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EXHIBIT 10.15
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$52,000,000
CREDIT AGREEMENT
AMONG
KING PHARMACEUTICALS, INC.,
AS BORROWER,
THE LENDERS SIGNATORIES HERETO,
THE PERSONS FROM TIME TO TIME ACTING
AS LETTER OF CREDIT ISSUERS HEREUNDER,
AND
GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT
DATED NOVEMBER 26, 1997.
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TABLE OF CONTENTS
COMMITMENT..................................................................................................... 1
Section 1.1. Commitments.................................................................................. 1
Section 1.2. Borrowing Options; Method of Borrowing.............................................. 2
Section 1.3. Evidence of Indebtedness............................................................ 3
Section 1.4. Interest............................................................................ 4
Section 1.5. Commitment and Other Fees........................................................... 4
Section 1.6. Repayment of Loans.................................................................. 5
Section 1.7. Reductions of Commitments........................................................... 5
Section 1.8. Computation of Interest and Fees.................................................... 7
Section 1.9. Maximum Interest Rate............................................................... 7
Section 1.10. Manner of Payment; Application of Payments.......................................... 7
Section 1.11. Return of Payments.................................................................. 7
LETTERS OF CREDIT.............................................................................................. 8
Section 2.1. Letters of Credit................................................................... 8
Section 2.2. Manner of Issuance.................................................................. 8
Section 2.3. Drawings Under Letters of Credit.................................................... 9
Section 2.4. Letter of Credit Fees; Administrative Fees; Interest................................ 11
Section 2.5. Limitation of Liability With Respect To Letters of Credit........................... 11
CONDITIONS TO EXTENSIONS OF CREDIT ............................................................................ 13
Section 3.1. Conditions to Initial Extension of Credit .......................................... 13
Section 3.2. Conditions to Issuance of Letters of Credit......................................... 16
Section 3.3. Conditions to Each Extension of Credit.............................................. 16
CERTAIN REPRESENTATIONS AND WARRANTIES OF BORROWER ............................................................ 18
Section 4.1. Organization; Power; Qualification; Subsidiaries.................................... 18
Section 4.2. Authorization and Compliance of Agreement, Notes and Extensions of Credit........... 18
Section 4.3. Litigation.......................................................................... 19
Section 4.4. Burdensome Provisions............................................................... 19
Section 4.5. No Adverse Change or Event.......................................................... 19
Section 4.6. No Adverse Fact..................................................................... 20
Section 4.7. Title to Properties................................................................. 20
Section 4.8. Environmental Matters............................................................... 20
Section 4.9. Debt................................................................................ 20
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Section 4.10. Patents, Trademarks, Etc............................................................ 20
Section 4.11. Solvency............................................................................ 20
Section 4.12. Security Interest................................................................... 21
Section 4.13. The Questionnaire................................................................... 21
Section 4.14 Labor Matters....................................................................... 21
Section 4.15. Governmental Regulation............................................................. 21
Section 4.16. Margin Regulations.................................................................. 22
Section 4.17. Taxes............................................................................... 22
Section 4.18. ERISA............................................................................... 22
Section 4.19. Brokers............................................................................. 23
COVENANTS...................................................................................................... 24
Section 5.1. Preservation of Existence and Properties, Scope of Business, Compliance with Law,
Payment of Taxes and Claims......................................................... 24
Section 5.2. Insurance........................................................................... 24
Section 5.3. Use of Proceeds..................................................................... 25
Section 5.4. Environmental Matters............................................................... 25
Section 5.5. Guaranties.......................................................................... 26
Section 5.6. Liens............................................................................... 26
Section 5.7. Merger, Consolidation, Acquisitions and Disposition of Assets....................... 26
Section 5.8. Transactions with Affiliates/Certain Account Debtors................................ 27
Section 5.9. Taxes of Other Persons.............................................................. 27
Section 5.10. Limitation on Restrictive Covenants................................................. 28
Section 5.11. Issuance or Disposition of Capital Securities....................................... 28
Section 5.12. Permitted Debt...................................................................... 28
Section 5.13. Limitations on Investments, Loans and Advances...................................... 28
Section 5.14. Additional Subsidiaries............................................................. 29
Section 5.15. Minimum Consolidated Net Worth...................................................... 30
Section 5.16. Leverage Ratio...................................................................... 30
Section 5.17. Interest Coverage Ratio............................................................. 30
Section 5.18. Fixed Charge Coverage Ratio......................................................... 30
Section 5.19. Capital Expenditures................................................................ 31
Section 5.20. Restricted Payments................................................................. 31
INFORMATION.................................................................................................... 32
Section 6.1. Financial Statements and Information to be Furnished................................ 32
Section 6.2. Accuracy of Financial Statements and Information.................................... 34
Section 6.3. Additional Covenants Relating to Disclosure......................................... 36
DEFAULT ....................................................................................................... 37
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Section 7.1. Events of Default................................................................... 37
Section 7.2. Remedies upon Event of Default...................................................... 39
CHANGES IN CIRCUMSTANCES ...................................................................................... 41
Section 8.1. Mandatory Suspension and Conversion of Eurodollar Rate Loans........................ 41
Section 8.2. Regulatory Changes.................................................................. 41
Section 8.3. Change of Lending Office............................................................ 42
Section 8.4. Funding Losses...................................................................... 43
Section 8.5. Determinations...................................................................... 43
THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT AND THE
LETTER OF CREDIT BANKS ............................................................................... 44
Section 9.1. Appointment and Authorization....................................................... 44
Section 9.2. Agent and Affiliates; Letter of Credit Issuer and Affiliates........................ 44
Section 9.3. Action by Agent and Letter of Credit Issuer......................................... 44
Section 9.4. Consultation with Experts........................................................... 45
Section 9.5. Liability of the Agent and Letter of Credit Issuers................................. 45
Section 9.6. Indemnification..................................................................... 45
Section 9.7. Credit Decision..................................................................... 45
Section 9.8. Successor Agent..................................................................... 46
Section 9.9. Security Documents, Etc............................................................. 46
INTERPRETATION ................................................................................................ 47
Section 10.1. Interpretation...................................................................... 47
Section 10.2. Accounting Matters.................................................................. 68
Section 10.3. Classes of Extensions of Credit and Types of Loans.................................. 68
Section 10.4. Captions............................................................................ 68
MISCELLANEOUS.................................................................................................. 69
Section 11.1. Notices............................................................................. 69
Section 11.2. Expenses; Indemnification........................................................... 71
Section 11.3. Rights Cumulative................................................................... 72
Section 11.4. Disclosure.......................................................................... 72
Section 11.5. Waivers; Amendments................................................................. 72
Section 11.6. Set-Off............................................................................. 73
Section 11.7. Assignment and Participations....................................................... 74
Section 11.8. Governing Law....................................................................... 76
Section 11.9. Judicial Proceedings; Waiver of Jury Trial.......................................... 76
Section 11.10. Severability of Provisions.......................................................... 77
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Section 11.11. Counterparts........................................................................... 77
Section 11.12. Entire Agreement....................................................................... 77
Section 11.13. Survival of Obligations................................................................ 77
Section 11.14. Successors and Assigns................................................................. 77
Section 11.15. Limitation of Liability................................................................ 77
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TABLE OF CONTENTS
Exhibit A-1 Form of Eurodollar Revolving Note
Exhibit A-2 Form of Base Rate Revolving Note
Exhibit B-1 Form of Eurodollar Term Note
Exhibit B-2 Form of Base Rate Term Note
Exhibit C Form of Security Agreement
Exhibit D Form of Pledge Agreement
Exhibit E Form of Guaranty Agreement
Exhibit F Form of Subsidiary Security Agreement
Exhibit G Form of Subsidiary Pledge Agreement
Exhibit H Form of Mortgage
Exhibit I Form of Trademark Security Agreement
Exhibit J Form of Subsidiary Trademark Security Agreement
Exhibit K Form of Patent Security Agreement
Exhibit L Form of Credit Party Questionnaire
Schedule 1.2(b) Form of Notice of Borrowing
Schedule 3.1(a) Form of Certificate of the Secretary or an Assistant
Secretary of the Borrower
Schedule 3.1(b)-1 Form of Certificate of Secretary or Assistant
Secretary of Guarantor (Monarch)
Schedule 3.1(b)-2 Form of Certificate of Secretary or Assistant
Secretary of Guarantor (King of Nevada)
Schedule 3.1(c)-1 Form of Borrower's Closing Certificate (Monarch)
Schedule 3.1(c)-2 Form of Guarantor's Closing Certificate (King of
Nevada)
Schedule 3.1(c)-3 Form of Guarantor's Closing Certificate
Schedule 3.1(h) Form of Opinion of Borrower's and Guarantors' Counsel
Schedule 4.1 Schedule of Subsidiaries
Schedule 4.2 Schedule of Consents and Approvals
Schedule 4.3 Schedule of Litigation
Schedule 4.4 Burdensome Provisions
Schedule 4.7 Schedule of Existing Liens
Schedule 4.8 Environmental Matters
Schedule 4.9 Agreements Relating to Debt of Borrower and
Subsidiaries
Schedule 5.1 Schedule of Real Estate Holdings
Schedule 5.2 Schedule of Acceptable Insurance
Schedule 5.5 Schedule of Existing Guaranties
Schedule 5.10 Schedule of Contracts with Permitted Restrictive
Covenants
Schedule 6.1(a) Form of Certificate of Borrower with respect to
Quarterly Financial Statements
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Schedule 6.1(b) Form of Certificate of the Borrower as to Annual
Financial Statements
Schedule 6.1(c)(v) Form of Certificate of the Borrower as to Borrowing
Base
Schedule 6.1(c)(vi) Form of Certificate of the Borrower as to Monthly
Income Statements
Schedule 6.2 Schedule of Historical Financial Information
Schedule 10.1(a) Disbursement Account
Schedule 11.7 Assignment and Assumption Agreement
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CREDIT AGREEMENT
DATED NOVEMBER 26, 1997
KING PHARMACEUTICALS, INC., a Tennessee corporation (the
"Borrower"), the banks and financial institutions signatories hereto (the
"Lenders"), and any assignees that may become "Lenders" as provided herein,
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, as agent (the
"Agent") and in its individual capacity ("GECC"), and any person that may from
time to time hereafter be designated by the Agent and the Borrower to serve as a
letter of credit issuer hereunder (each a "Letter of Credit Issuer" and,
collectively, the "Letter of Credit Issuers"), agree as follows (with certain
terms used herein being defined in Article X):
1.
COMMITMENT
Section 1.1 Commitments.
(a) Lenders' Commitments. Upon the terms and subject to the
conditions set forth herein, each of the Lenders severally, and not jointly,
agrees:
(i) from the Agreement Date to but excluding the Revolving
Credit Commitment Termination Date, to make Revolving Loans as provided
in Section 1.2 and to purchase participations in Letters of Credit
issued from time to time by a Letter of Credit Issuer, in an aggregate
principal amount at any time outstanding not to exceed the lesser of
(A) such Lender's Revolving Credit Commitment and (B) such Lender's
Proportionate Share of the Borrowing Base, and provided that the
outstanding amount of Letter of Credit Obligations arising under
Letters of Credit does not exceed at any time $3,000,000 (the "Letter
of Credit Commitment"), and provided further that the aggregate
outstanding amount of Revolving Loans plus the aggregate outstanding
amount of Letter of Credit Obligations, shall not exceed at any time
$12,000,000, as such amount may be reduced from time to time in
accordance with Section 1.7; and
(ii) from the Agreement Date to but excluding the Term Loan
Commitment Termination Date, to make Term Loans as provided in Section
1.2 in an aggregate outstanding amount not to exceed such Term Loan
Commitment, provided that the aggregate amount of the Term Loan
Commitments shall not exceed at any time $40,000,000, as such amount
may be reduced from time to time in accordance with Section 1.7.
(b) Letter of Credit Issuers' Commitment. Upon the terms and
subject to the conditions set forth herein and in any agreement pursuant to
which it may agree to serve as a Letter of
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Credit Issuer, each Letter of Credit Issuer agrees to issue, and to sell
participations in, its Letters of Credit as provided in Section 2.1.
(c) Proportional Participation. Each Lender shall make a Loan
with respect to each Borrowing and shall purchase a participation in each Letter
of Credit in the amount of its Proportionate Share of such Borrowing or Letter
of Credit.
Section 1.2 Borrowing Options; Method of Borrowing.
(a) Borrowing Options. Loans of any Class, at the option of
the Borrower, may be made as one or more Base Rate Borrowings or Eurodollar
Borrowings, or any combination thereof. Each Base Rate Borrowing shall be in a
minimum amount of $100,000. Each Eurodollar Borrowing shall be in a minimum
amount of $1,000,000 and in greater whole multiples of $100,000. There shall at
no time be in effect more than five Eurodollar Borrowings.
(b) Method of Borrowing. Whenever the Borrower desires to
incur a Borrowing it shall give the Agent notice of such requested Borrowing(s)
in the form of Schedule 1.2(b) (a "Notice of Borrowing") (which shall be
irrevocable), in the case of the incurrence of a Base Rate Borrowing one
Business Day, and in the case of the incurrence of a Eurodollar Borrowing, three
Business Days, before the requested date of such Borrowing, specifying: (i) the
requested date of the Borrowing(s), which shall be a Business Day, (ii) the
aggregate principal amount of the Borrowing(s) to be incurred, (iii) the Class
and Type of the Loans comprising such requested Borrowing(s), and (iv) in the
case of the incurrence of a Eurodollar Borrowing, the duration of the Interest
Period, subject to the provisions of the definition of Interest Period. In the
absence of an acceleration of the Obligations pursuant to Section 7.2, if a
request for a Eurodollar Borrowing is not made, or is not made in accordance
with this Section, upon the maturity of a Eurodollar Borrowing, and the Agent
shall not have received notice from the Borrower of its intention to repay such
Loans other than with the proceeds of a Rollover Borrowing at least one Business
Day prior to such maturity, then the Borrower shall be deemed to have requested
a Base Rate Borrowing in an amount necessary to repay such maturing Borrowing.
Any Notice of Borrowing received after noon (New York City time) shall be deemed
received on the following Business Day.
(c) Funding Of Loans. (i) After receiving a Notice of
Borrowing, the Agent shall notify each Lender of the contents of such Notice of
Borrowing, of such Lender's Proportionate Share of the requested Borrowing and,
in the case of a Eurodollar Borrowing, the applicable interest rate. Except as
provided in subsection (f) below and subject, in the case of Eurodollar
Borrowings, to the provisions of Article VIII, each Lender shall make available
to the Agent at the Agent's Office its Proportionate Share of any requested
Borrowing, in lawful money of the United States of America in immediately
available funds, prior to 12:00 Noon (New York City time) on the Business Day
requested for such Borrowing. The Agent shall, subject to the satisfaction of
the conditions set forth in Article III, by 3:00 p.m. (New York City time) on
such day, credit the amounts received by it in like funds to the Disbursement
Account or in such other manner as the Borrower and the Agent shall agree.
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(d) Rollover Borrowings. If any Lender makes a new Loan
hereunder on a day on which the Borrower is to repay all or any part of an
outstanding Loan from such Lender, such Lender shall apply the proceeds of its
new Loan to make such repayment (the amount of such new Loan made to repay a
maturing loan, a "Rollover Borrowing") and only an amount equal to the
difference (if any) between the amount being borrowed and the amount being
repaid shall be made available by such Lender as provided in subsection (e) of
this Section or remitted by the Borrower to the Agent as provided in Section
1.6.
(e) Agent May Assume Funding. Unless the Agent shall have
received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Agent such Lender's Proportionate Share of
such Borrowing, the Agent may assume that such Lender has made such amount
available to it on the date of such Borrowing in accordance with subsection (c)
of this Section 1.2, and may, in reliance upon such assumption, make available
for the account of the Borrower on such date a corresponding amount. If and to
the extent that such Lender shall not have so made such Proportionate Share
available to the Agent such Lender shall pay to the Agent forthwith on demand,
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to the Borrower until the date such amount is
paid to the Agent at the Federal Funds Rate. If such Lender shall pay to the
Agent, such corresponding amount, such amount so paid shall constitute such
Lender's Loan as part of such Borrowing for purposes of this Agreement. If such
Lender shall fail to pay such corresponding amount upon such demand, then the
Borrower shall, forthwith on demand, repay to the Agent, such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is paid, at the
interest rate applicable at such time to Loans comprising such Borrowing.
(f) Lenders' Obligations Independent. The failure of any
Lender to make a Loan to be made by it as part of any Borrowing or to purchase
any participation hereunder shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on the date of such Borrowing or
to purchase any such participation. Neither the Agent nor any Lender shall be
responsible for the failure of any other person to make any Loan or to purchase
any participation hereunder on the date required therefor.
Section 1.3. Evidence of Indebtedness.
(a) Notes. The Loans by each Lender to the Borrower and the
Borrower's obligations to repay such Loans with interest in accordance with the
terms of this Agreement, shall be evidenced by (i) in the case of Base Rate
Revolving Loans, a single Base Rate Revolving Note and (ii) in the case of
Eurodollar Revolving Loans, a single Eurodollar Revolving Note.
(b) Authorization to Make Notations. Each Lender shall record,
and prior to any transfer of any Note shall endorse on the schedules forming a
part thereof appropriate notations to evidence the date, amount and maturity of
each Loan made by it and the date and amount of each payment of principal made
by the Borrower with respect thereto; provided that the failure of any Lender
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to make any such recordation or endorsement shall not affect the obligations of
the Borrower hereunder or under the Notes. Each Lender is hereby irrevocably
authorized by the Borrower to so endorse its Note or Notes and to attach to and
make a part of its Note or Notes a continuation of any such schedule as and when
required.
(c) Loan Account and Accounting. Agent shall maintain a loan
account (the "Loan Account") on its books to record: (a) all Loans and Letter of
Credit Obligations, (b) all payments made by Borrower, and (c) all other debits
and credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower; provided that any failure to so record
or any error in so recording shall not limit or otherwise affect Borrower's duty
to pay the Obligations. Agent shall render to Borrower a monthly accounting of
transactions with respect to the Loans and Letter of Credit Obligations setting
forth the balance of the Loan Account. Unless Borrower notifies Agent in writing
of any objection to any such accounting (specifically describing the basis for
such objection), within thirty (30) days after the Borrower's receipt thereof,
each and every such accounting shall (absent manifest error) be deemed final,
binding and conclusive upon Borrower in all respects as to all matters reflected
therein. Only those items expressly objected to in such notice shall be deemed
to be disputed by Borrower.
Section 1.4 Interest.
(a) Rates. Each Loan shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to, (i) so long as it is a
Base Rate Loan, the Base Rate as in effect from time to time plus the Applicable
Margin, (ii) so long as it is a Eurodollar Loan, the applicable Adjusted
Eurodollar Rate plus the Applicable Margin, and (iii) from and including the
date of the occurrence of any Default to but excluding the date that such
Default shall have been cured or waived in accordance herewith, the Default Rate
and all other Obligations bearing interest under this agreement shall also bear
interest at the Default Rate during such period.
(b) Default Rate Interest. If all or any part of a Loan or
other Obligation is not paid when due (whether at maturity, by reason of notice
of prepayment or acceleration or otherwise), such unpaid amount shall bear
interest for each day during the period from the date such amount became so due
until it shall be paid in full (whether before or after judgment) at a rate per
annum equal to the Default Rate.
(c) Payments. Interest due pursuant to this Agreement shall be
payable in arrears, (i) in the case of Base Rate Loans, on each Interest Payment
Date, (ii) in the case of any Eurodollar Loan, on the last day of each Interest
Period applicable thereto, and (iii) in the case of any Loan or other
Obligation, when any portion of such Loan, or other Obligation shall be due
(whether at maturity, by reason of prepayment or acceleration or otherwise), but
only to the extent then accrued on the amount then so due. Interest at the
Default Rate shall be payable on demand.
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Section 1.5 Commitment and Other Fees.
(a) Other Fees. The Borrower agrees to pay to the Agent such
fees as provided in the Fee Letter.
(b) Revolving Credit Commitment Fee. The Borrower agrees to
pay to the Agent for the account of each Lender, for each day from and including
the Agreement Date to but excluding the Revolving Credit Commitment Termination
Date, an amount equal to .375% per annum on the daily unused Revolving Credit
Commitment of such Lender (the "Revolving Credit Commitment Fee"). Absent the
occurrence and continuation of a Default, at any time following the first
anniversary of the Closing Date, this fee will reduce to 0.25% per annum from
and after the fifth Business Day following the Agent's receipt of notice from
the Borrower that the Leverage Ratio as determined from the financial statements
most recently delivered pursuant to Section 6.1(b) or (c) was less than 2.25:1,
and shall continue so reduced until the earlier of a Default and the delivery of
financial statements pursuant to Section 6.1(b) or (c) from which it can be
determined that the Leverage Ratio is greater than or equal to 2.25:1.
(c) Fees Payable in Arrears. All fees due pursuant to
Section 1.5(b), and the fees due pursuant to Section 2.4(a), shall be payable
monthly in arrears on the first Business Day in each Month , commencing with
January 2, 1997, on the applicable Termination Date and, in the case of the
Revolving Credit Commitment Fee, upon each reduction of such Commitment to the
extent accrued on the amount of such reduction.
Section 1.6. Repayment of Loans.
(a) Mandatory Payment. (i) All Revolving Loans outstanding
on the Revolving Credit Commitment Termination Date shall mature and
become immediately due and payable. On any date that the aggregate
outstanding principal amount of Revolving Loans and Letter of Credit
Obligations shall exceed the lesser of (x) the Borrowing Base and (y)
the Revolving Credit Commitments, the Borrower shall repay Revolving
Loans, and/or Letter of Credit Obligations in an amount equal to such
excess.
(ii) All Term Loans outstanding on the Term Loan Credit
Commitment Termination Date shall mature and become immediately due and
payable. On any date that the aggregate outstanding principal amount of
Term Loans shall exceed the Term Loan Credit Commitments, the Borrower
shall repay Term Loans in an amount equal to such excess.
(iii) All Eurodollar Loans shall mature and become due and
payable on the last day of the Interest Period applicable thereto.
(b) Optional Payment. The Borrower may at any time upon one
Business Days' notice prepay Base Rate Loans in whole or in part without premium
or penalty, except that any prepayment of Base Rate Loans shall be in an
aggregate principal amount of at least $100,000 and in greater whole multiples
of $50,000, subject, however, to the Borrower's right to repay all outstanding
Loans in full, and except that Eurodollar Loans may not be optionally prepaid.
Amounts to be prepaid
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shall irrevocably be due and payable on the date specified in the applicable
notice of prepayment, together with interest thereon as provided in Section
1.4(c).
(c) Revolving Credit. Prior to the Revolving Credit
Commitment Termination Date and subject to the terms and conditions hereof,
Revolving Loans may be repaid and reborrowed. Except in the case of Rollover
Borrowings, Term Loans may not be repaid and reborrowed.
Section 1.7. Reductions of Commitments.
(a) Optional Reductions of Commitments. Subject to the
following sentence, the Borrower may elect to reduce any Commitment, in whole or
in part, by (i) giving the Agent not less than 30 Business Days' prior written
notice thereof, (ii) in the case of the Revolving Credit Commitment and the Term
Loan Commitment, paying to the Agent for the ratable account of the Lenders the
amount by which the sum of all outstanding Loans thereunder exceeds such
Commitment as so reduced, together with any accrued and unpaid interest and fees
thereon. Partial reductions of Commitments of any Class pursuant to this Section
1.7 shall be in incremental amounts of $1,000,000.
(b) Mandatory Reduction of Commitments. (i) The Revolving
Credit Commitments shall reduce automatically to zero on the Revolving Credit
Commitment Termination Date.
(ii) The Term Loan Commitments shall reduce automatically (A)
to the amount of the Term Loans outstanding at the close of the Agent's
business on the Closing Date, (B) by $1,428,571.43 on the last day of
each Fiscal Quarter, commencing February 27, 1997, (C) by the amount of
any prepayment not made with the proceeds of a Rollover Borrowing, and
(D) to zero on the earlier of the Term Loan Commitment Termination Date
and the Revolving Credit Commitment Termination Date.
