under any applicable
Environmental Law, permits, approvals, directives, injunctions, orders,
licenses or judgments of, by or from any governmental authority,
agency, person or court relating to environmental matters connected
with any Borrower's or any of its Subsidiaries' businesses.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 10% or more of any class
of the Voting Stock of a Person; or (iii) 10% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 10% or
more of the equity interest) of which is beneficially owned or held by
a Person or a Subsidiary of a Person.
Agent - Fleet Capital Corporation in its capacity as agent for
the Lenders under the Agreement and any successor in that capacity
appointed pursuant to Section 11.11 of the Agreement.
Agent Loans - as defined in subsection 1.1.5 of the Agreement.
Aggregate Percentage - with respect to each Lender, the
percentage equal to the quotient of (i) such Lender's Loan Commitment
divided by (ii) the aggregate of all Loan Commitments.
Agreement - the Sixth Amended and Restated Loan and Security
Agreement referred to in the first sentence of this Appendix A, all
Exhibits thereto and this Appendix A, as each of the same may be
amended from time to time.
Applicable Margin - from the Closing Date to, but not
including, the first Adjustment Date (as hereinafter defined), the
percentages set forth below with respect to the Base Rate and LIBOR:
Base Rate 0.50%
LIBOR 2.25%
The percentages set forth above will be adjusted on the first
day of the month following delivery by Borrowers to Agent of the
financial statements required to be delivered pursuant to subsection
8.1.3(ii) of the Agreement for each fiscal quarter during the Term,
commencing with the month ending September 30, 2003 (each such date an
"Adjustment Date"), effective prospectively, by reference to the
applicable "Financial Measurement" (as defined below) for the quarter
most recently ending in accordance with the following:
Interest Coverage Ratio
-----------------------
for preceding twelve month period LIBOR Base Rate
--------------------------------- ----- ---------
< 2.50 2.50 0.75
'> than = to' 2.50, but '< than = to' 3.25 2.25 0.50
'> than = to' 3.26, but '< than = to' 4.00 2.00 0.25
'> than = to' 4.01 1.75 0.00
provided that, (i) if Borrowers' audited financial statements for any
fiscal year delivered pursuant to subsection 8.1.3(i) of the Agreement
reflect a Financial Measurement that yields a different Applicable
Margin than that yielded by the monthly financial statements previously
delivered pursuant to subsection 8.1.3(ii) of the Agreement for the
last month of such fiscal year, the Applicable Margin shall be
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readjusted retroactively for the period that was incorrectly calculated
and (ii) if Borrowers fail to deliver the financial statements required
to be delivered pursuant to subsection 8.1.3(i) or subsection 8.1.3(ii)
of the Agreement on or before the due date thereof, the interest rate
shall automatically adjust to the highest interest rate set forth
above, effective prospectively from such due date until the next
Adjustment Date. For purposes hereof, "Financial Measurement" shall
mean the Interest Coverage Ratio. In calculating the Interest Coverage
Ratio, Agent shall calculate numbers to thousandths, and amounts of
0.005 or greater will be rounded up to the next hundredth. For example
(and not by way of limitation), 2.445 shall be rounded to 2.45.
Appraisal - an appraisal delivered by Borrower Representative
to Agent prior to the Closing Date and within 60 days prior to December
31st of each year setting forth the Net Orderly Liquidation Value of
Inventory of each Borrower, in form and substance and prepared by an
independent appraiser, acceptable to Agent.
Approved Seller Subordinated Financing - with respect to any
Indebtedness provided by any Seller or any other party in connection
with a Permitted Acquisition so long as :
(a) the principal amount of such Indebtedness does not
exceed the greater of (i) 20% of the total consideration paid by D&K
for the Target; or (ii) $2,000,000;
(b) such Indebtedness is a completely unsecured
obligation of D&K; and
(c) such Indebtedness is a Subordinated Debt subject to
Subordination Agreements.
Assignment and Acceptance Agreement - an assignment and
acceptance agreement in form and content reasonably acceptable to Agent
pursuant to which a Lender assigns to another Lender all or any portion
of any of such Lender's Revolving Loan Commitment as permitted pursuant
to the terms of this Agreement.
Availability - the amount of additional money which Borrowers
are entitled to borrow from time to time as Revolving Credit Loans,
such amount being the difference derived when the sum of the principal
amount of Revolving Credit Loans then outstanding (including any
amounts which Agent or any Lender may have paid for the account of any
Borrower pursuant to any of the Loan Documents and which have not been
reimbursed by such Borrower), the LC Amount and any reserves is
subtracted from the Borrowing Base. If the amount outstanding is equal
to or greater than the Borrowing Base, Availability is 0.
Bank - Fleet National Bank.
Base Rate - the rate of interest announced or quoted by Bank
from time to time as its prime rate for commercial loans, whether or
not such rate is the lowest rate charged by Bank to its most preferred
borrowers; and, if such prime rate for
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commercial loans is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute therefor shall be the
Base Rate.
