EXHIBIT 10.16
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of April 17, 2003, is by and
among CHRONIMED INC., a Minnesota corporation (the "Borrower"), the banks or
financial institutions listed on the signature pages hereof or which hereafter
become parties hereto by means of assignment and assumption as hereinafter
described (individually referred to as a "Bank" or collectively as the "Banks"),
and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent for
the Banks (in such capacity, the "Agent").
Preliminary Statement
The Borrower, U.S. Bank National Association and M&I Xxxxxxxx & Xxxxxx
Bank ("M&I"), as Banks, and U.S. Bank National Association, as Agent, have
entered into an Amended and Restated Credit Agreement, dated as of January 17,
2002 (as thereafter amended, the "Existing Credit Agreement"), under which the
Banks have made certain loans to the Borrower. The Borrower and the Agent have
agreed that (a) the Existing Credit Agreement shall be amended and restated in
the form of this Agreement to govern the loans made under the Existing Credit
Agreement and other extensions of credit as hereinafter provided, (b)
concurrently with entry by the parties into this Agreement, M&I shall terminate
its Commitments and participation under the Existing Credit Agreement and shall
cease to be a Bank under the Existing Credit Agreement and under this Agreement,
and (c) UMB Bank, N.A. shall be a Bank and shall enter into this Agreement.
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. In addition to the terms defined elsewhere
in this Agreement, the following terms shall have the following respective
meanings (and such meanings shall be equally applicable to both the singular and
plural form of the terms defined, as the context may require):
"Additional Capitalization" means, as used in Section 8.12, any
contribution by the Borrower or another Subsidiary to the capital of MEDgenesis
Inc. or Los Feliz Drugs Inc. or transfer by the Borrower or another Subsidiary
of corporate assets or opportunities to such Subsidiaries or development of new
businesses in such Subsidiaries.
"Adverse Event" means the occurrence of any event that could have a
material adverse effect on the business, operations, property, assets or
condition (financial or otherwise) of the Borrower and the Subsidiaries as a
consolidated enterprise or on the ability of the Borrower or any other party
obligated thereunder to perform its obligations under the Loan Documents.
"Agent" means U.S. Bank National Association, as agent for the Banks
hereunder and as collateral agent under the Security Agreement and each
successor, as provided in Section 11.8, who shall act as Agent.
"Agent's Fee Letter" means a letter, dated as of April 17, 2003,
between the Borrower and the Agent pertaining to certain fees payable to the
Agent.
"Agreement" means this Amended and Restated Revolving Credit Agreement,
as it may be amended, modified, supplemented, restated or replaced from time to
time.
"Applicable Margin and Applicable Commitment Fee Rate" shall mean the
percentages set forth below corresponding to the Cash Flow Leverage Ratios shown
below for the most recent Fiscal Quarter end for which financial statements have
been delivered:
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Cash Flow Applicable Applicable Commitment
Leverage Ratio: Margin Fee Rate:
-------------- ------ --------
Greater than 2.25 to 1.00 2.500% 0.500%
Less than or equal
to 2.25 to 1.00 but
greater than 1.75 to 1.00 2.250% 0.375%
Less than or equal
to 1.75 to 1.00 but
greater than 1.25 to 1.00 2.000% 0.250%
Less than or equal
to 1.25 to 1.00 1.750% 0.125%
The Applicable Margin and Applicable Commitment Fee Rate shall be
applied on a quarterly basis, effective as of the date 45 days after the end of
each Fiscal Quarter based on the Cash Flow Leverage Ratio as demonstrated by the
quarterly financial statements of the Borrower delivered for the Fiscal Quarter
most recently ended, and as certified by the Borrower's financial officer. In
the event that such financial statements are not delivered as required by
Section 8.1(a) or (b), the Applicable Margin and Applicable Commitment Fee Rate
shall be the highest percentages set forth above until such time as such
financial statements are delivered, after which time the Applicable Margin and
Commitment Fee Rate shall be readjusted to the rate applicable to the Cash Flow
Leverage Ratio applicable to such statements.
"Asset Disposition" means any sale, transfer or other disposition of
any asset, other than assets held for purposes of investing cash, of the
Borrower or any Subsidiary in a single transaction or in a series of related
transactions (other than the sale of inventory in the ordinary course).
"Borrowing Base" means the sum of (a) an amount equal to 75% of the net
amount (not to include the Borrower's reserves for payer allowance and
uncollectible accounts as determined by the Agent in the annual collateral
audit) of the Borrower's Eligible Accounts; plus (b) an amount equal to 50% of
the net value (the lower of the cost, determined on a first in first out basis,
or market value of such Inventory, not to include the Borrower's reserves for
obsolete inventory, as determined by the Agent in the annual collateral audit)
of the Borrower's and the Subsidiary Guarantor's Eligible Inventory.
"Borrowing Base Certificate" means a certificate in the form of Exhibit
C signed as indicated thereon, setting forth the amount of the Borrowing Base.
"Business Day" means any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota and New York, New York and on which dealings in
U.S. Dollars may be carried on by the Agent in the interbank eurodollar market.
"Capital Expenditure" means any amount debited to the fixed asset
account on the consolidated balance sheet of the Borrower in respect of (a) the
acquisition (including, without limitation, acquisition by entry into a
Capitalized Lease), construction, improvement, replacement or betterment of
land, buildings, machinery, equipment or of any other fixed assets or
leaseholds, and (b) to the extent related to and not included in (a) above,
materials, contract labor and direct labor (excluding expenditures properly
chargeable to repairs or maintenance in accordance with GAAP).
"Capitalized Lease" means any lease which is or should be capitalized
on the books of the lessee in accordance with GAAP.
"Cash Flow Leverage Ratio" means the ratio, calculated for each
Measurement Period, of (a) the average
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principal amount of the Loans for such Measurement Period plus the principal
amount of Funded Debt (other than the Loans) as of the last day of such
Measurement Period, to (b) EBITDA for such Measurement Period.
"Casualty Disposition" means loss of or damage to, or condemnation or
other taking of, any assets of the Borrower or any Subsidiary for which such
Person receives insurance proceeds, proceeds of a condemnation award or other
compensation.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute, together with regulations thereunder.
"Collateral Agent" means the "Collateral Agent" as defined in the
Security Agreement (initially, U.S. Bank National Association).
"Commitment" means the maximum unpaid principal amount of the Revolving
Loans of all Banks plus Letters of Credit which may from time to time be
outstanding hereunder, being initially $30,000,000, as the same may be reduced
from time to time pursuant to Section 4.3 and shall be reduced by the amount of
any Revolving Loan converted into a Term Loan as provided in Section 2.1(b), or,
if so indicated, the maximum unpaid principal amount of the Revolving Loans plus
participations in Letters of Credit of any Bank (which amounts are set forth on
the signature pages hereof or in the relevant Assignment and Assumption
Agreement for such Bank) and, as the context may require, the agreement of each
Bank to make Revolving Loans to the Borrower and to participate in Letters of
Credit subject to the terms and conditions of this Agreement up to its
Commitment.
"Commitment Fees" is defined in Section 3.2.
"Compliance Certificate" means a certificate in the form of Exhibit D,
duly completed and signed by an authorized officer of the Borrower.
"Consolidated Tangible Net Worth" means as of any date of
determination, the sum of the amounts set forth on the consolidated balance
sheet of the Borrower as the sum of the common stocks, preferred stock,
additional paid-in capital and retained earnings of the Borrower (excluding
treasury stock), less the book value of all assets of the Borrower and its
Subsidiaries that would be treated as intangibles under GAAP, including, without
limitation, all such items as goodwill, trademarks, trade names, service marks,
copyrights, patents, licenses, unamortized debt discount and unamortized
deferred charges.
"Default" means any event which, with the giving of notice to the
Borrower or lapse of time, or both, would constitute an Event of Default.
"EBIT" means, for any period of determination, the consolidated net
income of the Borrower and its Subsidiaries before provision for income taxes,
plus, to the extent subtracted in determining consolidated net income, Interest
Expense, as determined in accordance with GAAP, excluding (to the extent
included): (a) non-operating gains (including, without limitation, extraordinary
or nonrecurring gains, gains from the discontinuance of operations and gains
arising from the sale of assets other than inventory) during the applicable
period; and (b) one-time expenses related to restatement of the Borrower's
financial statements, as described on Schedule 1.1 attached hereto, and (c)
lease buy-out expenses, store closing expenses and moving, severance and other
relocation expenses related to consolidation of operations and the move of the
StatScript headquarters to Minneapolis, as described in reasonable detail in the
attachment to the Compliance Certificate for the relevant period of
determination.
"EBITDA" means, for any period of determination, EBIT plus, to the
extent subtracted in determining consolidated net income, depreciation and
amortization expense, as determined in accordance with GAAP plus non-cash
charges associated with the impairment of goodwill.
"Eligible Account" shall mean each Account owing to the Borrower which
meets the following requirements:
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(a) it is subject to a first-priority lien in favor of the
Collateral Agent under the Security Agreement;
(b) it is owned by the Borrower and is not subject to any
assignment, claim or Lien other than (i) a first priority Lien in favor
of the Collateral Agent, and (ii) other Liens consented to by the Agent
in writing;
(c) it is genuine and is in all respects what it purports to be;
(d) it arises from either (i) the performance of services by the
Borrower, which services have been fully performed and, if applicable,
acknowledged and/or accepted by the Account Debtor with respect
thereto; or (ii) the sale or lease of goods by the Borrower and such
goods comply with such Account Debtor's specifications (if any) and
have been shipped to, or delivered to and accepted by, such Account
Debtor and not been returned to the Borrower;
(e) it is evidenced by an invoice rendered to the Account Debtor
with respect thereto which (i) is dated not earlier than the date of
shipment or performance, and (ii) has payment terms acceptable to the
Agent;
(f) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto and it is reduced
in amount by the amount of (i) accounts owing by the Borrower to the
Account Debtor, and (ii) checks outstanding payable to the Account
Debtor and is not subject to setoff, counterclaim, credit or allowance
(except any credit or allowance which has been deducted in computing
the net amount of the applicable invoice as shown in the original
schedule or Borrowing Base Certificate furnished to the Agent
identifying or including such Account) or adjustment by the Account
Debtor with respect thereto, or to any claim by such Account Debtor
denying liability thereunder in whole or in part, and such Account
Debtor has not refused to accept any of the goods or services which are
the subject of such Account or offered or attempted to return any of
such goods;
(g) there are no proceedings or actions which are then threatened
or pending against the Account Debtor with respect thereto or to which
such Account Debtor is a party which might result in any material
adverse change in such Account Debtor's financial condition or in its
ability to pay any Account in full when due;
(h) it does not arise out of a contract or order which, by its
terms, forbids, restricts or makes void or unenforceable the assignment
by the Borrower to the Agent of such Account;
(i) the Account Debtor with respect thereto is not a Subsidiary or
Related Party, or a director, officer, employee or agent of the
Borrower, any Subsidiary, or any Related Party;
(j) the Account Debtor with respect thereto is a resident or
citizen of and is located within the United States of America unless
the sale of goods giving rise to such Account is on letter of credit,
banker's acceptance or other credit support terms satisfactory to the
Agent;
(k) it does not arise from a "sale on approval," "sale or return"
or "consignment," nor is it subject to any other repurchase or return
agreement other than Accounts arising from the sale of Fuzeon, which
accounts are not subject to any claim or security interest in favor of
the consignor of Fuzeon;
(l) the Borrower has observed and complied with all laws of the
jurisdiction in which the Account Debtor with respect to such Account
is located which, if not observed or complied with would deny the
Borrower access to the courts of such jurisdiction;
(m) it arises in the ordinary course of the Borrower's business;
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(n) if the Account Debtor with respect thereto is the United
States of America or any department, agency or instrumentality thereof
(a "Federal Governmental Authority"), or any state, county or local
Governmental Authority, or any department, agency or instrumentality
thereof, the Borrower has assigned its right to payment of such Account
Receivable to the Collateral Agent pursuant to the Assignment of Claims
Act of 1940 as amended in the case of the a Federal Governmental
Authority, or pursuant to applicable state law, if any, in all other
instances, and such assignment has been accepted and acknowledged by
the appropriate government officers;
(o) if it is evidenced by chattel paper or instruments, (i) the
Agent shall have specifically agreed to include such Account as an
Eligible Account Receivable, (ii) only payments then due and payable
under such chattel paper or instrument shall be included as an Eligible
Account and (iii) the originals of such chattel paper or instruments
have been assigned and delivered to the Collateral Agent;
(p) it has not remained unpaid more than 90 days after the
original invoice date; and
(q) the Account Debtor with respect thereto is not (i) insolvent
or dissolved, (ii) unable generally to pay its debts as they mature, or
(iii) subject to an assignment for the benefit of creditors, bankruptcy
or other insolvency proceeding.