(iii) The Term Loan Commitments shall reduce by the amount by
which the Net Proceeds received by the Borrower or any Subsidiary
during any fiscal year from all asset dispositions (including
condemnation proceeds, but excluding proceeds of asset dispositions
permitted by clauses (x) and (y) to the proviso to Section 5.7) and
from all sales of Stock of Subsidiaries, exceeds $100,000 (such excess
amount, the "Excess Net Proceeds"). Such reduction shall occur on the
date that financial statements are delivered by the Borrower pursuant
to Section 6.1(c) and on each earlier date that the cumulative amount
of such Excess Net Proceeds not yet applied to reduce the Term Loan
Commitment shall exceed $100,000.
(iv) If Borrower issues any Capital Securities or any debt
securities, other than in connection with the IPO, no later than the
Business Day following the date of receipt of the proceeds thereof, the
Term Loan Commitments shall reduce in an amount equal to 50% of the Net
Proceeds of such issuance.
(v) Commencing with the delivery of the financial statements
for fiscal year 1998 and continuing until the Termination Date for each
year that the Leverage Ratio for such year as shown on such financial
statement, is greater than 2.5:1, the Term Loan Commitments shall
reduce on the earlier of the date which is ten (10) days after (A) the
date on which Borrower's
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annual audited Financial Statements for such Fiscal Year are delivered
pursuant to Section 6.1(c) and (B) the date on which such annual
audited Financial Statements were required to be delivered pursuant to
Section 6.1(c), in an amount equal to 75% of Excess Cash Flow for such
Fiscal Year. Each such prepayment shall be accompanied by a certificate
signed by the Borrower's chief financial officer certifying the manner
in which Excess Cash Flow and the resulting prepayment were calculated,
which certificate shall be in form and substance reasonably
satisfactory to Agent.
(c) Application of Commitment Reductions. Commitment
reductions pursuant to Sections 1.7(a), and 1.7(b)(iii) through (v) shall be
applied against commitment reductions required pursuant Section 1.7(b)(ii) in
the inverse order of the occurrence thereof.
(d) Ratable Reduction of Commitments. Each reduction in
Commitments pursuant to this Section 1.7 shall permanently reduce the
appropriate Commitment of each Lender by an amount equal to its Proportionate
Share of such reduction.
Section 1.8 Computation of Interest and Fees. Interest and fees due
pursuant to this Agreement that are calculated at a per annum rate, unless
expressly stated to the contrary with respect to a particular item of interest
or a particular fee, shall be computed on the basis of a year of 360 days, and
paid, in arrears, for the actual number of days elapsed (including the first but
excluding the last day, which, in the case of any Interest Period, means from
and including the first day of such Interest Period to but excluding the last
day thereof). If the date for any payment of principal is extended (whether by
operation of this Agreement, any provision of law or otherwise), fees payable
pursuant to this Agreement as well as interest, shall be payable for such
extended time.
Section 1.9 Maximum Interest Rate. Nothing contained in this Agreement
or any Note shall require the Borrower to pay interest at a rate exceeding the
Maximum Permissible Rate. If amounts payable to the Agent, any Letter of Credit
Issuer or the Lenders on any date would be treated as interest in excess of the
Maximum Permissible Rate, such amounts automatically shall be reduced to the
Maximum Permissible Rate, and payments for any subsequent period, to the extent
less than the Maximum Permissible Rate, shall, to that extent, be increased by
the amount of such reduction.
Section 1.10 Manner of Payment; Application of Payments. Unless
otherwise provided herein, all payments and deposits due from the Borrower to
the Lenders, the Agent or any Letter of Credit Issuer hereunder or under the
Notes, or under any Reimbursement Agreement, shall be made not later than 12:00
noon (New York time), on the due date thereof, in Dollars in funds immediately
available (i) in the case of Loans and other payments hereunder, other than
Reimbursement Obligations, to the Agent to the Agent's Account, for the account
of, (A) in the case of payments on account of Eurodollar Loans, the Lenders'
Eurodollar Lending Offices, (B) in the case of all other payments hereunder for
the account of the Lenders, the Lenders' Base Rate Lending Offices and (C) in
the case of all payments for the account of the Agent, the Agent's Office, and
(ii) in the case of any Reimbursement Obligation or any amounts due to any
Letter of Credit Issuer, at such Letter of Credit Issuer's Office, without any
deduction whatsoever, including, but not limited to, any deduction for any
set-off, recoupment, counterclaim or Tax.
15
Section 1.11 Return of Payments. If the Agent or any Letter of Credit
Issuer shall be required by any court, trustee or debtor-in-possession or other
person to return any amount previously received by it in respect of the
Obligations under this Agreement or any Reimbursement Agreement, upon receipt
of notice from it, each Lender shall immediately pay over to it, such Lender's
Proportionate Share of the amount to be returned.
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2.
LETTERS OF CREDIT
Section 2.1 Letters of Credit.
(a) Purchase of Participations by Lenders. Simultaneously
with the issuance by any Letter of Credit Issuer of any Letter of Credit each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and participation
in such Letter of Credit (including, without limitation, all Obligations of the
Borrower with respect thereto except those expressly stated to be payable to the
Letter of Credit Issuer or the Agent hereunder or under the other Loan
Documents) and any documents or security therefor or Guaranty pertaining
thereto, equal to such Lender's Proportionate Share of such Letter of Credit.
The Agent shall promptly notify the Lenders upon the issuance of any Letter of
Credit issued after the Closing Date of the amount and expiration date thereof.
(c) Terms of Letters of Credit.
(i) Each Letter of Credit shall be in such form as the
Borrower, the Agent and the Letter of Credit Issuer issuing such Letter
of Credit shall agree. Each Letter of Credit shall expire on or prior
to the Revolving Credit Commitment Termination Date. The aggregate
stated amount of the Letters of Credit outstanding at any one time
shall not exceed $3,000,000. The Letters of Credit shall be issued
solely in connection with utility, bid, payment and/or performance
bonds, or to secure the Borrower's obligations in respect of worker's
compensation insurance.
(ii) In addition to any obligation of the Borrower hereunder
with respect to the Letters of Credit and drawings thereunder, the
Borrower's Reimbursement Obligations and any additional obligations in
respect of the Letters of Credit shall be set forth in, and shall be
evidenced by, the Reimbursement Agreements.
Section 2.2 Manner of Issuance. The Borrower shall deliver to the Agent
and any Letter of Credit Issuer prior to noon (New York City time) at least ten
days before the requested date of issuance of a Letter of Credit, a written
request (a "Letter of Credit Request") for the issuance of such Letter of Credit
together with all of the documents, materials and evidences required to be
delivered to the Agent pursuant to Article III prior to the issuance of such
Letter of Credit. Such request shall set forth: (i) the beneficiary of the
Letter of Credit, (ii) the stated amount thereof, (iii) if applicable, the
portions of such stated amount to be available for the payment of principal,
interest and premium (if any), (iv) the requested issue date, (v) the requested
expiration date, and (vi) the drawing conditions applicable thereto. On the
requested date of issuance of such Letter of Credit the Borrower shall deliver
to the Agent a duly executed Reimbursement Agreement in the form agreed to by
the Borrower, the Agent and the Letter of Credit Issuer issuing such Letter of
Credit (each a "Reimbursement Agreement") and such additional documents,
evidences and opinions as shall be required pursuant to Article III.
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Section 2.3 Drawings Under Letters of Credit.
(a) Notice to Lenders. Promptly upon receipt by any Letter of
Credit Issuer of any draft upon, or other notice of drawing under, a Letter of
Credit, such Letter of Credit Issuer shall give the Borrower, the Agent and each
Lender written or telephonic notice of the amount of such draft or notice of
drawing, of the Letter of Credit against which it is drawn and of the date upon
which such Letter of Credit Issuer proposes to honor such draft.
(b) Payments by Lenders. Each Lender hereby agrees that it
shall pay to any Letter of Credit Issuer prior to 2:00 p.m. (New York City time)
on the date each Letter of Credit Issuer honors each drawing under such Letter
of Credit Issuer's Letter of Credit such Lender's Proportionate Share of such
Letter of Credit drawing; provided, that, if the Borrower should pay in full or
in part any Letter of Credit drawing on the date thereof, the obligation of each
Lender to pay to such Letter of Credit Issuer pursuant to this Section its
proportionate share of such drawing shall be reduced by an amount equal to such
Lender's Proportionate Share of such payment. Amounts paid in excess of the net
amount so owed shall promptly be refunded by such Letter of Credit Issuer to
such Lender.
(c) Failure to Pay by Lenders. If any Lender shall fail to pay
the amount of its participation in a Letter of Credit drawing on the date such
amount is due in accordance with subsection (b) above, the Letter of Credit
Issuer to which such payment is due shall be deemed to have advanced funds on
behalf of such Lender. Each such advance shall be secured by such Bank's
participation interest, and such Letter of Credit Issuer shall be subrogated to
such Lender's rights hereunder in respect thereof. Such advance may be repaid by
application to such advance of any payment that such Lender is otherwise
entitled to receive under this Agreement. Any amount not paid by such Lender to
such Letter of Credit Issuer hereunder shall bear interest for each day from the
day such payment was due until such payment shall be paid in full at a rate per
annum equal to the Federal Funds Rate.
(d) Repayment by Borrower. The Borrower shall repay to each
Letter of Credit Issuer for the ratable account of the Lenders the amount of
each Letter of Credit Obligation under any Letter of Credit issued by such
Letter of Credit Issuer on the date provided in the applicable Reimbursement
Agreement (which, in the case of a drawing under a Letter of Credit, shall be
the date of such drawing); provided, that, notwithstanding anything in this
Agreement or any Reimbursement Agreement to the contrary, all Letter of Credit
Obligations (fixed or contingent, drawn or undrawn) not previously due and
payable shall become due and payable by the Borrower on the Revolving Credit
Commitment Termination Date. The amount of any Letter of Credit Obligation that
is not paid when due shall bear interest, payable on demand, from the due date
thereof until paid, at the Default Rate. The Borrower agrees that it shall be
indebted to each Lender in an amount equal to such Lender's Proportionate Share
of each Letter of Credit Obligation, including each drawing paid by any Letter
of Credit Issuer under a Letter of Credit.
(e) Borrower's Obligations Absolute. The obligation of the
Borrower to pay a Letter of Credit Issuer for the account of the Lenders, for
each Letter of Credit Obligation arising under the Letter of Credit issued by
such Letter of Credit Issuer shall be irrevocable, shall not be subject to any
18
qualification or exception whatsoever and shall be binding in accordance with
the terms and conditions of this Agreement under all circumstances, including,
without limitation, the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or right
which the Borrower may have at any time against a beneficiary of any
Letter of Credit or any transferee of any Letter of Credit (or any
person for whom any such transferee may be acting), the Agent, such
Letter of Credit Issuer, the Lenders or any other Person, whether in
connection with this Agreement, any Reimbursement Agreement or any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions;
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient (except for insufficiencies that are manifest) in any
respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement or the
other Loan Documents;
(v) any failure of the Agent or any Letter of Credit Issuer
to provide notice to the Borrower of any drawing under any Letter of
Credit;
(vi) the occurrence or continuance of any Default; or
(vii) any other reason that is not finally determined by a
court of competent jurisdiction to have been the result of gross
negligence or willful misconduct on the part of such Letter of Credit
Issuer.
The foregoing provisions shall not in any way act as a waiver of any
claim, right, or cause of action which the borrower may have against a
beneficiary of any Letter of Credit or any transferee of any Letter of Credit
(or any person for whom any such transferee may be acting), whether arising in
connection with this Agreement, and Reimbursement Agreement of any Letter of
Credit, the transactions contemplated herein, or any unrelated transactions.
(f) Lenders' Obligations Absolute. The obligation of each
Lender to pay to any Letter of Credit Issuer its Proportionate Share of each
drawing under a Letter of Credit issued by such Letter of Credit Issuer, (less
the amount thereof repaid by the Borrower as described above), shall be
irrevocable, unconditional, shall not be subject to any qualification or
exception whatsoever and shall be binding in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of this
Agreement;
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(ii) the existence of any claim, set-off, defense or other
right which the Borrower or any Lender may have at any time against the
other, the Agent, any Letter of Credit Issuer, any Lender or any other
Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transactions;
(iii) any draft or any other document presented under this
Agreement proving to be forged, fraudulent, invalid or insufficient
(except for insufficiencies that are manifest) in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement;
(v) the occurrence or continuance of any Default; or
(vi) any other reason not constituting gross negligence or
willful misconduct on the part of the Letter of Credit Issuer issuing
such Letter of Credit.
Section 2.4 Letter of Credit Fees; Administrative Fees; Interest.
(a) Letter of Credit Fee. With respect to each Letter of
Credit, the Borrower shall pay (i) to the Agent for the account of each Lender,
a fee equal to the Applicable Percentage on such Lender's Proportionate Share of
the undrawn face amount of such Letter of Credit, and (ii) to each Letter of
Credit Issuer, the fee agreed upon by the Borrower and such Letter of Credit
Issuer in the applicable Reimbursement Agreement.
(b) Administrative Fees. In addition to the foregoing fees
payable to the Lenders, the Agent and the Letter of Credit Issuers, the Borrower
shall pay to each Letter of Credit Issuer the fees specified in the applicable
Reimbursement Agreement and such other administrative fees as such Letter of
Credit Issuer customarily charges in respect of letter of credit transactions
together with all telecommunication fees and other expenses incurred by such
Letter of Credit Issuer in connection with the issuance of, or any drawing
under, any Letter of Credit issued by such Letter of Credit Issuer for the
Borrower's account.
(c) Interest on Reimbursement Obligations. All Reimbursement
Obligations shall bear interest from and including the date of the creation
thereof until due at the Default Rate
Section 2.5 Limitation of Liability With Respect To Letters of Credit.
(a) As among the Borrower, the Lenders, the Agent and the Letter of Credit
Issuers, the Borrower assumes all risks of the acts and omissions of, or misuse
of any Letter of Credit by the beneficiaries of such Letter of Credit. Without
limiting the foregoing, the Agent, the Letter of Credit Issuers and the Lenders
shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any draft, demand, application or other documents
submitted by any party in connection with any Letter
20
of Credit even if such document should in fact prove to be in any and
all respects invalid, insufficient, inaccurate, fraudulent or forged
(unless manifestly so);
(ii) the validity, genuineness or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason;
(iii) failure of the beneficiary of a Letter of Credit to
comply fully with the conditions required in order to draw upon such
Letter of Credit to the extent that the documents presented in
connection with a drawing manifestly comply with the terms of such
Letter of Credit;
(iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(v) errors in interpretations of technical terms;
(vi) any loss or delay in the transmission or otherwise of
any document required to make a drawing under any Letter of Credit or
with respect to the proceeds thereof;
(vii) the misapplication by the beneficiary of a Letter of
Credit or of the proceeds of any drawing under such Letter of Credit;
or
(viii) any consequences arising from causes beyond the control
of Agent, the Letter of Credit Issuers or the Lenders, including,
without limitation, any act or omission, rightfully or wrongfully, of
any present or future governmental authority.
None of the above circumstances shall affect, impair or prevent the vesting of
any of the Agent's, the Letter of Credit Issuer's, or the Lenders' rights or
powers under this Agreement.
(b) In furtherance and extension, and not in limitation, of
the specified provisions set forth above, any action taken or omitted by the
Agent or any Letter of Credit Issuer under or in connection with any Letter of
Credit or any Related Documents, if taken or omitted in good faith, shall not
expose the Agent, any Letter of Credit Issuer or any Lender to any liability to
the Borrower or relieve the Borrower from any of its obligations hereunder.
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3.
CONDITIONS TO EXTENSIONS OF CREDIT
Section 3.1 Conditions to Initial Extension of Credit. The obligation
of each Lender to make the initial Extension of Credit is subject to the receipt
by the Agent of each of the following, in form and substance satisfactory to the
Agent and the Lenders:
(a) a certificate of the Secretary or an Assistant Secretary
of the Borrower substantially in the form of Schedule 3.1(a) with respect to the
officers of the Borrower authorized to execute and deliver this Agreement, the
Notes and the other Loan Documents, to which shall be attached copies of the
resolutions and bylaws referred to in such certificate;
(b) a certificate of the Secretary or an Assistant Secretary
of each Guarantor substantially in the forms of Schedule 3.1(b)-1 and Schedule
3.1(b)-2 with respect to the officers of such Guarantor authorized to execute
and deliver the Loan Documents to which it is a party, to which shall be
attached copies of the resolutions and bylaws referred to in such certificate;
(c) a closing certificate of a senior executive officer of
each of the Borrower and the Guarantor in the form of Schedule 3.1(c)-1,
3.1(c)-2 and 3.1(c)-3;
(d) a copy of the certificate of incorporation of the Borrower
and each Guarantor, certified by the Secretary of State of the State of the
state of its organization;
(e) a certificate of existence with respect to the Borrower
and each Guarantor, issued as of a recent date by the Secretary of State of such
Person's organization;
(f) unless covered by the good standing certificate, a tax
clearance certificate for the Borrower and each Guarantor, issued by the
Department of Revenue of the state of its incorporation and each state listed
for such Person on Schedule 4.1;
(g) a certificate of the Secretaries of State of each State
listed on Schedule 4.1 issued as of a recent date, to the effect that the
Borrower and each Guarantor listed for such State is qualified to do business as
a foreign corporation in such state;
(h) an opinion of Green & Xxxx, a professional corporation,
counsel for the Borrower and the Guarantors, dated the Closing Date, in the form
of Schedule 3.1(h);
(i) the Notes, duly executed by the Borrower and payable to
the order of each Lender;
(j) a copy of each Governmental Approval and other consent or
approval listed on Schedule 4.2;
(k) a duly executed counterpart of this Agreement;
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(l) a duly executed counterpart of the Guaranty Agreement;
(m) a duly executed counterpart of each of the Security
Agreement and the Pledge Agreement;
(n) a duly executed counterpart of the Subsidiary Security
Agreement and the Subsidiary Pledge Agreement;
(o) a duly executed counterpart of each of the Trademark
Security Agreement, the Subsidiary Trademark Security Agreement and the Patent
Security Agreement;
(p) a duly executed counterpart of the Mortgage and the Lien
Subordination Agreement;
(q) evidence that such action (including, without limitation,
the filing of appropriately completed and duly executed Uniform Commercial Code
financing statements, the payment of all taxes and recording fees and the
recording of the Mortgage) as may be necessary or desirable, in the opinion of
the Agent and its counsel, to perfect the Security Interest shall have been
taken;
(r) surveys with respect to the Secured Property consisting of
real property and policies of title insurance (or commitments therefor with all
conditions marked satisfied), issued by Fidelity National Title Insurance
Company (the "TIC"), insuring the perfection, enforceability and first priority
of the Lien created under the Mortgage in an amount not less than the Designated
Amount, subject only to the Permitted Encumbrances (as defined in the Mortgage)
and to such other exceptions as are satisfactory to the Agent, containing such
endorsements and affirmative assurances as have been previously agreed to by the
Agent, and evidence that the Borrower shall have paid to the TIC all expenses
and premiums of the TIC in connection with the issuance of such policies and in
addition shall have paid to the TIC an amount equal to all the recording and
stamp taxes payable in connection with such Mortgage;
(s) UCC, Lien, judgment and tax search reports for each
jurisdiction in which the Borrower or any Guarantor is located or has
Collateral, showing no Liens or financing statements of record against the
Borrower or such Guarantor, except Permitted Liens, and showing no litigation
that if adversely determined, could reasonably be expected to have or result in
a Materially Adverse Effect;
(t) certificates of insurance evidencing the existence of all
insurance required to be maintained or caused to be maintained pursuant to
Section 5. 2;
(u) full payment of all amounts payable by the Borrower to the
Agent or the Lenders on or before the Closing Date, including, without
limitation, all amounts due under the Fee Letter;
(v) evidence that, after completion of all transactions
contemplated to be completed on the Closing Date and the making of all
Borrowings required to be made hereunder on such date, the
23
Borrower will have, on a pro forma basis, at least $4,000,000 of unused
borrowing availability under the Revolving Credit Commitment;
(w) evidence of the repayment of all Debt listed in part A of
Schedule 4.9 and the release of all Liens relating thereto;
(x) a duly executed counterpart of all agreements and
documents delivered or received or required to be delivered or received by the
Borrower in connection with the Acquisition, save and except the following:
the regulatory approvals and filings listed on Schedule 1.01(b) of
the Agreement for Purchase and Sale of Assets Relating to
Neosporin(R) and Polysporin(R) by and between Glaxo
Wellcome Inc. and Monarch dated November 14, 1997;
the product specifications listed on Schedule 1.12 of the Supply
Agreement for the Supply of Neosporin(R) and Polysporin(R) by
and between Glaxo Wellcome Inc. and Monarch dated
November 14, 1997;
the regulatory approvals and filings listed on Schedule
1.01(c) of the Agreement for Purchase and Sale of
Assets Relating to Septra(R), Proloprim(R),
Mantadil(R), and Kemadrin(R) by and between Glaxo
Wellcome Inc. and Monarch dated November 14, 1997;
and
the product specifications listed on Schedule 1.12 of the Supply
Agreement for the Supply of Septra(R), Proloprim(R),
Mantadil(R), and Kemadrin(R) by and between Glaxo Wellcome
Inc. and Monarch dated November 14, 1997,
together with a certificate of the chief executive officer of the Borrower that
such documents are complete and correct and evidence all agreements and
understandings of the parties in connection with the Acquisition, evidence that
the Acquisition has been consummated in accordance with the terms of such
documents and that the aggregate value of the consideration conveyed or to be
conveyed by the Borrower (including any assumed liabilities) and its Affiliates
to the seller in connection therewith is less than $25,000,000 and that the
aggregate amount of fees, closing costs and other transaction expenses
associated therewith, including the costs and closing fees associated with this
Credit Agreement and the other Loan Documents does not exceed $1,000,000;
(y) (i) satisfactory evidence that the Borrower and its
Subsidiaries have obtained all required consents and approvals of all Persons
including all requisite Governmental Authorities, to the execution, delivery and
performance of this Credit Agreement and the other Loan Documents and the
consummation of the Acquisition or (ii) an officer's certificate in form and
substance satisfactory to Agent affirming that no such consents or approvals are
required;
24
(ii) a fully executed original of a pay-off letter
satisfactory to Agent confirming that, except as contemplated on Schedule 4.9,
all Debt listed on Part A of such Schedule will be repaid in full from the
proceeds of the initial Borrowing and all Liens upon any of the property of
Borrower or any of its Subsidiaries in favor of any prior lender shall be
terminated by such lender immediately upon such payment; and (ii) all letters of
credit issued or guaranteed by prior lender shall have been cash collateralized,
supported by a guaranty of Agent or supported by a Letter of Credit, as mutually
agreed upon by Agent, Borrower and the prior lender;
(iii) satisfactory evidence that the capital structure of
Borrower and each of its Subsidiaries and the terms and conditions of all
Indebtedness of such Credit Party shall be consistent with the Borrower's prior
written disclosures to the Agent, or otherwise acceptable to the Lenders in
their sole discretion;
(iv) a duly executed and completed initial Borrowing Base
Certificate; and
(v) such other documents, instruments and opinions as the
Agent shall reasonably request.
To the extent that the Agent agrees to make the initial Extension of
Credit on the Closing Date without all of the conditions specified in this
Section 3.1 being satisfied, such conditions shall not be deemed to be waived
hereunder, but the Borrower shall be deemed to have convenanted that it will
satisfy all such conditions within 30 days of the Closing Date.
Section 3.2 Conditions to Issuance of Letters of Credit. The obligation
of the Letter of Credit Issuer to issue any Letter of Credit, and the Lenders'
obligation to purchase participations therein, is subject to the satisfaction of
the following conditions:
(a) the Agent shall have received prior to the issuance of
any Letter of Credit, a duly executed and completed Letter of Credit Request and
the Reimbursement Agreement together with evidence satisfactory to the Agent
that the Borrowing Base, after giving effect to the issuance of such Letter of
Credit, is greater than or equal to the sum of the aggregate principal amount of
all Revolving Loans and Letter of Credit Obligations; and
(b) the Agent and the Letter of Credit Issuer shall be
reasonably satisfied with all terms, actions and proceedings relating to the
Letter of Credit and Reimbursement Agreement and all transactions contemplated
thereunder.