Base Rate Loans - the Revolving Credit Loans so long as they
bear interest by reference to the Base Rate.
Borrowers - collectively, D&K, Xxxxxx, XX and MVP, and
"Borrower" shall mean any one of them.
Borrowing Base - as to all Borrowers on a Consolidated basis
and as at any date of determination thereof, an amount equal to the
lesser of:
(i) the Revolving Credit Maximum Amount; or
(ii) an amount equal to the sum of
(a) 85% of the net amount of Eligible
Accounts outstanding at such date;
plus
(b) the least of (1) 70% of the
Revolving Credit Maximum Amount,
(2) 65% of the book value of
Eligible Inventory at such date, or
(3) 85% multiplied by the most
recently determined Net Orderly
Liquidation Value Factor multiplied
by the book value of Eligible
Inventory at such date.
The limitations set forth in the immediately preceding
sentence and each of the advance rates set forth above may be adjusted
downward by Agent, as Agent shall deem necessary or appropriate in its
reasonable credit judgment. For purposes hereof, (1) the net amount of
Eligible Accounts at any time shall be the face amount of such Eligible
Accounts less any and all returns, rebates, discounts (which may, at
Agent's option, be calculated on shortest terms), credits, allowances
or excise taxes of any nature at any time issued, owing, claimed by
Account Debtors, granted, outstanding or payable in connection with
such Accounts at such time and (2) the amount of Eligible Inventory
shall be determined on a first-in, first-out, lower of cost or market
basis, net of cash discounts, in accordance with GAAP.
Borrower Representative - has the meaning set forth in Section
1.4 hereof.
Borrowing Base Certificate - a certificate by a responsible
officer of Borrowers, substantially in the form of Exhibit 8.1.4 (or
another form acceptable to Agent) setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof, all
in such detail as shall be satisfactory to Agent. All calculations of
the Borrowing Base in connection with the preparation of any Borrowing
Base Certificate shall originally be made by Borrowers and certified to
Agent; provided, that Agent shall have the right to review and adjust,
in the exercise
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of its sole judgment, any such calculation after giving notice thereof
to Borrowers, (1) to reflect its reasonable estimate of declines in
value of any of the Collateral described therein, and (2) to the extent
that Agent determines that such calculation is not in accordance with
this Agreement.
Business Day - any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Missouri or the
State of Illinois or is a day on which banking institutions located in
either of such states are closed.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful
life of more than one year, including the total principal portion of
Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions
precedent in Section 9 of the Agreement are satisfied or waived by
Agent and the initial Loan is made or the initial Letter of Credit or
LC Guaranty is issued under the Agreement.
Collateral - all of the Property and interests in Property
described in Section 5 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Compliance Certificate - as defined in subsection 8.1.3 of the
Agreement.
Computer Hardware and Software - all of Borrowers' rights
(including rights as licensee and lessee) with respect to (i) computer
and other electronic data processing hardware, including all integrated
computer systems, central processing units, memory units, display
terminals, printers, computer elements, card readers, tape drives, hard
and soft disk drives, cables, electrical supply hardware, generators,
power equalizers, accessories, peripheral devices and other related
computer hardware; (ii) all Software and all software programs designed
for use on the computers and electronic data processing hardware
described in clause (i) above, including all operating system software,
utilities and application programs in any form (source code and object
code in magnetic tape, disk or hard copy format or any other listings
whatsoever); (iii) any firmware associated with any of the foregoing;
and (iv) any documentation for hardware, Software and firmware
described in clauses (i), (ii) and (iii) above, including flow charts,
logic diagrams, manuals, specifications, training materials, charts and
pseudo codes.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
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Contract Right - any right of any Borrower to payment under a
contract for the sale or lease of goods or the rendering of services,
which right is at the time not yet earned by performance.
Current Assets - at any date means the amount at which all of
the current assets of a Person would be properly classified as current
assets shown on a balance sheet at such date in accordance with GAAP,
except that amounts due from Affiliates and investments in Affiliates
and prepaid expenses shall be excluded therefrom.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
Default Rate - as defined in subsection 2.1.2 of the
Agreement.
Derivative Obligations - every obligation of a Person under
any forward contract, futures contract, exchange contract, swap, option
or other financing agreement or arrangement (including, without
limitation, caps, floors, collars and similar agreement), the value of
which is dependent upon interest rates, currency exchange rates,
commodities or other indices.
Distribution - in respect of any Person means and includes:
(i) the payment of any dividends or other distributions on Securities
(except distributions in such Securities) and (ii) the redemption or
acquisition of Securities of such Person, as the case may be, unless
made contemporaneously from the net proceeds of the sale of Securities.
Dominion Account - a special bank account or accounts of Agent
established by Borrowers pursuant to subsection 6.2.4 of the Agreement
at banks selected by Borrowers, but acceptable to Agent in its sole
discretion, and over which Agent shall have sole and exclusive access
and control for withdrawal purposes.
EBITDA - has the meaning ascribed to it in Exhibit 8.3 hereto.
