--------------------------------------------------------------------------------
$125,000,000
CREDIT AGREEMENT
among
COLGATE MEDICAL LTD,
as Borrower,
and
ORTHOFIX INTERNATIONAL N.V. AND CERTAIN SUBSIDIARIES OF THE
BORROWER,
as Guarantors,
THE LENDERS PARTIES HERETO,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
and
WACHOVIA CAPITAL MARKETS, LLC,
as Sole Lead Arranger and Book Manager
Dated as of December 30, 2003
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS.........................................................1
Section 1.1 Defined Terms..............................................1
Section 1.2 Other Definitional Provisions.............................32
Section 1.3 Accounting Terms..........................................32
ARTICLE II THE LOANS; AMOUNT AND TERMS.......................................33
Section 2.1 Revolving Loans...........................................33
Section 2.2 Term Loan Facility........................................35
Section 2.3 Letter of Credit Subfacility..............................36
Section 2.4 Swingline Loan Subfacility................................40
Section 2.5 Fees......................................................41
Section 2.6 Commitment Reductions.....................................42
Section 2.7 Prepayments...............................................43
Section 2.8 Minimum Principal Amount of Tranches; Lending Offices.....45
Section 2.9 Default Rate and Payment Dates............................45
Section 2.10 Conversion Options........................................45
Section 2.11 Computation of Interest and Fees..........................46
Section 2.12 Pro Rata Treatment and Payments...........................47
Section 2.13 Non-Receipt of Funds by the Administrative Agent..........49
Section 2.14 Inability to Determine Interest Rate......................50
Section 2.15 Illegality................................................50
Section 2.16 Requirements of Law.......................................51
Section 2.17 Indemnity.................................................52
Section 2.18 Taxes.....................................................53
Section 2.19 Indemnification; Nature of Issuing Lender's Duties........56
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................57
Section 3.1 Financial Condition.......................................57
Section 3.2 No Change.................................................58
Section 3.3 Corporate Existence; Compliance with Law..................58
Section 3.4 Corporate Power; Authorization; Enforceable Obligations...59
Section 3.5 Status Under Certain Statutes.............................59
Section 3.6 Margin Regulations........................................60
Section 3.7 No Legal Bar; No Default..................................60
Section 3.8 No Material Litigation....................................60
Section 3.9 ERISA.....................................................60
Section 3.10 Environmental Matters.....................................61
Section 3.11 Use of Proceeds...........................................62
Section 3.12 Subsidiaries..............................................63
Section 3.13 Ownership.................................................63
Section 3.14 Indebtedness..............................................63
Section 3.15 Taxes.....................................................63
Section 3.16 Intellectual Property.....................................63
Section 3.17 Solvency..................................................64
Section 3.18 Investments...............................................64
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Section 3.19 Location of Collateral....................................64
Section 3.20 No Burdensome Restrictions................................64
Section 3.21 Labor Matters.............................................64
Section 3.22 Security Documents........................................65
Section 3.23 Accuracy and Completeness of Information..................65
Section 3.24 Fraud and Abuse...........................................65
Section 3.25 Licensing and Accreditation...............................66
Section 3.26 Other Regulatory Protection...............................66
Section 3.27 Reimbursement from Third Party Payors.....................66
Section 3.28 Other Agreements..........................................67
Section 3.29 Material Contracts........................................67
Section 3.30 Insurance.................................................67
Section 3.31 Classification as Senior Indebtedness.....................67
Section 3.32 Tax Shelter Regulations...................................67
ARTICLE IV CONDITIONS PRECEDENT..............................................68
Section 4.1 Conditions to Closing Date and Initial Extensions of
Credit....................................................68
Section 4.2 Conditions to All Extensions of Credit....................74
ARTICLE V AFFIRMATIVE COVENANTS..............................................75
Section 5.1 Financial Statements......................................75
Section 5.2 Certificates; Other Information...........................76
Section 5.3 Payment of Obligations....................................77
Section 5.4 Conduct of Business and Maintenance of Existence..........78
Section 5.5 Maintenance of Property; Insurance........................78
Section 5.6 Inspection of Property; Books and Records; Discussions....79
Section 5.7 Notices...................................................79
Section 5.8 Environmental Laws........................................80
Section 5.9 Financial Covenants.......................................81
Section 5.10 Additional Subsidiary Guarantors..........................82
Section 5.11 Compliance with Law.......................................82
Section 5.12 Pledged Assets............................................83
Section 5.13 Further Assurances........................................84
ARTICLE VI NEGATIVE COVENANTS................................................85
Section 6.1 Indebtedness..............................................85
Section 6.2 Liens.....................................................86
Section 6.3 Nature of Business........................................86
Section 6.4 Consolidation, Merger, Sale or Purchase of Assets, etc....86
Section 6.5 Advances, Investments and Loans...........................88
Section 6.6 Transactions with Affiliates..............................88
Section 6.7 Ownership of Subsidiaries; Restrictions...................88
Section 6.8 Fiscal Year; Organizational Documents; Material Contracts;
Subordinated Indebtedness Documents.......................88
Section 6.9 Limitation on Restricted Actions..........................89
Section 6.10 Restricted Payments.......................................89
Section 6.11 Sale Leasebacks...........................................90
Section 6.12 No Further Negative Pledges...............................90
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Section 6.13 Secured Indebtedness of Parent............................90
Section 6.14 Orthofix II B.V...........................................90
Section 6.15 Levtech Inc...............................................90
ARTICLE VII EVENTS OF DEFAULT................................................91
Section 7.1 Events of Default.........................................91
Section 7.2 Acceleration; Remedies....................................94
ARTICLE VIII THE AGENT.......................................................94
Section 8.1 Appointment...............................................94
Section 8.2 Delegation of Duties......................................95
Section 8.3 Exculpatory Provisions....................................95
Section 8.4 Reliance by Administrative Agent..........................95
Section 8.5 Notice of Default.........................................96
Section 8.6 Non-Reliance on Administrative Agent and Other Lenders....96
Section 8.7 Indemnification...........................................97
Section 8.8 Administrative Agent in Its Individual Capacity...........97
Section 8.9 Successor Administrative Agent............................97
Section 8.10 Other Agents..............................................98
ARTICLE IX MISCELLANEOUS.....................................................98
Section 9.1 Amendments, Waivers and Release of Collateral.............98
Section 9.2 Notices..................................................100
Section 9.3 No Waiver; Cumulative Remedies...........................101
Section 9.4 Survival of Representations and Warranties...............101
Section 9.5 Payment of Expenses and Taxes............................102
Section 9.6 Successors and Assigns; Participations;
Purchasing Lenders.......................................102
Section 9.7 Adjustments; Set-off.....................................106
Section 9.8 Table of Contents and Section Headings...................107
Section 9.9 Counterparts.............................................107
Section 9.10 Effectiveness............................................107
Section 9.11 Severability.............................................108
Section 9.12 Integration..............................................108
Section 9.13 Governing Law............................................108
Section 9.14 Consent to Jurisdiction and Service of Process...........108
Section 9.15 Confidentiality..........................................109
Section 9.16 Acknowledgments..........................................109
Section 9.17 Waivers of Jury Trial....................................110
Section 9.18 Patriot Act Notice.......................................110
ARTICLE X GUARANTY..........................................................110
Section 10.1 The Guaranty.............................................110
Section 10.2 Bankruptcy...............................................111
Section 10.3 Nature of Liability......................................111
Section 10.4 Independent Obligation...................................112
Section 10.5 Authorization............................................112
Section 10.6 Reliance.................................................112
Section 10.7 Waiver...................................................112
Section 10.8 Limitation on Enforcement................................114
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Section 10.9 Confirmation of Payment..................................114
iv
Schedules
Schedule 1.1-1 Account Designation Letter
Schedule 1.1-2 EBITDA Adjustments
Schedule 1.1-3 Permitted Liens
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.2(d) Form of Term Note
Schedule 2.4(d) Form of Swingline Note
Schedule 2.10 Form of Notice of Conversion/Extension
Schedule 3.8 Litigation
Schedule 3.12 Subsidiaries
Schedule 3.16 Intellectual Property
Schedule 3.19(a) Location of Real Property
Schedule 3.19(b) Location of Collateral
Schedule 3.19(c) Chief Executive Offices
Schedule 3.21 Labor Matters
Schedule 3.29 Material Contracts
Schedule 3.30 Insurance
Schedule 4.1-1 Form of Secretary's Certificate
Schedule 4.1-2 Form of Solvency Certificate
Schedule 5.10 Form of Joinder Agreement
Schedule 6.1(b) Indebtedness
Schedule 9.2 Schedule of Lenders' Lending Offices
Schedule 9.6(c) Form of Commitment Transfer Supplement
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CREDIT AGREEMENT, dated as of December 30, 2003, among COLGATE MEDICAL LTD,
a company formed under the laws of England and Wales and registered with number
01311455 (the "Borrower"), Orthofix International N.V., a Netherlands Antilles
corporation (the "Parent"), those Subsidiaries of the Borrower identified as a
"Guarantor" on the signature pages hereto and such other Subsidiaries of the
Borrower as may from time to time become a party hereto (each, a "Subsidiary
Guarantor" and, together with the Parent, the "Guarantors"), the several banks
and other financial institutions as may from time to time become parties to this
Agreement (collectively, the "Lenders"; and individually, a "Lender"), and
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent for the Lenders hereunder (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make loans and other
financial accommodations to the Borrower in the amount of up to $125,000,000, as
more particularly described herein; and
WHEREAS, the Lenders have agreed to make such loans and other financial
accommodations to the Borrower on the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms.
As used in this Agreement, terms defined in the first paragraph of this
Agreement have the meanings therein indicated, and the following terms have the
following meanings:
"Account Designation Letter" shall mean the Account Designation Letter
dated the Closing Date from the Borrower to the Administrative Agent
substantially in the form attached hereto as Schedule 1.1-1.
"Acquired Company" shall mean Breg, Inc., a California corporation.
"Acquisition" shall mean the merger of Trevor Acquisition, Inc., a wholly
owned subsidiary of Orthofix Holdings organized under the laws of Delaware, with
and into the Acquired Company, with the Acquired Company being the surviving
company, pursuant to the Acquisition Documents.
"Acquisition Documents" shall mean the Purchase Agreement, Voting
Agreement, Merger Documents and all other agreements and documents executed in
connection with the Acquisition.
"Additional Credit Party" shall mean each Person that becomes a Guarantor
by execution of a Joinder Agreement in accordance with Section 5.10.
"Administrative Agent" shall have the meaning set forth in the first
paragraph of this Agreement and any successors in such capacity.
"Affiliate" shall mean as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, a Person shall be deemed to
be "controlled by" a Person if such Person possesses, directly or indirectly,
power either (a) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Agreement" or "Credit Agreement" shall mean this Credit Agreement, as
amended, restated, modified or supplemented from time to time in accordance with
its terms.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean, at any time, the rate of interest per annum publicly
announced from time to time by Wachovia at its principal office in Charlotte,
North Carolina as its prime rate. Each change in the Prime Rate shall be
effective as of the opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced publicly by
Wachovia as its Prime Rate is an index or base rate and shall not necessarily be
its lowest or best rate charged to its customers or other banks; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published on the next succeeding Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the opening of business on the date of such
change.
"Alternate Base Rate Loans" shall mean Loans that bear interest at an
interest rate based on the Alternate Base Rate.
2
"Applicable Percentage" shall mean, for any day, the rate per annum set
forth below opposite the applicable level then in effect, it being understood
that the Applicable Percentage for (a) Revolving Loans that are Alternate Base
Rate Loans shall be the percentage set forth under the column "Alternate Base
Rate Margin for Revolving Loans", (b) Revolving Loans that are LIBOR Rate Loans
shall be the percentage set forth under the column "LIBOR Rate Margin for
Revolving Loans and Letter of Credit Fee", (c) the Letter of Credit Fee shall be
the percentage set forth under the column "LIBOR Rate Margin for Revolving Loans
and Letter of Credit Fee", (d) Term Loans that are Alternate Base Rate Loans
shall be the percentage set forth under the column "Alternate Base Rate Margin
for Term Loans", (e) Term Loans that are LIBOR Rate Loans shall be the
percentage set forth under the column "LIBOR Rate Margin for Term Loans", and
(f) the Commitment Fee shall be the percentage set forth under the column
"Commitment Fee":
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LIBOR Rate
Alternate Margin for Alternate
Base Rate Revolving Base Rate
Borrower Margin for Loans and Margin for LIBOR Rate
Leverage Revolving Letter of Term Margin for Commitment
Level Ratio Loans Credit Fee Loans Term Loans Fee
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I > = 2.50 to 1.0 1.25% 2.25% 1.75% 2.75% 0.50%
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II > = 2.00 to 1.0 but 1.00% 2.00% 1.75% 2.75% 0.50%
< 2.50 to 1.0
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III > = 1.50 to 1.0 but 0.75% 1.75% 1.50% 2.50% 0.50%
< 2.00 to 1.0
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IV < 1.50 to 1.0 0.50% 1.50% 1.50% 2.50% 0.375%
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The Applicable Percentage shall, in each case, be determined and adjusted
quarterly on the date five (5) Business Days after the date on which the
Administrative Agent has received from the Borrower the financial information
and certifications required to be delivered to the Administrative Agent and the
Lenders in accordance with the provisions of Sections 5.1(a) and (b) and Section
5.2(b) (each, an "Interest Determination Date"). Such Applicable Percentage
shall be effective from such Interest Determination Date until the next such
Interest Determination Date. The initial Applicable Percentages shall be based
on Level II until the first Interest Determination Date occurring after the
delivery of the officer's compliance certificate pursuant to Section 5.2(b) for
the quarter ended March 31, 2004. If the Borrower shall fail to provide the
annual and quarterly financial information and certifications in accordance with
the provisions of Sections 5.1(a) and (b) and Section 5.2(b), the Applicable
Percentage from such Interest Determination Date shall, on the date five (5)
Business Days after the date by which the Borrower was so required to provide
such financial information and certifications to the Administrative Agent and
the Lenders, be based on Level I until such time as such information and
certifications are provided, whereupon the level shall be determined by the then
current Leverage Ratio.
"Arranger" shall mean Wachovia Capital Markets, LLC, as sole lead arranger
and book manager, together with its successors and/or assigns.
3
"Asset Disposition" shall mean the disposition of any or all of the assets
(including, without limitation, the Capital Stock of a Subsidiary or any
ownership interest in a joint venture) of the Borrower or any Subsidiary whether
by sale, lease, transfer or otherwise. The term "Asset Disposition" shall not
include (i) the sale, lease, transfer or other disposition of assets permitted
by Section 6.4(a)(i), (ii), (iii), (iv) or (v) hereof or (ii) any Equity
Issuance, including any equity issued upon exercise of employee stock options.
"Bankruptcy Code" shall mean the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Borrower" shall have the meaning set forth in the first paragraph of this
Agreement.
"Borrower Leverage Ratio" shall mean, with respect to the Borrower and its
subsidiaries on a consolidated basis for the twelve-month period ending on the
last day of any fiscal quarter of the Borrower, the ratio of (a) Funded Debt of
the Borrower and its subsidiaries on a consolidated basis on the last day of
such period to (b) Consolidated Borrower EBITDA for such period.
"Borrowing Date" shall mean, in respect of any Loan, the date such Loan is
made.
"Business" shall have the meaning set forth in Section 3.10.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close; provided, however, that when used in
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate Loan, the term "Business Day" shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the London
interbank market.
"BV II" shall mean Orthofix II B.V., a company formed under the laws of the
Netherlands.
"BV II Limited Guaranty and Pledge Agreement" shall mean the Limited
Guaranty and Pledge Agreement dated as of the Closing Date executed by BV II, in
favor of the Administrative Agent, as amended, modified, restated or
supplemented from time to time in accordance with its terms and the terms
hereof.
"Capital Lease" shall mean any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations" shall mean the capitalized lease obligations
relating to a Capital Lease determined in accordance with GAAP.
"Capital Stock" shall mean (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership
4
interests (whether general or limited), (d) in the case of a limited liability
company, membership interests and (e) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Equivalents" shall mean (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition ("Government Obligations"), (b)
U.S. dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar certificates of
deposit of (i) any United States commercial bank of recognized standing having
capital and surplus in excess of $250,000,000 or (ii) bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Xxxxx'x is at least P-1 or the equivalent thereof (any such bank being an
"Approved Bank"), in each case with maturities of not more than 364 days from
the date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within six months of the date of acquisition, (d)
repurchase agreements with a bank or trust company (including a Lender) or a
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States of America, (e) obligations of any state of the United States or any
political subdivision thereof for the payment of the principal and redemption
price of and interest on which there shall have been irrevocably deposited
Government Obligations maturing as to principal and interest at times and in
amounts sufficient to provide such payment and (f) Investments, classified in
accordance with GAAP as current assets of the Borrower or its Subsidiaries, in
money market investment programs registered under the Investment Company Act of
1940, as amended, that are administered by financial institutions that have the
highest rating obtainable from either Moody's or S&P, and the portfolios of
which are limited solely to Investments (i) in corporate obligations having a
remaining maturity of less than two years, issued by corporations having
outstanding comparable obligations that are rated in the two highest categories
of Moody's and S&P or no lower than the two highest long term debt ratings
categories of either Moody's or S&P or (ii) of the character, quality and
maturity described in clauses (a)-(e) of this definition.
"CHAMPUS" shall mean the United States Department of Defense Civilian
Health and Medical Program of the United States.
"Change of Control" shall mean the occurrence of any of the following: (a)
any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined
in Rule l3d-3 under the Securities Exchange Act of 1934) of more than 30% of
then outstanding Voting Stock of the Parent, measured by voting power rather
than the number of shares; (b) Continuing Directors shall cease for any reason
to constitute a majority of the members of the board of directors of the Parent
then in office, (c) the Parent shall cease to own, directly or indirectly
through wholly-owned Subsidiaries, all of the outstanding Capital Stock of the
Borrower, or (d) the occurrence of a
5
"Change of Control" (or any comparable term) under, and as defined in, the
documents evidencing or governing any Subordinated Indebtedness.
"Closing Date" shall mean the date of this Agreement.
"CMS" shall mean the Centers for Medicare and Medicaid Services and any
successor thereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended, modified,
succeeded or replaced from time to time.
"Collateral" shall mean a collective reference to the collateral that is
identified in, and at any time will be covered by, the Security Documents.
"Commitment" shall mean the Revolving Commitment, the LOC Commitment, the
Swingline Commitment and the Term Loan Commitment, individually or collectively,
as appropriate.
"Commitment Fee" shall have the meaning set forth in Section 2.5(a).
"Commitment Percentage" shall mean the Revolving Commitment Percentage
and/or the Term Loan Commitment Percentage, as appropriate.
"Commitment Period" shall mean the period from and including the Closing
Date to but not including the Maturity Date.
"Commitment Transfer Supplement" shall mean a Commitment Transfer
Supplement, substantially in the form of Schedule 9.6(c).
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001(b)(1) of ERISA or is part of a group which includes the Borrower
and which is treated as a single employer under Section 414(b) or 414(c) of the
Code or, solely for purposes of Section 412 of the Code to the extent required
by such section, Section 414(m) or 414(o) of the Code.
"Consolidated Borrower EBITDA" shall mean, for any applicable period of
computation, the sum of (a) Consolidated Borrower Net Income for such period,
but excluding therefrom all extraordinary items of income or loss, plus (b) to
the extent deducted in determining Consolidated Borrower Net Income for such
period, the sum of (i) the aggregate amount of depreciation and amortization
charges for such period, plus (ii) Consolidated Borrower Interest Expense for
such period, plus (iii) the aggregate amount of all income taxes reflected on
the consolidated statements of income of the Borrower and its Subsidiaries for
such period, plus (iv) adjustments set forth on Schedule 1.1-2 related to (A)
the fees and expenses associated with the Acquisition and the closing of this
Credit Agreement and (B) OIG Settlement Costs in an aggregate amount not to
exceed $1,700,000.
6
"Consolidated Borrower Interest Expense" shall mean, for any applicable
period of computation, all interest expense of the Borrower and its Subsidiaries
on a consolidated basis for such period (including, without limitation, the
interest component under Capital Leases and any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product, but excluding interest income), as determined in accordance with GAAP.
"Consolidated Borrower Net Income" shall mean, for any applicable period of
computation, net income after taxes for such period of the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.
"Consolidated Capital Expenditures" shall mean, for any applicable period
of computation, all capital expenditures of the Borrower and its Subsidiaries on
a consolidated basis for such period, as determined in accordance with GAAP.
"Consolidated Parent EBITDA" shall mean, for any applicable period of
computation, the sum of (a) Consolidated Parent Net Income for such period, but
excluding therefrom all extraordinary items of income or loss, plus (b) to the
extent deducted in determining Consolidated Parent Net Income for such period,
the sum of (i) the aggregate amount of depreciation and amortization charges for
such period, plus (ii) Consolidated Parent Interest Expense for such period,
plus (iii) the aggregate amount of all income taxes reflected on the
consolidated statements of income of the Parent and its Subsidiaries for such
period plus (iv) adjustments set forth on Schedule 1.1-2 related to (A) the fees
and expenses associated with the Acquisition and the closing of this Credit
Agreement, (B) OIG Settlement Costs in an aggregate amount not to exceed
$1,700,000 and (C) KCI Litigation Expenses in an aggregate amount not to exceed
$3,900,000.
"Consolidated Parent Interest Expense" shall mean, for any applicable
period of computation, all interest expense of the Parent and its Subsidiaries
on a consolidated basis for such period (including, without limitation, the
interest component under Capital Leases and any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product, but excluding interest income), as determined in accordance with GAAP.
"Consolidated Parent Net Income" shall mean, for any applicable period of
computation, net income after taxes for such period of the Parent and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.
"Consolidated Working Capital" shall mean, for any applicable period of
computation, (a) all current assets of the Borrower and its Subsidiaries on a
consolidated basis minus (b) all current liabilities of the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.
"Continuing Directors" shall mean, during any period of up to 24
consecutive months commencing after the Closing Date, individuals who at the
beginning of such 24 month period were directors of the Parent (together with
any new director whose election by the Parent's board of directors or whose
nomination for election by the Parent's shareholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the
7
beginning of such period or whose election or nomination for election was
previously so approved).
"Contractual Obligation" shall mean, as to any Person, any provision of any
security issued by such Person or of any contract, agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyright Licenses" shall mean any agreement, written or oral, naming the
Borrower or any of its Subsidiaries as licensor and granting any right under any
Copyright including, without limitation, any thereof referred to in Schedule
3.16.
"Copyrights" shall mean (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith (including,
without limitation, registrations, recordings and applications in the United
States Copyright Office), including, without limitation, any thereof referred to
in Schedule 3.16, and (b) all renewals thereof including, without limitation,
any renewals referred to in Schedule 3.16.
"Credit Documents" shall mean this Agreement, each of the Notes, any
Joinder Agreement, the LOC Documents, the Security Documents and all other
agreements, documents, certificates and instruments delivered to the
Administrative Agent or any Lender by any Credit Party in connection therewith
(excluding, however, any Hedging Agreement).
"Credit Party" shall mean any of the Borrower or the Guarantors.
"Credit Party Obligations" shall mean, without duplication, (a) all of the
obligations of the Credit Parties to the Lenders (including the Issuing Lender)
and the Administrative Agent, whenever arising, under this Agreement, the Notes
or any of the other Credit Documents (including, but not limited to, any
interest accruing after the occurrence of a filing of a petition of bankruptcy
under the Bankruptcy Code with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code) and (b) all
liabilities and obligations, whenever arising, owing from any Credit Party or
any of its Subsidiaries to any Hedging Agreement Provider arising under any
Secured Hedging Agreement permitted pursuant to Section 6.1(e).
"Debentures" shall mean the Debentures, each dated as of the Closing Date,
executed by the Borrower and Orthofix UK Ltd in favor of the Administrative
Agent, in each case as amended, modified, restated or supplemented from time to
time in accordance with its terms and the terms hereof.
"Debt Issuance" shall mean the issuance of any Indebtedness for borrowed
money by the Borrower or any of its Subsidiaries (excluding, for purposes
hereof, any Equity Issuance or any Indebtedness of the Borrower and its
Subsidiaries permitted to be incurred pursuant to Section 6.1 hereof).
8
"Default" shall mean any event which would constitute an Event of Default,
whether or not any requirement for the giving of notice or the lapse of time, or
both, or any other condition with respect to such Event of Default, has been
satisfied.
"Defaulting Lender" shall mean, at any time, any Lender that, at such time
(a) has failed to make a Loan required pursuant to the term of this Credit
Agreement, including the funding of a Participation Interest in accordance with
the terms hereof, (b) has failed to pay to the Administrative Agent or any
Lender an amount owed by such Lender pursuant to the terms of this Credit
Agreement, or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver, trustee or similar
official.
"Deferred Purchase Agreement" shall mean the deferred purchase agreement
between the Borrower and Orthofix UK Ltd., dated as of the Closing Date.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's Domestic Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which Alternate Base Rate Loans of such Lender are to be made.
"Drop Down Date" shall mean the date upon which BV II shall have
transferred ownership of all of the Capital Stock of Orthofix Holdings owned by
BV II to the Borrower on terms reasonably satisfactory to the Administrative
Agent.
"Eligible UK Lender" means a Lender that is (a) (i) a "bank" (as defined
for purposes of Section 349 of the UK Income and Corporation Taxes Act 1988)
making an advance under this Credit Agreement or (ii) a Lender in respect of an
advance made under this Credit Agreement by a Person that was a "bank" (as
defined for purposes of Section 349 of the UK Income and Corporation Taxes Act
1988) at the time that such advance was made, and (b) beneficially entitled to
interest payable to such Lender in respect of such advance and within the charge
to United Kingdom corporation tax as regards any payments of interest made in
respect of such advance.
"Environmental Laws" shall mean any and all applicable foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirement of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health as such
relates to exposure to Materials of Environmental Concern or the environment, as
now or may at any time be in effect during the term of this Agreement.
"Equity Issuance" shall mean any issuance by the Parent, the Borrower or
any of the Borrower's Subsidiaries to any Person that is not the Parent or one
of its Subsidiaries of (a) shares of its Capital Stock, (b) any shares of its
Capital Stock pursuant to the exercise of options or warrants (excluding
employee stock options), (c) any shares of its Capital Stock
9
pursuant to the conversion of any debt securities to equity or (d) warrants or
options which are exercisable for shares of its Capital Stock. The term "Equity
Issuance" shall not include any Asset Disposition or Debt Issuance.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, modified, succeeded or replaced from time to time.
"Eurodollar Reserve Percentage" shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) that is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.
"Event of Default" shall mean any of the events specified in Section 7.1;
provided, however, with respect to any such event, that any requirement for the
giving of notice or the lapse of time, or both, or any other condition with
respect thereto, has been satisfied.
"Excess Cash Flow" shall mean, with respect to any fiscal year of the
Borrower commencing with the Borrower's fiscal year ending December 31, 2004,
for the Borrower and its Subsidiaries on a consolidated basis, an amount equal
to (a) Consolidated Borrower EBITDA for such period minus (b) Consolidated
Capital Expenditures for such period minus (c) Scheduled Funded Debt Payments
made during such period minus (d) Consolidated Borrower Interest Expense
(excluding any Consolidated Borrower Interest Expense associated with
intercompany Indebtedness) for such period minus (e) amounts paid in respect of
federal, state, local and foreign income taxes of the Borrower and its
Subsidiaries with respect to such period minus (f) increases in Consolidated
Working Capital plus (g) decreases in Consolidated Working Capital minus (h)
optional prepayments of Revolving Loans (to the extent accompanied by a
corresponding reduction of the Revolving Committed Amount) and the Term Loan
made pursuant to Section 2.7(a).
"Extension of Credit" shall mean, as to any Lender, the making of a Loan by
such Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.
"Federal Funds Effective Rate" shall have the meaning set forth in the
definition of "Alternate Base Rate".
"Fee Letter" shall mean the letter agreement dated November 10, 2003
addressed to the Borrower from Wachovia and WCM, as amended, modified, restated
or supplemented from time to time in accordance with its terms.
"Fixed Charge Coverage Ratio" shall mean, with respect to the Borrower and
its Subsidiaries on a consolidated basis for the twelve-month period ending on
the last day of any fiscal quarter of the Borrower, the ratio of (a)
Consolidated Borrower EBITDA for such period to (b) the sum of Consolidated
Borrower Interest Expense for such period plus Scheduled Funded
10
Debt Payments for such period plus cash taxes paid or payable during such period
plus Consolidated Capital Expenditures for such period plus Restricted Payments
made during such period. Notwithstanding the foregoing, for purposes of
calculating the Fixed Charge Coverage Ratio for the fiscal quarters ending March
31, 2004, June 30, 2004 and September 30, 2004, the Fixed Charge Coverage Ratio
shall be determined by annualizing the Consolidated Borrower Interest Expense
during such fiscal quarters such that (i) for the calculation of the Fixed
Charge Coverage Ratio as of March 31, 2004, the Consolidated Borrower Interest
Expense for the fiscal quarter ending March 31, 2004 would be multiplied by four
(4), (ii) for the calculation of the Fixed Charge Coverage Ratio as of June 30,
2004, the Consolidated Borrower Interest Expense for the two fiscal quarter
period then ending would be multiplied by two (2) and (iii) for the calculation
of the Fixed Charge Coverage Ratio as of September 30, 2004, the Consolidated
Borrower Interest Expense for the three fiscal quarter period then ending would
be multiplied by one and one-third (1 1/3).
"Flood Hazard Property" shall have the meaning set forth in Section
4.1(f)(iv).
"Funded Debt" shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person incurred, issued or
assumed as the deferred purchase price of property or services purchased by such
Person (other than trade debt incurred in the ordinary course of business and
due within six months of the incurrence thereof) that would appear as
liabilities on a balance sheet of such Person, (e) the principal portion of all
obligations of such Person under Capital Leases, (f) all obligations of such
Person under Hedging Agreements to the extent required to be accounted for as a
liability under GAAP, excluding any portion thereof which would be accounted for
as interest expense under GAAP, (g) the maximum amount of all letters of credit
issued or bankers' acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (h) all preferred Capital Stock or other equity interests issued
by such Person and which by the terms thereof could be (at the request of the
holders thereof or otherwise) subject to mandatory sinking fund payments,
redemption or other acceleration, (i) the principal balance outstanding under
any synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product, (j) all Indebtedness of others of
the type described in clauses (a) through (i) hereof secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production
from, property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (k) all Guaranty Obligations of such Person
with respect to Indebtedness of another Person of the type described in clauses
(a) through (i) hereof, and (l) all Indebtedness of the type described in
clauses (a) through (i) hereof of any partnership or unincorporated joint
venture in which such Person is a general partner or a joint venturer; provided,
however, that (i) with respect to Funded Debt of the Parent and its
Subsidiaries, Funded Debt shall not include Subordinated Indebtedness
(including, without limitation, the Parent Intercompany Loan) among the Borrower
and the Guarantors to the extent such Indebtedness would be eliminated on a
consolidated basis and (ii) with respect to Funded Debt
11
of the Borrower and its Subsidiaries, Funded Debt shall not include Subordinated
Indebtedness (including, without limitation, the Parent Intercompany Loan or the
Deferred Purchase Agreement) among the Borrower and the Subsidiary Guarantors to
the extent such Indebtedness would be eliminated on a consolidated basis.