Section 3.3 Conditions to Each Extension of Credit. The obligation of
each Lender, the Agent and each Letter of Credit Issuer to make each Extension
of Credit, including the initial Extension of Credit, is subject to the
fulfillment of each of the following conditions to the reasonable satisfaction
of the Required Lenders, provided that the conditions specified in Section
3.3(a) and 3.3(b) shall not apply in the case of a Rollover Borrowing made prior
to an acceleration of the Obligations:
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(a) each of the Representations and Warranties shall be true
and correct at and as of the time of such Extension of Credit, with and without
giving effect to such Extension of Credit and to the application of the proceeds
thereof, except those expressly stated to be made as of a particular date which
shall be true and correct as of such date;
(b) no Default shall have occurred and be continuing at the
time of such Extension of Credit, with or without giving effect to such
Extension of Credit and to the application of the proceeds thereof;
(c) receipt by the Agent of such materials as may have been
requested pursuant to Section 6.1(c);
(d) such Extension of Credit will not contravene any
Applicable Law applicable to the Lenders, the Agent or any Letter of Credit
Issuer; and
(e) all legal matters incident to such Extension of Credit and
the other transactions contemplated by this Agreement shall be reasonably
satisfactory to counsel for the Agent.
Each Notice of Borrowing under Section 1.2 (other than a
request for a Rollover Borrowing made prior to an acceleration of the
Obligations) and each request for the issuance of a Letter of Credit under
Section 2.2 shall constitute a representation and warranty by the Borrower, made
as of the time of the making of such Extension of Credit, that the conditions
specified in clauses (a) and (b) have been fulfilled as of such time, unless a
notice to the contrary specifically captioned "Disclosure Statement" is received
by the Agent from the Borrower prior to 2:00 p.m. (New York City time) on the
Business Day preceding the date of the requested Extension of Credit. To the
extent that the Required Lenders agree to make any Extension of Credit after
receipt of a Disclosure Statement in accordance with the preceding sentence, the
representations and warranties pursuant to the preceding sentence will be deemed
made as modified by the contents of such statement and repeated at the time of
the making of such Extension of Credit as so modified. Any such modification
shall be effective only for the occasion on which the Required Lenders elect to
make such Extension of Credit, and unless expressly agreed by the Required
Lenders in writing to the contrary as provided in Section 11.5, shall not be
deemed a waiver or modification of any condition to any other or future
Extension of Credit.
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4.
CERTAIN REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce the Lenders, the Agent and the Letter of Credit
Issuers to enter into this Agreement and to make each Extension of Credit, the
Borrower represents and warrants as follows:
Section 4.1 Organization; Power; Qualification; Subsidiaries; Licenses;
Compliance with Laws; Title to Properties. (a) Each of the Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has the
corporate power and authority to own its respective properties and to carry on
its respective business as now being and proposed to be conducted hereafter and
is duly qualified and is in good standing, and is authorized to do business, in
all jurisdictions in which the character of its properties or the nature of its
businesses requires such qualification or authorization, except for
qualifications and authorizations the lack of which, singly or in the aggregate,
has not had and is not reasonably likely to have a Materially Adverse Effect
upon the Borrower and its Subsidiaries, taken as a whole. Schedule 4.1 (as may
be modified by written notice entitled "Disclosure Statement" delivered by the
Borrower to the Agent with the consent of the Agent from time to time) sets
forth a complete and correct list of all Subsidiaries of the Borrower, and their
respective jurisdictions of incorporation and the record ownership of their
shares, with all Consolidated Subsidiaries being identified as such. Schedule
4.1 also sets forth for the Borrower and each Subsidiary each jurisdiction which
such person is required to qualify to do business. The Borrower or another
Subsidiary of the Borrower owns 100% of the outstanding Capital Securities of
each Subsidiary of the Borrower listed as such on Schedule 4.1 and has the
unrestricted right to vote, and (subject to limitations imposed by Applicable
Law and Permitted Restrictive Covenants) to receive dividends and distributions
on, all of the issued and outstanding shares of the Capital Securities of each
such Subsidiary, and all such shares of Capital Securities have been duly
authorized and issued and are fully paid and nonassessable.
(b) Each of the Borrower and its Subsidiaries (i) has all
Governmental Approvals, to the extent required for such ownership, operation and
conduct, except, in each case, to the extent that the failure to have such
Governmental Approval, individually or in the aggregate, has not had and could
not reasonably be expected to have or result in a Materially Adverse Effect;
(ii) is in compliance with its charter and by-laws; and (iii) is in compliance
with all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, has not had and could not reasonably be
expected to have or result in a Materially Adverse Effect.
Section 4.2 Authorization and Compliance of Agreement, Notes and
Extensions of Credit. Each of the Borrower and the Guarantors has the corporate
power, and has taken all necessary corporate (including stockholder, if
necessary) action to authorize it, to execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party in
accordance with the terms thereof, to borrow hereunder, to request the issuance
of Letters of Credit hereunder and to incur its other obligations under this
Agreement and each of the other Loan Documents to which it is a party. Each of
this Agreement and the other Loan Documents has been duly executed and delivered
by each
27
of the Borrower and the Guarantors to the extent that it is party thereto, and
constitutes the legal, valid and binding obligation of such Person, enforceable
against such Person, in accordance with its terms. The execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party by each of the Borrower and the Guarantors in accordance with their terms,
and the incurrence of Obligations thereunder, do not and will not (a) require
(i) any Governmental Approval, or (ii) any consent or approval of the
stockholders of the Borrower or any Guarantor that has not been obtained and is
not listed on, and a copy (certified in the case of Governmental Approvals) of
which is not attached to Schedule 4.2, (b) violate or conflict with, result in a
breach of, or constitute a default under, (i) any Contract to which the Borrower
or any Guarantor is a party or by which any of them or any of their properties
may be bound or (ii) any Applicable Law or (c) result in, or require the
creation of, any Lien upon any assets of the Borrower or any Guarantor other
than Liens created under this Agreement and the other Loan Documents in favor of
the Agent for the benefit of the Agent, the Lenders and the Letter of Credit
Issuers.
Section 4.3 Litigation. Except as set forth on Schedule 4.3, there are
not, in any court or before any arbitrator of any kind or before or by any
governmental or non-governmental body, any actions, suits or proceedings,
pending or threatened (nor, to the knowledge of the Borrower, is there any basis
therefor) against or in any other way relating to or affecting () the Borrower
or any Subsidiary or the business or any property of the Borrower or any
Subsidiary, except actions, suits or proceedings that, if adversely determined,
would not, singly or in the aggregate, have a Materially Adverse Effect on the
Borrower and its Subsidiaries, taken as a whole, or () the Security Interest,
this Agreement or any other Loan Document.
Section 4.4 Burdensome Provisions. Except as described on Schedule 4.4,
neither the Borrower nor any Subsidiary is a party to or bound by any Contract
or Applicable Law that could have a Materially Adverse Effect on (i) the
Borrower and its Subsidiaries, taken as a whole, or (ii) the Security Interest,
this Agreement or any of the other Loan Documents.
Section 4.5 No Adverse Change or Event. Since September 30, 1997, no
change in the business, assets, liabilities, financial condition, results of
operations or business prospects of the Borrower or any Subsidiary has occurred,
and no event has occurred or failed to occur, that has had or reasonably could
be expected to have, either alone or in conjunction with all other such changes,
events and failures, a Materially Adverse Effect on (i) the Borrower and its
Subsidiaries, taken as a whole, or (ii) the Security Interest, this Agreement or
any other Loan Document. In determining whether an adverse change has occurred,
it is understood that such an adverse change may have occurred, and such an
event may have occurred or failed to occur, at any particular time
notwithstanding the fact that at such time no Default shall have occurred and be
continuing. If a fact or circumstance disclosed in the financial statements
referred to in Section 6.2(a) or a Disclosure Statement, or if an action, suit
or proceeding disclosed in Schedule 4.3, should in the future have, or appear
reasonably likely to have, a Materially Adverse Effect upon the Borrower and the
Subsidiaries, taken as a whole, or upon this Agreement, the Security Interest or
any other Loan Document, such Materially Adverse Effect shall be a change or
event subject to Section 4.5 notwithstanding such disclosure.
28
Section 4.6 No Adverse Fact. No fact or circumstance is known to the
Borrower, as of the Agreement Date, that, either alone or in conjunction with
all other such facts and circumstances, has had or reasonably could be expected
in the future to have a Materially Adverse Effect upon the Borrower and the
Subsidiaries, taken as a whole, or on the Security Interest, this Agreement or
any other Loan Document, that has not been set forth or referred to in the
financial statements referred to in Section 6.2(a) or in a writing specifically
captioned "Disclosure Statement" and delivered to the Agent prior to the
Agreement Date.
Section 4.7 Title to Properties. Each of the Borrower and the
Subsidiaries has title to its respective properties reflected on the financial
statements referred to in Section 6.2(a) subject to no Liens or adverse claims
except as disclosed thereon and except for Permitted Liens.
Section 4.8 Environmental Matters. () The Borrower and its
Subsidiaries (i) are and have been in compliance with all Environmental Laws;
(ii) have obtained, and are in compliance with, all Environmental Permits
required by Environmental Laws for the operations of their respective businesses
as presently conducted or as proposed to be conducted and all such Environmental
Permits are valid, uncontested and in good standing; (iii) are not involved in
operations that are likely to create, and know of no facts, circumstances or
conditions that are likely to result in, any Environmental Liabilities of such
Person, and have not permitted any current or former tenant or occupant of the
real estate to engage in any such operations; (iv) are aware of no litigation
arising under or related to any Environmental Laws, Environmental Permits or
Hazardous Material; (v) have not been notified that they may be a "potentially
responsible party" or received a request for information under CERCLA or
analogous state statutes; (vi) are aware of no facts, circumstances or
conditions that may result in any one of them being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and (vii) have
provided to Agent copies of all existing environmental reports, reviews and
audits and all written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any such Person; except for
any of the foregoing as individually or in the aggregate with all such events,
have not had and could not reasonably be expected to have or result in a
Materially Adverse Effect.
Section 4.9 Debt All agreements relating to Debt of the Borrower or
any Subsidiary, or commitments or agreements to permit the Borrower or any
Subsidiary to incur Debt (other than any Loan Document) are described on
Schedule 4.9. The Borrower intends to use the proceeds of the credit provided
under this Agreement to repay and cancel all such Debt, except as described on
Part B on Schedule 4.9.
Section 4.10 Patents, Trademarks, Etc. Each of the Borrower and its
Subsidiaries owns, or is licensed or otherwise has the lawful right to use, all
Patents used in or necessary for the conduct of its business as currently
conducted. The use of such Patents by the Borrower or the Subsidiary using or
requiring the same, does not infringe on the rights of any Person, subject to
such claims and infringements as do not, in the aggregate, give rise to any
liability that is material to the Borrower and its Subsidiaries, taken as a
whole.
29
Section 4.11 Solvency. (i) Each of the Borrower and its Subsidiaries
has received fair consideration and reasonably equivalent value for the
incurrence of its obligations hereunder and under the other Loan Documents to
which it is a party, (ii) after giving effect to the incurrence of such
obligations, (A) the present fair saleable value of each of the Borrower's and
its Subsidiaries' assets exceeds its liabilities, and (B) each retains
sufficient capital to meet the reasonably anticipated needs and risks of its
ongoing business, and (iii) after giving effect to the incurrence of such
obligations and the acquisition of such rights, (A) none has incurred, nor is it
obligated for, debts beyond its ability to pay such debts as they mature, and
(B) the present fair saleable value of its assets is greater than that needed to
pay its probable existing debts as they become due.
Section 4.12 Security Interest. The Security Interest constitutes a
valid and perfected Lien of first priority, that is enforceable against each of
the Borrower and its Subsidiaries and all third parties subject only to
Permitted Liens.
Section 4.13 The Questionnaire. Each Credit Party Questionnaire is
complete and correct in all respects.
Section 4.14 Labor Matters. As of the Closing Date (a) no strikes or
other material labor disputes against the Borrower or any Subsidiary are pending
or, to the Borrower's knowledge, threatened; (b) hours worked by and payment
made to employees of the Borrower and its Subsidiaries comply with the Fair
Labor Standards Act and each other federal, state, local or foreign law
applicable to such matter, except for such non compliances as, singly or in the
aggregate, have not had and could not reasonably be expected to have or result
in a Material Adverse Effect; (c) all payments due from the Borrower or any
Subsidiary for employee health and welfare insurance have been paid or accrued
as a liability on the books of such Person, except for such non-payments or
non-accruals as, individually or in the aggregate, have not had and could not
reasonably be expected to have or result in a Material Adverse Effect; (d)
except as set forth in Schedule 4.14, neither the Borrower nor any Subsidiary is
a party to or bound by any collective bargaining agreement, management
agreement, consulting agreement or any material employment agreement (and true
and complete copies of any agreements described on Schedule 4.14 have been
delivered to Agent); (e) there is no organizing activity involving the Borrower
or any Subsidiary pending or, to Borrower's knowledge, threatened by any labor
union or group of employees; (f) there are no representation proceedings pending
or, threatened with the National Labor Relations Board, and no labor
organization or group of employees of any such Person has made a pending demand
for recognition; and (g) except as set forth in Schedule 4.14, there are no
complaints or charges against any the Borrower or any Subsidiary pending or, to
the knowledge of the Borrower, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any such
Person of any individual.
Section 4.15 Governmental Regulation. Neither the Borrower nor any
Subsidiary is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940 as amended. Neither the
Borrower nor any Subsidiary is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or any other federal or
state statute that restricts or
30
limits its ability to incur Indebtedness or to perform its obligations
hereunder. The making of the Loans by the Lenders to Borrower, the incurrence of
the Letter of Credit Obligations on behalf of Borrower, the application of the
proceeds thereof and repayment thereof and the consummation of the Acquisition
will not violate any provision of any such statute or any rule, regulation or
order issued by the Securities and Exchange Commission.
Section 4.16 Margin Regulations Neither the Borrower nor any Subsidiary
is engaged, nor will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin security" as such terms are defined in Regulation U or
G of the Federal Reserve Board as now and from time to time hereafter in effect
(such securities being referred to herein as "Margin Stock"). Neither the
Borrower nor any Subsidiary owns any Margin Stock (except for investments
permitted pursuant to Section 6.2(a)(v)), and none of the proceeds of the Loans
or other Extensions of Credit will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing
or retiring any Indebtedness which was originally incurred to purchase or carry
any Margin Stock or for any other purpose which might cause any of the Loans or
other extensions of credit under this Agreement to be considered a "purpose
credit" within the meaning of Regulation G, T, U or X of the Federal Reserve
Board. Neither the Borrower nor any Subsidiary will take or permit to be taken
any action which might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
Section 4.17 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
of the Borrower and its Subsidiaries have been filed with the appropriate
Governmental Authority and all charges have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid), excluding charges or other amounts being contested in accordance with
this Credit Agreement except for such filings or payments, the non-payment of
which, individually or in the aggregate, have not had and could not reasonably
be expected to have or result in a Materially Adverse Effect. Proper and
accurate amounts have been withheld by each of the Borrower and its Subsidiaries
from its respective employees for all periods in full and complete compliance
with all applicable federal, state, local and foreign law and such withholdings
have been timely paid to the respective Governmental Authorities except for such
withholdings and payments, the failure to make which, individually or in the
aggregate, have not had and could not reasonably be expected to have or result
in a Materially Adverse Effect. There are no pending or threatened assessments
currently outstanding. Neither the Borrower or any of its Subsidiaries nor, to
the Borrower's knowledge, their respective predecessors are liable for any
Taxes: (a) under any agreement (including any tax sharing agreements) or (b) as
a transferee.
Section 4.18 ERISA. (a) As of the Closing Date, Schedule 4.18 lists and
separately identifies all Title IV Plans, Multiemployer Plans, ESOPs and Retiree
Welfare Plans. Copies of all such listed Plans, together with a copy of the
latest form 5500 for each such Plan, have been delivered to Agent. Each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the Code, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the Code, and nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
Each Plan is in material compliance with the applicable provisions
31
of ERISA and the Code, including the filing of reports required under the Code
or ERISA. Neither the Borrower nor any ERISA Affiliate has failed to make any
contribution or pay any amount due as required by either Section 412 of the Code
or Section 302 of ERISA or the terms of any such Plan. Neither the Borrower nor
any ERISA Affiliate has engaged in a prohibited transaction, as defined
inSection 4975 of the Code, in connection with any Plan, which would subject any
of the Borrower's or its Subsidiaries to a material tax on prohibited
transactions imposed by Section 4975 of the Code.
(b) Except as set forth on Schedule 4.18: (i) no Title IV Plan
has any Unfunded Pension Liability; (ii) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur, which individually or in the aggregate, has had or
could reasonably be expected to have or result in a Materially Adverse Effect;
(iii) there are no pending, or to the knowledge of Borrower, threatened claims
(other than claims for benefits in the normal course), sanctions, actions or
lawsuits, asserted or instituted against any Plan or any Person as fiduciary or
sponsor of any Plan, which have a reasonable risk of being determined adversely
and which, if so determined, individually or in the aggregate, could have a
Materially Adverse Effect; (iv) neither the Borrower nor any ERISA Affiliate has
incurred or reasonably expects to incur any liability as a result of a complete
or partial withdrawal from a Multiemployer Plan; (v) within the last five years
no Title IV Plan with Unfunded Pension Liabilities has been transferred outside
of the "controlled group" (within the meaning of Section 4001(a)(14) of ERISA)
of the Borrower or any ERISA Affiliate; and (vi) no liability under any Title IV
Plan has been satisfied with the purchase of a contract from an insurance
company that is not rated AAA by the Standard & Poor's Corporation or the
equivalent by another nationally recognized rating agency.
Section 4.19 Brokers. No broker or finder acting on behalf of the
Borrower or any Subsidiary brought about the obtaining, making or closing of the
Loans or the Related Transactions, and neither the Borrower nor any Subsidiary
has any obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
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5.
COVENANTS
So long as (i) any Letter of Credit Obligation is outstanding or (ii)
any Loan, indebtedness or other obligation is outstanding under this Agreement
or any Loan Document or (iii) any Commitment shall remain in effect or the
Lenders, the Agent or any Letter of Credit Issuer shall have any obligation to
make any Extension of Credit:
A. THE BORROWER SHALL AND SHALL CAUSE EACH SUBSIDIARY TO:
Section 5.1 Preservation of Existence and Properties, Scope of
Business, Compliance with Law, Payment of Taxes and Claims. (i) Preserve and
maintain its corporate existence and all of its other franchises, licenses,
rights and privileges, (ii) preserve, protect and obtain all Patents, and
preserve and maintain in good repair, working order and condition all other
property, required for the conduct of its business, (iii) engage only in the
manufacture and sale of pharmaceutical products, (iv) comply with all Applicable
Laws, (v) pay or discharge when due all Taxes owing by it or imposed upon its
property (for the purposes of this clause, such Taxes shall be deemed to be due
on the date after which they become delinquent), and all Liabilities that might
become a Lien on any of its properties (other than any Tax or Liability to the
extent secured by a Permitted Lien or, in the case of any Tax not secured by a
Lien, to the extent such Tax is being contested in good faith by appropriate
proceedings and the Borrower has set aside adequate reserves on its books in
accordance with Generally Accepted Accounting Principles), (vi) pay its trade
payables in the ordinary course of its business consistent with past practice
and industry practice, subject however, to the Borrower's right to dispute items
in good faith, and (vii) at its cost and expense, take all such further actions
and obtain all consents and Governmental Approvals required or that the Agent
reasonably shall request so that the Obligations and the Security Interest will
at all times be valid, binding and enforceable in accordance with their
respective terms and entitled to the priority contemplated under the Loan
Documents and otherwise to effectuate the intent of the Loan Documents, except
that this Section 5.1 (other than clause (i), insofar as it requires the
Borrower and the Subsidiaries to preserve their corporate existence, clauses
(iii), (v) and (vi)) shall not apply in any circumstance where noncompliance,
together with all other noncompliances, will not have a Materially Adverse
Effect on (A) the Borrower and the Subsidiaries, taken as a whole, or (B) the
Security Interest, this Agreement or the other Loan Documents.
Section 5.2 Insurance. (a) Maintain insurance with one or more
Acceptable Insurers against such risks and in such amounts as are specified on
Schedule 5.2, or as may be required by Applicable Law, or as reasonably may be
requested by the Agent and the Required Lenders.
(b) All premiums on insurance policies required under this
Section shall be paid by the Borrower. All insurance policies shall contain loss
payable clauses in the form submitted to the Borrower by the Agent or in other
form and substance satisfactory to the Agent, naming the Agent as loss payee,
for its benefit and the benefit of the Lenders and the Letter of Credit Issuers.
Such policies
33
shall also name the Lenders, the Letter of Credit Issuers and the Agent as
additional insured parties, as their interest may appear, and shall provide
that:
(i) all proceeds thereunder that relate to losses or damages
sustained in respect of any item constituting a part of any Collateral
(under any Mortgage or other Security Document) shall be payable to the
Agent for the benefit of the Agent, the Letter of Credit Issuers and
the Lenders, as their interest may appear, and
(ii) such insurance shall not be affected by any unintentional
act or negligence on the part of the Borrower, any Subsidiary or other
owner of the policy or the property described in such policy.
All such insurance policies shall provide that the insurer shall, simultaneously
with the delivery to the Borrower or such Subsidiary of any notice under such
policy, deliver a copy of such notice to the Agent. All such insurance policies
and loss payable clauses shall provide that they may not be canceled, amended or
terminated unless the Agent is given at least the same number of days' notice
that the insurance company that issued such policies is required to give the
Borrower or any Subsidiary, but in no event less than 30 days' prior written
notice. So long as no Default has occurred and is continuing, proceeds of such
insurance for all losses equal to or less than $100,000 per occurrence shall be
paid directly to the Borrower. Proceeds for all losses in excess of $100,000 per
occurrence shall be paid directly to the Agent for the benefit of the Agent, the
Letter of Credit Issuers and the Lenders, whereupon the Agent shall apply such
proceeds as provided in the Security Documents. Proceeds held by the Agent shall
be as security for the Obligations pending application thereto.
(c) The Borrower will not use the Inventory or Collateral, or
permit the Inventory or Collateral to be used, unlawfully or in any manner
inconsistent with the terms of any insurance coverage.
Section 5.3 Use of Proceeds. Use (i) the proceeds of any Revolving Loan
for working capital purposes, to pay costs associated with this Agreement and
the other Loan Documents, and for general corporate purposes, (ii) the proceeds
of any Term Loan only to refinance the Debt listed on part A of Schedule 4.9, to
pay the purchase price and the costs associated with the Acquisition and (iii)
Letters of Credit shall be used only in connection with utilities, to secure
bid, performance or payment bonds, or to secure obligations in respect of
worker's compensation insurance. No Extension of Credit, and none of the
proceeds of any Extension of Credit shall be used to purchase or carry, or to
reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulations G, T, U and X) or to extend
credit to others for the purpose of purchasing or carrying any margin stock. If
requested by the Agent, the Borrower will furnish to the Agent statements in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U and
34
will take all other action necessary or desirable to ensure that the Lenders and
the Extensions of Credit are at all times in compliance with Regulations G, T, U
and X.
Section 5.4 Environmental Matters. (i) Use and operate all of its
facilities and properties in material compliance with all Environmental Laws,
(ii) keep all necessary permits, approvals, certificates, licenses and
authorizations relating to environmental matters in effect and remain in
material compliance therewith, and (iii) handle all Hazardous Materials in
material compliance with all applicable Environmental Laws. In addition, the
Borrower shall and shall cause each Subsidiary to:
(a) immediately notify the Agent and provide copies upon
receipt of all written claims, complaints or notices (excluding routine fee or
schedule notices) relating to compliance with, and liabilities or obligations
under, Environmental Laws or related common law theories with respect to its
facilities or properties and shall promptly cure and have dismissed with
prejudice to the satisfaction of the Required Lenders any actions or proceedings
relating to compliance with Environmental Laws; and
(b) provide such information and certifications that the Agent
may reasonably request from time to time to evidence compliance with this
Section 5.4.