Eligible Account - an Account arising in the ordinary course
of the business of any Borrower from the sale of goods or rendition of
services which Agent, in its reasonable judgment, deems to be an
Eligible Account. Without limiting the generality of the foregoing, no
Account shall be an Eligible Account if:
(i) it arises out of a sale made or services
rendered by any Borrower to a Subsidiary of such Borrower or
an Affiliate of such Borrower or to a Person controlled by an
Affiliate of such Borrower; or
(ii) except for Extended Dating Receivables, it
remains unpaid more than 30 days after the due date shown on
the invoice or 60 days after the original invoice date,
whichever is earlier; or
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(iii) the total unpaid Accounts of the Account
Debtor exceed 40% of the net amount of all Eligible Accounts,
but only to the extent of such excess; or
(iv) any covenant, representation or warranty
contained in the Agreement with respect to such Account has
been breached; or
(v) the Account Debtor is also a creditor or
supplier of any Borrower or any Subsidiary of such Borrower,
or the Account Debtor has disputed liability with respect to
such Account, or the Account Debtor has made any claim with
respect to any other Account due from such Account Debtor to
any Borrower or any Subsidiary of such Borrower, or the
Account is subject to a rebate or otherwise is or may become
subject to right of setoff by the Account Debtor, provided,
that any such Account shall be eligible to the extent such
amount thereof exceeds such contract, dispute, claim, setoff
or similar right; or
(vi) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by
a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or
any other petition or other application for relief under the
federal bankruptcy laws, as now constituted or hereafter
amended, has been filed against the Account Debtor, or if the
Account Debtor has failed, suspended business, ceased to be
Solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs; or
(vii) it arises from a sale made or services
rendered to an Account Debtor outside the United States,
unless the sale is (1) to an Account Debtor located in Puerto
Rico or (2) to an Account Debtor located in Ontario or any
other province of Canada in which the Personal Property
Security Act has been adopted in substantially the same form
as currently in effect in Ontario or (3) on letter of credit,
guaranty or acceptance terms, in each case acceptable to Agent
in its sole judgment; or
(viii) (1) it arises from a sale to the Account
Debtor on a xxxx-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, cash-on-delivery, consignment, or any other
repurchase or return basis; or (2) it is subject to a reserve
established by any Borrower for potential returns or refunds,
to the extent of such reserve; or
(ix) the Account Debtor is the United States of
America or any department, agency or instrumentality thereof,
unless the applicable Borrower
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assigns its right to payment of such Account to Agent, in a
manner satisfactory to Agent, in its sole judgment, so as to
comply with the Assignment of Claims Act of 1940 (31
U.S.C. Section 203 et seq., as amended); or
(x) it is not at all times subject to Agent's
duly perfected, first priority security interest or is subject
to a Lien that is not a Permitted Lien; or
(xi) the goods giving rise to such Account have
not been delivered to and accepted by the Account Debtor or
the services giving rise to such Account have not been
performed by the applicable Borrower and accepted by the
Account Debtor or the Account otherwise does not represent a
final sale; or
(xii) the Account is evidenced by chattel paper or
an instrument of any kind, or has been reduced to judgment; or
(xiii) the applicable Borrower or a Subsidiary of
such Borrower has made any agreement with the Account Debtor
for any extension, compromise, settlement or modification of
the Account or deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business
for prompt payment and which discounts or allowances are
reflected in the calculation of the face value of each invoice
related to such Account; or
(xiv) 25% or more of the Accounts owing from the
Account Debtor are not Eligible Accounts hereunder; or
(xv) the applicable Borrower has made an
agreement with the Account Debtor to extend the time of
payment thereof;
(xvi) it represents service charges, late fees or
similar charges; or
(xvii) it represents customer deposits.
Eligible Inventory - Inventory of any Borrower (other than
packaging materials and supplies, tooling, samples and literature)
which Agent, in its reasonable judgment, deems to be Eligible
Inventory. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory if:
(i) it is not finished goods which meet the
specifications of the purchase order or contract for such
Inventory, if any; or
(ii) it is not in good, new and saleable
condition; or
(iii) it is slow-moving, morgue Inventory,
obsolete or unmerchantable; or
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(iv) it does not meet all standards imposed by
any governmental agency or authority; or
(v) it does not conform in all respects to any
covenants, warranties and representations set forth in the
Agreement; or
(vi) it is not at all times subject to Agent's
duly perfected, first priority security interest or is subject
to a Lien that is not a Permitted Lien; or
(vii) it is not situated at a location in
compliance with the Agreement, provided that Inventory
situated at a location not owned by the applicable Borrower
will be Eligible Inventory only if Agent has received a
satisfactory landlord's agreement or bailee letter, as
applicable, with respect to such location; or
(viii) it is in transit from a supplier; or
(ix) it consists of supplies or labels.