"GAAP" shall mean generally accepted accounting principles in effect in the
United States of America applied on a consistent basis, subject, however, in the
case of determination of compliance with the financial covenants set out in
Section 5.9, to the provisions of Section 1.3.
"Government Acts" shall have the meaning set forth in Section 2.19(a).
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty Obligations" shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (a) to purchase any such Indebtedness or
any property constituting security therefore, (b) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (c) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.
"Guarantor" shall have the meaning set forth in the first paragraph of this
Agreement.
"Guaranty" shall mean the guaranty of the Guarantors set forth in Article
X.
"Hedging Agreement Provider" shall mean any Person that enters into a
Secured Hedging Agreement with a Credit Party or any of its Subsidiaries that is
permitted by Section 6.1(e) to the extent such Person is a Lender, an Affiliate
of a Lender or any other Person that was a Lender (or an Affiliate of a Lender)
at the time it entered into the Secured Hedging Agreement but has ceased to be a
Lender (or whose Affiliate has ceased to be a Lender) under the Credit
Agreement.
"Hedging Agreements" shall mean, with respect to any Person, any agreements
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreements or similar arrangements between such Person
and one or more counterparties, any foreign currency
12
exchange agreements, currency protection agreements, commodity purchase or
option agreements or other interest or exchange rate or commodity price hedging
agreements.
"Indebtedness" shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) that would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Guaranty Obligations of such Person with respect to Indebtedness of another
Person, (h) the principal portion of all obligations of such Person under
Capital Leases plus any accrued interest thereon, (i) all obligations of such
Person under Hedging Agreements to the extent required to be accounted for as a
liability under GAAP, excluding any portion thereof which would be accounted for
as interest expense under GAAP, (j) the maximum amount of all letters of credit
issued or bankers' acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock or other equity interest issued
by such Person and which by the terms thereof could be (at the request of the
holders thereof or otherwise) subject to mandatory sinking fund payments,
redemption or other acceleration, (l) the principal balance outstanding under
any synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product plus any accrued interest thereon,
and (m) the Indebtedness of any partnership or unincorporated joint venture in
which such Person is a general partner or a joint venturer.
"Initial Lender" shall mean a Lender (a) that is a party to this Credit
Agreement on the Closing Date or (b) whose Commitment is held by Wachovia on the
Closing Date and assigned from Wachovia to such Lender thereafter; provided that
a Lender shall not be treated as an Initial Lender for the purposes of Section
9.6 immediately following an assignment or participation by such Lender of all
of its rights and obligations under this Credit Agreement.
"Initial Mortgaged Properties" shall have the meaning set forth in Section
4.1(f)(i).
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Insolvent" shall mean being in a condition of Insolvency.
"Intellectual Property" shall mean, collectively, all Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses.
13
"Interest Coverage Ratio" shall mean, with respect to the Borrower and its
subsidiaries on a consolidated basis for the twelve-month period ending on the
last day of any fiscal quarter of the Borrower, the ratio of (a) Consolidated
Borrower EBITDA for such period to (b) Consolidated Borrower Interest Expense
for such period. Notwithstanding the foregoing, for purposes of calculating the
Interest Coverage Ratio for the fiscal quarters ending March 31, 2004, June 30,
2004 and September 30, 2004, the Interest Coverage Ratio shall be determined by
annualizing the Consolidated Borrower Interest Expense during such fiscal
quarters such that (i) for the calculation of the Interest Coverage Ratio as of
March 31, 2004, the Consolidated Borrower Interest Expense for the fiscal
quarter ending March 31, 2004 would be multiplied by four (4), (ii) for the
calculation of the Interest Coverage Ratio as of June 30, 2004, the Consolidated
Borrower Interest Expense for the two fiscal quarter period then ending would be
multiplied by two (2) and (iii) for the calculation of the Interest Coverage
Ratio as of September 30, 2004, the Consolidated Borrower Interest Expense for
the three fiscal quarter period then ending would be multiplied by one and
one-third (1 1/3).
"Interest Determination Date" shall have the meaning assigned thereto in
the definition of "Applicable Percentage".
"Interest Payment Date" shall mean (a) as to any Alternate Base Rate Loan
or Swingline Loan, the last Business Day of each March, June, September and
December during the term of this Agreement and on the Maturity Date, (b) as to
any LIBOR Rate Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any LIBOR Rate Loan having an Interest
Period longer than three months, (i) each three month anniversary of the first
day of such Interest Period and (ii) the last day of such Interest Period, and
(d) as to any Loan which is the subject of a mandatory prepayment required
pursuant to Section 2.7(b) hereof, the date of such prepayment.
"Interest Period" shall mean, with respect to any LIBOR Rate Loan,
(a) initially, the period commencing on the Borrowing Date or
conversion date, as the case may be, with respect to such LIBOR Rate Loan
and ending one, two, three or six months thereafter, subject to
availability, as selected by the Borrower in the Notice of Borrowing or
Notice of Conversion/Extension given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Rate Loan
and ending one, two, three or six months thereafter, subject to
availability, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three (3) Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that the foregoing provisions are subject to the
following:
(i) if any Interest Period pertaining to a LIBOR Rate Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension
14
would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan 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
at the end of such Interest Period) shall end on the last Business Day
of the relevant calendar month for such Interest Period;
(iii) if the Borrower shall fail to give notice as provided
above, the Borrower shall be deemed to have selected an Alternate Base
Rate Loan to replace the affected LIBOR Rate Loan;
(iv) any Interest Period in respect of any Loan that would
otherwise extend beyond the Maturity Date shall end on the Maturity
Date;
(v) with regard to the Term Loan, no Interest Period shall extend
beyond any principal amortization payment date unless the portion of
the Term Loan consisting of Alternate Base Rate Loans together with
the portion of the Term Loan consisting of LIBOR Rate Loans with
Interest Periods expiring prior to or concurrently with the date such
principal amortization payment date is due, is at least equal to the
amount of such principal amortization payment due on such date; and
(vi) no more than six (6) LIBOR Rate Loans may be in effect at
any time; provided that, for purposes hereof, LIBOR Rate Loans with
different Interest Periods shall be considered as separate LIBOR Rate
Loans, even if they shall begin on the same date and have the same
duration, although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new LIBOR Rate Loan with a
single Interest Period.
"Investment" shall mean all investments made directly or indirectly in, to
or from any Person, whether in cash or by acquisition of shares of Capital
Stock, property, assets, indebtedness or other obligations or securities or by
loan advance, capital contribution or otherwise.
"IOL" shall mean Intavent Orthofix Limited, a company formed under the laws
of England and Wales and registered with number 02853159.
"IOL Limited Guaranty and Pledge Agreement" shall mean the pledge agreement
dated as of the Closing Date executed by IOL, in favor of the Administrative
Agent, as amended, modified, restated or supplemented from time to time in
accordance with its terms and the terms hereof.
"Issuing Lender" shall mean Wachovia.
15
"Issuing Lender Fees" shall have the meaning set forth in Section 2.5(c).
"Joinder Agreement" shall mean a Joinder Agreement substantially in the
form of Schedule 5.10, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10.
"KCI Litigation Expenses" shall mean those expenses incurred by the Parent
or its Subsidiaries in connection with the litigation between Novamedix, a
subsidiary of the Parent, and Kinetic Concepts Inc., regarding alleged
infringement of patents relating to Novamedix's A-V Impulse System product.
"Kinesis Earnout" shall mean the earnout obligations of Orthofix Inc. upon
(i) the receipt of a unique healthcare reimbursement code and (ii) the
attainment of certain sales thresholds, in each case owed to Kinesis Medical
Inc. in connection with Orthofix Inc.'s acquisition of Kinesis Medical Inc.'s
pneumatic vest business on August 31, 2000.
"Lender" shall have the meaning set forth in the first paragraph of this
Agreement and shall include the Issuing Lender and the Swingline Lender.
"Letters of Credit" shall mean any letter of credit issued by the Issuing
Lender pursuant to the terms hereof, as such Letters of Credit may be amended,
modified, extended, renewed or replaced from time to time.
"Letter of Credit Fee" shall have the meaning set forth in Section 2.5(b).
"LIBOR" shall mean, for any LIBOR Rate Loan for any Interest Period
therefore, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR" shall mean, for any LIBOR Rate Loan for
any Interest Period therefore, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%). If, for any reason, neither of such rates is
available, then "LIBOR" shall mean the rate per annum at which, as determined by
the Administrative Agent, Dollars in an amount comparable to the Loans then
requested are being offered to leading banks at approximately 11:00 A.M. London
time, two (2) Business Days prior to the commencement of the applicable Interest
Period for settlement in immediately available funds by leading banks in the
London interbank market for a period equal to the Interest Period selected.
16
"LIBOR Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's LIBOR Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which the LIBOR Rate Loans of such Lender are to be made.
"LIBOR Rate" shall mean a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:
LIBOR Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
"LIBOR Rate Loan" shall mean Loans the rate of interest applicable to which
is based on the LIBOR Rate.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).
"Limited Guarantors" shall mean IOL and BV II.
"Loan" shall mean a Revolving Loan, a Swingline Loan and/or a Term Loan, as
appropriate.
"LOC Commitment" shall mean the commitment of the Issuing Lender to issue
Letters of Credit and, with respect to each Revolving Lender, the commitment of
such Revolving Lender to purchase participation interests in the Letters of
Credit up to the amount identified as such Revolving Lender's "LOC Commitment"
on Schedule 2.1(a) or in the Register, as such amount may be modified in
connection with any assignment made in accordance with the provisions of Section
9.6(c) or reduced from time to time in accordance with the provisions hereof.
"LOC Committed Amount" shall have the meaning set forth in Section 2.3(a).
"LOC Documents" shall mean, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefore, and any agreements, instruments,
guarantees or other documents (whether general in application or applicable only
to such Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or (b) any collateral security for such
obligations.
"LOC Obligations" shall mean, at any time, the sum of (a) the maximum
amount which is, or at any time thereafter may become, available to be drawn
under Letters of Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Letters
17
of Credit plus (b) the aggregate amount of all drawings under Letters of Credit
honored by the Issuing Lender but not theretofore reimbursed.
"Mandatory Borrowing" shall have the meaning set forth in Section 2.3(e)
and Section 2.4(b)(ii), as the context may require.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Parent and its Subsidiaries taken as a whole or the Borrower and its
Subsidiaries taken as a whole, (b) the ability of the Parent, the Borrower or
the Borrower and the Subsidiary Guarantors taken as a whole to perform its or
their obligations, as applicable, when such obligations are required to be
performed, under this Agreement, any of the Notes or any other Credit Document
or (c) the validity or enforceability of this Agreement, any of the Notes or any
of the other Credit Documents or the rights or remedies of the Administrative
Agent or the Lenders hereunder or thereunder.
"Material Contract" shall mean any contract or other arrangement, whether
written or oral, to which the Parent, the Borrower or any of the Borrower's
Subsidiaries is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.
"Material Property" shall mean real and/or personal property of the
Borrower and the Subsidiary Guarantors with an aggregate fair market value
greater than or equal to $1,000,000.
"Materials of Environmental Concern" shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" shall mean December 30, 2008.
"Medicaid" shall mean that entitlement program under Title XIX of the
Social Security Act that provides federal grants to states for medical
assistance based on specific eligibility criteria.
"Medicaid Certification" shall mean recognition by a state agency or other
such entity administering a particular state's Medicaid program that a health
care provider or supplier is in compliance with all the conditions of
participation set forth in the appropriate state and federal Medicaid
Regulations.
"Medicaid Provider Agreement" shall mean an agreement entered into between
a state agency or other such entity administering the Medicaid program and a
health care provider or supplier under which the health care provider or
supplier agrees to provide services for Medicaid patients in accordance with the
terms of the agreement and Medicaid Regulations.
"Medicaid Regulations" shall mean, collectively, (a) all federal statutes
(whether set forth
18
in Title XIX of the Social Security Act or elsewhere) affecting the medical
assistance program established by Title XIX of the Social Security Act and any
statutes succeeding thereto; (b) all applicable provisions of all federal rules,
regulations, manuals and orders of all Governmental Authorities promulgated
pursuant to or in connection with the statutes described in clause (a) above and
all federal administrative, reimbursement and other guidelines of all
Governmental Authorities having the force of law promulgated pursuant to or in
connection with the statutes described in clause (a) above; (c) all state
statutes and plans for medical assistance enacted in connection with the
statutes and provisions described in clauses (a) and (b) above; and (d) all
applicable provisions of all rules, regulations, manuals and orders of all
Governmental Authorities promulgated pursuant to or in connection with the
statutes described in clause (c) above and all state administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of law promulgated pursuant to or in connection with the statutes
described in clause (b) above, in each case as may be amended, supplemented or
otherwise modified from time to time.
"Medical Reimbursement Programs" shall mean Medicare, Medicaid and TRICARE
programs and any other healthcare program operated by or financed in whole or in
part by any foreign, federal, state or local government and any other
non-government funded third party payor programs.
"Medicare Certification" shall mean recognition by CMS or an entity under
contract with CMS that the health care provider or supplier is in compliance
with all of the conditions of participation set forth in the Medicare
Regulations.
"Medicare Provider Agreement" means an agreement entered into between CMS
or other such entity administering the Medicare program on behalf of CMS, and a
health care provider or supplier under which the health care provider or
supplier agrees to provide services for Medicare patients in accordance with the
terms of the agreement and Medicare Regulations.
"Medicare" shall mean that government-sponsored entitlement program under
Title XVIII of the Social Security Act that provides for a health insurance
system for eligible elderly and disabled individuals.
"Medicare Regulations" shall mean, collectively, all Federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled established by
Title XVIII of the Social Security Act and any statutes succeeding thereto;
together with all applicable provisions of all rules, regulations, manuals and
orders and administrative, reimbursement and other guidelines having the force
of law of all Governmental Authorities (including, without limitation, the
United States Department of Health and Human Services ("HHS"), CMS, the OIG, or
any person succeeding to the functions of any of the foregoing) promulgated
pursuant to or in connection with any of the foregoing having the force of law,
as each may be amended, supplemented or otherwise modified from time to time.
"Merger Documents" shall mean the Certificate of Merger to be filed with
the Secretary of State of the State of Delaware and the Agreement of Merger to
be filed with the Secretary of State of the State of California, in each case in
connection with the Acquisition.
19
"Mexican Security Documents" shall mean the Pledge Agreement executed by
the Mexican Subsidiary in favor of the Administrative Agent and any other
agreement or instrument executed by the Mexican Subsidiary in connection
therewith, in each case as amended, modified, restated or supplemented from time
to time in accordance with its terms and the terms hereof.
"Mexican Subsidiary" shall mean Breg Mexico S. de X.X. de C.V., a company
organized under the laws of Mexico.
"Moody's" shall mean Xxxxx'x Investors Service, Inc or any successor rating
agency.
"Mortgage Instruments" shall mean any mortgage, deed of trust or deed to
secure debt executed by a Credit Party in favor of the Administrative Agent
pursuant to the terms of Section 4.1(f)(i), 5.10 or 5.12, as the same may be
amended, modified, restated or supplemented from time to time.
"Mortgage Policy" shall mean an ALTA mortgagee title insurance policy
issued by the Title Insurance Company in an amount (limited to 125% of the
appraised value (if an appraisal is available) or, if no appraisal is available,
then 125% of the assessed value) satisfactory to the Administrative Agent, in
form and substance satisfactory to the Administrative Agent.
"Mortgaged Property" shall mean any owned or leased real property of a
Credit Party with respect to which such Credit Party executes a Mortgage
Instrument in favor of the Administrative Agent.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean the aggregate cash proceeds received by (a)
the Borrower or any of its Subsidiaries in respect of any Asset Disposition,
Debt Issuance or Recovery Event and (b) the Parent, the Borrower or any of the
Borrower's Subsidiaries in respect of any Equity Issuance, in each case net of
(i) direct costs paid or payable as a result thereof (including, without
limitation, reasonable legal, accounting and investment banking fees, and sales
commissions) and (ii) taxes paid or payable as a result thereof; it being
understood that "Net Cash Proceeds" shall include, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration
received by (y) the Borrower or any of its Subsidiaries in respect of such Asset
Disposition, Equity Issuance, Debt Issuance or Recovery Event and (z) the Parent
in respect of any Equity Issuance.
"Non-U.S. Subsidiary" shall mean any Subsidiary that is not a U.S.
Subsidiary.
"Note" or "Notes" shall mean the Revolving Notes, the Swingline Note and/or
the Term Notes, collectively, separately or individually, as appropriate.
"Notice of Borrowing" shall have the meaning set forth in Section
2.1(b)(i).
20
"Notice of Conversion/Extension" shall have the meaning set forth in
Section 2.10.
"Obligations" shall mean, collectively, Loans and LOC Obligations.
"OIG" shall mean the Office of the Inspector General for the United States
Department of Health and Human Services.
"OIG Settlement Costs" shall mean those costs incurred by the Parent or its
Subsidiaries under the settlement agreement with CHAMPUS/Tricare in connection
with the OIG's investigation of the Parent's xxxxxxxx to federal and state
healthcare programs for the off-label use of the Parent's FDA approved pulsed
electronic magnetic field device.
"Orthofix Holdings" shall mean Orthofix Holdings, Inc., a subsidiary of the
Borrower organized under the laws of Delaware.
"Orthofix Holdings Contribution Agreement" shall mean the contribution
agreement between Orthofix Holdings and the Borrower, dated as of the Closing
Date.
"Orthofix Holdings Pledge Agreement" shall mean the Pledge Agreement dated
as of the Closing Date executed by Orthofix Holdings in favor of the
Administrative Agent, as amended, modified, restated or supplemented from time
to time in accordance with its terms and the terms hereof.
"Orthofix Inc." shall mean Orthofix Inc., a Minnesota corporation.
"Parent" shall have the meaning set forth in the first paragraph of this
Agreement.
"Parent Intercompany Loan" shall mean that certain unsecured, subordinated
intercompany loan from the Parent to Orthofix Holdings in connection with the
consummation of the Acquisition in an aggregate principal amount not to exceed
$35,561,835.
"Parent Leverage Ratio" shall mean, with respect to the Parent and its
Subsidiaries on a consolidated basis for the twelve-month period ending on the
last day of any fiscal quarter of the Parent, the ratio of (a) Funded Debt of
the Parent and its Subsidiaries on a consolidated basis on the last day of such
period to (b) Consolidated Parent EBITDA for such period.
"Participant" shall have the meaning set forth in Section 9.6(b).
"Participation Interest" shall mean the purchase by a Revolving Lender of a
participation interest in Letters of Credit as provided in Section 2.3 and in
Swingline Loans as provided in Section 2.4.
"Patent License" shall mean any agreement, whether written or oral,
providing for the grant by or to the Borrower or any of its Subsidiaries of any
right to manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Schedule 3.16.
21
"Patents" shall mean (a) all patents of the United States or any other
country and all reissues and extensions thereof, including, without limitation,
any thereof referred to in Schedule 3.16, and (b) all applications for patents
of the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any thereof
referred to in Schedule 3.16.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Acquisition" shall mean any acquisition or any series of related
acquisitions by the Borrower or a Subsidiary Guarantor of the assets or a
majority of the Voting Stock or equity interests of a Person that is
incorporated, formed or organized in the United States, including any of its
territories or commonwealths, or any division, line of business or other
business unit of a Person that is incorporated, formed or organized in the
United States, including any of its territories or commonwealths (such Person or
such division, line of business or other business unit of such Person referred
to herein as the "Target"), in each case that is a type of business (or assets
used in a type of business) permitted to be engaged in by the Borrower and the
Subsidiary Guarantors pursuant to this Credit Agreement, so long as (a) no
Default or Event of Default shall then exist or would exist after giving effect
thereto, (b) the Administrative Agent, on behalf of the Lenders, shall have
received (or shall receive in connection with the closing of such acquisition),
a first priority perfected security interest in all property with such
exceptions as approved by the Administrative Agent (including, without
limitation, Capital Stock or equity interests) acquired with respect to the
Target and the Target, if a Person, shall have executed a Joinder Agreement, (c)
such acquisition is not a "hostile" acquisition and has been approved by the
board of directors and/or shareholders (or comparable persons or groups) of the
Borrower or the applicable Subsidiary Guarantor and the Target, (d) after giving
effect to such acquisition, there shall be at least $5,000,000 of borrowing
availability under the Revolving Committed Amount, (e) the Administrative Agent
shall have received a certificate from a Responsible Officer of the Borrower
certifying that, in the reasonable judgment of the Borrower, the Borrower and
the Subsidiary Guarantors have conducted such financial, legal, environmental
and consulting due diligence with respect to the Target as a substantially
similarly situated prudent purchaser acquiring substantially similar property
and/or assets would customarily conduct, (f) the total consideration (including,
without limitation, cash, Capital Stock, assumed Indebtedness, earnout payments
and any other deferred payment) paid for the Target acquired in such acquisition
or series of related acquisitions shall not exceed $15,000,000 for any
individual acquisition (or series of related acquisitions), $25,000,000 in the
aggregate for all acquisitions during any four fiscal quarter period, or
$50,000,000 in the aggregate during the Commitment Period and (g) to the extent
the total consideration of any Permitted Acquisition is in excess of $5,000,000
or the Borrower requests a Revolving Loan to fund such Permitted Acquisition,
the Borrower and the Subsidiary Guarantors shall provide not less than twenty
(20) Business Days prior to the consummation of such Permitted Acquisition (i) a
reasonably detailed description of the material terms of such Permitted
Acquisition (including, without limitation, the purchase price and method and
structure of payment) and of each Target, (ii) to the extent available,
financial statements of the Target for the previous two years and year-to-date
financial statements of the Target, and (iii) a certificate, in form and
substance reasonably satisfactory to
22
the Administrative Agent, executed by a Responsible Officer of the Borrower (A)
setting forth the best good faith estimate of the total consideration
(including, without limitation, cash, Capital Stock, assumed Indebtedness,
earnout payments and any other deferred payment) to be paid for each Target, and
(B) certifying that such Permitted Acquisition complies with the requirements of
this Credit Agreement and (z) certifying and demonstrating that after giving
effect to such Permitted Acquisition and any borrowings in connection therewith
on a Pro Forma Basis, the Borrower and its Subsidiaries will be in compliance
with the financial covenants set forth in Section 5.9.
"Permitted Investments" shall mean:
(a) cash and Cash Equivalents;
(b) receivables owing to the Borrower or any of its Subsidiaries or
any receivables and advances to suppliers, in each case if created,
acquired or made in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(c) Investments (including, without limitation, the purchase or
ownership of Capital Stock) by any Credit Party in any other Credit Party
(other than the Parent) and Subordinated Indebtedness owing by any Credit
Party to any other Credit Party (other than the Parent);
(d) the Parent Intercompany Loan;
(e) loans and advances to officers, directors, employees and
Affiliates in the ordinary course of business in an aggregate amount not to
exceed $500,000 at any time outstanding;
(f) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(g) Investments, acquisitions or transactions permitted under Section
6.4(b);
(h) Permitted Acquisitions;
(i) Hedging Agreements to the extent permitted pursuant to Section
6.1(e); and
(j) additional loan advances and/or Investments of a nature not
contemplated by the foregoing clauses hereof; provided that such loans,
advances and/or Investments made pursuant to this clause (j) shall not
exceed an aggregate amount of $500,000.
23
"Permitted Liens" shall mean:
(a) Liens created by or otherwise existing, under or in connection
with this Agreement or the other Credit Documents in favor of the
Administrative Agent and each other Secured Party;
(b) Liens securing purchase money Indebtedness and Capital Lease
Obligations to the extent permitted under Section 6.1(c), including Liens
existing on any asset at the time of acquisition pursuant to a Permitted
Acquisition (other than any such Liens created in contemplation of such
acquisition that do not secure the purchase price); provided that (i) any
such Lien attaches to such property concurrently with or within thirty (30)
days after the acquisition thereof and (ii) such Lien attaches solely to
the property so acquired in such transaction;
(c) Liens for taxes, assessments, charges or other governmental levies
not yet due or as to which the period of grace (not to exceed 60 days), if
any, related thereto has not expired or which are being contested in good
faith by appropriate proceedings; provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or any of its
Subsidiaries, as the case may be, in conformity with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than sixty (60) days or which are being
contested in good faith by appropriate proceedings;
(e) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements incurred in the ordinary course of business;
(f) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(g) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred to in
the foregoing clauses; provided that such extension, renewal or replacement
Lien shall be limited to all or a part of the property which secured the
Lien so extended, renewed or replaced;
(h) Liens in favor of a Hedging Agreement Provider in connection with
any Secured Hedging Agreement, but only (i) to the extent such Liens are on
the Collateral and are shared ratably with the Administrative Agent and
(ii) if such Hedging Agreement Provider, the Administrative Agent and the
Lenders shall share the proceeds of the Collateral subject to such Liens in
accordance with the terms of Section 2.12(b);
24
(i) Liens existing on the Closing Date and set forth on Schedule
1.1-3; provided that (i) no such Lien shall at any time be extended to
cover property or assets other than the property or assets subject thereto
on the Closing Date and (ii) the principal amount of the Indebtedness
secured by such Liens shall not be extended, renewed, refunded or
refinanced;
(j) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances shown on any Mortgage Policy or not, in any
material respect, impairing the use of the encumbered Property for its
intended purposes; and
(iii) Liens on equipment arising from precautionary UCC financing
statements relating to the lease of such equipment to the extent permitted
by this Agreement.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" shall mean, at any particular time, any employee benefit plan which
is covered by Title IV of ERISA and in respect of which any Credit Party or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreement" shall mean the pledge agreement dated as of the Closing
Date executed by the Borrower and its Subsidiaries in favor of the
Administrative Agent, as amended, modified, restated or supplemented from time
to time in accordance with its terms and the terms hereof.
"Prime Rate" shall have the meaning set forth in the definition of
"Alternate Base Rate".
"Pro Forma Basis" shall mean, with respect to any transaction, that such
transaction shall be deemed to have occurred as of the first day of the
twelve-month period ending as of the most recent month end ending at least
twenty (20) days preceding the date of such transaction.
"Properties" shall have the meaning set forth in Section 3.10(a).
"Purchase Agreement" shall mean the Acquisition Agreement dated as of
November 20, 2003, among the Parent, Trevor Acquisition, Inc., a Delaware
company, the Acquired Company and Xxxxxxx X. Xxxxx, as the representative
shareholders of the Acquired Company.
"Purchasing Lenders" shall have the meaning set forth in Section 9.6(c).
"Qualified Lender" shall mean a Treaty Lender or an Eligible UK Lender.
25
"Recovery Event" shall mean the receipt by the Borrower or any Subsidiary
Guarantor of any cash insurance proceeds or condemnation award payable by reason
of theft, loss, physical destruction or damage, taking or similar event with
respect to any Material Property.
"Register" shall have the meaning set forth in Section 9.6(d).
"Reorganization" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.
"Related Fund" shall mean, with respect to any Lender, any fund or trust or
entity that invests in commercial bank loans in the ordinary course of business
and is advised or managed by (a) such Lender, (b) an Affiliate of such Lender,
(c) any other Lender or any Affiliate thereof or (d) the same investment advisor
as any Person described in clauses (a) - (c).
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under PBGC Reg. ss.4043.
"Required Lenders" shall mean, at any time, Lenders holding in the
aggregate a majority of (i) the Commitments (and Participation Interests
therein) or (ii) if the Commitments have been terminated, the outstanding Loans
and Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit and of the Swingline Lender in Swingline
Loans); provided, however, that if any Lender shall be a Defaulting Lender at
such time, then there shall be excluded from the determination of Required
Lenders, Obligations (including Participation Interests) owing to such
Defaulting Lender and such Defaulting Lender's Commitments, or after termination
of the Commitments, the principal balance of the Obligations owing to such
Defaulting Lender.
"Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Material Property or to which such
Person or any of its Material Property is subject.
"Responsible Officer" shall mean, as to (a) the Borrower, any of the
President, the Chief Executive Officer or the Chief Financial Officer or the
Treasurer or (b) any other Credit Party, any duly authorized officer thereof.
"Restricted Payments" shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Borrower or any of its Subsidiaries, now or hereafter outstanding, (b) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding,
(c) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or
26
hereafter outstanding, (d) any payment with respect to any earnout
obligation, (e) any payment or prepayment of principal of, premium, if any, or
interest on, redemption, purchase, retirement, defeasance, sinking fund or
similar payment with respect to, any Subordinated Indebtedness or (f) the
payment by the Borrower or any of its Subsidiaries of any management or
consulting fee to any Person or of any salary, bonus or other form of
compensation to any Person who is directly or indirectly a significant partner,
shareholder, owner or executive officer of any such Person, to the extent such
salary, bonus or other form of compensation is either not included in the
corporate overhead of the Borrower or such Subsidiary or, to the extent such
salary, bonus or other form of compensation, is reimbursed by the Parent.
"Revolving Committed Amount" shall have the meaning set forth in Section
2.1.
"Revolving Commitment" shall mean, with respect to each Revolving Lender,
the commitment of such Revolving Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding up to the amount identified as such
Revolving Lender's "Revolving Commitment" on Schedule 2.1(a) or in the Register,
as such amount may be modified in connection with any assignment made in
accordance with the provisions of Section 9.6(c) or reduced from time to time in
accordance with the provisions hereof.
"Revolving Commitment Percentage" shall mean, for each Revolving Lender,
the percentage identified as its "Revolving Commitment Percentage" on Schedule
2.1(a) or in the Register, as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 9.6(c).
"Revolving Lender" shall mean, as of any date of determination, each Lender
with a Revolving Commitment greater than $0.
"Revolving Loans" shall have the meaning set forth in Section 2.1.
"Revolving Note" or "Revolving Notes" shall mean the promissory notes of
the Borrower in favor of each of the Revolving Lenders evidencing the Revolving
Loans provided pursuant to Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, supplemented,
extended, renewed or replaced from time to time.
"S&P" shall mean Standard & Poor's Ratings Service, a division of The
McGraw Hill Companies, Inc. or any successor or rating agency.
"Scheduled Funded Debt Payments" shall mean, as of any date of
determination for the Borrower and its Subsidiaries, the sum of all scheduled
payments of principal on Funded Debt for the applicable period ending on the
date of determination (including the principal component of payments due on
Capital Leases during the applicable period ending on the date of
determination).
"Secured Hedging Agreement" shall mean any Hedging Agreement between a
Credit Party and a Hedging Agreement Provider, as amended, modified, restated or
supplemented from time to time in accordance with its terms.