An Account which is at any time an Eligible Account but which
subsequently fails to meet any of the foregoing requirements shall forthwith
cease to be an Eligible Account.
"Eligible Inventory" shall mean Inventory of the Borrower and the
Subsidiary Guarantors which meets the following requirements:
(a) it is subject to a first-priority lien in favor of the
Collateral Agent;
(b) it is owned by the Borrower or the Subsidiary Guarantors and
is not subject to any assignment, claim or Lien other than (i) a first
priority Lien in favor of the Collateral Agent, and (ii) other Liens
consented to by the Agent in writing;
(c) if held for sale or lease or furnishing under contracts of
service, it is (except as the Agent may otherwise consent in writing)
new and unused;
(d) except as the Agent may otherwise consent, it is not stored
with a bailee, warehouseman or similar party;
(e) the Agent has determined, based on the annual collateral
audit, that it is not unacceptable due to age, type, category, quality
and/or quantity;
(f) it is not held by the Borrower or the Subsidiary Guarantors on
"consignment" and is not subject to any other repurchase or return
agreement;
(g) it complies with all standards imposed by any governmental
agency having regulatory authority over such goods and/or their use,
manufacture or sale;
(h) it is located within the continental United States;
(i) it does not consist of branded packaging or promotional
materials; and
(j) it is not Roche Inventory.
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Inventory of the Borrower or Subsidiary Guarantors which is at any time
Eligible Inventory but which subsequently fails to meet any of the foregoing
requirements shall forthwith cease to be Eligible Inventory.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute, together with regulations thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Rate" means for any day a rate per annum determined
pursuant to the following formula, which rate shall continue in effect until the
next succeeding Business Day:
{ LIBO Rate }
Eurodollar Rate = {------------------------------}
{1.00 - Eurodollar Reserve Rate}
In such formula, (i) "Eurodollar Reserve Rate" is defined below, and
(ii) "LIBO Rate" means the offered rate for deposits in United States Dollars
for an interest period of one month quoted by the Agent from Page 3750 of the
Dow Xxxxx Markets (Telerate) screen as of 11:00 a.m., London time on each
Business Day or the rate determined by the Agent based on such other published
service of general application as shall be selected by the Agent for such
purpose; provided, that in lieu of determining the rate in the foregoing manner,
the Agent may determine the rate based on rates offered to the Agent for
deposits in United States Dollars in the interbank eurodollar market at such
time for an interest period of one month.
"Eurodollar Reserve Rate" means a percentage equal to the aggregate
maximum reserve requirements (including all basic, supplemental, marginal and
other reserves), as specified under Regulation D of the Federal Reserve Board,
or any other applicable regulation that prescribes reserve requirements
applicable to Eurocurrency liabilities (as presently defined in Regulation D) or
applicable to extensions of credit by the Agent the rate of interest on which is
determined with regard to rates applicable to Eurocurrency liabilities. Without
limiting the generality of the foregoing, the Eurodollar Reserve Rate shall
reflect any reserves required to be maintained by the Agent against (i) any
category of liabilities that includes deposits by reference to which the
Eurodollar Rate is to be determined, or (ii) any category of extensions of
credit or other assets that includes the Loans.
"Event of Default" means any event described in Section 10.1.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fiscal Year" and "Fiscal Quarter" means, respectively, the fiscal
years and fiscal quarters used by the Borrower for reporting and tax purposes,
and shall be identified (a) in the case of Fiscal Years, by the calendar year in
which the last day falls (e.g., "Fiscal Year 2002" shall mean the Fiscal Year
ending on June 28, 2002), and (b) in the case of Fiscal Quarters, by the
sequential number of the Fiscal Quarter within the Fiscal Year identified (e.g.
"Fiscal Quarter 1 of Fiscal Year 2002" shall mean the Fiscal Quarter ending
September 28, 2001).
"Fixed Charge Coverage Ratio" means the ratio, calculated for each
Measurement Period, of:
(a) the total for such Measurement Period of (i) EBITDA, plus (ii)
Operating Lease Expense, minus (iii) the amount of Capital Expenditures
for such Measurement Period less the amount of financing of such
Capital Expenditures by means of seller financing, purchase money
financing or a direct loan for the exclusive purposes of financing such
Capital Expenditures, minus (iv) dividends and distributions in respect
of the stock of the Borrower paid during such Measurement Period, and
minus (v) income taxes paid during such Measurement Period;
to
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(b) the sum for such Measurement Period of (i) Interest Expense paid,
plus (ii) Operating Lease Expense, plus (iii) mandatory or scheduled
principal payments of Funded Debt, including without limitation the
Term Loans, plus (iv) an amount equal to 1/5 of the average Revolving
Loans during such Measurement Period."
"Funded Debt" means, without duplication, all obligations of the
Borrower or a Subsidiary on a consolidated basis: (a) in respect of borrowed
money; (b) secured by a mortgage, pledge, security interest, lien or charge on
the assets of the Borrower or a Subsidiary, whether the obligation secured is
the obligation of the owner or another Person (provided that non-recourse
obligations will only be taken into account up to the fair market value of the
related property); (c) any obligation for the deferred purchase price of any
property or services evidenced by a note, payment contract (other than an
account payable arising in the ordinary course of business) or other instrument,
(d) any obligation as lessee under any Capitalized Lease; (e) all guaranties and
contingent or other legal obligations in respect to Funded Debt of other
Persons, excluding ordinary course endorsements; (f) net liabilities under any
interest rate swap, collar or other interest rate hedging agreement. and (g)
undertakings or agreements to reimburse or indemnify issuers of letters of
credit other than commercial letters of credit.
"GAAP" means generally accepted accounting principles as applied in the
preparation of the audited financial statement of the Borrower referred to in
Section 7.5.
"Indebtedness" means, without duplication, all obligations, contingent
or otherwise, which in accordance with GAAP should be classified upon the
obligor's balance sheet as liabilities, but in any event including the following
(whether or not they should be classified as liabilities upon such balance
sheet): (a) obligations secured by any mortgage, pledge, security interest,
lien, charge or other encumbrance existing on property owned or acquired subject
thereto, whether or not the obligation secured thereby shall have been assumed
and whether or not the obligation secured is the obligation of the owner or
another party; (b) any obligation on account of deposits or advances; (c) any
obligation for the deferred purchase price of any property or services, except
trade accounts payable arising in the ordinary course of business, (d) any
obligation as lessee under any Capitalized Lease; (e) all guaranties,
endorsements and other contingent obligations in respect to Indebtedness of
others; (f) undertakings or agreements to reimburse or indemnify issuers of
letters of credit; and (g) net liabilities under any interest rate swap, collar
or other interest rate hedging agreement. For all purposes of this Agreement,
the Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture in which such Person is a general partner or a joint venturer.
"Interest and Lease Coverage Ratio" means the ratio, calculated for
each Measurement Period on a consolidated basis for the Borrower and its
Subsidiaries in accordance with GAAP, of:
(a) the sum for such Measurement Period of (i) EBIT, plus, (ii)
Operating Lease Expense;
to
(b) the sum for such Measurement Period of (i) Interest Expense, to the
extent paid in cash, plus, (ii) Operating Lease Expense.
"Interest Expense means, for any period of determination, the aggregate
consolidated amount, without duplication, of interest paid, accrued or scheduled
to be paid in respect of any Indebtedness of the Borrower and its Subsidiaries,
including in all cases interest expense determined in accordance with GAAP and
(a) all but the principal component of payments in respect of conditional sale
contracts, Capitalized Leases and other title retention agreements, (b)
commissions, discounts and other fees and charges with respect to letters of
credit and bankers' acceptance financings and (c) net costs under any interest
rate swap, collar or other interest rate hedging agreements, in each case
determined in accordance with GAAP.
"Investment" means the acquisition, purchase, making or holding of any
stock or other security, any loan, advance, contribution to capital, extension
of credit (except for trade and customer accounts receivable for inventory sold
or services rendered in the ordinary course of business and payable in
accordance with customary trade terms), any acquisitions of real or personal
property (other than real and personal property acquired in the ordinary course
of business)
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and any purchase or commitment or option to purchase stock or other debt or
equity securities of or any interest in another Person or any integral part of
any business or the assets comprising such business or part thereof.
"Letters of Credit" shall have the meaning set forth in Section 2.4.
"Letter of Credit Agreements" shall have the meaning set forth in
Section 2.4.
"Letter of Credit Obligations" means the aggregate amount of all
possible drawings under all Letters of Credit plus all amounts drawn under any
Letter of Credit and not reimbursed by the Borrower under the applicable Letter
of Credit Agreement.
"Liabilities" means all obligations and liabilities of the Borrower to
the Agent and the Banks under this Agreement and all other Loan Documents,
including without limitation obligations to pay principal, interest, fees,
expenses and other amounts, and all obligations of the Borrower to any of the
Banks under any swap, collar, cap, or other interest rate hedging agreement
between the Borrower and such Bank, including without limitation any such
obligations that arise after the filing of a petition by or against the Borrower
under the Bankruptcy Code, even if the obligations do not accrue because of the
automatic stay under Bankruptcy Code Section 362 or otherwise.
"Lien" means any security interest, mortgage, pledge, lien,
hypothecation, judgment lien or similar legal process, charge, encumbrance,
title retention agreement or analogous instrument or device (including, without
limitation, the interest of the lessors under Capitalized Leases and the
interest of a vendor under any conditional sale or other title retention
agreement).
"Loan Documents" means this Agreement, the Notes, each Subsidiary
Guaranty, the Security Agreement, each Subsidiary Security Agreement, each
Letter of Credit Agreement, the Roche Intercreditor Agreement and each other
instrument, document, guaranty, security agreement, mortgage, or other agreement
executed and delivered by the Borrower or any guarantor or party granting
security interests in connection with this Agreement, the Loans or any
collateral for the Loans.
"Loans" means the Revolving Loans and the Term Loans.
"Measurement Period" means, for purposes of calculating the Cash Flow
Leverage Ratio, Fixed Charge Coverage Ratio, and Interest and Lease Coverage
Ratio, each period of four consecutive Fiscal Quarters of the Borrower. A
Measurement Period ending on the last day of a given Fiscal Quarter shall
consist of such Fiscal Quarter and the prior three Fiscal Quarters.
"Net Casualty Proceeds" means, with respect to a Casualty Disposition,
the amount of insurance proceeds, proceeds of a condemnation award or other
compensation received by the Borrower or a Subsidiary, net of the Borrower's
good faith estimate of federal and state taxes, if any, payable with respect to
such Casualty Disposition, and net of amounts which the Borrower or such
Subsidiary elects within a reasonable period of time to reinvest in assets to
replace the assets lost, damaged or condemned.
"Net Issuance Proceeds" means, with respect to any sale or issuance by
the Borrower or any Subsidiary of any equity securities of the Borrower or any
Subsidiary to a Person other than the Borrower or a Subsidiary, cash or readily
marketable cash equivalents received therefrom, whether at the time of such sale
or issuance or subsequent thereto, net of all legal expenses, commissions and
other fees and all costs and expenses directly related to such sale or issuance.
"Net Sale Proceeds" means, with respect to any Asset Disposition, the
sum of cash or readily marketable cash equivalents received (including by way of
a cash generating sale or discounting of a note or account receivable)
therefrom, whether at the time of such disposition or subsequent thereto, net
of: (a) all legal, title and recording tax expenses, commissions and other fees
and all costs and expenses directly related to such Asset Disposition; (b) the
Borrower's good faith estimate of federal and state taxes payable in respect of
receipt of proceeds of such Asset Disposition; (c) all payments made by the
Borrower or any of its Subsidiaries on any
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Funded Debt which is secured by such assets pursuant to a permitted Lien upon or
with respect to such assets or which must, by the terms of such Lien, in order
to obtain a necessary consent to such Asset Disposition, or by applicable law,
be repaid out of the proceeds from such Asset Disposition; and (d) amounts which
the Borrower or such Subsidiary elects within a reasonable period of time to
reinvest in substantially similar assets.