For purposes of this definition, "morgue Inventory" means, as of any
date of determination, Inventory which is within 6 months of its stated
expiration date.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, orders and consent decrees relating to health,
safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
any Borrower's operations or owned by any Borrower in which any
Borrower has an interest, whether now owned or hereafter acquired by
any Borrower and wherever located, and all parts, accessories and
special tools and all increases and accessions thereto and
substitutions and replacements thereof.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute, and all rules and regulations
from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the
Agreement.
Extended Dating Receivables - Accounts arising from sales to
new customers with due dates specified in the applicable invoices of
more than 30 days, but less than 180 days, after the original invoice
date in an aggregate amount not to exceed $2,000,000.
Fee Letter - as defined in Section 2.3 of the Agreement.
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Fixed Charge Coverage Ratio - has the meaning ascribed to it
in Exhibit 8.3 hereto.
Fixed Charges - has the meaning ascribed to it in Exhibit 8.3
hereto.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
Guarantors - Jaron, Inc., a Florida corporation, IPD Holdings,
Inc., a Delaware corporation, Tykon, Inc., a Wisconsin corporation, VC
Services, Inc., a Minnesota corporation, and each other Person who now
or hereafter guarantees payment or performance of the whole or any part
of the Obligations.
Guaranty Agreements - the Guaranty Agreement which is to be
executed on the Closing Date by any Guarantor, in form and substance
satisfactory to Agent, together with each other guaranty hereafter
executed by any Guarantor.
Inactive Subsidiary - means any Subsidiary of any Borrower
which does not conduct any ongoing business activity and which does not
own any assets with a fair market value in excess of $100,000. At any
time that an Inactive Subsidiary either (i) commences any business
activity or (ii) owns assets with a fair market value in excess of
$100,000, such Inactive Subsidiary shall automatically constitute a
Subsidiary and Borrowers shall promptly, and shall promptly cause such
Subsidiary to, comply with Section 8.1.8 hereof. Notwithstanding the
foregoing, at no time shall a Subsidiary be permitted to become an
Inactive Subsidiary.
Indebtedness - as applied to a Person means, without
duplication:
(i) all items which in accordance with GAAP
would be included in determining total liabilities as shown on
the liability side of a balance sheet of such Person as at the
date as of which Indebtedness is to be determined, including,
without limitation, Capitalized Lease Obligations;
(ii) all obligations of other Persons which such
Person has guaranteed;
(iii) all reimbursement obligations in connection
with letters of credit or letter of credit guaranties issued
for the account of such Person;
(iv) Derivative Obligations; and
(v) in the case of any Borrower (without
duplication), the Obligations.
Intellectual Property - all past, present and future: trade
secrets, know-how and other proprietary information; trademarks,
internet domain names, service marks, trade dress, trade names,
business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and
other source
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and/or business identifiers, and the goodwill of the business relating
thereto and all registrations or applications for registrations which
have heretofore been or may hereafter be issued thereon throughout the
world; copyrights (including copyrights for computer programs) and
copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all
tangible property embodying the copyrights, unpatented inventions
(whether or not patentable); patent applications and patents;
industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income
therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, computer software, source codes, object
codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing;
the right to xxx for all past, present and future infringements of any
of the foregoing; all other intellectual property; and all common law
and other rights throughout the world in and to all of the foregoing.
Interest Coverage Ratio - has the meaning ascribed to it in
Exhibit 8.3 hereto.
Interest Expense - has the meaning ascribed to it in Exhibit
8.3 hereto.
LC Amount - at any time, the aggregate undrawn face amount of
all Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Agent or any
Affiliate of Agent shall guaranty the payment or performance by any
Borrower of its reimbursement obligation under any letter of credit.
LC Obligations - Any Obligations that arise from any draw
against any Letter of Credit or against any Letter of Credit supported
by an LC Guaranty.
Lead Arranger - Fleet Securities, Inc.
Letter of Credit - any standby or documentary letter of credit
issued by Agent or any Affiliate of Agent for the account of any
Borrower.
LIBOR - a fluctuating rate of interest per annum equal to the
rate per annum (rounded upward, if necessary, to the nearest 1/8 of one
percent) as determined on the basis of the offered rates for deposits
in U.S. dollars, for one-month interest periods, which appears on the
Telerate page 3750 as of 11:00 a.m. (London time) on each Business Day;
provided, however, if the rate described above does not appear on the
Telerate System on any applicable interest determination date, the
LIBOR shall be the rate (rounded upwards as described above, if
necessary) for deposits in U.S. dollars for an interest period of one
month on the Reuters Page "LIBO" (or such other page as may replace the
LIBO Page on that service for the purpose of displaying such rates), as
of 11:00 a.m. (London Time), on each Business Day. If both the Telerate
and Reuters systems are unavailable, then the rate for that date will
be determined on the basis of the offered rates for deposits in U.S.
dollars for a one-month interest
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period which are offered by four (4) major banks in the London
interbank market at approximately 11:00 a.m. (London time), on each
Business Day. The principal London office of each of the major London
banks so selected will be requested to provide a quotation of its U.S.
dollar deposit offered rate. If at least two (2) such quotations are
provided, the rate for that date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted
for loans in U.S. dollars to leading European banks for a one-month
interest period offered by major banks in New York City at
approximately 11:00 a.m. (New York City time), on each Business Day. In
the event that Agent is unable to obtain any such quotation as provided
above, it will be determined that LIBOR cannot be determined. In the
event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of Bank then
for any period during which such Reserve Percentage shall apply, LIBOR
shall be equal to the amount determined above divided by an amount
equal to 1 minus the Reserve Percentage.