27
"Secured Party" shall mean each of the Administrative Agent, the Lenders
and the Hedging Agreement Providers, together with their respective successors
and assigns.
"Security Agreement" shall mean the security agreement dated as of the
Closing Date executed by the Borrower and the Subsidiary Guarantors in favor of
the Administrative Agent, as amended, modified, restated or supplemented from
time to time in accordance with its terms and the terms hereof.
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement, the BV II Limited Guaranty and Pledge Agreement, the Mortgage
Instruments, the Mexican Security Documents, the UK Collateral Documents and
such other documents executed and delivered in connection with the grant,
attachment and perfection of the Administrative Agent's security interests and
liens arising thereunder, including, without limitation, UCC financing
statements.
"Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan.
"Social Security Act" shall mean the Social Security Act as set forth in
Title 42 of the United States Code, as amended, and any successor statute
thereto, as interpreted by the rules and regulations issued thereunder, in each
case as in effect from time to time. References to sections of the Social
Security Act shall be construed also to refer to any successor sections.
"Solvent" shall mean, with respect to any Person on any date (a) the fair
saleable value of such Person's assets, measured on a going concern basis,
exceeds all probable liabilities of such Person, including contingent
liabilities and those liabilities to be incurred pursuant to this Credit
Agreement, or (b) such Person (i) does not have unreasonably small capital in
relation to the business in which it is or proposes to be engaged, (ii) has not
incurred, or believes that it will incur after giving effect to the transactions
contemplated by this Credit Agreement, debts beyond its ability to pay such
debts as they become due, (iii) has not suspended making payments on any of its
debts unless subject to a good faith dispute or (iv) by reason of actual or
anticipated financial difficulties, has not commenced negotiations with one or
more of its creditors in order to reschedule the payment of such indebtedness.
"Subordinated Indebtedness" shall mean any Indebtedness (including, without
limitation, the Parent Intercompany Loan and the Deferred Purchase Agreement)
incurred by any Credit Party that is (a) specifically subordinated in right of
payment to the prior payment of the Credit Party Obligations on terms acceptable
to the Administrative Agent and the Lenders and (b) evidenced by promissory
notes, to the extent such Indebtedness (other than Indebtedness owing in respect
of the Deferred Purchase Agreement) is owed to another Credit Party, which
promissory notes shall be pledged to the Administrative Agent as Collateral for
the Credit Party Obligations.
"Subsidiary" shall mean (a) as to any Person other than the Borrower, a
corporation, partnership, limited liability company or other entity of which
shares of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of
28
directors or other managers of such corporation, partnership, limited liability
company or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person, and (b) as to the Borrower, a corporation, partnership,
limited liability company or other entity of which shares or stock or other
ownership interest of at least a 49% interest are at the time owned directly or
indirectly through one or more intermediaries, or both, by the Borrower;
provided, however, Levtech Inc. shall not be considered a "Subsidiary"
hereunder. Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"Subsidiary Guarantor" shall have the meaning set forth in the first
paragraph of this Agreement.
"Survey" shall mean any maps or plats of an as-built survey of the site of
a Mortgaged Property, which maps or plats and the surveys on which they are
based shall be sufficient to delete any standard printed survey exception
contained in the applicable title policy and be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps, plats or surveys the
following: (a) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines; (b) the lines of
streets abutting the sites and width thereof; (c) all access and other easements
appurtenant to the sites necessary to use the sites; (d) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (e) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (f) if the site is described as being on a filed
map, a legend relating the survey to said map.
"Swingline Commitment" shall mean the commitment of the Swingline Lender to
make Swingline Loans in an aggregate principal amount at any time outstanding up
to the Swingline Committed Amount, and the commitment of the Revolving Lenders
to purchase participation interests in the Swingline Loans as provided in
Section 2.4(b)(ii), as such amounts may be reduced from time to time in
accordance with the provisions hereof.
"Swingline Committed Amount" shall have the meaning set forth in Section
2.4(a).
"Swingline Lender" shall mean Wachovia.
"Swingline Loan" or "Swingline Loans" shall have the meaning set forth in
Section 2.4(a).
"Swingline Note" shall mean the promissory note of the Borrower in favor of
the Swingline Lender evidencing the Swingline Loans provided pursuant to Section
2.4(d), as such promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time.
29
"Syndication Agent" shall have the meaning set forth in the first paragraph
of this Agreement and any successors in such capacity.
"Target" shall have the meaning set forth in the definition of "Permitted
Acquisition".
"Taxes" shall have the meaning set forth in Section 2.18.
"Term Loan" shall have the meaning set forth in Section 2.2(a).
"Term Loan Commitment" shall mean, with respect to each Term Loan Lender,
the commitment of such Term Loan Lender to make its portion of the Term Loan in
a principal amount equal to such Term Loan Lender's Term Loan Commitment
Percentage of the Term Loan Committed Amount (and for purposes of making
determinations of Required Lenders hereunder after the Closing Date, the
principal amount outstanding on the Term Loan).
"Term Loan Commitment Percentage" shall mean, for any Term Loan Lender, the
percentage identified as its Term Loan Commitment Percentage on Schedule 2.1(a),
as such percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 9.6(c).
"Term Loan Committed Amount" shall have the meaning set forth in Section
2.2(a).
"Term Loan Lender" shall mean, as of any date of determination, each Lender
that holds a portion of the outstanding Term Loan.
"Term Note" or "Term Notes" shall mean the promissory notes of the Borrower
in favor of each of the Term Loan Lenders evidencing the portion of the Term
Loan provided pursuant to Section 2.2(d), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.
"Title Insurance Company" shall mean Chicago Title Insurance Company or any
other title insurance company approved by the Administrative Agent.
"Trademark License" shall means any agreement, written or oral, providing
for the grant by or to the Borrower or any of its Subsidiaries of any right to
use any Trademark, including, without limitation, any thereof referred to in
Schedule 3.16.
"Trademarks" shall mean (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress and
service marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 3.16, and (b) all renewals
thereof, including, without limitation, any thereof referred to in Schedule
3.16.
30
"Tranche" shall mean the collective reference to LIBOR Rate Loans whose
Interest Periods begin and end on the same day. A Tranche may sometimes be
referred to as a "LIBOR Tranche".
"Transfer Effective Date" shall have the meaning set forth in each
Commitment Transfer Supplement.
"Treaty Lender" means a Lender that is treated as a resident (as such term
is defined in the appropriate double taxation agreement) in a country with which
the United Kingdom has an appropriate double taxation agreement for purposes of
such agreement, which agreement gives residents of that country full exemption
from United Kingdom taxation on interest and such Lender is (subject to
completion of any necessary formalities) entitled to such exemption.
"TRICARE" means the United States Department of Defense healthcare program
for service families (including TRICARE Prime, TRICARE Extra and TRICARE
Standard), and any successor or predecessor thereof, including without
limitation, CHAMPUS.
"Type" shall mean, as to any Loan, its nature as an Alternate Base Rate
Loan or LIBOR Rate Loan, as the case may be.
"UK Collateral Documents" shall mean the IOL Limited Guaranty and Pledge
Agreement, the Orthofix Holdings Pledge Agreement and the Debentures.
"U.S." or "United States" shall mean the United States of America.
"U.S. Subsidiary" shall mean any Subsidiary that is organized and existing
under the laws of the United States or any state or commonwealth thereof or
under the laws of the District of Columbia.
"Voting Agreement" shall mean the Voting and Subscription Agreement dated
as of November 20, 2003 among the Parent and the "Significant Shareholders" of
the Acquired Company as identified on the signature pages thereto.
"Voting Stock" shall mean, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
may be or have been suspended by the happening of such a contingency.
"Wachovia" shall mean Wachovia Bank, National Association, a national
banking association, together with its successors and/or assigns.
"WCM" shall mean Wachovia Capital Markets, LLC.
"Works" shall mean all works which are subject to copyright protection
pursuant to Title 17 of the United States Code.
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Section 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have such defined meanings when used in the Notes or other
Credit Documents or any certificate or other document made or delivered
pursuant hereto.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
Section 1.3 Accounting Terms.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Parent delivered to the Lenders;
provided that, if the Borrower notifies the Administrative Agent that it wishes
to amend any covenant in Section 5.9 to eliminate the effect of any change in
GAAP on the operation of such covenant (or if the Administrative Agent notifies
the Borrower that the Required Lenders wish to amend Section 5.9 for such
purpose), then the Borrower's compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Borrower and the Required Lenders.
The Borrower shall deliver to the Administrative Agent and each Lender at
the same time as the delivery of any annual or quarterly financial statements
given in accordance with the provisions of Section 5.1, (a) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (b) a reasonable estimate of the effect on the financial statements on
account of such changes in application.
Notwithstanding the above, the parties hereto acknowledge and agree that,
for purposes of all calculations made in determining compliance for any
applicable period with the financial covenants set forth in Section 5.9
(including without limitation for purposes of the definition of "Pro Forma
Basis" set forth in Section 1.1), after consummation of any Permitted
Acquisition, (i) income statement items and other balance sheet items (whether
positive or negative) attributable to the Target acquired in such transaction
shall be included in such calculations to the extent relating to such applicable
period, and (ii) Indebtedness of a Target that is retired in connection with a
Permitted Acquisition shall be excluded from such calculations and deemed to
have been retired as of the first day of such applicable period, in each case in
accordance with
32
Regulation S-X under the Securities Act of 1933, as amended, applicable to a
Registration Statement under such Act on Form S-1.
ARTICLE II
THE LOANS; AMOUNT AND TERMS
Section 2.1 Revolving Loans.
(a) Revolving Commitment. During the Commitment Period, subject to the
terms and conditions hereof, each Revolving Lender severally, but not
jointly, agrees to make revolving credit loans ("Revolving Loans") to the
Borrower from time to time in an aggregate principal amount of up to
FIFTEEN Million DOLLARS ($15,000,000) (as such aggregate maximum amount may
be reduced from time to time as provided in Section 2.6, the "Revolving
Committed Amount") for the purposes hereinafter set forth; provided,
however, that (i) with regard to each Revolving Lender individually, the
sum of such Revolving Lender's Revolving Commitment Percentage of
outstanding Revolving Loans plus such Revolving Lender's Revolving
Commitment Percentage of outstanding Swingline Loans plus such Revolving
Lender's Revolving Commitment Percentage of LOC Obligations shall not
exceed such Revolving Lender's Revolving Commitment and (ii) with regard to
the Revolving Lenders collectively, the sum of the outstanding Revolving
Loans plus outstanding Swingline Loans plus LOC Obligations shall not
exceed the Revolving Committed Amount. Revolving Loans may consist of
Alternate Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as
the Borrower may request, and may be repaid and reborrowed in accordance
with the provisions hereof; provided, however, Revolving Loans made on the
Closing Date or on any of the three (3) Business Days following the Closing
Date may only consist of Alternate Base Rate Loans. LIBOR Rate Loans shall
be made by each Revolving Lender at its LIBOR Lending Office and Alternate
Base Rate Loans at its Domestic Lending Office.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a Revolving
Loan borrowing by written notice (a "Notice of Borrowing")
substantially in the form of the notice attached as Schedule 2.1(b)(i)
(or telephone notice promptly confirmed by delivery to the
Administrative Agent of a Notice of Borrowing by fax or other
electronic notice with confirmed receipt from the recipient) to the
Administrative Agent not later than 12:00 Noon. (Charlotte, North
Carolina time) on the Business Day of the requested borrowing in the
case of Alternate Base Rate Loans, and on the third Business Day prior
to the date of the requested borrowing in the case of LIBOR Rate
Loans. Each such request for borrowing shall be irrevocable and shall
specify (A) that a Revolving Loan is requested, (B) the date of the
requested borrowing (which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, (D) whether the borrowing shall be
comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a
combination
33
thereof, and if LIBOR Rate Loans are requested, the Interest Period(s)
therefore. If the Borrower shall fail to specify in any such Notice of
Borrowing (I) an applicable Interest Period in the case of a LIBOR
Rate Loan, then such notice shall be deemed to be a request for an
Interest Period of one month, or (II) the type of Revolving Loan
requested, then such notice shall be deemed to be a request for an
Alternate Base Rate Loan hereunder. The Administrative Agent shall
give notice to each Revolving Lender promptly upon receipt of each
Notice of Borrowing, of the contents thereof and each such Revolving
Lender's share thereof.
(ii) Minimum Amounts. Each Revolving Loan shall be in a minimum
aggregate amount of $1,000,000 and in integral multiples of $500,000
in excess thereof (or the remaining amount of the Revolving Committed
Amount, if less).
(iii) Advances. Each Revolving Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing available to
the Administrative Agent for the account of the Borrower at the office
of the Administrative Agent specified in Section 9.2, or at such other
office as the Administrative Agent may designate in writing, by 2:00
P.M. (Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent by
crediting the account of the Borrower designated in the Account
Designation Letter (or as otherwise agreed by the Borrower and the
Administrative Agent) with the aggregate of the amounts made available
to the Administrative Agent by the Revolving Lenders and in like funds
as received by the Administrative Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be
due and payable in full on the Maturity Date, unless accelerated sooner
pursuant to Section 7.2.
(d) Interest. Subject to the provisions of Section 2.9, Revolving
Loans shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as Revolving
Loans shall be comprised of Alternate Base Rate Loans, each such
Alternate Base Rate Loan shall bear interest at a per annum rate equal
to the sum of the Alternate Base Rate plus the Applicable Percentage;
and
(ii) LIBOR Rate Loans. During such periods as Revolving Loans
shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan
shall bear interest at a per annum rate equal to the sum of the LIBOR
Rate plus the Applicable Percentage.
Interest on Revolving Loans shall be payable in arrears on each Interest
Payment Date.
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(e) Revolving Notes. Each Revolving Lender's Revolving Commitment
shall be evidenced by a duly executed promissory note of the Borrower to
such Revolving Lender in substantially the form of Schedule 2.1(e).
Section 2.2 Term Loan Facility.
(a) Term Loan. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each
Term Loan Lender severally agrees to make available to the Borrower on the
Closing Date, by transfer of funds as directed by the Administrative Agent
to the Borrower's account set forth in the Account Designation Letter, such
Term Loan Lender's Term Loan Commitment Percentage of a term loan in
Dollars (the "Term Loan") in the aggregate principal amount of ONE HUNDRED
TEN MILLION DOLLARS ($110,000,000) (the "Term Loan Committed Amount") for
the purposes hereinafter set forth. The Term Loan may consist of Alternate
Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as the
Borrower may request; provided that on the Closing Date the Term Loan shall
only consist of Alternate Base Rate Loans. Amounts repaid or prepaid on the
Term Loan may not be reborrowed.
(b) Repayment of Term Loan. The principal amount of the Term Loan
shall be repaid in twenty (20) consecutive quarterly installments as
follows, unless accelerated sooner pursuant to Section 7.2:
===============================================================================
Principal Amortization Term Loan
Payment Date Principal Amortization Payment
-------------------------------------------------------------------------------
March 31, 2004 $2,750,000
-------------------------------------------------------------------------------
June 30, 2004 $2,750,000
-------------------------------------------------------------------------------
September 30, 2004 $2,750,000
-------------------------------------------------------------------------------
December 31, 2004 $2,750,000
-------------------------------------------------------------------------------
March 31, 2005 $2,750,000
-------------------------------------------------------------------------------
June 30, 2005 $2,750,000
-------------------------------------------------------------------------------
September 30, 2005 $2,750,000
-------------------------------------------------------------------------------
December 31, 2005 $2,750,000
-------------------------------------------------------------------------------
March 31, 2006 $2,750,000
-------------------------------------------------------------------------------
June 30, 2006 $2,750,000
-------------------------------------------------------------------------------
September 30, 2006 $2,750,000
-------------------------------------------------------------------------------
December 31, 2006 $2,750,000
-------------------------------------------------------------------------------
March 31, 2007 $2,750,000
-------------------------------------------------------------------------------
35
===============================================================================
Principal Amortization Term Loan
Payment Date Principal Amortization Payment
-------------------------------------------------------------------------------
June 30, 2007 $2,750,000
-------------------------------------------------------------------------------
September 30, 2007 $2,750,000
-------------------------------------------------------------------------------
December 31, 2007 $2,750,000
-------------------------------------------------------------------------------
March 31, 2008 $16,500,000
-------------------------------------------------------------------------------
June 30, 2008 $16,500,000
-------------------------------------------------------------------------------
September 30, 2008 $16,500,000
-------------------------------------------------------------------------------
Maturity Date $16,500,000
----------------------------------- -------------------------------------------
(c) Interest on the Term Loan. Subject to the provisions of Section
2.9, the Term Loan shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as the Term
Loan shall be comprised of Alternate Base Rate Loans, each such
Alternate Base Rate Loan shall bear interest at a per annum rate equal
to the sum of the Alternate Base Rate plus the Applicable Percentage;
and
(ii) LIBOR Rate Loans. During such periods as the Term Loan shall
be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear
interest at a per annum rate equal to the sum of the LIBOR Rate plus
the Applicable Percentage.
Interest on the Term Loan shall be payable in arrears on each Interest
Payment Date.
(d) Term Notes. Each Term Loan Lender's Term Loan Commitment
Percentage of the Term Loan Committed Amount shall be evidenced by a duly
executed promissory note of the Borrower to such Term Loan Lender in
substantially the form of Schedule 2.2(d).
Section 2.3 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require, during the Commitment Period the Issuing
Lender shall issue, and the Revolving Lenders shall participate in, Letters
of Credit for the account of the Borrower from time to time upon request in
a form acceptable to the Issuing Lender; provided, however, that (i) the
aggregate amount of LOC Obligations shall not at any time exceed FIVE
MILLION DOLLARS ($5,000,000) (the "LOC Committed Amount"), (ii) the sum of
outstanding Revolving Loans plus outstanding Swingline Loans plus LOC
Obligations shall not at any time exceed the Revolving Committed Amount,
(iii) all
36
Letters of Credit shall be denominated in U.S. Dollars and (iv) Letters of
Credit shall be issued for lawful corporate purposes and may be issued as
standby letters of credit, including in connection with workers'
compensation and other insurance programs. Except as otherwise expressly
agreed upon by all the Revolving Lenders, no Letter of Credit shall have an
original expiry date more than twelve (12) months from the date of
issuance; provided, however, so long as no Default or Event of Default has
occurred and is continuing and subject to the other terms and conditions to
the issuance of Letters of Credit hereunder, the expiry dates of Letters of
Credit may be extended annually or periodically from time to time at the
request of the Borrower or by operation of the terms of the applicable
Letter of Credit to a date not more than twelve (12) months from the date
of extension; provided, further, that no Letter of Credit, as originally
issued or as extended, shall have an expiry date extending beyond the
Maturity Date. Each Letter of Credit shall comply with the related LOC
Documents. The issuance and expiry date of each Letter of Credit shall be a
Business Day. Any Letters of Credit issued hereunder shall be in a minimum
original face amount of $100,000. Wachovia shall be the Issuing Lender on
all Letters of Credit issued on or after the Closing Date. In the event and
to the extent that the provisions of any LOC Document shall conflict with
this Agreement, the provisions of this Agreement shall govern. The Issuing
Lender shall make any Letter of Credit issued hereunder available to the
Borrower at its office referred to in Section 9.2 or as otherwise agreed
with the Borrower in connection with such issuance.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted to the Issuing Lender at least five (5) Business
Days prior to the requested date of issuance. The Issuing Lender will
promptly upon request provide to the Administrative Agent for dissemination
to the Revolving Lenders a detailed report specifying the Letters of Credit
which are then issued and outstanding and any activity with respect thereto
which may have occurred since the date of any prior report, and including
therein, among other things, the account party, the beneficiary, the face
amount, expiry date as well as any payments or expirations which may have
occurred.
(c) Participations. Each Revolving Lender upon issuance of a Letter of
Credit shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and the
obligations arising thereunder and any collateral relating thereto, in each
case in an amount equal to its Revolving Commitment Percentage of the
obligations under such Letter of Credit and shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as
surety, and be obligated to pay to the Issuing Lender therefore and
discharge when due, its Revolving Commitment Percentage of the obligations
arising under such Letter of Credit. Without limiting the scope and nature
of each Revolving Lender's participation in any Letter of Credit, to the
extent that the Issuing Lender has not been reimbursed as required
hereunder or under any LOC Document, each such Revolving Lender shall pay
to the Issuing Lender its Revolving Commitment Percentage of such
unreimbursed drawing in same day funds on the day of notification by the
Issuing Lender of an unreimbursed drawing pursuant to the provisions of
subsection (d) hereof. The obligation of each Revolving Lender to so
reimburse the Issuing Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of Default or any
other
37
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Borrower to reimburse the Issuing Lender under
any Letter of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower and the
Administrative Agent. The Borrower shall reimburse the Issuing Lender on
the day of drawing under any Letter of Credit (with the proceeds of a
Revolving Loan obtained hereunder or otherwise) in same day funds as
provided herein or in the LOC Documents. If the Borrower shall fail to
reimburse the Issuing Lender as provided herein, the unreimbursed amount of
such drawing shall bear interest at a per annum rate equal to the Alternate
Base Rate plus the Applicable Percentage for Revolving Loans that are
Alternate Base Rate Loans plus two percent (2%). Unless the Borrower shall
promptly notify the Issuing Lender and the Administrative Agent of its
intent to otherwise reimburse the Issuing Lender, the Borrower shall be
deemed to have requested a Revolving Loan in the amount of the drawing as
provided in subsection (e) hereof, the proceeds of which will be used to
satisfy the reimbursement obligations. The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional under all
circumstances irrespective of any rights of set-off, counterclaim or
defense to payment the Borrower may claim or have against the Issuing
Lender, the Administrative Agent, the Lenders, the beneficiary of the
Letter of Credit drawn upon or any other Person, including without
limitation any defense based on any failure of the Borrower to receive
consideration or the legality, validity, regularity or unenforceability of
the Letter of Credit. The Issuing Lender will promptly notify the other
Revolving Lenders of the amount of any unreimbursed drawing and each
Revolving Lender shall promptly pay to the Administrative Agent for the
account of the Issuing Lender in Dollars and in immediately available
funds, the amount of such Revolving Lender's Revolving Commitment
Percentage of such unreimbursed drawing. Such payment shall be made on the
day such notice is received by such Revolving Lender from the Issuing
Lender if such notice is received at or before 2:00 P.M. (Charlotte, North
Carolina time), otherwise such payment shall be made at or before 12:00
Noon (Charlotte, North Carolina time) on the next succeeding Business Day.
If such Revolving Lender does not pay such amount to the Issuing Lender in
full upon such request, such Revolving Lender shall, on demand, pay to the
Administrative Agent for the account of the Issuing Lender interest on the
unpaid amount during the period from the date of such drawing until such
Revolving Lender pays such amount to the Issuing Lender in full at a rate
per annum equal to, if paid within two (2) Business Days of the date of
drawing, the Federal Funds Effective Rate and thereafter at a rate equal to
the Alternate Base Rate. Each Revolving Lender's obligation to make such
payment to the Issuing Lender, and the right of the Issuing Lender to
receive the same, shall be absolute and unconditional, shall not be
affected by any circumstance whatsoever and without regard to the
termination of this Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the Credit Party
Obligations hereunder and shall be made without any offset, abatement,
withholding or reduction whatsoever.
38
(e) Repayment with Revolving Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, a Revolving Loan to
reimburse a drawing under a Letter of Credit, the Administrative Agent
shall give notice to the Revolving Lenders that a Revolving Loan has been
requested or deemed requested in connection with a drawing under a Letter
of Credit, in which case a Revolving Loan borrowing comprised entirely of
Alternate Base Rate Loans (each such borrowing, a "Mandatory Borrowing")
shall be immediately made (without giving effect to any termination of the
Commitments pursuant to Section 7.2) pro rata based on each Revolving
Lender's respective Revolving Commitment Percentage (determined before
giving effect to any termination of the Commitments pursuant to Section
7.2) and the proceeds thereof shall be paid directly to the Issuing Lender
for application to the respective LOC Obligations. Each Revolving Lender
hereby irrevocably agrees to make such Revolving Loans immediately upon any
such request or deemed request on account of each Mandatory Borrowing in
the amount and in the manner specified in the preceding sentence and on the
same such date notwithstanding (i) the amount of Mandatory Borrowing may
not comply with the minimum amount for borrowings of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in
Section 4.2 are then satisfied, (iii) whether a Default or an Event of
Default then exists, (iv) failure for any such request or deemed request
for Revolving Loan to be made by the time otherwise required in Section
2.1(b), (v) the date of such Mandatory Borrowing, or (vi) any reduction in
the Revolving Committed Amount after any such Letter of Credit may have
been drawn upon; provided, however, that in the event any such Mandatory
Borrowing should be less than the minimum amount for borrowings of
Revolving Loans otherwise provided in Section 2.1(b)(ii), the Borrower
shall pay to the Administrative Agent for its own account an administrative
fee of $500. In the event that any Mandatory Borrowing cannot for any
reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code), then each such Revolving Lender hereby agrees that it
shall forthwith fund (as of the date the Mandatory Borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) its
Participation Interests in the LOC Obligations; provided, further, that in
the event any Revolving Lender shall fail to fund its Participation
Interest on the day the Mandatory Borrowing would otherwise have occurred,
then the amount of such Revolving Lender's unfunded Participation Interest
therein shall bear interest payable by such Revolving Lender to the Issuing
Lender upon demand, at the rate equal to, if paid within two (2) Business
Days of such date, the Federal Funds Effective Rate, and thereafter at a
rate equal to the Alternate Base Rate.
(f) Modification, Extension. The issuance of any supplement,
modification, amendment, renewal, or extension to any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender shall have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published by the International Chamber of Commerce
(the "UCP") as of the
39
date of issue, in which case the UCP may be incorporated therein and deemed
in all respects to be a part thereof.
Section 2.4 Swingline Loan Subfacility.
(a) Swingline Commitment. During the Commitment Period, subject to the
terms and conditions hereof, the Swingline Lender, in its individual
capacity, agrees to make certain revolving credit loans to the Borrower
(each a "Swingline Loan" and, collectively, the "Swingline Loans") for the
purposes hereinafter set forth; provided, however, (i) the aggregate amount
of Swingline Loans outstanding at any time shall not exceed FIVE MILLION
DOLLARS ($5,000,000) (the "Swingline Committed Amount"), and (ii) the sum
of the outstanding Revolving Loans plus outstanding Swingline Loans plus
LOC Obligations shall not exceed the Revolving Committed Amount. Swingline
Loans hereunder may be repaid and reborrowed in accordance with the
provisions hereof.
(b) Swingline Loan Borrowings.
(i) Notice of Borrowing and Disbursement. The Swingline Lender
will make Swingline Loans available to the Borrower by crediting the
account of the Borrower designated in the Account Designation Letter
(or as otherwise agreed between the Borrower and the Administrative
Agent) on any Business Day upon request made by the Borrower through
the delivery of a Notice of Borrowing (with appropriate modifications)
to the Administrative Agent and the Swingline Lender not later than
2:00 P.M. (Charlotte, North Carolina time) on such Business Day.
Swingline Loan borrowings hereunder shall be made in minimum amounts
of $100,000 and in integral amounts of $100,000 in excess thereof.
(ii) Repayment of Swingline Loans. Each Swingline Loan borrowing
shall be due and payable on the Maturity Date. The Swingline Lender
may, at any time, in its sole discretion, by written notice to the
Borrower and the Administrative Agent, demand repayment of its
Swingline Loans by way of a Revolving Loan borrowing, in which case
the Borrower shall be deemed to have requested a Revolving Loan
borrowing comprised entirely of Alternate Base Rate Loans in the
amount of such Swingline Loans; provided, however, that, in the
following circumstances, any such demand shall also be deemed to have
been given one Business Day prior to each of (A) the Maturity Date,
(B) the occurrence of any Event of Default described in Section
7.1(e), (C) upon acceleration of the Credit Party Obligations
hereunder, whether on account of an Event of Default described in
Section 7.1(e) or any other Event of Default, and (D) the exercise of
remedies in accordance with the provisions of Section 7.2 hereof (each
such Revolving Loan borrowing made on account of any such deemed
request therefore as provided herein being hereinafter referred to as
"Mandatory Borrowing"). Each Revolving Lender hereby irrevocably
agrees to make such Revolving Loans promptly upon any such request or
deemed request on account
40
of each Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the same such date notwithstanding
(I) the amount of Mandatory Borrowing may not comply with the minimum
amount for borrowings of Revolving Loans otherwise required hereunder,
(II) whether any conditions specified in Section 4.2 are then
satisfied, (III) whether a Default or an Event of Default then exists,
(IV) failure of any such request or deemed request for Revolving Loans
to be made by the time otherwise required in Section 2.1(b)(i), (V)
the date of such Mandatory Borrowing, or (VI) any reduction in the
Revolving Committed Amount or termination of the Revolving Commitments
immediately prior to such Mandatory Borrowing or contemporaneously
therewith. In the event that any Mandatory Borrowing cannot for any
reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code), then each Revolving Lender hereby agrees
that it shall forthwith purchase (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to such
purchase) from the Swingline Lender such participations in the
outstanding Swingline Loans as shall be necessary to cause each such
Revolving Lender to share in such Swingline Loans ratably based upon
its respective Revolving Commitment Percentage (determined before
giving effect to any termination of the Commitments pursuant to
Section 7.2); provided that (x) all interest payable on the Swingline
Loans shall be for the account of the Swingline Lender until the date
as of which the respective participation is purchased, and (y) at the
time any purchase of participations pursuant to this sentence is
actually made, the purchasing Revolving Lender shall be required to
pay to the Swingline Lender interest on the principal amount of such
participation purchased for each day from and including the day upon
which the Mandatory Borrowing would otherwise have occurred to but
excluding the date of payment for such participation, at the rate
equal to, if paid within two (2) Business Days of the date of the
Mandatory Borrowing, the Federal Funds Effective Rate, and thereafter
at a rate equal to the Alternate Base Rate.
(c) Interest on Swingline Loans. Subject to the provisions of Section
2.9, Swingline Loans shall bear interest at a per annum rate equal to the
Alternate Base Rate plus the Applicable Percentage for Revolving Loans that
are Alternate Base Rate Loans. Interest on Swingline Loans shall be payable
in arrears on each Interest Payment Date.
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower to the Swingline Lender in the
original amount of the Swingline Committed Amount and substantially in the
form of Schedule 2.4(d).
Section 2.5 Fees.
(a) Commitment Fee. In consideration of the Revolving Commitments, the
Borrower agrees to pay to the Administrative Agent for the ratable benefit
of the Revolving Lenders a commitment fee (the "Commitment Fee") in an
amount equal to the
41
Applicable Percentage per annum on the average daily unused amount of the
Revolving Committed Amount. For purposes of computation of the Commitment
Fee, LOC Obligations shall be considered usage of the Revolving Committed
Amount but Swingline Loans shall not be considered usage of the Revolving
Committed Amount. The Commitment Fee shall be payable quarterly in arrears
on the last Business Day of each calendar quarter for the prior calendar
quarter then ending.