B. THE BORROWER SHALL NOT AND SHALL NOT PERMIT ANY SUBSIDIARY TO,
DIRECTLY OR INDIRECTLY:
Section 5.5 Guaranties. Become or remain liable with respect to any
Guaranty except that this Section 5.5 shall not apply to (i) Existing Guaranties
or (ii) Permitted Guaranties.
Section 5.6 Liens. Create, assume or incur, or permit or suffer to
exist or to be created, assumed or incurred, any Lien upon any of its properties
or assets of any character, whether now owned or hereafter acquired, or upon any
income or profits therefrom, except that this Section 5.6 shall not apply to (i)
Permitted Liens or (ii) the Security Interest; provided, however, that if,
notwithstanding this Section 5.6, any Lien to which this Section is applicable
shall be created or arise, all Obligations shall automatically be secured by
such Lien equally and ratably with the other Debt secured thereby, and the
holder of such other Debt, by accepting such Lien, shall be deemed to have
agreed thereto and to share with the Lenders, the Agent and the Letter of Credit
Issuers on that basis, the proceeds of such Lien, whether or not the lender's
Lien shall be perfected, provided further, however, that notwithstanding such
equal and ratable securing and sharing, the existence of such Lien shall
constitute a default in the performance or observance of this Section 5.6.
Section 5.7 Merger, Consolidation, Acquisitions and Disposition of
Assets. (a) Subject to the provisions of subsection (b) below and unless the
Required Lenders shall, in their
35
sole discretion, otherwise give their prior written consent, (i) Merge or
consolidate with any Person, provided that, if after giving effect thereto no
Default would exist, this Section 5.7 shall not apply to (A) any merger or
consolidation of the Borrower with any Subsidiary, so long as the Borrower shall
be the continuing entity, or (B) any merger or consolidation of any Subsidiary
with any other Subsidiary if, after giving effect thereto, the continuing entity
is a Wholly-Owned Subsidiary of the Borrower that has no Liabilities other than
Permitted Debt, (ii) purchase, lease or otherwise acquire for cash, stock or
other consideration all or any substantial portion of the assets of any other
Person (which for the purposes of this Section shall mean (x) more than 5% of
the gross assets of such Person or (y) any business line, product line or brand
name, but shall not include the purchase of inventory in the ordinary course of
business), or (iii) sell, lease, transfer or otherwise dispose of any assets,
provided that this Section 5.7 shall not apply to (x) the creation of a
Permitted Lien, (y) any purchase or disposition of inventory or investments
permitted by Section 5.13(c) in the ordinary course of business or (z) the
disposition of any obsolete or retired property not used or useful in its
business the fair market value of which obsolete or retired property, singly or
when aggregated with all other such assets sold in any Fiscal Year, does not
exceed $250,000.
(b) Following the date that the Borrower shall receive no
less than $50,000,000 in Net Proceeds from the IPO, the Borrower may acquire the
stock or assets of another Person (including but not limited to brand names or
product lines) without the consent of the Required Lenders, notwithstanding
clause (ii) of subsection (a) above, for an aggregate consideration (whether
paid in cash, securities, property, assumption of liabilities or otherwise) not
to exceed an amount equal to the net proceeds from the IPO, subject to the
following criteria:
(i) the assets acquired (including but not limited to brand
names or product lines) or the business of the entity whose stock is
acquired shall be in the Borrower's current line of business or in a
line of business that is substantially related thereto;
(ii) the value of the total consideration to be paid or
provided by the Borrower and/ or its Subsidiaries for such acquisition
(other than an acquisition of assets constituting a brand name or
product line), whether in cash, securities or assumption of liabilities
shall not exceed $25,000,000;
(iii) immediately before and after giving effect to such
acquisition no Default shall have occurred or be continuing, and
(iv) (x) in the case of any acquisition, and (y) in the case
of any acquisition of assets constituting a brand name or a product
line where the total consideration shall exceed $10,000,000, the
Borrower shall provide the Agent with a certificate that: (A) such
acquisition complies with the terms hereof, (B) immediately before and
after
36
giving effect to such acquisition no Default shall have occurred or be
continuing, and (C) demonstrating compliance with the financial
covenants contained herein on a pro forma basis as of the most recently
ended fiscal quarter, calculated giving effect to the acquisition as at
the beginning of the four fiscal quarter period for which such
calculation is made, provided that, no pro forma effect shall be given
to the earnings performance of an acquired asset in the case of an
acquisition of only assets constituting a brandname or a product line.
Section 5.8 Transactions with Affiliates. Effect any transaction with
any Affiliate except for transactions effected in the ordinary course of
business consistent with past practice and on a basis no less favorable to the
Borrower or a Subsidiary, as the case may be, than would at the time be
available to an unrelated third party for a comparable transaction in
arms-length dealing.
Section 5.9 Taxes of Other Persons. (i) File a consolidated tax return
with any other Person other than the Borrower and its Consolidated Subsidiaries,
or (ii) except as required by Applicable Law, pay any Taxes owing by any Person
other than the Borrower and its Consolidated Subsidiaries.
Section 5.10 Limitation on Restrictive Covenants. Enter into any
Contract, or otherwise create or cause or permit to exist or become effective
any consensual restriction, (i) purporting to restrict (whether by covenant,
event of default or otherwise) any Subsidiary from (A) paying dividends or
making any other distributions on shares of its capital stock held by the
Borrower or any Subsidiary, (B) paying any obligation owed to the Borrower or
any Subsidiary, (C) making any loan or advance to or investment in the Borrower
or in any Subsidiary or (D) transferring any of its property or assets to the
Borrower or any Subsidiary, or (ii) purporting to restrict the Borrower or any
Subsidiary from creating any Lien upon its property or assets whether now owned
or hereafter acquired or upon any income or profits therefrom, except in each
case ((i) and (ii)) for Permitted Restricted Covenants.
Section 5.11 Issuance or Disposition of Capital Securities. Issue any
of its Capital Securities or sell, transfer or otherwise dispose of any Capital
Securities of any of its Subsidiaries, except that this Section 5.11 shall not
apply to (i) any issuance by the Borrower of any of its Capital Securities in
the IPO and (ii) any issuance by a Subsidiary of its Capital Securities to the
Borrower provided that such shares are promptly delivered to the Agent in pledge
pursuant to terms of the Pledge and Security Agreement.
Section 5.12 Permitted Debt. Create, incur, assume or suffer to exist
any Debt, other than:
(a) Debt arising under this Agreement or the other Loan
Documents;
37
(b) Existing Debt;
(c) Purchase Money Debt in an amount not to exceed at any time
outstanding (i) $7,500,000, minus (ii) all outstanding Existing Debt that
constitutes Purchase Money Debt;
(d) Guaranteed Debt consisting of endorsements of negotiable
instruments for deposit or collection in the ordinary course of business;
(e) Debt consisting of intercompany loans and advances made by
Borrower to any of its Subsidiaries or by any Wholly-Owned Subsidiary to
Borrower;
(f) Prior to January 31, 1998, the Contingent Put Option of
the United Company under Article 1.5 of that certain Stock Purchase Agreement
between the United Company and King Pharmaceuticals, Inc., dated March 17, 1997;
and
(g) Other Debt in an amount not to exceed at any time
outstanding $700,000.
Section 5.13 Limitations on Investments, Loans and Advances. Make any
advance, loan or other extension of credit to, or equity or other investment in,
any Person, except that, so long as at the time of such transaction, and
immediately after giving effect thereto, no Default would exist:
(a) (i) any Subsidiary may make payments to the Borrower and
(ii) any Subsidiary may make loans, advances, or other extensions of credit to,
or equity investments in, the Borrower, provided that any loan to the Borrower
shall be subordinated to the payment of the Obligations on terms satisfactory to
the Required Lenders;
(b) the Borrower or any of its Subsidiaries may create and
hold receivables owing to it, if such receivables are created in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms (provided that nothing in this clause (b) shall prevent the Borrower
or any of its Subsidiaries from offering such concessionary trade terms in
accordance with past practice, as management deems reasonable in the
circumstances);
(c) the Borrower and any Subsidiary may acquire and hold any
of the following:
(i) debt securities if (A) such securities are long-term
securities and rated "A" or higher by Xxxxx'x Investors Service, Inc.
("Moody's"), or "A" or higher by Standard & Poor's Corporation
("S&P's"), or (B) such securities have been issued or fully guaranteed
as to principal and interest by the United States of America or any
agency or instrumentality thereof whose obligations are backed by the
full faith and credit of the United States of America;
38
(ii) commercial paper rated "P-1" or higher by Moody's or
"A-1" or higher by S&P's or has been given an equivalent rating by
another nationally recognized statistical rating agency;
(iii) certificates of deposit of, or demand or time deposits
in, the Agent, any Letter of Credit Issuer or the Lenders;
(iv) demand deposits in domestic banks that are insured by
the Federal Deposit Insurance Corporation, have combined capital and
surplus in excess of $300,000,000 and whose (or whose parent company's)
publicly held long-term debt securities, if any, meet the standards set
forth in item (i) above.;
(v) repurchase contracts covering securities that are
described in clause (i) above, and which contracts have a maturity not
exceeding the date fourteen days from the date of acquisition thereof
and which contracts are entered into with a bank meeting the
requirements of clause (iii) or (iv) above; and
(vi) other investments of any kind not exceeding $250,000 in
any fiscal year.
(d) the Borrower or any of its Subsidiaries may make
advances to employees or consultants for business expenses in the ordinary
course of business consistent with past practice;
Section 5.14 Additional Subsidiaries. Create or acquire any Subsidiary;
provided that, if notwithstanding this Section the Borrower shall acquire or
create any Subsidiary, it shall immediately cause such Subsidiary to become a
party to the Guaranty Agreement, the Subsidiary Pledge and Security Agreement
and to mortgage all of its real property assets, in each case, to secure the
Obligations. The Borrower shall immediately pledge, or cause to be pledged, 100%
of the capital stock of such Subsidiary to the Agent for the equal and ratable
benefit of the Agent, the Lenders, and the Letter of Credit Issuers, to secure
the Obligations pursuant to the Pledge and Security Agreement.
C. THE BORROWER SHALL NOT AT ANY TIME:
Section 5.15 Minimum Consolidated Net Worth. Permit Consolidated Net
Worth on any date during any fiscal year set forth below to be less than the
amount set forth for such fiscal year, plus the Net Proceeds received from the
issuance of any Stock of the Borrower:
FISCAL YEAR AMOUNT
----------- ------
1997 $11,000,000
1998 25,000,000
39
1999 35,000,000
2000 50,000,000
2001 65,000,000
2002 80,000,000
Section 5.16 Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio for any period ending during a period specified below to be less
than the amount specified opposite such period:
PERIOD RATIO
Closing Date through December 31, 1997 3.50 : 1.00
January 1, 1998 through June 30, 1998 3.25 : 1.00
July 1, 1998 through September 30, 1998 3.00 : 1.00
October 1, 1998 through March 31, 1999 2.75 : 1.00
April 1, 1999 through September 30, 1999 2.65 : 1.00
October 1, 1999 through March 31, 2000 2.50 : 1.00
April 1, 2000 through September 30, 2000 2.30 : 1.00
Thereafter 2.00 : 1.00
Section 5.17 Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period to be less than 4.00:1.00.
Section 5.18 Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period ending during a period
specified below to be less than the amount the amount specified opposite such
period:
PERIOD RATIO
Closing Date through March 31, 1997 1.10 : 1.00
April 1, 1998 through September 30, 1998 1.15 : 1.00
October 1, 1998 through March 31, 1999 1.20 : 1.00
April 1, 1999 through September 30, 1999 1.35 : 1.00
Thereafter 1.50 : 1.00
Section 5.19 Capital Expenditures. Permit Consolidated Capital
Expenditures during any fiscal year to exceed the amount specified for such year
below:
40
FISCAL YEAR AMOUNT
1998 $3,000,000
1999 3,500,000
2000 4,000,000
2001 4,500,000
Thereafter 5,000,000
Section 5.20 Restricted Payments. Declare or make any Restricted
Payment, except that this Section 5.18 shall not prohibit any payment of salary
or bonuses, or payment or advance of business expenses to employees or
consultants who are shareholders in each case, so long as such payments are made
in the ordinary course of business consistent with past practices.
41
6.
INFORMATION
Section 6.1 Financial Statements and Information to be Furnished. So
long as (i) any Loan or Letter of Credit Obligation is outstanding or (ii) any
other indebtedness or obligation is outstanding under this Agreement or any of
the other Loan Documents or (iii) the Lenders, the Agent or the Letter of Credit
Issuers shall have any Commitment or any obligation to make an Extension of
Credit, the Borrower shall furnish to each Lender, at its Base Rate Lending
Office, to the Agent, at the Agent's Office, and to each Letter of Credit Issuer
(if it is not also a Lender), at the address specified pursuant to Section 11.1:
(a) Monthly Reports. As soon as available and in any event
within 30 days after the end of each fiscal month of the Borrower:
(i) a balance sheet and income statement for the Borrower
and its Consolidated Subsidiaries for such month and the elapsed
portion of the fiscal year ended with the last day of such month,
setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year and the figures for
the corresponding periods from the most recently delivered projections;
(ii) a report showing sales and gross margins by product line
(in dollars and in units) for such month and the elapsed portion of the
fiscal year ended with the last day of such month, setting forth in
each case in comparative form the figures for the corresponding periods
of the previous fiscal year; and
(iii) a certificate of the president or chief financial
officer of the Borrower in the form of Schedule 6.1(a).
(b) Quarterly Reports. As soon as available and in any event
within 45 days after the close of each quarterly accounting period in each
fiscal year of the Borrower:
(i) consolidated and consolidating balance sheets of the
Borrower and its Consolidated Subsidiaries, as at the end of such
quarterly period and the related consolidated and consolidating
statements of income, shareholders' equity and cash flows of the
Borrower and its Consolidated Subsidiaries for such quarterly period
and the elapsed portion of the fiscal year ended with the last day of
such quarterly period, setting forth in each case in comparative form
the figures for the corresponding periods of the previous fiscal year
and the figures for the corresponding periods from the most recently
delivered projections, and showing sales and gross margins by product
line; and
(ii) a certificate with respect thereto of the president or
chief financial officer of the Borrower in the form of Schedule 6.1(b).
42
(c) Annual Reports. As soon as available and in any event
within 90 days after the end of each fiscal year of the Borrower:
(i) audited consolidated and consolidating balance sheets of
the Borrower and its Consolidated Subsidiaries as at the end of such
fiscal year and the related consolidated and consolidating statements
of income, shareholders' equity and cash flows of the Borrower and its
Consolidated Subsidiaries for such fiscal year, setting forth in
comparative form the figures as at the end of and for the previous
fiscal year;
(ii) a report on the financial statements of the Borrower by
Coopers & Xxxxxxx or other independent certified public accountants of
recognized standing satisfactory to the Required Lenders, which report
shall be unqualified as to scope of audit and shall state that, based
upon an audit conducted in accordance with generally accepted auditing
standards, such consolidated financial statements present fairly, in
all material respects, the consolidated financial condition of the
Borrower and its Consolidated Subsidiaries as at the end of such fiscal
year, and the consolidated earnings, shareholders' equity and cash
flows of the Borrower and its Consolidated Subsidiaries for such fiscal
year in accordance with Generally Accepted Accounting Principles
consistently applied throughout the periods involved;
(iii) a certificate of such accountants addressed and in form
and substance satisfactory, to the Required Lenders (A) confirming that
(1) the Borrower is authorized to deliver the report referred to in
clause (ii) to the Lenders pursuant to this Agreement and (2) it is
their understanding that the Lenders are relying on such report and
such certificate, and (B) stating that they have caused this Agreement
and the other Loan Documents to be reviewed and that, in making the
examination necessary for their report on such consolidated financial
statements, nothing came to their attention that caused them to believe
that, as of the date of such financial statements, any Default exists
or, if such is not the case, specifying such Default and its nature,
when it occurred and whether it is continuing; and
(iv) a certificate of the president or chief financial
officer of the Borrower, in the form of Schedule 6.1(c).
(d) Other Reports.
(i) Promptly upon receipt thereof, copies of any management
letters submitted to the Borrower, or the Board of Directors of the
Borrower, by its independent certified public accountants;
(ii) Promptly upon their becoming available, copies of: (i)
all financial statements, reports, notices and proxy statements made
publicly available by the Borrower or any of its Subsidiaries to its
debt or security holders; (ii) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by the
43
Borrower or any of its Subsidiaries with any securities exchange or
with the Securities and Exchange Commission or any governmental or
private regulatory authority; and (iii) all press releases and other
statements made available by the Borrower or any of its Subsidiaries to
the public concerning material adverse changes or developments in the
business of the Borrower or any of its Subsidiaries;
(iii) On the date not later than 30 days after the close of
each fiscal year and promptly upon and change or revision thereof,
board approved projections of its performance for each of the next
three fiscal years, with the first year's projections prepared on a
monthly basis, and the projections for the second and third years
prepared on a quarterly basis, and otherwise prepared in such detail as
the Agent shall request. Such projections shall be accompanied by a
certificate of the President or Chief Financial Officer of the Borrower
to the effect that the projections were prepared based on the best
assumptions currently available to management and that such assumptions
are reasonable based on the Borrower's historical performance. Such
projections shall also be accompanied by a management commentary
thereon including a discussion of any changes therein from the previous
projections and a discussion of all assumptions used in therein;
(iv) Promptly upon its becoming aware thereof, notice of each
federal statutory Lien, tax or other state or local government Lien or
other Lien (other than the Security Interest) filed against the
property of the Borrower or any of its Subsidiaries;
(v) On (A) the first Business Day of each calendar month, a
duly completed Borrowing Base Certificate as at the close of the last
Business Day of the preceding month in the form of Schedule 6.1(c)(v),
duly executed by the chief financial officer of the Borrower; and
(vi) From time to time and upon the request of the Agent,
such data, certificates, reports, statements, opinions of counsel,
documents or further information as any Lender, the Agent or any Letter
of Credit Issuer may reasonably request.
(e) Notice of Defaults, Litigation and Other Matters. Prompt
notice of: (i) any Default; (ii) any change or event referred to in Section 4.5;
(iii) any event or condition referred to in clauses (i) through and including
(vii) of Section 7.1(h), whether or not such event or condition shall constitute
an Event of Default; (iv) the commencement of any action, suit or proceeding or
investigation in any court or before any arbitrator of any kind or by or before
any governmental or non-governmental body against or in any other way relating
adversely to or affecting (A) the Borrower or any Subsidiary or any of their
businesses or properties, that, if adversely determined,
44
might, singly or in the aggregate, have a Materially Adverse Effect on the
Borrower and its Subsidiaries, taken as a whole, or (B) this Agreement, the
other Loan Documents, the Security Interest, or any transaction contemplated
hereby or thereby; and (v) any amendment of the certificate of incorporation or
bylaws of the Borrower or any Subsidiary.
Section 6.2 Accuracy of Financial Statements and Information.
(a) Historical Financial Statements. The Borrower hereby
represents and warrants to the Lenders, the Agent and the Letter of Credit
Issuers: (i) that the financial statements listed on Schedule 6.2, are complete
and correct and present fairly, in accordance with Generally Accepted Accounting
Principles consistently applied throughout the periods involved, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as at their respective dates and the consolidated earnings,
shareholders' equity and cash flows of the Borrower and such Subsidiaries for
the respective periods to which such statements relate (except in the case of
unaudited interim financial statements for the absence of footnotes and normally
recurring year-end adjustments), and (ii) that, except as disclosed or reflected
in such financial statements or in Schedule 4.3, as at September 30, 1997,
neither the Borrower nor any of its Subsidiaries has any liabilities, contingent
or otherwise, nor any unrealized or anticipated losses, that, singly or in the
aggregate, have had or might have a Materially Adverse Effect on the Borrower
and its Subsidiaries, taken as a whole.
(b) Future Financial Statements. All financial statements
delivered pursuant to Section 6.1(a) or (b), shall be complete and correct and
present fairly, in accordance with Generally Accepted Accounting Principles
consistently applied throughout the periods involved, the consolidated financial
position of the Borrower and its Subsidiaries, as at their respective dates and
the consolidated earnings, shareholders' equity, and consolidated cash flows of
the Borrower and its Subsidiaries for the respective periods to which such
statements relate (subject, in the case of the financial statements delivered
pursuant to Section 6.1(a), to the absence of footnotes and normally recurring
year-end adjustments), and the furnishing of the same to the Lenders shall
constitute a representation and warranty by the Borrower made on the date the
same are furnished to the Lenders to that effect and to the further effect that,
except as disclosed or reflected in such financial statements, as at the
respective dates thereof, neither the Borrower nor any of its Subsidiaries had
any liability, contingent or otherwise, nor any unrealized or anticipated loss,
that, singly or in aggregate, has had or might have a Materially Adverse Effect
on the Borrower and its Subsidiaries, taken as a whole.
(c) Historical Information. The Borrower hereby represents and
warrants to the Lenders, the Agent and Letter of Credit Issuers that all
Information furnished to the Lenders, the Agent or the Letter of Credit Issuers
by or on behalf of the Borrower prior to the Agreement Date in connection with
or pursuant to this Agreement and the relationship established hereunder, at the
time the same was so furnished, but in the case of Information dated as of a
prior date, as of such date, (i) in the case of any such Information prepared in
the ordinary course of business, was complete and correct in the light of the
purpose prepared, and, in the case of any such Information the preparation of
which was requested by the Agent, was complete and correct in all material
45
respects to the extent necessary to give true and accurate knowledge of the
subject matter thereof, and (ii) did not contain any untrue statement of a
material fact.
(d) Future Information. All Information furnished to the
Lenders, the Letter of Credit Issuers or the Agent by or on behalf of the
Borrower or its Subsidiaries on and after the Agreement Date in connection with
or pursuant to this Agreement or any other Loan Document or in connection with
or pursuant to any amendment or modification of, or waiver under, this Agreement
or any other Loan Document, shall, at the time the same is so furnished, but in
the case of Information dated as of a prior date, as of such date, (i) in the
case of any such prepared in the ordinary course of business, be complete and
correct in the light of the purpose prepared, and, in the case of any such
Information required by the terms of this Agreement or the preparation of which
was requested by the Lenders, the Letter of Credit Issuers or the Agent, be
complete and correct in all material respects to the extent necessary to give
true and accurate knowledge of the subject matter thereof, and (ii) not contain
any untrue statement of a material fact, and the furnishing of the same to the
Lenders, the Agent or the Letter of Credit Issuers shall constitute a
representation and warranty by the Borrower made on the date the same are so
furnished to the effect specified in clauses (i) and (ii).
(e) Change in Fiscal Year. The Borrower shall not change its
fiscal year.
Section 6.3 Additional Covenants Relating to Disclosure. From the
Agreement Date and until the Termination Date, the Borrower shall and shall
cause each of its Subsidiaries to:
(a) Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete), as may be required or necessary to permit (i) the
preparation of financial statements required to be delivered pursuant to Section
6.1 and (ii) the determination of the Borrower's compliance with the terms of
this Agreement and the other Loan Documents.
(b) Visits and Inspections. Permit representatives (whether or
not officers or employees) of the Agent, from time to time, as often as may be
reasonably requested, but only during normal business hours, to (i) visit and
inspect any of the properties of the Borrower or its Subsidiaries, (ii) inspect
and make extracts from their books and records, including but not limited to
management letters prepared by the Borrower's independent accountants, (iii)
discuss with their principal officers, and their independent accountants, their
respective businesses, assets, liabilities, financial condition, results of
operations and business prospects and (iv) audit and inspect the Mortgaged
Premises and the Collateral and the premises upon which any of the Collateral is
located, verify the amount, quality, quantity, value and condition of, or any
other matter relating to, the Collateral. In the event that any of the
Collateral is under the exclusive control of any third party, the Borrower shall
cause such parties to make such inspection rights available to the Agent.
46
7.