LIBOR Loans - the Revolving Credit Loans so long as they bear
interest calculated by reference to LIBOR.
LIBOR Option - the option granted pursuant to Section 2.1.2 of
the Agreement to have the interest on all or any portion of the
principal amount of the Revolving Credit Loans based on the LIBOR.
LIBOR Request - a notice in writing (or by telephone confirmed
electronically or by telecopy or other facsimile transmission on the
same day as the telephone request) from Borrower Representative to
Agent requesting that interest on the Revolving Credit Loans be based
on LIBOR.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract. The
term "Lien" shall also include rights of seller under conditional sales
contracts or title retention agreements, reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, any Borrower
shall be deemed to be the owner of any Property which it has acquired
or holds subject to a conditional sale agreement or other arrangement
pursuant to which title to the Property has been retained by or vested
in some other Person for security purposes.
Loan Account - the loan account established on the books of
Agent pursuant to Section 3.6 of the Agreement.
Loan Commitment - with respect to any Lender, the amount of
such Lender's Revolving Loan Commitment.
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Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loans - all loans and advances of any kind made by Agent, any
Lender, or any Affiliate of Agent or any Lender, pursuant to the
Agreement.
London Banking Day - any date on which commercial banks are
open for business in London, England.
Majority Lenders - as of any date, Lenders holding 51% of the
Revolving Loan Commitments determined on a combined basis and following
the termination of the Revolving Loan Commitments, Lenders holding 51%
or more of the outstanding Loans, LC Amounts and LC Obligations not yet
reimbursed by any Borrower or funded with a Revolving Credit Loan;
provided, that (i) in each case, if there are 2 or more Lenders with
outstanding Loans, LC Amounts, unfunded and unreimbursed LC Obligations
or Revolving Loan Commitments, at least 2 Lenders shall be required to
constitute Majority Lenders; and (ii) prior to termination of the
Revolving Loan Commitments, if any Lender breaches its obligation to
fund any requested Revolving Credit Loan, for so long as such breach
exists, its voting rights hereunder shall be calculated with reference
to its outstanding Loans, LC Amounts and unfunded and unreimbursed LC
Obligations, rather than its Revolving Loan Commitment.
Material Adverse Effect - (i) a material adverse effect on the
business, condition (financial or otherwise), operation, performance or
properties of Borrowers and their Subsidiaries taken as a whole, (ii) a
material adverse effect on the rights and remedies of Agent or Lenders
under the Loan Documents, or (iii) the material impairment of the
ability of any Borrower or any of its Subsidiaries to perform its
obligations hereunder or under any Loan Document.
Money Borrowed - means, (i) Indebtedness arising from the
lending of money by any Person to any Borrower or any of its
Subsidiaries; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to any Borrower or any
of its Subsidiaries, (1) which is represented by notes payable or
drafts accepted that evidence extensions of credit, (2) which
constitutes obligations evidenced by bonds, debentures, notes or
similar instruments, or (3) upon which interest charges are customarily
paid (other than accounts payable) or that was issued or assumed as
full or partial payment for Property; (iii) Indebtedness that
constitutes a Capitalized Lease Obligation; (iv) reimbursement
obligations with respect to letters of credit or guaranties of letters
of credit and (v) Indebtedness of any Borrower or any of its
Subsidiaries under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (i) through (iii) hereof,
if owed directly by any Borrower or any of its Subsidiaries. Money
Borrowed shall not include trade payables or accrued expenses.
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Mortgages - the mortgages or deeds of trust executed by any
Borrower on or about the Closing Date in favor of Agent, for the
benefit of itself and Lenders, by which such Borrower has granted to
Agent, as security for the Obligations, a Lien upon the real Property
of such Borrower located at 000 X. 0xx Xx. Xxxxxxxxxxx, XX 00000 and
000 Xxxxxxxx Xxxxxx Xxxx Xxxxxxxxx, XX 00000, together with all
mortgages, deeds of trust and comparable documents now or at any time
hereafter securing the whole or any part of the Obligations.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Net Orderly Liquidation Value - with respect to Inventory, the
orderly liquidation value of such Inventory (less estimated liquidation
expenses, taking into account the regulatory costs of selling Inventory
that includes controlled substances and other drugs that may be sold
only by licensed distributors through specific channels of
distribution), as determined by reference to the most recent Appraisal
thereof delivered to Agent pursuant to Section 6.3.2, which is
satisfactory to Agent in its reasonable credit judgment.