(b) Letter of Credit Fees. In consideration of the LOC Commitments,
the Borrower agrees to pay to the Issuing Lender a fee (the "Letter of
Credit Fee") equal to the Applicable Percentage per annum on the average
daily maximum amount available to be drawn under each Letter of Credit from
the date of issuance to the date of expiration. In addition to such Letter
of Credit Fee, the Issuing Lender may charge, and retain for its own
account without sharing by the other Lenders, an additional facing fee of
one-eighth of one percent (0.125%) per annum on the average daily maximum
amount available to be drawn under each such Letter of Credit issued by it.
The Issuing Lender shall promptly pay over to the Administrative Agent for
the ratable benefit of the Revolving Lenders (including the Issuing Lender)
the Letter of Credit Fee. The Letter of Credit Fee shall be payable
quarterly in arrears on the last Business Day of each calendar quarter for
the prior calendar quarter then ending.
(c) Issuing Lender Fees. In addition to the Letter of Credit Fees
payable pursuant to subsection (b) hereof, the Borrower shall pay to the
Issuing Lender for its own account without sharing by the other Lenders the
reasonable and customary charges from time to time of the Issuing Lender
with respect to the amendment, transfer, administration, cancellation and
conversion of, and drawings under, such Letters of Credit (collectively,
the "Issuing Lender Fees"); provided such fees shall not be duplicative of
any fees charged under any LOC Document.
(d) Administrative Fee. The Borrower agrees to pay to the
Administrative Agent the annual administrative fee as described in the Fee
Letter.
Section 2.6 Commitment Reductions.
(a) Voluntary Reductions. The Borrower shall have the right to
terminate or permanently reduce the unused portion of the Revolving
Committed Amount at any time or from time to time upon not less than five
(5) Business Days' prior notice to the Administrative Agent (which shall
notify the Revolving Lenders thereof as soon as practicable) of each such
termination or reduction, which notice shall specify the effective date
thereof and the amount of any such reduction which shall be in a minimum
amount of $1,000,000 or a whole multiple of $500,000 in excess thereof and
shall be irrevocable and effective upon receipt by the Administrative
Agent; provided that no such reduction or termination shall be permitted if
after giving effect thereto, and to any prepayments of the Loans made on
the effective date thereof, the sum of the outstanding Revolving Loans plus
outstanding Swingline Loans plus LOC Obligations would exceed the Revolving
Committed Amount.
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(b) Mandatory Reductions. On any date that the Revolving Loans are
required to be prepaid pursuant to the terms of Section 2.7(b) (ii), (iii)
and (iv), the Revolving Committed Amount shall be automatically permanently
reduced by the amount of such required prepayment and/or reduction.
(c) Maturity Date. The Revolving Commitment, the Swingline Commitment
and the LOC Commitment shall automatically terminate on the Maturity Date.
Section 2.7 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right to prepay
Loans in whole or in part from time to time; provided, however, that each
partial prepayment of a Revolving Loan and the Term Loan shall be in a
minimum principal amount of $1,000,000 and integral multiples of $500,000
in excess thereof, and each partial prepayment of a Swingline Loan shall be
in a minimum principal amount of $100,000 and integral multiples of
$100,000 in excess thereof. The Borrower shall give three (3) Business
Days' irrevocable notice in the case of LIBOR Rate Loans and one Business
Day's irrevocable notice in the case of Alternate Base Rate Loans, to the
Administrative Agent (which shall notify the Lenders thereof as soon as
practicable). Amounts prepaid under this Section 2.7(a) shall be applied to
the outstanding Loans as the Borrower may elect; provided that each Lender
shall receive its pro rata share (except with respect to prepayments of
Swingline Loans) of any such prepayment based on its Revolving Commitment
Percentage or Term Loan Commitment Percentage, as applicable. All
prepayments under this Section 2.7(a) shall be subject to Section 2.17, but
otherwise without premium or penalty. Interest on the principal amount
prepaid shall be payable on the next occurring Interest Payment Date that
would have occurred had such Loans not been prepaid or, at the request of
the Administrative Agent, interest on the principal amount prepaid shall be
payable on any date that a prepayment is made hereunder through the date of
prepayment. Amounts prepaid on the Revolving Loans and the Swingline Loans
may be reborrowed in accordance with the terms hereof. Amounts prepaid on
the Term Loan may not be reborrowed.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time after the Closing
Date, the sum of the outstanding Revolving Loans plus outstanding
Swingline Loans plus LOC Obligations shall exceed the Revolving
Committed Amount, the Borrower immediately shall prepay the Loans and
cash collateralize the LOC Obligations in an amount sufficient to
eliminate such excess (such prepayment to be applied as set forth in
clause (vi) below).
(ii) Asset Dispositions. Promptly following any Asset Disposition
in excess of $100,000 in the aggregate for all such Asset Dispositions
during any fiscal year, the Borrower shall prepay the Loans and cash
collateralize the LOC Obligations in an aggregate amount equal to 100%
of the Net Cash Proceeds derived from such Asset Disposition (such
prepayment to be applied as set forth
43
in clause (vi) below); provided, however, that such Net Cash Proceeds
shall not be required to be so applied to the extent the Borrower
delivers to the Administrative Agent promptly following such Asset
Disposition a certificate stating that it intends to use such Net Cash
Proceeds to acquire like assets used in the business of the Borrower
and its Subsidiaries within 180 days of the receipt of such Net Cash
Proceeds, it being expressly agreed that any Net Cash Proceeds not so
reinvested shall be applied to prepay the Loans and cash collateralize
the LOC Obligations immediately thereafter (such prepayment to be
applied as set forth in clause (vi) below).
(iii) Issuances. Immediately upon receipt by any Credit Party of
proceeds from (A) any Debt Issuance, the Borrower shall prepay the
Loans and cash collateralize the LOC Obligations in an aggregate
amount equal to 100% of the Net Cash Proceeds of such Debt Issuance to
the Lenders (such prepayment to be applied as set forth in clause (vi)
below) or (B) any Equity Issuance, the Borrower shall prepay the Loans
and cash collateralize the LOC Obligations in an aggregate amount
equal to 100% of the Net Cash Proceeds of such Equity Issuance (such
prepayment to be applied as set forth in clause (vi) below).
(iv) Recovery Event. To the extent of Net Cash Proceeds received
in connection with a Recovery Event that are not applied in accordance
with Section 6.4(a)(iii), immediately following the expiration of the
period allowed for reinvesting of such Net Cash Proceeds pursuant to
Section 6.4(a)(iii), the Borrower shall prepay the Loans and cash
collateralize the LOC Obligations in an aggregate amount equal to 100%
of such Net Cash Proceeds (such prepayment to be applied as set forth
in clause (vi) below).
(v) Excess Cash Flow. Within ninety (90) days after the end of
each fiscal year (commencing with the fiscal year ending December 31,
2004), the Borrower shall prepay the Loans and cash collateralize the
LOC Obligations in an amount equal to 75% of the Excess Cash Flow
earned during such prior fiscal year (such prepayments to be applied
as set forth in clause (vi) below); provided, however, if the Borrower
Leverage Ratio is less than or equal to 1.50 to 1.00 as of the end of
the preceding fiscal year of the Borrower, then the Borrower shall
prepay the Loans and cash collateralize the LOC Obligations in an
amount equal to 50% of the Excess Cash Flow earned during such prior
fiscal period.
(vi) Application of Mandatory Prepayments. All amounts required
to be paid pursuant to this Section 2.7(b) shall be applied as
follows: (A) with respect to all amounts prepaid pursuant to Section
2.7(b)(i), (1) first, to the Swingline Loans, (2) second, to the
Revolving Loans and (3) third (after all Revolving Loans have been
repaid), to a cash collateral account in respect of LOC Obligations,
and (B) with respect to all amounts prepaid pursuant to Sections
2.7(b)(ii) through (v), (1) first, to the remaining Term Loan
amortization payments set forth in Section 2.2(b) on a pro rata basis,
(2) second to the Swingline Loans (with a corresponding reduction in
the Revolving Committed
44
Amount), (3) third, to the Revolving Loans (with a corresponding
reduction in the Revolving Committed Amount) and (4) fourth (after all
Revolving Loans have been repaid), to a cash collateral account in
respect of LOC Obligations. Within the parameters of the applications
set forth above, prepayments shall be applied first to Alternate Base
Rate Loans and then to LIBOR Rate Loans in direct order of Interest
Period maturities. Each Lender shall receive its pro rata share
(except with respect to prepayments of Swingline Loans) of any such
prepayment based on its Revolving Commitment Percentage or Term Loan
Commitment Percentage, as applicable. All prepayments under this
Section 2.7(b) shall be subject to Section 2.17 and include interest
on the principal amount prepaid through the date of prepayment.
(c) Hedging Obligations Unaffected. Any repayment or prepayment made
pursuant to this Section 2.7 shall not affect the Borrower's obligation to
continue to make payments under any Secured Hedging Agreement, which shall
remain in full force and effect notwithstanding such repayment or
prepayment, subject to the terms of such Secured Hedging Agreement.
Section 2.8 Minimum Principal Amount of Tranches; Lending Offices.
(a) All borrowings, payments and prepayments in respect of Revolving
Loans and the Term Loan shall be in such amounts and be made pursuant to
such elections so that after giving effect thereto the aggregate principal
amount of the Revolving Loans and the Term Loan comprising any Tranche
shall be (i) with respect to LIBOR Rate Loans, $1,000,000 or a whole
multiple of $500,000 in excess thereof and (ii) with respect to Alternate
Base Rate Loans, $500,000 or a whole multiple of $100,000 in excess
thereof.
(b) LIBOR Rate Loans shall be made by each Lender at its LIBOR Lending
Office and Alternate Base Rate Loans at its Domestic Lending Office.
Section 2.9 Default Rate and Payment Dates.
Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall, at
the discretion of the Required Lenders, bear interest, payable on demand, at a
per annum rate 2% greater than the rate which would otherwise be applicable (or
if no rate is applicable, whether in respect of interest, fees or other amounts,
then the Alternate Base Rate plus the Applicable Percentage with respect to
Alternate Base Rate Loans plus 2%).
Section 2.10 Conversion Options.
(a) The Borrower may, in the case of Revolving Loans and Term Loan,
elect from time to time to convert Alternate Base Rate Loans to LIBOR Rate
Loans, by giving the Administrative Agent at least three (3) Business Days'
prior irrevocable written notice of such election substantially in the form
of the notice attached as Schedule 2.10
45
(the "Notice of Conversion/Extension"). If the date upon which an Alternate
Base Rate Loan is to be converted to a LIBOR Rate Loan is not a Business
Day, then such conversion shall be made on the next succeeding Business Day
and during the period from such last day of an Interest Period to such
succeeding Business Day such Loan shall bear interest as if it were an
Alternate Base Rate Loan. All or any part of outstanding Alternate Base
Rate Loans may be converted as provided herein; provided that (i) no Loan
may be converted into a LIBOR Rate Loan when any Default or Event of
Default has occurred and is continuing and (ii) partial conversions shall
be in an aggregate principal amount of (A) in the case of Revolving Loans,
$1,000,000 or a whole multiple of $500,000 in excess thereof and (B) in the
case of the Term Loan, $2,000,000 or a whole multiple of $1,000,000 in
excess thereof.
(b) Any LIBOR Rate Loans may be continued as such upon the expiration
of an Interest Period with respect thereto by compliance by the Borrower
with the notice provisions contained in Section 2.10(a); provided, that no
LIBOR Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, in which case such Loan shall be
automatically converted to an Alternate Base Rate Loan at the end of the
applicable Interest Period with respect thereto. If the Borrower shall fail
to give timely notice of an election to continue a LIBOR Rate Loan, or the
continuation of LIBOR Rate Loans is not permitted hereunder, such LIBOR
Rate Loans shall be automatically converted to Alternate Base Rate Loans at
the end of the applicable Interest Period with respect thereto.
Section 2.11 Computation of Interest and Fees.
(a) Interest payable hereunder with respect to Alternate Base Rate
Loans based on the Prime Rate shall be calculated on the basis of a year of
365 days (or 366 days, as applicable) for the actual days elapsed. All
other fees, interest and all other amounts payable hereunder shall be
calculated on the basis of a 360-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and
the Lenders of each determination of a LIBOR Rate on the Business Day of
the determination thereof. Any change in the interest rate on a Loan
resulting from a change in the Alternate Base Rate shall become effective
as of the opening of business on the day on which such change in the
Alternate Base Rate shall become effective. The Administrative Agent shall
as soon as practicable notify the Borrower and the Lenders of the effective
date and the amount of each such change.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding
on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the computations used by the Administrative
Agent in determining any interest rate.
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Section 2.12 Pro Rata Treatment and Payments.
(a) Each borrowing of Revolving Loans and any reduction of the
Revolving Commitments shall be made pro rata according to the respective
Revolving Commitment Percentages of the Revolving Lenders. Each payment
under this Agreement or any Note shall be applied, first, to any fees then
due and owing by the Borrower pursuant to Section 2.5, second, to interest
then due and owing in respect of the Notes of the Borrower and, third, to
principal then due and owing hereunder and under the Notes of the Borrower.
Each payment on account of any fees pursuant to Section 2.5 shall be made
pro rata in accordance with the respective amounts due and owing (except as
to the portion of the Letter of Credit retained by the Issuing Lender and
the Issuing Lender Fees). Each payment (other than prepayments) by the
Borrower on account of principal of and interest on the Revolving Loans and
the Term Loan shall be made pro rata according to the respective amounts
due and owing in accordance with Section 2.7 hereof. Prepayments made
pursuant to Section 2.15 shall be applied in accordance with such section.
Each optional prepayment on account of principal of the Loans shall be
applied in accordance with Section 2.7(a) and each mandatory prepayment on
account of principal of the Loans shall be applied in accordance with
Section 2.7(b). All payments (including prepayments) to be made by the
Borrower on account of principal, interest and fees shall be made without
defense, set-off or counterclaim (except as provided in Section 2.18(b))
and shall be made to the Administrative Agent for the account of the
Lenders at the Administrative Agent's office specified on Schedule 9.2 in
Dollars and in immediately available funds not later than 1:00 P.M.
(Charlotte, North Carolina time) on the date when due. The Administrative
Agent shall distribute such payments to the Lenders entitled thereto
promptly upon receipt in like funds as received. If any payment hereunder
(other than payments on the LIBOR Rate Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a LIBOR Rate Loan becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day unless the result of such extension would
be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day.
(b) Allocation of Payments After Exercise of Remedies. Notwithstanding
any other provision of this Credit Agreement to the contrary, upon the
exercise of remedies by the Administrative Agent or the Lenders pursuant to
Section 7.2 (or after the Commitments shall automatically terminate and the
Loans and all other amounts under the Credit Documents shall automatically
become due and payable in accordance with the terms of such Section), all
amounts collected or received by the Administrative Agent or any Lender on
account of the Credit Party Obligations or any other amounts outstanding
under any of the Credit Documents or in respect of the Collateral shall be
paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the Administrative
47
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents and any protective advances made by the
Administrative Agent with respect to the Collateral under or pursuant
to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to the Administrative Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the
Credit Documents or otherwise with respect to the Credit Party
Obligations owing to such Lender;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest, including with respect to any
Secured Hedging Agreement, any fees, premiums and scheduled periodic
payments due under such Secured Hedging Agreement and any interest
accrued thereon;
FIFTH, to the payment of the outstanding principal amount of the
Credit Party Obligations and the payment or cash collateralization of
the outstanding LOC Obligations, and including with respect to any
Secured Hedging Agreement, any breakage, termination or other payments
due under such Secured Hedging Agreement and any interest accrued
thereon;
SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under the Credit
Documents or otherwise and not repaid pursuant to clauses "FIRST"
through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied
in the numerical order provided until exhausted prior to application
to the next succeeding category; (ii) each of the Lenders and Hedging
Agreement Providers shall receive an amount equal to its pro rata
share (based on the proportion that the then outstanding Loans and LOC
Obligations held by such Lender or the outstanding obligations payable
to such Hedging Agreement Provider bears to the aggregate then
outstanding Loans, LOC Obligations and obligations payable under all
Secured Hedging Agreements) of amounts available to be applied
pursuant to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and
(iii) to the extent that any amounts available for distribution
pursuant to clause "FIFTH" above are attributable to the issued but
undrawn amount of outstanding Letters of Credit, such amounts shall be
held by the Administrative Agent in a cash collateral account and
applied (A) first, to reimburse the Issuing Lender from time to time
for any drawings under such Letters of Credit and (B) then, following
the expiration of all Letters of Credit, to all other obligations of
the types described in clauses "FIFTH" and "SIXTH" above in the manner
provided in this
48
Section 2.12(b). Notwithstanding the foregoing terms of this Section
2.12(b), only Collateral proceeds and payments under the Guaranty with
respect to Secured Hedging Agreements shall be applied to obligations
under any Secured Hedging Agreement.
Section 2.13 Non-Receipt of Funds by the Administrative Agent.
(a) Unless the Administrative Agent shall have been notified in
writing by a Lender prior to the date a Loan is to be made by such Lender
(which notice shall be effective upon receipt) that such Lender does not
intend to make the proceeds of such Loan available to the Administrative
Agent, the Administrative Agent may assume that such Lender has made such
proceeds available to the Administrative Agent on such date, and the
Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative
Agent, the Administrative Agent shall be able to recover such corresponding
amount from such Lender. If such Lender does not pay such corresponding
amount forthwith upon the Administrative Agent's demand therefore, the
Administrative Agent will promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to recover from the
Lender or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
made available by the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent at a per
annum rate equal to (i) from the Borrower at the applicable rate for the
applicable borrowing pursuant to the Notice of Borrowing and (ii) from a
Lender at the Federal Funds Effective Rate.
(b) Unless the Administrative Agent shall have been notified in
writing by the Borrower, prior to the date on which any payment is due from
it hereunder (which notice shall be effective upon receipt) that the
Borrower does not intend to make such payment, the Administrative Agent may
assume that such Borrower has made such payment when due, and the
Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to each Lender on such payment date an amount
equal to the portion of such assumed payment to which such Lender is
entitled hereunder, and if the Borrower has not in fact made such payment
to the Administrative Agent, such Lender shall, on demand, repay to the
Administrative Agent the amount made available to such Lender. If such
amount is repaid to the Administrative Agent on a date after the date such
amount was made available to such Lender, such Lender shall pay to the
Administrative Agent on demand interest on such amount in respect of each
day from the date such amount was made available by the Administrative
Agent to such Lender to the date such amount is recovered by the
Administrative Agent at a per annum rate equal to the Federal Funds
Effective Rate.
(c) A certificate of the Administrative Agent submitted to the
Borrower or any Lender with respect to any amount owing under this Section
2.13 shall be conclusive in the absence of manifest error.
49
Section 2.14 Inability to Determine Interest Rate.
Notwithstanding any other provision of this Agreement, if (i) the
Administrative Agent shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR Rate for any Interest Period, or (ii) the Administrative
Agent or the Required Lenders shall reasonably determine (which determination
shall be conclusive and binding absent manifest error) that LIBOR Rate does not
adequately and fairly reflect the cost to such Lenders of funding LIBOR Rate
Loans that the Borrower has requested be outstanding as a LIBOR Tranche during
such Interest Period, the Administrative Agent shall forthwith give telephone
notice of such determination, confirmed in writing, to the Borrower, and the
Lenders at least two (2) Business Days prior to the first day of such Interest
Period. Unless the Borrower shall have notified the Administrative Agent upon
receipt of such telephone notice that it wishes to rescind or modify its request
regarding such LIBOR Rate Loans, any Loans that were requested to be made as
LIBOR Rate Loans shall be made as Alternate Base Rate Loans and any Loans that
were requested to be converted into or continued as LIBOR Rate Loans shall
remain as or be converted into Alternate Base Rate Loans. Until any such notice
has been withdrawn by the Administrative Agent, no further Loans shall be made
as, continued as, or converted into, LIBOR Rate Loans for the Interest Periods
so affected.
Section 2.15 Illegality.
Notwithstanding any other provision of this Agreement, if the adoption of
or any change in any Requirement of Law or in the interpretation, administration
or application thereof by the relevant Governmental Authority to any Lender
shall make it unlawful for such Lender or its LIBOR Lending Office to make or
maintain LIBOR Rate Loans as contemplated by this Agreement or to obtain in the
interbank eurodollar market through its LIBOR Lending Office the funds with
which to make such Loans, (a) such Lender shall promptly notify the
Administrative Agent and the Borrower thereof, (b) the commitment of such Lender
hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall
forthwith be suspended until the Administrative Agent shall give notice that the
condition or situation which gave rise to the suspension shall no longer exist,
and (c) such Lender's Loans then outstanding as LIBOR Rate Loans, if any, shall
be converted on the last day of the Interest Period for such Loans or within
such earlier period as required by law to Alternate Base Rate Loans. The
Borrower hereby agrees promptly to pay any Lender, upon its demand, any
additional amounts necessary to compensate such Lender for actual and direct
costs (but not including anticipated profits) reasonably incurred by such Lender
including, but not limited to, any interest or fees payable by such Lender to
lenders of funds obtained by it in order to make or maintain its LIBOR Rate
Loans hereunder. A certificate as to any additional amounts payable pursuant to
this Section submitted by such Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its reasonable discretion to be
material.
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Section 2.16 Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law (other
than any change by way of imposition or increase of reserve requirements
included in the Eurodollar Reserve Percentage) or in the interpretation,
administration or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date
hereof:
(i) shall subject such Lender to any tax of any kind whatsoever
with respect to any Letter of Credit or any application relating
thereto, any LIBOR Rate Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for
changes in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender which is not otherwise included in
the determination of the LIBOR Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender of making or maintaining LIBOR Rate Loans or the Letters of Credit
or to reduce any amount receivable hereunder or under any Note, then, in
any such case, the Borrower shall promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such Lender for such
additional cost or reduced amount receivable which such Lender reasonably
deems to be material as determined by such Lender with respect to its LIBOR
Rate Loans or Letters of Credit. A certificate as to any additional amounts
payable pursuant to this Section submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its Domestic Lending Office or LIBOR Lending
Office, as the case may be) to avoid or to minimize any amounts that might
otherwise be payable pursuant to this paragraph of this Section; provided,
however, that such efforts shall not cause the imposition on such Lender of
any additional costs or legal or regulatory burdens deemed by such Lender
in its reasonable discretion to be material.
(b) If any Lender shall have reasonably determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in
the interpretation or application thereof or compliance by such Lender or
any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from
any central bank or Governmental Authority made subsequent to the date
hereof does or shall have the effect of reducing the rate of return on such
51
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount reasonably deemed by such Lender in its
reasonable discretion to be material, then from time to time, within
fifteen (15) days after demand by such Lender, the Borrower shall pay to
such Lender such additional amount as shall be certified by such Lender as
being required to compensate it for such reduction. Such a certificate as
to any additional amounts payable under this Section submitted by a Lender
(which certificate shall include a description of the basis for the
computation), through the Administrative Agent, to the Borrower shall be
conclusive absent manifest error.
(c) In the event that any Lender demands payment of costs or
additional amounts pursuant to Section 2.16 or Section 2.18 or asserts,
pursuant to Section 2.15, that it is unlawful for such Lender to make LIBOR
Rate Loans, then (subject to such lender's right to rescind such demand or
assertion within 10 days after the notice from the Borrower referred to
below) the Borrower may, upon 20 days' prior written notice to such Lender
and the Administrative Agent, elect to cause such Lender to assign at par
its Loans and Commitments in full to one or more Persons selected by the
Borrower so long as (i) each such Person is either another Lender or any
Affiliate or Related Fund thereof or is otherwise satisfactory to the
Administrative Agent, (ii) such Lender receives payment in full in cash of
the outstanding principal amount of all Loans made by it and all accrued
and unpaid interest thereon and all other amounts due and payable to such
Lender as of the date of such assignment (including, without limitation,
amounts owing pursuant to Sections 2.16, 2.17 and 2.18) and (iii) each such
Lender assignee agrees to accept such assignment and to assume all
obligations of such assigning party hereunder in accordance with Section
9.6.
(d) The agreements in this Section 2.16 shall survive the termination
of this Agreement and payment of the Notes and all other amounts payable
hereunder.
Section 2.17 Indemnity.
The Borrower hereby agrees to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which such Lender may sustain or incur
as a consequence of (a) default by the Borrower in payment of the principal
amount of or interest on any Loan by such Lender in accordance with the terms
hereof, (b) default by the Borrower in accepting a borrowing after the Borrower
has given a notice in accordance with the terms hereof, (c) default by the
Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder. A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender, through the Administrative Agent, to the
Borrower (which certificate must be delivered to the Administrative Agent within
thirty (30) days following such default, prepayment
52
or conversion) shall be conclusive in the absence of manifest error. The
agreements in this Section shall survive termination of this Agreement and
payment of the Notes and all other amounts payable hereunder.
Section 2.18 Taxes.
(a) All payments made by the Borrower hereunder or under any Note will
be, except to the extent required by law, made free and clear of, and
without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now
or hereafter imposed by any Governmental Authority or by any political
subdivision or taxing authority thereof or therein with respect to such
payments (but excluding any tax imposed on or measured by the net income or
profits of a Lender or the Administrative Agent pursuant to the laws of the
jurisdiction in which it is organized or resident for tax purposes or the
jurisdiction in which the principal office or applicable lending office of
such Lender or the Administrative Agent is located or any subdivision
thereof or therein) and all interest, penalties or similar liabilities with
respect thereto (all such non-excluded taxes, levies, imposts, duties,
fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay
the full amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such
Note. The Borrower will furnish to the Administrative Agent, as soon as
practicable after the date the payment of any Taxes is due pursuant to
applicable law, certified copies (to the extent reasonably available and
required by law) of tax receipts evidencing such payment by the Borrower.
The Borrower agrees to indemnify and hold harmless each Lender, and
reimburse such Lender upon its written request, for the amount of any Taxes
so levied or imposed and paid by such Lender.
(b) Each Lender that is created or organized under the laws of the
United States or any state thereof or the District of Columbia agrees to
deliver to the Borrower and the Administrative Agent on or prior to the
Closing Date, or in the case of a Lender that is an assignee or transferee
of an interest under this Agreement pursuant to Section 9.6(c) (unless the
respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Lender, two accurate and complete original signed copies of Internal
Revenue Service Form W-9 (or any subsequent versions thereof or successors
thereto). Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the
Borrower and the Administrative Agent on or prior to the Closing Date, or
in the case of a Lender that is an assignee or transferee of an interest
under this Agreement pursuant to Section 9.6(c) (unless the respective
Lender was already a Lender hereunder immediately prior to such assignment
or transfer), on the date of such assignment or transfer to such Lender,
two accurate and complete original signed copies of Internal Revenue
Service Form W-8BEN or W-8ECI (or successor forms) or such other evidence
satisfactory to the Borrower and the Administrative Agent that such Lender
is entitled to a complete exemption from United States withholding tax with
53
respect to payments to be made under this Agreement and under any Note. In
addition, each Lender agrees that it will deliver upon the Borrower's
request updated versions of the foregoing, as applicable, whenever the
previous certification has become obsolete or inaccurate in any material
respect, together with such other forms as may be required in order to
confirm or establish the entitlement of such Lender to a continued
exemption from or reduction in United States withholding tax with respect
to payments under this Agreement and any Note. To the extent necessary, the
Administrative Agent shall provide to the Borrower two accurate and
complete original, signed copies of Form W-8IMY (or any subsequent version
thereof or successor thereto), together with all documentation required to
be supplied therewith. Notwithstanding anything to the contrary contained
in Section 2.18(a), but subject to the immediately succeeding sentence, (x)
the Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold Taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from
interest, fees or other amounts payable hereunder for the account of any
Lender for U.S. Federal income tax purposes to the extent that such Lender
has not provided to the Borrower U.S. Internal Revenue Service Forms or
other evidence satisfactory to the Borrower and the Administrative Agent
that establish a complete exemption from such deduction or withholding and
(y) the Borrower shall not be obligated pursuant to Section 2.18(a) hereof
to gross-up payments to be made to a Lender in respect of Taxes imposed by
the United States if such Lender has not provided to the Borrower the
Internal Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 2.18(b). Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section 2.18, the
Borrower agrees to pay additional amounts and to indemnify each Lender in
the manner set forth in Section 2.18(a) (without regard to the identity of
the jurisdiction requiring the deduction or withholding) in respect of any
amounts deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Closing Date in any
applicable law, treaty, governmental rule, regulation, guideline or order,
or in the interpretation thereof, relating to the deducting or withholding
of Taxes.
(c) Each Initial Lender (other than an Eligible UK Lender) shall, as
soon as is reasonably practicable after the Closing Date, or in the case of
a Lender that is an assignee or transferee of an interest under this
Agreement pursuant to Section 9.6(c) (other than an Eligible UK Lender or
an Initial Lender that is assigned its initial Commitment in connection
with the closing of this Agreement), on or before the date of such
assignment or transfer to such Lender, complete the appropriate application
forms and lodge them with the relevant tax authority in the relevant
jurisdiction in relation to payments made or to be made by the Borrower
under this Agreement. If the relevant tax authority determines that such
form filed by such Initial Lender does not establish that the Initial
Lender is entitled to receive payments made by the Borrower under this
Agreement as at the date of delivery thereof without deduction or
withholding of United Kingdom withholding taxes or, if the relevant tax
authority requires proof of such entitlement, such Initial Lender shall
offer such reasonable assistance as the Borrower may reasonably request in
order to establish such Initial Lender's entitlement (if any) to receive
payments made by the Borrower under this Agreement without deduction or
withholding of United Kingdom withholding taxes. The Borrower shall not be
required
54
to pay any amounts to a Lender (other than an Eligible UK Lender) in
respect of any deduction or withholding of United Kingdom withholding taxes
imposed on a payment of interest which would otherwise be payable under
this Section 2.18 (and the Borrower, if required by law to do so, shall be
entitled to withhold such amounts and pay such amounts to the government of
the United Kingdom) if (i) the obligation to pay such additional amounts
would not have arisen but for a failure by such Lender to complete and
lodge the requisite forms with the relevant tax authority in a timely
manner or provide the Borrower with such other reasonable assistance in
accordance with this Section 2.18(c), or (ii) such Lender is neither (A) an
Initial Lender nor (B) a Qualified Lender on the date on which the payment
falls due; provided that if such Lender would have been (if it had been a
Lender at such time) a Qualified Lender on the Closing Date, or if such
Lender was a Qualified Lender on the effective date of the Commitment
Transfer Supplement pursuant to which it became a Lender hereunder, but
such Lender has ceased to be a Qualified Lender as a result of the
introduction of, change in, or any change in the interpretation,
administration or application of, any law or regulation, any double
taxation treaty or any practice or concession of the United Kingdom Inland
Revenue occurring after the Closing Date or after the effective date of
such Commitment Transfer Supplement, as applicable, the Borrower shall be
required to pay any amounts to such Lender in respect of any deduction or
withholding of United Kingdom withholding taxes imposed on a payment of
interest in accordance with the terms of this Section 2.18.