DEFAULT
Section 7.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary, or within or without the control of the Borrower or
any of its Subsidiaries, or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or quasi-governmental body:
(a) The Borrower or any Subsidiary shall fail to pay (i) any
amount payable pursuant to this Agreement, the Notes or any other Loan Document
with respect to interest or periodic fees within three days of the due date
therefor and in the manner prescribed hereunder (ii) or any other Obligation
when and as due (whether at maturity, by reason of notice of prepayment,
acceleration or otherwise) in accordance with the terms of this Agreement, any
Note or other Loan Document;
(b) Any Representation and Warranty shall at any time prove
to have been incorrect or misleading in any material respect when made;
(c) The Borrower shall default in the performance or
observance of:
(i) any term, covenant, condition or agreement contained in
Section 3.1, Section 5.1(i) (insofar as such section requires the
preservation of the corporate existence of the Borrower), Section 5.3,
Section 5.5 through Section 5.20, Section 6.1, Section 6.2(e) or
Section 6.3(b); or
(ii) any term, covenant, condition or agreement contained in
this Agreement or any other Loan Document (other than a default in the
performance or observance of any other term, covenant, condition or
agreement which is elsewhere in this section specifically dealt with)
and such default shall continue unremedied for a period of 30 days
after any officer of the Borrower has knowledge thereof;
(d) The Borrower or any of its Subsidiaries shall fail to
pay, in accordance with its terms and when due and payable, the principal of, or
interest or premium on, any Debt having an aggregate outstanding balance in
excess of $100,000 (other than the Obligations), or the maturity of any such
Debt, in whole or in part, shall have been accelerated, or any such Debt, in
whole or in part, shall have been required to be prepaid prior to the stated
maturity thereof, in accordance with the provisions of any Contract evidencing,
providing for the creation of or concerning such Debt or, if any event shall
have occurred and be continuing that, with the passage of time or the giving of
notice or both, would permit any holder or holders of such Debt, any trustee or
agent acting on behalf of such holder or holders or any other Person so to
accelerate such maturity or require any such prepayment;
47
(e) A default shall occur and be continuing under any Contract
(other than a Contract relating to Debt to which clause (d) of this Section 7.1
is applicable) binding upon the Borrower or any of its Subsidiaries, except such
a default that, together with all other such defaults, has not had and will not
have a Materially Adverse Effect on (i) the Borrower and its Subsidiaries, taken
as a whole, (ii) the Loan Documents or (iii) the Security Interest;
(f)(i) The Borrower or any of its Subsidiaries shall (A)
commence a voluntary case under the Federal bankruptcy laws (as now or hereafter
in effect), (B) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts, (C) consent to, or fail to contest in
a timely and appropriate manner, any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (D) apply for, or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of a substantial part of its assets, domestic or foreign, (E) admit in
writing its inability to pay, or generally not be paying, its debts (other than
those that are the subject of bona fide disputes) as they become due, (F) make a
general assignment for the benefit of creditors, or (G) take any corporate
action for the purpose of effecting any of the foregoing; or
(ii) A case or other proceeding shall be commenced against the
Borrower or any of its Subsidiaries in any court of competent
jurisdiction seeking (A) relief under the Federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up
or adjustment of debts, or (B) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower or any of its
Subsidiaries, or of all or any substantial part of the assets, domestic
or foreign, of the Borrower or any such Subsidiary, and, in each case,
such case or proceeding shall continue undismissed or unstayed for a
period of 60 days, or an order granting the relief requested in such
case or proceeding against the Borrower or any such Subsidiary
(including, but not limited to, an order for relief under such Federal
bankruptcy laws) shall be entered;
(g) (i) A judgment or order for the payment of money in an
amount that individually, or when aggregated with all other unpaid judgments
outstanding against the Borrower and its Subsidiaries, exceeds $200,000 shall be
entered against the Borrower or any of its Subsidiaries by any court, and (ii)
either (A) such judgment or order shall continue undischarged and/or unbonded or
unstayed for a period of 30 days or (B) enforcement proceedings shall have been
commenced upon such judgment or order;
(h) (i) Any Termination Event shall occur, (ii) any Person
shall engage in any Prohibited Transaction involving any Plan, (iii) any
Accumulated Funding Deficiency, whether or not waived, shall exist with respect
to any Plan, (iv) the Borrower or any ERISA Affiliate of the Borrower shall be
in "default" (as defined in ERISA Section 4219(c)(5)) with respect to payments
owing to a multiemployer plan (as defined in ERISA Section 4001(a)(3)) as a
result of the Borrower's or such ERISA Affiliate's
48
complete or partial withdrawal (as described in ERISA Section 4203 or 4205) from
such Plan, (v) the Borrower or any ERISA Affiliate shall fail to pay when due
any amount that is payable by it to the PBGC or to a Plan under Title IV of
ERISA, (vi) a proceeding shall be instituted by a fiduciary of any Plan against
the Borrower or any ERISA Affiliate to enforce ERISA Section 515 and such
proceeding shall not have been dismissed within 30 days thereafter, or (vii) any
other event or condition shall occur with respect to a Plan, except that no
event or condition referred to in any of the clauses (i) through (vii) shall
constitute an Event of Default if it, together with all other events or
conditions at the time existing, has not subjected, or in the reasonable
determination of the Required Lenders would not subject, the Borrower or any of
its Subsidiaries to any Liability that, alone or in the aggregate with all such
Liabilities, would have a Materially Adverse Effect on the Borrower and its
Subsidiaries taken as a whole;
(i) The Security Interest shall cease to be fully perfected,
enforceable in accordance with its terms, and prior to the rights of any third
party in respect of any portion of the Collateral (except for Permitted Liens);
(j) Any material provision of any Loan Document, or any
portion of any obligation for the payment of money under any Loan Document shall
cease to be in full force and effect, or the Borrower or any of its Subsidiaries
or Affiliates shall so assert in writing or bring any action challenging the
enforceability or binding effect of any of the foregoing or of the Security
Interest or the priority of the Security Interest;
(k) A default or "Event of Default" as defined in any Loan
Document shall have occurred and be continuing;
(l) An event, condition or circumstance shall occur or exist
having a Materially Adverse Effect with respect to the Borrower and its
Subsidiaries, taken as a whole, or on this Agreement, the other Loan Documents,
the Security Interest or the Obligations; or
() There shall occur any Change of Control.
Section 7.2 Remedies upon Event of Default. (a) Upon the occurrence and
during the continuance of any Event of Default (other than one specified in
Section 7.1(f)) and in every such event, the Agent, if requested by the Required
Lenders, upon notice to the Borrower, may do any or all of the following: (i)
declare, in whole or, from time to time, in part, the Obligations to be, and the
Obligations shall thereupon become, due and payable to the Agent, the Letter of
Credit Issuers and the Lenders, (ii) demand in writing that the Borrower deliver
to the Agent at once and in full, an amount sufficient to reimburse the Agent,
the Letter of Credit Issuers and the Lenders for all outstanding Letter of
Credit
49
Obligations, which amount shall become immediately due and payable by the
Borrower, and to the extent paid by the Borrower shall constitute a prepayment
under this Agreement, (iii) deliver, or cause the applicable Letter of Credit
Issuer to deliver, notice to any Letter of Credit beneficiary of such Event of
Default and require the Letter of Credit beneficiary to draw upon the applicable
Letter of Credit and to take other action as may be appropriate under the terms
of such Letter of Credit, (iv) terminate, in whole or, from time to time, in
part each Lender's Commitments, the Agent's and the Letter of Credit Issuers'
obligations hereunder and (v) exercise, or direct any Letter of Credit Issuer to
exercise, any rights or remedies provided herein, in any other Loan Document or
otherwise.
(a) Upon the occurrence of an Event of Default specified in
Section 7.1(f), automatically and without any notice to the Borrower, (i) the
Obligations shall be due and payable, including, without limitation, all
outstanding Letter of Credit Obligations, (ii) each Lender's Commitments shall
terminate, (iii) the Agent's and the Letter of Credit Issuers' obligations to
the Borrower hereunder shall terminate and (iv) the Agent, if requested by the
Required Lenders, or any Letter of Credit Issuer, if directed by the Agent, may
take such other actions as permitted to it hereunder, under any other Loan
Document or otherwise.
(b) Presentment, demand, protest or notice of any kind (other
than the notice provided for in the first sentence of this Section 7.2) are
hereby expressly waived. The remedies specified in this Section shall be in
addition to and not in limitation of the remedies set forth elsewhere herein and
in the other Loan Documents, existing at law or in equity.
50
8.
CHANGES IN CIRCUMSTANCES
Section 8.1 Mandatory Suspension and Conversion of Eurodollar Rate
Loans. Any Lender's obligations to make or continue Loans as, or to convert
Loans into, Eurodollar Loans shall be suspended, all outstanding Eurodollar
Loans shall be converted on the last day of their applicable Interest Periods
(or, if earlier, in the case of clause (b) below, on the last day such Lender
may lawfully continue to maintain Loans of that Type or, in the case of clause
(c) below, the day determined by such Lender to be the last Business Day before
the effective date of the applicable restriction) into, and all pending requests
for the making or continuation of or conversion, into Loans of that Type shall
be deemed requests for, Base Rate Loans, if:
(a) on or prior to the determination of an interest rate for a
Eurodollar Loan for any Interest Period, the Agent reasonably determines that
for any reason the Eurodollar Rate cannot be determined as provided herein, or
any Lender shall reasonably determine that such Rate would not accurately
reflect the cost to such Lender of making or continuing a Loan as, or converting
a Loan into, a Eurodollar Loan for such Interest Period;
(b) at any time such Lender reasonably determines that any
Regulatory Change makes it unlawful or impracticable for such Lender to make or
maintain any Eurodollar Loan, or to comply with its obligations hereunder in
respect thereof; or
(c) such Lender reasonably determines that by reason of any
Regulatory Change it is restricted, directly or indirectly, in the amount that
it may hold of (A) a category of liabilities that includes deposits by reference
to which, or on the basis of which, the interest rate applicable to Eurodollar
Loans is directly or indirectly determined, or (B) the category of assets which
includes Eurodollar Loans.
The Agent or any such Lender, as the case may be, shall promptly notify the
Borrower and the other parties to this Agreement of any circumstances that would
make the provisions of this Section 8.1 applicable, but the failure to give any
such notice shall not affect such Lender's rights hereunder.
Section 8.2 Regulatory Changes. (a) If any Regulatory Change:
(i) shall subject the Agent, any Letter of Credit Issuer or
any Lender to any Tax, duty or other charge reasonably determined by
the Agent, such Letter of Credit Issuer or such Lender, as the case may
be, to be applicable to any Extension of Credit, to its obligation to
make or maintain any such Extension of Credit, or to this Agreement,
any Note or any other Loan Document, or shall, in the reasonable
51
determination of the Agent, or any Lender, as the case may be, change
the basis of taxation of payments to such Lender or the Agent on the
principal of or interest on any Eurodollar Loan or of any other amounts
payable under this Agreement in respect of any Eurodollar Loan or its
obligation to make or maintain any Eurodollar Loan; or
(ii) shall impose, increase, modify or deem applicable any
reserve, special deposit, assessment, or other requirement or condition
against assets of, deposits with or to the account of, Extensions of
Credit by, or the Commitment or obligations of, any Lender, any Letter
of Credit Issuer or the Agent, or shall impose on the Agent or such
Lender or on any relevant interbank market for Dollars, any condition;
and the result of the foregoing, in the reasonable determination of the Agent,
such Letter of Credit Issuer or such Lender, as the case may be, is (x) to
reduce the amount of any sum received or receivable by such Lender with respect
to any Eurodollar Loan or the return to be earned by the Agent, such Letter of
Credit Issuer, or such Lender on any Extension of Credit, (y) to impose a cost
or increase any existing cost on the Agent, such Letter of Credit Issuer, or
such Lender, as the case may be, or any parent company of the Agent, such Letter
of Credit Issuer, or such Lender, that is attributable to the making or
maintaining of any Extension of Credit or its Commitment or its obligation to
make any Extension of Credit, or (z) to require the Agent, such Letter of Credit
Issuer, or such Lender, or any parent company of the Agent, such Letter of
Credit Issuer, or such Lender, to make any payment on or calculated by reference
to the gross amount of any amount received by it hereunder, under any Loan
Document or under any Note, then, within 15 days after request by the Agent,
such Letter of Credit Issuer, or such Lender, the Borrower shall pay to the
Agent, such Letter of Credit Issuer, or such Lender such additional amount or
amounts as the Agent, such Letter of Credit Issuer, or such Lender reasonably
determines will compensate it, or its parent company, for such reduction,
increased cost or payment. The Agent, such Letter of Credit Issuer, or any such
Lender, as the case may be, will promptly notify the Borrower of any Regulatory
Change of which it has knowledge and that will entitle the Agent, such Letter of
Credit Issuer, or such Lender to compensation pursuant to this Section 8.2, but
the failure to give such notice shall not affect the Agent, such Letter of
Credit Issuer, or such Lender's right to such compensation.
(b) If after the date hereof the Agent, any Letter of Credit
Issuer, or any Lender shall have reasonably determined that the adoption or
implementation of any applicable law, rule or regulation regarding capital
adequacy, or any change therein or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by it (or its Applicable Lending Office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Person (or its parent) as a consequence of
such Person's obligations
52
hereunder or obligations held by it, including, without limitation its
Commitments, Loans and participation interests in Letters of Credit to a level
below that which such Person (or its parent) could have achieved but for such
adoption, change or compliance (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 15 days after demand by such Person (with a copy
to the Agent), the Borrower shall pay to such Person such additional amount or
amounts as will compensate such Person (or its parent) for such reduction.
Section 8.3 Change of Lending Office. Any Lender will, if an event
occurs with respect to a Lending Office that makes Section 8.1 or 8.2
applicable, and if requested by the Borrower, use reasonable efforts to
designate another Lending Office or Offices, provided that such designation
would not, in the sole and absolute discretion of such Lender, be
disadvantageous to such Lender in any manner or contrary to such Lender's
policy. Any Lender may at any time and from time to time change any Lending
Office and shall give notice of any such change to the Borrower. Except in the
case of a change in Lending Offices made at the request of the Borrower, the
designation of a new Lending Office by a Lender shall not make operable the
provisions of clause (ii) or (iii) of Section 8.1 or entitle such Lender to make
a claim under Section 8.2 if the operability of such clause or such claim
results solely from such designation and not from a subsequent Regulatory
Change.
Section 8.4 Funding Losses. The Borrower shall pay to the Agent and
each Lender, upon request, such amount or amounts as such Person determines are
necessary to compensate it for any loss, cost or expense incurred by it as a
result of (i) any payment, prepayment, conversion or continuation of a
Eurodollar Loan on a date other than the last day of an Interest Period for such
Eurodollar Loan or (ii) a Eurodollar Loan for any reason not being made or
converted after the Borrower shall have given a Notice of Borrowing, or any
payment of principal of or interest thereon not being made on the date therefor
determined in accordance with the applicable provisions of this Agreement, in
each case whatever the reason for such event, including, without limitation, the
operation of Sections 1.6, 1.7, 7.2 or otherwise. In the case of a Eurodollar
Loan, at the election of such Lender, and without limiting the generality of the
foregoing, but without duplication, such compensation on account of losses
referred to in (i) and (ii) above may include an amount equal to the excess of
(x) the interest that would have been received from the Borrower under this
Agreement on any amounts to be reemployed during an Interest Period or its
remaining portion over (y) the interest component of the return that such Lender
determines it could have obtained had it placed such amount on deposit in the
London interbank market for a period equal to such Interest Period or its
remaining portion.
Section 8.5 Determinations. In making the determinations contemplated
by Sections 8.1, 8.2 and 8.4, the Agent, the Letter of Credit Issuers, and the
Lenders may make such reasonable estimates, assumptions, allocations and the
like that they, in good faith, reasonably determine to be appropriate, but a
Lender's, the Letter of Credit Issuers' or the Agent's selection thereof in
accordance with this Section 8.5, and the determinations made by a Lender, the
Letter of Credit Issuers, or the Agent on the basis thereof, shall be presumed
correct absent convincing evidence to the contrary. Any such Lender, Letter of
Credit Issuer or the Agent, as the case may be, shall furnish to the Borrower
53
upon request a certificate outlining in reasonable detail the computation of any
amounts claimed by it under this Article VIII and the assumptions underlying
such computations.
54
9.
THE ADMINISTRATIVE AGENT AND THE LETTER OF CREDIT BANKS
Section 9.1 Appointment and Authorization.
(a) Each Lender irrevocably appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement, the Notes, the Security Documents and the Letters of Credit as
are delegated to the Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto.
(b) Each Lender irrevocably authorizes each Letter of Credit
Issuer to issue the Letters of Credit as provided in this Agreement, and to take
all other actions specifically delegated to it under this Agreement and the
Reimbursement Agreements to which it is a party and as are reasonably incidental
thereto.
Section 9.2 Agent and Affiliates; Letter of Credit Issuer and
Affiliates. (a) GECC shall have the same rights and powers under this Agreement
and the Loan Documents as any other Lender and may exercise or refrain from
exercising the same as though it were not the Agent and GECC and its affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower, or any Subsidiary or Affiliate of the Borrower as if
it were not the Agent hereunder.
(b) Each Letter of Credit Issuer, acting in its individual
capacity, shall have the same rights and powers under this Agreement and the
other Loan Documents, and may exercise, or refrain from exercising such rights
as though it were not a Letter of Credit Issuer hereunder, and its affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
it were not a Letter of Credit Issuer hereunder.
Section 9.3 Action by Agent and Letter of Credit Issuer. The respective
obligations hereunder of the Agent and of the Letter of Credit Issuers are only
those expressly set forth herein. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect to
any Default, except as requested by the Required Lenders. The Agent and the
Letter of Credit Issuers shall in all cases be fully protected in acting or in
refraining from acting hereunder and under the other Loan Documents in
accordance with the written instructions signed by the Required Lenders and each
such instruction and any action taken or any failure to act pursuant thereto
shall be binding on all of the parties thereto, their successors and assigns.
Neither the Agent nor any Letter of Credit Issuer shall have any duty to
exercise any right, power or remedy hereunder or under any of the other Loan
Documents or to take any affirmative action hereunder or under any of the other
Loan Documents unless directed to do so by the Required Lenders and unless first
indemnified by the Lenders to its satisfaction against the costs and expenses of
taking such action.
Section 9.4 Consultation with Experts. Each of the Agent and the Letter
of Credit Issuers may consult with legal counsel (who may be counsel for the
Borrower), independent public
55
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it hereunder or under the other Loan
Documents in good faith in accordance with the advice of such counsel,
accountants or experts.
Section 9.5 Liability of the Agent and Letter of Credit Issuers. None
of the Agent, any Letter of Credit Issuer, or any of their respective directors,
officers, agents, or employees shall be liable for any action taken or not taken
by it in connection herewith (i) with the consent or at the request of the
Required Lenders or (ii) in the absence of its own gross negligence or willful
misconduct. None of the Agent, any Letter of Credit Issuer, or any of their
respective directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any statement, warranty
or representation made by or on behalf of the Borrower in connection with this
Agreement, any of the other Loan Documents or any Extension of Credit hereunder;
(ii) the performance or observance of any of the covenants or agreements of the
Borrower or the Guarantors; (iii) the satisfaction of any condition specified in
Article III, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of this Agreement, the Notes,
any Letter of Credit, any Reimbursement Agreement, any Security Document or any
other instrument or writing furnished in connection herewith or therewith or the
Security Interest, or any filing in connection therewith. Neither the Agent nor
any Letter of Credit Issuer shall incur any liability by acting in reliance upon
any notice, consent, certificate, statement, or other writing (which may be a
bank wire, telex or similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
Section 9.6 Indemnification. Each Lender shall, ratably based upon its
Proportionate Share of the Commitments, indemnify the Agent and each Letter of
Credit Issuer, to the extent not reimbursed by the Borrower, against any cost,
expense (including counsel fees and disbursements), claim, demand, action, loss
or liability (except such as results from the Agent's or such Letter of Credit
Issuer's, as the case may be, gross negligence or willful misconduct) that the
Agent or such Letter of Credit Issuer, as the case may be, may suffer or incur
in connection with this Agreement or any of the other Loan Documents or any
action taken or omitted hereunder or under any of the other Loan Documents by
the Agent or such Letter of Credit Issuer.
Section 9.7 Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, any Letter of Credit Issuer
or any other Lender, and based on such documents and information as it has
deemed appropriate (but without reliance upon the Agent's information memorandum
circulated by the Agent to the Lenders), made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent, any Letter of Credit
Issuer 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 any action under this Agreement or the other Loan
Documents.
Section 9.8 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Letter of Credit Issuers, the Lenders and the
Borrower. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent, which successor, or its parent company,
shall have its long term debt securities rated "A" or better (or the equivalent)
by
56
S&P's or Xxxxx'x, or another nationally recognized securities rating firm. If no
such successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent's giving
of notice of resignation, or the Required Lenders' removal then the retiring
Agent may, on behalf of the Lenders, appoint a successor meeting the
requirements set forth in the immediately preceding sentence. Upon the
acceptance of its appointment hereunder, such successor shall thereupon succeed
to and become vested with all the rights and duties of the retiring Agent and
the retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Loan Documents. After any retiring Agent's resignation or
removal hereunder, the provisions of this Article shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent.
Section 9.9 Security Documents, Etc.
(a) The Letter of Credit Issuers and the Lenders hereby
authorize the Agent to enter into each of the Security Documents and to take all
action contemplated thereby. All rights and remedies under the Security
Documents may be exercised by the Agent for the benefit of (i) the Agent, the
Letter of Credit Issuers and the Lenders, and (ii) the Agent, the Letter of
Credit Issuers and the Lenders. The Agent may assign its rights and obligations
under any of the Security Documents to any affiliate thereof or to any trustee,
which assignee in each such case shall be entitled to all the rights of the
Agent under the applicable Security Document and all rights hereunder of the
Agent with respect to the applicable Security Document.
(b) Except as provided in Section 11.5 with respect to
releasing Collateral, in each circumstance where, under any provision of any
Security Document, the Agent shall have the right to grant or withhold any
consent, exercise any remedy, make any determination or direct any action by the
Borrower under such Security Document, the Agent shall act in respect of such
consent, exercise or remedies, determination or action, as the case may be, with
consent of and at the direction of the Required Lenders; provided, however, that
no such consent of the Required Lenders shall be required with respect to any
consent, determination or other matter that is, in the Agent's judgment,
non-material, ministerial or administrative in nature. In each circumstance
where any consent of or direction from the Required Lenders is required, the
Agent shall notify the Lenders in reasonable detail of the matter as to which
consent or direction is required and the Agent's proposed course of action with
respect thereto. In the event the Agent shall not have received a response from
any Lender within three Business Days after receipt of such written notice, such
Lender shall be deemed to have agreed to the course of action proposed by the
Agent.
57
10.
INTERPRETATION
Section 10.1 Interpretation.
(a) Defined Terms. For the purposes of this Agreement:
"ACCEPTABLE INSURER" means an insurance company (i) having an
A.M. Best rating of "A" or better and being in a financial size category of X or
larger (as such category is defined as of the date hereof) or (ii) otherwise
reasonably acceptable to the Required Lenders.
"ACCOUNT" means any right of the Borrower to payment for goods
sold or leased, or for services rendered, by the Borrower that is not evidenced
by an instrument or chattel paper.
"ACQUISITION" means (i) the purchase by Borrower from Glaxo
Wellcome Inc. of the trademarks, know-how, regulatory filings and related
documentation, tradedress (if any) and certain finished good inventory relating
to the Septra(r), Proloprim(r), Mantadil(r), Kemadrin(r), and Pro-Kemadrin
product lines in the United States, its territories and possessions; (ii) the
purchase by Borrower from Glaxo Wellcome Inc. of the know-how, regulatory
filings and related documentation, tradedress (if any) and certain finished good
inventory relating to the prescription formulations of Neosporin(r) and
Polysporin(r); and (iii) the assignment to Borrower from Glaxo Wellcome Inc. of
Glaxo Wellcome Inc.'s right, title and interest in and to the trademarks for
Neosporin(r) and Polysporin(r) in the prescription field as such right, title or
interest existed under that certain Trademark, Patent, Copyright and Know-How
License Agreement dated June 30, 1996 between Xxxxxx-Xxxxxxx Company and Glaxo
Wellcome Inc.