Net Orderly Liquidation Value Factor - the ratio of the Net
Orderly Liquidation Value of Inventory to the book value of Inventory,
expressed as a percentage. The Net Orderly Liquidation Value Factor
shall be determined as of the Closing Date based on the Appraisal
delivered prior to the Closing Date and shall be updated annually as
new Appraisals are received.
Notes - the Revolving Notes.
Obligations - all Loans, the LC Amounts and all other
advances, debts, liabilities, obligations, covenants and duties,
together with all interest, fees and other charges thereon, owing,
arising, due or payable from any Borrower to Agent, for its own
benefit, from any Borrower to Agent for the benefit of any Lender, from
any Borrower to any Lender or from any Borrower to Bank or any other
Affiliate of Agent, of any kind or nature, present or future, whether
or not evidenced by any note, guaranty or other instrument, whether
arising under the Agreement or any of the other Loan Documents or any
agreement governing Product Obligations, whether direct or indirect
(including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter
arising and however acquired, including, without limitation, any
Product Obligations owing to Agent, any Lender, Bank or any Affiliate
of Bank or Agent or any Lender.
Organizational I.D. Number - with respect to any Person, the
organizational identification number assigned to such Person by the
applicable governmental unit or agency of the jurisdiction of
organization of such Person.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter
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executed by any Borrower, any Subsidiary of any Borrower or any other
third party and delivered to Agent or any Lender in respect of the
transactions contemplated by the Agreement, including, without
limitation, the Fee Letter.
Overadvance - as defined in subsection 1.1.2 of the Agreement.
PBI - Pharmaceutical Buyers, Inc., an Arkansas corporation.
Permitted Liens - any Lien of a kind specified in subsection
8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of any Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and the principal amount of which,
when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of any Borrower and its
Subsidiaries at the time outstanding, does not exceed $5,000,000. For
the purposes of this definition, the principal amount of any Purchase
Money Indebtedness consisting of capitalized leases (as opposed to
operating leases) shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of any Borrower or any of its Subsidiaries that is
covered by Title IV of ERISA.
Prior Commitments - as defined in the first recital of the
Agreement.
Prior Loan and Security Agreement - as defined in the first
recital of the Agreement.
Prior Loans - as defined in the first recital of the
Agreement.
Product Obligations - every obligation of each Borrower under
and in respect of any one or more of the following types of services or
facilities extended to such Borrower by Bank, Agent, any Lender or any
Affiliate of Bank, Agent or any Lender: (i) credit cards, (ii) cash
management or related services including the automatic clearing house
transfer of funds for the account of such Borrower pursuant to
agreement or overdraft, (iii) cash management, including controlled
disbursement services and (iv) Derivative Obligations.
Projections -Borrowers' forecasted Consolidated and
consolidating (i) balance sheets, (ii) profit and loss statements,
(iii) cash flow statements, and (iv) Availability, all prepared on a
consistent basis with the historical financial statements of Borrowers
A-15
and their Subsidiaries, together with appropriate supporting details
and a statement of underlying assumptions.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all or any
part of the purchase price of any fixed assets, (ii) any Indebtedness
(other than the Obligations) incurred at the time of or within 10 days
prior to or after the acquisition of any fixed assets for the purpose
of financing all or any part of the purchase price thereof, and (iii)
any renewals, extensions or refinancings thereof, but not any increases
in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness
secured by such Lien.
Rentals - as defined in subsection 8.2.18 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(c) of ERISA.
Reserve Percentage - the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which
is imposed on member banks of the Federal Reserve System against
"Euro-currency Liabilities" as defined in Regulation D.
Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the
following:
(i) investments by any Borrower, to the extent
existing on the Closing Date, in one or more Subsidiaries of
such Borrower;
(ii) Property to be used in the ordinary course
of business;
(iii) Current Assets arising from the sale of
goods and services in the ordinary course of business of any
Borrower or any of its Subsidiaries;
(iv) investments in direct obligations of the
United States of America, or any agency thereof or obligations
guaranteed by the United States of America, provided that such
obligations mature within one year from the date of
acquisition thereof;
A-16
(v) investments in certificates of deposit
maturing within one year from the date of acquisition and
fully insured by the Federal Deposit Insurance Corporation;
(vi) investments in commercial paper given the
highest rating by a national credit rating agency and maturing
not more than 270 days from the date of creation thereof;
(vii) investments in money market, mutual or
similar funds having assets in excess of $100,000,000 and the
investments of which are limited to investment grade
securities;
(viii) intercompany loans permitted under
subsection 8.2.2(iii) of the Agreement;
(ix) investments existing on the date hereof and
listed on Exhibit 8.2.12 hereto; and
(x) investments otherwise expressly permitted
pursuant to the Agreement.
Revolving Credit Loan - a Loan made by any Lender pursuant to
Section 1.1 of the Agreement.
Revolving Credit Maximum Amount -$600,000,000, as such amount
may be reduced from time to time pursuant to the terms of the
Agreement.
Revolving Loan Commitment - with respect to any Lender, the
amount of such Lender's Revolving Loan Commitment pursuant to
subsection 1.1.1 of the Agreement, as set forth on Exhibit 1.1.1 to the
Agreement or any Assignment and Acceptance Agreement executed by such
Lender.
Revolving Loan Percentage - with respect to each Lender, the
percentage equal to the quotient of such Lender's Revolving Loan
Commitment divided by the aggregate of all Revolving Loan Commitments.
Revolving Note - the Secured Promissory Note to be executed by
Borrowers on or about the Closing Date in favor of each Lender to
evidence the Revolving Credit Loans, which shall be in the form of
Exhibit 1.1 to the Agreement, together with any replacement or
successor notes therefor.
Schedule of Accounts - as defined in Section 6.2.1 of the
Agreement.
Security Documents - the Guaranty Agreements, the Mortgages
and all other instruments and agreements now or at any time hereafter
securing the whole or any part of the Obligations.
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Seller - any seller of assets, stock or ownership interests in
connection with a Permitted Acquisition.
Solvent - as to any Person, that such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (ii) is
able to pay all of its Indebtedness as such Indebtedness matures and
(iii) has capital sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage.
Subordinated Debt - Indebtedness of any Borrower or any
Subsidiary of such Borrower that is subordinated to the Obligations in
a manner and on terms and conditions satisfactory to Agent in its sole
discretion, including, without limitation, any Indebtedness payable to
a Seller in connection with a Permitted Acquisition, and contains
terms, including without limitation, payment terms, satisfactory to
Agent in its sole discretion.
Subordination Agreements - the Subordination Agreements, in
form and substance and on terms and conditions satisfactory to Agent in
its sole discretion, relating to each of the notes evidencing the
Subordinated Debt between Agent and the holders of such notes.
Subsidiary - any Person of which another Person owns, directly
or indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination. Notwithstanding the
foregoing, (i) the definition of Subsidiary shall not include
SourceTenn, LLC and any Inactive Subsidiary and (ii) PBI shall not be
deemed to be a Subsidiary for purposes of Section 8.2 so long as D&K
owns less than 100% of the outstanding capital stock of PBI.
Swingline Loans - as defined in subsection 1.1.4 of the
Agreement.
Term - as defined in Section 4.1 of the Agreement.
Total Credit Facility -$600,000,000, as reduced from time to
time pursuant to the terms of the Agreement.
Type of Organization - with respect to any Person, the kind or
type of entity by which such Person is organized, such as a corporation
or limited liability company.
UCC - the Uniform Commercial Code as in effect in the State of
Illinois on the date of this Agreement, as it may be amended or
otherwise modified.
Unused Line Fee - as defined in Section 2.5 of the Agreement.
Voting Stock - Securities of any class or classes of a
corporation, limited partnership or limited liability company or any
other entity the holders of which are
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ordinarily, in the absence of contingencies, entitled to vote with
respect to the election of corporate directors (or Persons performing
similar functions).
OTHER TERMS. All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. The section titles, table of contents
and list of exhibits appear as a matter of convenience only and shall not affect
the interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
A-19
LIST OF EXHIBITS
Exhibit 1.1 Form of Revolving Note
Exhibit 1.1.1 Revolving Loan Commitments
Exhibit 6.1.1 Business Locations
Exhibit 7.1.1 Jurisdictions in which each Borrower and each Subsidiary is Authorized
to do Business
Exhibit 7.1.4 Capital Structure and Stock Option Plans of each Borrower and each
Subsidiary
Exhibit 7.1.5 Names; Organization
Exhibit 7.1.14 Tax Identification Numbers of Subsidiaries
Exhibit 7.1.15 Brokers' Fees
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19 Contracts Restricting Right to Incur Debts
Exhibit 7.1.20 Litigation
Exhibit 7.1.22 Capitalized and Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.25 Labor Relations
Exhibit 7.1.26 Environmental Laws
Exhibit 8.1.3 Form of Compliance Certificate
Exhibit 8.1.4 Form of Borrowing Base Certificate
Exhibit 8.2.3 Existing Indebtedness
Exhibit 8.2.5 Permitted Liens
Exhibit 8.2.12 Permitted Investments
Exhibit 8.3 Financial Covenants
List of Exhibits and Schedules
EXHIBIT 8.3
FINANCIAL COVENANTS
DEFINITIONS
ADJUSTED NET EARNINGS FROM OPERATIONS - with respect to any
fiscal period, means the net earnings (or loss) after provision for
income taxes for such fiscal period of Borrowers, as reflected on the
financial statements of Borrowers supplied to Agent pursuant to the
Agreement, but excluding:
(i) any gain or loss arising from the sale of
capital assets;
(ii) any gain arising from any write-up of
assets;
(iii) earnings of any Subsidiary of any Borrower
accrued prior to the date it became a Subsidiary;
(iv) earnings of any corporation, substantially
all the assets of which have been acquired in any manner by a
Borrower, realized by such corporation prior to the date of
such acquisition;
(v) net earnings of any business entity (other
than a Subsidiary of a Borrower) in which any Borrower has an
ownership interest unless such net earnings shall have
actually been received by a Borrower in the form of cash
distributions;
(vi) any portion of the net earnings of any
Subsidiary of a Borrower which for any reason is unavailable
for payment of dividends to such Borrower;
(vii) the earnings of any Person to which any
assets of a Borrower shall have been sold, transferred of
disposed of, or into which a Borrower shall have merged, or
been a party to any consolidation or other form of
reorganization, prior to the date of such transaction;
(viii) any gain arising from the acquisition of any
securities issued by a Borrower;
(ix) any gain arising from extraordinary or
non-recurring items; and
(x) any non-cash loss arising from extraordinary
or non-recurring items, other than write-downs of Accounts or
Inventory.
Exhibit 8.3 - Page 1
ADJUSTED TANGIBLE ASSETS - at any date, all assets except: (i)
any surplus resulting from any write-up of assets subsequent to the Closing
Date; (ii) deferred assets, other than prepaid insurance and prepaid taxes;
(iii) patents, copyrights, trademarks, trade names, non-compete agreements,
franchises and other similar intangibles; (iv) goodwill, including any amounts,
however designated on a balance sheet, representing the excess of the purchase
price paid for assets or stock over the value assigned thereto on the books of
such Person; (v) Restricted Investments; (vi) unamortized debt discount and
expense; (vii) assets located and notes and receivables due from obligors
outside of the United States; and (viii) Accounts, notes and other receivables
due from Affiliates or employees, all as determined for Borrowers and their
Subsidiaries on a Consolidated basis and in accordance with GAAP.
ADJUSTED TANGIBLE NET WORTH - at any date, a sum equal to:
(i) the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other
proper reserves) at which the Adjusted Tangible Assets of a
Person would be shown on a balance sheet at such date in
accordance with GAAP, minus
(ii) the amount at which such Person's
liabilities (other than capital stock and surplus) would be
shown on such balance sheet in accordance with GAAP, and
including as liabilities all reserves for contingencies and
other potential liabilities,
all as determined for Borrowers and their Subsidiaries on a Consolidated basis
and in accordance with GAAP.
EBITDA - with respect to any period, the sum of Borrowers'
Adjusted Net Earnings from Operations before Interest Expense, income taxes, and
allowances for depreciation and amortization for such period, all as determined
for Borrowers and their Subsidiaries on a Consolidated basis and in accordance
with GAAP.
FIXED CHARGE COVERAGE RATIO - with respect to any period, the
ratio of (i) EBITDA for such period minus the sum of (a) any provision for (plus
any benefit from) income taxes included in the determination of net earnings (or
loss) for such period plus (b) non-financed Capital Expenditures during such
period, to (ii) Fixed Charges for such period, all as determined for Borrowers
and their Subsidiaries on a Consolidated basis and in accordance with GAAP.
FIXED CHARGES - with respect to any period, the sum of: (i)
scheduled principal payments required to be made during such period in respect
to Indebtedness for Money Borrowed (including the principal portion of
Capitalized Lease Obligations), plus (ii) Interest Expense for such period, all
as determined for Borrowers and their Subsidiaries on a Consolidated basis and
in accordance with GAAP, plus (iii) Distributions other than repurchases of
common stock permitted in accordance with clause (c) of Section 8.2.7.
Ex. 8.3 - Page 2
INTEREST COVERAGE RATIO - with respect to any period, the
ratio of (i) EBITDA for such period to (ii) Interest Expense for such period,
all as determined for Borrowers and their Subsidiaries on a Consolidated basis
and in accordance with GAAP.
INTEREST EXPENSE - with respect to any period, interest
expense incurred for such period, including without limitation the interest
portion of Capitalized Lease Obligations, plus the Letter of Credit and LC
Guaranty fees owing for such period, all as determined for Borrowers and their
Subsidiaries on a Consolidated basis and in accordance with GAAP.
COVENANTS
FIXED CHARGE COVERAGE RATIO. Borrowers shall not permit the
Fixed Charge Coverage Ratio, on a Consolidated basis, for any period of twelve
months ending on the dates set forth below to be less than the ratio set forth
below opposite such period:
PERIOD RATIO
------ -----
June 30, 2003 1.25 to 1.0
September 30, 2003 1.25 to 1.0
December 31, 2003 1.25 to 1.0
March 31, 2004 and the last day of each fiscal quarter
thereafter through March 31, 2007 1.50 to 1.0
MINIMUM ADJUSTED TANGIBLE NET WORTH. Borrowers shall maintain
at all times Consolidated Adjusted Tangible Net Worth of not less than the
amount shown below for the period corresponding thereto:
PERIOD AMOUNT
------ ------
At all times prior to March 30, 2004 $107,000,000
From March 31, 2004 through June 29, 2004 $115,000,000
From June 30, 2004 through June 29, 2005 $119,000,000
From June 30, 2005 through June 29, 2006 $137,000,000
From June 30, 2006 through March 31, 2007 $156,000,000
Ex. 8.3 - Page 3