(d) Within thirty (30) days after the date of any payment of Taxes,
the applicable Credit Party shall furnish to the Administrative Agent the
original or a certified copy of a receipt evidencing such payment.
(e) Each Lender agrees to use reasonable efforts (including reasonable
efforts to change its Domestic Lending Office or LIBOR Lending Office, as
the case may be) to avoid or to minimize any amounts which might otherwise
be payable pursuant to this Section; provided, however, that such efforts
shall not cause the imposition on such Lender of any additional costs or
legal or regulatory burdens deemed by such Lender in its reasonable
discretion to be material.
(f) If the Borrower pays any additional amount pursuant to this
Section 2.18 with respect to a Lender, such Lender or such Lender's owners
or members shall use reasonable efforts to obtain a refund of tax or credit
against its tax liabilities on account of such payment; provided that such
Lender or such Lender's owners or members shall have no obligation to use
such reasonable efforts if such Lender or such Lender's owners or members
reasonably believes in good faith that it is not able to obtain the benefit
of any such refund or credit. In the event that such Lender or such
Lender's owners or members receives such a refund or credit, such Lender or
such Lender's owners or members shall pay to the Borrower an amount that
such Lender or such Lender's owners or members reasonably determines is
equal to the net tax benefit obtained by such Lender or such Lender's
owners or members as a result of such payment by the Borrower. In the event
that no refund or credit is obtained with respect to the Borrower's
payments to such Lender pursuant to this Section 2.18, then such Lender or
such Lender's owners or members shall upon request provide a certification
that such Lender or such Lender's
55
owners or members has not received a refund or credit for such payments.
Nothing contained in this Section 2.18 shall require such Lender or such
Lender's owners or members to disclose or detail the basis of its
calculation of the amount of any tax benefit or any other amount or the
basis of its determination referred to in the proviso to the first sentence
of this Section 2.18 to the Borrower or any other party.
(g) If a Lender is not entitled to receive payments from the Borrower
in respect of any deduction or withholding of withholding taxes imposed on
a payment of interest in accordance with the terms of this Section 2.18,
the Borrower shall offer such reasonable assistance as such Lender may
reasonably request in order to reduce the amount or the rate of such
withholding taxes.
(h) The agreements in this Section 2.18 shall survive the termination
of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
Section 2.19 Indemnification; Nature of Issuing Lender's Duties.
(a) In addition to its other obligations under Section 2.3, the
Borrower hereby agrees to protect, indemnify, pay and save each Issuing
Lender harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of
Credit or (ii) the failure of the Issuing Lender to honor a drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"Government Acts").
(b) As between the Borrower and the Issuing Lender, the Borrower shall
assume all risks of the acts, omissions or misuse of any Letter of Credit
by the beneficiary thereof. The Issuing Lender shall not be responsible
for: (i) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole
or in part, that may prove to be invalid or ineffective for any reason;
(iii) failure of the beneficiary of a Letter of Credit to comply fully with
conditions required in order to draw upon a 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 interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (vii) any consequences arising from causes beyond the control
of the Issuing Lender, including, without limitation, any Government Acts.
None of the above shall affect, impair, or prevent the vesting of the
Issuing Lender's rights or powers hereunder.
56
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the
Issuing Lender, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put such
Issuing Lender under any resulting liability to the Borrower. It is the
intention of the parties that this Agreement shall be construed and applied
to protect and indemnify the Issuing Lender against any and all risks
involved in the issuance of the Letters of Credit, all of which risks are
hereby assumed by the Borrower, including, without limitation, any and all
risks of the acts or omissions, whether rightful or wrongful, of any
Government Authority. The Issuing Lender shall not, in any way, be liable
for any failure by the Issuing Lender or anyone else to pay any drawing
under any Letter of Credit as a result of any Government Acts or any other
cause beyond the control of the Issuing Lender.
(d) Nothing in this Section 2.19 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.3(d)
hereof. The obligations of the Borrower under this Section 2.19 shall
survive the termination of this Agreement. No act or omissions of any
current or prior beneficiary of a Letter of Credit shall in any way affect
or impair the rights of the Issuing Lender to enforce any right, power or
benefit under this Agreement.
(e) Notwithstanding anything to the contrary contained in this Section
2.19, the Borrower shall have no obligation to indemnify any Issuing Lender
in respect of any liability incurred by such Issuing Lender arising out of
the gross negligence or willful misconduct of the Issuing Lender (including
action not taken by an Issuing Lender), as determined by a court of
competent jurisdiction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit herein provided for, the Borrower and its Subsidiaries
hereby represent and warrant to the Administrative Agent and each Lender and,
with respect to Sections 3.1 through 3.9 and Sections 3.17, 3.23, 3.28 and 3.29,
the Parent hereby represents and warrants to the Administrative Agent and to
each Lender that:
Section 3.1 Financial Condition.
The Borrower has delivered to the Administrative Agent and the Lenders (a)
balance sheets and the related statements of income and of cash flows of (i) the
Parent and its Subsidiaries for the fiscal years ended December 31, 2000 and
2001 audited by Price WaterhouseCoopers, and for the fiscal year ended December
31, 2002 audited by Ernst & Young and (ii) the Acquired Company and its
Subsidiaries for the fiscal years ended December 31, 2000, December 31, 2001 and
December 31, 2002 audited by Deloitte & Touche, (b) a company-
57
prepared unaudited balance sheet and the related statement of income and of cash
flow of Orthofix, Inc. for fiscal years ended December 31, 2000, December 31,
2001 and December 31, 2002, (c) company-prepared unaudited balance sheets and
related statements of income and cash flows for the Parent and its Subsidiaries,
the Borrower and its Subsidiaries and the Acquired Company and its Subsidiaries
as of November 30, 2003 and for the eleven-month period then ending, (d) pro
forma balance sheets of the Parent and its Subsidiaries, the Borrower and its
Subsidiaries and the Acquired Company and its Subsidiaries as of November 30,
2003, in each case prepared giving effect to the Acquisition and the initial
Extensions of Credit made hereunder on a Pro Forma Basis and in form and
substance satisfactory to the Administrative Agent and the Lenders and (e) the
five-year projections of the Parent and the Borrower, in form and substance
reasonably satisfactory to the Administrative Agent. The financial statements
referred to in subsections (a)-(d) above are complete and correct and present
fairly the financial condition of the Parent, the Borrower, the Acquired Company
and their respective Subsidiaries as of such dates, subject in the case of
unaudited financials to the absence of footnotes and immaterial year end
adjustments. All such financial statements and projections, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as disclosed
therein).
Section 3.2 No Change.
Since December 31, 2002 there has been no development or event which has
had or could reasonably be expected to have a Material Adverse Effect.
Section 3.3 Corporate Existence; Compliance with Law.
Each of Credit Parties (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, (b) has the requisite power and authority and the legal right to
own and operate all its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged, (c) is duly
qualified to conduct business and is in good standing under the laws of (i) the
state of its organization and (ii) each other jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification except to the extent that the failure to so qualify or be in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, each of the Credit Parties represents
that:
(i) (A) There is no Credit Party or, to the knowledge of the Credit
Parties, individual employed by any Credit Party who may reasonably be
expected to have criminal culpability or to be excluded or suspended from
participation in any Medical Reimbursement Program for their corporate or
individual actions or failures to act where such culpability, exclusion
and/or suspension has or could be reasonably expected to result in a
Material Adverse Effect; and (B) there is no member of management
continuing to be employed by any Credit Party who may reasonably be
expected to have individual culpability for matters under investigation by
any Governmental Authority
58
unless such member of management has been, within a reasonable period of
time after discovery of such actual or potential culpability, either
suspended or removed from positions of responsibility related to those
activities under challenge by the Governmental Authority;
(ii) Current billing policies, arrangements, protocols and
instructions comply with expressly stated requirements of Medical
Reimbursement Programs and are administered by properly trained personnel
except where any such failure to comply could not reasonably be expected to
result in a Material Adverse Effect; and
(iii) Current medical director compensation arrangements and other
arrangements with referring physicians comply with state and federal
self-referral and anti-kickback laws, including without limitation 42
U.S.C. Section 1320a-7b(b)(1) - (b)(2) and 42 U.S.C. Section 1395nn, except
where any such failure to comply could not reasonably be expected to result
in a Material Adverse Effect.
Section 3.4 Corporate Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has full power and authority and the legal right
to make, deliver and perform the Credit Documents to which it is party and has
taken all necessary limited liability company or corporate or other action to
authorize the execution, delivery and performance by it of the Credit Documents
to which it is party. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery or performance of any Credit Document by the Credit Parties (other than
those which have been obtained) or with the validity or enforceability of any
Credit Document against the Credit Parties (except such filings as are necessary
in connection with the perfection of the Liens created by such Credit
Documents). This Credit Agreement has been, and each other Credit Document when
delivered hereunder will have been, duly executed and delivered on behalf of
each of the Credit Parties party thereto. Each Credit Document to which it is a
party constitutes a legal, valid and binding obligation of each of the Credit
Parties, enforceable against such Credit Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
Section 3.5 Status Under Certain Statutes.
No Credit Party is (i) required to be registered as an "investment
company", or "controlled" by a Person that is required to be registered as an
"investment company", under the Investment Company Act of 1940, as amended, or
(ii) subject to regulation under any federal or state statute or regulation
limiting its ability to incur the Credit Party Obligations.
59
Section 3.6 Margin Regulations.
No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Parent and
the Borrower and its Subsidiaries taken as a group do not own "margin stock"
except as identified in the financial statements referred to in Section 3.1 and
the aggregate value of all "margin stock" owned by the Parent and the Borrower
and its Subsidiaries taken as a group does not exceed 25% of the value of their
assets.
Section 3.7 No Legal Bar; No Default.
The execution, delivery and performance of the Credit Documents, the
borrowings thereunder and the use of the proceeds of the Loans will not violate
any Requirement of Law or any Contractual Obligation of the Parent, the Borrower
or any of the Borrower's Subsidiaries (except those as to which waivers or
consents have been obtained), and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any Requirement of Law or Contractual Obligation other than
the Liens arising under or contemplated in connection with the Credit Documents.
Neither the Parent, nor the Borrower, nor any of the Borrower's Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
material respect. No Default or Event of Default has occurred and is continuing.
Section 3.8 No Material Litigation.
As of the Closing Date, set forth on Schedule 3.8 is a description of any
material litigation, investigation, claim, criminal prosecution, civil
investigative demand, criminal or civil fine and penalty, or other proceeding of
or before any arbitrator or Governmental Authority (including but not limited to
those regulatory agencies responsible for licensing, accrediting or issuing
Medicare or Medicaid certifications) that is pending or, to the best knowledge
of the Parent, the Borrower and the Borrower's Subsidiaries, threatened by or
against the Parent, the Borrower or any of the Borrower's Subsidiaries or
against any of its or their respective properties or revenues. No litigation,
investigation, claim, criminal prosecution, civil investigative demand,
imposition of criminal or civil fines and penalties, or any other proceeding of
or before any arbitrator or Governmental Authority (including but not limited to
those regulatory agencies responsible for licensing, accrediting or issuing
Medicare or Medicaid certifications) is pending or, to the best knowledge of the
Borrower and its Subsidiaries, threatened by or against the Borrower or any of
its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to the Credit Documents or any Loan or any of the
transactions contemplated hereby, or (b) which, if adversely determined could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 3.9 ERISA.
No Reportable Event that could reasonably be expected to result in a
Material Adverse Effect, and no "accumulated funding deficiency" (within the
meaning of Section 412 of the Code
60
or Section 302 of ERISA), has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Single Employer Plan. Each Single Employer Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. No termination of
a Single Employer Plan has occurred resulting in any liability that has remained
underfunded. No Lien in favor of a Single Employer Plan or in favor of the PBGC
with respect to a Single Employer Plan has arisen, during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Single Employer Plan (other than a Lien with respect to a
liability which has been satisfied in full). The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits, except to the extent
that such underfunding could not reasonably be expected to result in a Material
Adverse Effect. Neither any Credit Party nor any Commonly Controlled Entity has
any outstanding liability for a complete or partial withdrawal from a
Multiemployer Plan, except to the extent such liability could not reasonably be
expected to result in a Material Adverse Effect.
Section 3.10 Environmental Matters.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain any
Materials of Environmental Concern in amounts or concentrations that
constitute a violation of or a liability under, any Environmental Law.
(b) The Properties, all operations of the Borrower and/or its
Subsidiaries at the Properties, and the business operated by the Borrower
or any of its Subsidiaries (the "Business") are in compliance, and have in
the last two years been in compliance, with all applicable Environmental
Laws.
(c) Neither the Borrower nor any of its Subsidiaries has received any
written notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business,
nor does the Borrower or any of its Subsidiaries have knowledge that any
such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties by the Borrower or any of its Subsidiaries
in violation of any Environmental Law, and neither the Borrower nor any of
its Subsidiaries has received any written notice of any liability or
potential liability for any Materials of Environmental Concern transported
or disposed of from the Properties by the Borrower or any of its
Subsidiaries. Materials of Environmental Concern have not been generated,
treated, stored or disposed of by the Borrower or any of its Subsidiaries
at, on or under any of the Properties in violation of any applicable
Environmental Law, and neither the Borrower nor any of its Subsidiaries is
liable for any Materials of Environmental Concern
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that have been generated, treated, stored or disposed of at, on or under
any of the Properties.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower and its Subsidiaries,
threatened, under any Environmental Law to which the Borrower or any
Subsidiary is or, with respect to any threatened proceeding or action, is
reasonably expected to become a party with respect to the Properties or the
Business, nor are there any governmental consent decrees, consent orders or
administrative orders with respect to which the Borrower or any of its
Subsidiaries is a party, or other administrative or judicial requirements
applicable to the Borrower or any of its Subsidiaries outstanding under any
Environmental Law with respect to the Properties or the Business.
(f) There has been no release of Materials of Environmental Concern by
the Borrower or any of its Subsidiaries or for which the Borrower or any of
its Subsidiaries is liable at or from the Properties, or arising from or
related to the operations of the Borrower or any of its Subsidiaries in
connection with the Properties or otherwise in connection with the
Business, in violation of, or in amounts or in a manner that give rise to
liability, under Environmental Laws, except for any such release that has
been remediated in accordance with applicable Environmental Laws.
Section 3.11 Use of Proceeds.
The proceeds of the Extensions of Credit shall be used solely by the
Borrower to (i) finance a portion of the Acquisition, (ii) pay any fees and
expenses in connection with the Acquisition, (iii) pay any fees and expenses
owing to the Lenders and the Administrative Agent in connection with this
Agreement and the other Credit Documents (including those under the Fee Letter)
and (iv) provide for working capital and other general corporate purposes,
including, without limitation, Permitted Acquisitions.
Section 3.12 Subsidiaries.
Set forth on Schedule 3.12 is a complete and accurate list of all direct
and indirect Subsidiaries of the Borrower as of the Closing Date. Information on
the attached Schedule includes jurisdiction of incorporation or organization;
the number of shares of each class of Capital Stock or other equity interests
outstanding; the number and percentage of outstanding shares of each class of
Capital Stock held by each shareholder; and the number and effect, if exercised,
of all outstanding options, warrants, rights of conversion or purchase and
similar rights. The outstanding Capital Stock and other equity interests of all
such Subsidiaries is validly issued, fully paid and non-assessable and is owned,
free and clear of all Liens (other than those arising under or contemplated in
connection with the Credit Documents).
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Section 3.13 Ownership.
Each of the Borrower and its Subsidiaries is the owner of, and has good and
insurable title to or an indefeasible leasehold interest in, all of its
respective assets and none of such assets is subject to any Lien on such party's
interest other than Permitted Liens.
Section 3.14 Indebtedness.
Except as otherwise permitted under Section 6.1, the Borrower and its
Subsidiaries have no Indebtedness.
Section 3.15 Taxes.
Each of the Borrower and its Subsidiaries has filed, or caused to be filed,
all tax returns required to be filed and paid (a) all amounts of taxes shown
thereon to be due (including interest and penalties) and (b) all other taxes,
fees, assessments and other governmental charges (including mortgage recording
taxes, documentary stamp taxes and intangibles taxes) owing by it, except for
such taxes (i) that are not yet delinquent or (ii) that are being contested in
good faith and by proper proceedings, and against which adequate reserves are
being maintained in accordance with GAAP. Neither the Borrower nor any of its
Subsidiaries are aware as of the Closing Date of any proposed tax assessments
against it or any of its Subsidiaries that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
Section 3.16 Intellectual Property.
Each of the Borrower and its Subsidiaries owns, or has the legal right to
use, all Intellectual Property necessary for each of them to conduct its
business as currently conducted. Set forth on Schedule 3.16 is a list of all
material Intellectual Property (excluding unregistered trademarks to the extent
not used or not reasonably identifiable by the Borrower or any of its
Subsidiaries) owned by the Borrower and its Subsidiaries or that the Borrower or
any of its Subsidiaries has the right to use (excluding standard "off the shelf"
licensed software used in the ordinary course of business). Except pursuant to a
license agreement disclosed in Schedule 3.16 hereto, or as otherwise disclosed
in Schedule 3.16 hereto, (a) the Borrower and its Subsidiaries has the right to
use the Intellectual Property disclosed in Schedule 3.16 hereto in perpetuity
and without payment of royalties, (b) all registrations with and applications to
Governmental Authorities in respect of such Intellectual Property are valid or
subsisting and in full force and effect and are not subject to the payment of
any taxes or maintenance fees or the taking of any interest therein, held by the
Borrower or any of its Subsidiaries to maintain their validity or effectiveness
in any material respects, and (c) there are no restrictions on the direct or
indirect transfer of any Contractual Obligation, or any interest therein, held
by the Borrower or any of its Subsidiaries in respect of such Intellectual
Property. Neither the Borrower nor any of its Subsidiaries is in default (or
with the giving of notice or lapse of time or both, would be in default) under
any license to use any material Intellectual Property; no claim has been
asserted in writing and is pending by any Person, in any material respects,
seeking to restrict or deny the use of any material Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does the
Borrower or any of their Subsidiaries know of any such claim; and, to the
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knowledge of the Borrower and its Subsidiaries, the use of any material
Intellectual Property by the Borrower or any of its Subsidiaries does not
infringe on the rights of any Person. Schedule 3.16 may be updated from time to
time by the Borrower to include new Intellectual Property by giving written
notice thereof to the Administrative Agent.
Section 3.17 Solvency.
Each of the Parent, the Borrower and the Subsidiary Guarantors is Solvent.
Section 3.18 Investments.
All Investments of each of the Borrower and its Subsidiaries are Permitted
Investments.
Section 3.19 Location of Collateral.
Set forth on Schedule 3.19(a) is a list of the real Properties (whether
owned or leased) of the Borrower and its Subsidiaries as of the Closing Date
with street address, county and state where located. Set forth on Schedule
3.19(b) is a list of all locations where any tangible personal property of the
Borrower and its Subsidiaries is located as of the Closing Date (other than
tangible personal property in transit, held by sales representatives or on
consignment with third parties), including county and state where located. Set
forth on Schedule 3.19(c) is the chief executive office and principal place of
business of each of the Borrower and its Subsidiaries as of the Closing Date and
the jurisdiction of incorporation or organization of each such Person as of the
Closing Date.
Section 3.20 No Burdensome Restrictions.
Neither the Borrower nor any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
Section 3.21 Labor Matters.
Except as otherwise set forth in Schedule 3.21 hereto, as of the Closing
Date, (a) there are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower or any of its Subsidiaries, (b) neither
the Borrower nor any of its Subsidiaries has suffered any strikes, walkouts,
work stoppages or other material labor difficulty within the last five years,
(c) neither the Borrower nor any of its Subsidiaries has knowledge of any
material potential or pending strike, walkout or work stoppage and (d) no
material unfair labor practice compliant is pending or, to the best knowledge of
the Borrower and its Subsidiaries, threatened against the Borrower or any of its
Subsidiaries before any Governmental Authority.
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Section 3.22 Security Documents.
The Security Documents create (or will create upon the execution and
delivery thereof) valid security interests in, and Liens on, the Collateral
purported to be covered thereby, which security interests and Liens are
currently (or will be upon the execution and delivery of the Security Documents
and upon the filing of appropriate financing statements, the recordation of the
applicable Mortgage Instruments, the filing of appropriate notices with the
United States Patent and Trademark Office and the United States Copyright
Office, the filing of the relevant UK Collateral Documents at Companies House in
the United Kingdom and the filing of the relevant Mexican Collateral Documents
in the applicable filing or recording offices in Mexico, in each case in favor
of the Administrative Agent, on behalf of the Lenders) perfected security
interests and Liens, prior to all other Liens other than Permitted Liens that
would be prior to the Liens in favor of the Administrative Agent as a matter of
law.
Section 3.23 Accuracy and Completeness of Information.
All factual written information (other than written financial projections)
heretofore, contemporaneously or hereafter furnished by or on behalf of any
Credit Party or any of its Subsidiaries to the Administrative Agent or any
Lender for purposes of or in connection with this Agreement or any other Credit
Document, or any transaction contemplated hereby or thereby, is or will be true
and accurate in all material respects and not incomplete by omitting to state
any material fact necessary to make such information not misleading. The written
financial projections concerning the Borrower and its Subsidiaries heretofore,
contemporaneously or hereafter furnished by or on behalf of any Credit Party or
any of its Subsidiaries to the Administrative Agent or any Lender for purposes
of or in connection with this Agreement or any other Credit Document, or any
transaction contemplated hereby or thereby, have been and will be prepared in
good faith based upon assumptions that the Borrower believes to be reasonable at
the time of such preparation. There is no fact now known to the Borrower, any
other Credit Party or any of their Subsidiaries which has, or could reasonably
be expected to have, a Material Adverse Effect, which fact has not been set
forth herein, in the financial statements of the Borrower and its Subsidiaries
furnished to the Administrative Agent and/or the Lenders, or in any opinion or
other written statement made or furnished by any Credit Party to the
Administrative Agent and/or the Lenders.
Section 3.24 Fraud and Abuse.
Neither the Borrower and its Subsidiaries nor, to the knowledge of the
Borrower and its Subsidiaries, any of their stockholders, officers or directors,
have engaged in any activities which are prohibited under federal Medicare and
Medicaid statutes, 42 U.S.C. ss.1320a-7b, or 42 U.S.C. ss.1395nn or the
regulations promulgated pursuant to such statutes or related state or local
statutes or regulations, or which are prohibited by binding rules of
professional conduct, including but not limited to the following: (a) knowingly
and willfully making or causing to be made a false statement or representation
of a material fact in any applications for any benefit or payment; (b) knowingly
and willfully making or causing to be made any false statement or representation
of a material fact for use in determining rights to any benefit or payment; (c)
failing to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to
65
any benefit or payment on its own behalf or on behalf of another with the intent
to secure such benefit or payment fraudulently; (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind or
offering to pay such remuneration (i) in return for referring an individual to a
Person for the furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part by Medicare, Medicaid or other
applicable third party payors, or (ii) in return for purchasing, leasing or
ordering or arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare, Medicaid or other applicable third party payors.
Section 3.25 Licensing and Accreditation.
Each of the Borrower and its Subsidiaries has, to the extent applicable:
(a) obtained and maintains in good standing all required licenses; (b) to the
extent prudent and customary in the industry in which it is engaged, obtained
and maintains accreditation from all generally recognized accrediting agencies;
(c) obtained and maintains Medicaid Certification and Medicare Certification;
and (d) entered into and maintains in good standing its Medicare Provider
Agreement and its Medicaid Provider Agreement. To the knowledge of the Borrower
and its Subsidiaries, all such required licenses are in full force and effect on
the date hereof and have not been revoked or suspended or otherwise limited.
Section 3.26 Other Regulatory Protection.
Each of the Borrower and its Subsidiaries represent that it does not
manufacture pharmaceutical products and is in compliance with all applicable
rules, regulations and other requirements of the Food and Drug Administration
("FDA"), the Federal Trade Commission ("FTC"), the Occupational Safety and
Health Administration ("OSHA"), the Consumer Product Safety Commission, the
United States Customs Service and the United States Postal Service and other
state or federal regulatory authorities or jurisdictions in which the Borrower
or any of its Subsidiaries do business or distribute and market products, except
to the extent that any such noncompliance, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. Except as so
disclosed, neither the FDA, the FTC, OSHA, the Consumer Product Safety
Commission, nor any other such regulatory authority has requested (or, to the
knowledge of the Borrower and its Subsidiaries, are considering requesting) any
product recalls or other enforcement actions that (a) if not complied with,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect and (b) with which the Borrower and its Subsidiaries
have not complied within the time period allowed.
Section 3.27 Reimbursement from Third Party Payors.
The accounts receivable of the Borrower and its Subsidiaries have been and
will continue to be adjusted to reflect the reimbursement policies (both those
most recently published in writing as well as those not in writing which have
been verbally communicated) of third party payors such as Medicare, Medicaid,
Blue Cross/Blue Shield, private insurance companies, health maintenance
organizations, preferred provider organizations, alternative delivery systems,
managed care systems, government contacting agencies and other third party
payors. In
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particular, accounts receivable relating to third party payors do not and shall
not exceed amounts any obligee is entered to receive under any capitation
arrangement, fee schedule, discount formula, cost-based reimbursement or other
adjustment or limitation to its usual charges.
Section 3.28 Other Agreements.
No Credit Party is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in (a) any Medicaid
Provider Agreement, Medicare Provider Agreement or other agreement or instrument
to which such Person is a party, which default has resulted in, or if not
remedied within any applicable grace period could result in, the revocation,
termination, cancellation or material suspension of Medicaid Certification or
Medicare Certification of any such Person or (b) any other agreement or
instrument to which any such Person is a party, which default, individually or
in the aggregate, has, or if not remedied within any applicable grace period
could reasonably be expected to have, a Material Adverse Effect.
Section 3.29 Material Contracts.
Schedule 3.29 sets forth a true and correct and complete list of all
Material Contracts currently in effect. All of the Material Contracts are in
full force and effect and no material defaults exist thereunder.
Section 3.30 Insurance.
The insurance coverage of the Borrower and its Subsidiaries is outlined as
to carrier, policy number, expiration date, type and amount on Schedule 3.30 and
such insurance coverage complies the requirements set forth in Section 5.5(b).
Section 3.31 Classification as Senior Indebtedness.
The Credit Party Obligations constitute "Senior Indebtedness" under and as
may be defined in any agreement governing any outstanding Subordinated
Indebtedness and the subordination provisions set forth in each such agreement
are legally valid and enforceable against the parties thereto.
Section 3.32 Tax Shelter Regulations.
The Borrower does not intend to treat the Loans or Letters of Credit and
related transactions as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4). In the event the Borrower determines to
take any action inconsistent with such intention, it will promptly notify the
Administrative Agent thereof. If the Borrower so notifies the Administrative
Agent, the Borrower acknowledges that one or more of the Lenders may treat its
Loans and/or Letters of Credit as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as
applicable, will maintain the lists and other records required by such treasury
regulation.
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ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions to Closing Date and Initial Extensions of Credit.
This Agreement shall become effective upon, and the obligation of each
Lender to make the initial Revolving Loans and the Term Loans on the Closing
Date is subject to, the satisfaction of the following conditions precedent:
(a) Execution of Agreements. The Administrative Agent shall have
received (i) counterparts of this Agreement, (ii) for the account of each
applicable Lender, a Revolving Note and a Term Note, (iii) for the account
of each Swingline Lender, the Swingline Note, and (iv) counterparts of the
Security Agreement, the Pledge Agreement, the UK Collateral Documents, the
BV II Limited Guaranty and Pledge Agreement, and each Mortgage Instrument,
in each case conforming to the requirements of this Agreement and executed
by a duly authorized officer of each party thereto, and in each case in
form and substance reasonably satisfactory to the Lenders.
(b) Authority Documents. The Administrative Agent shall have received
the following:
(i) Articles of Incorporation/Organizational Documents. Copies of
the articles of incorporation, certificate of incorporation or other
organizational documents, as applicable, of each Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the jurisdiction of its
incorporation or organization, as the case may be.
(ii) Resolutions. Copies of resolutions of the board of directors
(or comparable group and, where applicable, the shareholders or
members) of each Credit Party approving and adopting the Credit
Documents, the transactions contemplated therein and authorizing
execution and delivery thereof, certified by a secretary or assistant
secretary of such Credit Party (pursuant to a secretary's certificate
in substantially the form of Schedule 4.1-1 attached hereto) as of the
Closing Date to be true and correct and in force and effect as of such
date.
(iii) Bylaws/Operating Agreement. A copy of the bylaws,
memorandum and articles of association, limited liability company
agreement or comparable operating agreement of each Credit Party
certified by a secretary or assistant secretary of such Credit Party
(pursuant to a secretary's certificate in substantially the form of
Schedule 4.1-1 attached hereto) as of the Closing Date to be true and
correct and in force and effect as of such date.
(iv) Good Standing. Copies of certificates of good standing,
existence or its equivalent (to the extent applicable) with respect to
the each Credit Party
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certified as of a recent date by the appropriate Governmental
Authorities of the jurisdiction of incorporation or organization and
each other jurisdiction in which the failure to so qualify and be in
good standing could reasonably be expected to have a Material Adverse
Effect on the business or operations of the Borrower and its
Subsidiaries in such state.
(v) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary (pursuant to a
secretary's certificate in substantially the form of Schedule 4.1-1
attached hereto) to be true and correct as of the Closing Date.
(c) Legal Opinions of Counsel. The Administrative Agent shall have
received (i) opinions of legal counsel (including local counsel to the
extent required by the Administrative Agent) for the Credit Parties, dated
the Closing Date and addressed to the Administrative Agent and the Lenders,
which opinions shall include, without limitation, a "no conflicts" opinion
with respect to corporate instruments and Material Contracts of the Credit
Parties on the Closing Date after giving effect to the transactions
contemplated herein, and (ii) an opinion from Xxxxxx Xxxxxxxx Xxxxxxx as
to, inter alia, the enforceability of the UK Collateral Documents, each
such opinion to be in form and substance reasonably satisfactory to the
Administrative Agent.
(d) Reliance. The Administrative Agent shall have received a copy of
each opinion, report, agreement, and other document required to be
delivered pursuant to the Acquisition Documents and the transactions
contemplated in connection therewith, together with evidence that the
Administrative Agent and the Lenders have been authorized to rely on each
such opinion, all in form and substance reasonably satisfactory to the
Administrative Agent, it being agreed that no affirmative requirement for
the delivery of opinions exists in the Acquisition Documents.
(e) Personal Property Collateral. The Administrative Agent shall have
received, in form and substance reasonably satisfactory to the
Administrative Agent:
(i) searches of Uniform Commercial Code filings in the
jurisdiction of the chief executive office of the Borrower and its
Subsidiaries (other than the Mexican Subsidiary), the state or
jurisdiction of incorporation or organization of each of the Borrower
and its U.S. Subsidiaries and each jurisdiction where any Collateral
is located or where a filing would need to be made in order to perfect
the Administrative Agent's security interest in the Collateral (unless
otherwise agreed by the Administrative Agent), copies of the financing
statements on file in such jurisdictions and evidence that no Liens
exist other than Permitted Liens;
(ii) duly executed UCC financing statements for each appropriate
jurisdiction as is necessary, in the Administrative Agent's sole
discretion, to perfect the Administrative Agent's security interest in
the Collateral; and
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(iii) duly executed consents as are necessary, in the
Administrative Agent's sole discretion, to perfect the Lenders'
security interest in the Collateral.
(f) Real Property Collateral. The Administrative Agent shall have
received, in form and substance reasonably satisfactory to the
Administrative Agent:
(i) subject to the receipt of the applicable landlord consents
pursuant to the terms of clause (vii) of this subsection (f) (to the
extent the applicable leases require such landlord consents), fully
executed and notarized Mortgage Instruments encumbering the leasehold
interest in the Mortgaged Properties leased by the Borrower, the
Acquired Company or any of their respective Subsidiaries in McKinney,
Texas and Vista, California (collectively, the "Initial Mortgaged
Properties");
(ii) a title report in respect of each of the Initial Mortgaged
Properties;
(iii) with respect to each Initial Mortgaged Property, Mortgage
Policies assuring the Administrative Agent that each of the Mortgage
Instruments creates a valid and enforceable first priority mortgage
lien on the applicable Initial Mortgaged Property, free and clear of
all defects and encumbrances except Permitted Liens, which Mortgage
Policies shall provide for affirmative insurance and such reinsurance
as the Administrative Agent may reasonably request, all of the
foregoing in form and substance reasonably satisfactory to the
Administrative Agent;
(iv) evidence as to (A) whether any Initial Mortgaged Property is
in an area designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards (a "Flood Hazard Property")
and (B) if any Initial Mortgaged Property is a Flood Hazard Property,
(1) whether the community in which such Initial Mortgaged Property is
located is participating in the National Flood Insurance Program, (2)
the Borrower's or the applicable Subsidiary Guarantor's written
acknowledgment of receipt of written notification from the
Administrative Agent (y) as to the fact that such Initial Mortgaged
Property is a Flood Hazard Property and (z) as to whether the
community in which each such Flood Hazard Property is located is
participating in the National Flood Insurance Program and (3) copies
of insurance policies or certificates of insurance of the Borrower and
its Subsidiaries evidencing flood insurance reasonably satisfactory to
the Administrative Agent and naming the Administrative Agent as loss
payee on behalf of the Lenders;
(v) to the extent available, surveys of the sites of the Initial
Mortgaged Properties;
(vi) reasonably satisfactory Phase I environmental site
assessment reports with respect to each of the Initial Mortgaged
Properties, together with reliance letters with respect to such
reports in favor of the Lenders;
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(vii) opinions of counsel to the Borrower or the applicable
Subsidiary Guarantors for each jurisdiction in which the Initial
Mortgaged Properties are located; and
(viii) in the case of the Properties located in Mexicali, Baja
California and McKinney, Texas and Vista, California, such estoppel
letters, consents and waivers from the landlords on such Properties as
the Administrative Agent may reasonably require; provided, that the
Credit Parties shall not be required (A) to obtain any such consent to
the extent the applicable landlord refuses to execute such consent
after the Credit Parties have used their best efforts to obtain such
consent or (B) to expend any significant amount of money to obtain
such consents.
(g) Liability, Casualty and Business Interruption Insurance. The
Administrative Agent shall have received copies of insurance policies or
certificates of insurance evidencing liability and casualty insurance
meeting the requirements set forth herein or in the Security Documents and
business interruption insurance satisfactory to the Administrative Agent.
The Administrative Agent shall be named as loss payee or mortgagee, as its
interest may appear, and/or additional insured with respect to any such
insurance providing coverage in respect of any Collateral, and each
provider of any such insurance shall agree, by endorsement upon the policy
or policies issued by it or by independent instruments furnished to the
Administrative Agent, that it will give the Administrative Agent thirty
(30) days prior written notice before any such policy or policies shall be
altered or canceled.
(h) Fees. The Administrative Agent and the Lenders shall have received
(i) all fees, if any, owing pursuant to the Fee Letter and Section 2.5 and
(ii) evidence that the aggregate amount of fees and expenses payable in
connection with the consummation of the Acquisition by the Parent and its
Subsidiaries (excluding those fees identified in the foregoing subsection
(i)) did not exceed $6,000,000.
(i) Litigation. Except as set forth on Schedule 3.8, there shall not
exist any material litigation, investigation, claim, criminal prosecution,
civil investigative demand, imposition of criminal or civil fines and
penalties, or any other proceeding of or before any arbitrator or
Governmental Authority (including but not limited to those regulatory
agencies responsible for licensing, accrediting or issuing Medicare or
Medicaid certifications) affecting or relating to any of the Parent, the
Borrower or the Borrower's Subsidiaries, this Agreement and the other
Credit Documents, that has not been settled, dismissed, vacated, discharged
or terminated prior to the Closing Date.
(j) Solvency Certificate. The Administrative Agent shall have received
an officer's certificate prepared by the chief financial officer of the
Parent as to the financial condition, solvency and related matters of each
Credit Party, in each case after giving effect to the Acquisition and the
initial borrowings under the Credit Documents, in substantially the form of
Schedule 4.1-2 hereto.
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(k) Account Designation Letter. The Administrative Agent shall have
received the executed Account Designation Letter in the form of Schedule
1.1-1 hereto.
(l) Corporate Structure. The corporate, capital and ownership
structure of the Borrower and its Subsidiaries after giving effect to the
Acquisition shall be as described in Schedule 3.12, and shall otherwise be
reasonably satisfactory to the Administrative Agent and the Lenders. The
Administrative Agent and the Lenders shall be satisfied with the management
of the Borrower and its Subsidiaries after giving effect to the
Acquisition.
(m) Acquisition Documents. The Administrative Agent shall have
reviewed and approved in its sole discretion all of the Acquisition
Documents and there shall not have been any material modification,
amendment, supplement or waiver to the Acquisition Documents without the
prior written consent of the Administrative Agent, and the Acquisition
shall have been consummated in accordance with the terms of the Acquisition
Documents (without waiver of any conditions precedent to the obligations of
any party thereto). The Administrative Agent shall have received a copy,
certified by an officer of the Borrower as true and complete, of each
Acquisition Document as originally executed and delivered, together with
all exhibits and schedules thereto.
(n) Consents. The Administrative Agent shall have received evidence
that all governmental, shareholder, board of director and material third
party consents and approvals necessary in connection with the financings,
the Acquisition and other transactions contemplated hereby have been
obtained and all applicable waiting periods have expired without any action
being taken by any authority that could restrain, prevent or impose any
material adverse conditions on such transactions or that could seek or
threaten any of such transactions.
(o) Compliance with Laws. The financings and other transactions
contemplated hereby shall be in compliance with all applicable Requirements
of Law (including all applicable securities and banking laws, rules and
regulations).
(p) Bankruptcy. There shall be no bankruptcy or insolvency proceedings
with respect to any Credit Party or any of its Subsidiaries.
(q) Material Adverse Effect. No material adverse change shall have
occurred since December 31, 2002 in the business, properties, operations or
condition (financial or otherwise) of the Parent, the Borrower, the
Acquired Company or any of their respective Subsidiaries.
(r) Minimum Consolidated Parent EBITDA. The Administrative Agent shall
have received evidence satisfactory thereto provided by the Parent that the
Consolidated Parent EBITDA as of the Closing Date calculated on a Pro Forma
Basis, is no less than $65,000,000.
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(s) Maximum Parent Leverage. The Administrative Agent shall have
received evidence satisfactory thereto provided by the Parent that the
Parent Leverage Ratio as of the Closing Date calculated on a Pro Forma
Basis, is no greater than 1.85 to 1.0.
(t) Minimum Consolidated Borrower EBITDA. The Administrative Agent
shall have received evidence satisfactory thereto provided by the Borrower
that the Consolidated Borrower EBITDA as of the Closing Date calculated on
a Pro Forma Basis, is no less than $43,500,000.
(u) Maximum Indebtedness. The Administrative Agent shall have received
evidence satisfactory thereto provided by the Borrower that the
Indebtedness of the Borrower and its Subsidiaries as of the Closing Date
(excluding intercompany Subordinated Indebtedness of the Borrower and the
Subsidiary Guarantors to the extent such Indebtedness would be eliminated
on a consolidated basis, but including, without limitation, the Parent
Intercompany Loan) calculated on a Pro Forma Basis, is no greater than
$149,000,000.
(v) Financial Statements. The Administrative Agent shall have received
copies of the financial statements and projections referred to in Section
3.1 hereof, each in form and substance satisfactory to it.
(w) Termination of Existing Indebtedness; Approval of Intercompany
Indebtedness. All existing Indebtedness for borrowed money of the Borrower,
the Parent, the Acquired Company and their respective Subsidiaries in
excess of $8,000,000 in the aggregate, shall have been repaid in full and
terminated and all Liens relating thereto shall have been terminated. The
Administrative Agent shall have reviewed and approved in its sole
discretion all loan documentation with respect to any intercompany
Indebtedness of the Credit Parties and the Administrative Agent shall have
received a copy, certified by an officer of the Borrower as true and
complete, of each such document, as originally executed and delivered,
together with all exhibits, schedules, amendments and modifications
thereto.
(x) Officer's Certificates. The Administrative Agent shall have
received a certificate executed by a Responsible Officer of the Borrower as
of the Closing Date stating that (i) immediately after giving effect to
this Credit Agreement (including the initial Extensions of Credit
hereunder), the other Credit Documents and the Acquisition Documents and
all the transactions contemplated therein to occur on such date, (A) no
Default or Event of Default exists, (B) all representations and warranties
contained herein and in the other Credit Documents are true and correct in
all material respects, and (C) the Credit Parties are in compliance with
each of the financial covenants set forth in Section 5.9 in each case after
giving effect to the Acquisition and the initial borrowings under the
Credit Documents on a Pro Forma Basis, and demonstrating compliance with
such financial covenants.
73
(y) Credit Rating. The Borrower shall have obtained a senior secured
credit rating from Xxxxx'x and from S&P.
(z) Patriot Act Certificate. The Administrative Agent shall have
received a certificate satisfactory thereto, for benefit of itself and the
Lenders, provided by the Borrower that sets forth information required by
the Patriot Act (as defined in Section 9.18) including, without limitation,
the identity of the Borrower, the name and address of the Borrower and
other information that will allow the Administrative Agent or any Lender,
as applicable, to identify the Borrower in accordance with the Patriot Act.
(aa) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Administrative Agent
and its counsel.
Section 4.2 Conditions to All Extensions of Credit.
The obligation of each Lender to make any Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent on the date of
making such Extension of Credit:
(a) Representations and Warranties. The representations and warranties
made by the Credit Parties herein, in the Security Documents or which are
contained in any certificate furnished at any time under or in connection
herewith shall be true and correct on and as of the date of such Extension
of Credit as if made on and as of such date (other than any such
representations or warranties that, by their terms, refer to a specific
date other than the date of such Extension of Credit, in which case, as of
such specific date).
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date or after giving effect
to the Extension of Credit to be made on such date unless such Default or
Event of Default shall have been waived in accordance with this Agreement.
(c) Compliance with Commitments. Immediately after giving effect to
the making of any such Extension of Credit (and the application of the
proceeds thereof), (i) the sum of outstanding Revolving Loans plus
outstanding Swingline Loans plus LOC Obligations shall not exceed the
Revolving Committed Amount, (ii) the LOC Obligations shall not exceed the
LOC Committed Amount and (iii) the Swingline Loans shall not exceed the
Swingline Committed Amount.
(d) Additional Conditions to Extensions of Credit. If such Extension
of Credit is made pursuant to Sections 2.1, 2.2, 2.3 or 2.4 all conditions
set forth in such Section shall have been satisfied.
Each request for an Extension of Credit and each acceptance by the Borrower
of any such Extension of Credit shall be deemed to constitute a representation
and warranty by the Borrower
74
as of the date of such Extension of Credit that the applicable conditions in
paragraphs (a) through (d) of this Section have been satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower and the Subsidiary Guarantors hereby covenant and agree that
on the Closing Date, and thereafter for so long as this Agreement is in effect
and until the Commitments have terminated, no Note shall remain outstanding and
unpaid and the Credit Party Obligations, together with interest, Commitment Fees
and all other amounts owing to the Administrative Agent or any Lender hereunder,
shall have been paid in full, the Borrower and the Subsidiary Guarantors shall:
Section 5.1 Financial Statements.
Furnish to the Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, but in any
event within ninety (90) days after the end of each fiscal year of the
Borrower commencing with the fiscal year ended December 31, 2003 (or, with
respect to the comparative information required below, commencing with the
fiscal year ended December 31, 2005), a copy of the consolidated and
consolidating balance sheet of the Parent and its consolidated Subsidiaries
(which consolidating balance sheet shall include the consolidated balance
sheet of the Borrower and its Subsidiaries) as at the end of such fiscal
year and the related consolidated and consolidating statements of income
and retained earnings and of cash flows of the Parent and its consolidated
Subsidiaries (which consolidating statements shall include the consolidated
statements of income and retained earnings and cash flow of the Borrower
and its Subsidiaries) for such year, together with an "other financial
information" opinion with respect to the Borrower and its Subsidiaries,
audited (with respect to the consolidated statements only) by a firm of
independent certified public accountants of, as appropriate, nationally or
internationally recognized standing reasonably acceptable to the
Administrative Agent, setting forth in comparative form consolidated and
consolidating figures for the preceding fiscal year, reported on without a
"going concern" or like qualification or exception, or qualification
indicating that the scope of the audit was inadequate to permit such
independent certified public accountants to certify such financial
statements without such qualification;
(b) Quarterly Financial Statements. (i) As soon as available and in
any event within (i) forty-five (45) days after the end of each of the
first three fiscal quarters of the Borrower and (ii) ninety (90) days after
the end of the fourth fiscal quarter of the Borrower, a company-prepared
consolidated and consolidating balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such period and related
company-prepared consolidated and consolidating statements of income and
retained earnings and of cash flows for the Borrower and its consolidated
Subsidiaries for such
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quarterly period and for the portion of the fiscal year ending with such
period, in each case setting forth in comparative form consolidated and
consolidating figures for the corresponding period or periods of the
preceding fiscal year (subject to normal recurring year-end audit
adjustments) and including a summary of accounts receivable and accounts
payable aging reports in form satisfactory to the Lenders and (ii) as soon
as available and in any event within (i) forty-five (45) days after the end
of each of the first three fiscal quarters of the Parent and (ii) ninety
(90) days after the end of the fourth fiscal quarter of the Parent, a
company-prepared consolidated and consolidating balance sheet of the Parent
and its consolidated Subsidiaries as at the end of such period and related
company-prepared consolidating and consolidating statements of income and
retained earnings and of cash flows for the Parent and its consolidated
Subsidiaries for such quarterly period and for the portion of the fiscal
year ending with such period, in each case setting forth in comparative
form consolidated and consolidating figures for the corresponding period or
periods of the preceding fiscal year (subject to normal recurring year-end
audit adjustments) and including management discussion and analysis of
operating results inclusive of operating metrics in comparative form and a
summary of accounts receivable and accounts payable aging reports in form
satisfactory to the Lenders; and
(c) Annual Budget Plan. As soon as available, but in any event within
thirty (30) days after the end of each fiscal year, a copy of the detailed
annual budget or plan of the Borrower for the next fiscal year on a
quarterly basis, in form and detail reasonably acceptable to the
Administrative Agent and the Required Lenders, together with a summary of
the material assumptions made in the preparation of such annual budget or
plan;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of a change, if any, in the application of accounting principles as
provided in Section 1.3.
Section 5.2 Certificates; Other Information.
Furnish to the Administrative Agent and each of the Lenders:
(a) concurrently with the delivery of the financial statements
referred to in Section 5.1(a) above, certificates of the independent
certified public accountants with respect to the Borrower and the Parent
reporting on such financial statements stating that in making the
examination necessary therefore no knowledge was obtained of any Default or
Event of Default under Section 5.9, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and 5.1(b) above, a certificate of a
Responsible Officer of the Borrower
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stating that, to the best of such Responsible Officer's knowledge, during
such period each of the Credit Parties observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in
this Agreement to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate and such certificate shall
include the calculations in reasonable detail required to indicate
compliance with Section 5.9 as of the last day of such period;
(c) within ten (10) days after the same are sent, copies of all
reports (other than those otherwise provided pursuant to Section 5.1 and
those which are of a promotional nature) and other financial information
which the Parent sends to its members and equity holders, and within ten
(10) days after the same are filed, copies of all financial statements and
non-confidential reports which the Parent may make to or file with the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) within ninety (90) days after the end of each fiscal year of the
Borrower, a certificate containing information regarding the amount of all
Asset Dispositions, Debt Issuances, and Equity Issuances that were made
during the prior fiscal year and amounts received in connection with any
Recovery Event during the prior fiscal year;
(e) promptly upon receipt thereof, a copy of any other report or
"management letter" submitted or presented by independent accountants to
any Credit Party or any of the Borrower's Subsidiaries in connection with
any annual, interim or special audit of the books of such Person;
(f) promptly, copies of all notices from or material requests to the
FDA, FTC, and OSHA (each, as defined in Section 3.26); and
(g) promptly, such additional financial and other information as the
Administrative Agent, on behalf of any Lender, may from time to time
reasonably request.
Section 5.3 Payment of Obligations.
Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all its taxes (Federal, state, local and
any other taxes) and all its other obligations and liabilities of whatever
nature and any additional costs that are imposed as a result of any failure to
so pay, discharge or otherwise satisfy such obligations and liabilities, except
(a) when the amount or validity of such obligations, liabilities and costs is
currently being contested in good faith by appropriate proceedings and reserves,
if applicable, in conformity with GAAP with respect thereto have been provided
on the books of the Borrower or a Subsidiary Guarantor, as the case may be or
(b) where any such failure to pay, discharge or satisfy could not reasonably be
expected to have a Material Adverse Effect.
77
Section 5.4 Conduct of Business and Maintenance of Existence.
Continue to (a) engage in business of the same general type as now
conducted by it on the Closing Date and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business; provided that, if in the discretion of the Borrower it
is commercially feasible to do so and if in the discretion of the Administrative
Agent no materially adverse consequences to the Lenders would result therefrom,
(i) the Borrower may change its jurisdiction of organization from the United
Kingdom to any state of the United States so long as the Administrative Agent
has received such corporate documentation, collateral documentation and opinions
of counsel as the Administrative Agent may reasonably request in connection
therewith, and (ii) Orthofix Holdings may change its jurisdiction of
incorporation from the State of Minnesota to the State of Delaware so long as
the Borrower confirms that the Administrative Agent has filed all necessary UCC
financing statement in connection therewith; and provided, further, that the
Borrower may consummate the Acquisition and any other merger or consolidation
permitted under Section 6.4 or liquidate or dissolve any Subsidiary that has no
assets or that has sold, disposed of or otherwise transferred all of its assets
to the Borrower or another of the Subsidiaries and (b) comply with all
Contractual Obligations and Requirements of Law applicable to it except to the
extent that failure to comply therewith, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
Section 5.5 Maintenance of Property; Insurance.
(a) Keep all material property useful and necessary in its business in
good working order and condition (ordinary wear and tear, damage by
casualty and obsolescence excepted);
(b) Maintain with financially sound and reputable insurance companies
insurance on all its Material Property (including without limitation its
material tangible Collateral) in at least such amounts and against at least
such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to the
Administrative Agent, upon written request, full information as to the
insurance carried. The Administrative Agent shall be named as loss payee or
mortgagee, as its interest may appear, (or additional insured in the case
of liability coverage) with respect to any such insurance providing
coverage in respect of any Collateral, and each provider of any such
insurance shall agree, by endorsement upon the policy or policies issued by
it or by independent instruments furnished to the Administrative Agent,
that it will give the Administrative Agent thirty (30) days prior written
notice before any such policy or policies shall be altered or canceled, and
that no act or default of any Credit Party or any Subsidiary of the
Borrower or any other Person shall affect the rights of the Administrative
Agent or the Lenders under such policy or policies; and
(c) In case of any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Administrative Agent generally
describing the nature and extent of such damage or destruction. In case of
any loss, damage to or destruction of the Collateral of any Credit
78
Party or any part thereof, such Credit Party, whether or not the insurance
proceeds, if any, received on account of such damage or destruction shall
be sufficient for that purpose, at such Credit Party's cost and expense,
will promptly repair or replace the Collateral of such Credit Party so
lost, damaged or destroyed.
Section 5.6 Inspection of Property; Books and Records; Discussions.
Keep proper books and records of account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its businesses and activities; and
permit, during regular business hours and upon reasonable notice by the
Administrative Agent or any Lender, the Administrative Agent or any Lender to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records (other than materials protected by the attorney-client
privilege and materials which the Borrower may not disclose without violation of
a confidentiality obligation binding upon it) once a fiscal quarter or upon the
occurrence and during the continuance of a Default or an Event of Default, and
to discuss the business, operations, properties and financial and other
condition of the Credit Parties and their Subsidiaries with officers and
employees of the Credit Parties and their Subsidiaries and with its independent
certified public accountants. The forgoing, with respect to the Lenders, shall
be at such Lender's expense and, with respect to the Administrative Agent, shall
be at the Borrower's expense.
Section 5.7 Notices.
Give notice in writing to the Administrative Agent (which shall promptly
transmit such notice to each Lender) of:
(a) promptly, but in any event within two (2) Business Days after any
Credit Party knows thereof, the occurrence of any Default or Event of
Default;
(b) promptly, any default or event of default under any Contractual
Obligation of any Credit Party or any of its Subsidiaries which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or involve a monetary claim in excess of
$1,000,000;
(c) promptly, any litigation, or any investigation or proceeding known
to any Credit Party (i) affecting any Credit Party or any of its
Subsidiaries which, if adversely determined, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect
or involve a monetary claim in excess of $1,000,000 or (ii) affecting or
with respect to this Agreement or any other Credit Document;
(d) as soon as possible and in any event within thirty (30) days after
any Credit Party knows or has reason to know thereof: (i) the occurrence of
any material Reportable Event with respect to any Single Employer Plan, a
failure to make any required contribution to a Single Employer Plan, the
creation of any Lien in favor of a Single Employer Plan or in favor of the
PBGC with respect to a Single Employer Plan (other than a Permitted Lien)
or any withdrawal from, or the termination, Reorganization
79
or Insolvency of, any Multiemployer Plan, which could reasonably be
expected to result in any material liability for any Credit Party, or (ii)
the institution of proceedings or the taking of any other action by the
PBGC or any Credit Party or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan, which could reasonably be
expected to result in any material liability for any Credit Party;
(e) promptly, of the institution of any investigation or proceeding
against any Credit Party to suspend, revoke or terminate or which may
result in the termination of any Medicaid Provider Agreement, Medicaid
Certification, Medicare Provider Agreement, Medicare Certification or
exclusion from any Medical Reimbursement Program;
(f) promptly, after any Credit Party becomes involved in a pending
civil or criminal investigation, criminal action or civil proposed
debarment, exclusion or other sanctioning action related to any Federal or
state healthcare program;
(g) promptly, any other development or event which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect;
(h) promptly, any intention by the Borrower to treat the Loans and/or
Letters of Credit and related transactions as being a "reportable
transaction" (within the meaning of Treasury Regulation Section 1.6011-4),
a duly completed copy of IRS Form 8886 or any successor form; and
(i) promptly, the Borrower or any of its Subsidiaries (i) entering
into a collective bargaining agreement or Multiemployer Plan covering the
employees of the Borrower or any of its Subsidiaries, (ii) suffering any
strike, walkout, work stoppage or other material labor difficulty or (iii)
becoming aware of any material unfair labor practice compliant against the
Borrower or any of its Subsidiaries before any Governmental Authority.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto. In the case of any notice of a Default or Event of Default, the
Borrower shall specify that such notice is a Default or Event of Default notice
on the face thereof.
Section 5.8 Environmental Laws.
(a) Comply in all material respects with, and ensure compliance in all
material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply in all material
respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable
80
Environmental Laws except to the extent that failure to do so, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws except to the extent that the same are being contested
in good faith by appropriate proceedings and the pendency of such
proceedings could not reasonably be expected to have a Material Adverse
Effect; and
(c) Defend, indemnify and hold harmless the Administrative Agent and
the Lenders, and their respective employees, agents, officers and directors
and affiliates, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever
kind or nature known or unknown, contingent or otherwise, arising out of,
or in any way relating to the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of any Credit
Party or any of the Borrower's Subsidiaries or the Properties, or any
orders, requirements or demands of Governmental Authorities related
thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct of the
Person seeking indemnification or any of its employees, agents, officers
and directors and affiliates. The agreements in this paragraph shall
survive repayment of the Notes and all other amounts payable hereunder.
Section 5.9 Financial Covenants.
Commencing on the day immediately following the Closing Date and for so
long as this Agreement shall remain in effect, each of the Credit Parties shall,
and shall cause each of its Subsidiaries to, comply with the following financial
covenants:
(a) Parent Leverage Ratio. The Parent Leverage Ratio, as of the last
day of each fiscal quarter of the Parent and its Subsidiaries, shall be
less than or equal to 2.25 to 1.0.
(b) Borrower Leverage Ratio. The Borrower Leverage Ratio, as of the
last day of each fiscal quarter of the Borrower and its Subsidiaries during
the periods indicated below, shall be less than or equal to the following:
81
-----------------------------------------------------------------------
Period Ratio
------ -----
-----------------------------------------------------------------------
Closing Date through June 30, 2004 2.875 to 1.00
-----------------------------------------------------------------------
July 1, 2004 through December 30, 2004 2.75 to 1.00
-----------------------------------------------------------------------
December 31, 2004 through March 30, 2005 2.50 to 1.00
-----------------------------------------------------------------------
March 31, 2005 through September 29, 2005 2.375 to 1.00
-----------------------------------------------------------------------
September 30, 2005 through March 30, 2006 2.25 to 1.00
-----------------------------------------------------------------------
March 31, 2006 through March 30, 2007 2.00 to 1.00
-----------------------------------------------------------------------
March 31, 2007 through December 30, 2007 1.75 to 1.00
-----------------------------------------------------------------------
December 31, 2007 and thereafter 1.50 to 1.00
-----------------------------------------------------------------------
(c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as
of the last day of each fiscal quarter of the Borrower occurring during the
periods indicated below, shall be greater than or equal to the following:
Period Ratio
------ -----
Closing Date through March 30, 2006 1.10 to 1.0
March 31, 2006 through March 30, 2007 1.20 to 1.0
March 31, 2007 and thereafter 1.25 to 1.0
(d) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
last day of each fiscal quarter of the Borrower occurring during the
periods indicated below, shall be greater than or equal to the following:
Period Ratio
------ -----
Closing Date through September 29, 2005 4.00 to 1.0
September 30, 2005 and thereafter 5.00 to 1.0
Section 5.10 Additional Subsidiary Guarantors.
The Borrower and its Subsidiary Guarantors will cause each of their U.S.
Subsidiaries, whether newly formed, after acquired or otherwise existing, to
promptly become a Guarantor hereunder by way of execution of a Joinder
Agreement. The guaranty obligations of any such Additional Credit Party shall be
secured by, among other things, the property and assets of the Additional Credit
Party and such U.S. Subsidiary shall execute and deliver to the Administrative
Agent such Security Documents, legal opinions and related documents as the
Administrative Agent may reasonably request with respect to such property and
assets.
Section 5.11 Compliance with Law.
The Borrower, the Parent and the Subsidiary Guarantors will, and will cause
each of its Subsidiaries to, (a) comply with all expressly stated laws, rules,
regulations, orders, restrictions and valid requirements imposed by all
Governmental Authorities and regulatory authorities applicable to it, its
property and assets and the conduct of its business if noncompliance with any
such law, rule, regulation, order, restriction or requirement, including without
limitation Titles XVIII and XIX of the Social Security Act, Medicare Regulations
and Medicaid Regulations,
82
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, and (b) obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and herein
contemplated, including without limitation professional licenses, appropriate
Medicaid Certifications and Medicare Certifications, if failure to do so could
have, individually or in the aggregate, a Material Adverse Effect. Specifically,
but without limiting the foregoing, and except where any such failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect: (x) billing policies, arrangements, protocols and
instructions will comply with reimbursement requirements under Medicare,
Medicaid and other Medical Reimbursement Programs and will be administered by
properly trained personnel; and (y) medical director compensation arrangements
and other arrangements with referring physicians will comply with applicable
state and federal self-referral and anti-kickback laws, including without
limitation 42 U.S.C. Section 1320a-7b(b)(1) - (b)(2) and 42 U.S.C. Section
1395nn.
Section 5.12 Pledged Assets.
(a) The Borrower will, and will cause each of its Subsidiaries to,
cause 100% of the outstanding Capital Stock of each of its direct or
indirect Subsidiaries to be subject at all times to a first priority,
perfected Lien in favor of the Administrative Agent pursuant to the terms
and conditions of the Security Documents or such other security documents
as the Administrative Agent shall reasonably request.
(b) If, subsequent to the Closing Date, the Borrower or any Subsidiary
Guarantor shall acquire any securities, instruments (except checks),
chattel paper or other personal property required for perfection to be
delivered to the Administrative Agent as Collateral hereunder or under any
of the Security Documents, the Borrower or such Subsidiary Guarantor shall
promptly (and in any event within three (3) Business Days) after such
acquisition notify the Administrative Agent of same; provided that property
the value of which, individually, is less than $50,000 and, in the
aggregate, is less than $250,000 in any twelve-month period, shall not be
required to be delivered until such time that all such property shall
exceed $100,000 in the aggregate. Each of the Borrower and the Subsidiary
Guarantors shall take such action at its own expense as may be necessary or
otherwise requested by the Administrative Agent (including, without
limitation, any of the actions described in Sections 4.1(e) and (f) hereof)
to ensure that the Administrative Agent has a first priority perfected Lien
to secure the Credit Party Obligations in (i) all personal property
Collateral of the Borrower and the Subsidiary Guarantors and (ii) to the
extent required by the Administrative Agent or the Required Lenders in its
or their sole reasonable discretion, all real property owned by the
Borrower and the Subsidiary Guarantors, subject in each case only to
Permitted Liens.