"ACCUMULATED FUNDING DEFICIENCY" has the meaning ascribed to
that term in Section 302 of ERISA.
"ADJUSTED EURODOLLAR RATE" means for any Interest Period a
rate per annum (rounded upward, if necessary to the next higher 1/16 of 1%)
equal to the rate obtained by dividing (a) the Eurodollar Rate (similarly
rounded) for such Interest Period by (b) a percentage equal to 1 minus the
Reserve Requirement in effect from time to time during such Interest Period.
58
"AFFILIATE" means any Person (other than the Borrower) (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Borrower, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Borrower, (iii) of which the Borrower or its Subsidiaries or Shareholders
beneficially own or hold 5% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 5% or more of the equity interest), or (iv)
who is a member of the Board of Directors of the Borrower or a member of the
immediate family of any such Person. The term "immediate family" of any Person
shall include the spouse, brothers, sisters and descendants of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"AGENT" means GECC.
"AGENT'S ACCOUNT" means, an account of the Agent, the writing
instructions for which are as follows:
Bankers Trust Company
Xxx Xxxxxxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA # 000-000-000
Acct. Name: GECC/CAFDepository
Acct. #: 00-000-000
Re: CFA 4632 King Pharmaceuticals
Attention: Xxxxx Xxxxxxx
and/or any account specified by the Agent to the Lenders from time to time.
"AGENT'S OFFICE" means the address of the Agent specified in
or determined in accordance with the provisions of Section 11.1.
"AGREEMENT" means this Agreement.
"AGREEMENT DATE" means the date as of which this Agreement is
dated.
"APPLICABLE LAW" means, anything in Section 11.8 to the
contrary notwithstanding, (i) all applicable common law and principles of equity
and (ii) all applicable provisions of all (A) constitutions, statutes, rules,
regulations and orders of governmental bodies, (B) Governmental Approvals and
(C) orders, decisions, judgments and decrees of all courts and arbitrators.
59
"APPLICABLE MARGIN" means, (i) from the Closing Date, until
the first date upon which the Applicable Margin shall begin to adjust pursuant
to clause (ii) below, the Applicable Margins for any Class and Type of Loan
shall be the Margin set forth below for such Class and Type of Loan:
REVOLVING LOANS TERM LOANS
BASE RATE MARGIN EURODOLLAR MARGIN BASE RATE MARGIN EURODOLLAR MARGIN
0.00 2.25 0.50 2.75
and, (ii) beginning on the date following the first anniversary of the Agreement
Date that is five Business Days following the Agent's receipt of financial
statements from the Borrower pursuant to Section 6.1(b) or (c) and continuing on
the date that is five business days following each subsequent receipt by the
Agent of financial statements from the Borrower pursuant to Section 6.1(b) or
(c), the Applicable Margin for any Class and Type of Loan shall adjust to the
percentage set forth below for such Class and Type of Loan opposite the
applicable Consolidated Leverage Ratio for the most recently ended fiscal
quarter of the Borrower as such ratio is determined from such financial
statements:
REVOLVING LOANS
IF THE LEVERAGE RATIO IS: Base Rate Margin Eurodollar Margin
< 1.75x -0.50% 1.75%
< 2.25X, but > 1.75x -0.25% 2.00%
-
<2.75X, but > 2.25x 0% 2.25%
-
> 2.75x 0.25% 2.50%
-
TERM LOANS
IF THE LEVERAGE RATIO IS: Base Rate Margin Eurodollar Margin
< 1.75x 0% 2.25%
< 2.25X, but > 1.75x 0.25% 2.50%
-
<2.75X, but > 2.25x 0.50% 2.75%
-
> 2.75x 0.75% 3.00%
Notwithstanding the foregoing, so long as a Default shall have occurred and be
continuing, the Applicable Margins shall be the highest rates specified above.
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"APPLICABLE PERCENTAGE" means, (i) from the Closing Date,
until the first date upon which the Applicable Percentage shall begin to adjust
pursuant to clause (ii) below, 2.25%, and (ii) beginning on the date following
the first anniversary of the Agreement Date that is five Business Days following
the Agent's receipt of financial statements from the Borrower pursuant to
Section 6.1(b) or (c) and continuing on the date that is five business days
following each subsequent receipt by the Agent of financial statements from the
Borrower pursuant to Section 6.1(b) or (c), the Applicable Percentage shall
adjust to the percentage set forth below opposite the applicable Consolidated
Leverage Ratio for the most recently ended fiscal quarter of the Borrower as
such ratio is determined from such financial statements:
IF THE LEVERAGE RATIO IS : APPLICABLE PERCENTAGE
< 1.75X 1.75%
< 2.25X, but > 1.75X 2.00%
<2.75X, but > 2.25X 2.25%
> 2.75 2.50%
-
Notwithstanding the foregoing, so long as a Default shall have occurred and be
continuing, the Applicable Percentage shall be the highest rate specified above.
"BASE RATE" means for any day, a floating rate per annum equal
to the higher of (i) the rate publicly quoted from time to time by The Wall
Street Journal as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Base Rate
shall take effect at the time of such change in the Base Rate. The Base Rate is
a reference rate only and is not necessarily the lowest rate offered by the
Lenders to their customers.
"BASE RATE LENDING OFFICE" of a Lender means the branch or
office designated by such Lender from time to time as the branch or office of
such Lender at which Base Rate Loans are to be made and maintained. Each
Lender's initial Base Rate Lending Office is set forth on the signature pages
hereof.
"BASE RATE LOAN" means a Loan, the interest on which is, or is
to be, as the context may require, computed, as provided in Section 1.4(a), on
the basis of the Base Rate.
"BASE RATE REVOLVING NOTE" means a promissory note of the
Borrower in the form attached hereto as Exhibit A-2 payable to the order of a
Lender and evidencing such Lender's Revolving Loans that are Base Rate Loans.
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"BASE RATE TERM NOTE" means a promissory note of the Borrower
in the form attached hereto as Exhibit B-2 payable to the order of a Lender and
evidencing such Lender's Term Loans that are Base Rate Loans.
"BORROWING" means the aggregation of the Loans of a particular
Class and Type made by more than one Lender pursuant to a single Notice of
Borrowing on a single date and, if such Loans are Eurodollar Loans, for a single
Interest Period. A Borrowing is a "Base Rate Borrowing" if such Loans are Base
Rate Loans or a "Eurodollar Borrowing" if such Loans are Eurodollar Loans.
"BORROWING BASE" means, at any date, an amount equal to the
sum of (i) 70% of Customer Trade Accounts, plus (ii) 65% of Net Pharmaceutical
Inventory, in each case ((i) and (ii)) as shown on the most recent Borrowing
Base Certificate delivered by the Borrower to the Agent pursuant to Section
6.1(c)(v), minus (iii) the amount of any reasonable reserve against availability
established by the Agent and the Required Lenders from time to time in their
good faith discretion.
"BORROWING BASE CERTIFICATE" means a certificate of the
Borrower in the form of Schedule 6.1(c)(v).
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which banks in New York, New York are required or authorized to
close and, if the applicable Business Day relates to any Eurodollar Loan, on
which commercial banks are open for international business (including dealings
in Dollar deposits) in London.
"CAPITAL LEASE" means a lease giving rise to a Capitalized
Lease Obligation.
"CAPITAL SECURITIES" means, with respect to any Person, any
shares of capital stock of such Person or any security convertible into, or any
option, warrant or other right to acquire, any shares of capital stock of such
Person.
"CAPITALIZED LEASE OBLIGATION" means indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with Generally Accepted Accounting Principles.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time and in
effect.
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"CHANGE IN CONTROL" means, (i) prior to the IPO, any event,
transaction or occurrence as a result of which (A) the Borrower's stockholders
on the Agreement Date shall cease to own and control all of the economic and
voting rights associated with ownership of at least 80% of the outstanding
Capital Securities of all classes of Borrower on a fully diluted basis, or (B)
Borrower shall cease to own and control all of the economic and voting rights
associated with all of the outstanding Capital Securities of each of its
Subsidiaries and, (ii) following the IPO, (A) any person or group of persons
(within the meaning of the Securities Exchange Act of 1934, as amended) 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, as amended) of 20% or more of the issued and outstanding shares of Capital
Securities of Borrower having the right to vote for the election of directors of
Borrower under ordinary circumstances; (B) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new directors
whose election by the board of directors of Borrower or whose nomination for
election by the stockholders of Borrower 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 elections 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, or (C) Borrower shall
cease to own and control all of the economic and voting rights associated with
all of the outstanding Capital Securities of each of its Subsidiaries.
"CLASS" has the meaning ascribed to it in Section 10.3.
"CLOSING DATE" means the date on which the initial Extension
of Credit is made.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means the property covered by the Mortgage and
the other Security Documents and any other property, real or personal, tangible
or intangible, now existing or hereafter acquired, that may at any time be or
become subject to a security interest or Lien in favor of Agent, on behalf of
itself, the Letter of Credit Issuers and Lenders, to secure the Obligations.
"COMMITMENT" means, (i) with respect to each Lender, a Term
Loan Commitment and/or a Revolving Credit Commitment and (ii) with respect to
any Letter of Credit Issuer, its commitment to issue a Letter of Credit; and
"Commitments" means any two or more of the foregoing, or, with respect to a
commitment to make Loans of any Class or to purchase participations in Letters
of Credit, the Commitments of all Lenders to make such Loans or to purchase such
participations.
"COMMITMENT FEE" means any of the amounts payable with respect
to a Commitment pursuant to Section 1.5.
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"COMMITMENT PERCENTAGE" means, with respect to any Lender's
Commitment of any Class, the percentage of all of the Lenders' Commitments of
such Class set forth opposite such Lender's name on the signature pages hereof.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate amount, of expenditures (including the portion of Capitalized Lease
Obligations incurred during such period) by the Borrower and its Subsidiaries
during that period that, in conformity with Generally Accepted Accounting
Principles, are included in "capital expenditures", "additions to property,
plant and equipment" or comparable items in the statement of cash flows of the
Borrower and its Subsidiaries.
"CONSOLIDATED CASH INTEREST EXPENSE" shall mean, for any
fiscal period of Borrower, that portion of Consolidated Interest Charges paid in
cash.
"CONSOLIDATED DEBT" means the sum of all Debt of the Borrower
and the Subsidiaries as consolidated in accordance with Generally Accepted
Accounting Principles, after elimination of all intercompany items.
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net
Income for such period, plus all amounts deducted in determining such
Consolidated Net Income for such period for deprecation expense, amortization
and income tax expense, plus Consolidated Interest Charges.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means the ratio,
calculated on the last day of any fiscal quarter for the number of consecutive
fiscal quarters then most recently ended since the Closing Date (considered as a
single accounting period, but not to exceed four quarters), of: (i) Consolidated
Free Cash Flow for the period ended on the last day of such fiscal quarter, to
(ii) the sum of: (A) Consolidated Interest Charges for such period plus (B)
scheduled payments of principal on Consolidated Funded Debt for such period.
"CONSOLIDATED FREE CASH FLOW" means, for any period,
Consolidated EBITDA for such period, less Consolidated Capital Expenditures for
such period, less all amounts paid in cash in respect of income taxes during
such period, but excluding, however, up to $1,000,000 paid in fiscal year 1998
in respect of the 1995 tax audit adjustment relating to the sale of 7.5/750
[HCBT]/[APAP] and 5.0/500 [HCBT]/[APAP] sold to Mallinchrodt Chemical, Inc.
"CONSOLIDATED FUNDED DEBT" means, at any time, that portion of
Consolidated Debt that is, or at the time of its incurrence was, repayable over
a term in excess of one year or renewable at the option of the Borrower or a
Subsidiary for such a term.
"CONSOLIDATED INTEREST CHARGES" means, for any period, the
aggregate amount of all interest on Debt (including payments in the nature of
interest under Capital Leases) that would, in accordance with Generally Accepted
Accounting Principles, be deducted in determining Consolidated Net Income for
such period.
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"CONSOLIDATED INTEREST COVERAGE RATIO" means the ratio,
calculated on the last day of any fiscal quarter for the number of consecutive
fiscal quarters then most recently ended since the Closing Date (considered as a
single accounting period, but not to exceed four quarters), of: (i) Consolidated
EBITDA for such period to (ii) the Consolidated Interest Charges for such
period.
"CONSOLIDATED NET INCOME," for any period, means the amount of
net income or net loss of the Borrower and its Subsidiaries, for such period
(taken as a cumulative whole) determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles after elimination of intercompany
items and portions of income attributable to minority interests in Subsidiaries
(until such earnings are received by the Borrower), provided, that there shall
be excluded:
(i) any extraordinary gains and any gains on the sale or
other disposition of investments or of fixed or capital assets, and any
taxes on such excluded gains;
(ii) the proceeds of any life insurance policy;
(iii) net earnings and losses of any Subsidiary accrued prior
to the date it became a Subsidiary;
(iv) net earnings and losses of any entity, substantially
all the assets of which have been acquired in any manner, that were
realized by such entity prior to the date of such acquisition;
(v) net earnings and losses of any entity (other than a
Subsidiary) with which the Borrower or a Subsidiary shall have
consolidated or that shall have merged into or with the Borrower or a
Subsidiary, that were realized by such entity prior to the date of such
consolidation or merger;
(vi) net earnings of any business entity in which the
Borrower or any Subsidiary has an ownership interest unless such net
earnings shall have actually been received by the Borrower or such
Subsidiary in the form of cash distributions;
(vii) any portion of the net earnings of any Subsidiary of
any other business entity (other than a Subsidiary of the Borrower) in
which the Borrower or any Subsidiary has an ownership interest, that
for any reason (other than the provisions of this Agreement or the
other Loan Documents) is unable to be dividended to the Borrower or any
other Subsidiary;
(viii) earnings resulting from any reappraisal, reevaluation
or write-up of assets;
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(ix) any deferred or other credit representing any excess of
the equity in any Subsidiary at the date of acquisition thereof over
the amount invested in such Subsidiary; and
(x) any gain arising from the acquisition of any Capital
Securities of the Borrower or any Subsidiary of the Borrower.
"CONSOLIDATED NET WORTH" means at any time the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries less any
amount included therein with respect to Mandatorily Redeemable Stock (except to
the extent deducted in determining such consolidated stockholders' equity), as
of such time.
"CONTRACT" means an indenture, agreement (other than this
Agreement and any other Loan Document), other contractual restriction, lease,
instrument (other than the Notes), certificate of incorporation or charter, or
bylaw.
"CREDIT PARTY" means the Borrower and any Subsidiary.
"CREDIT PARTY QUESTIONNAIRE" means a credit party
questionnaire in the form of Exhibit L, delivered by each Credit Party to the
Agent in connection with the Closing Date.
"CUSTOMER TRADE ACCOUNTS" means the aggregate amount shown on
the consolidated balance sheet of the Borrower of accounts in respect of sales
of pharmaceutical products by the Borrower and its Subsidiaries to customers in
the ordinary course of business, net of any amount shown on such balance sheet
as a deduction therefrom for reserves, adjustments or discounts or for
allowances for doubtful accounts, provided that there shall not be deducted from
such aggregate amount that portion of reserve maintained for returns that does
not exceed 25% of such aggregate amount.
"DEBT" of any Person means at any time, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable that arise in the ordinary
course of business but only if and so long as the same are payable on customary
trade terms, (iv) Capitalized Lease Obligations of such Person, (v) all
Mandatorily Redeemable Stock of such Person owned by any Person other than such
Person, a Wholly-Owned Subsidiary of such Person that has no Debt other than the
Obligations (the amount of any such Stock to be determined for this purpose as
the higher of the liquidation preference of and the amount payable upon
redemption or mandatory repurchase of such Stock), (vi) all obligations of such
Person to purchase securities or other property that arise out of or in
connection with the sale of the same or substantially similar securities or
property, (vii) all obligations of such Person, whether fixed or contingent, to
reimburse any other Person in respect of amounts paid under a letter of credit
or similar instrument, (viii) all obligations with respect to interest rate and
currency swaps and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency, except that
66
if any agreement relating to such obligations provides for the netting of
amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligations shall be the net amount thereof,
(ix) all of the foregoing of others secured by (or for which the holder of such
Debt has an existing right, contingent or otherwise, to be secured by) a Lien on
any asset of such Person, whether or not such Debt is assumed by such Person,
and (x) all of the foregoing of others Guaranteed by such Person.
"DEFAULT" means any condition or event that constitutes an
Event of Default or that with the giving of notice or lapse of time or both,
would, unless cured or waived, become an Event of Default.
"DEFAULT RATE" means a rate per annum equal to the Base Rate
as in effect from time to time, plus the Applicable Margin, plus 2%; provided
that, if the amount in default is a Eurodollar Loan and the due date is a day
prior to the last day of an Interest Period therefor, the "Default Rate" for
such Loan shall be (x) from such day through the last day of such Interest
Period, the rate applicable to such Loan for such Interest Period as provided in
Section 1.4(a), plus 2%, and (y) thereafter the Base Rate as in effect from time
to time, plus the Applicable Margin, plus 2%.
"DESIGNATED AMOUNT" means $15,000,000.
"DISBURSEMENT ACCOUNT" means an account (each a "Disbursement
Account" and collectively, the "Disbursement Accounts") at a bank acceptable to
Agent into which Agent shall, from time to time, deposit proceeds of Loans made
to Borrower, which on the Closing Date is described on Schedule 10(a) hereto.
"DOLLARS" and the sign "$" mean lawful money of the United
States of America.
"ENVIRONMENTAL LAWS" means all applicable federal, state or
local statutes, laws, ordinances, codes, rules and regulations (including
consent decrees and administrative orders) relating to public health and safety
and the protection of the environment.
"ENVIRONMENTAL LIABILITIES" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
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"ENVIRONMENTAL PERMITS" shall mean all permits, licenses,
authorizations, certificates, approvals, registrations or other written
documents required by any Governmental Authority under any Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"ERISA AFFILIATE" means a trade or business including, a
Subsidiary or other Affiliate, that is a member of any group of organizations
within the meaning of Code Sections 414(b),(c),(m) or (o) of which the Borrower
or any Guarantor is a member.
"EURODOLLAR LENDING OFFICE" of a Lender means the branch or
office designated by such Lender from time to time, as the branch or office of
such Lender at which Eurodollar Loans are to be made and maintained. Each
Lender's initial Eurodollar Lending Office is set forth on the signature pages
hereof.
"EURODOLLAR RATE" for each Interest Period, a rate of interest
determined by Agent equal to the offered rate for deposits in United States
Dollars for the applicable Interest Period which appears on Dow Xxxxx Markets
Page 3750 as of 11:00 a.m., London time, on the second full Business Day next
preceding the first day of such Interest Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be used)
(such rate to be adjusted to the nearest one sixteenth of one percent (1/16th of
1%) or, if there is not a nearest one sixteenth of one percent (1/16th of 1%),
to the next highest one sixteenth of one percent (1/16th of 1%). If such
interest rates shall cease to be available from Dow Xxxxx Markets, the
Eurodollar Rate shall be determined from such financial reporting service or
other information as shall be selected by the Agent.
"EURODOLLAR LOAN" means a Loan the interest on which is, or is
to be, as the context may require, computed, as provided in Section 1.4(a), on
the basis of the Adjusted Eurodollar Rate.
"EURODOLLAR REVOLVING NOTE" means a promissory note of the
Borrower in the form attached hereto as Exhibit A-1 payable to the order of a
Lender and evidencing such Lender's Revolving Loans that are Eurodollar Loans.
"EURODOLLAR TERM NOTE" means a promissory note of the Borrower
in the form attached hereto as Exhibit B-1 payable to the order of a Lender and
evidencing such Lender's Term Loans that are Eurodollar Loans.
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"EVENT OF DEFAULT" means any of the events specified in
Section 7.1.
"EXCESS CASH FLOW" shall mean, for any fiscal year of the
Borrower: (a) Consolidated EBITDA for such fiscal year, minus (b) the sum of (i)
Consolidated Cash Interest Expense for such fiscal year, plus (ii) all principal
payments made on Consolidated Funded Debt (other than Revolving Loans) during
such fiscal year, plus (iii) that portion of Capital Expenditures (including
Capital Lease Obligations) paid in cash during such fiscal year, plus (iv) any
amount deducted for income tax expense in determining Consolidated Net Income
that was paid in cash during such fiscal year, plus (c) any decrease in Working
Capital during such fiscal year, minus (d) any increase in Working Capital
during such fiscal year, plus (e) the cash portion of any extraordinary gains
during such fiscal year. For the purposes of this definition, "Working Capital"
shall mean the excess of Borrower's Current Assets over its Current Liabilities;
"Current Assets" shall mean all assets of Borrower that are or should be
classified as current on a consolidated balance sheet of Borrower prepared in
accordance with GAAP; and "Current Liabilities" shall mean all liabilities of
Borrower that are or should be classified as current on a consolidated balance
sheet of Borrower prepared in accordance with GAAP, but excluding the Revolving
Loans and the current portion of any other Funded Debt.
"EXISTING DEBT" means (i) Debt issued and outstanding on the
Agreement Date to the extent set forth in the financial statements delivered
pursuant to Section 6.2(a)(i) and on Schedule 4.9, (ii) Debt of a Person
outstanding at the time such Person becomes a Subsidiary of the Borrower but
only if such Debt was not incurred in contemplation thereof, and (iii) but only
if, immediately after giving effect thereto, no Default would exist, Debt that
(A) constitutes a renewal, extension or refunding of, but not an increase in the
principal amount of, Existing Debt that is such by virtue of clause (i) or (ii),
(B) is binding only on the obligor or obligors under the Existing Debt being
renewed, extended or refunded and (C) bears interest at a rate per annum that is
commercially reasonable at the time.
"EXISTING GUARANTY" means (i) a Guaranty outstanding on the
Agreement Date, to the extent set forth on Schedule 5.5, and (ii) but only if,
immediately after giving effect thereto, no Default would exist, a Guaranty that
(A) constitutes a renewal, extension or replacement of, but not an increase in
the principal amount or interest rate Guaranteed by (except for any increase in
interest rates that was commercially reasonable at the time of such increase),
of an Existing Guaranty that is such by virtue of clause (i), and (B) is binding
only on the obligor or obligors under the Guaranty being renewed, extended or
replaced.
"EXTENSION OF CREDIT" means any of the following: (i) a Loan,
(ii) the conversion of a Loan of one Type into a Loan of another Type, (iii) a
Letter of Credit and (iv) a participation interest in a Letter of Credit.
"FEDERAL FUNDS RATE" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight federal funds
transactions among members of the Federal Reserve System, as determined by
Agent.
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"FEE LETTER" means the Letter Agreement dated October 31, 1997
between GECC and the Borrower.
"GECC" means General Electric Capital Corporation, a New York
corporation, in its individual capacity.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means the
generally accepted accounting principles as in effect in the United States of
America as in effect from time to time, consistently applied throughout the
periods involved.
"GOVERNMENTAL APPROVAL" means an authorization, consent,
approval, license or exemption of, registration or filing with, or report or
notice to, any governmental body, including, without limitation, any such
approval required under ERISA or by the PBGC.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTOR" means any Subsidiary of the Borrower.
"GUARANTY" by any Person means any obligation, contingent or
otherwise, of such Person, directly or indirectly, guaranteeing any Liability of
any other Person, or in any manner providing for the payment of any Liability of
any other Person or otherwise protecting the holder of such Liability against
loss (whether by agreement to keep well, to purchase assets, goods, securities
or services, to take or pay, to reimburse for payments made under performance
letters of credit or otherwise). The term "Guarantee", used as a verb, has a
correlative meaning.
"GUARANTY AGREEMENT" means the Guaranty Agreement, from the
Guarantors to the Agent, for the benefit of the Agent, the Letter of Credit
Issuers and the Lenders, dated the Agreement Date and in the form of Exhibit E
hereto.
"HAZARDOUS MATERIAL" means (a) any "hazardous substance" as
defined by CERCLA; (b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act ; (c) any petroleum products; or (d) any
pollutant, contaminant or hazardous, dangerous or toxic chemical, material or
substance within the meaning of any other applicable federal, state or local
Environmental Law.