"Notes" means the Notes described in Section 2.3.
"Operating Lease Expense means, for any period of determination, the
aggregate consolidated amount, without duplication, of amounts paid under leases
of real or personal property that are not Capitalized Leases, including in all
cases operating lease expense determined in accordance with GAAP.
"Overadvance Amount" means $10,000,000, until the making of the Term
Loan, as contemplated in Section 2.1(b), and $0, on and after the making of such
Term Note.
"PBGC" means the Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
"Percentage" means, as to any Bank, the proportion, expressed as a
percentage, that such Bank's Commitment bears to the total Commitments of all
Banks.
"Permitted Acquisitions" means acquisition by the Borrower of all or
substantially all of the assets or stock, membership interest or other equity
interests of another Person or Persons subject to the following: (a) no Default
or Event of Default shall have occurred and continued at the time of such
acquisition, (b) total consideration for such acquisitions (including cash paid,
notes issued, Indebtedness assumed and all other consideration) for such
acquisitions shall not exceed (i) $5,000,000 for acquisition of any one Person
or related group of Persons, or (ii) $20,000,000 for all such acquisitions after
the date of this Agreement; and (c) any Subsidiary formed or acquired shall
comply with the requirements of Section 8.12 for delivery of a Subsidiary
Guaranty and Subsidiary Security Agreement, if required by such Section.
"Person" means any natural person, corporation, limited liability
company, partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Plan" means an employee benefit plan or other plan, maintained for
employees of the Borrower or of any ERISA Affiliate, and subject to Title IV of
ERISA or Section 412 of the Code.
"Prime Rate" means the rate of interest from time to time announced by
the Agent as its "prime rate." For purposes of determining any interest rate
which is based on the Prime Rate, such interest rate shall be adjusted each time
that the prime rate changes.
"Related Party" means any Person (other than a Subsidiary): (a) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Borrower, (b) which
beneficially owns or holds 5% or more of the equity interest of the Borrower; or
(c) 5% or more of the equity interest of which is beneficially owned or held by
the Borrower or a Subsidiary. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any such waivers in accordance
with Section 412(d) of the Code.
"Required Banks" means, if there are only two Banks, both Banks, or if
there are three or more Banks, those
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Banks whose total Percentage exceeds 66 2/3%, or if no Commitments remain in
effect, whose share of principal of the Loans exceeds 66 2/3% of the aggregate
outstanding principal of all Loans.
"Revolving Loans" means the loans made under Section 2.1(a).
"Roche Intercreditor Agreement" means the Intercreditor Agreement,
dated as of March 14, 2003, between the Agent and Roche Laboratories Inc.,
consented to by the Borrower, as such agreement may hereafter be amended,
modified, renewed or replaced from time to time.
"Roche Inventory" means Fuzeon, as defined in the Roche Intercreditor
Agreement, or any other goods in which the Agent has waived and terminated its
security interest under the Roche Intercreditor Agreement.
"Security Agreement" means the Amended and Restated Security Agreement,
dated as of January 17, 2002, between the Borrower and the Agent, as such
agreement may hereafter be amended, modified, renewed or replaced from time to
time.
"Subsidiary" means any Person of which or in which the Borrower and its
other Subsidiaries own directly or indirectly 50% or more of: (a) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profit interest of such Person,
if it is a partnership, joint venture or similar entity, or (c) the beneficial
interest of such Person, if it is a trust, association or other unincorporated
organization.
"Subsidiary Guarantor" means Chronimed Holdings Inc., a Minnesota
corporation, and each other Subsidiary delivering a Subsidiary Guaranty in
accordance with the terms of Section 8.12.
"Subsidiary Guaranty" means a Guaranty by Chronimed Holdings Inc.,
dated as of January 17, 2002, as confirmed by a Guarantor's Acknowledgement
dated as of the date of this Agreement, and each subsequent Subsidiary Guaranty
delivered in accordance with the terms of Section 8.12, as such Guaranties may
hereafter be amended, modified, renewed or replaced from time to time.
"Subsidiary Security Agreement" means a Security Agreement between each
Subsidiary Guarantor and the Agent, including that certain Subsidiary Security
Agreement dated as of January 17, 2002 by Chronimed Holdings Inc., and each
subsequent Subsidiary Security Agreement delivered in accordance with the terms
of Section 8.12, as such agreements may hereafter be amended, modified, renewed
or replaced from time to time.
"Term Loans" means the term loans into which a portion of the Loans may
be converted as provided in Section 2.1(b).
"Termination Date" means the earliest of (a) Xxxxx 00, 0000, (x) the
date on which the Commitments are terminated pursuant to Section 10.2 hereof or
(c) the date on which the Commitments are reduced to zero pursuant to Section
4.3 hereof.
Section 1.2 Accounting Terms and Calculations. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder (including,
without limitation, determination of compliance with financial ratios and
restrictions in Articles VIII and IX hereof) shall be made in accordance with
GAAP consistently applied. Any reference to "consolidated" financial terms shall
be deemed to refer to those financial terms as applied to the Borrower and its
Subsidiaries in accordance with GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding."
Section 1.4 Other Definitional Terms. 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
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Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided.
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ARTICLE II TERMS OF LENDING
Section 2.1 The Commitments.
(a) Subject to the terms and conditions hereof and in reliance upon the
warranties of the Borrower herein, each Bank agrees, severally and not
jointly, to make loans (each, a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower from time to time from the date
hereof until the Termination Date, during which period the Borrower may
repay and reborrow in accordance with the provisions hereof, provided,
that the aggregate unpaid principal amount of all Revolving Loans of
all Banks and the aggregate Letter of Credit Obligations outstanding
shall not exceed at any time the lesser of (i) the Commitments of all
Banks, or (ii) the sum of the Borrowing Base plus the Overadvance
Amount, determined as of the most recent monthly Borrowing Base
Certificate delivered by the Borrower to the Agent. The Revolving Loans
shall be made by the Banks on a pro rata basis, calculated for each
Bank based on its Percentage. Each Loan shall be in a minimum amount of
$100,000 or in an integral multiple of $100,000 above such amount.
(b) In the event that the average excess of (i) the aggregate unpaid
principal amount of all Revolving Loans of all Banks and the aggregate
Letter of Credit Obligations outstanding, over (ii) the Borrowing Base,
shall be equal to or greater than $10,000,000 for any period of two
consecutive Fiscal Quarters, an amount of the Loans not less than such
average excess, and equal to the Loans borrowed for purposes of
financing capital expenditures or acquisitions during the preceding
four Fiscal Quarters shall be converted into a fully-amortizing term
loan (the "Term Loan") with amortization rate of no greater than 6
years and a final maturity date of the Termination Date (which shall
require a balloon payment). Upon such conversion, (x) the Overadvance
Amount shall (as provided in the definition thereof) be reduced to $0,
(y) the proceeds of the Term Loan shall be applied to the extent
necessary to the concurrent payment in full of the principal amount of
the Revolving Loans outstanding on the date of such conversion, and (z)
the Commitments shall be deemed to be reduced by the amount of such
Term Loan (ratably, for all Banks).
Section 2.2 Borrowing Procedures.
(a) Request by Borrower. Any request by the Borrower for a Loan or
Letter of Credit shall be in writing, or by telephone promptly
confirmed in writing, and must be given so as to be received by the
Agent not later than:
(i) 10:00 a.m., Minneapolis time, on the Business Day of the
requested Loan; or
(ii) 10:00 a.m., Minneapolis time, three Business days prior
to the date of any requested Letter of Credit.
Each request shall specify (1) the borrowing date (which shall be a
Business Day), (2) the amount of such Loan, and (3) if a request for a
Letter of Credit, the form of such Letter of Credit and such other
information as the Agent shall reasonably request.
(b) Funding of Agent. The Agent shall promptly notify each other Bank
of the receipt of such request, the matters specified therein, and of
such Bank's Percentage of the requested Loans. On the date of the
requested Loans, each Bank shall provide its share of the requested
Loans to the Agent in immediately available funds not later than 1:00
p.m., Minneapolis time. Unless the Agent determines that any applicable
condition specified in Article VI has not been satisfied, the Agent
will make the requested Loans available to the Borrower at the Agent's
principal office in Minneapolis, Minnesota in immediately available
funds not later than 5:00 p.m. (Minneapolis time) on the lending date
so requested. If the Agent has made a Loan to the Borrower on behalf of
a Bank but has not received the amount of such Loan from such Bank by
the time herein required, such Bank shall pay interest to the Agent on
the amount so advanced at the overnight Federal Funds rate from the
date of such Loan to the date funds are received by
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the Agent from such Bank, such interest to be payable with such
remittance from such Bank of the principal amount of such Loan
(provided, however, that the Agent shall not make any Loan on behalf of
a Bank if the Agent has received prior notice from such Bank that it
will not make such Loan). If the Agent does not receive payment from
such Bank by the next Business Day after the date of any Loan, the
Agent shall be entitled to recover such Loan, with interest thereon at
the rate then applicable to the such Loan, on demand, from the
Borrower, without prejudice to the Agent's and the Borrower's rights
against such Bank. If such Bank pays the Agent the amount herein
required with interest at the overnight rate before the Agent has
recovered from the Borrower, such Bank shall be entitled to the
interest payable by the Borrower with respect to the Loan in question
accruing from the date the Agent made such Loan.
Section 2.3 The Notes.
(a) The Revolving Loans of each Bank shall be evidenced by a promissory
note of the Borrower (the "Revolving Notes"), substantially in the form
of Exhibit A hereto, in the amount of such Bank's Commitment originally
in effect and dated as of the date of this Agreement. The Banks shall
enter in their respective records the amount of each Revolving Loan,
the rate of interest borne by the Revolving Loans and the payments made
on the Revolving Loans, and such records shall be deemed conclusive
evidence of the subject matter thereof, absent manifest error.
(b) The Term Loans of each Bank shall be evidenced by a promissory note
of the Borrower (the "Term Notes"; together with the Revolving Notes
called the "Notes"), substantially in the form of Exhibit B hereto. The
Banks shall enter in their respective records the amount of its Term
Loan, the rate of interest borne by its Term Loan and the payments of
the Term Loan, and such records shall be conclusive evidence of the
subject matter thereof, absent manifest error.
Section 2.4 Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement, the Borrower may, in addition to Loans provided for in
Section 2.1 hereof, request that the Agent issue letters of credit for
the account of the Borrower, by making such request as provided in
Section 2.2 hereof (such letters of credit as any of them may be
amended, supplemented, extended or confirmed from time to time, being
herein collectively called the "Letters of Credit"). The face amount of
the Letters of Credit outstanding at any time shall be limited so that
the aggregate Letter of Credit Obligations not exceed $5,000,000, and
the sum of Letter of Credit Obligations plus the Revolving Loans under
Section 2.1(a) shall not exceed at any time the lesser of (i) the
Commitment of all Banks, or (ii) the Borrowing Base plus the
Overadvance Amount. The Agent may, at its discretion, elect to issue or
decline to issue any requested Letter of Credit. Upon the date of the
issuance of a Letter of Credit, the Agent shall be deemed, without
further action by any party hereto, to have sold to each Bank, and each
Bank shall be deemed without further action by any party hereto, to
have purchased from the Agent, a participation, in a percentage equal
to such Bank's Percentage of such Letter of Credit and the related
Letter of Credit Obligations. No Letter of Credit issued pursuant to
this Agreement shall have an expiration date later than one year from
date of issuance or later than the Termination Date.
(b) Additional Provisions. The following additional provisions shall
apply to each Letter of Credit:
(i) Upon receipt of any request for a Letter of Credit,
the Agent shall notify each Bank of the contents of such
request and of such Bank's Percentage of the amount of such
proposed Letter of Credit.
(ii) No Letter of Credit may be issued if after giving
effect thereto the sum of (x) the aggregate outstanding
principal amount of Loans plus (y) the aggregate Letter of
Credit Obligations would exceed the Total Commitment. The
Commitment of each Bank shall be deemed to be utilized for all
purposes hereof in an amount equal to such Bank's Percentage
of the Letter of Credit Obligations.
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(iii) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment thereunder, Agent shall
promptly notify the Borrower and each Bank as to the amount to
be paid as a result of such demand and the payment date. If at
any time the Agent shall have made a payment to a beneficiary
of such Letter of Credit in respect of a drawing or in respect
of an acceptance created in connection with a drawing under
such Letter of Credit, each Bank will pay to Agent immediately
upon demand by the Agent at any time during the period
commencing after such payment until reimbursement thereof in
full by the Borrower, an amount equal to such Bank's
Percentage of such payment, together with interest on such
amount for each day from the date of demand for such payment
(or, if such demand is made after 2:00 a.m. Minneapolis time
on such date, from the next succeeding Business Day) to the
date of payment by such Bank of such amount at a rate of
interest per annum equal to the overnight Federal Funds rate
for such period.
(iv) The Borrower shall be irrevocably and unconditionally
obligated forthwith to reimburse the Agent for any amount paid
by the Agent upon any drawing under any Letter of Credit,
without presentment, demand, protest or other formalities of
any kind, all of which are hereby waived. Such reimbursement
may, subject to satisfaction of all conditions precedent and
to the available Commitment (after adjustment in the same to
reflect the elimination of the corresponding Letter of Credit
Obligation), be made by the borrowing of Loans. The Agent will
pay to each Bank such Bank's Percentage of all amounts
received from the Borrower for application in payment, in
whole or in part, of a Letter of Credit Obligation, but only
to the extent such Bank has made payment to the Agent in
respect of such Letter of Credit pursuant to clause (iii)
above.
(v) The Borrower will pay to Agent for the account of
each Bank in accordance with its Percentage letter of credit
fee with respect to each Letter of Credit equal to an amount,
calculated on the basis of face amount of each Letter of
Credit, in each case for the period from and including the
date of issuance of such Letter of Credit to and including the
date of expiration or termination thereof at a per annum rate
equal to the Applicable Margin applicable from time to time,
such fee to be due and payable in advance on the date of the
issuance thereof. The Agent will pay to each Bank, promptly
after receiving any payment in respect of letter of credit fee
referred to in this clause (v), an amount equal to the product
of such Bank's Percentage times the amount of such fees. The
Borrower shall also pay to Agent at the Principal Office for
the account of the Agent an up-front issuance fee of 0.125% of
the face amount of the applicable Letter of Credit. The
Borrower shall pay to the Agent the Agent's fees in connection
with each Letter of Credit (including amendment fees,
negotiation fees and others) in accordance with the Agent's
standard fee schedule in effect from time to time. All fees
hereunder shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed.
(vi) The issuance by the Agent of each Letter of Credit
shall, in addition to the discretionary nature of this
facility, be subject to the conditions precedent that the
Borrower shall have executed and delivered such applications
and other instruments and agreements relating to such Letter
of Credit as the Agent shall have reasonably requested and are
not inconsistent with the terms of this Agreement (the `Letter
of Credit Agreements'). In the event of a conflict between the
terms of this Agreement and the terms of any Letter of Credit
Agreement, the terms hereof shall control.
(c) Indemnification and Release. The Borrower hereby indemnifies
and holds harmless the Agent and each Bank from and against any and all
claims and damages, losses, liabilities, costs or expenses which the
Agent or such Bank may incur (or which may be claimed against the Agent
or such Bank by any Person whatsoever), REGARDLESS OF WHETHER CAUSED IN
WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES,
in connection with the execution and delivery of any Letter of Credit
or transfer of or payment or failure to pay under any Letter of Credit;
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provided that the Borrower shall not be required to indemnify any party
seeking indemnification for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by (x)
the willful misconduct or gross negligence of the party seeking
indemnification, or (y) by the failure by the party seeking
indemnification to pay under any Letter of Credit after the
presentation to it of a request required to be paid under applicable
law.
ARTICLE III INTEREST AND FEES
Section 3.1 Interest and Payments.
(a) Except as provided in (b) below, the unpaid principal amount of the
Loans shall bear interest at a rate per annum equal to the Eurodollar
Rate plus the Applicable Margin.
(b) Following occurrence of an Event of Default and during continuance
thereof, the unpaid principal amount of the Loans shall bear interest
until paid in full at a rate per annum equal to the Prime Rate plus
2.00%.
(c) Interest under (a) shall be paid on the last day of each month of
each year. Interest under (b) shall be payable on demand.
Section 3.2 Commitment Fee. The Borrower shall pay fees (the
"Commitment Fees") to the Agent for the account of the Banks in an amount
determined by applying the Applicable Commitment Fee Rate per annum to the
average daily unused amount of the Commitments of the respective Banks for the
period from the date hereof to the Termination Date. Accrued unpaid Commitment
Fees shall be payable in arrears on the last day of March, June, September and
December of each year.
Section 3.3 Computation. Interest and Commitment Fees shall be computed
on the basis of actual days elapsed and a year of 360 days.
Section 3.4 Agent's Fees. The Borrower shall pay to the Agent the fees
described in the Agent's Fee Letter.
ARTICLE IV PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION
OF THE CREDIT AND SETOFF
Section 4.1 Repayment.
(a) Principal of the Revolving Loans, together with all accrued and
unpaid interest thereon, shall be due and payable on the Termination
Date.
(b) Principal of the Term Loans shall be payable in quarterly
installments due on the last day of March, June, September and December
of each year, commencing the first such day after the making of the
Term Loans, each in the amount of not less than 1/20 of the initial
amount of the Term Loans when made, and a final payment equal to all
unpaid principal of the Term Loans, payable on the Termination Date.
Section 4.2 Prepayments.
(a) Optional Prepayments. The Borrower may prepay the Loans, in whole
or in part, at any time without any premium or penalty. Each partial
prepayment shall be in a minimum amount of $100,000 or in an integral
multiple of $100,000 above such amount. Each prepayment of the Term
Loan shall be applied to the unpaid installments of the Term Loan in
the inverse order of their maturities.
(b) Mandatory Prepayment - Asset and Casualty Dispositions and Equity
Issuance. The Borrower shall prepay the Loans in the following amounts:
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(i) Asset Dispositions. One Hundred Percent (100%) of the
aggregate Net Sale Proceeds realized upon all Asset
Disposition if such Net Sale Proceeds of any asset in a single
transaction or a series of related transactions exceeds
$250,000 during any fiscal year, provided, that if no Event of
Default shall have occurred and continued, the prepayment
required hereunder shall be reduced by the amount of such Net
Sale Proceeds applied by the Borrower or a Subsidiary to
purchase assets similar to those sold within 30 days after the
sale giving rise to such Net Sale Proceeds;
(ii) Casualty Dispositions. One Hundred Percent (100%) of the
aggregate Net Casualty Proceeds realized upon all Casualty
Dispositions if such Net Casualty Proceeds of any asset in a
single transaction or a series of related transactions exceeds
$250,000; and
(iii) Equity Issuance. One Hundred Percent (100%) of the Net
Issuance Proceeds realized upon the sale by the Borrower or
such Subsidiary of any issuance of its equity securities in
excess of $1,000,000 on and after the date of this Agreement.
Prepayment under this Section 4.2(b) shall be made as soon as possible
following prompt determination of the amount thereof by the Borrower.
Prepayments under this Section 4.2(b) shall be applied first, to the
Term Loan (to unpaid installments in the inverse order of their
maturities) and thereafter to the Revolving Loans.
(c) Mandatory Prepayment - Borrowing Base. If at any time the aggregate
unpaid principal amount of all Revolving Loans of all Banks and the
aggregate Letter of Credit Obligations outstanding shall exceed the
lesser of (i) the Commitments of all Banks, or (ii) the Borrowing Base
plus the Overadvance Amount, the Borrower shall (x) prepay the
Revolving Loans in the amount of such excess, and (y) if all of the
Revolving Loans are paid in full and such excess still exists, deliver
cash collateral for the Letter of Credit Obligations in the amount of
such excess to be held as described in Section 10.4.
Section 4.3 Reduction or Termination of Commitments. The Borrower may,
at any time, upon no less than three Business Days prior written or telephonic
notice received by the Agent, reduce the Commitments of all Banks, such
reduction to be in a minimum amount of $1,000,000 or an integral multiple
thereof and to be applied ratably to the Commitments of the respective Banks.
The Borrower may, at any time, upon not less than three Business Days prior
written notice to the Agent, terminate the Commitments in their entirety. Upon
termination of the Commitments pursuant to this Section, the Borrower shall pay
to the Agent for the account of the Banks the full amount of all outstanding
Loans, all accrued and unpaid interest thereon, and all other unpaid obligations
of the Borrower to the Banks hereunder. Upon any reduction in the Commitments
pursuant to this Section, the Borrower shall pay to the Agent for the account of
the Banks the amount, if any, by which the aggregate unpaid principal amount of
outstanding Loans exceeds the total Commitments of all Banks as so reduced.
Amounts so paid cannot be reborrowed.
Section 4.4 Payments. Payments and prepayments of principal of, and
interest on, the Notes and all fees, expenses and other obligations under the
Loan Documents shall be made without set-off or counterclaim in immediately
available funds not later than 2:00 p.m., Minneapolis time, on the dates due at
the main office of the Agent in Minneapolis, Minnesota. Funds received on any
day after such time shall be deemed to have been received on the next Business
Day. The Agent shall promptly distribute in like funds to each Bank its
Percentage share of each such payment of principal and interest. Whenever any
payment to be made hereunder or on the Notes shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
any interest or fees.
Section 4.5 Proration of Payments. If any Bank or other holder of a
Loan shall obtain any payment or other recovery (whether voluntary, involuntary,
by application of offset, pursuant to the guaranty hereunder, or otherwise) on
account of principal of, interest on, or fees with respect to any Loan, or
payment of any Letter of Credit Obligations, in any case in excess of the share
of payments and other recoveries of other Banks or holders, such Bank or other
holder shall purchase from the other Banks or holders, in a manner to be
specified by the Agent, such participations in the Loans held
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by such other Banks or holders as shall be necessary to cause such purchasing
Bank or other holder to share the excess payment or other recovery ratably with
each of such other Banks or holders; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Bank or holder, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
Section 4.6 Clean-Down Periods. The Borrower shall repay the Revolving
Loans so that the outstanding principal balance of all Revolving Loans does not
exceed $15,000,000 for at least two non-consecutive Business Days during each
Fiscal Year.
ARTICLE V ADDITIONAL PROVISIONS RELATING TO LOANS
Section 5.1 Increased Costs. If, as a result of any law, rule,
regulation, treaty or directive, or any change therein or in the interpretation
or administration thereof, or compliance by the Banks with any request or
directive (whether or not having the force of law) from any court, central bank,
governmental authority, agency or instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to any Loan, the Notes
or the Commitments is imposed, modified or deemed applicable, or the
basis of taxation of payments to any Bank of interest or principal of
the Loans (other than taxes imposed on the overall net income of such
Bank by the jurisdiction in which such Bank has its principal office)
is changed;
(b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Bank is imposed, modified or deemed applicable;
(c) any increase in the amount of capital required or expected to be
maintained by any Bank or any Person controlling such Bank is imposed,
modified or deemed applicable; or
(d) any other condition affecting this Agreement or the Commitments is
imposed on any Bank or the relevant funding markets;
and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining the Loans, issuing or participating in the Letters of
Credit or extending its Commitment is increased, or the amount of any sum
receivable by such Bank hereunder or under the Notes in respect of any Loan is
reduced;
then, the Borrower shall pay to such Bank upon demand such additional amount or
amounts as will compensate such Bank (or the controlling Person in the instance
of (c) above) for such additional costs or reduction (provided that such Bank
have not been compensated for such additional cost or reduction in the
calculation of the Eurodollar Reserve Rate). Determinations by each Banks for
purposes of this Section 5.1 of the additional amounts required to compensate
such Bank shall be conclusive in the absence of manifest error. In determining
such amounts, the Banks may use any reasonable averaging, attribution and
allocation methods.
Section 5.2 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability. If the Agent determines (which determination shall
be conclusive and binding on the parties hereto) that:
(a) deposits of the necessary amount are not available in the relevant
markets or that, by reason of circumstances affecting such market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate;
(b) the Eurodollar Rate will not adequately and fairly reflect the cost
to the Banks of making or funding the Loans;
(c) the making or funding of Loans indexed at the Eurodollar Rate has
become impracticable as a result of any event occurring after the date
of this Agreement which, in the opinion of the Agent, materially and
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adversely affects such funding or the relevant market; or
(d) the adoption of any law, rule, regulation, treaty or directive, or
any change therein or in the interpretation or administration thereof
by any court, central bank, governmental authority, agency or
instrumentality, or comparable agency charged with the interpretation
or administration thereof, makes it unlawful or impossible for the Bank
to make or fund loans indexed at the Eurodollar Rate,
then, the Agent shall promptly give notice of such determination to the
Borrower, and thereafter all Loans shall bear interest at a per annum rate equal
to the Prime Rate plus or minus interest rate margin(s) determined by the Bank
to approximate the economic equivalent of Applicable Margin, provided, that such
margin(s) shall not be higher than the Applicable Margin.
ARTICLE VI CONDITIONS PRECEDENT
Section 6.1 Conditions of Initial Loan. The obligation of the Banks to
make the initial Loan hereunder shall be subject to the satisfaction of the
conditions precedent, in addition to the applicable conditions precedent set
forth in Section 6.2 below, that the Agent shall have received all of the
following, in form and substance satisfactory to the Agent, each duly executed
and certified or dated as of the date of this Agreement or such other date as is
satisfactory to the Agent:
(a) The Notes payable to each Bank executed by a duly authorized
officer of the Borrower.
(b) An Acknowledgment by Chronimed Holdings, Inc., acknowledging the
existing Subsidiary Guaranty and Subsidiary Security Agreement.
(c) Certificates of the Secretary or an Assistant Secretary of the
Borrower, attesting to and attaching (i) a copy of the corporate
resolution of the Borrower authorizing the execution, delivery and
performance of the Loan Documents, (ii) an incumbency certificate
showing the names and titles, and bearing the signatures of, the
officers of the Borrower authorized to execute the Loan Documents,
(iii) a copy of any amendments to the Articles or Certificate of
Incorporation or By-Laws of the Borrower since the copies delivered in
connection with the Existing Credit Agreement.
(d) A Certificate of Good Standing for the Borrower in the jurisdiction
of its incorporation, certified by the appropriate governmental
officials.
(e) An opinion of counsel to the Borrower, addressed to the Bank, in
substantially the form of Exhibit E.
Section 6.2 Conditions Precedent to all Loans. The obligation of the
Bank to make any Loan hereunder (including the initial Loan) shall be subject to
the satisfaction of the following conditions precedent (and any request for a
Loan shall be deemed a representation by the Borrower that the following are
satisfied):
(a) Before and after giving effect to such Loan, the representation and
warranties contained in Article VII shall be true and correct, as
though made on the date of such Loan.
(b) Before and after giving effect to such Loan, no Default or Event of
Default shall have occurred and be continuing.
ARTICLE VII REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement, to
grant the Commitments and to make Loans hereunder, the Borrower represents and
warrants to the Agent and the Banks:
Section 7.1 Organization, Standing, Etc. The Borrower and each of its
corporate Subsidiaries are corporations
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duly incorporated and validly existing and in good standing under the laws of
the jurisdiction of their respective incorporation and have all requisite
corporate power and authority to carry on their respective businesses as now
conducted, to (in the instance of the Borrower) enter into the Loan Documents
and to perform its obligations under the Loan Documents. The Borrower and each
of its Subsidiaries are duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character of the properties owned,
leased or operated by it or the business conducted by it makes such
qualification necessary, and where failure to so qualify would not constitute an
Adverse Event.
Section 7.2 Authorization and Validity. The execution, delivery and
performance by the Borrower of the Loan Documents have been duly authorized by
all necessary corporate action by the Borrower, and the Loan Documents
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, subject to
limitations as to enforceability which might result from bankruptcy, insolvency,
moratorium and other similar laws affecting creditors' rights generally and
subject to limitations on the availability of equitable remedies.
Section 7.3 No Conflict; No Default. The execution, delivery and
performance by the Borrower of the Loan Documents will not (a) violate any
provision of any law, statute, rule or regulation or any order, writ, judgment,
injunction, decree, determination or award of any court, governmental agency or
arbitrator presently in effect having applicability to the Borrower, (b) violate
or contravene any provisions of the Articles (or Certificate) of Incorporation
or by-laws of the Borrower, or (c) result in a breach of or constitute a default
under any indenture, loan or credit agreement or any other agreement, lease or
instrument to which the Borrower is a party or by which it or any of its
properties may be bound or result in the creation of any Lien on any asset of
the Borrower or any Subsidiary. Neither the Borrower nor any Subsidiary is in
default under or in violation of any such law, statute, rule or regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, loan or credit agreement or other agreement, lease or instrument in
any case in which the consequences of such default or violation could constitute
an Adverse Event. No Default or Event of Default has occurred and is continuing.
Section 7.4 Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Loan Documents.
Section 7.5 Financial Statements and Condition. The Borrower's audited
consolidated and consolidating financial statements for Fiscal Year 2002, and
its unaudited consolidated and consolidating financial statements for Fiscal
Quarter 2 of Fiscal Year 2003, as heretofore furnished to the Banks, have been
prepared in accordance with GAAP on a consistent basis and fairly present the
financial condition of the Borrower and its Subsidiaries as at such dates and
the results of their operations and changes in financial position for the
respective periods then ended. As of the dates of such financial statements,
neither the Borrower nor any Subsidiary had any material obligation, contingent
liability, liability for taxes or long-term lease obligation which is not
reflected in such financial statements or in the notes thereto. Since the end of
Fiscal Year 2002, no Adverse Event has occurred. The dates of the last days of
the Borrower's Fiscal Quarters and Fiscal Years are set forth on Schedule 7.5.
Section 7.6 Litigation and Contingent Liabilities. Except as described
in Schedule 7.6, there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any of their properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which, if
determined adversely to the Borrower or such Subsidiary, could constitute an
Adverse Event. Except as described in Schedule 7.6, neither the Borrower nor any
Subsidiary has any contingent liabilities which are material to the Borrower and
the Subsidiaries as a consolidated enterprise.
Section 7.7 Compliance. The Borrower and its Subsidiaries are in
material compliance with all statutes and governmental rules and regulations
applicable to them.
Section 7.8 Environmental, Health and Safety Laws. There does not exist
any violation by the Borrower or any Subsidiary of any applicable federal, state
or local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which
E-24
will or threatens to impose a material liability on the Borrower or a Subsidiary
or which would require a material expenditure by the Borrower or such Subsidiary
to cure. Neither the Borrower nor any Subsidiary has received any notice to the
effect that any part of its operations or properties is not in material
compliance with any such law, rule, regulation or order or notice that it or its
property is the subject of any governmental investigation evaluating whether any
remedial action is needed to respond to any release of any toxic or hazardous
waste or substance into the environment, the consequences of which
non-compliance or remedial action could constitute an Adverse Event.
Section 7.9 ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for which
the reporting requirements have been waived by regulations of the PBGC, has
occurred and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no event
or condition which would permit the institution of proceedings to terminate any
Plan under Section 4042 of ERISA. The current value of the Plans' benefits
guaranteed under Title IV or ERISA does not exceed the current value of the
Plans' assets allocable to such benefits.
Section 7.10 Regulation U. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry margin
stock or for any other purpose which would violate any of the margin
requirements of the Board of Governors of the Federal Reserve System.
Section 7.11 Ownership of Property; Liens. Each of the Borrower and the
Subsidiaries has good and marketable title to its real properties and good and
sufficient title to its other properties, including all properties and assets
referred to as owned by the Borrower and its Subsidiaries in the audited
financial statement of the Borrower referred to in Section 7.5 (other than
property disposed of since the date of such financial statement in the ordinary
course of business). None of the properties, revenues or assets of the Borrower
or any of its Subsidiaries is subject to a Lien, except for (a) Liens disclosed
in the financial statements referred to in Section 7.5, (b) Liens listed on
Schedule 7.11, or (c) Liens allowed under Section 9.12.
Section 7.12 Taxes. Each of the Borrower and the Subsidiaries has filed
all federal, state and local tax returns required to be filed and has paid or
made provision for the payment of all taxes due and payable pursuant to such
returns and pursuant to any assessments made against it or any of its property
and all other taxes, fees and other charges imposed on it or any of its property
by any governmental authority (other than taxes, fees or charges the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of the Borrower). No tax Liens have been filed and no
material claims are being asserted with respect to any such taxes, fees or
charges. The charges, accruals and reserves on the books of the Borrower in
respect of taxes and other governmental charges are adequate.
Section 7.13 Trademarks, Patents. Each of the Borrower and the
Subsidiaries possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business, without known conflict with the rights of others.
Section 7.14 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Section 7.15 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.
Section 7.16 Subsidiaries. Schedule 7.16 sets forth as of the date of
this Agreement a list of all Subsidiaries and the number and percentage of the
shares of each class of capital stock owned beneficially or of record by the
Borrower or any Subsidiary therein, and the jurisdiction of incorporation of
each Subsidiary.
E-25
Section 7.17 Partnerships and Joint Ventures. Schedule 7.17 sets forth
as of the date of this Agreement a list of all partnerships or joint ventures in
which the Borrower or any Subsidiary is a partner (limited or general) or joint
venturer.
ARTICLE VIII AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until the Commitments
are terminated or expire and the Loans and all other liabilities of the Borrower
to the Banks hereunder and under the Note have been paid in full, the Borrower
will do, and will cause each Subsidiary (except in the instance of Section 8.1)
to do, all of the following:
Section 8.1 Financial Statements and Reports. Furnish to the Banks:
(a) As soon as available and in any event within 90 days after the end
of each Fiscal Year of the Borrower, the annual audit report of the
Borrower and its Subsidiaries prepared on a consolidating and
consolidated basis and in conformity with GAAP, consisting of at least
statements of income, cash flow, changes in financial position and
stockholders' equity, and a consolidated balance sheet as at the end of
such Fiscal Year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified without
qualification by independent certified public accountants of recognized
standing selected by the Borrower and acceptable to the Bank, together
with any management letters, management reports or other supplementary
comments or reports to the Borrower or its board of directors furnished
by such accountants and the Borrower's report filed with the Securities
and Exchange Commission on Form 10K.
(b) As soon as available and in any event within 45 days after the end
of each Fiscal Year, an annual budget for the next Fiscal Year,
including anticipated expenditures and cash flows and other information
reasonably requested by the Agent.
(c) As soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year, a copy
of the unaudited financial statement of the Borrower and its
subsidiaries prepared in the same manner as the audit report referred
to in Section 8.1(a), signed by the Borrower's chief financial officer,
consisting of at least consolidated statements of income, cash flow,
changes in financial position and stockholders' equity for the Borrower
and the Subsidiaries for such Fiscal Quarter and for the period from
the beginning of such Fiscal Year to the end of such Fiscal Quarter,
and a consolidated balance sheet of the Borrower as at the end of such
Fiscal Quarter and the Borrower's report filed with the Securities and
Exchange Commission on Form 10Q.
(d) Together with the financial statements furnished by the Borrower
under Sections 8.1(a) and 8.1(c), a Compliance Certificate signed by
the chief financial officer of the Borrower stating that as at the date
of each such financial statement there did not exist any Default or
Event of Default or, if such Default or Event of Default existed,
specifying the nature and period of existence thereof and what action
the Borrower proposes to take with respect thereto.
(e) Within 30 days after the end of each month, a Borrowing Base
Certificate as of the end of such month.
(f) Immediately upon becoming aware of any Default or Event of Default,
a notice describing the nature thereof and what action the Borrower
proposes to take with respect thereto.
(g) Immediately upon becoming aware of the occurrence, with respect to
any Plan, of any Reportable Event (other than a Reportable Event for
which the reporting requirements have been waived by PBGC regulations)
or any "prohibited transaction" (as defined in Section 4975 of the
Code), a notice specifying the nature thereof and what action the
Borrower proposes to take with respect thereto, and, when received,
copies of any notice from PBGC of intention to terminate or have a
trustee appointed for any Plan.
(h) Promptly upon the mailing or filing thereof, copies of all
financial statements, reports and proxy statements
E-26
mailed to the Borrower's shareholders, and copies of all registration
statements, periodic reports and other documents filed with the
Securities and Exchange Commission (or any successor thereto) or any
national securities exchange.
(i) Immediately upon becoming aware of the occurrence thereof, notice
of the institution of any litigation, arbitration or governmental
proceeding, or the rendering of a judgment or decision in such
litigation or proceeding, which is material to the Borrower and its
Subsidiaries as a consolidated enterprise, and the steps being taken by
the Person(s) affected by such proceeding.
(j) Immediately upon becoming aware of the occurrence thereof, notice
of any violation as to any environmental matter by the Borrower or any
Subsidiary and of the commencement of any judicial or administrative
proceeding relating to health, safety or environmental matters (i) in
which an adverse determination or result could result in the revocation
of or have a material adverse effect on any operating permits, air
emission permits, water discharge permits, hazardous waste permits or
other permits held by the Borrower or any Subsidiary which are material
to the operations of the Borrower or such Subsidiary, or (ii) which
will or threatens to impose a material liability on the Borrower or
such Subsidiary to any Person or which will require a material
expenditure by the Borrower or such Subsidiary to cure any alleged
problem or violation.
(k) From time to time, such other information regarding the business,
operation and financial condition of the Borrower and the Subsidiaries
as any Bank may reasonably request.
Section 8.2 Corporate Existence. Subject to Section 9.1 in the instance
of a Subsidiary, maintain its corporate existence in good standing under the
laws of its jurisdiction of incorporation and its qualification to transact
business in each jurisdiction in which the character of the properties owned,
leased or operated by it or the business conducted by it makes such
qualification necessary and where failure to so qualify would constitute an
Adverse Event.
Section 8.3 Insurance. Maintain with financially sound and reputable
insurance companies such insurance as may be required by law and such other
insurance in such amounts and against such hazards as is customary in the case
of reputable corporations engaged in the same or similar business and similarly
situated.
Section 8.4 Payment of Taxes and Claims. File all tax returns and
reports which are required by law to be filed by it and pay before they become
delinquent all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including,
without limitation, those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; provided that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings, and as
long as the Borrower's or such Subsidiary's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with and adequate reserves with
respect thereto have been set aside on the Borrower's or such Subsidiary's books
in accordance with GAAP.
Section 8.5 Inspection. Permit any Person designated by the Agent (or,
following occurrence of an Event of Default, any Bank) to visit and inspect any
of its properties, corporate books and financial records, to examine and to make
copies of its books of accounts and other financial records, and to discuss the
affairs, finances and accounts of the Borrower and the Subsidiaries with, and to
be advised as to the same by, its officers at such reasonable times and
intervals as such Bank may designate. So long as no Event of Default exists, the
expenses of the Agent for one such examination per Fiscal Year shall be
reimbursed by the Borrower and the expense of any additional examinations shall
be at the expense of the Agent, and any such visits, inspections, and
examinations made while any Event of Default is continuing shall be at the
expense of the Borrower.
Section 8.6 Maintenance of Properties. Maintain its properties used or
useful in the conduct of its business in good condition, repair and working
order, and supplied with all necessary equipment, and make all necessary
repairs, renewals, replacements, betterments and improvements thereto, all as
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 8.7 Books and Records. Keep adequate and proper records and
books of account in which full and
E-27
correct entries will be made of its dealings, business and affairs.
Section 8.8 Compliance. Comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject.
Section 8.9 ERISA. Maintain each Plan in compliance with all material
applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code.
Section 8.10 Environmental Matters. Observe and comply with all laws,
rules, regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters to
the extent non-compliance could result in a material liability or otherwise
constitute or result in an Adverse Event.
Section 8.11 Landlords' Waivers. The Borrower will used best commercial
efforts to obtain, within 60 days after closing of this Agreement, landlords'
waivers satisfactory to the Agent in form and substance from the owners and
lessors of the Borrower's facilities located in San Francisco, California and
Minnetonka, Minnesota. The Agent shall provide to the Borrower a form of
landlord's waiver that would be satisfactory for such purpose.
Section 8.12 Additional Subsidiaries. Upon any Person becoming a direct
or indirect Subsidiary of Borrower, or upon Additional Capitalization of
MEDgenesis Inc. or Los Feliz Drugs Inc., Borrower shall promptly notify the
Agent, and (a) cause such Subsidiary to execute and deliver a Subsidiary
Guaranty in form and substance satisfactory to the Agent, and (b) cause such
Subsidiary to execute and deliver a Subsidiary Security Agreement in form and
substance satisfactory to the Agent. Notwithstanding the foregoing, if such
Subsidiary is not organized under the laws of the United States, any State or
the District of Columbia, and the Borrower shall certify to the Agent that such
actions would cause a dividend to be deemed to have been paid to the Borrower
under the Code, in lieu of such Subsidiary delivering a Subsidiary Guaranty and
Subsidiary Security Agreement, the Borrower may pledge 65% of the stock of such
Subsidiary to the Agent for the benefit of the Banks. In connection therewith,
Borrower shall deliver to the Agent financing statements, corporate approvals,
certificates of good standing and other documents requested by the Agent with
respect to such Subsidiary.
ARTICLE IX NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Commitments
are terminated or expire and the Loans and all other liabilities of the Borrower
to the Banks hereunder and under the Note have been paid in full, the Borrower
will not, and will not permit any Subsidiary to, do any of the following:
Section 9.1 Merger. Merge or consolidate or enter into any analogous
reorganization or transaction with any Person; provided, however, any
wholly-owned Subsidiary may be merged with or liquidated into the Borrower (if
the Borrower is the surviving corporation) or any other wholly-owned Subsidiary.
Section 9.2 Sale of Assets. Sell, transfer, lease or otherwise convey
all or any substantial part of its assets except for sales and leases of
inventory in the ordinary course of business and except for sales or other
transfers by a wholly-owned Subsidiary to the Borrower or another wholly-owned
Subsidiary.
Section 9.3 Purchase of Assets. Purchase or lease or otherwise acquire
all or substantially all of the assets of any Person, except for (a) purchases
or other transfers by the Borrower or a wholly-owned Subsidiary from a
wholly-owned Subsidiary, and (b) Permitted Acquisitions made in accordance with
and subject to the limitations set forth in the definition thereof.
Section 9.4 Plans. Permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, permit
any
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Plan to terminate under any circumstances which would cause the lien provided
for in Section 4068 of ERISA to attach to any property, revenue or asset of the
Borrower or any Subsidiary or permit the underfunded amount of Plan benefits
guaranteed under Title IV of ERISA to exceed $100,000.
Section 9.5 Change in Nature of Business. Make any material change in
the nature of the business of the Borrower or such Subsidiary, as carried on at
the date hereof.
Section 9.6 Subsidiaries, Partnerships, Joint Ventures and Ownership of
Stock. Do any of the following: (a) form or acquire any corporation which would
thereby become a Subsidiary, except for any Permitted Acquisition; (b) form or
enter into any partnership as a limited or general partner or into any joint
venture; (c) permit any Subsidiary to purchase or otherwise acquire any shares
of the stock of the Borrower; or (d) take any action, or permit any Subsidiary
to take any action, which would result in a decrease in the Borrower's or any
Subsidiary's ownership interest in any Subsidiary (including, without
limitation, decrease in the percentage of the shares of any class of stock
owned).
Section 9.7 Other Agreements. Enter into any agreement, bond, note or
other instrument with or for the benefit of any Person other than the Banks
which would: (a) prohibit the Borrower or such Subsidiary from granting, or
otherwise limit the ability of the Borrower or such Subsidiary to grant, to the
Banks any Lien on any assets or properties of the Borrower or such Subsidiary;
or (b) be violated or breached by the Borrower's performance of its obligations
under the Loan Documents.
Section 9.8 Restricted Payments. Either: (a) purchase or redeem or
otherwise acquire for value any shares of the Borrower's or any Subsidiary's
stock, declare or pay any dividends thereon (other than stock dividends and
dividends payable solely to the Borrower), make any distribution on, or payment
on account of the purchase, redemption, defeasance or other acquisition or
retirement for value of, any shares of the Borrower's or any Subsidiary's stock
or set aside any funds for any such purpose (other than payment to, or on
account of or for the benefit of, the Borrower only); or (b) directly or
indirectly make any payment on, or redeem, repurchase, defease, or make any
sinking fund payment on account of, or any other provision for, or otherwise
pay, acquire or retire for value, any Indebtedness of the Borrower or any
Subsidiary that is subordinated in right of payment to the Loans (whether
pursuant to its terms or by operation of law), except for regularly-scheduled
payments of interest and principal (which shall not include payments
contingently required upon occurrence of a change of control or other event)
that are not otherwise prohibited hereunder or under the document or agreement
stating the terms of such subordination.
Section 9.9 Capital Expenditures. Make Capital Expenditures (exclusive
of any Permitted Acquisition or any portion thereof that may be deemed a Capital
Expenditure) in an amount exceeding $7,000,000 on a consolidated basis during
any period of four consecutive Fiscal Quarters.
Section 9.10 Investments. Acquire for value, make, have or hold any
Investments, except:
(a) Investments outstanding on the date hereof and listed on Schedule
9.10;
(b) Travel advances to officers and employees in the ordinary course of
business;
(c) Investments in readily marketable direct obligations of the United
States of America having maturities of one year or less from the date
of acquisition;
(d) Certificates of deposit or bankers' acceptances, each maturing
within one year from the date of acquisition, issued by any commercial
bank organized under the laws of the United States or any State thereof
which has (i) combined capital, surplus and undivided profits of at
least $100,000,000, and (ii) a credit rating with respect to its
unsecured indebtedness from a nationally recognized rating service that
is satisfactory to the Bank;
(e) Commercial paper maturing within 270 days from the date of issuance
and given the highest rating by a nationally recognized rating service;
(f) Repurchase agreements relating to securities issued or guaranteed
as to principal and interest by the United
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States of America;
(g) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale of goods and services in the ordinary
course of business;
(h) share of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business;
(i) Permitted Acquisitions, made in accordance with and subject to the
limitations set forth in the definition thereof; and
(j) Investments outstanding on the date hereof in Subsidiaries by the
Borrower and other Subsidiaries.
Section 9.11 Indebtedness. Incur, create, issue, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness under this Agreement;
(b) Current liabilities, other than for borrowed money, incurred in the
ordinary course of business;
(c) Indebtedness existing on the date of this Agreement and disclosed
on Schedule 9.11 hereto;
(d) Indebtedness secured by Liens permitted under Section 9.12 hereof;
and
(e) Indebtedness consisting of endorsements for collection, deposit or
negotiation and warranties of products or services, in each case
incurred in the ordinary course of business.
Section 9.12 Liens. Create, incur, assume or suffer to exist any Lien
with respect to any property, revenues or assets now owned or hereafter
arising or acquired, except:
(a) Liens in connection with the acquisition of property after the date
hereof by way of purchase money mortgage, conditional sale or other
title retention agreement, Capitalized Lease or other deferred payment
contract, and attaching only to the property being acquired if the
Indebtedness secured thereby does not exceed the fair market value of
such property at the time of acquisition thereof nor $2,000,000 in the
aggregate for the Borrower and all Subsidiaries at any one time
outstanding;
(b) Liens existing on the date of this Agreement and disclosed on
Schedule 7.11 hereto;
(c) Deposits or pledges to secure payment of workers' compensation,
unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of the Borrower or a
Subsidiary;
(d) Liens for taxes, fees, assessments and governmental charges not
delinquent or to the extent that payments therefor shall not at the
time be required to be made in accordance with the provisions of
Section 8.4;
(e) Liens of carriers, warehousemen, mechanics and materialmen, and
other like Liens arising in the ordinary course of business, for sums
not due or to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 8.4;
and
(f) Deposits to secure the performance of bids, trade contracts,
leases, statutory obligations and other obligations of a like nature
incurred in the ordinary course of business.
Section 9.13 Contingent Liabilities. Either: (i) endorse, guarantee,
contingently agree to purchase or to provide funds for the payment of, or
otherwise become contingently liable upon, any obligation of any other Person,
except by the endorsement of negotiable instruments for deposit or collection
(or similar transactions) in the ordinary course of business, or (ii) agree to
maintain the net worth or working capital of, or provide funds to satisfy any
other financial test applicable
E-30
to, any other Person.