(c) If, subsequent to the Closing Date, the Borrower or any Subsidiary
Guarantor leases a warehouse, plant or other real property material to the
such Person's business, the Borrower or such Subsidiary Guarantor shall (i)
promptly notify the Administrative Agent of such lease, (ii) to the extent
required by the Administrative Agent and to the extent consented to by the
relevant landlord or not prohibited under the
83
lease, promptly deliver to the Administrative Agent such Mortgage
Instruments, title reports, Mortgage Policies, Surveys, environmental site
assessment reports, legal opinions and other documentation as the
Administrative Agent may require and (iii) use its reasonable best efforts
to deliver to the Administrative Agent such estoppel letters, consents and
waivers from the landlord on such real property as may be required by the
Administrative Agent; provided, that the Borrower and the Subsidiary
Guarantors shall not be required to expend any significant amount of money
to obtain such consents.
Section 5.13 Further Assurances.
(a) Drop Down Date. If the Drop Down Date shall not have occurred on
or prior to January 29, 2004, the Parent promptly will cause BV II and IOL
to execute a full guaranty of the Credit Party Obligations and cause each
of BV II and IOL to provide first-priority security interests in all of
such Person's property and assets in favor of the Administrative Agent on
behalf of the Lenders. If the Drop Down Date occurs on or prior to January
29, 2004, the BV II Limited Guaranty and Pledge Agreement shall be
automatically terminated and no consent of the Administrative Agent or any
Lender or action by BV II, the Administrative Agent or any Lender shall be
required in connection therewith.
(b) Mexican Security Documents. Within 30 days after the Closing Date
(or such extended period of time as agreed to by the Administrative Agent),
the Administrative Agent shall have received (i) a Joinder Agreement and
the Mexican Security Documents, in each case executed by the Mexican
Subsidiary, and (ii) such corporate documents and certificates, opinion of
counsel and other documents (including, without limitation, one or more
certificates evidencing the outstanding Capital Stock of the Mexican
Subsidiary to the extent available and obtainable) as the Administrative
Agent may reasonably request in connection with the foregoing.
(c) New Jersey Opinion. If at any time (i) the Consolidated Borrower
EBITDA attributable to Neomedics, Inc. shall exceed 5% of the total
Consolidated Borrower EBITDA at such time or (ii) the fair market value of
the assets of Neomedics, Inc. shall exceed 5% of the fair market value of
the total assets of the Borrower and its Subsidiaries, then, within 30 days
thereafter (or such extended period of time as agreed to by the
Administrative Agent), the Administrative Agent shall have received such
opinion of counsel with respect to Neomedics, Inc. as the Administrative
Agent may reasonably request.
(d) IP Matters. Within sixty (60) days after the Closing Date (or such
extended period of time as agreed to by the Administrative Agent), the
Borrower and the Subsidiary Guarantors shall have used commercially
reasonable efforts to correct with the United States Patent and Trademark
Office any chain of title issues with respect to its Intellectual Property
and to file with the United States Patent and Trademark Offices any
security interest terminations, in each case as may be reasonably requested
by the Administrative Agent.
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(e) Landlord Waiver. Within thirty (30) days after the Closing Date
(or such extended period of time as agreed to by the Administrative Agent),
the Borrower and the Subsidiary Guarantors shall have used commercially
reasonable efforts to obtain a landlord waiver with respect to that certain
leased property located in Vista, California on terms and conditions
reasonably satisfactory to the Administrative Agent; provided that if the
Administrative Agent determines that the cost of obtaining such waiver
exceeds the value thereof, then such waiver shall no longer be required
pursuant to this Section 5.13(e).
ARTICLE VI
NEGATIVE COVENANTS
The Borrower and the Subsidiary Guarantors hereby covenant and agree and,
with respect to Section 6.13, the Parent hereby covenants and agrees that on the
Closing Date, and thereafter for so long as this Agreement is in effect and
until the Commitments have terminated, no Note remains outstanding and unpaid
and the Credit Party Obligations, together with interest, Commitment Fee and all
other amounts owing to the Administrative Agent or any Lender hereunder, are
paid in full that:
Section 6.1 Indebtedness.
Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, contract, create, incur, assume or permit to exist any
Indebtedness, except without duplication:
(a) Indebtedness arising or existing under this Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower and its Subsidiaries existing as of
the Closing Date as referenced in the financial statements referenced in
Section 3.1 (and set out more specifically in Schedule 6.1(b)) hereto and
renewals, refinancings or extensions thereof in a principal amount not in
excess of that outstanding as of the date of such renewal, refinancing or
extension; provided that the Borrower and the Subsidiary Guarantors party
to the intercompany notes set forth on Schedule 6.1(b) hereby agree that
the intercompany Indebtedness evidenced by such intercompany notes shall be
subordinated to the Credit Party Obligations and that the Credit Party
Obligations shall be paid in full prior to any payments being made on such
intercompany notes, except as permitted by Section 6.10;
(c) Indebtedness of the Borrower and its Subsidiaries incurred after
the Closing Date consisting of Capital Leases or Indebtedness incurred to
provide all or a portion of the purchase price or cost of construction of
an asset; provided that (i) such Indebtedness when incurred shall not
exceed the purchase price or cost of construction of such asset; (ii) no
such Indebtedness shall be refinanced for a principal amount in excess
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of the principal balance outstanding thereon at the time of such
refinancing; and (iii) the total amount of all such Indebtedness shall not
exceed $2,500,000 at any time outstanding;
(d) Unsecured intercompany Subordinated Indebtedness among the
Borrower and the Subsidiary Guarantors;
(e) Indebtedness and obligations owing under Secured Hedging
Agreements and other Hedging Agreements entered into in order to manage
existing or anticipated interest rate or exchange rate risks and not for
speculative purposes;
(f) Indebtedness and obligations of the Borrower and its Subsidiaries
owing under documentary letters of credit for the purchase of goods or
other merchandise (but not under standby, direct pay or other letters of
credit except for the Letters of Credit hereunder) generally;
(g) The Parent Intercompany Loan, the Deferred Purchase Agreement and
other unsecured Subordinated Indebtedness of the Borrower and its
Subsidiaries, which other Subordinated Indebtedness does not exceed
$10,000,000 in the aggregate at any time outstanding;
(h) Guaranty Obligations in respect of Indebtedness of the Borrower
and its Subsidiaries to the extent such Indebtedness is permitted to exist
or be incurred pursuant to this Section 6.1; and
(i) other Indebtedness of the Borrower and its Subsidiaries which does
not exceed $1,000,000 in the aggregate at any time outstanding.
Section 6.2 Liens.
Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any of its Subsidiaries to, contract, create, incur, assume or permit to exist
any Lien with respect to any of its property or assets of any kind (whether real
or personal, tangible or intangible), whether now owned or hereafter acquired,
except for Permitted Liens.
Section 6.3 Nature of Business.
Each of the Credit Parties will not, nor will the Borrower or any
Subsidiary Guarantor permit any Subsidiary to, alter the character of its
business or any business activities reasonably related thereto in any material
respect from that conducted as of the Closing Date.
Section 6.4 Consolidation, Merger, Sale or Purchase of Assets, etc.
Each of the Credit Parties (other than the Parent with respect to
subclauses (a) and (b)(i) below) will not, nor will the Borrower or any
Subsidiary Guarantor permit any Subsidiary to,
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(a) dissolve, liquidate or wind up its affairs, sell, transfer, lease
or otherwise dispose of its property or assets or agree to do so at a
future time except the following, without duplication, shall be expressly
permitted:
(i) the sale, transfer, lease or other disposition of inventory
and materials in the ordinary course of business;
(ii) the sale, transfer or other disposition of cash and Cash
Equivalents;
(iii) (A) the disposition of property or assets as a direct
result of a Recovery Event or (B) the sale, lease, transfer or other
disposition of machinery, parts and equipment no longer used or useful
in the conduct of the business of the Borrower or any of its
Subsidiaries, so long as the net proceeds therefrom are used to
replace such machinery, parts and equipment or to purchase or
otherwise acquire new assets or property within 180 days of receipt of
the net proceeds;
(iv) the sale, lease or transfer of property or assets between or
among the Borrower and the Subsidiary Guarantors;
(v) the termination of any Hedging Agreement permitted pursuant
to Section 6.1(e);
(vi) the sale, lease or transfer of property or assets not to
exceed $1,000,000 in the aggregate in any fiscal year; and
(vii) liquidate or dissolve any Subsidiary that has no assets or
that has sold, disposed of or otherwise transferred all of its assets
to the Borrower or a Subsidiary Guarantor;
provided, that, in the case of clauses (i), (ii), (iii) and (vi) above, at
least 75% of the consideration received therefore by the Borrower or any
other Credit Party is in the form of cash or Cash Equivalents; provided,
further, that with respect to sales of assets permitted hereunder only, the
Administrative Agent shall without the consent of the Required Lenders,
release its Liens relating to the particular assets sold; or
(b) (i) purchase, lease or otherwise acquire (in a single transaction
or a series of related transactions) the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases,
materials, property and equipment in the ordinary course of business,
except as otherwise limited or prohibited herein) or (ii) enter into any
transaction of merger or consolidation, except for (A) consummation of the
Acquisition, (B) investments or acquisitions permitted pursuant to Section
6.5, and (C) the merger or consolidation of a Credit Party (other than the
Parent) with and into another Credit Party (other than the Parent);
provided that (1) if the Borrower is a party thereto, the Borrower will be
the surviving corporation and (2) the Administrative Agent's Liens with
respect to
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the Collateral of each Credit Party involved in such merger or
consolidation shall remain continuously perfected.
Section 6.5 Advances, Investments and Loans.
Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, make any Investment except for Permitted Investments.
Section 6.6 Transactions with Affiliates.
Except as permitted in subsection (e) of the definition of Permitted
Investments, neither the Borrower nor any Subsidiary Guarantor will, nor will it
permit any Subsidiary to, enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer, director,
shareholder or Affiliate other than on terms and conditions substantially as
favorable as would be obtainable in a comparable arm's-length transaction with a
Person other than an officer, director, shareholder or Affiliate.
Section 6.7 Ownership of Subsidiaries; Restrictions.
Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, create, form or acquire any Subsidiaries, except for U.S.
Subsidiaries which are Credit Parties or which are joined as Additional Credit
Parties in accordance with the terms hereof. Neither the Borrower nor any
Subsidiary Guarantor will sell, transfer, pledge or otherwise dispose of any
Capital Stock or other equity interests in any of its Subsidiaries, nor will it
permit any of its Subsidiaries to issue, sell, transfer, pledge or otherwise
dispose of any of their Capital Stock or other equity interests, except in a
transaction permitted by Section 6.4.
Section 6.8 Fiscal Year; Organizational Documents; Material Contracts;
Subordinated Indebtedness Documents.
Each of the Credit Parties will not, nor will the Borrower or any
Subsidiary Guarantor permit any Subsidiary to, change its fiscal year or its
accounting policies except as required by GAAP. Except as permitted pursuant to
Section 5.4, each of the Credit Parties will not, nor will the Borrower or any
Subsidiary Guarantor permit any Subsidiary to, amend, modify or change its
articles of incorporation (or corporate charter or other similar organizational
document) or bylaws (or other similar document) without the prior written
consent of the Required Lenders. Each of the Credit Parties will not, nor will
the Borrower or any Subsidiary Guarantor permit any Subsidiary to, without the
prior written consent of the Administrative Agent, amend, modify, cancel or
terminate or fail to renew or extend or permit the amendment, modification,
cancellation or termination of any of the Material Contracts to the extent any
amendment, modification, cancellation, termination or failure to renew or extend
could reasonably be expected to have a Material Adverse Effect. Each of the
Borrower and its Subsidiaries will not, without the prior written consent of the
Required Lenders, amend, modify, waive or extend or permit the amendment,
modification, waiver or extension of any Subordinated Indebtedness or of any
documentation governing or evidencing such Subordinated Indebtedness in a manner
that is adverse to the interests of the Lenders or the issuer of such
Subordinated Indebtedness.
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Section 6.9 Limitation on Restricted Actions.
Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any such Person to (a) pay dividends or make any other distributions to any
Credit Party on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, (b) pay any Indebtedness or other
obligation owed to any Credit Party, (c) make loans or advances to any Credit
Party, (d) sell, lease or transfer any of its properties or assets to any Credit
Party, or (e) act as a guarantor and pledge its assets pursuant to the Credit
Documents or any renewals, refinancings, exchanges, refundings or extension
thereof, except (in respect of any of the matters referred to in clauses (a)-(d)
above) for such encumbrances or restrictions existing under or by reason of (i)
this Agreement and the other Credit Documents, (ii) applicable law, (iii) any
document or instrument governing Indebtedness incurred pursuant to Section
6.1(c); provided that any such restriction contained therein relates only to the
asset or assets constructed or acquired in connection therewith, or (iv) any
Permitted Lien or any document or instrument governing any Permitted Lien;
provided that any such restriction contained therein relates only to the asset
or assets subject to such Permitted Lien.
Section 6.10 Restricted Payments.
Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment except (a) to make dividends payable
solely in the same class of Capital Stock of such Person, (b) to make dividends
or other distributions (directly or indirectly through Subsidiaries) payable to
any Credit Party other than the Parent, (c) to make payments in respect of the
Kinesis Earnout in an aggregate amount not to exceed $1,200,000 so long as such
payment is not to an Affiliate of the Credit Parties, (d) if the Borrower
achieves a Borrower Leverage Ratio of 1.50 to 1.0 as of the end of any fiscal
year, so long as (i) no Default or Event of Default has occurred and is
continuing at the time of any such payment or would result therefrom and (ii)
the Parent, the Borrower and the Borrower's Subsidiaries are in compliance with
the financial covenants set forth in Section 5.9 after giving effect to any such
payment on a Pro Forma Basis, the Borrower may make distributions to the Parent
for purposes of repaying the principal amount of the Parent Intercompany Loan in
an aggregate amount not to exceed (x) 25% of the Excess Cash Flow from the
fiscal year then ending and (y) $35,561,835 over the term of this Credit
Agreement; provided further that to the extent any such portion of Excess Cash
Flow is distributed in the form of a dividend, there shall be no bankruptcy or
insolvency of Orthofix International B.V. or either of the Limited Guarantors at
the time of such dividend or reasonable expectation of bankruptcy or insolvency
of Orthofix International B.V. or the Limited Guarantors at the time of such
dividend, (e) so long as no Event of Default has occurred and is continuing or
would result therefrom, to make payments on intercompany Subordinated
Indebtedness permitted under Sections 6.1(b) and (d), (f) so long as no Event of
Default has occurred and is continuing or would result therefrom, to make
interest payments on intercompany Subordinated Indebtedness permitted under
Section 6.1(g), (g) so long as (i) no Default or Event of Default has occurred
and is continuing at the time of any such payment or would result therefrom and
(ii) the Parent, the Borrower and the Borrower's Subsidiaries are in compliance
with the financial covenants set forth in Section 5.9
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after giving effect to any such payment on a Pro Forma Basis, to make interest
payments on the Parent Intercompany Loan in an aggregate amount not to exceed 5%
per annum, and (h) payments by Orthofix UK Ltd to the Borrower pursuant to the
terms of the Deferred Purchase Agreement.
Section 6.11 Sale Leasebacks.
Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, directly or indirectly become or remain liable as lessee or
as guarantor or other surety with respect to any lease, whether an operating
lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, which the Borrower, or any Subsidiary
Guarantor or any Subsidiary has sold or transferred or is to sell or transfer to
a Person which is not another Credit Party or Subsidiary thereof.
Section 6.12 No Further Negative Pledges.
Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation, except (a) pursuant to this Agreement and the other Credit
Documents, (b) pursuant to any document or instrument governing Indebtedness
incurred pursuant to Section 6.1(c), provided that any such restriction
contained therein relates only to the asset or assets constructed or acquired in
connection therewith and (c) in connection with any Permitted Lien or any
document or instrument governing any Permitted Lien; provided that any such
restriction contained therein relates only to the asset or assets subject to
such Permitted Lien.
Section 6.13 Secured Indebtedness of Parent.
The Parent will not, nor will it permit any of its Subsidiaries (other than
the Borrower and its Subsidiaries) to contract, create, incur, assume or permit
to exist any secured Indebtedness in excess of $10,000,000 in the aggregate at
any one time outstanding.
Section 6.14 Orthofix II B.V.
Prior to the Drop Down Date, BV II shall not incur any Indebtedness nor
grant any Liens upon any of its properties or assets nor engage in any
commercial operations other than owning 100% of the Capital Stock of IOL and a
majority of the Capital Stock of Orthofix Holdings, pledging its interests
therein to the Administrative Agent on behalf of the Lenders and providing the
limited guaranty provided for in the BV Limited Guaranty and Pledge Agreement.
Section 6.15 Levtech Inc.
The Borrower will not undertake any measures to reinstate Levtech Inc., a
subsidiary of the Borrower organized under the laws of Florida that has been
administratively dissolved by the Department of State of the State of Florida,
nor will the Borrower or its Subsidiaries use Levtech
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Inc. or its name to conduct any business operations, including, without
limitation, owning, leasing, holding or maintaining any assets, entering into
any agreements or incurring any Indebtedness or other liabilities, other than in
connection with its corporate dissolution and as permitted under Section
6.4(a)(vii).
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "Event of Default"):
(a) The Borrower shall fail to pay any principal on any Loan when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to reimburse the Issuing Lender for any LOC Obligations when due in
accordance with the terms hereof; or the Borrower shall fail to pay any
interest on any Loan or any fee or other amount payable hereunder when due
in accordance with the terms thereof or hereof and such failure shall
continue unremedied for three (3) Business Days (or any Guarantor shall
fail to pay on the Guaranty in respect of any of the foregoing or in
respect of any other Guaranty Obligations thereunder within the aforesaid
period of time); or
(b) Any representation or warranty made or deemed made herein or in
any of the other Credit Documents or which is contained in any certificate,
document or financial or other written statement furnished at any time
under or in connection with this Agreement shall prove to have been
incorrect, false or misleading in any material respect on or as of the date
made or deemed made; or
(c) (i) Any of the Parent, the Borrower or the Borrower's Subsidiaries
shall fail to perform, comply with or observe any term, covenant or
agreement applicable to it contained in Section 5.1(a) and (b), Section
5.2, Section 5.4, Section 5.7(a), Section 5.9 or Article VI hereof; or (ii)
any Credit Party shall fail to comply with any other covenant, contained in
this Credit Agreement or the other Credit Documents or any other agreement,
document or instrument among any Credit Party, the Administrative Agent and
the Lenders or executed by any Credit Party in favor of the Administrative
Agent or the Lenders (other than as described in Sections 7.1(a), 7.1(b) or
7.1(c)(i) above), and in the event such breach or failure to comply is
capable of cure, is not cured within thirty (30) days of its occurrence; or
(d) Any of the Parent, the Borrower or the Borrower's Subsidiaries
shall (i) default in any payment of principal of or interest on any
Indebtedness (other than the Notes) in a principal amount outstanding of at
least $1,000,000 in the aggregate for the Credit Parties and their
Subsidiaries beyond the period of grace (not to exceed 30 days), if any,
provided in the instrument or agreement under which such Indebtedness was
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created; (ii) default in the observance or performance of any other
agreement or condition relating to any Indebtedness in a principal amount
outstanding of at least $1,000,000 in the aggregate for the Parent, the
Borrower and the Borrower's Subsidiaries or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity; or (iii) breach or
default any Secured Hedging Agreement; or
(e) (i) The Parent, Borrower, or any of the Borrower's Subsidiaries
shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, suspension of payment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator,
administrator, administrative receiver, compulsory manager or other similar
official for it or for all or any substantial part of its assets, or the
Parent, the Borrower or any Subsidiary of the Borrower shall make a general
assignment or arrangement for the benefit of any of its creditors; or (ii)
there shall be commenced against any of the Parent, the Borrower or any of
the Borrower's Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for, with respect to such proceeding
or other action in a jurisdiction outside the United States, a period of
fifteen (15) days and, with respect to such proceeding or other action in a
United States jurisdiction, a period of forty-five (45) days; or (iii)
there shall be commenced against any of the Parent, the Borrower or the
Borrower's Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within, with
respect to such case, proceeding or other action in a jurisdiction outside
the United States, fifteen (15) days from the entry thereof and, with
respect such case, proceeding or other action in a United States
jurisdiction, thirty (30) days from the entry thereof; or (iv) any of the
Parent, the Borrower or the Borrower's Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clauses (i), (ii), or (iii)
above; or (v) any of the Parent, the Borrower or the Borrower and its
Subsidiaries taken as a whole shall fail to be Solvent; or
(f) One or more judgments or decrees shall be entered against any of
the Parent, the Borrower or the Subsidiary Guarantors involving in the
aggregate a liability (to the extent not paid when due or covered by
insurance) of $3,000,000 or more and all such judgments or decrees shall
not have been paid and satisfied, vacated, discharged, stayed or bonded
pending appeal within ten (10) days from the entry thereof; or
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(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Single Employer Plan, (ii) any "accumulated funding deficiency" (as defined
in Section 302 of ERISA), whether or not waived, shall exist with respect
to any Single Employer Plan or any Lien in favor of a Single Employer Plan
or in favor of the PBGC with respect to a Single Employer Plan (other than
a Permitted Lien) shall arise on the assets of any Credit Party or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single
Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a Trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, or (v) any Credit Party or any Commonly
Controlled Entity shall incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, any Multiemployer Plan; and
in each case in clauses (i) through (v) above, such event or condition,
together with all other such events or conditions, if any, could reasonably
be expected to have a Material Adverse Effect; or
(h) There shall occur a Change of Control; or
(i) The Guaranty or any provision thereof shall cease to be in full
force and effect or any Guarantor or any Person acting by or on behalf of
any Guarantor shall deny or disaffirm any Guarantor's obligations under the
Guaranty; or
(j) (i) The IOL Limited Guaranty and Pledge Agreement or any provision
thereof shall cease to be in full force and effect or IOL or any Person
acting by or on behalf of IOL shall deny or disaffirm IOL's obligations
under the IOL Limited Guaranty and Pledge Agreement, or (ii) the BV II
Limited Guaranty and Pledge Agreement or any provision thereof shall cease
to be in full force and effect or BV II or any Person acting by or on
behalf of BV II shall deny or disaffirm BV II's obligations under the BV II
Limited Guaranty and Pledge Agreement; or
(k) Any other Credit Document shall fail to be in full force and
effect or to give the Administrative Agent and/or the Lenders the security
interests, liens, rights, powers and privileges purported to be created
thereby (except as such documents may be terminated or no longer in force
and effect in accordance with the terms thereof, other than those
indemnities and provisions which by their terms shall survive); or
(l) Any default (which is not waived or cured within the applicable
period of grace) or event of default shall occur under any of document
governing or evidencing any Subordinated Indebtedness or the subordination
provisions contained therein shall cease to be in full force and effect or
to give the Administrative Agent and the Lenders the rights, powers and
privileges purported to be created thereby; or
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(m) any Credit Party shall be temporarily or permanently excluded
from, or have payments suspended under, (i) any Medicaid Provider
Agreement, Medicaid Certification, Medicare Provider Agreement or Medicare
Certification or (ii) any Medical Reimbursement Program, where such
exclusion or suspension arises from fraud or other claims or allegations
which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
Section 7.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, then, and in any such event,
(a) if such event is an Event of Default specified in Section 7.1(e) above with
respect to the Parent, the Borrower or any material Subsidiary of the Borrower,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon), and all other amounts under the Credit Documents
(including without limitation the maximum amount of all contingent liabilities
under Letters of Credit) shall immediately become due and payable, and (b) if
such event is any other Event of Default, any or all of the following actions
may be taken: (i) with the written consent of the Required Lenders, the
Administrative Agent may, or upon the written request of the Required Lenders,
the Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; (ii) the Administrative Agent may, or upon the written
request of the Required Lenders, the Administrative Agent shall, by notice of
default to the Borrower, declare the Loans (with accrued interest thereon) and
all other amounts owing under this Agreement and the Notes to be due and payable
forthwith and direct the Borrower to pay to the Administrative Agent cash
collateral as security for the LOC Obligations for subsequent drawings under
then outstanding Letters of Credit in an amount equal to the maximum amount of
which may be drawn under Letters of Credit then outstanding, whereupon the same
shall immediately become due and payable; (iii) exercise any rights or remedies
of the Administrative Agent or the Lenders under this Agreement or any other
Credit Document, including, without limitation, any rights or remedies with
respect to the Collateral; and (iv) exercise any rights or remedies available to
the Administrative Agent or Lenders under applicable law.
ARTICLE VIII
THE AGENT
Section 8.1 Appointment.
Each Lender hereby irrevocably designates and appoints Wachovia Bank,
National Association as the Administrative Agent of such Lender under this
Agreement, and each such Lender irrevocably authorizes Wachovia Bank, National
Association, as the Administrative Agent for such Lender, to take such action on
its behalf under the provisions of this Agreement and to exercise such powers
and perform such duties as are expressly delegated to the Administrative Agent
by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those
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expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Administrative Agent.
Section 8.2 Delegation of Duties.
The Administrative Agent may execute any of its duties under this Agreement
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care. Without limiting the
foregoing, but subject to the provisions of Section 8.3, the Administrative
Agent may appoint one of its affiliates as its agent to perform the functions of
the Administrative Agent hereunder relating to the advancing of funds to the
Borrower and distribution of funds to the Lenders and to perform such other
related functions of the Administrative Agent hereunder as are reasonably
incidental to such functions.
Section 8.3 Exculpatory Provisions.
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Borrower or any officer thereof contained in this Agreement or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Credit Documents or for any failure of the Borrower
to perform its obligations hereunder or thereunder. The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance by the Borrower of any of the agreements contained
in, or conditions of, this Agreement, or to inspect the properties, books or
records of the Borrower and its Subsidiaries.
Section 8.4 Reliance by Administrative Agent.
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any Credit Party), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless (a) a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Administrative Agent and (b)
the Administrative Agent shall have received the written agreement of such
assignee to be bound hereby as fully and to the same extent as if such assignee
were an original Lender party hereto, in each case in form satisfactory to the
Administrative Agent. The Administrative Agent shall be fully justified in
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failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
any of the Credit Documents in accordance with a request of the Required Lenders
or all of the Lenders, as may be required under this Agreement, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes.
Section 8.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders except to the extent that
this Credit Agreement expressly requires that such action be taken, or not
taken, only with the consent or upon the authorization of the Required Lenders,
or all of the Lenders, as the case may be.
Section 8.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representation or warranty to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness
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of the Borrower which may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
Section 8.7 Indemnification.
The Lenders agree to indemnify the Administrative Agent in its capacity
hereunder (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitment Percentages in effect on the date on which indemnification is sought
under this Section, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of any Credit Document or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the Agent's gross negligence or willful misconduct,
as determined by a court of competent jurisdiction. The agreements in this
Section 8.7 shall survive the termination of this Agreement and payment of the
Notes and all other amounts payable hereunder.
Section 8.8 Administrative Agent in Its Individual Capacity.
The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower as
though the Administrative Agent were not the Administrative Agent hereunder.
With respect to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
Section 8.9 Successor Administrative Agent.
The Administrative Agent may resign as Administrative Agent upon thirty
(30) days' prior notice to the Borrower and the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the Notes,
then the Required Lenders shall appoint from among the Lenders a successor agent
for the Lenders, which successor agent shall be approved by the Borrower,
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Agent's rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Notes. After any retiring Agent's resignation as Administrative Agent, the
provisions of this Section 8.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement.
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Section 8.10 Other Agents.
None of the Lenders or other Persons identified on the facing page or
signature pages of this Agreement as a "syndication agent," "documentation
agent," "co-agent," "book manager," "book runner," "lead manager," "arranger,"
"lead arranger" or "co-arranger" shall have any right (except as expressly set
forth herein), power, obligation, liability, responsibility or duty under this
Agreement other than, in the case of such Lenders, those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders or other
Persons so identified shall have or be deemed to have any fiduciary relationship
with any Lender. Each Lender acknowledges that it has not relied, and will not
rely, on any of the Lenders or other Persons so identified in deciding to enter
into this Credit Agreement or in taking or not taking action hereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendments, Waivers and Release of Collateral.
Neither this Agreement, nor any of the other Credit Documents, nor any
terms hereof or thereof may be amended, supplemented, waived or modified except
in accordance with the provisions of this Section. The Required Lenders may, or,
with the written consent of the Required Lenders, the Administrative Agent may,
from time to time, (a) enter into with the Credit Parties written amendments,
supplements or modifications hereto and to the other Credit Documents for the
purpose of adding any provisions to this Agreement or the other Credit Documents
or changing in any manner the rights of the Lenders or of the Credit Parties
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders may specify in such instrument, any of the requirements of this
Agreement or the other Credit Documents or any Default or Event of Default and
its consequences; provided, however, that no such waiver and no such amendment,
waiver, supplement, modification or release shall:
(i) (A) reduce the amount or extend the scheduled date of
maturity of any Loan or Note or any installment thereon; (B) reduce
the stated rate of any interest or fee payable hereunder (except in
connection with a waiver of interest at the increased post-default
rate set forth in Section 2.9 which shall be determined by a vote of
the Required Lenders) or extend the scheduled date of any payment
thereof; (C) modify the definition of Interest Period so as to permit
Interest Periods greater than 6 months without regard to the
availability of such longer Interest Periods to each Lender; or (D)
increase the amount or extend the expiration date of any Lender's
Commitment, in each case without the written consent of each Lender
directly affected thereby; provided that, it is understood and agreed
that no waiver, reduction or deferral of a mandatory prepayment
required pursuant to Section 2.7(b), nor any amendment of Section
2.7(b) or the definitions of Asset Disposition, Debt Issuance, Equity
Issuance, Excess Cash Flow, or Recovery
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Event, shall constitute a reduction of the amount of, or an extension
of the scheduled date of, any principal installment of any Loan or
Note; or
(ii) amend, modify or waive any provision of this Section 9.1 or
reduce the percentage specified in the definition of Required Lenders,
without the written consent of all the Lenders; or
(iii) amend, modify or waive any provision of Article VIII
without the written consent of the then Administrative Agent; or
(iv) release the Borrower or all or substantially all of the
Guarantors from its or their obligations hereunder or under the
Guaranty, without the written consent of all of the Lenders and each
Hedging Agreement Provider; or
(v) release all or substantially all of the Collateral without
the written consent of all of the Lenders and each Hedging Agreement
Provider; or
(vi) permit the Borrower to assign or transfer any of its rights
or obligations under this Credit Agreement or other Credit Documents;
or
(vii) amend, modify or waive any provision of the Credit
Documents requiring consent, approval or request of the Required
Lenders or all Lenders without the written consent of the Required
Lenders or of all Lenders as appropriate; or
(viii) amend or modify the definition of Credit Party Obligations
to delete or exclude any obligation or liability described therein
without the written consent of each Lender and each Hedging Agreement
Provider directly affected thereby; or
(ix) amend, modify or waive the order in which Credit Party
Obligations are paid in Section 2.12(b) without the written consent of
each Lender and each Hedging Agreement Provider directly affected
thereby; or
(x) without the consent of Revolving Lenders holding in the
aggregate more than 50% of the outstanding Revolving Commitments (or
if the Revolving Commitments have been terminated, the outstanding
Revolving Loans), amend, modify or waive Section 4.2 or waive any
Default or Event of Default (or amend any Credit Document to
effectively waive any Default or Event of Default) if the effect of
such waiver is that the Revolving Lenders shall be required to
continue to make Revolving Loans;
provided, further, that no amendment, waiver or consent affecting the rights or
duties of the Administrative Agent, the Issuing Lender or the Swingline Lender
under any Credit Document shall in any event be effective, unless in writing and
signed by the Administrative Agent, the
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Issuing Lender and/or the Swingline Lender, as applicable, in addition to the
Lenders required hereinabove to take such action.
Any such waiver, any such amendment, supplement or modification and any
such release shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the other Credit Parties, the Lenders, the Administrative
Agent and all future holders of the Notes. In the case of any waiver, the
Borrower, the other Credit Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the
outstanding Loans and Notes and other Credit Documents, and any Default or Event
of Default permanently waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
Notwithstanding any of the foregoing to the contrary, the consent of the
Borrower shall not be required for any amendment, modification or waiver of the
provisions of Article VIII (other than the provisions of Section 8.9); provided,
however, that the Administrative Agent will provide written notice to the
Borrower of any such amendment, modification or waiver. In addition, the
Borrower and the Lenders hereby authorize the Administrative Agent to modify
this Credit Agreement by unilaterally amending or supplementing Schedule 2.1(a)
from time to time in the manner requested by the Borrower, the Administrative
Agent or any Lender in order to reflect any assignments or transfers of the
Loans as provided for hereunder; provided further, however, that the
Administrative Agent shall promptly deliver a copy of any such modification to
the Borrower and each Lender.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersedes the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.
Section 9.2 Notices.
Except as otherwise provided in Article II, all notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy or other electronic communication with confirmed
receipt from the recipient), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made (a) when delivered by hand, (b)
when transmitted via telecopy (or other electronic communication device with
confirmed receipt from the recipient) to the number set out herein, (c) the day
following the day on which the same has been delivered prepaid (or pursuant to
an invoice arrangement) to a reputable national overnight air courier service,
or (d) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case addressed as follows
in the case of the Borrower, the other Credit Parties and the Administrative
Agent, and as set forth on Schedule 9.2 in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto and
any future holders of the Notes:
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The Borrower Colgate Medical Ltd
and the other Xxx Xxxxxx Xxxxxxxx, Xxxxx 000
Credit Parties: 00000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx
Telecopier: 000 000 0000
Telephone: 000 000 0000
The Administrative Wachovia Bank, National Association, as Administrative Agent
Agent: Charlotte Plaza
000 Xxxxx Xxxxxxx Xxxxxx
XX0000/XX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Syndication Agency Services
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Wachovia Bank, National Association
One Wachovia Center
000 Xxxxx Xxxxxxx Xxxxxx
XX0000/XX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx Santa Xxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Section 9.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
Section 9.4 Survival of Representations and Warranties.
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans; provided that all such representations and warranties shall
terminate on the date upon which the Commitments have been terminated, no Credit
Document remains in effect and all Credit Party Obligations have been paid in
full.
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Section 9.5 Payment of Expenses and Taxes.
The Borrower agrees (a) to pay or reimburse the Administrative Agent and
the Arranger for all their reasonable out-of-pocket costs and expenses incurred
in connection with the development, preparation, negotiation, printing and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Credit Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, together with the reasonable fees
and disbursements of counsel to the Administrative Agent and the Arranger, (b)
to pay or reimburse the Administrative Agent and, if an Event of Default shall
have occurred and is continuing, each Lender for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement and the other Credit Documents, including, without limitation,
the reasonable fees and disbursements of counsel to the Administrative Agent and
to the Lenders (including reasonable allocated costs of in-house legal counsel),
and (c) on demand, to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, the Credit Documents and any such other documents, except for
such recording and filing fees and any and all stamp, excise and other similar
taxes payable in connection with any transfer under Section 9.6 of this
Agreement, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their Affiliates harmless from and against, any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of the Credit Documents and any such other documents and the use, or proposed
use, of proceeds of the Loans (all of the foregoing, collectively, the
"indemnified liabilities"); provided, however, that the Borrower shall not have
any obligation hereunder to the Administrative Agent or any Lender with respect
to indemnified liabilities arising from the gross negligence or willful
misconduct of the Administrative Agent or any such Lender, as determined by a
court of competent jurisdiction pursuant to a final non-appealable judgment. The
agreements in this Section 9.5 shall survive repayment of the Loans, Notes and
all other Credit Party Obligations.
Section 9.6 Successors and Assigns; Participations; Purchasing Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of
the Credit Parties, the Lenders, the Administrative Agent, all future
holders of the Notes and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement or the other Credit Documents without the
prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or
other entities
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("Participants") participating interests in any Loan owing to such Lender,
any Note held by such Lender, any Commitment of such Lender, or any other
interest of such Lender hereunder. In the event of any such sale by a
Lender of participating interests to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note
for all purposes under this Agreement, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. No Lender shall transfer or grant any participation under which
the Participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such
amendment or waiver would (i) extend the scheduled maturity of any Loan or
Note or any installment thereon in which such Participant is participating,
or reduce the stated rate or extend the time of payment of interest or fees
thereon (except in connection with a waiver of interest at the increased
post-default rate) or reduce the principal amount thereof, or increase the
amount of the Participant's participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of
Default shall not constitute a change in the terms of such participation,
and that an increase in any Commitment or Loan shall be permitted without
consent of any participant if the Participant's participation is not
increased as a result thereof), (ii) release all or substantially all of
the Guarantors from their obligations under the Guaranty, (iii) release all
or substantially all of the Collateral, or (iv) consent to the assignment
or transfer by the Borrower of any of its rights and obligations under this
Agreement. In the case of any such participation, the Participant shall not
have any rights under this Agreement or any of the other Credit Documents
(the Participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had
not sold such participation; provided that each Participant shall be
entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.5 with respect
to its participation in the Commitments and the Loans outstanding from time
to time; provided further, that no Participant shall be entitled to receive
any greater amount pursuant to such Sections than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had
no such transfer occurred. If an Initial Lender that receives gross-up
withholding tax payments from the Borrower pursuant to Section 2.18(c)
sells participating interests to a Participant that is not a Qualified
Lender in accordance with the terms of this Section, such Initial Lender
shall promptly notify the Administrative Agent and the Borrower of such
participation amount and such gross-up withholding tax payments shall
thereafter be reduced an amount corresponding to the percentage of such
Initial Lender's total outstanding Loans that are subject to such
participation.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time, with the consent of the
Administrative Agent and, so long as (i) no Default then exists that has
not been cured within fifteen (15) days after the occurrence thereof and
(ii) no Event of Default has occurred and is continuing, the Borrower (in
each case, which consent shall not be unreasonably withheld or delayed),
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sell or assign to one or more additional banks or financial institutions or
entities (each, a "Purchasing Lender"), all or any part of its rights and
obligations under this Agreement and the Notes in minimum amounts of (A)
$2,000,000 with respect to its Revolving Commitment or its Revolving Loans
and (B) $1,000,000 with respect to its Term Loan (or, if less, the entire
amount of such Lender's obligations), pursuant to a Commitment Transfer
Supplement, executed by such Purchasing Lender and such transferor Lender
(and, to the extent required above, the Administrative Agent and the
Borrower), and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided, however, that (1) any sale or
assignment to an Initial Lender of its initial Commitment in connection
with the closing of this Agreement shall not require the consent of the
Administrative Agent or the Borrower, (2) any sale or assignment to an
existing Lender or any Affiliate or Related Fund thereof shall not require
the consent of the Administrative Agent or the Borrower to the extent such
Person is a Qualified Lender, (3) any sale or assignment to an existing
Lender or any Affiliate or Related Fund thereof that is not a Qualified
Lender shall not require the consent of the Administrative Agent or the
Borrower to the extent the assigning Lender is not a Qualified Lender and
(4) any sale or assignment to an existing Lender or any Affiliate or
Related Fund thereof shall not be subject to the minimum assignment amounts
specified herein. Upon such execution, delivery, acceptance and recording,
from and after the Transfer Effective Date specified in such Commitment
Transfer Supplement, (x) the Purchasing Lender thereunder shall be a party
hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender hereunder with a Commitment as
set forth therein, and (y) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from
its obligations under this Agreement (and, in the case of a Commitment
Transfer Supplement covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement, such transferor
Lender shall cease to be a party hereto; provided, however, that such
Lender shall still be entitled to any indemnification rights that expressly
survive hereunder). Such Commitment Transfer Supplement shall be deemed to
amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment
of Commitment Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Notes. On or prior to the Transfer
Effective Date specified in such Commitment Transfer Supplement, the
Borrower, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the Notes delivered to the
Administrative Agent pursuant to such Commitment Transfer Supplement new
Notes to the order of such Purchasing Lender in an amount equal to the
Commitment assumed by it pursuant to such Commitment Transfer Supplement
and, unless the transferor Lender has not retained a Commitment hereunder,
new Notes to the order of the transferor Lender in an amount equal to the
Commitment retained by it hereunder. Such new Notes shall be dated the
Closing Date and shall otherwise be in the form of the Notes replaced
thereby. The Notes surrendered by the transferor Lender shall be returned
by the Administrative Agent to the Borrower marked "canceled".
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(d) The Administrative Agent shall maintain at its address referred to
in Section 9.2 a copy of each Commitment Transfer Supplement delivered to
it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower,
the Administrative Agent and the Lenders may treat each Person whose name
is recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly executed Commitment Transfer
Supplement, together with payment to the Administrative Agent by the
transferor Lender or the Purchasing Lender, as agreed between them, of a
registration and processing fee of $3,500.00 for each Purchasing Lender
listed in such Commitment Transfer Supplement (provided that in the case of
simultaneous assignments on the same day by or to more than one fund or
trust or entity that invests in commercial bank loans in the ordinary
course of business that is managed or advised by the same investment
adviser, only a single $3,500 registration and processing fee shall be
payable for all such assignments) and the Notes subject to such Commitment
Transfer Supplement, the Administrative Agent shall (i) accept such
Commitment Transfer Supplement, (ii) record the information contained
therein in the Register and (iii) give prompt notice of such acceptance and
recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any pledgee
pursuant to subsection (i) below, any Participant or any Purchasing Lender
(each, a "Transferee") and any prospective Transferee any and all financial
information in such Lender's possession concerning the Borrower and its
Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such
Lender by or on behalf of the Borrower in connection with such Lender's
credit evaluation of the Borrower and its Subsidiaries prior to becoming a
party to this Agreement, in each case subject to Section 9.16.
(g) At the time of each assignment pursuant to this Section 9.6 to a
Person which is not already a Lender hereunder and which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code)
for Federal income tax purposes, the respective assignee Lender shall
provide to the Borrower and the Administrative Agent the appropriate
Internal Revenue Service Forms described in Section 2.18.
(h) At the time of each assignment pursuant to this Section 9.6 (other
than assignments to Eligible UK Lenders), the respective assignee Lender
shall (i) comply with the terms of Section 2.18(c), including the
completion of appropriate forms and lodging them with the relevant tax
authority and providing such assistance as the Borrower may reasonably
request in order to establish an entitlement to treaty relief and (ii)
unless such assignee Lender is an initial Lender and such assignment is the
assignment to such Initial Lender of its initial Commitment in connection
with the
105
closing of this Agreement, confirm in the Commitment Transfer Supplement
whether, to the best of its knowledge, it is or is not a Qualified Lender.
(i) Nothing herein shall prohibit any Lender from pledging or
assigning any of its rights under this Credit Agreement (including, without
limitation, any right to payment of principal and interest under any Note)
to secure obligations of such Lender, including without limitation, (i) any
pledge or assignment to secure obligations to a Federal Reserve Bank and
(ii) in the case of any Lender that is a fund or trust or entity that
invests in commercial bank loans in the ordinary course of business, any
pledge or assignment to any holders of obligations owed, or securities
issued, by such Lender including to any trustee for, or any other
representative of, such holders; it being understood that the requirements
for assignments set forth in this Section 9.6 shall not apply to any such
pledge or assignment of a security interest, except with respect to any
foreclosure or similar action taken by such pledgee or assignee with
respect to such pledge or assignment; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto and no such pledgee or assignee shall have any
voting rights under this Credit Agreement unless and until the requirements
for assignments set forth in this Section 9.6 are complied with in
connection with any foreclosure or similar action taken by such pledgee or
assignee.
Section 9.7 Adjustments; Set-off.
(a) Each Lender agrees that if any Lender (a "benefited Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of the
nature referred to in Section 7.1(e), or otherwise) in a greater proportion
than any such payment to or collateral received by any other Lender, if
any, in respect of such other Lender's Loans, or interest thereon, such
benefited Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loan, or
shall provide such other Lenders with the benefits of any such collateral,
or the proceeds thereof, as shall be necessary to cause such benefited
Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all
or any portion of such excess payment or benefits is thereafter recovered
from such benefited Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest. The Borrower agrees that each Lender so purchasing a
portion of another Lender's Loans may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law (including, without limitation, other rights of set-off), each Lender
shall have the right, without prior notice to the Borrower, any such notice
being expressly waived by the Borrower to the extent permitted by
applicable law, in the event that all amount's under the Credit Agreement
shall have become immediately due and payable pursuant to
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Section 7.2, to setoff and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held by or owing to such Lender or any branch or
agency thereof to or for the credit or the account of the Borrower or any
other Credit Party, or any part thereof in such amounts as such Lender may
elect, against and on account of the Loans and other Credit Party
Obligations of the Borrower and the other Credit Parties to such Lender
hereunder and claims of every nature and description of such Lender against
the Borrower and the other Credit Parties, in any currency, whether arising
hereunder, under any other Credit Document or any Secured Hedging Agreement
provided by such Lender pursuant to the terms of this Agreement, as such
Lender may elect, whether or not such Lender has made any demand for
payment and although such obligations, liabilities and claims may be
contingent or unmatured. The aforesaid right of set-off may be exercised by
such Lender against the Borrower, any other Credit Party or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor of the
Borrower or any other Credit Party, or against anyone else claiming through
or against the Borrower, any other Credit Party or any such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor, notwithstanding
the fact that such right of set-off shall not have been exercised by such
Lender prior to the occurrence of any Event of Default. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
set-off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off
and application.
Section 9.8 Table of Contents and Section Headings.
The table of contents and the Section and subsection headings herein are
intended for convenience only and shall be ignored in construing this Agreement.
Section 9.9 Counterparts.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same agreement.
Section 9.10 Effectiveness.
This Credit Agreement shall become effective on the date on which all of
the parties have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent pursuant to Section
9.2 or, in the case of the Lenders, shall have given to the Administrative Agent
written, telecopied or other electronic notice with confirmed receipt from the
recipient at such office that the same has been signed and mailed to it.
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Section 9.11 Severability.
Any provision of this Agreement that 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, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 9.12 Integration.
This Agreement and the other Credit Documents represent the agreement of
the Borrower, the Administrative Agent and the Lenders with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Administrative Agent, the Borrower or any Lender relative
to the subject matter hereof not expressly set forth or referred to herein or in
the other Credit Documents.
Section 9.13 Governing Law.
This Agreement and the other Credit Documents (other than the UK Collateral
Documents) and the rights and obligations of the parties under this Agreement
and the other Credit Documents (other than the UK Collateral Documents) shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York.
Section 9.14 Consent to Jurisdiction and Service of Process.
All judicial proceedings brought against any party hereto with respect to
this Agreement, any Note or any of the other Credit Documents may be brought in
any state or federal court of competent jurisdiction in the State of New York,
and, by execution and delivery of this Agreement, each of such parties accepts,
for itself and in connection with its properties, generally and unconditionally,
the non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with this
Agreement, any Note or any other Credit Document from which no appeal has been
taken or is available. The parties hereto irrevocably agree that all service of
process in any such proceedings in any such court may be effected by mailing a
copy thereof by registered or certified mail (or any substantially similar form
of mail), postage prepaid, to it at its address set forth in Section 9.2 or at
such other address of which the Administrative Agent or the Borrower shall have
been notified pursuant thereto, such service being hereby acknowledged by the
parties hereto to be effective and binding service in every respect. Each of the
parties hereto irrevocably waives any objection, including, without limitation,
any objection to the laying of venue based on the grounds of forum non
conveniens which it may now or hereafter have to the bringing of any such action
or proceeding in any such jurisdiction. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
any party to bring proceedings against any other party in the court of any other
jurisdiction.
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Section 9.15 Confidentiality.
The Administrative Agent and each of the Lenders agrees that it will use
its best efforts not to disclose without the prior consent of the Borrower
(other than to its employees, affiliates, auditors or counsel or to another
Lender) any information with respect to the Credit Parties and their
Subsidiaries which is furnished pursuant to this Agreement, any other Credit
Document or any documents contemplated by or referred to herein or therein and
which is designated by the Borrower to the Lenders in writing as confidential or
as to which it is otherwise reasonably clear such information is not public,
except that any Lender may disclose any such information (a) as has become
generally available to the public other than by a breach of this Section 9.16,
(b) as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state or federal regulatory body having or claiming
to have jurisdiction over such Lender or to the Federal Reserve Board or the
Federal Deposit Insurance Corporation or the OCC or the NAIC or similar
organizations (whether in the United States or elsewhere) or their successors,
(c) as may be required or appropriate in response to any summons or subpoena or
any law, order, regulation or ruling applicable to such Lender, (d) to any
prospective Participant or assignee in connection with any contemplated transfer
pursuant to Section 9.6; provided that such prospective transferee shall have
agreed to be bound by the confidentiality provisions set forth in this Section,
(e) to any actual or prospective counterparty (or its advisors) to any Hedging
Agreement relating to a Credit Party and its obligations; provided that such
prospective transferee shall have agreed to be bound by the confidentiality
provisions set forth in this Section, (f) to Gold Sheets and other similar bank
trade publications, such information to consist of deal terms and other
information regarding the credit facilities evidenced by this Credit Agreement
customarily found in such publications or (g) in connection with any suit,
action or proceeding for the purpose of defending itself, reducing its
liability, or protecting or exercising any of its claims, rights, remedies or
interests under or in connection with the Credit Documents or any Secured
Hedging Agreement. Notwithstanding anything herein to the contrary, the
Administrative Agent and each Lender may disclose to any and all Persons,
without limitation of any kind, any information with respect to the "tax
treatment" and "tax structure" (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Administrative Agent or such Lender relating to such tax
treatment and tax structure; provided that with respect to any document or
similar item that in either case contains information concerning the tax
treatment or tax structure of the transaction as well as other information, this
sentence shall only apply to such portions of the document or similar item that
relate to the tax treatment or tax structure of the Loans, Letters of Credit and
transactions contemplated hereby.
Section 9.16 Acknowledgments.
The Borrower and the other Credit Parties each hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of each Credit Document;
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(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any other Credit Party arising
out of or in connection with this Agreement and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower and the
other Credit Parties, on the other hand, in connection herewith is solely
that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the Borrower or
the other Credit Parties and the Lenders.
Section 9.17 Waivers of Jury Trial.
THE BORROWER, THE OTHER CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
Section 9.18 Patriot Act Notice.
Each Lender and the Administrative Agent (for itself and not on behalf of
any other party) hereby notifies the Borrower that, pursuant to the requirements
of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26,
2001 (the "Patriot Act"), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Patriot Act.
ARTICLE X
GUARANTY
Section 10.1 The Guaranty.
In order to induce the Lenders to enter into this Credit Agreement and any
Hedging Agreement Provider to enter into any Secured Hedging Agreement and to
extend credit hereunder and thereunder and in recognition of the direct benefits
to be received by the Guarantors from the Extensions of Credit hereunder and any
Secured Hedging Agreement, each of the Guarantors hereby agrees with the
Administrative Agent and the Lenders as follows: the Guarantor hereby
unconditionally and irrevocably jointly and severally guarantees as primary
obligor and not merely as surety the full and prompt payment when due, whether
upon maturity, by acceleration or otherwise, of any and all indebtedness of the
Borrower owed to the Administrative Agent, the Lenders and the Hedging Agreement
Providers. If any or all of the indebtedness becomes due and payable hereunder
or under any Secured Hedging Agreement, each Guarantor unconditionally promises
to pay such indebtedness to the Administrative Agent, the Lenders, the Hedging
Agreement Providers, or their respective order, or demand, together with any and
all reasonable expenses which may be incurred by the Administrative Agent, the
110
Lenders or the Hedging Agreement Providers in collecting any of the Credit Party
Obligations. The word "indebtedness" is used in this Article X in its most
comprehensive sense and includes any and all advances, debts, obligations and
liabilities of the Borrower and the Guarantors, including specifically all
Credit Party Obligations, arising in connection with this Credit Agreement, the
other Credit Documents or any Secured Hedging Agreement, in each case,
heretofore, now, or hereafter made, incurred or created, whether voluntarily or
involuntarily, absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time reduced, or
extinguished and thereafter increased or incurred, whether the Borrower and the
Guarantors may be liable individually or jointly with others, whether or not
recovery upon such indebtedness may be or hereafter become barred by any statute
of limitations, and whether or not such indebtedness may be or hereafter become
otherwise unenforceable.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable law relating to fraudulent
conveyances or transfers) then the obligations of each such Guarantor hereunder
shall be limited to the maximum amount that is permissible under applicable law
(including, without limitation, the Bankruptcy Code or its non-U.S. equivalent).
Section 10.2 Bankruptcy.
Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all Credit Party
Obligations of the Borrower to the Lenders and any Hedging Agreement Provider
whether or not due or payable by the Borrower upon the occurrence of any of the
events specified in Section 7.1(e) as applicable to the Parent, the Borrower or
any material Subsidiaries of the Borrower, and unconditionally promises to pay
such Credit Party Obligations to the Administrative Agent for the account of the
Lenders and to any such Hedging Agreement Provider, or order, on demand, in
lawful money of the United States. Each of the Guarantors further agrees that to
the extent that the Borrower or a Guarantor shall make a payment or a transfer
of an interest in any property to the Administrative Agent, any Lender or any
Hedging Agreement Provider, which payment or transfer or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, or
otherwise is avoided, and/or required to be repaid to the Borrower or a
Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or other
applicable law or equitable cause, then to the extent of such avoidance or
repayment, the obligation or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment had not been
made.
Section 10.3 Nature of Liability.
The liability of each Guarantor hereunder is exclusive and independent of
any security for or other guaranty of the Credit Party Obligations of the
Borrower whether executed by any such Guarantor, any other guarantor or by any
other party, and no Guarantor's liability hereunder shall be affected or
impaired by (a) any direction as to application of payment by the Borrower or by
any other party, or (b) any other continuing or other guaranty, undertaking or
maximum
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liability of a guarantor or of any other party as to the Credit Party
Obligations of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Administrative Agent, the Lenders or any Hedging Agreement Provider on the
Credit Party Obligations that the Administrative Agent, such Lenders or such
Hedging Agreement Provider repay the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each of the Guarantors waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
Section 10.4 Independent Obligation.
The obligations of each Guarantor hereunder are independent of the
obligations of any other guarantor or the Borrower, and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other guarantor or the Borrower and whether or not
any other Guarantor or the Borrower is joined in any such action or actions.
Section 10.5 Authorization.
Each of the Guarantors authorizes the Administrative Agent, each Lender and
each Hedging Agreement Provider without notice or demand (except as shall be
required by applicable law and cannot be waived), and without affecting or
impairing its liability hereunder, from time to time to (a) renew, compromise,
extend, increase, accelerate or otherwise change the time for payment of, or
otherwise change the terms of the Credit Party Obligations or any part thereof
in accordance with this Agreement and any Secured Hedging Agreement, as
applicable, including any increase or decrease of the rate of interest thereon,
(b) take and hold security from any Guarantor or any other party for the payment
of this Guaranty or the Credit Party Obligations and exchange, enforce waive and
release any such security, (c) apply such security and direct the order or
manner of sale thereof as the Administrative Agent and the Lenders in their
discretion may determine and (d) release or substitute any one or more
endorsers, Guarantors, the Borrower or other obligors.
Section 10.6 Reliance.
It is not necessary for the Administrative Agent, the Lenders or any
Hedging Agreement Providers to inquire into the capacity or powers of the
Borrower or the officers, directors, members, partners or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
Section 10.7 Waiver.
(a) Each of the Guarantors waives any right (except as shall be
required by applicable law and cannot be waived) to require the
Administrative Agent, any Lender or any Hedging Agreement Provider to (i)
proceed against the Borrower, any other guarantor or any other party, (ii)
proceed against or exhaust any security held from the
112
Borrower, any other guarantor or any other party, or (iii) pursue any other
remedy in the Administrative Agent's, any Lender's or any Hedging Agreement
Provider's power whatsoever. Each of the Guarantors waives any defense
based on or arising out of any defense of the Borrower, any other guarantor
or any other party other than payment in full of the Credit Party
Obligations, including without limitation any defense based on or arising
out of the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the Credit Party Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of
the Borrower other than payment in full of the Credit Party Obligations.
The Administrative Agent or any of the Lenders may, at their election,
foreclose on any security held by the Administrative Agent or a Lender by
one or more judicial or nonjudicial sales, whether or not every aspect of
any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative Agent and any Lender may have against the Borrower or any
other party, or any security, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Credit Party
Obligations have been paid in full. Each of the Guarantors, to the extent
permitted by law, waives any defense arising out of any such election by
the Administrative Agent and each of the Lenders, even though such election
operates to impair or extinguish any right of reimbursement or subrogation
or other right or remedy of the Guarantors against the Borrower or any
other party or any security.
(b) Each of the Guarantors waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notice of protest, notices of dishonor, notices of
acceptance of this Guaranty, and notices of the existence, creation or
incurring of new or additional Credit Party Obligations. Each Guarantor
assumes all responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Credit Party Obligations and the
nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that neither the Administrative Agent nor any
Lender shall have any duty to advise such Guarantor of information known to
it regarding such circumstances or risks.
(c) Each of the Guarantors hereby agrees it will not exercise any
rights of subrogation which it may at any time otherwise have as a result
of this Guaranty (whether contractual, under Section 509 of the U.S.
Bankruptcy Code, or otherwise) to the claims of the Lenders or the Hedging
Agreement Provider against the Borrower or any other guarantor of the
Credit Party Obligations of the Borrower owing to the Lenders or such
Hedging Agreement Provider (collectively, the "Other Parties") and all
contractual, statutory or common law rights of reimbursement, contribution
or indemnity from any Other Party which it may at any time otherwise have
as a result of this Guaranty until such time as the Credit Party
Obligations shall have been paid in full, no Credit Document or Secured
Hedging Agreement remains in effect and the Commitments have been
terminated. Each of the Guarantors hereby further agrees not to exercise
any right to enforce any other remedy which the Administrative Agent, the
Lenders or any Hedging Agreement Provider now have or may hereafter have
against any Other Party, any endorser or any other guarantor of all or any
part of the Credit Party Obligations of
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the Borrower and any benefit of, and any right to participate in, any
security or collateral given to or for the benefit of the Lenders and/or
the Hedging Agreement Providers to secure payment of the Credit Party
Obligations of the Borrower until such time as the Credit Party Obligations
shall have been paid in full, no Credit Document or Secured Hedging
Agreement remains in effect and the Commitments have been terminated.
Section 10.8 Limitation on Enforcement.
The Lenders and the Hedging Agreement Providers agree that this Guaranty
may be enforced only by the action of the Administrative Agent acting upon the
instructions of the Required Lenders or any such Hedging Agreement Provider
(only with respect to obligations under the applicable Secured Hedging
Agreement) and that no Lender or Hedging Agreement Provider shall have any right
individually to seek to enforce or to enforce this Guaranty, it being understood
and agreed that such rights and remedies may be exercised by the Administrative
Agent for the benefit of the Lenders under the terms of this Credit Agreement
and for the benefit of any Hedging Agreement Provider under any Secured Hedging
Agreement. The Lenders and the Hedging Agreement Providers further agree that
this Guaranty may not be enforced against any director, officer, employee or
stockholder of the Guarantors.
Section 10.9 Confirmation of Payment.
The Administrative Agent and the Lenders will, upon request after payment
of the Credit Party Obligations under the Credit Documents which are the subject
of this Guaranty and termination of the Commitments relating thereto, confirm to
the Borrower, the Guarantors or any other Person that the Credit Party
Obligations under the Credit Documents have been paid in full and the
Commitments relating thereto terminated, subject to the provisions of Section
10.2.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by its proper and duly authorized officers as of the
day and year first above written.
BORROWER: COLGATE MEDICAL LTD,
a company formed under the laws of England and Wales
By: /s/ X.X. XXXXX
---------------------------------------------
Name: X.X. Xxxxx
Title: Director
[Signature Pages Continue]
GUARANTORS: ORTHOFIX INTERNATIONAL N.V.,
a Netherlands Antilles corporation
By: /s/ XXXXXX XXXX
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Financial Officer
[Signature Pages Continue]
ORTHOFIX HOLDINGS, INC.,
a Delaware Corporation
By: /s/ XXXXXX XXXX
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Secretary
[Signature Pages Continue]
ORTHOFIX INC.,
a Minnesota corporation
By: /s/ XXXXXX XXXX
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Financial Officer
[Signature Pages Continue]
BREG, INC.,
a California corporation
By: /s/ XXXXXX XXXX
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Asst. Secretary
[Signature Pages Continue]
ORTHOFIX UK LTD,
a company formed under the laws of England and Wales
By: /s/ X.X. XXXXX
---------------------------------------------
Name: X.X. Xxxxx
Title: Director
[Signature Pages Continue]
ORTHOFIX US LLC,
a Delaware limited liability company
By: ORTHOFIX UK LTD,
Sole Member
By: /s/ XXXXXX XXXX
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Secretary
[Signature Pages Continue]
AMEI TECHNOLOGIES INC.,
a Delaware corporation
By: /s/ XXXXXX XXXX
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Assistant Secretary
[Signature Pages Continue]
NEOMEDICS, INC., a New Jersey corporation
By: /s/ XXXXXX XXXX
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Assistant Secretary
[Signature Pages Continue]
OSTEOGENICS INC., a Delaware corporation
By: /s/ XXXXXX XXXX
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Assistant Secretary
[Signature Pages Continue]
ADMINISTRATIVE AGENT
AND LENDERS: WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent and as a Lender
By: /s/ XXXXX SANTA XXXX
---------------------------------------------
Name: Xxxxx Santa Xxxx
Title: Director
[Signature Pages Continue]
BANK OF AMERICA, N.A., as a Lender
By: /s/ XXXX X. XXXXXXX
---------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
[Signature Pages Continue]
ALLIED IRISH BANKS, P.L.C., as a Lender
By: /s/ XXXX XXXXXXXXXX
---------------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Senior Vice President
By: /s/ XXXXXX X. XXXXXXXXX
---------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
[Signature Pages Continue]
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By: /s/ XXXX X. XXXXX III
---------------------------------------------
Name: Xxxx X. Xxxxx III
Title: Duly Authorized Signatory
[Signature Pages End]