"IPO" means the sale by the Company of its common stock in an
initial registered offering pursuant to a firm commitment underwriting upon the
terms and conditions described in its Registration Statement on Form S-1 as
filed with the Securities and Exchange Commission on October 24, 1997.
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"INFORMATION" means written data, services, reports,
statements (including, but not limited to, financial statements delivered
pursuant to or referred to in Sections 6.1 and 6.2), opinions of counsel,
documents and other information, whether, in the case of any such in writing,
the same was prepared by the Borrower or any other Person on behalf of the
Borrower.
"INTEREST PAYMENT DATE" means the last Business Day of each
month commencing December 31, 1997.
"INTEREST PERIOD" means a period commencing on the date of the
making of such Loan and ending, at the election of the Borrower, on the same day
in the first, second, or third calendar month thereafter, except that (i) any
Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day, (ii) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month in which such Interest
Period ends) shall end on the last Business Day of a calendar month, and (iii)
no Interest Period in respect of Eurodollar Revolving Loans shall extend past
the Revolving Credit Commitment Termination Date or the Term Loan Commitment
Termination Date, as applicable.
"LENDING OFFICE" with respect to any Lender means such
Lender's Base Rate Lending Office or the Eurodollar Lending Office, or both, as
the context may require. For purposes of Section 8.1 and 8.2, references to any
"Lender" shall be deemed to include reference to such Lender's applicable
Lending Office.
"LENDERS" means the financial institutions, funds or banks
signatories hereto, as the same may be amended from time to time, any assignees
thereof as provided in Section 11.7(a).
"LETTER OF CREDIT" means a Letter of Credit issued pursuant to
Section 1.1(a)(i) and Section 2.1.
"LETTER OF CREDIT ISSUER" means a Lender selected by the
Borrower with the consent of the Agent to issue a Letter of Credit, or a
financial institution selected by the Agent with the consent of the Borrower.
"LETTER OF CREDIT ISSUER'S OFFICE" means the office of a
Letter of Credit Issuer specified pursuant to Section 11.1.
"LETTER OF CREDIT OBLIGATION" means, in respect of each Letter
of Credit, the undrawn face amount of such Letter of Credit, plus the aggregate
amount of all Reimbursement Obligations with respect thereto.
"LETTER OF CREDIT OBLIGATIONS" means the sum of all Letter of
Credit Obligations.
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"LETTER OF CREDIT REQUEST" has the meaning ascribed to it in
Section 2.2.
"LIABILITY", as applied to a Person, means and include all
obligations of such Person that in accordance with Generally Accepted Accounting
Principles, shall be classified upon the balance sheet of such Person as
liabilities.
"LIEN", as applied to the property or assets (or the income or
profits therefrom) of any Person, means (in each case, whether the same is
consensual or nonconsensual or arises by Contract, operation of law, legal
process or otherwise): any mortgage, lien, pledge, attachment, financing
statement, levy, charge, or other security interest or encumbrance of any kind
in respect of any property or assets of such Person, or upon the income or
profits therefrom. For this purpose, the Borrower, the Guarantors or any
Subsidiary shall be deemed to own subject to a Lien any asset that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease or other title retention agreement
relating to such asset.
"LIEN SUBORDINATION AGREEMENT" means the agreement between the
United Companies and the Agent pursuant to which the United Companies shall
subordinate their Lien on the Mortgaged Premises to the Liens under the Mortgage
on terms and conditions satisfactory to the Agent.
"LOAN" means a Revolving Loan or a Term Loan, as the context
may require.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, the Reimbursement Agreements, the Guaranty Agreement, the Fee Letter,
each Schedule to this Agreement and each document, instrument, certificate, and
opinion executed and delivered in connection with any of the foregoing.
"MANDATORILY REDEEMABLE STOCK" means, as applied to a Person,
any share of such Person's capital stock to the extent that it is redeemable,
payable or required to be purchased or otherwise retired or extinguished (i) at
a fixed or determinable date, whether by operation of a sinking fund or
otherwise, (ii) at the option of any Person other than such Person or (iii) upon
the occurrence of a condition not solely within the control of such Person, such
as a redemption required to be made out of future earnings.
"MATERIALLY ADVERSE EFFECT" means, (i) with respect to any
Person, a materially adverse effect on such Person's business, assets,
liabilities, financial condition, results of operations or business prospects,
(ii) with respect to a group of Persons "taken as a whole," a materially adverse
effect on such Persons' business, assets, liabilities, financial conditions,
results of operations or business prospects taken as a whole, if a consolidated
entity, on a consolidated basis in accordance with Generally Accepted Accounting
Principles, (iii) with respect to any Contract or any other obligation (other
than the Loan Documents), a materially adverse effect, as to the Borrower, upon
the binding nature, validity or enforceability thereof, (iv) with respect to
this Agreement and the other Loan Documents, an adverse effect, WHETHER OR NOT
MATERIAL, upon the binding nature, validity or enforceability of any provision
thereof or on the
72
obligations of the Borrower for the payment of money thereunder and (v) with
respect to the Security Interest, an adverse effect, WHETHER OR NOT MATERIAL,
upon the priority, perfection, validity or enforceability thereof against the
Borrower, or any other Person.
"MAXIMUM PERMISSIBLE RATE" means, with respect to interest
payable on any amount, the rate of interest on such amount that, if exceeded,
could, under Applicable Law, result in (i) civil or criminal penalties being
imposed on any Lender or (ii) any Lender being unable to enforce payment of (or
if collected, to retain) all or part of such amount or the interest payable
thereon.
"MONARCH" means Monarch Pharmaceuticals, Inc., a Tennessee
corporation.
"XXXXX'X" has the meaning ascribed to it in Section
5.13(c)(i).
"MORTGAGE" means, that certain Deed of Trust, Assignment of
Rents and Leases and Security Agreement from the Borrower to the Agent, dated
the Agreement Date, conveying all of the Borrower's right, title and interest in
and to the Borrower's manufacturing facilities located in Xxxxxxxx County, at
Bristol, Tennessee as security for the Obligations, in substantially the form of
Exhibit H.
"MORTGAGED PREMISES" means the Borrower's manufacturing
facilities located in Xxxxxxxx County, at Bristol, Tennessee.
"NET PHARMACEUTICAL INVENTORY" means the amount shown on the
consolidated balance sheet of the Borrower in accordance with Generally Accepted
Accounting Principals in respect of pharmaceutical inventory of the Borrower and
its Consolidated Subsidiaries, less any amounts shown thereon as deductions
thereto in respect of reserves or otherwise.
"NET PROCEEDS" means, with respect to the issuance or sale of
any security or asset, the proceeds of such sale or disposition, net of (A)
discounts, commissions and other reasonable and customary transaction costs,
fees and expenses properly attributable to such transaction and payable by
Borrower or any Subsidiary in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior
Liens (to the extent such Liens constitute Permitted Liens hereunder), if any,
and (D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith (such net amount, the "Net Proceeds"),.
"NOTE" means a Base Rate Revolving Note or a Eurodollar
Revolving Note, as the context may require.
"NOTICE OF BORROWING" has the meaning ascribed to it in
Section 1.2.
"OBLIGATIONS" mean all loans, fees, indebtedness, liabilities,
obligations, Letter of Credit Obligations, covenants and duties of the Borrower
to the Lenders, the Agent and the Letter of Credit Issuers of every kind, nature
and description, direct or indirect, absolute or contingent, due
73
or not due, in contract or tort, liquidated or unliquidated, arising under this
Agreement, or under the other Loan Documents, by operation of law or otherwise
in connection with the transactions contemplated hereby, now existing or
hereafter arising, and whether or not for the payment of money or the
performance or non-performance of any act, including, but not limited to, all
damages that the Borrower or any Subsidiary may owe to the Agent, any Letter of
Credit Issuer, and/or the Lenders by reason of any breach by the Borrower or any
Subsidiary of any representation, warranty, covenant, agreement or other
provision of this Agreement or any of the other Loan Documents.
"PATENTS" means patents, patent rights or licenses,
trademarks, trademark rights, trade names, trade name rights, copyrights, and
any other rights with respect to the foregoing.
"PATENT SECURITY AGREEMENT" means the Patent Security
Agreement between Monarch and the Agent, dated as of the Closing Date, in the
form of Exhibit K, and any similar agreement subsequently entered into between
the Agent, the Borrower or any Subsidiary.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED DEBT" means Debt permitted under Section 5.12.
"PERMITTED GUARANTY" means a Guaranty that is (i) an
endorsement of a negotiable instrument for collection in the ordinary course of
business and (ii) a Guaranty by any Subsidiary of the Borrower's obligations
hereunder.
"PERMITTED LIEN" means: (a) when used with respect to the
Borrower and its Subsidiaries (i) a Lien securing a tax, assessment or other
governmental charge or levy (excluding any Lien arising under any of the
provisions of ERISA), the claim of a materialman, mechanic, carrier,
warehouseman or landlord for labor, materials, supplies or rentals incurred in
the ordinary course of business, or a money judgment rendered by a court or
administrative tribunal, but in each case only if (A) such amount is not overdue
and payable or, in the case of a tax assessment or other governmental charge or
levy, if payment thereof shall not at the time be required to be made in
accordance with Section 5.1(v), (B) foreclosure, distraint, sale or other
similar proceedings shall not have been commenced or, if commenced, such
proceeding is being contested in good faith by appropriate action and any
execution in respect thereof has been bonded or stayed, and (C) such Lien,
together with all other such Liens, secures obligations that do not exceed
$100,000 in the aggregate; (ii) a Lien on the properties and assets of a
Subsidiary of the Borrower securing Debt owing to the Borrower; (iii) a Lien
consisting of a deposit or pledge made, in the ordinary course of business, in
connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance or similar legislation; (iv) a Lien
constituting an encumbrance in the nature of zoning restrictions, easements and
rights or restrictions of record on the use of real property that does not
materially detract from the value of such property or impair the use thereof in
the business of the Borrower or any Subsidiary; (v) a Lien existing on (A)
property of any Person at the time such Person becomes a Subsidiary or (B) any
asset prior to the acquisition thereof by the Borrower or a Subsidiary, but
only, in the case of either (A) or (B), if such Lien was not created in
contemplation thereof and so long as the obligation secured by such Lien
constitutes Permitted
74
Debt and is not in default and such Lien is and will remain confined to the
property subject to it at the time such Person becomes a Subsidiary or such
property is acquired and to fixed improvements thereafter erected on such
property; (vi) a Lien in existence on the Agreement Date to the extent set forth
on Schedule 4.7 hereto, but only, in the case of each such Lien, to the extent
it secures Existing Debt; (vii) a Lien securing Purchase Money Debt but only if,
in the case of each such Lien: (A) such Lien shall at all times be confined
solely to the asset the purchase price of which was financed through the
incurrence of the Purchase Money Debt secured by such Lien and to fixed
improvements then or thereafter erected on such asset; (B) such Lien attached to
such asset within 30 days of the acquisition of such property; and (C) the
aggregate principal amount of Purchase Money Debt secured by such Lien at no
time exceeds an amount equal to 90% of the lesser of (1) the cost (including the
principal amount of such Debt, whether or not assumed) to the Borrower or a
Subsidiary of the asset subject to such Lien and (2) the fair value of such
asset at the time of such acquisition; (viii) a Lien constituting a renewal,
extension or replacement of a Lien constituting a Permitted Lien by virtue of
clause (vi), (vii) or (viii) of this definition, but only, in the case of each
such renewal, extension or replacement Lien, to the extent that the principal
amount of indebtedness secured by such Lien does not exceed the principal amount
of such indebtedness so secured at the time of the extension, renewal or
replacement, and that such renewal, extension or replacement Lien is limited to
all or a part of the property that secured the Lien extended, renewed or
replaced and to fixed improvements then or thereafter erected on such property;
and (ix) a Lien arising pursuant to an order of attachment, distraint or similar
legal process arising in the execution or other enforcement thereof is not
unstayed for more than 20 days, and (b) when used with respect to Collateral
means "Permitted Liens" as defined in the Security Agreement or "Permitted
Encumbrances" as defined in the Mortgage, as the case may be that is applicable
thereto.
"PERMITTED RESTRICTIVE COVENANTS" means (i) any covenant or
restriction contained in this Agreement or any other Loan Document, (ii) any
covenant or restriction binding upon any Person at the time such Person becomes
a Subsidiary of the Borrower if the same is not created in contemplation
thereof, (iii) any covenant or restriction of the type contained in Section 5.6
that is contained in any Contract evidencing or providing for the creation of or
concerning Purchase Money Debt, and only to the extent that such covenant
extends only to the asset subject to the Permitted Lien securing such Debt, (iv)
any covenant or restriction contained in any Contract listed on Schedule 5.10,
but only to the extent such covenant or restriction is there identified by
specific reference to the relevant section or paragraph of such Contract and/or
(v) any covenant or restriction that (A) is not more burdensome than an existing
Permitted Restrictive Covenant that is such by virtue of clause (ii), (iii) or
(iv), (B) is contained in a Contract constituting a renewal, extension or
replacement of the Contract in which such existing Permitted Restrictive
Covenant is contained and (C) is binding only on the Person or Persons bound by
such existing Permitted Restrictive Covenant.
"PERSON" means an individual, corporation, partnership, trust
or unincorporated organization, a government or any agency or political
subdivision thereof.
"PLAN" means, at any time, any employee benefit plan
(including a multiemployer plan), the funding requirements of which (under
Section 302 of ERISA or Section 412 of the Code)
75
are, or at any time within six years immediately preceding the time in question
were, in whole or in part, the responsibility of the Borrower, any Guarantor or
an ERISA Affiliate.
"PLEDGE AGREEMENT" means the Pledge Agreement between the
Borrower and the Agent, dated as of the Agreement Date, in the form of Exhibit
D.
"PROHIBITED TRANSACTION" means a transaction that is
prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of ERISA.
"PROPORTIONATE SHARE" of a Lender in respect of any amount,
means the product obtained by multiplying such amount by such Lender's relevant
"Commitment Percentage" set forth by its name on the signature pages hereof.
"PURCHASE MONEY DEBT" means (i) Debt of the Borrower or a
Subsidiary that, within 30 days of such purchase, is incurred to finance part or
all of (but not more than) the purchase price of tangible assets in which
neither the Borrower nor any Subsidiary had at any time prior to such purchase
any interest other than a security interest and/or (ii) Debt (A) that
constitutes a renewal, extension or refunding of, but not an increase in the
principal amount of, Purchase Money Debt that is such by virtue of clause (i),
(B) is binding only on the obligor or obligors under the Purchase Money Debt
being renewed, extended or refunded and (C) bears interest at a rate per annum
that is commercially reasonable at the time.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time, and any regulation
successor thereto.
"REGULATION G" means Regulation G of the Board of Governors of
the Federal Reserve System, as in effect from time to time, and any regulation
successor thereto.
"REGULATION T" means Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from time to time, and any regulation
successor thereto
"REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time, and any regulation
successor thereto.
"REGULATION X" means Regulation X of the Board of Governors of
the Federal Reserve System, as in effect from time to time, and any regulation
successor thereto.
"REGULATORY CHANGE" means (i) any new, or any change in any
existing, Applicable Law, interpretation, directive or request (whether or not
having the force of law) or (ii) any change in the administration or enforcement
of any such Applicable Law, interpretation, directive or request, in each case,
that becomes effective after the Agreement Date, whether as a result of an
enactment by a government or any agency or political subdivision thereof, a
determination of a court or a regulatory authority, or otherwise.
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"REIMBURSEMENT AGREEMENT" means an agreement among a Letter of
Credit Issuer, the Borrower and the Agent with respect to the issuance of a
Letter of Credit.
"REIMBURSEMENT OBLIGATION" means, with respect to any Letter
of Credit, the Borrower's obligation to reimburse the Lenders and the Letter of
Credit Issuer for drawings thereunder as provided herein and in the relevant
Reimbursement Agreement.
"RELEASE" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"REPORTABLE EVENT" means, to the extent the same relates to or
affects a Plan, (i) any of the events set forth in ERISA Sections 4043(b) (other
than a Reportable Event as to which the provision of 30 days' notice to the PBGC
is waived under applicable regulations), 4068(f) or 4063(a) or the regulations
thereunder, (ii) any event requiring the Borrower, any Guarantor or any ERISA
Affiliate to provide security to a Plan under Code Section 401(a)(29) and (iii)
any failure to make a payment required by Code Section 412(m).
"REPRESENTATION AND WARRANTY" means each representation and
warranty made pursuant to or under (i) Section 3.3, Article IV, Section 6.2 or
any other provision of this Agreement or any other Loan Document, (ii) any
amendment of or waiver or consent under this Agreement or any other Loan
Document, (iii) any Schedule to this Agreement, any other Loan Document or any
such amendment, waiver or consent, or (iv) any statement contained in any
certificate, financial statement, legal opinion or other instrument or document
delivered by or on behalf of the Borrower or any Subsidiary pursuant to any Loan
Document, WHETHER OR NOT (except as expressly provided to the contrary herein),
IN THE CASE OF ANY REPRESENTATION OR WARRANTY REFERRED TO IN CLAUSE (i), (ii),
(iii) OR (iv) OF THIS DEFINITION, THE INFORMATION THAT IS THE SUBJECT MATTER
THEREOF IS WITHIN THE KNOWLEDGE OF THE BORROWER OR SUCH SUBSIDIARY.
"REQUIRED LENDERS" means, at any time, the Lenders holding at
least 51% of the then aggregate unpaid principal amount of the Loans and the
participations in Letter of Credit Obligations, or if no such obligations are
outstanding, the Lenders having at least 51% of the Commitments to make Loans or
to purchase participations in Letters of Credit.
"RESERVE REQUIREMENT" means at any time the then current
maximum rate for which reserves (including any marginal, supplemental or
emergency reserve) are required to be maintained under Regulation D by member
banks of the Federal Reserve System in New York City with deposits comparable in
amount to those of the Agent against "Eurocurrency liabilities", as that term is
used in Regulation D. The Adjusted Eurodollar Rates shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.
77
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended and
in effect from time to time.
"RESTRICTED PAYMENT" means as to any Person (i) any dividend
or other distribution on any shares of such Person's capital stock (other than
dividends payable solely in shares of its capital stock), (ii) any payment on
account of any subordinated debt or any Debt convertible into shares of such
Person's capital stock, (iii) any acquisition of any of such Person's Capital
Securities (except an acquisition of shares of such Person's capital stock upon
the conversion thereof into or the exchange thereof for other shares of its
capital stock), (iv) any advance, loan, financial accommodation or extension of
credit (other than accounts arising in arms-length transactions in the ordinary
course of business on customary trade terms) by such Person to any of its
Affiliates or (v) any payment or distribution to any principal shareholder,
director or any member of the immediate family of any of the foregoing or any
partnership, trust or other entity controlled directly or indirectly by any of
the foregoing.
"REVOLVING CREDIT COMMITMENT" means the commitment of each
Lender to make Revolving Loans pursuant to Section 1.1(a)(i) in the amount set
forth opposite such Lender's name on the signature pages hereof, as such amount
may be reduced from time to time pursuant to Section 1.7. Revolving Credit
Commitments means the sum of the Revolving Credit Commitments of all the
Lenders.
"REVOLVING CREDIT COMMITMENT FEE" has the meaning ascribed to
such term in Section 1.5(b)(iii).
"REVOLVING CREDIT COMMITMENT TERMINATION DATE" means the
earlier of (i) the date upon which the Revolving Credit Commitments reduce to
zero pursuant to Section 1.7 or Section 7.2, and (ii) November 26, 2002.
"REVOLVING LOAN" means an amount advanced pursuant to Section
1.1(a)(i).
"ROLLOVER BORROWING" has the meaning ascribed to such term in
Section 1.2(d).
"S&P'S" has the meaning ascribed to it in Section 5.13(c)(i).
"SECURITY AGREEMENT" means the Security Agreement between the
Borrower and the Agent, dated the Agreement Date, in the form of Exhibit C.
"SECURITY DOCUMENTS" shall mean, collectively, the Pledge
Agreement, the Security Agreement, the Subsidiary Pledge Agreement, the
Subsidiary Security Agreement, the Trademark Security Agreement, the Subsidiary
Trademark Security Agreement, the Patent Security Agreement, the Mortgage and
each other mortgage, deed of trust, security agreement, pledge agreement, or
other security or collateral document securing the Obligations.
78
"SECURITY INTEREST" means the mortgages, pledges and
assignments to the Agent, for the ratable benefit of the Lenders, the Agent and
the Letter of Credit Issuers of a continuing Lien upon, the Collateral intended
to be effected by the terms of this Agreement and the other Loan Documents, and
the other acts, documents and agreements relating thereto.
"SUBSIDIARY" when used to determine the relationship of a
Person to another Person, means any Person of which (a) securities having
ordinary voting power to elect a majority of the board of directors (or other
persons having similar functions), or (b) other ownership interests ordinarily
constituting a majority voting interest, in each case, are at the time, directly
or indirectly, owned or controlled by such other Person, or by one or more other
Subsidiaries of such other Person, or by such other Person and one or more of
its Subsidiaries. Unless otherwise specified "Subsidiary" means a Subsidiary of
the Borrower.
"SUBSIDIARY PLEDGE AGREEMENT" means the Subsidiary Pledge
Agreement among the Guarantors and the Agent, dated as of the Agreement Date, in
the form of Exhibit G.
"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security
Agreement among the Guarantors and the Agent, dated as of the Agreement Date, in
the form of Exhibit F.
"SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means the Trademark
Security Agreement between Monarch and the Agent, dated as of the Closing Date,
in the form of Exhibit J, and any similar agreement subsequently entered into
between the Agent and any Subsidiary.
"SUBORDINATION AGREEMENT" means the Subordination Agreement
among the Borrower, the United Companies and the Agent, dated as of the
Agreement Date, in the form of Exhibit H.
"TAX" means any Federal, State or foreign tax, assessment or
other governmental charge or levy (including any withholding tax) upon a Person
or upon its assets, revenues, income or profits other than income and franchise
taxes imposed upon a Lender by the jurisdictions (or any political subdivision
thereof) in which such Lender or its Lending Office is located.
"TERM LOAN" means an amount advanced pursuant to Section
1.1(a)(ii).
"TERM LOAN COMMITMENT" means the commitment of each Lender to
make Term Loans pursuant to Section 1.1(a)(i) in the amount set forth opposite
such Lender's name on the signature pages hereof, as such amount may be reduced
from time to time pursuant to Section 1.7. Term Loan Commitments means the sum
of the Term Loan Commitments of all the Lenders.
"TERM LOAN COMMITMENT TERMINATION DATE" means the earlier of
(i) the date upon which the Term Loan Commitments reduce to zero pursuant to
Section 1.7 or Section 7.2, and (ii) November 26, 2002.
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"TERMINATION DATE" means (i) with respect to the Revolving
Credit Commitments, the Revolving Credit Commitment Termination Date and (ii)
with respect to the Term Loan Commitments, the Term Loan Commitment Termination
Date.
"TERMINATION EVENT" means (i) a Reportable Event, (ii) the
termination of a Plan, or the filing of a notice of intent to terminate a Plan,
or the treatment of a Plan amendment as a termination under Section 4041(c) of
ERISA, (iii) the institution of proceedings to terminate a Plan under Section
4042(a) of ERISA, or (iv) the appointment of a trustee to administer any Plan
under Section 4042(b) of ERISA.
"TRADEMARK SECURITY AGREEMENT" means the Trademark Security
Agreement between the Borrower and the Agent, dated as of the Agreement Date, in
the form of Exhibit I.
"TYPE" has the meaning ascribed to it in Section 10.3.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction.