Section 9.14 Unconditional Purchase Obligations. Enter into or be a
party to any contract for the purchase or lease of materials, supplies or other
property or services if such contract requires that payment be made by it
regardless of whether or not delivery is ever made of such materials, supplies
or other property or services.
Section 9.15 Transactions with Related Parties. Enter into or be a
party to any transaction or arrangement, including, without limitation, the
purchase, sale lease or exchange of property or the rendering of any service,
with any Related Party, except in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's or the applicable Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than would obtain in a comparable arm's-length transaction with
a Person not a Related Party.
Section 9.16 Use of Proceeds. Permit any proceeds of the Loans to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Federal Reserve Board, as amended from time to
time, and furnish to any Bank, upon its request, a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in Regulation U.
Section 9.17 Tangible Net Worth. Permit its Consolidated Tangible Net
Worth at any time to be less than the sum of (a) $45,000,000, plus (b) 50% of
the aggregate amount of consolidated net income before non-cash charges related
to the impairment of goodwill of the Borrower for Fiscal Quarter 3 Fiscal Year
2003 and each Fiscal Quarter thereafter, on a cumulative basis without giving
effect to any net loss for any Fiscal Quarter.
Section 9.18 Cash Flow Leverage Ratio. Permit the Cash Flow Leverage
Ratio to exceed 2.50 to 1.00 for any Measurement Period.
Section 9.19 Interest and Lease Coverage Ratio. Permit the Interest and
Lease Coverage Ratio to be less than 2.00 to 1.00 for any Measurement Period.
Section 9.20 Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio to be less than the following for the following Measurement
Periods:
Measurement Periods: Minimum Fixed Charge
-------------------- --------------------
Coverage Ratio:
---------------
Measurement Periods
ending through and including
last day of Fiscal Quarter
3 of Fiscal Year 2004: 1.20 to 1.00
Measurement Periods
ending last day of Fiscal
Year 2004 through and including
last day of Fiscal Quarter
3 of Fiscal Year 2005: 1.25 to 1.00
Each Measurement Period ending
thereafter: 1.30 to 1.00
ARTICLE X EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an Event of Default:
E-31
(a) The Borrower shall fail to make when due, whether by acceleration
or otherwise, any payment of principal of or interest on the Note or
any fee or other amount required to be made to the Banks pursuant to
the Loan Documents;
(b) Any representation or warranty made or deemed to have been made by
or on behalf of the Borrower or any Subsidiary by any of the Loan
Documents or by or on behalf of the Borrower or any Subsidiary in any
certificate, statement, report or other writing furnished by or on
behalf of the Borrower to the Banks pursuant to the Loan Documents
shall prove to have been false or misleading in any material respect on
the date as of which the facts set forth are stated or certified or
deemed to have been stated or certified;
(c) The Borrower shall fail to comply with Section 8.2 hereof or any
Section of Article IX hereof;
(d) The Borrower or the Subsidiary Guarantor shall fail to comply with
any agreement, covenant, condition, provision or term contained in the
Loan Documents (and such failure shall not constitute an Event of
Default under any of the other provisions of this Section 10.1) and
such failure to comply shall continue for 30 calendar days after notice
thereof to the Borrower by the Bank;
(e) The Borrower or any Subsidiary shall become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall
consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver of the Borrower or such Subsidiary or for a
substantial part of the property thereof or, in the absence of such
application, consent or acquiescence, a custodian, trustee or receiver
shall be appointed for the Borrower or a Subsidiary or for a
substantial part of the property thereof and shall not be discharged
within 30 days;
(f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted
by or against the Borrower or a Subsidiary, and, if instituted against
the Borrower or a Subsidiary, shall have been consented to or
acquiesced in by the Borrower or such Subsidiary, or shall remain
undismissed for 30 days, or an order for relief shall have been entered
against the Borrower or such Subsidiary, or the Borrower or any
Subsidiary shall take any corporate action to approve institution of,
or acquiescence in, such a proceeding;
(g) Any dissolution or liquidation proceeding shall be instituted by or
against the Borrower or a Subsidiary and, if instituted against the
Borrower or such Subsidiary, shall be consented to or acquiesced in by
the Borrower or such Subsidiary or shall remain for 30 days
undismissed, or the Borrower or any Subsidiary shall take any corporate
action to approve institution of, or acquiescence in, such a
proceeding;
(h) A judgment or judgments for the payment of money in excess of the
sum of $1,000,000 in the aggregate shall be rendered against the
Borrower or a Subsidiary and the Borrower or such Subsidiary shall not
discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereof, prior to any execution
on such judgments by such judgment creditor, within 30 days from the
date of entry thereof, and within said period of 30 days, or such
longer period during which execution of such judgment shall be stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal;
(i) The institution by the Borrower or any ERISA Affiliate of steps to
terminate any Plan if in order to effectuate such termination, the
Borrower or any ERISA Affiliate would be required to make a
contribution to such Plan, or would incur a liability or obligation to
such Plan, in excess of $1,000,000, or the institution by the PBGC of
steps to terminate any Plan;
(j) The maturity of any Funded Debt of the Borrower (other than Funded
Debt under this Agreement) or a Subsidiary shall be accelerated, or the
Borrower or a Subsidiary shall fail to pay any such Funded Debt when
due or, in the case of such Funded Debt payable on demand, when
demanded, or any event shall occur or condition shall exist and shall
continue for more than the period of grace, if any, applicable thereto
and shall have the effect of causing, or permitting (any required
notice having been given and grace period having expired) the holder of
any such Funded Debt or any trustee or other Person acting on behalf of
such holder to cause, such Funded Debt to become due prior to its
stated maturity or to realize upon any collateral given as security
therefor;
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(k) Any Loan Document shall not be, or shall cease to be, enforceable
in accordance with its terms or the Borrower or the Subsidiary
Guarantor shall disavow, contest, or attempt to disavow or contest, its
obligations thereunder; or
(l) Any Person, or group of Persons acting in concert, that owned less
than 5% of the shares of any voting class of stock of the Borrower
shall have acquired more than 25% of the shares of such voting stock.
Section 10.2 Remedies. If (a) any Event of Default described in
Sections 10.1(e), (f) or (g) shall occur with respect to the Borrower, the
Commitments shall automatically terminate and the outstanding unpaid principal
balance of the Notes, the accrued interest thereon and all other obligations of
the Borrower to the Banks and the Agent under the Loan Documents shall
automatically become immediately due and payable; or (b) any other Event of
Default shall occur and be continuing, then the Agent may take any or all of the
following actions (and shall take any or all of the following actions on
direction of the Required Banks): (i) declare the Commitments terminated,
whereupon the Commitments shall terminate, (ii) declare that the outstanding
unpaid principal balance of the Notes, the accrued and unpaid interest thereon
and all other obligations of the Borrower to the Banks and the Agent under the
Loan Documents to be forthwith due and payable, whereupon the Notes, all accrued
and unpaid interest thereon and all such obligations shall immediately become
due and payable, in each case without demand or notice of any kind, all of which
are hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding, (iii) exercise all rights and remedies under any other
instrument, document or agreement between the Borrower and the Agent or the
Banks, and (iv) enforce all rights and remedies under any applicable law.
Section 10.3 Offset. In addition to the remedies set forth in Section
10.2, upon the occurrence of any Event of Default or at any time thereafter
while such Event of Default continues, each Bank or any other holder of the Note
may offset any and all balances, credits, deposits (general or special, time or
demand, provisional or final), accounts or monies of the Borrower then or
thereafter with such Bank or such other holder, or any obligations of such Bank
or such other holder of the Note, against the Indebtedness then owed by the
Borrower to such Bank.
Section 10.4 Letters of Credit. In addition to the foregoing remedies,
if any Event of Default described in Sections 10.1(e), (f) or (g) shall occur,
or if any other Event of Default shall have occurred and the Agent shall have
declared that the principal balance of the Notes is due and payable, the
Borrower shall, upon demand by the Agent, pay to the Agent, as agent and bailee
for the Banks, an amount equal to all Letter of Credit Obligations. Such payment
shall be in immediately available funds or in similar cash collateral acceptable
to the Agent and shall be pledged to the Agent as agent and bailee for the
benefit of the Banks. Such amount shall be held by the Agent in a cash
collateral account until the outstanding Letters of Credit are terminated
without payment or are paid and Letter of Credit Obligations with respect
thereto are payable. In the event the Borrower defaults in the payment of any
Letter of Credit Obligations, the proceeds of the cash collateral account shall
be applied to the payment thereof. The Borrower acknowledges and agrees that the
Banks would not have an adequate remedy at law for failure by the Borrower to
pay immediately to the Agent the amount provided under this Section, and that
the Agent and the Banks shall have the right to require the Borrower to perform
specifically such undertaking whether or not any of the Letter of Credit
Obligations are due and payable. Upon the failure of the Borrower to make any
payment required under this Paragraph, the Agent, on behalf of the Banks, may
proceed to use all remedies available at law or equity to enforce the obligation
of the Borrower to pay or reimburse the Banks, including without limitation any
right the Agent or Banks may have to enforce any security interest in any
collateral for such obligations. The balance of any payment due under this
Section shall bear interest payable on demand until paid in full at a per annum
rate equal to interest rate then applicable to the Loans.
ARTICLE XI THE AGENT
Section 11.1 Appointment and Grant of Authority. Each Bank hereby
appoints the Agent, and the Agent hereby agrees to act, as agent under this
Agreement and each other Loan Document. The Agent shall have and may exercise
such powers under this Agreement and the other Loan Documents as are
specifically delegated to the
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Agent by the terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. Each Bank hereby authorizes, consents to, and
directs the Borrower to deal with the Agent as the true and lawful agent of such
Bank to the extent set forth herein.
Section 11.2 Non-Reliance on Agent. Each Bank agrees that it has,
independently and without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Borrower and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement. The Agent shall not be required to keep informed as to the
performance or observance by the Borrower of this Agreement and the Loan
Documents or to inspect the properties or books of the Borrower. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its related companies) which may come into the Agent's possession.
Section 11.3 Responsibility of the Agent and Other Matters.
(a) The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and those duties and
liabilities shall be subject to the limitations and qualifications set
forth in this Section. The duties of the Agent shall be mechanical and
administrative in nature.
(b) Neither the Agent nor any of its directors, officers or
employees shall be liable for any action taken or omitted (whether or
not such action taken or omitted is within or without the Agent's
responsibilities and duties expressly set forth in this Agreement)
under or in connection with this Agreement, or any other instrument or
document in connection herewith, except for gross negligence or willful
misconduct. Without limiting the foregoing, neither the Agent nor any
of its directors, officers or employees shall be responsible for, or
have any duty to examine: (i) the genuineness, execution, validity,
effectiveness, enforceability, value or sufficiency of the Loan
Agreements; (ii) the collectibility of any amounts owed by the
Borrower; (iii) any recitals or statements or representations or
warranties in connection with this Agreement or the Notes; (iv) any
failure of any party to this Agreement to receive any communication
sent; or (v) the assets, liabilities, financial condition, results of
operations, business or creditworthiness of the Borrower.
(c) The Agent shall be entitled to act, and shall be fully
protected in acting upon, any communication in whatever form believed
by the Agent in good faith to be genuine and correct and to have been
signed or sent or made by a proper person or persons or entity. The
Agent may consult counsel and shall be entitled to act, and shall be
fully protected in any action taken in good faith, in accordance with
advice given by counsel. The Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct
of any such agents or attorneys-in-fact selected by the Agent with
reasonable care. The Agent shall not be bound to ascertain or inquire
as to the performance or observance of any of the terms, provisions or
conditions of this Agreement or the Notes on the Borrower's part.
Section 11.4 Action on Instructions. The Agent shall be entitled to act
or refrain from acting, and in all cases shall be fully protected in acting or
refraining from acting under this Agreement or the Notes or any other instrument
or document in connection herewith or therewith in accordance with instructions
in writing from (i) the Required Banks except for instructions which under the
express provisions hereof must be received by the Agent from all the Banks, and
(ii) in the case of such instructions, from all the Banks.
Section 11.5 Indemnification. To the extent the Borrower does not
reimburse and save the Agent harmless according to the terms hereof for and from
all costs, expenses and disbursements in connection herewith or with the other
Loan Documents, such costs, expenses and disbursements to the extent reasonable
shall be borne by the Banks ratably in accordance with their Percentages and the
Banks hereby agree on such basis (a) to reimburse the Agent for all such
reasonable costs, expenses and disbursements on request and (b) to indemnify and
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save harmless the Agent against and from any and all losses, obligations,
penalties, actions, judgments and suits and other reasonable costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, other than as a consequence of actual gross
negligence or willful misconduct on the part of the Agent, arising out of or in
connection with this Agreement or the Notes or any instrument or document in
connection herewith or therewith, or any request of the Banks, including without
limitation the reasonable costs, expenses and disbursements in connection with
defending itself against any claim or liability, or answering any subpoena,
related to the exercise or performance of any of its powers or duties under this
Agreement or the other Loan Documents or the taking of any action under or in
connection with this Agreement or the Notes.
Section 11.6 U.S. Bank National Association and Affiliates. With
respect to U.S. Bank National Association's Commitment and any Loans by U.S.
Bank National Association under this Agreement and any Note and any interest of
U.S. Bank National Association in any Note, U.S. Bank National Association shall
have the same rights, powers and duties under this Agreement and such Note as
any other Bank and may exercise the same as though it were not the Agent. U.S.
Bank National Association and its affiliates may accept deposits from, lend
money to, and generally engage, and continue to engage, in any kind of business
with the Borrower as if U.S. Bank National Association were not the Agent.
Section 11.7 Notice to Holder of Notes. The Agent may deem and treat
the payees of the Notes as the owners thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof has been filed with the
Agent. Any request, authority or consent of any holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note.
Section 11.8 Successor Agent. The Agent may resign at any time by
giving at least 30 days written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been appointed by the Required
Banks and shall have accepted such appointment within 30 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, but shall not
be required to, on behalf of the Banks, appoint a successor Agent.
ARTICLE XII MISCELLANEOUS
Section 12.1 No Waiver and Amendment. No failure on the part of the
Banks or the holder of the Notes to exercise and no delay in exercising any
power or right hereunder or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in any other instrument, document or
agreement delivered or to be delivered to the Banks hereunder or in connection
herewith are cumulative and not exclusive of any remedies provided by law. No
notice to or demand on the Borrower not required hereunder or under the Notes
shall in any event entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the right of the
Banks or the holder of the Notes to any other or further action in any
circumstances without notice or demand.
Section 12.2 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Borrower and the Agent upon direction of the required Banks and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless agreed to by the Agent and all of the Banks:
(a) increase the amounts of or extend the terms of the Commitments or
subject the Banks to any additional obligations;
(b) reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder;
(c) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other
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amounts payable hereunder; or
(d) change the definition of Required Banks or amend this Section 12.2
provided, further that amendments, waivers or consents affecting the rights of
the Agent shall also require the consent of the Agent.
Section 12.3 Assignments and Participations.
(a) Assignments. Each Bank shall have the right, subject to the further
provisions of this Sections 12.3, to sell or assign all or any part of
its Commitments, Loans, Notes, and other rights and obligations under
this Agreement and related documents (such transfer, and "Assignment")
to any commercial lender, other financial institution or other entity
(an "Assignee"). Upon such Assignment becoming effective as provided in
Section 12.3(b), the assigning Bank shall be relieved from the portion
of its Commitment, obligations to indemnify the Agent and other
obligations hereunder to the extent assumed and undertaken by the
Assignee, and to such extent the Assignee shall have the rights and
obligations of a "Bank" hereunder. Notwithstanding the foregoing,
unless otherwise consented to by the Borrower and the Agent, each
Assignment shall be in the initial principal amount of not less than
$5,000,000 in the aggregate for all Loans and Commitments assigned, or
an integral multiple of $1,000,000 if above such amount Each Assignment
shall be documented by an agreement between the assigning Bank and the
Assignee (an "Assignment and Assumption Agreement") substantially in
the form of Exhibit F attached hereto.
(b) Effectiveness of Assignments. An Assignment shall become effective
hereunder when all of the following shall have occurred: (i) the Agent
and the Borrower (or, following occurrence and during continuance of an
Event of Default, the Agent only and not the Borrower) shall have been
given notice of the Assignment and shall have given prior written
consent to such Assignment, unless the Assignee is already a Bank under
this Agreement, (ii) either the assigning Bank or the Assignee shall
have paid a processing fee of $3,500 to the Agent for its own account,
(iii) the Assignee shall have submitted the Assignment and Assumption
Agreement to the Agent with a copy for the Borrower, and shall have
provided to the Agent information the Agent shall have reasonably
requested to make payments to the Assignee, and (iv) the assigning Bank
and the Agent shall have agreed upon a date upon which the Assignment
shall become effective. Upon the Assignment becoming effective, (x) if
requested by the assigning Bank, the Agent and the Borrower shall make
appropriate arrangements so that new Notes are issued to the assigning
Bank and the Assignee; and (y) the Agent shall forward all payments of
interest, principal, fees and other amounts that would have been made
to the assigning Bank, in proportion to the percentage of the assigning
Bank's rights transferred, to the Assignee.
(c) Participations. Each Bank shall have the right, subject to the
further provisions of this Section 12.3, to grant or sell a
participation in all or any part of its Loans, Notes and Commitments (a
"Participation") to any commercial lender, other financial institution
or other entity (a "Participant") without the consent of the Borrower,
the Agent of any other party hereto. The Borrower agrees that if
amounts outstanding under this agreement and the Notes are due and
unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of setoff in respect of its
Participation in amounts owing under this Agreement and any Note to the
same extent as if the amount of its Participation were owing directly
to it as a Bank under this agreement or any note; provided, that such
right of setoff shall be subject to the obligation of such Participant
to share with the Banks, and the Banks agree to share with such
Participant, as provided in Section 4.5 hereof. The Borrower also
agrees that each Participant shall be entitled to the benefits of
Article V with respect to its Participation, provided, that no
Participant shall be entitled to receive any greater amount pursuant to
such Sections than the transferor Bank would have been entitled to
receive in respect of the amount of the Participation transferred by
such transferor Bank to such Participant had no such transfer occurred.
(d) Limitation of Rights of any Assignee or Participant.
Notwithstanding anything in the foregoing to the
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contrary, except in the instance of an Assignment that has become
effective as provided in Section 12.3(b), (i) no Assignee or
Participant shall have any direct rights hereunder, (ii) the Borrower,
the Agent and the Banks other than the assigning or selling Bank shall
deal solely with the assigning or selling Bank and shall not be
obligated to extend any rights or make any payment to, or seek any
consent of, the Assignee or Participant, (iii) no Assignment or
Participation shall relieve the assigning or selling Bank from its
Commitment to make Loans hereunder or any of its other obligations
hereunder and such Bank shall remain solely responsible for the
performance hereof, the (iv) no Assignee or Participant, other than an
affiliate of the assigning or selling Bank, shall be entitled to
require such Bank to take or omit to take any action hereunder, except
that such Bank may agree with such Assignee or Participant that such
Bank will not, without such Assignee's or Participant's consent, take
any action which would, in the case of any principal, interest or fee
in which the Assignee or Participant has an ownership or beneficial
interest: (w) extend the final maturity of any Loans or extend the
Termination Date, (x) reduce the interest rate on the Loans, (y)
forgive any principal of, or interest on, the Loans or any fees, or (z)
release all or substantially all of the Collateral for the Loans.
(e) Tax Matters. No Bank shall be permitted to enter into any
Assignment or Participation with any Assignee or Participant who is not
a United States Person unless such Assignee or Participant represents
and warrants to such Bank that, as at the date of such Assignment or
Participation, it is entitled to receive interest payments without
withholding or deduction of any taxes and such Assignee or Participant
executes and delivers to such Bank on or before the date of execution
and delivery of documentation of such Participation or Assignment, a
United States Internal Revenue Service Form W8BEN or W8ECI, or any
successor to either of such forms, as appropriate, properly completed
and claiming complete exemption from withholding and deduction of all
Federal Income Taxes. A "United States Person" means any citizen,
national or resident of the United States, any corporation or other
entity created or organized in or under the laws of the United States
or any political subdivision hereof or any estate or trust, in each
case that is not subject to withholding of United States Federal income
taxes or other taxes on payment of interest, principal or fees
hereunder.
(f) Information. Each Bank may furnish any information concerning the
Borrower in the possession of such Bank from time to time to Assignees
and Participants and potential Assignees and Participants.
(g) Federal Reserve Bank. Nothing herein stated shall limit the right
of any Bank to assign any interest herein and in any Note to a Federal
Reserve Bank.
Section 12.4 Costs, Expenses and Taxes; Indemnification.
(a) The Borrower agrees, whether or not any Loan is made hereunder, to
pay on demand: (i) all costs and expenses of the Agent (including the
reasonable fees and expenses of counsel and paralegals for such persons
who may be employees of such persons) incurred in connection with the
preparation, execution and delivery of the Loan Documents and the
preparation, negotiation and execution of any and all amendments to
each thereof, and (ii) all costs and expenses of the Agent and each of
the Banks incurred after the occurrence of an Event of Default in
connection with the enforcement of the Loan Documents. The Borrower
agrees to pay, and save the Banks harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution
or delivery of the Loan Documents. The Borrower agrees to indemnify and
hold the Banks harmless from any loss or expense which may arise or be
created by the acceptance in good faith by the Agent of telephonic or
other instructions for making Loans or disbursing the proceeds thereof.
(b) The Borrower agrees to defend, protect, indemnify, and hold
harmless the Agent and each and all of the Banks, each of their
respective Affiliates and each of the respective officers, directors,
employees and agents of each of the foregoing (each an "Indemnified
Person" and, collectively, the "Indemnified Persons") from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation, the fees
and disbursements of counsel to such Indemnified Persons) in connection
with any investigative, administrative or judicial proceeding, whether
direct, indirect or consequential and
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whether based on any federal or state laws or other statutory
regulations, including, without limitation, securities and commercial
laws and regulations, under common law or at equitable cause, or on
contract or otherwise, the capitalization of the Borrower, the
Commitments, the making of, management of and participation in the
Loans or the use or intended use of the proceeds of the Loans, provided
that the Borrower shall have no obligation under this Section 12.4(b)
to an Indemnified Person with respect to any of the foregoing to the
extent resulting from the gross negligence or willful misconduct of
such Indemnified Person or arising solely from claims between one such
Indemnified Person and another such Indemnified Person. The indemnity
set forth herein shall be in addition to any other obligations or
liabilities of the Borrower to each Indemnified Person under the Loan
Documents or at common law or otherwise.
(c) The obligations of the Borrower under this Section 12.4 shall
survive any termination of this Agreement.
Section 12.5 Notices. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent under Article II hereof shall be deemed to have been
given only when received by the Agent.
Section 12.6 Successors. This Agreement shall be binding upon the
Borrower, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Banks and the Agent and the
successors and assigns of the Banks. The Borrower shall not assign its rights or
duties hereunder without the written consent of the Banks.
Section 12.7 Severability. Any provision of the Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 12.8 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Borrower has
one or more Subsidiaries.
Section 12.9 Captions. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
Section 12.10 Entire Agreement. The Loan Documents embody the entire
agreement and understanding between the Borrower, the Banks and the Agent with
respect to the subject matter hereof and thereof. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
Section 12.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.12 Governing Law. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.
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Section 12.13 Consent to Jurisdiction. AT THE OPTION OF THE BANKS, THIS
AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. XXXX, MINNESOTA; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE BANKS AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 12.14 Waiver of Jury Trial. THE BORROWER, THE BANKS AND THE
AGENT EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Section 12.15 Confirmation of Security Agreement. The Borrower
expressly confirms that the Security Agreement remains in full force and effect
and secures the Liabilities as defined herein. Each reference in the Security
Agreement to the "Credit Agreement" shall refer to this Agreement, as hereafter
amended, modified, renewed, extended or replaced from time to time.
(signature pages follows)
E-39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above.
CHRONIMED INC.
By:____________________________________
Title:_________________________________
00000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
' Attention: Xx. Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Signature Page 1
E-40
Commitments:
$20,000,000 U.S. BANK NATIONAL ASSOCIATION,
as Agent and a Bank
By:_________________________________
Title:______________________________
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Signature Page 2
E-41
$10,000,000 UMB BANK, N.A.,
as a Bank
By:______________________________
Title:___________________________
0000 Xxxxx Xxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
000 000-0000
000 000-0000 fax
Signature Page 3
E-42