"UNFUNDED BENEFIT LIABILITIES" means with respect to any Plan
at any time, the amount of unfunded benefit liabilities of such Plan at such
time as determined under Section 4001(18) of ERISA.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of a Person, all
of the Capital Securities and all other ownership interests and rights to
acquire ownership interests of which are, directly or indirectly, owned or
controlled by such Person or one or more Wholly-Owned Subsidiaries of such
Person or by such Person and one or more of such Subsidiaries.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references
herein (A) to any Person, other than the Borrower or any Guarantor,
shall be deemed to include such Person's successors, transferees and
assignees, but only, in the case of transferees and assignees of the
Lenders, to the extent the applicable transfer or assignment complies
with the provisions of this Agreement, (B) to the Borrower or any
Guarantor shall be deemed to include such Person's successors, (C) to
any Applicable Law specifically defined or referred to herein shall be
deemed references to such Applicable Law as the same may be amended or
supplemented from time to time, (D) to any Contract defined or referred
to herein shall be deemed references to such Contract (and, in the case
of any instrument, any other instrument issued in substitution
therefor) as the terms thereof may have been amended, supplemented,
waived or otherwise modified from time to time and (E) to any Loan
Document, as the terms thereof may have been amended, supplemented,
waived or otherwise modified from time to time in accordance with
Section 11.5 or any corresponding provision of such Loan Document.
80
(ii) When used in this Agreement, the words "herein",
"hereof" and "hereunder" and words of similar import shall refer to
this Agreement as a whole and not to any provision of this Agreement,
and "Section," "Subsection," "Schedule" and "Exhibit" shall refer to
Sections and Subsections of, and Schedules and Exhibits to, this
Agreement unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes
the plural, and vice versa.
(iv) All terms defined in this Agreement shall have the same
defined meanings when used in any Note or, except as otherwise
expressly stated therein, any certificate, opinion or other Loan
Document or other document delivered pursuant hereto.
Section 10.2 Accounting Matters. Unless otherwise specified herein, all
accounting determinations hereunder and all computations utilized by the
Borrower and the Guarantors in complying with the covenants contained herein
shall be made, all accounting terms used herein shall be interpreted, and all
financial statements requested to be delivered hereunder shall be prepared, in
accordance with Generally Accepted Accounting Principles, consistently applied
throughout the periods involved. If the Agent or the Required Lenders shall
notify the Borrower that any change in GAAP adversely effects the calculation of
the financial covenants contained herein, such change shall not be effective
until the Agent, the Required Lenders and the Borrower shall have agreed on an
amendment to the affected covenant, that in the judgment of the Agent and the
Required Lenders, restores such covenant to its effect prior to such change.
Section 10.3 Classes of Extensions of Credit and Types of Loans.
Extensions of Credit hereunder are distinguished by "Class" and by "Type". The
"Class" of an Extension of Credit (or of a Commitment to make such Extension of
Credit) refers to the determination of whether such Extension of Credit arises
under the Revolving Loan Commitment or the Term Loan Commitment, each group of
which constitutes a Class. The "Type" of a Loan refers to the determination of
whether such Loan is a Eurodollar Loan or a Base Rate Loan. A Loan may be
identified by both Class and Type (e.g., a "Eurodollar Revolving Loan" indicates
that such Loan is both a Revolving Loan and a Eurodollar Loan).
Section 10.4 Captions. Article and Section captions in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
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11.
MISCELLANEOUS
Section 11.1 Notices.
(a) Manner of Delivery. All notices and other communications
under this Agreement, including but not limited to materials delivered pursuant
to Article VI, shall, except in those cases where a telephonic notice is
expressly permitted, be in writing (which shall include communications by telex
and telecopy). All written notices and communications shall be sent by
registered or certified mail, postage prepaid, return receipt requested, by
prepaid telex or telecopier, reputable overnight courier, freight prepaid, or
delivered by hand.
(b) Addresses. All notices and other communications under this
Agreement shall be given at the following respective addresses and telex,
telecopier and telephone numbers and to the attention of the following Persons:
(i) If to the Borrower:
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
Chairman of the Board & CEO
With a copy to:
Legal Department
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. X. Xxxxxxx
Executive Vice President
and General Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
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(ii) If to the Agent:
General Electric Capital Corporation
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Vice President
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, III, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(iii) If to a Letter of Credit Issuer at its respective
address and telex, telecopier and telephone numbers set forth in the
Reimbursement Agreement to which such Letter of Credit Issuer is a
party;
(iv) If to the Lenders, at their respective address and
telex, telecopier and telephone numbers set forth on the signature
pages hereto (as the same may be amended from time to time);
or at such other address or telex, telecopier or telephone number or to the
attention of such other person as the party to whom such information pertains
may hereafter specify for the purpose in a notice to the other specifically
captioned "Notice of Change of Address".
(c) Effectiveness. Each notice and other communication
under this Agreement shall be effective or deemed delivered or furnished (i) if
given by mail, on the fifth Business Day after such communication is deposited
in the mail, addressed as above provided, (ii) if given by telex or telecopier,
when such communication is transmitted to the appropriate number determined as
above provided in this Section 11.1 and the appropriate answer-back is received
or receipt is otherwise
83
acknowledged, (iii) if given by hand delivery or overnight courier, when left at
the address of the addressee addressed as above provided, and (iv) if given by
telephone, when communicated to the Person or to the holder of the office
specified as the Person or officeholder to whose attention communications are to
be given, or, in the case of notice by the Agent to the Borrower under Section
7.2, given by telephone as provided below, if such Person or officeholder is
unavailable at the time, to any other responsible officer of the Borrower,
except that notices of a change of address, telex, telecopier or telephone
number, and notices to the Agent shall not be effective, and materials furnished
to the Lenders pursuant to Article VI shall not be deemed furnished until
received, and in the case of the Agent, such notices and materials shall not be
deemed received until physically received by a responsible officer at the office
of the Agent set forth above, not later than noon (New York City time) on any
day if such day is to count as a Business Day for the purpose of determining the
adequacy of any notice to the Agent hereunder. Notices under Sections 1.2, 2.2,
2.3, and 7.2 may be by telephone, promptly confirmed in writing (which shall
include communications by telex and telecopy). The failure by the Agent to give
written confirmation of any such notice shall not effect the validity thereof.
In the event of a discrepancy between telephonic notice and the written
confirmation thereof, or in the event written confirmation of such notice is not
furnished, the telephonic notice as understood by the Agent will be deemed the
effective notice.
Section 11.2 Expenses; Indemnification. Whether or not any Extension of
Credit is made hereunder, the Borrower shall, on demand, pay or reimburse the
Lenders, the Agent and the Letter of Credit Issuers for (a) all transfer,
documentary, stamp and similar taxes, and all search, recording and filing fees,
if any, payable in connection with, arising out of or in any way related to the
execution, delivery and performance of this Agreement, the other Loan Documents
or the Extensions of Credit, and (b) all reasonable costs and expenses
(including fees and disbursements of legal counsel and other experts) incurred,
and all payments made, and indemnify and hold the Lenders, the Agent and the
Letter of Credit Issuers harmless from and against all losses suffered, in
connection with, arising out of, or in any way related to (i) the negotiation,
preparation, execution and delivery of (A) this Agreement and the other Loan
Documents, (B) any Extension of Credit and (C) (whether or not executed) any
waiver, amendment or consent hereunder or thereunder, or hereto or thereto, (ii)
the administration of this Agreement and the other Loan Documents, including
without limitation the matters set forth in Section 6.3(b)(iv) (other than
ordinary course overhead associated with regular employees of the Agent incurred
in the ordinary course of the administration of this Agreement absent an Event
of Default), (iii) consulting with respect to any matter in any way arising out
of, relating to, or connected with, this Agreement or any of the other Loan
Documents, including, but not limited to, the enforcement by the Lenders, the
Agent or the Letter of Credit Issuers of any of their rights hereunder or under
any of the other Loan Documents, or the performance by the Lenders, the Agent or
the Letter of Credit Issuers of any of their obligations hereunder or under any
other Loan Document, if any, (iv) protecting, preserving, exercising or
enforcing any of the rights of the Lenders, the Agent or the Letter of Credit
Issuers hereunder or under any of the other Loan Documents, (v) any claim
(whether asserted by the Lenders, the Agent, the Letter of Credit Issuers, the
Borrower, or any other Person and whether asserted before or after the payment,
performance and observance in full of the Borrower's obligations hereunder and
under the other Loan Documents) and the prosecution or defense thereof, in any
way arising under, related to, or connected with, this Agreement, or any of the
other Loan Documents or the relationship established hereunder or under the
other Loan Documents, and
84
(vi) any governmental investigation arising out of, relating to, or in any way
connected with this Agreement or any of the other Loan Documents, provided that
the foregoing indemnity shall not be applicable to any loss suffered by any
Lender, the Agent or a Letter of Credit Issuer to the extent such loss is
determined by a judgment of a court that is binding on such Lender, the Agent or
such Letter of Credit Issuer, final and not subject to review on appeal, to be
the result of acts or omissions of such Lender, the Agent or such Letter of
Credit Issuer, constituting (x) gross negligence or willful misconduct, (y)
violations of law, or (z) its failure to observe any other standard expressly
applicable to it under any of the other provisions of this Agreement or any of
the other Loan Documents. The Agent shall have the right to charge any account
of the Borrower for amounts due under this Section, and may cause the Borrower
to incur a Borrowing in such amounts as may be necessary to repay such
Obligations.
Section 11.3 Rights Cumulative. The rights and remedies of the Lenders,
the Agent and the Letter of Credit Issuers under this Agreement and the other
Loan Documents shall be cumulative and not exclusive of, nor limiting upon, any
rights or remedies that they would otherwise have, and no failure or delay by
any Lender, the Agent or any Letter of Credit Issuer in exercising any right
shall operate as a waiver of it, nor shall any single or partial exercise of any
power or right preclude its other or further exercise or any other power or
right.
Section 11.4 Disclosure. The Agent, the Lenders and the Letter of
Credit Issuers may disclose to, and exchange and discuss with, any other Person
any information concerning the Borrower and any of its Subsidiaries (whether
received by the Agent, the Letter of Credit Issuers, the Lenders or such person
in connection with or pursuant to this Agreement or otherwise) only (i) as may
be required by Applicable Law, (ii) for the purpose of protecting, preserving,
exercising or enforcing any rights hereunder or under any of the other Loan
Documents, or consulting with respect to any such rights or any rights of the
Borrower or (iii) as reasonably required in connection with the making of
assignments and the sale of participations by the Lenders as provided in Section
11.7.
Section 11.5 Waivers; Amendments. (a) Any term, covenant, agreement or
condition of this Agreement or any Loan Document may be amended with the consent
of the Borrower, the Agent and the Required Lenders, or compliance therewith may
be waived in writing by the Agent and, in the case of a term, covenant,
agreement or condition contained in any Reimbursement Agreement, the Letter of
Credit Issuer party thereto, when authorized by the Required Lenders, and in any
such event, the failure to observe, perform or discharge any such covenant,
condition or obligation (whether such amendment is executed or such consent or
waiver is given before or after such failure) shall not be construed as a breach
of such covenant, condition or obligation or a Default hereunder, provided that
no such amendment, consent or waiver shall:
(i) affect the amount or extend the time of the Commitment of
any Lender, of the obligation of any Letter of Credit Issuer to issue
Letters of Credit or extend the expiration date of any Letter of
Credit, or of the obligation of the Agent, any Letter of Credit Issuer
or any Lender to pay amounts on account of Loans or Letters of Credit,
and thereby extend credit to the Borrower, without the prior written
consent of such Lender, such Letter of Credit Issuer or the Agent, as
the case may be;
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(ii) alter the time or times of payment of the principal of
or interest on any Obligation or with respect to any participation in a
Letter of Credit or any fees payable hereunder or any Loan Document, or
the amount of the principal of any Note, Reimbursement Obligation or
Letter of Credit, or the rates of interest, commission or fees, or
permit any subordination of principal, interest, or fees hereunder or
any Loan Document, without the prior written consent of the Lender,
Letter of Credit Issuer or Agent as to its interest in the
corresponding Obligation, participation interest, commission or fees;
(iii) alter any provision requiring the ratable application of
amounts received by the Agent in payment of, or for application on,
indebtedness under this Agreement or under any of the Notes or any
other Loan Document or any Obligation or Letter of Credit Obligation,
or change the parties or percentages required to authorize or direct
the taking of any action under this Agreement or any Loan Document,
without the prior written consent of the Agent and all the Lenders and,
to the extent such change adversely affects a Letter of Credit Issuer,
the prior written consent of such Letter of Credit Issuer;
(iv) release all or substantially all of the Collateral or
reduce the Security Interest, or change the definition of "Borrowing
Base" or any component thereof, without the prior written consent of
all the Lenders; or
(v) amend any term or provision of Article IX or Section
11.2 or any waiver, release or limitation of liability in favor of the
Agent or the Letter of Credit Issuer contained herein or in any other
Loan Document without the prior written consent of the Agent and, to
the extent the rights or obligations of any Letter of Credit Issuer are
adversely affected thereby, the prior written consent of such Letter of
Credit Issuer.
Except as set forth in this Section, each Letter of Credit Issuer agrees to act
upon the direction of the Required Lenders in all respects under its respective
Reimbursement Agreement. In addition to the foregoing rights, for the purpose of
this Section, the Letter of Credit Issuer shall be deemed to own and be entitled
to vote in an amount equal to the participation interest of any Lender that has
failed to pay any amount owing to the Letter of Credit Issuer hereunder.
(b) Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
Section 11.6 Set-Off.
(a) Exercise of Set-Off Rights. Upon the occurrence and
during the continuance of any Event of Default, each of the Agent, the Letter of
Credit Issuers and the Lenders, and each of its branches and offices, is hereby
authorized by the Borrower, at any time and from time to time, without notice to
the Borrower, (i) to set-off against, and to appropriate and apply to the
payment of the Obligations (whether matured or unmatured, fixed or contingent or
liquidated or unliquidated), any and all amounts owing by the Agent, such Letter
of Credit Issuer or such
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Lender, or any such office or branch, to the Borrower (whether payable in
Dollars or any other currency, whether matured or unmatured, and, in the case of
deposits, whether general or special time or demand and however evidenced) and
(ii) pending any such action, to the extent necessary, to hold such amounts as
collateral to secure such Obligations and to return as unpaid for insufficient
funds any and all checks and other items drawn against any deposits so held as
such Person in its sole discretion may elect. The Borrower agrees, to the
fullest extent it may effectively do so under Applicable Law, that any holder of
a participation in any Extension of Credit may exercise rights of set-off and
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of the Borrower in the
amount of such participation. The Agent, each Letter of Credit Issuer and each
Lender agrees to give the Borrower prompt notice following its exercise of any
set-off pursuant to this Section, but the failure to give such notice shall not
affect the effectiveness of such exercise.
(b) Sharing of Set-Offs. Each of the Agent, the Letter of
Credit Issuers and the Lenders agree that if it shall, by exercising any right
of set-off or counterclaim or otherwise, obtain any payment (whether voluntary
or involuntary), of a proportion of the Obligations held by it that is greater
than the proportion received by any other of them in respect of the Obligations
held by such other of them, the Agent, the Letter of Credit Issuer and/or the
Lender, as the case may be, receiving such proportionately greater payment shall
purchase such participations in the Obligations held by the other of them, and
such other adjustments shall be made, as may be required so that all such
payments in respect of the Obligations shall be shared by all of them pro rata.
Any party receiving such proportionately greater payment shall immediately
notify the Agent thereof. Promptly upon its receipt of such notice, the Agent
shall notify each of the Lenders and the Letter of Credit Issuers of the amount
or amounts received by one or more of the Lenders in excess of its Proportionate
Share thereof. On the immediately succeeding Business Day after the giving of
such notice by the Agent, the appropriate adjustments in the Obligations shall
be made as provided in this Section 11.6(b).
(c) No Impairment of Set-Off Rights. Nothing in subsection (b)
of this Section 11.6 shall impair the right of the Agent, any Letter of Credit
Issuer or any Lender to exercise any right of set-off or counterclaim it may
have, or to otherwise obtain payment, and to apply such amount to the payment of
indebtedness other than the Obligations.
Section 11.7 Assignment and Participations.
(a) Assignments. The Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and all the Lenders, and no such assignment or transfer of
any such obligations shall relieve the Borrower thereof unless the Lenders shall
have consented to such release in a writing specifically referring to the
obligation from which the Borrower is to be released. Any Lender may assign its
rights and delegate its obligations under this Agreement and the other Loan
Documents and further may assign, all or any part of any Extensions of Credit
made by it, or its Commitment or any other
87
interest herein or in any other Loan Documents to another bank or entity;
provided, that, except in the case of an assignment by a Lender to one of its
branches or its affiliates, (i) the Agent and each Letter of Credit Issuer shall
have consented in writing to such assignment and the terms thereof, including
the amount of such assignment and the assignee thereof, but which consent shall
not be unreasonably withheld, (ii) the Agent shall have received a $5,000
assignment fee from the assignor Lender, and (iii) the Agent shall have received
an Assignment and Assumption Agreement in the form of Schedule 11.7 duly
executed by the assignee, the assignor Lender and the Agent; and provided
further that except (A) in the case of an assignment by a Lender to one of its
branches or affiliates or (B) in the case of an assignment to a bank, a fund or
an institutional investor with capital and surplus in excess of $300,000,000 or
any of whose securities are rated investment grade or above by any nationally
recognized rating service, the Borrower shall have given its prior written
consent which consent shall not be unreasonably withheld or delayed; as promptly
as practicable following its becoming a Lender hereunder, each assignee shall
notify the Borrower thereof and provide the Borrower with a copy thereof. Upon
any such assignment by a Lender pursuant to the terms hereof, the assignee
thereof shall have, to the extent of such assignment (unless otherwise provided
therein) the same rights and benefits as it would have if it were an original
Lender hereunder and under the Loan Documents, and such assignee shall assume
all of the obligations of a Lender hereunder and such assignor Lender shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required to effect such
assignments, assumptions and corresponding releases.
(b) Participations. Any Lender may from time to time sell or
otherwise grant participations in the Extensions of Credit, and the holder of
any such participation, if the participation agreement so specifically provides,
shall be entitled to all of the rights of a Lender hereunder respecting the
taking of any action directly affecting the extension of the final maturity of
the principal amount of, or any payment date for any interest on, a Loan
allocated to such participation, the reduction in the principal amount of, or
the rate of interest payable on, the Loans, the release of all or substantially
all of the Collateral, or the enforcement of the Obligations. Except as provided
in the preceding sentence and as provided in Article VIII or Section 11.6, a
holder of a participation shall not be deemed a Lender.
(c) Requirements Upon Transfer. If, pursuant to this
subsection, any interest in this Agreement or any Loan Document is transferred
to any assignee that is organized under the laws of any jurisdiction other than
the United States or any state thereof, the transferor Lender shall cause such
assignee concurrently with the effectiveness of such transfer, (i) to represent
to the transferor Lender (for the benefit of the transferor Lender, the Agent,
the Letter of Credit Issuers and the Borrower) that it is either (x) entitled to
the benefits of an income tax treaty with the United States that provides for an
exemption from United States withholding tax on interest and other payments
which may be made by the Borrower to other Loan Document; or (y) is engaged in
the trade or business within the United States, (ii) to furnish to the
transferor Lender, the Agent, the Letter of Credit Issuers and the Borrower
either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein such assignee claims entitlement to complete
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exemption from U.S. federal withholding tax on all payments hereunder) and (iii)
to agree (for the benefit of the transferor Lender, the Agent, the Letter of
Credit Issuers and the Borrower) to provide to the transferor Lender, the Agent,
the Letter of Credit Issuers and the Borrower a new Form 4224 or Form 1001 upon
the obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations with regard to such
withholding tax exemption.
(d) Lender Covenants. Each Lender represents and warrants to
the Borrower, the Letter of Credit Issuers and the Agent that it is either (x) a
United States person (as defined in Section 7701(a)(30) of the Code); (y)
entitled to the benefits of an income tax treaty with the United States that
provides for an exemption from United States withholding tax on interest and
other payments which may be made by the Borrower to such Lender pursuant to the
terms of this Agreement or any other Loan Document; or (z) engaged in trade or
business within the United States. Each Lender that is organized under the laws
of any jurisdiction other than the United States or any State thereof (including
the District of Columbia) agrees to furnish to the Agent, the Letter of Credit
Issuers and the Borrower, prior to the date of the first interest payment
hereunder, two copies of either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Lender claims entitlement to
complete exemption from U.S. federal withholding tax on all payments hereunder)
and to provide to the Agent, the Letter of Credit Issuers and the Borrower a new
Form 4224 or Form 1001 upon the obsolescence of any previously delivered form
and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such Lender, and to
comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemptions.
Section 11.8 Governing Law. THIS AGREEMENT SHALL BE EFFECTIVE UPON
ACCEPTANCE BY THE LENDERS IN GEORGIA, AND THE AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE
STATE OF GEORGIA WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
Section 11.9 Judicial Proceedings; Waiver of Jury Trial. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENTS, MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN
XXX XXXX XX XXXXXXX, XXXXX XX XXXXXXX, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER (A) ACCEPTS, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED APPELLATE COURT, AND
IRREVOCABLY AGREES (WITHOUT WAIVING ANY RIGHT TO APPEAL) TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AND (B) IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN INCONVENIENT FORUM (WITHOUT WAIVING ANY RIGHT THE
89
BORROWER MAY HAVE TO REMOVE ANY SUCH JUDICIAL PROCEEDING TO THE UNITED STATES
DISTRICT COURT LOCATED IN XXX XXXX XX XXXXXXX, XXXXX XX XXXXXXX). THE BORROWER
HEREBY WAIVES, PERSONAL SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS
UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
(WITH A COPY BY OVERNIGHT COURIER), AT ITS ADDRESS SPECIFIED OR DETERMINED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 11.1, AND SERVICE SO MADE SHALL BE
DEEMED COMPLETED ON THE FIFTH DAY AFTER SUCH SERVICE IS DEPOSITED IN THE MAIL.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE AGENT, ANY LETTER OF CREDIT
ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
LENDERS, THE AGENT OR THE LETTER OF CREDIT BANKS, INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE BROUGHT ONLY IN A COURT
LOCATED IN XXX XXXX XX XXXXXXX XXX XXXXX XX XXXXXXX. THE BORROWER, THE AGENT,
EACH LETTER OF CREDIT ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING TO WHICH ANY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER AND WHETHER ARISING OR
ASSERTED BEFORE OR AFTER THE AGREEMENT DATE OR BEFORE OR AFTER PAYMENT,
OBSERVANCE AND PERFORMANCE IN FULL OF THE BORROWER'S OBLIGATIONS HEREUNDER OR
THEREUNDER.
Section 11.10 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. To the extent permitted by Applicable Law, the Borrower hereby
waives any provision of law that renders any provision hereof prohibited or
unenforceable in any respect.
Section 11.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which shall be deemed to constitute but one
original and shall be binding upon all parties, their successors and permitted
assigns.
Section 11.12 Entire Agreement. This Agreement and the other Loan
Documents, and the Notes executed in connection herewith embody the entire
agreement between the parties hereto relating to the subject matter hereof and
supersede all prior agreements, representations and understandings, if any,
relating to the subject matter hereof.
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Section 11.13 Survival of Obligations. Except as otherwise expressly
provided herein, the representations, warranties, rights and obligations of the
parties hereunder shall survive the execution of this Agreement, any
investigation of any matters by the Agent, any Letter of Credit Issuer or any
Lender and the extension and repayment of the Loans and other Obligations. This
Agreement, other than the indemnities set forth in Sections 9.6 and 11.2, which
shall survive, shall terminate upon the termination, expiration or reduction to
zero of the Lenders' Commitments and the payment in full of all outstanding
Loans, Letter of Credit Obligations and other Obligations.
Section 11.14 Successors and Assigns. Subject to the provisions of
Section 11.7, all of the provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
Section 11.15 Limitation of Liability. Neither the Lenders, the Letter
of Credit Issuers, the Agent or any Affiliate thereof shall have any liability
with respect to, and, THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX
UPON, ANY CLAIM FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY
THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY
THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the day and year first
written above.
KING PHARMACEUTICALS, INC.,
as Borrower
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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"LENDERS"
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Commitments: Amount: Percentage:
Revolving:
Term
Total
Base Rate Lending Office:
Attention:
Eurodollar Lending Office:
Attention:
Address for purposes of Section 11.1:
Telecopier No.: (___) ___-____
Telephone No.: (___) ___-____
Attention:
