Exhibit (10)
CREDIT AGREEMENT
DATED AS OF OCTOBER 21, 2002
BY AND AMONG
MEDICAL ACTION INDUSTRIES INC.
AND
JPMORGAN CHASE BANK
AS ADMINISTRATIVE AGENT
AND
THE LENDERS PARTY HERETO
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS........................................................................ 1
SECTION 1.01...................................................................................DEFINITIONS 1
SECTION 1.02...............................................................................TERMS GENERALLY 16
ARTICLE II LOANS.................................................................................................. 16
SECTION 2.01........................................................................REVOLVING CREDIT LOANS 16
SECTION 2.02.........................................................................REVOLVING CREDIT NOTE 17
SECTION 2.03....................................................................................TERM LOAN. 18
SECTION 2.04....................................................................................TERM NOTE. 18
ARTICLE III PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT; FEES AND PAYMENTS.................................... 19
SECTION 3.01...........................................INTEREST RATE; CONTINUATION AND CONVERSION OF LOANS 19
SECTION 3.02..............................................................................USE OF PROCEEDS. 21
SECTION 3.03...................................................................................PREPAYMENTS 21
SECTION 3.04.........................................................................................FEES. 21
SECTION 3.05.........................................................INABILITY TO DETERMINE INTEREST RATE. 22
SECTION 3.06...................................................................................ILLEGALITY. 22
SECTION 3.07...............................................................................INCREASED COSTS 22
SECTION 3.08....................................................................................INDEMNITY. 24
SECTION 3.09.........................................................................................TAXES 24
SECTION 3.10...............................................................PRO RATA TREATMENT AND PAYMENTS 25
SECTION 3.11.............................................................FUNDING AND DISBURSEMENT OF LOANS 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES......................................................................... 26
SECTION 4.01..........................................................................ORGANIZATION POWERS. 27
SECTION 4.02...........................................AUTHORIZATION OF BORROWING, ENFORCEABLE OBLIGATIONS 27
SECTION 4.03..........................................................................FINANCIAL CONDITION. 27
SECTION 4.04........................................................................................TAXES. 28
SECTION 4.05...........................................................................TITLE TO PROPERTIES 29
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SECTION 4.06....................................................................................LITIGATION 29
SECTION 4.07...................................................................................AGREEMENTS. 29
SECTION 4.08........................................................................COMPLIANCE WITH ERISA. 29
SECTION 4.09..................................................FEDERAL RESERVE REGULATIONS; USE OF PROCEEDS 29
SECTION 4.10......................................................................................APPROVAL 30
SECTION 4.11..................................................................SUBSIDIARIES AND AFFILIATES. 30
SECTION 4.12...........................................................................HAZARDOUS MATERIALS 30
SECTION 4.13........................................................................INVESTMENT COMPANY ACT 30
SECTION 4.14...................................................................................NO DEFAULT. 30
SECTION 4.15...........................................................................MATERIAL CONTRACTS. 31
SECTION 4.16.........................................................................PERMITS AND LICENSES. 31
SECTION 4.17..........................................................................COMPLIANCE WITH LAW. 31
SECTION 4.18...........................................................................SECURITY DOCUMENTS. 31
SECTION 4.19...................................................................................DISCLOSURE. 31
SECTION 4.20........................................................................................VALUE. 31
SECTION 4.21...........................................................................MAXXIM TRANSACTION. 31
ARTICLE V CONDITIONS OF LENDING................................................................................... 32
SECTION 5.01.....................................................CONDITIONS TO INITIAL EXTENSION OF CREDIT 32
SECTION 5.02........................................................CONDITIONS TO ALL EXTENSIONS OF CREDIT 35
SECTION 5.03.......................................................................CONDITIONS TO TERM LOAN 35
ARTICLE VI AFFIRMATIVE COVENANTS.................................................................................. 37
SECTION 6.01..............................................................EXISTENCE, PROPERTIES, INSURANCE 37
SECTION 6.02............................................................PAYMENT OF INDEBTEDNESS AND TAXES. 37
SECTION 6.03...........................................................FINANCIAL STATEMENTS, REPORTS, ETC. 38
SECTION 6.04.........................................................BOOKS AND RECORDS; ACCESS TO PREMISES 39
SECTION 6.05......................................................................NOTICE OF ADVERSE CHANGE 40
SECTION 6.06.............................................................................NOTICE OF DEFAULT 40
SECTION 6.07..........................................................................NOTICE OF LITIGATION 40
SECTION 6.08........................................................NOTICE OF DEFAULT IN OTHER AGREEMENTS. 40
SECTION 6.09.........................................................................NOTICE OF ERISA EVENT 41
SECTION 6.10.......................................................NOTICE OF ENVIRONMENTAL LAW VIOLATIONS. 41
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SECTION 6.11..........................................................NOTICE REGARDING MATERIAL CONTRACTS. 41
SECTION 6.12...............................................................COMPLIANCE WITH APPLICABLE LAWS 41
SECTION 6.13..................................................................................SUBSIDIARIES 42
SECTION 6.14...........................................................................ENVIRONMENTAL LAWS. 42
SECTION 6.15..........................................................................COLLATERAL MORTGAGE. 42
SECTION 6.16.....................................................................INTEREST RATE PROTECTION. 43
SECTION 6.17.......................................................FIRST MORTGAGE RE: CLARKSBURG PREMISES. 43
ARTICLE VII NEGATIVE COVENANTS.................................................................................... 44
SECTION 7.01..................................................................................INDEBTEDNESS 44
SECTION 7.02.........................................................................................LIENS 44
SECTION 7.03....................................................................................GUARANTIES 45
SECTION 7.04................................................................................SALE OF ASSETS 46
SECTION 7.05.........................................................................SALES OF RECEIVABLES. 46
SECTION 7.06........................................................................LOANS AND INVESTMENTS. 46
SECTION 7.07...........................................................................NATURE OF BUSINESS. 46
SECTION 7.08...........................................................................SALE AND LEASEBACK. 46
SECTION 7.09...................................................................FEDERAL RESERVE REGULATIONS 46
SECTION 7.10............................................................ACCOUNTING POLICIES AND PROCEDURES 46
SECTION 7.11...........................................................................HAZARDOUS MATERIALS 47
SECTION 7.12............................................................LIMITATIONS ON FUNDAMENTAL CHANGES 47
SECTION 7.13..........................................................................FINANCIAL COVENANTS. 47
SECTION 7.14............................................................................SUBORDINATED DEBT. 49
SECTION 7.15.....................................................................................DIVIDENDS 49
SECTION 7.16..................................................................TRANSACTIONS WITH AFFILIATES 49
SECTION 7.17..............................................................IMPAIRMENT OF SECURITY INTEREST. 49
SECTION 7.18.................................................................MAXXIM TRANSACTION DOCUMENTS. 49
ARTICLE VIII EVENTS OF DEFAULT.................................................................................... 50
SECTION 8.01.............................................................................EVENTS OF DEFAULT 50
ARTICLE IX THE ADMINISTRATIVE AGENT............................................................................... 52
SECTION 9.01............................................................APPOINTMENT, POWERS AND IMMUNITIES 52
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SECTION 9.02..............................................................RELIANCE BY ADMINISTRATIVE AGENT 53
SECTION 9.03.............................................................................EVENTS OF DEFAULT 53
SECTION 9.04............................................................................RIGHTS AS A LENDER 53
SECTION 9.05...............................................................................INDEMNIFICATION 53
SECTION 9.06........................................NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS 54
SECTION 9.07................................................................................FAILURE TO ACT 54
SECTION 9.08...........................................................RESIGNATION OF ADMINISTRATIVE AGENT 54
SECTION 9.09............................................................SHARING OF COLLATERAL AND PAYMENTS 55
ARTICLE X MISCELLANEOUS........................................................................................... 55
SECTION 10.01......................................................................................NOTICES 55
SECTION 10.02......................................................................EFFECTIVENESS; SURVIVAL 57
SECTION 10.03.......................................................................INDEMNITY AND EXPENSES 58
SECTION 10.04.......................................................................AMENDMENTS AND WAIVERS 58
SECTION 10.05.......................................................SUCCESSORS AND ASSIGNS; PARTICIPATIONS 59
SECTION 10.06...............................................................NO WAIVER; CUMULATIVE REMEDIES 62
SECTION 10.07...............................................................................APPLICABLE LAW 62
SECTION 10.08...................................................................SUBMISSION TO JURISDICTION 62
SECTION 10.09.................................................................................SEVERABILITY 63
SECTION 10.10..............................................................................RIGHT OF SETOFF 63
SECTION 10.11.....................................................................................HEADINGS 64
SECTION 10.12.................................................................................CONSTRUCTION 64
SECTION 10.13.................................................................................COUNTERPARTS 64
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SCHEDULES
Schedule I - Subsidiaries
Schedule II - Permitted Indebtedness (post closing)
Schedule III - Existing Liens
Schedule IV - Existing Guarantees
Schedule V - Material Contracts
Schedule VI - Excluded Machinery and Equipment
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Term Note
Exhibit C - Form of Security Agreement
Exhibit D - Form of Guaranty
Exhibit E - Form of Borrowing Base Certificate
Exhibit F - Form of Opinion of Counsel
Exhibit G - Form of Assignment and Acceptance Agreement
Exhibit H-1 - Form of First Mortgage
Exhibit H-2 - Form of Collateral Mortgage
Exhibit I - Form of Pledge Agreement
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CREDIT AGREEMENT dated as of October 21, 2002, by and among MEDICAL
ACTION INDUSTRIES INC., a Delaware corporation (the "Company"), the LENDERS
which from time to time are parties to this Agreement (individually, a "Lender"
and, collectively, the "Lenders") and JPMORGAN CHASE BANK, a New York banking
corporation as Administrative Agent for the Lenders.
RECITALS
The Company has requested the Lenders to extend credit from time to
time and the Lenders are willing to extend such credit to the Company, subject
to the terms and conditions hereinafter set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINITIONS. As used herein, the following words and
terms shall have the following meanings:
"Adjusted Libor Loans" shall mean Revolving Credit Loans at such time
as they are made and/or being maintained at a rate of interest based upon
Reserve Adjusted Libor.
"Administrative Agent" shall mean JPMorgan Chase Bank in its capacity
as administrative agent for the Lenders under this Agreement or its successor
Administrative Agent permitted pursuant to Section 9.08.
"Affiliate" shall mean with respect to a specified Person, another
Person which, directly or indirectly, controls or is controlled by or is under
common control with such specified Person. For the purpose of this definition,
"control" of a Person shall mean the power, direct or indirect, to direct or
cause the direction of the management or policies of such Person whether through
the ownership of voting securities, by contract or otherwise; provided that, in
any event, any Person who owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 10% or more of the partnership or other
ownership interest of any Person (other than as a limited partner of such other
Person) will be deemed to control such corporation or other Person.
"Aggregate Outstandings" shall mean, at a particular time, the
aggregate outstanding principal amount of all Revolving Credit Loans at such
time.
"Agreement" shall mean this Credit Agreement dated as of October 21,
2002, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate as in effect on such day, and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate,
for any reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to clause (b) of the
first sentence of this definition, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.
"Alternate Base Rate Loans" shall mean Loans at such times as they are
being made and/or maintained at a rate of interest based on the Alternate Base
Rate.
"Applicable Margin" shall mean (a) with respect to an Adjusted Libor
Loan, the percentage set forth below under the heading "LIBOR Margin" opposite
the applicable ratio and (b) with respect to an Alternate Base Rate Loan, the
percentage set forth below under the heading "ABR Margin" opposite the
applicable ratio.
ABR Margin LIBOR Margin
Leverage Ratio (360 day basis) (360 day basis)
-------------- --------------- ---------------
Less than 1.50:1.0 0 basis points 225 basis points
Equal to or greater than 25 basis points 275 basis points
1.50:1.00 but less than
2.00:1.00
Equal to or greater than 50 basis points 300 basis points
2.00:1.00 but less than
2.50:1.00
Equal to or greater than 75 basis points 325 basis points
2.50:1:00
Notwithstanding the foregoing, during the period commencing on the Closing Date
and ending on the date of reset of the Applicable Margin in accordance with this
paragraph, the ABR Margin shall be 50 basis points and the LIBOR Margin shall be
300 basis points. The Applicable Margin will be set or reset with respect to
each Loan on the date which is fifteen (15) days following the date of receipt
by the Administrative Agent of the financial statements referred to in Section
6.03(a) and Section 6.03(b) together with a certificate of the Financial Officer
of the Company certifying the Leverage Ratio and setting forth the calculation
thereof in detail; provided, however, (a) the Applicable Margin will first be
reset based on the financial statements for the fiscal year ending Xxxxx 00,
0000, (x) at no time prior to delivery of the financial
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statements for the fiscal quarter ending September 30, 2003 shall the Applicable
Margin be reduced by more than one pricing level at any one time, and (c) if any
such financial statement and certificate are not received by the Administrative
Agent within the time period required pursuant to Section 6.03(a) or Section
6.03(b), as the case may be, the Applicable Margin will be set or reset, unless
the rate of interest specified in Section 3.01(c) is in effect, based on a
Leverage Ratio of greater than 2.50:1.00 from the date such financial statements
and certificate were due until the date which is fifteen (15) days following the
receipt by the Administrative Agent of such financial statements and
certificate, and provided, further, that the Lenders shall not in any way be
deemed to have waived any Default or Event of Default, including without
limitation, an Event of Default resulting from the failure of the Company to
comply with Section 7.13 of this Agreement, or any rights or remedies hereunder
or under any other Loan Document in connection with the foregoing proviso.
During the occurrence and continuance of a Default or an Event of Default, no
downward adjustment, and only upward adjustments, shall be made to the
Applicable Margin.
"Assignment and Acceptance Agreement" shall mean an Assignment and
Acceptance entered into by a Lender and an assignee in accordance with Section
10.05 hereof, in the form attached hereto as Exhibit G or any other form
approved by the Administrative Agent.
"Borrowing Base" shall mean, at a particular time, an amount equal to
the sum of (1) eighty (80%) percent of all Eligible Receivables, plus (2) the
lesser of (a) fifty-five percent (55%) of Eligible Inventory or (b) $7,500,000.
"Borrowing Base Certificate" shall mean the Borrowing Base Certificate
in the form set forth as Exhibit E attached hereto.
"Borrowing Date" shall mean, with respect to any Loan, the date on
which such Loan is disbursed to the Company.
"Business Day" shall mean (a) any day not a Saturday, Sunday or legal
holiday, on which banks in New York City are open for business and (b) as it
relates to any payment, determination, funding or notice to be made or given in
connection with any Adjusted Libor Loan, any day specified in clause (a) on
which trading is carried on by and between banks in Dollar deposits in the
London interbank eurodollar market.
"Capital Expenditures" shall mean additions to property and equipment
of the Company (including, without limitation fixed assets acquired under
Capital Leases) which, in conformity with Generally Accepted Accounting
Principles, are included as "additions to property, plant or equipment" or
similar items which would be reflected in the combined statement of cash flow of
the Company, including without limitation, property and equipment which are the
subject of Capital Leases.
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"Capital Lease" shall mean any lease the obligations of which are
required to be capitalized on the balance sheet of a Person in accordance with
Generally Accepted Accounting Principles.
"Change of Control" shall mean any event which results in (i) any
Person, or two or more Persons acting in concert, acquiring beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company (or other securities convertible into such securities)
representing 30% or more of the combined voting power of all securities of the
Company entitled to vote in the election of directors; or (ii) during any period
of up to 12 consecutive months, individuals who at the beginning of such
12-month period were directors of the Company ceasing for any reasons to
constitute a majority of the Board of Directors of the Company; or (iii) any
Person, or two or more Persons acting in concert, acquiring by contract or
otherwise, or entering into a contract or arrangement which upon consummation
will result in its or their acquisition of, or control over, securities of the
Company (or securities convertible into such securities) representing 30% or
more of the combined voting power of all securities of the Company entitled to
vote in the election of directors.
"Clarksburg Premises" shall mean the real property and improvements
located at 00 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxx Xxxxxxxx, as more
particularly described in the First Mortgage.
"Closing Date" shall mean October 21, 2002.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral Mortgage" shall mean the Mortgage and Security Agreement in
the form attached hereto as Exhibit H-2 to be executed and delivered on the
Closing Date by the Company with respect to the Hauppauge Premises, as the same
may hereafter be amended, restated, supplemented or otherwise modified, from
time to time.
"Commitments" shall mean, collectively, the Revolving Credit
Commitments and the Term Loan Commitments.
"Commitment Proportion" shall mean, with respect to each Lender at the
time of determination the ratio, expressed as a percentage, which such Lender's
Commitments bear to the Total Commitment or if the Commitments have expired or
have been terminated, the ratio, expressed as a percentage, which the aggregate
principal amount of the Loans outstanding of such Lender bears to the Aggregate
Outstandings plus the aggregate principal amount of Term Loans outstanding at
such time.
"Company" shall have the meaning set forth in the preamble hereto.
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"Cumulative Basis" shall mean, with respect to the calculation of Debt
Service Coverage Ratio for the six-month period commencing October 1, 2002 and
ending March 31, 2003 and the nine-month period commencing October 1, 2002 and
ending June 30, 2003, that EBITDA, interest expense, scheduled installments of
principal of long-term Indebtedness and cash taxes shall be determined based
solely upon the actual earnings and expenditures, as applicable, made during
such six-month and nine-month period, as the case may be.
"Current Assets" shall mean all assets of the Company which would, in
accordance with Generally Accepted Accounting Principles applied on a consistent
basis, be classified on the balance sheet of the Company as current assets.
"Current Liabilities" shall mean all liabilities of the Company which
would, in accordance with Generally Accepted Accounting Principles applied on a
consistent basis, be classified on the balance sheet of the Company as current
liabilities, provided that Current Liabilities shall include the Aggregate
Outstandings.
"Current Ratio" shall mean the ratio of (a) Current Assets to (b)
Current Liabilities.
"Customer" shall mean and include the account debtor or obligor with
respect to any Receivable.
"Debt Service Coverage Ratio" shall mean, for any period, the ratio of
(a) EBITDA to (b) the sum of (i) Interest Expense plus (ii) the scheduled
installments of principal on all Indebtedness (including Capital Leases) having
a final maturity of one year or more from the date of incurrence thereof plus
(iii) cash income taxes actually paid by the Company to any government or
governmental instrumentality. All the foregoing categories shall be determined
in accordance with Generally Accepted Accounting Principles applied on a
consistent basis and shall be calculated (without duplication) over the four
fiscal quarters then most recently ended, provided, that the scheduled
installments of principal on all Indebtedness of the Company with an original
maturity of one year or more shall be calculated based upon the next succeeding
four fiscal quarters; and provided further that, Debt Service Coverage Ratio
shall be determined on a Cumulative Basis for (i) the fiscal year ending March
31, 2003 and (ii) for the fiscal quarter ending June 30, 2003.
"Default" shall mean any condition or event which upon notice, lapse of
time or both would constitute an Event of Default.
"Dollar" and the symbol "$" shall mean lawful money of the United
States of America
"Domestic Subsidiary" shall mean any Subsidiary of the Company
organized under the laws of any state of the United States of America.
"EBITDA" shall mean for any period, Net Income (or net loss) for such
period, plus the sum, without duplication, of (a) interest expense, (b)
depreciation and amortization expense, and
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(c) all income taxes to any government or governmental instrumentality expensed
on the Company's books (whether paid or accrued), minus the sum of (i) interest
income, (ii) all extraordinary or unusual gains, and (iii) any other non-cash
income, in each case, determined in accordance with Generally Accepted
Accounting Principles applied on a consistent basis. All of the foregoing
categories shall be calculated (without duplication) over the four fiscal
quarters next preceding the date of calculation thereof. Notwithstanding
anything to the contrary, for purposes of determining the Leverage Ratio in
connection with the setting or resetting of the Applicable Margin for the fiscal
year ending March 31, 2003 and the fiscal quarter ending June 30, 2003, EBITDA
shall be calculated on an annualized basis for the period then ending as
follows: (a) with respect to the fiscal year ending March 31, 2003, EBITDA shall
be determined to equal to actual EBITDA for the two fiscal quarters then ending
multiplied by a multiple of two, and (b) with respect to the fiscal quarter
ending June 30, 2003, EBITDA shall be determined to equal actual EBITDA for the
three fiscal quarters then ending multiplied by a multiple of one and one-third.
"Eligible Inventory" shall mean the gross amount of the Company's
finished goods and raw materials inventory located in the United States of
America and inventory for which the Company has ownership and title and which is
in transit to the Company, less the following items: any packaging materials and
supplies; work-in-process; supplies (other than supplies held for sale), damaged
or unsalable goods, damaged or unsalable goods returned or rejected by
Customers; obsolete goods; goods to be returned to the Company's suppliers;
goods in transit to third parties; consigned inventory; and inventory located at
facilities where the Administrative Agent has not (a) been granted a first
priority perfected security interest and (b) received landlord or warehousemens'
waiver letters, as appropriate, if the facility is not owned and occupied by the
Company, provided "Eligible Inventory" shall exclude all other inventory which
is otherwise regarded by the Required Lenders in their sole discretion as
unsuitable collateral for the Loans. If any inventory is moved to a location
where the Lenders' security interest therein becomes unperfected upon such move
under applicable law, such inventory shall not be Eligible Inventory (a) until
91 days after the date on which the Lenders' security interest therein has
become perfected under applicable law and (b) such inventory meets all of the
other requirements set forth in this definition. The value of all Eligible
Inventory shall be determined at the lower of cost or market value on a first in
first out basis in accordance with Generally Accepted Accounting Principles
applied on a consistent basis.
"Eligible Investments" shall mean (a) direct obligations of the United
States of America or any governmental agency thereof which are fully guaranteed
by the United States of America, provided that such obligations mature within
one year from the date of acquisition thereof; or (b) dollar denominated
certificates of time deposit maturing within one year issued by any bank
organized and existing under the laws of the United States or any state thereof
and having aggregate capital and surplus in excess of $1,000,000,000; or (c)
money market mutual funds having assets not less than $2,500,000,000; or (d)
commercial paper rated not less than P-1 or A-1 or their equivalent by Xxxxx'x
Investor Services, Inc. or Standard & Poor's Ratings Group, respectively; or (e)
tax exempt securities of a U.S. issuer rated A or better by Standard and Poor's
Ratings Group or Xxxxx'x Investor Services, Inc.
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"Eligible Receivables" shall mean Receivables created by the Company in
the ordinary course of business arising out of the sale or lease of goods or
rendition of services by the Company (including any deposits awaiting bank
collections), which are and at all times shall continue to be acceptable to the
Required Lenders in all respects. Standards of eligibility may be fixed and
revised from time to time solely by the Required Lenders in the Required
Lenders' exclusive judgment. In general, without limiting the foregoing, a
Receivable shall in no event be deemed to be an Eligible Receivable unless: (a)
all payments due on the Receivable have been invoiced and the underlying goods
shipped or services performed, as the case may be; (b) no more than (i) ninety
(90) days have elapsed from the invoice date, with respect to Receivables from
non-hospital Customers and (ii) one hundred twenty (120) days have elapsed from
the invoice date, with respect to Receivables from hospital Customers, and (iii)
sixty (60) days have elapsed from the invoice due date; (c) the payments due on
more than 25% of all Receivables from the same Customer are not more than ninety
(90) days past the invoice date or more than sixty (60) days past due the
invoice due date; (d) the Receivable arose from a completed and bona fide
transaction (and with respect to a sale of goods, a transaction in which title
has passed to the Customer) which requires no further act under any
circumstances on the part of the Company in order to cause such Receivable to be
payable in full by the Customer; (e) the Receivable is in full conformity with
the representations and warranties made by the Administrative Agent and Lenders
with respect thereto and is free and clear of all security interests and Liens
of any nature whatsoever other than any security interest deemed to be held by
the Company or any security interest created pursuant to the Security Documents
or permitted by Section 7.02 hereof; (f) the Receivable constitutes an "account"
or "chattel paper" within the meaning of the Uniform Commercial Code of the
state in which the Receivable is located; (g) the Customer has not asserted that
the Receivable, and the Company is not aware that the Receivable, arises out of
a xxxx and hold, consignment or progress billing arrangement or is subject to
any setoff, contrast, net-out contract, offset, deduction, dispute, credit,
counterclaim or other defense arising out of the transactions represented by the
Receivables or independently thereof and the Customer has finally accepted the
goods from the sale out of which the Receivable arose and has not objected to
its liability thereon or returned, rejected or repossessed any of such goods,
except for complaints made or goods returned in the ordinary course of business
for which, in the case of goods returned, goods of equal or greater value have
been shipped in return; (h) the Receivable arose in the ordinary course of
business of the Company; (i) the Customer is not (x) the United States
government or the government of any state or political subdivision thereof or
therein, or any agency or department of any thereof or any foreign government
unless there has been compliance to the satisfaction of the Administrative Agent
with the Federal Assignment of Claims Act or similar state or foreign statutes
or (y) an Affiliate of the Company or any Guarantor or any Subsidiary of any
thereof; (j) such Receivable is from a Customer which is (i) a United States
person, or (ii) an obligor in the United States, unless such Receivable is
supported to the satisfaction of the Lender by a letter of credit, insurance or
other acceptable form of guarantee; (k) the Receivable complies with all
material requirements of all applicable laws and regulations, whether federal,
state or local (including, without limitation, usury laws and laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy); (1) the
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Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the Customer enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and by general equity principles; (m) the Receivable is denominated in
and provides for payment by the Customer in U.S. dollars; (n) the Receivable has
not been and is not required to be charged off or written off as uncollectible
in accordance with Generally Accepted Accounting Principles or the customary
business practices of the Company; (o) the Administrative Agent on behalf of the
Lenders possesses a valid, perfected first priority security interest in such
Receivable as security for payment of the Obligations; (p) the Required Lenders
are satisfied with the credit standing of the Customer in relation to the amount
of credit extended; and (r) rebates to distributors in accordance with contract
agreements.
"Environmental Law" shall mean any law, ordinance, rule, regulation, or
policy having the force of law of any Governmental Authority relating to
pollution or protection of the environment or to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601, et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.) the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 6901, et seq.) and the rules and regulations
promulgated pursuant thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Company or any Affiliate of the Company would be
deemed to be a member of the same "controlled group" within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"Eurocurrency Reserve Requirement" shall mean a fraction (expressed as
a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves, under any regulations of the Board of Governors of the Federal Reserve
System or any other governmental authority having jurisdiction with respect
thereto) as from time to time in effect, dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "eurocurrency
liabilities" in Regulation D) maintained by the Lender. For purposes hereof each
Adjusted Libor Loan shall be deemed to constitute a "eurocurrency liability" as
defined in Regulation D, and subject to the reserve requirements of "Regulation
D," without benefit of credit or proration, exemptions or offsets which might
otherwise be available to any Lender from time to time under Regulation D.
"Event of Default" shall have the meaning set forth in Article VIII.
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"Executive Officer" shall mean any of the President, the Chief
Executive Officer, Chief Operating Officer or the Secretary of the Company, or
any Guarantor, as applicable.
"Existing Indebtedness" shall mean the Company's outstanding
indebtedness owing to Citibank, N.A. (as successor-in-interest to European
American Bank) on the Closing Date pursuant to that certain Loan Agreement,
dated as of March 18, 1999, as amended.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal fund brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal fund brokers of recognized standing
selected by the Administrative Agent.
"Financial Officer" shall mean the Chief Operating Officer or
Controller of the Company or Guarantor, as applicable.
"First Mortgage" shall mean the Mortgage and Security Agreement in the
form attached hereto as Exhibit H-1 to be executed and delivered pursuant to
Section 6.17 hereof by the Company with respect to the Clarksburg Premises, as
the same may hereafter be amended, restated, supplemented or otherwise modified,
from time to time.
"Funded Debt" shall mean all outstanding Indebtedness of the Company
with original maturities of one year or more, as at any date of determination,
including all current portions thereof, all as determined in accordance with
Generally Accepted Accounting Principles applied on a consistent basis.
"Generally Accepted Accounting Principles" shall mean those generally
accepted accounting principles in the United States of America, as in effect
from time to time.
"Governmental Authority" shall mean any nation or government, any
state, province, city or municipal entity or other political subdivision
thereof, and any governmental, executive, legislative, judicial, administrative
or regulatory agency, department, authority, instrumentality, commission, board
or similar body, whether federal, state, provincial, territorial, local or
foreign.
"Guarantors" shall mean, each Domestic Subsidiary who, from time to
time hereafter, is required to execute a Guaranty in accordance with Section
6.13 hereof; provided such Subsidiary's status as a Guarantor shall be effective
as of the date of such execution.
"Guaranty" shall mean the Guaranty substantially in the form of Exhibit
D attached hereto to be executed and delivered on the Closing Date by each
Guarantor and, thereafter, by any Person who may be required to execute the same
pursuant to Section 6.13, as the same may hereafter be amended, restated,
supplemented or otherwise modified from time to time.
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"Hauppauge Premises" shall mean the real property and improvements
located at 000 Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx, as more particularly described
in the Collateral Mortgage.
"Hazardous Materials" shall mean any explosives, radioactive materials,
or other materials, wastes, substances, or chemicals regulated as toxic
hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Law.
"Hedging Agreement" shall mean any interest rate swap, collar, cap,
floor or forward rate agreement or other agreement regarding the hedging of
interest rate risk exposure executed in connection with hedging the interest
rate exposure of a Person, and any confirming letter executed pursuant to such
agreement, all as amended, supplemented, restated or otherwise modified from
time to time.
"Indebtedness" shall mean, without duplication, as to any Person or
Persons (a) indebtedness for borrowed money; (b) indebtedness for the deferred
purchase price of property or services; (c) indebtedness evidenced by bonds,
debentures, notes or other similar instruments; (d) obligations and liabilities
secured by a Lien upon property owned by such Person, whether or not owing by
such Person and even though such Person has not assumed or become liable for the
payment thereof; (e) obligations and liabilities directly or indirectly
guaranteed by such Person; (f) obligations or liabilities created or arising
under any conditional sales contract or other title retention agreement with
respect to property used and/or acquired by such Person; (g) obligations of such
Person as lessee under Capital Leases; (h) net liabilities of such Person under
Hedging Agreements and foreign currency exchange agreements, as calculated on a
basis satisfactory to the Administrative Agent and in accordance with accepted
practice; (i) all obligations of such Person in respect of bankers' acceptance;
and (j) all obligations, contingent or otherwise of such Person as an account
party or applicant in respect of letters of credit.
"Interest Payment Date" shall mean (a) as to any Alternate Base Rate,
the last day of each calendar quarter commencing December 31, 2002, during the
term hereof; (b) as to any Adjusted Libor Loan, the last day of the Interest
Period applicable thereto and, if such Interest Period exceeds three months, the
date that falls three months after the beginning of such Interest Period and
quarterly thereafter, and (c) as to any Loan, the date such Loan is paid in full
or in part.
"Interest Period" shall mean with respect to any Adjusted Libor Loan:
(a) initially, the period commencing on the date such
Adjusted Libor Loan is made and ending one, two, three, six, nine or twelve
months thereafter, as selected by the Company in its notice of borrowing or in
its notice of conversion from an Alternate Base Rate Loan provided, in each
case, in accordance with the terms of Articles II and III hereof; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Adjusted Libor Loan and ending
one, two, three, six, nine or twelve months thereafter, as selected by the
Company by irrevocable written notice to the
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Administrative Agent not later than 11:00 a.m. New York, New York time three
Business Days prior to the last day of the then current Interest Period with
respect to such Adjusted Libor Loan; provided, however, that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) if the Company shall fail to give notice as
provided in clause (b) above, the Company shall be deemed to
have requested conversion of the affected Adjusted Libor Loan
to an Alternate Base Rate Loan on the last day of the then
current Interest Period with respect thereto;
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(iv) no more than eight (8) Interest Periods may exist
at any one time; and
(v) the Company shall select Interest Periods so as
not to require a payment or prepayment of any Adjusted Libor
Loan during an Interest Period for such Adjusted Libor Loan.
"IRB" shall mean Buncombe County Industrial Facilities and Pollution
Control Financing Authority.
"IRB Collateral" shall mean the machinery and equipment located at the
Company premises in 00 Xxxxxxx Xxxx, Xxxxx, Xxxxx Xxxxxxxx as described on
Schedule VI hereto, which machinery and equipment is subject to the security
interest in favor of First Union Bank now known as Wachovia Bank of North
Carolina pursuant to the IRB Transaction.
"IRB Transaction" shall mean the issuance by the IRB of $5,500,000 of
bonds for the acquisition and rehabilitation of the Company's manufacturing
facilities, secured by, among other things, the IRB Collateral.
"Lenders" shall have the meaning set forth in the preamble hereto.
"Lending Office" shall mean for each Lender, the office specified under
such Lender's name on the signature pages hereof with respect to each Type of
Loan, or such other office as
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such Lender may designate in writing from time to time to the Company and the
Administrative Agent with respect to such Type of Loan.
"Leverage Ratio" shall mean, at any particular date of determination,
the ratio of (i) Funded Debt to (ii) EBITDA.
"Lien" shall mean any lien (statutory or otherwise), security interest,
mortgage, deed of trust, pledge, charge, conditional sale, title retention
agreement, Capital Lease or other encumbrance or similar right of others, or any
agreement to give any of the foregoing.
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Security Documents, the Guaranties, the Pledge Agreements, and each other
agreement executed in connection with the transactions contemplated hereby or
thereby, as each of the same may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"Loans" shall mean, collectively, the Revolving Credit Loan and the
Term Loan.
"Material Adverse Effect" shall mean a material adverse effect upon (a)
the business, operations, property, prospects or condition (financial or
otherwise) of the Company or any Guarantor, or (b) the ability of the Company or
any Guarantor to perform in any of its material obligations under any Loan
Document to which it is a party.
"Material Contract" shall mean each contract, instrument or agreement
(a) to which the Company or any Guarantor is a party which is material to the
business, operations or condition (financial or otherwise), prospects, or
properties of the Company or such Guarantor, or (b) which requires the payment
during the term thereof in excess of $1,000,000. Material Contracts shall
include all documents and agreements pursuant to which the Company shall assume
any of the liabilities in connection with the Maxxim Transaction.
"Maxxim" shall mean Maxxim Medical, Inc., a Delaware corporation.
"Maxxim Asset Purchase Agreement" shall mean the Asset Purchase
Agreement by and between Maxxim and the Company, dated August 30, 2002.
"Maxxim Transaction" shall mean the acquisition of the business and
substantially all of the assets and assumption of certain of the liabilities of
the Bio-Safety Division of Maxxim pursuant to the Maxxim Transaction Documents.
"Maxxim Transaction Documents" shall mean the Maxxim Asset Purchase
Agreement, and the documents and agreements executed in connection therewith.
"Mortgages" shall mean, collectively, the First Mortgage and the
Collateral Mortgage.
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"Net Income" shall mean, for any period, the net income (or net loss)
of the Company for such period, determined in accordance with Generally Accepted
Accounting Principles applied on a consistent basis.
"Net Worth" shall mean, at any particular date of determination, (a)
total assets of the Company less (b) total liabilities of the Company, in each
case determined in accordance with Generally Accepted Accounting Principles
applied on a consistent basis.
"Non-Domestic Subsidiary" shall mean any Subsidiary of the Company not
organized under the laws of any state of the United States of America.
"Notes" shall mean, collectively, the Revolving Credit Notes and the
Term Notes.
"Obligations" shall mean all obligations, liabilities and indebtedness
of the Company to the Lenders and the Administrative Agent, whether now existing
or hereafter created, absolute or contingent, direct or indirect, due or not,
whether created directly or acquired by assignment or otherwise, arising under
or relating to this Agreement, the Notes or any other Loan Document including,
without limitation, all obligations, liabilities and indebtedness of the Company
with respect to the principal of and interest on the Loans and all fees, costs,
expenses and indemnity obligations of the Company and the Administrative Agent
hereunder, or under any other Loan Document.
"Payment Office" shall mean the Administrative Agent's office located
at 000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 or such other office as the
Administrative Agent may designate from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Liens" shall mean the Liens specified in clauses (a) through
(g) of Section 7.02.
"Person" shall mean any natural person, corporation, limited liability
company, limited liability partnership, business trust, joint venture,
association, company, partnership or Governmental Authority.
"Plan" shall mean any multi-employer or single-employer plan defined in
Section 4001 of ERISA, which covers, or at any time during the five calendar
years preceding the date of this Agreement covered, employees of the Company any
Guarantor or an ERISA Affiliate on account of such employees' employment by the
Company, such Guarantor or an ERISA Affiliate.
"Pledge Agreements" shall mean such pledge agreements or other
documents, as may be required in order to grant to the Administrative Agent (for
the benefit of the Lenders) a security
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interest in 65% of the issued and outstanding shares of stock or other ownership
interest of any Non-Domestic Subsidiary, substantially in the form attached as
Exhibit I hereto.
"Prime Rate" shall mean the rate per annum announced by the
Administrative Agent from time to time as its prime rate in effect at its
principal office, each change in the Prime Rate shall be effective on the date
such change is announced to become effective.
"Receivables" shall mean any and all rights of the Company to payment
for goods sold or leased or for services rendered, including accounts, contract
rights, general intangibles and any such right evidenced by chattel paper,
instruments or documents.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30 day notice requirement has not
been waived by the PBGC.
"Required Lenders" shall mean Lenders owed at least 65% of the sum of
the Aggregate Outstandings and the Term Loans or, if no Revolving Credit Loans
or Term Loans are outstanding, Lenders having at least 65% of the Total
Revolving Credit Commitment.
"Reserve Adjusted Libor" shall mean, with respect to the Interest
Period pertaining to an Adjusted Libor Loan, a rate per annum equal to the
product (rounded upwards to the next higher 1/16 of one percent) of (a) the
annual rate of the interest at which Dollar deposits of an amount comparable to
the amount of such Loan and for a period equal to the Interest Period applicable
thereto are offered to the London office of the Administrative Agent in
immediately available funds in the London interbank market for Eurodollars by
leading banks in the eurodollar market at approximately 11:00 A.M. (London time)
on the second Business Day prior to the commencement of such Interest Period,
multiplied by (b) the Eurocurrency Reserve Requirement.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the obligation of such Lender to make Revolving Credit Loans to the Company in
an aggregate amount not to exceed the amount set forth opposite such Lender's
name on the signature pages hereof under the caption "Revolving Credit
Commitment", as such amounts may be adjusted in accordance with the terms of
this Agreement.
"Revolving Credit Commitment Period" shall mean the period from and
including the Closing Date to, but not including, the Revolving Credit
Commitment Termination Date or such earlier date as the Revolving Credit
Commitment shall terminate as provided herein.
"Revolving Credit Commitment Termination Date" shall mean October 21,
2005.
"Revolving Credit Loans" shall have the meaning set forth in Section
2.01(a).
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"Revolving Credit Notes" shall have the meaning set forth in Section
2.02.
"Security Agreement" shall mean the Security Agreement in the form
attached as Exhibit C to be executed and delivered on the Closing Date by the
Company, as same may be amended, restated, supplemented or otherwise modified,
from time to time.
"Security Documents" shall mean the Security Agreement, the Mortgages,
and each other collateral security document delivered to the Administrative
Agent hereunder.
"Solvent" shall mean with respect to any Person as of the date of
determination thereof that (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise," as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required on its debts as such debts become absolute
and matured, (c) such Person will not have as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such Person
will be able to pay its debts as they mature.
"Subordinated Debt" or "Subordinated Indebtedness" shall mean all debt
which is subordinated in right of payment to the prior final and indefeasible
payment in full of the obligations of the Company to the Lenders hereunder and
under any other Loan Document on terms satisfactory to and approved in writing
by the Required Lenders.
"Subsidiaries" shall mean, with respect to any Person, any corporation,
association or other business entity more than 50% of the voting stock or other
ownership interests (including, without limitation, membership interests in a
limited liability company) of which is at the time owned or controlled, directly
or indirectly, by such Person or one or more of its Subsidiaries or a
combination thereof.
"Taxes" shall have the meaning set forth in Section 3.09.
"Term Loan" shall have the meaning set forth in Section 2.03.
"Term Loan Commitment" shall mean, with respect to each Lender, the
obligation of such Lender to make Term Loans to the Company in an amount not to
exceed the amount set forth opposite such Lender's name on the signature pages
hereof under the caption "Term Loan Commitment", which shall be $25,000,000, in
the aggregate.
"Term Loan Maturity Date" shall mean September 30, 2007.
"Term Note" shall have the meaning set forth in Section 2.04.
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"Total Commitments" shall mean, at any time, the aggregate of the
Commitments in effect at such time which, initially shall be $40,000,000.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate of the Revolving Credit Commitments in effect at such time which,
initially, shall be $15,000,000.
"Type" shall mean as to any Loan its status as an Alternate Base Rate
Loan or an Adjusted Libor Loan.
"Unfunded Current Liability" of any Plan shall mean the amount, if any,
by which the present value of the accrued benefits under the Plan as of the
close of its most recent plan year exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
SECTION 1.02. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and the neuter. Except as otherwise
herein specifically provided, each accounting term used herein shall have the
meaning given to it under Generally Accepted Accounting Principles. The term
"including" shall not be limited or exclusive, unless specifically indicated to
the contrary. The word "will" shall be construed to have the same meaning in
effect as the word "shall". The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole, including the
exhibits and schedules hereto, all of which are by this reference incorporated
into this Agreement.
ARTICLE II
LOANS
SECTION 2.01. REVOLVING CREDIT LOANS. (a) Subject to the terms and
conditions, and relying upon the representations and warranties, set forth
herein, each Lender severally agrees to make loans (individually a "Revolving
Credit Loan" and, collectively, the "Revolving Credit Loans") to the Company
from time to time during the Revolving Credit Commitment Period, up to but not
exceeding at any one time outstanding the amount of its Revolving Credit
Commitment; provided, however, that no Revolving Credit Loan shall be made if,
after giving effect to such Revolving Credit Loan, the Aggregate Outstandings
would exceed the lesser of (x) the Total Revolving Credit Commitment in effect
at such time and (y) the Borrowing Base. During the Revolving Credit Commitment
Period, the Company may from time to time borrow, repay and reborrow hereunder
on or after the date hereof and prior to the Revolving Credit Commitment
Termination Date, subject to the terms, provisions and limitations set forth
herein. The Revolving Credit Loans may be (i) Adjusted Libor Loans, (ii)
Alternate Base Rate Loans or (iii) a combination thereof.
(b) The Company shall give the Administrative Agent
irrevocable written notice (or telephonic notice promptly confirmed in writing)
not later than 11:00 a.m., New York, New York time, three Business Days prior to
the date of each proposed Adjusted Libor Loan
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under this Section 2.01 or prior to 11:00 a.m. New York, New York time on the
date of each proposed Alternate Base Rate Loan under this Section 2.01. Such
notice shall be irrevocable and shall specify (i) the amount and Type of the
proposed borrowing, (ii) the proposed use of the loan proceeds, (iii) the
initial Interest Period if an Adjusted Libor Loan, and (iv) the proposed
Borrowing Date. Upon receipt of such notice from the Company, the Administrative
Agent shall promptly notify each Lender thereof. Except for borrowings which
utilize the full remaining amount of the Total Revolving Credit Commitment, each
borrowing of an Alternate Base Rate Loan shall be in an amount not less than
$500,000 or, if greater, whole multiples of $500,000 in excess thereof. Each
borrowing of an Adjusted Libor Loan shall be in an amount not less than
$1,250,000 or whole multiples of $100,000 in excess thereof.
(c) The Company shall have the right, upon not less than
three Business Days' prior written notice to the Administrative Agent to
terminate the Total Revolving Credit Commitment or from time to time to
permanently reduce the amount of the Total Revolving Credit Commitment;
provided, however, that no such termination or reduction shall be permitted if,
after giving effect thereto and to any prepayments of the Revolving Credit Loans
made on the effective date thereof, the Aggregate Outstandings would exceed the
lesser of (x) the Total Revolving Credit Commitment as then reduced and (y) the
Borrowing Base; provided, further, that any such termination or reduction
requiring prepayment of any Adjusted Libor Loan shall be made only on the last
day of the Interest Period with respect thereto or on the date of payment in
full of all amounts owing pursuant to Section 3.08 as a result of such
termination or reduction. Any such reduction shall be in the amount of $500,000
or whole multiples of $500,000 in excess thereof, and shall reduce permanently
the amount of the Total Revolving Credit Commitment then in effect.
(d) The several agreements of the Lenders to make Revolving
Credit Loans pursuant to this Section 2.01 shall automatically terminate on the
Revolving Credit Commitment Termination Date. Upon such termination, the Company
shall immediately repay in full the principal amount of the Revolving Credit
Loans then outstanding, together with all accrued interest thereon and all other
amounts due and payable hereunder.
SECTION 2.02. REVOLVING CREDIT NOTE. The Revolving Credit Loans made by
each Lender shall be evidenced by a promissory note of the Company
(individually, a "Revolving Credit Note" and collectively the "Revolving Credit
Notes"), substantially in the form attached hereto as Exhibit A, each
appropriately completed, duly executed and delivered on behalf of the Company
and payable to the order of such Lender in a principal amount equal to the
Revolving Credit Commitment of such Lender. Each Revolving Credit Note shall (a)
be dated the Closing Date, (b) be stated to mature on the Revolving Credit
Commitment Termination Date, and (c) bear interest from the date thereof until
paid in full on the unpaid principal amount thereof from time to time
outstanding as provided in Section 3.01. Each Lender is authorized to record the
date, Type and amount of each Revolving Credit Loan and the date and amount of
each payment or prepayment of principal of each Revolving Credit Loan in such
Lender's records or on the grid schedule annexed to the Revolving Credit Note;
provided, however, that the failure of a Lender to set forth each such Revolving
Credit Loan, payment and
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other information shall not in any manner affect the obligation of the Company
to repay each Revolving Credit Loan made by such Lender in accordance with the
terms of its Revolving Credit Note and this Agreement. The Revolving Credit
Note, the grid schedule and the books and records of each Lender shall
constitute presumptive evidence of the information so recorded absent manifest
error.
SECTION 2.03. TERM LOAN. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make a term loan (individually, a "Term
Loan" and collectively, the "Term Loans") to the Company upon satisfaction of
the conditions set forth in Section 5.03 hereof in an amount not to exceed its
Term Loan Commitment. The Company shall give the Administrative Agent
irrevocable written notice (or telephonic notice promptly confirmed in writing)
not later than 11:00 a.m. New York, New York time three Business Days prior to
the Closing Date specifying (i) the amount to be borrowed, which shall not
exceed the Term Loan Commitment, (ii) the Type or Types of such Term Loans and
the related amounts for each and (iii) if such Term Loan is an Adjusted Libor
Loan, the initial Interest Period selected for such Term Loan. Upon receipt of
such notice from the Company, the Administrative Agent shall promptly notify
each Lender thereof. The Term Loans may, at the election of the Company, be (i)
Adjusted Libor Loans, (ii) Alternate Base Rate Loans or (iii) a combination
thereof. The Term Loan Commitment shall terminate upon funding of the Term Loans
on the Closing Date.
SECTION 2.04. TERM NOTE. The Term Loan made by each Lender shall be
evidenced by a promissory note of the Company, substantially in the form of
Exhibit B, with appropriate insertions (individually a "Term Note" and,
collectively, the "Term Notes") payable to the order of such Lender and
representing the obligation of the Company to pay the unpaid principal amount of
the Term Loan of such Lender with interest thereon as prescribed in Section
3.01. Each Lender is authorized to record the Type of its Term Loan and the date
and amount of each payment or prepayment of principal thereof in such Lender's
records or on the grid schedule annexed to the Term Note; provided, however,
that the failure of a Lender to set forth each payment and other information
shall not in any manner affect the obligation of the Company to repay the Term
Loan made by such Lender in accordance with the terms of its Term Note and this
Agreement. The Term Note, the grid schedule and the books and records of each
Lender shall constitute presumptive evidence of the information so recorded
absent manifest error. Each Term Note shall (a) be dated the Closing Date, (b)
be stated to mature on the Term Loan Maturity Date and (c) be payable as to
principal in twenty consecutive equal quarterly installments commencing on
December 31, 2002 and on the last day of each March, June, September and
December thereafter. The amount of such payments received by each Lender on each
of the initial nineteen installment dates shall be in the amount of each
Lender's Commitment Proportion of $1,250,000, and the last installment received
by each Lender shall be in the amount of each Lender's Commitment Proportion of
the remaining principal amount outstanding. Each Term Note shall bear interest
from the date thereof until paid in full on the unpaid principal amount thereof
from time to time outstanding at the applicable interest rate per annum
determined as provided in, and payable as specified in, Section 3.01.
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ARTICLE III
PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT;
FEES AND PAYMENTS
SECTION 3.01. INTEREST RATE; CONTINUATION AND CONVERSION OF LOANS.
(a) Each Alternate Base Rate Loan shall bear interest for the
period from the date thereof on the unpaid principal amount thereof at a
fluctuating rate per annum equal to the Alternate Base Rate plus the Applicable
Margin.
(b) Each Adjusted Libor Loan shall bear interest for the
Interest Period applicable thereto on the unpaid principal amount thereof at a
rate per annum equal to the Reserve Adjusted Libor determined for each Interest
Period thereof in accordance with the terms hereof plus the Applicable Margin.
(c) Upon the occurrence and during the continuance of an
Event of Default the outstanding principal amount of the Loans (excluding any
defaulted payment of principal accruing interest in accordance with clause (d)
below), shall, at the option of the Required Lenders, bear interest payable on
demand at a rate of interest 3% per annum in excess of the interest rate
otherwise then in effect or, if no rate is in effect, 3% per annum in excess of
the Alternate Base Rate.
(d) If the Company shall default in the payment of the
principal of, or interest on, any portion of any Loan or any other amount
becoming due hereunder, whether with respect to interest, fees, expenses or
otherwise, the Company shall on demand from time to time pay additional interest
on such defaulted amount accruing from the date of such default (without
reference to any period of grace) up to and including the date of actual payment
(after as well as before judgment) calculated as follows: the amount of such
past due payment of principal, interest, fees or expenses times (a) 3% per annum
in excess of the rate otherwise in effect or, if no rate is in effect, 3% per
annum in excess of the Alternate Base Rate times (b) the number of days that
such payment is past due, determined on a year of 360 days.
(e) The Company may elect from time to time to convert
outstanding Loans from Adjusted Libor Loans to Alternate Base Rate Loans by
giving the Administrative Agent at least three Business Day's prior irrevocable
written notice of such election, provided that any such conversion of Adjusted
Libor Loans shall only be made on the last day of an Interest Period with
respect thereto or upon the date of payment in full of any amounts owing
pursuant to Section 3.08 as a result of such conversion. Upon receipt of such
notice, the Administrative Agent shall promptly notify each Lender thereof. The
Company may elect from time to time to convert outstanding Loans from Alternate
Base Rate Loans to Adjusted Libor Loans by giving the Administrative Agent
irrevocable written notice of such election not later than 11:00 a.m. New York,
New York time, three Business Days prior to the date of the proposed conversion.
Upon receipt of such notice the Administrative Agent shall promptly notify each
Lender thereof. All or any part of outstanding Alternate Base Rate Loans may be
converted as provided herein,
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provided that each conversion shall be in the principal amount of $1,250,000 or
whole multiples of $100,000 in excess thereof, and further provided that no
Default or Event of Default shall have occurred and be continuing. Any
conversion to or from Adjusted Libor Loans hereunder shall be in such amounts
and be made pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of all Adjusted Libor Loans having the same Interest
Period shall not be less than $1,250,000.
(f) Any Adjusted Libor Loan in a minimum principal amount of
$1,250,000 may be continued as such upon the expiration of an Interest Period
with respect thereto by compliance by the Company with the notice provisions
contained in the definition of Interest Period; provided, that no Adjusted Libor
Loan may be continued as such when any Default or Event of Default has occurred
and is continuing, but shall be automatically converted to an Alternate Base
Rate Loan on the last day of the Interest Period in effect when the
Administrative Agent is notified, or otherwise has actual knowledge, of such
Default or Event of Default.
(g) If the Company shall fail to select the duration of any
Interest Period for any Adjusted Libor Loan in accordance with the definition of
"Interest Period" set forth in Section 1.01, the Company shall be deemed to have
selected an Interest Period of one month.
(h) No Loan may be funded as an Adjusted Libor Loan or
converted to or continued as an Adjusted Libor Loan with an Interest Period that
extends beyond (i) the Revolving Credit Commitment Termination Date, with
respect to Revolving Credit Loans, or (ii) the Term Loan Maturity Date with
respect to the Term Loan.
(i) Interest on each Loan shall be payable in arrears on each
Interest Payment Date and shall be calculated on the basis year of 360 days and
shall be payable for the actual days elapsed. Any rate of interest on the Loans
or other Obligations which is computed on the basis of the Alternate Base Rate
shall change when and as the Alternate Base Rate changes in accordance with the
definition thereof. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall, absent demonstrable error, be conclusive
and binding for all purposes.
(j) Anything in this Agreement or in any Note to the contrary
notwithstanding, the obligation of the Company to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be paid to a Lender to the extent that the charging or receipt
thereof would not be permissible under the law or laws applicable to such Lender
limiting the rates of interest that may be charged or collected by such Lender.
In each such event payments of interest required to be paid to such Lender shall
be calculated at the highest rate permitted by applicable law until such time as
the rates of interest required hereunder may lawfully be charged and collected
by such Lender. If the provisions of this Agreement or any Note would at any
time otherwise require payment by the Company to any Lender of any amount of
interest in excess of the maximum amount then permitted by applicable law, the
interest payments to such Lender shall be reduced to the extent necessary so
that such Lender shall not receive interest in excess of such maximum amount.
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SECTION 3.02. USE OF PROCEEDS. The Term Loan shall be used to finance
(a) the purchase price payable to Maxxim in connection with the Maxxim
Transaction and (b) working capital needs of the Company. The proceeds of the
Revolving Credit Loans shall be solely used to (a) pay the Existing Indebtedness
and (b) finance the working capital needs of the Company in the ordinary course
of business.
SECTION 3.03. PREPAYMENTS.
(a) The Company may, at any time and from time to time,
prepay the then outstanding Loans, in whole or in part, without premium or
penalty, except as provided in Section 3.08 hereof, upon written notice to the
Administrative Agent (or telephonic notice promptly confirmed in writing) not
later than 11:00 a.m. New York, New York time, three Business Days before the
date of prepayment with respect to prepayments of Adjusted Libor Loans, or 11:00
a.m. New York, New York time one Business Day before the date of prepayment with
respect to Alternate Base Rate Loans. Each notice shall be irrevocable and shall
specify the date and amount of repayment and whether such repayment is of the
Term Loans or of Revolving Credit Loans and whether such repayment is of
Adjusted Libor Loans or Alternate Base Rate Loans or a combination thereof, and
if a combination thereof, the amount of repayment allocable to each. Upon
receipt of such notice, the Administrative Agent shall promptly notify each
Lender thereof. If such notice is given, the Company shall make such prepayment,
and the payment amount specified in such notice shall be due and payable, on the
date specified therein. Each partial prepayment pursuant to this Section 3.03 of
(x) Alternate Base Rate Loans shall be in a principal amount of $500,000 or
whole multiples of $500,000 in excess thereof and (y) of Adjusted LIBOR Loans
shall be in a principal amount of $500,000 or whole multiples of $500,000 in
excess thereof.
(b) To the extent that the Aggregate Outstandings exceeds the
Borrowing Base as in effect at any time, the Company shall immediately prepay
the Revolving Credit Loans to the extent necessary to cause compliance with the
Borrowing Base.
(c) Each prepayment of principal of a Loan pursuant to this
Section 3.03 shall be accompanied by accrued interest to the date prepaid on the
amount prepaid and all amounts, if any, due pursuant to Section 3.08 hereof. All
partial prepayments of the Term Loans, shall be applied to the remaining
installments of principal thereof in inverse order of maturity. Prepayments of
the Term Loans may not be reborrowed. Partial prepayments of any Loan shall be
applied first to outstanding Alternate Base Rate Loans and then to Adjusted
Libor Loans having the shortest remaining Interest Periods. Prepayments of
Adjusted Libor Loans shall be accompanied by the amounts, if any, due pursuant
to Section 3.08.
SECTION 3.04. FEES.
(a) The Company agrees to pay to the Administrative Agent for
the account of, and pro rata distribution to, each Lender a commitment fee on
the average daily unused
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portion of the Revolving Credit Commitment from the Closing Date until the
Revolving Credit Commitment Termination Date at a rate per annum equal to
one-quarter of one percent (.25%), based upon a year of 360 days, payable
quarterly, in arrears, on the last day of each December, March, June, and
September of each year, commencing December 31, 2002, on the Revolving Credit
Commitment Termination Date, and on each date the Revolving Credit Commitment is
permanently reduced in whole or in part.
(b) The Company agrees to pay the Administrative Agent for
the Administrative Agent's own account, such agency, syndication and other fees
as separately agreed between the Administrative Agent and the Company.
SECTION 3.05. INABILITY TO DETERMINE INTEREST RATE. In the event that
the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that, by reason of circumstances
affecting the London interbank market, adequate and reasonable means do not
exist for ascertaining the Reserve Adjusted Libor applicable pursuant to Section
3.01(b) for any requested Interest Period with respect to (a) the making of an
Adjusted Libor Loan, (b) an Adjusted Libor Loan that will result from the
requested conversion of an Alternate Base Rate Loan into an Adjusted Libor Loan,
or (c) the continuation of an Adjusted Libor Loan beyond the expiration of the
then current Interest Period with respect thereto, the Administrative Agent
shall forthwith give notice by telephone of such determination, promptly
confirmed in writing, to the Company of such determination. Until the
Administrative Agent notifies the Company that the circumstances giving rise to
the suspension described herein no longer exist, the Company shall not have the
right to request or continue an Adjusted Libor Loan or to convert an Alternate
Base Rate Loan to an Adjusted Libor Loan.
SECTION 3.06. ILLEGALITY. Notwithstanding any other provisions herein,
if any introduction of or change, on or after the date hereof, in any law,
regulation, treaty or directive or in the interpretation or application thereof
shall make it unlawful for any Lender to make or maintain Adjusted Libor Loans
as contemplated by this Agreement, such Lender shall forthwith give notice by
telephone of such circumstances, promptly confirmed in writing, to the
Administrative Agent, which notice the Administrative Agent shall promptly
transmit to the Company and the other Lenders and (a) the commitment of such
Lender to make and to allow conversion to or continuations of Adjusted Libor
Loans shall forthwith be cancelled for the duration of such illegality and (b)
the Loans then outstanding as Adjusted Libor Loans, if any, shall be converted
automatically to Alternate Base Rate Loans on the next succeeding last day of
each Interest Period applicable to such Adjusted Libor Loans or, within such
earlier period as may be required by law. The Company shall pay to such Lender,
upon demand, any additional amounts required to be paid pursuant to Section 3.08
hereof.
SECTION 3.07. INCREASED COSTS. (a) In the event that any introduction
of or change, on or after the date hereof, in any applicable law, regulation,
treaty, order, directive or in the interpretation or application thereof
(including, without limitation, any request, guideline or policy, whether or not
having the force of law, of or from any central bank or other governmental
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authority, agency or instrumentality and including, without limitation,
Regulation D), by any authority charged with the administration or
interpretation thereof shall occur, which:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note, or any Loan, or change the
basis of taxation of payments to such Lender of principal, interest, fees or any
other amount payable hereunder (other than any tax that is measured with respect
to the overall net income of such Lender or Lending Office of such Lender and
that is imposed by the United States of America, or any political subdivision or
taxing authority thereof or therein, or by any jurisdiction in which such
Lender's Lending Office is located, or by any jurisdiction in which such Lender
is organized, has its principal office or is managed and controlled); or
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement (whether or not having
the force of law) against assets held by, or deposits or other liabilities in or
for the account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of any Lender; or
(iii) shall impose on any Lender any other condition, or
change therein;
and the result of any of the foregoing is to increase the cost
to such Lender of making, renewing or maintaining or participating in advances
or extensions of credit hereunder or to reduce any amount receivable hereunder,
in each case by an amount which such Lender deems material, then, in any such
case, the Company shall pay such Lender, such additional amount or amounts as
such Lender shall have determined will compensate such Lender for such increased
costs or reduction.
(b) If any Lender shall have determined that the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
Lending Office of any Lender) or any Lender's holding company, with any request
or directive regarding capital adequacy (whether or not having the force of the
law) of any such authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on such Lender's capital or on the
capital of such Lender's holding company as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, the Company shall pay to such Lender, the additional amount or
amounts as such Lender shall have determined will compensate such Lender or such
Lender's holding company for such reduction. Such Lender's determination of such
amounts shall be conclusive and binding on the Company absent manifest error.
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(c) A certificate of (a) Lender setting forth the amount or
amounts payable pursuant to Sections 3.07(a) and 3.07(b) above shall be
conclusive absent manifest error. The Company shall pay any Lender the amount
shown as due on any such certificate within ten days after receipt thereof.
(d) In the event any Lender shall be entitled to
compensation pursuant to Section 3.07(a) or Section 3.07(b), it shall notify the
Administrative Agent and Company of the event by reason of which it has become
so entitled; provided, however, no failure on the part of any Lender to demand
compensation under clause (a) or clause (b) above on one occasion shall
constitute a waiver of its right to demand compensation on any other occasion.
SECTION 3.08. INDEMNITY. The Company agree to indemnify each Lender
and to hold each Lender harmless from any loss, cost or expense which such
Lender may sustain or incur, including, without limitation, interest or fees
payable by such Lender to lenders of funds obtained by it in order to maintain
Adjusted Libor Loans hereunder, as a consequence of (a) default by the Company
in payment of the principal amount of or interest on any Adjusted Libor Loan,
(b) default by the Company to accept or make a borrowing of an Adjusted Libor
Loan or a conversion into or continuation of an Adjusted Libor Loan after the
Company have requested such borrowing, conversion or continuation, (c) default
by the Company in making any prepayment of any Adjusted Libor Loan after the
Company give notice in accordance with Section 3.03 of this Agreement and/or (d)
the making of any payment or prepayment (whether mandatory or optional) of an
Adjusted Libor Loan or the making of any conversion of an Adjusted Libor Loan to
an Alternate Base Rate Loan on a day which is not the last day of the applicable
Interest Period with respect thereto. A certificate of a Lender setting forth
such amounts shall be conclusive absent manifest error. The Company shall pay
such Lender the amount shown as due on any certificate within ten days after
receipt thereof. This Section 3.08 shall survive termination of this Agreement
and payment of the Obligations.
SECTION 3.09. TAXES. (a) All payments made by the Company under this
Agreement shall be made free and clear of, and without reduction for or on
account of, any present or future taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding income and
franchise taxes imposed on the Administrative Agent, or a Lender by (i) the
United States of America or any political subdivision or taxing authority
thereof or therein, (ii) the jurisdiction under the laws of which the
Administrative Agent, or such Lender is organized or in which it has its
principal office or is managed and controlled or any political subdivision or
taxing authority thereof or therein, or (iii) any jurisdiction in which such
Lender's Lending Office is located or any political subdivision or taxing
authority thereof or therein (such non-excluded taxes being called "Taxes"). If
any Taxes are required to be withheld from any amounts payable to the
Administrative Agent, or any Lender hereunder, or under the Notes, the amount so
payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Taxes and free and clear of all liability in respect of such
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the Notes. Whenever
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any Taxes are payable by the Company, the Company shall promptly send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt showing
payment thereof. If the Company fails to pay Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Company shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure together with any expenses payable by the
Administrative Agent or any Lender in connection therewith.
(b) Prior to the first Interest Payment Date, each Lender
that is not organized under the laws of the United States or a state thereof
agrees that it will deliver to the Administrative Agent (i) two duly completed
copies of United States Internal Revenue Service Form W-8BEN or W-8ECI or
successor applicable form, as the case may be, certifying in each case that such
Lender is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, and (ii) an Internal
Revenue Service Form W-8 or W-9 or successor applicable form, as the case may
be, to establish an exemption from United States back-up withholding tax. Each
Lender which delivers to the Company and the Administrative Agent a Form W-8BEN
or W-8ECI and Form W-8 or W-9 pursuant to the preceding sentence further
undertakes to deliver to Administrative Agent two further copies of the said
statement and Form W-8BEN or W-8ECI and Form W-8 or W-9, or successor applicable
forms, or other manner of certification, as the case may be, on or before the
date that any such letter or form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent letter and form
previously delivered by it to the Administrative Agent, and such extensions or
renewals thereof as may reasonably be requested by the Administrative Agent,
certifying in the case of a Form W-8BEN or W-8ECI that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes.
SECTION 3.10. PRO RATA TREATMENT AND PAYMENTS. Each borrowing by the
Company from the Lenders, each conversion of a Loan pursuant to Section 3.01(e)
or continuation of a Loan pursuant to Section 3.01(f), each payment by the
Company on account of any fee (other than with respect to fees described in
Section 3.04(b)) and any reduction of the Commitments of the Lenders hereunder
shall be made pro rata according to the respective relevant Commitment
Proportions of the Lenders. Each payment (including each prepayment) by the
Company on account of principal of and interest on each Loan shall be made pro
rata according to the respective outstanding principal amounts of such Loans
held by each Lender. All payments (including prepayments) to be made by the
Company on account of principal, interest, fees and reimbursement obligations
shall be made without set-off or counterclaim and shall be made to the
Administrative Agent, for the account of the Lenders (except as specified in
Section 3.04(b)), at the Payment Office of the Administrative Agent in Dollars
in immediately available funds. The Administrative Agent may, in its sole
discretion, directly charge interest payments due in respect of the Loans to the
Company's accounts at the Payment Office or other office of the Administrative
Agent. The Administrative Agent shall distribute such payments to
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the Lenders promptly upon receipt in like funds by wire transfer of such
Lender's portion of such payment to such Lender for the account of its Lending
Office. Except as otherwise provided in the definition of "Interest Period", if
any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
SECTION 3.11. FUNDING AND DISBURSEMENT OF LOANS. (a) Each Lender shall
make each Loan to be made by it hereunder available to the Administrative Agent
at the Payment Office for the account of such office and the Administrative
Agent by 1:00 p.m. New York, New York time on the Borrowing Date in Dollars in
immediately available funds. Unless any applicable condition specified in
Article V has not been satisfied, the amount so received by Administrative Agent
will be made available to the Company at the Payment Office by crediting the
account of the Company with such amount and in like funds as received by the
Administrative Agent; provided, however, that if the proceeds of any Loan or any
portion thereof are to be used to prepay outstanding Loans, then the
Administrative Agent shall apply such proceeds for such purpose to extent
necessary and credit the balance, if any, to the Company's account.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a proposed Borrowing Date that such Lender will
not make the amount which would constitute its Commitment Proportion of the
borrowing on such Borrowing Date available to the Administrative Agent, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on such Borrowing Date, and the Administrative Agent
may, in reliance upon such assumption, make available to the Company a
corresponding amount. If such amount is not made available to the Administrative
Agent until a date after such Borrowing Date, such Lender shall pay to the
Administrative Agent on demand interest on such Lender's Commitment Proportion
of such borrowing at a rate equal to the greater of (i) the daily average
Federal Funds Rate and (ii) a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation during such
period, from and including such Borrowing Date to the date on which such
Lender's Commitment Proportion of such borrowing shall have become immediately
available to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts due pursuant to this Section
3.11(b) shall be conclusive absent manifest error. Nothing herein shall be
deemed to relieve any Lender from its obligations to fulfill its commitment
hereunder or to prejudice any right which the Company may have against any
Lender as a result of any default by such Lender hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
extend the credit herein provided for, the Company represents and warrants to
the Administrative Agent and each Lender that:
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SECTION 4.01. ORGANIZATION POWERS. The Company (a) is a corporation
duly formed, validly existing and in good standing under the laws of the State
of Delaware, (b) has the corporate power and authority to own its properties and
to carry on its business as now being conducted, (c) is duly qualified to do
business in every jurisdiction wherein the conduct of its business or the
ownership of its properties are such as to require such qualification except
those jurisdictions in which the failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect, and (d) has the corporate power
to execute, deliver and perform each of the Loan Documents to which it is a
party, including, without limitation, the power to obtain extensions of credit
hereunder and to execute and deliver the Notes. Each Guarantor is a corporation,
limited liability company or limited partnership (as indicated on Schedule I
hereto) duly organized or formed, as applicable, validly existing and in good
standing under the laws of the state of its incorporation or formation, (b) has
the power and authority to own or lease its properties and to carry on its
business as now being conducted, (c) is duly qualified to do business in every
jurisdiction wherein the conduct of its business or the ownership of its
properties are such as to require such qualification, and (d) has the power to
execute, deliver and perform each of the Loan Documents to which it is a party.
SECTION 4.02. AUTHORIZATION OF BORROWING, ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by the Company of this Agreement, and the
other Loan Documents to which it is a party, the borrowings hereunder, and the
execution and delivery by each of the Guarantors of the Loan Documents to which
such Guarantor is a party, (a) have been duly authorized by all requisite
corporate action, (b) will not violate or require any consent under (i) any
provision of law applicable to the Company or any Guarantor, any rule or
regulation of any Governmental Authority, or the certificate of incorporation or
by-laws of the Company or the certificate of incorporation, by-laws, or other
organizational documents, as applicable, of any Guarantor or (ii) any order of
any court or other Governmental Authority binding on the Company or any
Guarantor or any indenture, agreement or other instrument to which the Company
or any Guarantor is a party, or by which the Company or any Guarantor or any of
their respective properties are bound, and (c) will not be in conflict with,
result in a breach of or constitute (with due notice and/or lapse of time) a
default under, any such indenture, agreement or other instrument, or result in
the creation or imposition of any Lien, of any nature whatsoever upon any of the
property or assets of the Company or any Guarantor other than as contemplated by
this Agreement or the other Loan Documents. This Agreement and each other Loan
Document to which the Company or any Guarantor is a party constitutes a legal,
valid and binding obligation of the Company and such Guarantor enforceable, as
the case may be, against the Company and such Guarantor, as the case may be, in
accordance with its terms except to the extent that enforcement may be limited
by applicable bankruptcy, reorganization, moratorium, insolvency and similar
laws affecting creditors' rights generally or by equitable principles of general
application, regardless of whether considered in a proceeding in equity or at
law.
SECTION 4.03. FINANCIAL CONDITION. (a) The Company has heretofore
furnished to the Agent and each Lender (i) the audited balance sheet of the
Company and the related audited statements of income, retained earnings and cash
flow of the Company audited by Grant
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Xxxxxxxx XXX, xxxxxxxxxxx certified public accountants, for the fiscal year
ended March 31, 2002, and (ii) the management-prepared balance sheet of the
Company and the related statements of income, retained earnings and cash flow
for the three month period ended June 30, 2002. Such financial statements were
prepared in conformity with Generally Accepted Accounting Principles, applied on
a consistent basis, and fairly present the financial condition and results of
operations of the Company as of the date of such financial statements and for
the periods to which they relate, subject to normal year end adjustments and,
since March 31, 2002, no Material Adverse Effect has occurred. The Company shall
deliver to the Administrative Agent, with a copy for each Lender, a certificate
of the Financial Officer of the Company to that effect on the Closing Date.
Other than obligations and liabilities arising in the ordinary course of
business since March 31, 2002, there are no obligations or liabilities
contingent or otherwise, of the Company which are not reflected or disclosed on
such audited statements.
(b) The Company is Solvent and immediately after giving
effect to each respective Loan and each other extension of credit contemplated
by this Agreement and the execution of each Loan Document, will be Solvent.
(c) The pro-forma balance sheet of the Company as of the
Closing Date, which balance sheet was previously delivered to the Administrative
Agent, (i) was based upon the financial statements of the Company as of
September 30, 2002 after giving effect to the Maxxim Transaction, (ii) was
prepared in conformity with Generally Accepted Accounting Principles, applied on
a consistent basis, and (iii) fairly reflects the transactions contemplated
therein, subject to normal year-end adjustments and to the assumption and
qualifications stated therein. The Company shall deliver to the Administrative
Agent, with a copy for each Lender, a certificate of the Financial Officer of
the Company to that effect on the Closing Date.
(d) The financial projections (including balance sheets,
income statements and statements of cash flows) of the Company for the fiscal
years ending March 31, 2003 through and including March 31, 2007, which
projections were previously delivered to the Administrative Agent, were prepared
in good faith by the Financial Officer of the Company after giving effect to the
Maxxim Transaction, based upon reasonable assumptions and on the basis of sound
financial planning practice. The Financial Officer has no reason to believe that
they are incorrect or misleading in any material respect. The Company shall
deliver to the Administrative Agent, with a copy for each Lender, a certificate
of the Financial Officer of the Company to that effect on the Closing Date.
SECTION 4.04. TAXES. All assessed deficiencies resulting from Internal
Revenue Service examinations of the federal income tax returns of the Company
and each Guarantor have been discharged or reserved against in accordance with
Generally Accepted Accounting Principles. The Company and each Guarantor has
filed or caused to be filed all federal, state and local tax returns which are
required to be filed, and has paid or has caused to be paid all taxes as shown
on said returns or on any assessment received by them, to the extent that such
taxes have become due, except taxes which are being contested in good faith and
which are reserved against in accordance with Generally Accepted Accounting
Principles.
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SECTION 4.05. TITLE TO PROPERTIES. The Company and each Guarantor has
good title to their respective properties and assets reflected on the financial
statements referred to in Section 4.03 hereof, except for such properties and
assets as have been disposed of since the date of such financial statements as
no longer used or useful in the conduct of their respective businesses or as
have been disposed of in the ordinary course of business, and all such
properties and assets are free and clear of all Liens other than Permitted
Liens.
SECTION 4.06. LITIGATION. (a) There are no actions, suits or
proceedings (whether or not purportedly on behalf of the Company or any
Guarantor) pending or, to the knowledge of the Company, threatened or affecting
against the Company or any Guarantor at law or in equity or before or by any
Governmental Authority, which involve any of the transactions contemplated
herein or which, if adversely determined against the Company or such Guarantor,
could reasonably be expected to result in a Material Adverse Effect; and (b)
neither the Company nor any Guarantor is in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any Governmental
Authority which could reasonably be expected to result in a Material Adverse
Effect.
SECTION 4.07. AGREEMENTS. Neither the Company nor any Guarantor is a
party to any agreement or instrument or, with respect to the Company, subject to
any charter or other corporate restriction or any judgment, order, writ,
injunction, decree or regulation which could reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Guarantor is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party,
which default could reasonably be expected to have a Material Adverse Effect.
SECTION 4.08. COMPLIANCE WITH ERISA. Each Plan is in compliance with
ERISA; no Plan is insolvent or in reorganization, no Plan or Plans have an
Unfunded Current Liability, and no Plan has an accumulated or waived funding
deficiency; no Reportable Event has occurred with respect to any Plan; neither
the Company, any Guarantor, nor any ERISA Affiliate has incurred any liability
to or on account of a Plan pursuant to Section 515, 4062, 4063, 4064, 4201 or
4204 of ERISA or expects to incur any liability under any of the foregoing
sections on account of the prior termination of participation in or
contributions to any such Plan; no proceedings have been instituted to terminate
any Plan; no condition exists which could reasonably be expected to present a
risk to the Company, any Guarantor or any ERISA Affiliate of incurring a
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; no lien imposed under the Code or ERISA on the assets of the
Company, any Guarantor or any of its ERISA Affiliates exists or is likely to
arise on account of any Plan and the Company and each Guarantor may terminate
contributions to any other employee benefit plans maintained by it without
incurring any material liability to any Person interested therein.
SECTION 4.09. FEDERAL RESERVE REGULATIONS; USE OF PROCEEDS. (a)
Neither the Company nor any Guarantor is engaged principally in, nor has as one
of its important activities, the business of extending credit for the purpose of
purchasing or carrying any "margin stock"
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(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System of the United States, as amended from time to time).
(b) No part of the proceeds of any Loan will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or to carry margin stock or to extend credit to
others for the purpose of purchasing or carrying margin stock, or to refund
indebtedness originally incurred for such purposes, or (ii) for any purpose
which violates or is inconsistent with the provisions of Regulation T, U, or X
of the Board of Governors of the Federal Reserve System.
(c) The proceeds of each Loan shall be used solely for the
purposes permitted under Section 3.02.
SECTION 4.10. APPROVALS. No registration with or consent or approval
of, or other action by, any Governmental Authority or any other Person is
required in connection with the execution, delivery and performance of this
Agreement by the Company or any Guarantor, or with the execution and delivery of
other Loan Documents to which it is a party or with respect to the Company, the
borrowings hereunder.
SECTION 4.11. SUBSIDIARIES AND AFFILIATES. Attached hereto as Schedule
I is a correct and complete list of all Subsidiaries and Affiliates of the
Company showing as to each Subsidiary and Affiliate, its name, the jurisdiction
of its incorporation, its shareholders or other owners of an interest in each
Subsidiary and Affiliate and the ownership of each such entity (including the
percentage of the ownership interest held by each such entity). The shareholders
of the Company and their respective percentage ownership in the Company are
identified on Schedule I. As of the Closing Date, the Company has no
Subsidiaries.
SECTION 4.12. HAZARDOUS MATERIALS. The Company and each Guarantor is
in compliance in all material respects with all applicable Environmental Laws
and neither the Company nor any Guarantor has used Hazardous Materials on, from,
or affecting any property now owned or occupied or previously owned or occupied
by the Company or any Guarantor in any manner which violates any applicable
Environmental Law. To the knowledge of the Company, no prior owner of any such
property or any tenant, subtenant, prior tenant or prior subtenant have used
Hazardous Materials on, from, or affecting such property in any manner which
violates any applicable Environmental Law.
SECTION 4.13. INVESTMENT COMPANY ACT. Neither the Company nor any
Guarantor 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 4.14. NO DEFAULT. No Default or Event of Default has occurred
and is continuing.
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SECTION 4.15. MATERIAL CONTRACTS. All Material Contracts are disclosed
on Schedule VI hereto. Each such Material Contract is in full force and effect
and is binding upon and enforceable against the Company and, to the Company's
knowledge, all other parties thereto in accordance with its terms, and there
exists no default under any Material Contract by the Company or by any other
party thereto which has not been fully cured or waived.
SECTION 4.16. PERMITS AND LICENSES. The Company and each Guarantor has
all permits, licenses, certifications, authorizations and approvals required for
it lawfully to own and operate their respective businesses except those the
failure of which to have could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
SECTION 4.17. COMPLIANCE WITH LAW. The Company and each Guarantor is
in compliance, with all laws, rules, regulations, orders and decrees which are
applicable to the Company or such Guarantor, or to any of their respective
properties, which the failure to comply with could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.18. SECURITY DOCUMENTS. Each Security Document executed by
the Company shall constitute a valid and continuing lien on and security
interest in the collateral referred to in such Security Document in favor of the
Administrative Agent for the ratable benefit of the Lenders prior to all other
Liens, claims and right of all other Persons, other than Permitted Liens, and
shall be enforceable as such against all other Persons.
SECTION 4.19. DISCLOSURE. Neither this Agreement, any other Loan
Document, nor any other document, certificate or written statement furnished to
the Lender by or on behalf of the Company or any Guarantor for use in connection
with the transactions contemplated by this Agreement contains any untrue
statement of material fact or omits to state a material fact necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances in which they were made.
SECTION 4.20. VALUE. Immediately following the consummation of the
Maxxim Transaction and the transactions contemplated by this Agreement
(including, without limitation, the funding of the initial Loans), (a) the fair
value of the assets of the Company and each Guarantor will exceed its respective
Indebtedness (including Subordinated Indebtedness), (b) the present fair
saleable value of the property and assets of the Company and each Guarantor will
be greater than the amount required to pay the probable liabilities of its
respective Indebtedness (including Subordinated Indebtedness), (c) the Company
and each Guarantor will be able to pay its respective Indebtedness (including
Subordinated Indebtedness), as such Indebtedness shall mature, and (d) neither
the Company nor any Guarantor will have unreasonably small capital in order to
conduct the business in which it is engaged.
SECTION 4.21. MAXXIM TRANSACTION. The Company has heretofore delivered
to the Administrative Agent a true, correct and complete copy of the Maxxim
Transaction Documents. The Maxxim Transaction Documents set forth the entire
agreement of the parties
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thereto with respect to the subject matter thereof. No consent or approval,
authorization or declaration of any Governmental Authority is or will be
required in connection with the Maxxim Transaction. The Company has acquired, by
virtue of the consummation of the Maxxim Transaction and now has valid, legal
and marketable title to the Bio-Safety Division of Maxxim to be acquired
pursuant to the Maxxim Asset Purchase Agreement, free and clear of any Lien,
except for Permitted Liens. The representations and warranties of the Company in
Article III of the Maxxim Asset Purchase Agreement are true and correct in all
respects and are hereby deemed remade and restated in favor of the
Administrative Agent and the Lenders.
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01. CONDITIONS TO INITIAL EXTENSION OF CREDIT. The
obligation of each Lender to make the initial Loans hereunder is subject to the
following conditions precedent:
(a) REVOLVING CREDIT NOTES. On or prior to the Closing Date,
the Administrative Agent shall have received a Revolving Credit Note for the
account of each Lender.
(b) GUARANTIES. On or prior to the Closing Date, the
Administrative Agent shall have received, with a counterpart for each Lender, a
Guaranty duly executed by each Guarantor, if any.
(c) SECURITY DOCUMENTS; FINANCING STATEMENTS. On or prior to
the Closing Date, the Administrative Agent shall have received, with a
counterpart for each Lender, the Security Documents, each duly executed by the
Company with duly executed financing statements on form UCC-1 describing the
collateral covered by the Security Documents.
(d) OPINION OF COUNSEL. On or prior to the Closing Date, the
Administrative Agent shall have received a written opinion of counsel for the
Company and the Guarantors dated the Closing Date and addressed to the
Administrative Agent and each Lender, substantially in the form of Exhibit F
attached hereto.
(e) SUPPORTING DOCUMENTS. On or prior to the Closing Date,
the Administrative Agent shall have received, with a copy for each Lender, (i) a
certificate of good standing for the Company and each Guarantor from the
secretary of state of the state of its organizational jurisdiction dated as of a
recent date; (ii) certified copies of the charter documents of the Company and
Guarantor; (iii) a certificate of an authorized officer or member of the Company
and each Guarantor dated the Closing Date and certifying: (x) that the charter
documents of Person have not been amended since the date of their certification
(or if there has been any such amendment, attaching a certified copy thereof);
(y) that attached thereto is a true and complete copy of resolutions adopted by
the board of directors or members, as applicable, of such Person authorizing the
execution, delivery and performance of each Loan Document to which it is a
party; and (z) the incumbency and specimen signature of each officer or member
of
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such Person executing each Loan Document to which it is a party and any
certificates or instruments furnished pursuant hereto or thereto, and a
certification by another officer or member of such Person as to the incumbency
and signature of the Person executing such certificate; and (iv) such other
documents as the Administrative Agent may reasonably request.
(f) OFFICER'S CERTIFICATE. On the Closing Date, the
Administrative Agent shall have received a certificate dated the Closing Date,
executed by (i) an Executive Officer confirming compliance with the conditions
set forth and clauses (a) and (b) of Section 5.02.
(g) INSURANCE. On or prior to the Closing Date, the
Administrative Agent shall have received a certificate or certificates of
insurance from an independent insurance broker or brokers confirming the
insurance required to be maintained pursuant to Section 6.01 hereof, and
evidence that the Administrative Agent (for the benefit of itself and the other
Lenders) has been named loss payee and additional insured, as applicable, with
respect to each policy of such insurance.
(h) ASSETS FREE FROM LIENS. Prior to the Closing Date, the
Administrative Agent shall have received UCC-1 financing statement, tax and
judgment lien searches evidencing that the Company's and each Guarantor's
accounts receivable, inventory, equipment and all other assets of the Company
and each Guarantor (including, without limitation, those assets to be acquired
by the Company in connection with the Maxxim Transaction) are free and clear of
all Liens except Permitted Liens.
(i) FEES AND EXPENSES. On or prior to the Closing Date, the
Administrative Agent shall have received the fees payable on the Closing Date
pursuant to Section 3.04(b) and reimbursement of expenses in accordance with
Section 10.03(b).
(j) NO LITIGATION. There shall exist no action, suit,
investigation, litigation or proceeding affecting the Company or any Guarantor
pending or, to the knowledge of the Company, threatened before any court,
governmental agency or arbiter that could reasonably be expected to be adversely
determined against the Company or any Guarantor and, if so adversely determined,
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(k) CONSENTS AND APPROVALS. All governmental and third party
consents and approvals necessary in connection with the transactions
contemplated by this Agreement, the other Loan Documents, shall have been
obtained (without the imposition of any conditions that are not acceptable to
the Required Lenders) and shall remain in effect, and no law or regulation shall
be applicable in the judgment of the Required Lenders that imposes materially
adverse conditions upon the transactions contemplated hereby.
(l) NO MATERIAL ADVERSE CHANGES. There shall not have
occurred any material adverse change in the business, operations, properties,
prospects or condition (financial or otherwise) of the Company or any Guarantor.
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(m) MATERIAL CONTRACTS. The Lenders shall have received a
copy of each Material Contract and shall be satisfied with the form and
substance of each thereof.
(n) DUE DILIGENCE. The Lenders shall have completed their
due diligence with respect to the Company and each Guarantor, including, without
limitation, bank checks, trade checks, customer checks and litigation checkings
and the Lender shall be satisfied with the results thereof. and the Required
Lenders shall have been satisfied with the result thereof.
(o) FINANCIAL STATEMENTS; FINANCIAL OFFICER'S CERTIFICATE.
No later than fifteen (15) days prior to the Closing Date the Lenders shall have
received (i) the pro-forma balance sheet of the Company as of the Closing Date,
based upon the financial statements of the Company as of September 30, 2002
after giving effect to the Maxxim Transaction, (ii) the balance sheet and income
statement of the Borrower for the fiscal quarter ended June 30, 2002, and (iii)
financial projections (including balance sheets, income statements and
statements of cash flows) of the Company for the fiscal years ending March 31,
2003 through and including March 31, 2007. All such financial shall have been
prepared in good faith by the management of the Company based on reasonable
assumptions and the Required Lenders shall have been satisfied with the form and
substance thereof. In addition, on the Closing Date the Lenders shall have
received a certificate of the Financial Officer of the Company as to the matters
set forth in Section 4.03 hereof.
(p) EMPLOYMENT AGREEMENTS. The Lenders shall have received
copies of all employment agreements and management consulting agreements to
which the Company or any Guarantor is a party, which agreements shall be in form
and substance satisfactory to the Required Lenders.
(q) EXISTING INDEBTEDNESS. The Administrative Agent shall
have received concurrently with the extension of the initial Loan (i) evidence
that the Existing Indebtedness has been paid in full, (ii) evidence that the
credit facility documents governing such indebtedness shall be terminated on
such date, (iii) UCC Termination Statements with respect to the termination by
Citibank, N.A. of its existing security interests in the assets of the Company,
and (iv) releases of all guarantees delivered to Citibank, N.A. in connection
with such credit facility.
(r) LEASE SCHEDULE. Prior to the Closing Date, the Lenders
shall have received schedule of all lease agreements to which the Company or any
Guarantor is a party, which schedule shall include the identity of the lessor,
the lessee, the term of the lease, the annual lease expenditures, the expiration
of the lease and whether such lease is an operating lease or a capital lease,
and the Lender shall be satisfied with its review thereof.
(s) COLLATERAL AUDIT. Prior to the Closing Date, the
Administrative Agent shall have received the result of a field examination of
the Receivables and inventory of the Company and all related books and records,
the results of which shall be satisfactory to the Administrative Agent in all
respects.
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(t) BORROWING BASE CERTIFICATE. The Administrative Agent
shall have received a duly completed Borrowing Base Certificate for the calendar
month ended September 30, 2002, signed by the Financial Officer of the Company.
(t) OTHER INFORMATION, DOCUMENTATION. The Lenders shall have
received such other and further information and documentation as they may
require, including, but not limited to, any information or documentation
relating to compliance by the Company and each Guarantor with the requirements
of all Environmental Laws.
(u) COMPLETION OF PROCEEDINGS. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by the Loan Documents, shall be
satisfactory in form and substance to the Administrative Agent and its counsel.
SECTION 5.02. CONDITIONS TO ALL EXTENSIONS OF CREDIT. The obligation
of each Lender to make each Loan hereunder, including, without limitation, the
initial Loan, is subject to the conditions precedent set forth in Section 5.01
and the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties by the Company pursuant to this Agreement and the other Loan
Documents to which each is a party shall be true and correct in all material
respects on and as of the Borrowing Date, with the same effect as though such
representations and warranties had been made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on the Borrowing Date or will result after giving
effect to the Loan requested.
(c) AVAILABILITY. After giving effect to any requested
Revolving Credit Loan, the Aggregate Outstandings shall not exceed the lesser of
(i) the Total Revolving Credit Commitment then in effect or (ii) the Borrowing
Base. Each borrowing hereunder shall constitute a representation and warranty of
the Company that the statements contained in clauses (a), (b), and (c) of
Section 5.02 are true and correct on and as of the Borrowing Date.
SECTION 5.03. CONDITIONS TO TERM LOAN. The obligation of each Lender
to make the Lender to make the Term Loan hereunder is subject to the conditions
precedent set forth in Sections 5.01 and 5.02 and to the following conditions
precedent:
(a) TERM NOTES. On or prior to the Closing Date, the
Administrative Agent shall have received a Term Note for the account of each
Lender.
(b) MAXXIM TRANSACTION. The Lenders shall have received
certified true, correct and complete copies of each Maxxim Transaction Document,
including, without limitation the Maxxim Asset Purchase Agreement and the
schedules and exhibits thereto, which documents shall be in form and substance
satisfactory to the Lenders and the Lenders and their
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counsel shall be satisfied with all legal and business aspects of the Maxxim
Transaction, including the structure, the liabilities to be assumed by the
Company in connection therewith, the costs of such transaction and the valuation
of the assets to be purchased thereunder.
(c) CONSUMMATION OF MAXXIM TRANSACTION. Simultaneously with
the funding of the Term Loan, the Administrative Agent shall have received, with
a counterpart for each Lender, (a) a certificate of an Executive Officer of the
Company certifying that (i) the Maxxim Transaction has been consummated (other
than the payment of the purchase price) in accordance with the terms of the
Maxxim Transaction Documents and in compliance with all laws, including without
limitation laws relating to bulk asset sales, (ii) that all conditions precedent
with respect to the consummation of the Maxxim Transaction have been satisfied,
(iii) no party to the Maxxim Transaction has waived the fulfillment of any
material condition precedent set forth therein to the consummation of the Maxxim
Transaction, (iv) no party has failed to perform any of its obligations
thereunder and (v) nothing has come to the attention of the Company which would
cause it to believe that any of the representations or warranties of Maxxim
contained in the Maxxim Asset Purchase Agreement were false or misleading when
made or when reaffirmed on the date of funding of the Term Loan, (b) evidence
that the cash purchase price paid by the Company pursuant to the Maxxim
Transaction shall not exceed $19,500,000, subject to adjustments of up to
$1,000,000 at closing, and (c) evidence that the Company and Maxxim have
approved the Maxxim Transaction.
(d) CONSENTS AND APPROVALS. All governmental and third party
consents and approvals necessary in connection with the transactions
contemplated by the Maxxim Transaction Documents, shall have been obtained
(without the imposition of any conditions that are not acceptable to the
Required Lenders) and shall remain in effect, and no law or regulation shall be
applicable in the judgment of the Required Lenders that imposes materially
adverse conditions upon the transactions contemplated hereby.
(e) NO MATERIAL ADVERSE CHANGES. There shall not have
occurred any material adverse change in the business, operations, properties,
prospects or condition (financial or otherwise) of the Company or Maxxim (with
respect to the assets to be acquired pursuant to the Maxxim Transaction).
(f) NO LITIGATION. There shall exist no action, suit,
investigation, litigation or proceeding affecting the Company or Maxxim pending
or, to the knowledge of the Company, threatened before any court, governmental
agency or arbiter that could reasonably be expected to be adversely determined
against the Company or Maxxim and, if so adversely determined, could reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on the transactions contemplated by the Maxxim Transaction.
(g) VALUE. The Lenders shall be satisfied that, immediately
following the consummation of the Maxxim Transaction and the transactions
contemplated by this Agreement (including, without limitation, the funding of
the initial Loans), (a) the fair value of the assets of the Company and each
Guarantor will exceed its respective Indebtedness (including
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Subordinated Indebtedness), (b) the present fair saleable value of the property
and assets of the Company and each Guarantor will be greater than the amount
required to pay the probable liabilities of its respective Indebtedness
(including Subordinated Indebtedness), (c) the Company and each Guarantor will
be able to pay its respective Indebtedness (including Subordinated
Indebtedness), as such Indebtedness shall mature, and (d) neither the Company
nor any Guarantor will have unreasonably small capital in order to conduct the
business in which it is engaged.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees with the Lenders that so long as the
Commitments remain in effect, or any of the principal of or interest on the
Notes or any other Obligations hereunder shall be unpaid it will, and will cause
each Guarantor to:
SECTION 6.01. EXISTENCE, PROPERTIES, INSURANCE. Do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
or limited liability existence as applicable, rights and franchises and comply
in all material respects with all laws applicable to it; at all times maintain,
preserve and protect all franchises and trade names and preserve all of its
property, and keep the same in good repair, working order and condition and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly and advantageously
conducted in the ordinary course at all times; and at all times maintain
insurance covering its assets and its businesses with financially sound and
reputable insurance companies or associations in such amounts and against such
risks (including, without limitation, hazard, business interruption, public
liability and product liability) as are usually carried by companies engaged in
the same or similar business. Each such policy of insurance of the Company and
any Guarantor shall name the Administrative Agent as loss payee and additional
insured, as applicable, and shall provide for at least thirty (30) days' prior
written notice to the Administrative Agent of any modification or cancellation
of such policies. The Company shall provide to the Administrative Agent promptly
upon receipt thereof evidence of the annual renewal of each such policy.
SECTION 6.02. PAYMENT OF INDEBTEDNESS AND TAXES. (a) Pay all
indebtedness and obligations, now existing or hereafter arising, as and when due
and payable, and (b) pay and discharge or cause to be paid and discharged
promptly all taxes, assessments and government charges or levies imposed upon it
or upon its income and profits, or upon any of its property, real, personal or
mixed, or upon any part thereof, before the same shall become in default, as
well as all lawful claims for labor, materials and supplies or otherwise which,
if unpaid, might become a lien or charge upon such properties or any part
thereof; provided, however, that neither the Company nor any Guarantor shall be
required to pay and discharge or cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings, and the Company or such
Guarantor, as the case may be, shall have set aside on its books adequate
reserves determined in accordance with
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Generally Accepted Accounting Principles with respect to any such tax,
assessment, charge, levy or claim so contested; further, provided that, subject
to the foregoing proviso, the Company and each Guarantor shall pay or cause to
be paid all such taxes, assessments, charges, levies or claims upon the
commencement of proceedings to foreclose any lien which has attached as security
therefor.
SECTION 6.03. FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to each
Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Company, a copy of the audited balance
sheet of the Company as of the end of such year and the related audited
statements of income, shareholders' equity and cash flow for such year, setting
forth in comparative form the respective figures as of the end of and for the
previous fiscal year, and accompanied by a report thereon of independent
certified public accountants of recognized standing selected by the Company and
satisfactory to the Administrative Agent and the Required Lenders (the
"Auditor"), which report shall be unqualified; and which statements shall be
prepared in accordance with Generally Accepted Accounting Principles, applied on
a consistent basis; provided that the requirements of this Section 6.03(a) shall
be deemed satisfied by delivery within the time period specified above of copy
the Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) which includes the financial statements described in
this Section 6.03(a) prepared in accordance with the requirements therefor and
filed with the Securities and Exchange Commission;
(b) as soon as available, but in any event not later than 45
days after the end of each first, second and third fiscal quarter of the
Company, a copy of the balance sheet of the Company as of the end of each such
quarter and the related interim statements of income, shareholders' equity and
cash flow for such quarter and the portion of the fiscal year through such date
and setting forth in each case in comparative form the respective figures for
the corresponding date and period in the previous fiscal year, prepared by
management of the Company in accordance with Generally Accepted Accounting
Principles, applied on a consistent basis, and accompanied by a certificate to
that effect executed by the Financial Officer of the Company; provided that the
requirements of this Section 6.03(b) shall be deemed satisfied by delivery
within the time period specified above of (A) a copy of the Company's Quarterly
Report on Form 10-Q for such fiscal quarter, which includes the financial
statements described in this Section 6.03(b), prepared in compliance with the
requirements therefor and filed with the Securities and Exchange Commission;
(c) a certificate prepared and signed by the Financial
Officer with each delivery required by clauses (a) and (b), as to whether or
not, as of the close of such preceding period and at all times during such
preceding period, the Company was in compliance with all the provisions in this
Agreement, showing computation of financial covenants and quantitative negative
covenants, and if the Financial Officer shall have obtained knowledge of any
default in such compliance or notice of such default, it shall disclose in such
certificate such default or
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defaults or notice thereof and the nature thereof, whether or not the same shall
constitute a Default or an Event of Default hereunder;
(d) at all times indicated in clause (a) above a copy of the
management letter, if any, prepared by the Auditor;
(e) on or prior to the fifteenth day of each calendar month,
a detailed schedule of accounts receivable of the Company and the Guarantors, if
any, certified by the Financial Officer of the Company and current as of the
last Business Day of the preceding month, all in form satisfactory to the
Administrative Agent;
(f) on or prior to the fifteenth day of each calendar month,
a detailed schedule of inventory of the Company and the Guarantors, if any,
certified by the Financial Officer of the Company and current as of the last
Business Day of the preceding month, which schedule shall contain a breakdown of
such inventory by type, amount and warehouse and production facility location,
appropriately completed, all in form satisfactory to the Administrative Agent;
(g) within fifteen (15) days after the end of each calendar
month (with respect to the Borrowing Base for the calendar month then ending)
and simultaneously with the request for a Revolving Credit Loan (with respect to
the Borrowing Base as of the last day of the immediately preceding calendar
month), a completed Borrowing Base Certificate;
(h) promptly after filing thereof, copies of all regular and
periodic financial information, proxy materials and other information and
reports which the Company or any Guarantor shall file with the Securities and
Exchange Commission or shall send to its shareholders;
(i) promptly after submission to any government or
regulatory agency, all documents and information furnished to such government or
regulatory agency other than such documents and information prepared in the
normal course of business and which could not reasonably be expected to result
in any materially adverse action to be taken by such agency; and
(j) promptly, from time to time, such other information
regarding the operations, business affairs and condition (financial or
otherwise) of the Company or the Guarantors as any Lender may reasonably
request.
Notwithstanding anything to the contrary herein if, at any time, the Company
shall create, establish or acquire of any Subsidiary, all financial statements
and other information to be provided to the Administrative Agent and the Lenders
pursuant to this Section 6.03 shall be prepared on a consolidated basis with
respect to the Company and such Subsidiary or Subsidiaries, as applicable.
SECTION 6.04. BOOKS AND RECORDS; ACCESS TO PREMISES. Keep adequate
records and proper books of record and account in which complete entries will be
made in a manner to
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enable the preparation of financial statements in accordance with Generally
Accepted Accounting Principles, and which shall reflect all financial
transactions of the Company and each of the Guarantors. At any time, and from
time to time (and provided that no Default or Event of Default has occurred and
is continuing, upon reasonable prior notice) , permit the Administrative Agent
or any agent or representative thereof, to examine and request copies of and
abstracts from the books and records of such information which such Lender deems
is necessary or desirable (including, without limitation, the financial records
of the Company and each Guarantor) and to visit the properties of the Company
and each Guarantor and to discuss the affairs, finances and accounts of the
Company and each Guarantor with any of their executive officers or independent
accountants; and as often as required at any time upon reasonable notice to the
Company and during normal business hours, permit the Administrative Agent or any
agent or representative thereof, to examine and audit the inventory and
Receivables of the Company. The Companies shall pay, upon demand, the costs,
expenses and charges incurred by the Administrative Agent or its agents and
representatives in connection with any such examination and audits in accordance
with Section 10.03 hereof, provided that so long as no Default or Event of
Default shall have occurred, the Company shall pay for the costs, expenses and
charges of only one such asset audit per year.
SECTION 6.05. NOTICE OF ADVERSE CHANGE. Promptly notify the
Administrative Agent in writing of (a) any change in the business or the
operations of the Company or any Guarantor which could reasonably be expected to
have a Material Adverse Effect, and (b) any information which indicates that any
financial statements which are the subject of any representation contained in
this Agreement, or which are furnished to the Administrative Agent or the
Lenders pursuant to this Agreement, fail, in any material respect, to present
fairly, the financial condition and results of operations purported to be
presented therein, disclosing the nature thereof.
SECTION 6.06. NOTICE OF DEFAULT. Promptly notify the Administrative
Agent of any Default or Event of Default which shall have occurred, which notice
shall include a written statement as to such occurrence, specifying the nature
thereof and the action, if any, which is proposed to be taken with respect
thereto.
SECTION 6.07. NOTICE OF LITIGATION. Promptly notify the Administrative
Agent of any action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency which, if adversely determined
against the Company or any Guarantor on the basis of the allegations and
information set forth in the complaint or other notice of such action, suit or
proceeding, or in the amendments thereof, if any, could reasonably be expected
to have a Material Adverse Effect.
SECTION 6.08. NOTICE OF DEFAULT IN OTHER AGREEMENTS. Promptly notify
the Administrative Agent of any default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which the Company or any Guarantor is a party which
default could reasonably be expected to have a Material Adverse Effect.
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SECTION 6.09. NOTICE OF ERISA EVENT. Promptly deliver to the
Administrative Agent a certificate of the Financial Officer of the Company
setting forth details as to such occurrence and such action, if any, which the
Company, a Guarantor or an ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed with or
by the Company, such Guarantor, such ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator, with respect thereto: that a Reportable
Event has occurred with respect to a Plan, that an accumulated funding
deficiency has been incurred or an application may be or has been made to the
Secretary of the Treasury for a waiver or modification of the minimum funding
standard (including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan, that a
Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA, that one or more Plans have an Unfunded
Current Liability giving rise to a Lien under ERISA, that proceedings may be or
have been instituted to terminate a Plan, that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan,
or that the Company, any Guarantor or any ERISA Affiliate will or may incur any
liability (including any contingent or secondary liability) to or on account of
the termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4201 or 4204 of ERISA. The Company will deliver to each Lender a complete copy
of the annual report (Form 5500) of each Plan required to be filed with the
Internal Revenue Service. In addition to any certificates or notices delivered
to each Lender pursuant to the first sentence hereof, copies of annual reports
and any other notices received by the Company or such Guarantor required to be
delivered to each Lender hereunder shall be delivered to each Lender no later
than ten days after the later of the date such report or notice has been filed
with the Internal Revenue Service or the PBGC, given to Plan participants or
received by the Company or any Guarantor.
SECTION 6.10. NOTICE OF ENVIRONMENTAL LAW VIOLATIONS. Promptly notify
the Administrative Agent of the receipt of any notice of an action, suit, and
proceeding before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, pending against the
Company or any Guarantor relating to any alleged violation of any Environmental
Law which could reasonably be expected to have a Material Adverse Effect.
SECTION 6.11. NOTICE REGARDING MATERIAL CONTRACTS. Promptly notify the
Administrative Agent of (a) any termination, material amendment, material
supplement or other material modification of any Material Contract and (b) the
occurrence of a default by the Company or any Guarantor, or by any other party
to any Material Contract of which the Company is aware.
SECTION 6.12. COMPLIANCE WITH APPLICABLE LAWS. Comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, the breach of which could reasonably be expected to have
a Material Adverse Effect.
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SECTION 6.13. SUBSIDIARIES. The Company or a Guarantor, as
appropriate, shall (a) concurrently with the creation, establishment or
acquisition of a Non-Domestic Subsidiary, (i) execute a Pledge Agreement (or
such other agreement as shall be required by the Administrative Agent), as
applicable, with respect to not more than 65% of the capital stock of each
Subsidiary of such Person which is or becomes a Non-Domestic Subsidiary, and
(ii) deliver an opinion of counsel addressed to the Administrative Agent and
each Lender that such Pledge Agreement is valid and enforceable in the
jurisdiction of formation of such Non-Domestic Subsidiary, and (b) concurrently
with the creation, establishment or acquisition of Domestic Subsidiary, (i)
cause each Subsidiary of such Person which is a Domestic Subsidiary to execute a
Guaranty, in the form of Exhibit D hereto, and a Security Agreement, in the form
of Exhibit C hereto, (ii) deliver a favorable written opinion of counsel
addressed to the Administrative Agent and each Lender, with respect to such
Domestic Subsidiary and with respect to the documents required to be executed by
such Domestic Subsidiary pursuant to this Section 6.13, substantially in the
form attached hereto as Exhibit G, and (iii) provide to each Lender the
supporting documents identified in clauses (i), (ii), and (iii) of Section
5.01(e) hereof in each case with respect to such Domestic Subsidiary. In no
event shall the Company be required to pledge any of the assets of a Subsidiary
of the Company that is a controlled foreign corporation, as defined in Section
957(a) of the Code, including, but not limited, to the stock of any Subsidiary
of the Company held directly or indirectly by any such Subsidiary.
SECTION 6.14. ENVIRONMENTAL LAWS. Comply in all material respects with
the requirements of all Environmental Laws, provide to the Lenders all
documentation in connection with such compliance that the Lenders may reasonably
request, and defend, indemnify, and hold harmless the Administrative Agent and
each Lender and their respective employees, agents, officers, and directors,
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs, or expenses of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of, or in any way related to, (a)
the presence, disposal, or release of any Hazardous Materials on any property at
any time owned or occupied by the Company or any Guarantor; (b) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to such Hazardous Materials; (c) any lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous
Materials, and/or (d) any violation of applicable Environmental Laws, including,
without limitation, reasonable attorney and consultant fees, investigation and
laboratory fees, court costs, and litigation expenses.
SECTION 6.15. COLLATERAL MORTGAGE. Upon the occurrence and continuance
of an Event of Default for sixty (60) days or more the Administrative Agent may
record the Collateral Mortgage and, in connection therewith, the Company shall
provide to the Administrative Agent, for the benefit of the Lenders, within ten
(10) Business Days of the expiration of such sixty (60) day period, (a) a title
policy and a lender's title insurance binder issued by an insurance company
authorized to transact business in the State of New York and acceptable to the
Lenders naming the Administrative Agent as insured and insuring that the
Collateral Mortgage creates a continuing, valid lien on the Hauppauge Premises
prior to all Liens, and securing an amount and on terms and conditions
satisfactory to the Required Lenders
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at such time, (b) a current legal description and survey of the Hauppauge
Premises certified to the Administrative Agent and the title company, (c) a
certificate of insurance from an independent insurance broker confirming the
insurance required to be maintained pursuant to the Collateral Mortgage, with
respect to the Hauppauge Premises, naming the Administrative Agent as mortgagee
with respect to such insurance, and (d) such other documents, promissory notes,
agreements and information that the Administrative Agent and the Lenders may
request. The Company further agrees to pay all title insurance premiums,
recording and filing fees and charges and other expenses incurred by the
Administrative Agent in connection with the recording of the Collateral Mortgage
and the delivery of the other documents required pursuant to this Section 6.15.
In the event that the Collateral Mortgage shall be recorded, the Administrative
Agent shall insert into such document the amount to be secured by the Collateral
Mortgage prior to its recording thereof in accordance with the terms hereof,
such amount to be determined by the Administrative Agent at such time, but not
to exceed the value of the Hauppauge Premises at such time.
SECTION 6.16. INTEREST RATE PROTECTION. The Company shall arrange for
interest rate protection with respect to the interest owing under the Term Loan,
on terms and conditions satisfactory to JPMorgan Chase Bank, within thirty (30)
days of the Closing Date.
SECTION 6.17. FIRST MORTGAGE RE: CLARKSBURG PREMISES. On or prior to
December 21, 2002, the Company shall have delivered to the Administrative Agent,
(a) a title policy and a lender's title insurance binder issued by an insurance
company authorized to transact business in West Virginia and acceptable to the
Lenders naming the Administrative Agent as insured and insuring that the
Mortgage creates a continuing, valid lien on the Clarksburg Premises prior to
all Liens, and securing an amount not less than $4,000,000, (b) a current legal
description and survey of the Clarksburg Premises certified to the
Administrative Agent and the title company; (c) an appraisal of the Clarksburg
Premises from an appraiser engaged by the Administrative Agent, with a copy for
each Lender, in form and substance satisfactory to the Lenders, with all costs
of such appraisal for the account of the Company, and otherwise in complete
conformity with all applicable rules and regulations and the Administrative
Agent's appraisal policy and indicating a minimum appraised value of the
Premises and the equipment located thereat of at least $5,000,000; (d) an
environmental review report with respect to the Clarksburg Premises from an
environmental review firm engaged by the Administrative Agent which report shall
be satisfactory in form and substance to the Lenders; all costs of such review
shall be for the account of the Company; (e) a certificate of insurance from an
independent insurance broker confirming the insurance required to be maintained
pursuant to the First Mortgage, with respect to the Clarksburg Premises, naming
the Administrative Agent as mortgagee with respect to such insurance, and (f)
such other documents, agreements and information that the Administrative Agent
and the Lenders may request. The Company further agrees to pay all title
insurance premiums, recording and filing fees and charges and other expenses
incurred by the Administrative Agent in connection with the recording of the
First Mortgage and the delivery of the other documents required pursuant to this
Section 6.17.
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ARTICLE VII
NEGATIVE COVENANTS
The Company covenants and agrees that so long as the Commitments remain
in effect or any of the principal of or interest on any Note or any other
Obligations hereunder shall be unpaid, it will not, and will not cause or permit
any Guarantor, directly or indirectly, to:
SECTION 7.01. INDEBTEDNESS. Incur, create, assume or suffer to exist
or otherwise become liable in respect of any Indebtedness, other than:
(a) Indebtedness incurred prior to the date hereof as
described in Schedule II attached hereto, but not including any renewals or
extensions thereof;
(b) Indebtedness to the Lenders under this Agreement, the
Notes or any other Loan Document;
(c) Indebtedness for trade payables incurred in the
ordinary course of business; provided such payables shall be paid or discharged
when due;
(d) Indebtedness consisting of guarantees permitted pursuant
to Section 7.03;
(e) Subordinated Indebtedness; provided, however, that no
Default or Event of Default shall have occurred and be continuing or would occur
after giving effect to the incurrence of such Subordinated Indebtedness;
(f) Indebtedness secured by purchase money liens as
permitted under Section 7.02(f);
(g) Indebtedness owing by the Company to any Guarantor or
from any Guarantor to the Company or any other Guarantor;
(h) Indebtedness owing by the Company to JPMorgan Chase Bank
in connection with Hedging Agreements; and
(i) Indebtedness owing by the Company to the IRB in
connection with the IRB Transaction, in an amount not to exceed $3,970,000.
SECTION 7.02. LIENS. Incur, create, assume or suffer to exist any Lien
on any of their respective assets now or hereafter owned, other than:
(a) Liens existing on the date hereof as set forth on
Schedule III attached hereto, but not including any renewals or extensions
thereof;
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(b) Liens for taxes, assessments or other governmental
charges or levies not yet delinquent or which are being contested in good faith
by appropriate proceedings, provided, however, that adequate reserves with
respect thereto are maintained on the books of the Company or the Guarantors in
accordance with Generally Accepted Accounting Principles;
(c) carriers', warehousemens', mechanics', suppliers' or
other like Liens arising in the ordinary course of business and (i) not overdue
for a period of more than 30 days or (ii) which are being contested in good
faith by appropriate proceedings in a manner which will not jeopardize or
diminish the interest of the Administrative Agent in any of the collateral
subject to the Security Documents, provided, however, that adequate reserves
with respect thereto are maintained on the books of the Company or the
Guarantors in accordance with Generally Accepted Accounting Principles;
(d) deposits under workmen's compensation, unemployment
insurance and social security laws;
(e) liens granted to the Lenders or the Administrative
Agent, for the ratable benefit of the Lenders, under this Agreement or any other
Loan Document;
(f) purchase money liens for fixed or capital assets
including obligations with respect to Capital Leases; provided in each case (i)
no Default or Event of Default shall have occurred and be continuing or shall
occur after giving effect to such lien, (ii) such purchase money lien does not
exceed 80% of the purchase price of, and encumbers only, the property acquired,
and (iii) such purchase money Lien does not secure any Indebtedness other than
in respect of the purchase price of the asset acquired; and
(g) liens granted to the IRB in connection with the IRB
Transaction, provided that such liens only encumber the IRB Collateral.
SECTION 7.03. GUARANTIES. Guarantee, endorse, become surety for, or
otherwise in any way become or be responsible for the Indebtedness or
obligations of any Person, whether by agreement to maintain working capital or
equity capital or otherwise maintain the net worth or solvency of any Person or
by agreement to purchase the Indebtedness of any other Person, or agreement for
the furnishing of funds, directly or indirectly, through the purchase of goods,
supplies or services for the purpose of discharging the Indebtedness of any
other Person or otherwise, or enter into or be a party to any contract for the
purchase of merchandise, materials, supplies or other property if such contract
provides that payment for such merchandise, materials, supplies or other
property shall be made regardless of whether delivery of such merchandise,
supplies or other property is ever made or tendered except:
(a) guaranties executed on or prior to the date hereof as
described on Schedule IV attached hereto including any renewals or extension
thereof;
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(b endorsements of negotiable instruments for collection or
deposit in the ordinary course of business;
(c) guaranties of any Indebtedness owing to the
Administrative Agent and the Lenders; and
(d) guaranties by the Guarantors of Indebtedness of the
Company permitted pursuant to Section 7.01(c).
SECTION 7.04. SALE OF ASSETS. Sell, assign, lease, transfer or
otherwise dispose of any of their now owned or hereafter acquired respective
properties and assets, whether or not pursuant to an order of a federal agency
or commission, except for the sale of inventory disposed of in the ordinary
course of business.
SECTION 7.05. SALES OF RECEIVABLES. Sell, transfer, discount or
otherwise dispose of notes, accounts receivable or other obligations owing to
the Company or any Guarantor, with or without recourse, except for collection in
the ordinary course of business.
SECTION 7.06. LOANS AND INVESTMENTS. Make or commit to make any
advance, loan, extension of credit, or capital contribution to, or purchase or
hold beneficially any stock or other securities, or evidence of Indebtedness of,
purchase or acquire all or a substantial part of the assets of, make or permit
to exist any interest whatsoever in, any other Person except (a) for the
ownership of stock of any Subsidiaries existing as of the Closing Date or
created after the Closing Date as permitted pursuant to Section 7.12 hereof and
provided that the Company has complied with its obligations under Section 6.13
with respect to such Subsidiary; (b) Eligible Investments; (c) loans and
advances by the Company to any Guarantor and loans and advances by any Guarantor
to the Company or any other Guarantor; and (d) the Maxxim Transaction.
SECTION 7.07. NATURE OF BUSINESS. Change or alter, in any material
respect, the nature of its business from th nature of the business engaged in by
it on the date hereof.
SECTION 7.08. SALE AND LEASEBACK. Enter into any arrangement, directly
or indirectly, with any Person whereby it shall sell or transfer any property,
whether real or personal, used or useful in its business, whether now owned or
hereafter acquired, of it, if at the time of such sale or disposition it intends
to lease or otherwise acquire the right to use or possess (except by purchase)
such property or like property for a substantially similar purpose.
SECTION 7.09 . FEDERAL RESERVE REGULATIONS. Permit any Loan or the
proceeds of any Loan to be used for any purpose which violates or is
inconsistent with the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
SECTION 7.10. ACCOUNTING POLICIES AND PROCEDURES. Permit any change in
the accounting policies and procedures of the Company or any Guarantor,
including a change in fiscal year, provided, however, that any policy or
procedure required to be changed by the
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Financial Accounting Standards Board (or other board or committee thereof) in
order to comply with Generally Accepted Accounting Principles may be so changed.
SECTION 7.11. HAZARDOUS MATERIALS. Cause or permit any of its
properties or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose of, transfer, produce or process Hazardous
Materials, except in compliance with all applicable federal, state and local
laws or regulations, or cause or permit, as a result of any intentional or
negligent act or omission on the part of the Company, a release of Hazardous
Materials onto such property or asset or onto any other property.
SECTION 7.12. LIMITATIONS ON FUNDAMENTAL CHANGES. Merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now or hereafter acquired) to, any Person, or, acquire all of the stock or all
or substantially all of the assets or the business of any Person or liquidate,
wind up or dissolve or suffer any liquidation or dissolution; provided, however,
any Guarantor may merge with (a) the Company provided that the Company shall be
the continuing or surviving entity, or (b) with any one or more Guarantors; and
provided further, that the Company may enter into the Maxxim Transaction.
SECTION 7.13. FINANCIAL COVENANTS.
(a) Minimum Net Worth. Permit Net Worth, at any date of
determination set forth below, to be less that the amount set forth below
opposite the applicable determination date:
Date Amount
---- ------
September 30, 2002 $33,750,000, plus 50% of Net Income of
the Company for the period from March 31,
2002 through September 30, 2002
December 31, 2002 and as at Actual Net Worth of the Company as
the last day of each fiscal quarter of the previous fiscal quarter end, plus
thereafter 50% of Net Income of the Company for the
fiscal quarter then ending
(b) Maximum Leverage Ratio. Permit the Leverage Ratio at any
time during the period set forth below, to be greater than the ratio set forth
below opposite the applicable period:
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Period Ratio
------ -----
March 31, 2003 through 2.50:1.00
March 30, 2004
March 31, 2004 and thereafter 2.25:1.00
(c) Minimum EBITDA. Permit EBITDA to be less than the amount
set forth below opposite the applicable determination date:
Date Amount
---- ------
Fiscal quarter ending $3,000,000
September 30, 2002
Six month period ending $7,000,000
December 31, 2002
(d) Minimum Current Ratio. Permit the Current Ratio to be
less than 1.25:1.00 at any time.
(e) Debt Service Coverage Ratio. Permit the Debt Service
Coverage Ratio to be less than the ratio set forth opposite the applicable
determination date:
Date Ratio
---- -----
Six months ending March 31, 2003 1.25:1.00
Nine months ending June 30, 2003 1.25:1.00
September 30, 2003 and at the end 1.25:1.00
of each fiscal quarter thereafter
(f) Net Loss. Permit the Company to suffer a net loss for
any period.
(g) Maximum Capital Expenditures. Permit Capital
Expenditures to exceed (i) $2,000,000, during the fiscal year ending March 31,
2003, or (b) $1,500,000, during any fiscal year thereafter, provided however
that if Capital Expenditures of the Company are less than such permitted amount
in any fiscal year, the difference between the amount permitted and the actual
Capital Expenditures for such year may be carried forward for no more than one
fiscal year to be expended during such succeeding fiscal year. Such carried
forward amount may only be applied after the permitted amount of Capital
Expenditures have been expended in such succeeding fiscal year.
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Notwithstanding anything to the contrary herein if, at any time, the Company
shall create, establish or acquire of any Subsidiary or Subsidiaries, all
financial covenants in this Section 7.13 shall be calculated on a consolidated
basis with respect to the Company and such Subsidiary or Subsidiaries, as
applicable.
SECTION 7.14. SUBORDINATED DEBT. Directly or indirectly prepay,
defease, purchase, redeem, or otherwise acquire any Subordinated Debt or amend,
supplement or otherwise modify any of the terms thereof without the prior
written consent of the Required Lenders.
SECTION 7.15. DIVIDENDS. Declare any dividend on, or make any payment
on account of, or set apart assets for a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of, any shares
of any class of stock of the Company or any Guarantor, or warrant to purchase
any class of stock or other equity interest of the Company or any Guarantor,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash, securities or property
or in obligations of the Company or any Guarantor or in any combination thereof,
or permit any Affiliate to make any payment on account of, or purchase or
otherwise acquire, any shares of any class of the stock of the Company or any
Guarantor from any Person; provided, however, any Guarantor may declare and pay
cash dividends to its immediate parent provided no Default or Event of Default
shall have occurred and be continuing or will occur immediately after giving
effect to such declaration or payment, including, without limitation, any
Default or Event of Default arising out of the failure to comply with the
financial covenants set forth in Section 7.13.
SECTION 7.16. TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Company's
or Guarantor's business and upon fair and reasonable terms no less favorable to
the Company or Guarantor than they would obtain in a comparable arms-length
transaction with a Person not an Affiliate.
SECTION 7.17. IMPAIRMENT OF SECURITY INTEREST. Take or omit to take
any action which could reasonably be expected to have the result of impairing
the security interest in any property subject to a security interest in favor of
the Administrative Agent or grant to any person any interest whatsoever in any
property which is subject to a security interest in favor of the Administrative
Agent.
SECTION 7.18. MAXXIM TRANSACTION DOCUMENTS. Amend, restate, supplement
or otherwise modify and Maxxim Transaction Documents in any manner adverse to
the interests of the Administrative Agent and the Lenders
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ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. In the case of the happening of any
of the following events (each an "Event of Default"):
(a) failure to pay the principal of or interest on any
Loan or any fees or other amounts payable under this Agreement, in each case, as
and when due and payable;
(b) default shall be made in the due observance or
performance of any covenant, condition or agreement of the Company or any
Guarantor to be performed pursuant to this Agreement, the Notes or any other
Loan Document;
(c) any representation or warranty made or deemed made in
this Agreement or any other Loan Document shall prove to be false or misleading
in any material respect when made or given or when deemed made or given;
(d) any report, certificate, financial statement or other
instrument furnished in connection with this Agreement or any other Loan
Document or the borrowings hereunder, shall prove to be false or misleading in
any material respect when made or given or when deemed made or given;
(e) default in the performance or compliance in respect of
any agreement or condition relating to any Indebtedness of the Company or any
Guarantor in excess of $100,000 individually or in the aggregate (other than the
Notes) if the effect of such default is to accelerate the maturity of such
Indebtedness or to permit the holder or obligee thereof (or a trustee on behalf
of such holder or obligee) to cause such Indebtedness to become due prior to the
stated maturity thereof, or, any such Indebtedness shall not be paid when due;
(f) the Company shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code or any other federal or state bankruptcy, insolvency or similar law,
(ii) consent to the institution of, or fail to controvert in a timely and
appropriate manner, any such proceeding or the filing of any such petition,
(iii) apply for or consent to the employment of a receiver, trustee, custodian,
sequestrator or similar official for the Company or for a substantial part of
its property; (iv) file an answer admitting the material allegations of a
petition filed against it in such proceeding, (v) make a general assignment for
the benefit of creditors, (vi) take corporate action for the purpose of
effecting any of the foregoing; or (vii) become unable or admit in writing its
inability or fail generally to pay its debts as they become due; or any of the
actions identified in the preceding clauses (i) through (vii) shall have
occurred with respect to any Guarantor.
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Company or
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of a substantial part of their respective property, under Title 11 of the United
States Code or any other federal or state bankruptcy insolvency or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or for a substantial part of their property, or (iii)
the winding-up or liquidation of the Company and such proceeding or petition
shall continue undismissed for 30 days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect for 30 days;
or any of the actions identified in the preceding clauses (i), (ii) or (iii)
shall have occurred with respect to any Guarantor;
(h) One or more orders, judgments or decrees for the payment
of money in excess of $100,000 in the aggregate shall be rendered against the
Company or any Guarantor and the same shall not have been paid in accordance
with such judgment, order or decree or settlement and either (i) an enforcement
proceeding shall have been commenced by any creditor upon such judgment, order
or decree, or (ii) there shall have been a period of thirty (30) days during
which a stay of enforcement of such judgment, order or decree, by reason of
pending appeal or otherwise, was not in effect;
(i) any Plan shall fail to maintain the minimum funding
standard required for any Plan year or part thereof or a waiver of such standard
or extension of any amortization period is applied for or granted under Section
412 of the Code, any Plan is terminated by the Company, any Guarantor or any
ERISA Affiliate or the subject of termination proceedings under ERISA, any Plan
shall have an Unfunded Current Liability, a Reportable Event shall have occurred
with respect to a Plan or the Company, any Guarantor, or any ERISA Affiliate
shall have incurred a liability to or on account of a Plan under Section 515,
4062, 4063, 4201 or 4204 of ERISA, and there shall result from any such event or
events the imposition of a lien upon the assets of the Company or the granting
of a security interest on such assets, or a liability to the PBGC or a Plan or a
trustee appointed under ERISA or a penalty under Section 4971 of the Code;
(j) any material provision of any Loan Document shall for
any reason cease to be in full force and effect in accordance with its terms or
the Company or any Guarantor shall so assert in writing;
(k) a Change of Control shall have occurred;
(l) any of the Liens purported to be granted pursuant to any
Security Document shall fail or cease for any reason to be legal, valid and
enforceable liens on the collateral purported to be covered thereby or shall
fail or cease to have the priority purported to be created thereby; or
(m) a default shall have occurred and be continuing under
any Maxxim Transaction Document;
then, at any time thereafter during the continuance of any
such event, the Administrative Agent may, and, upon the request of the Required
Lenders, shall, by written or
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telephonic notice to the Company, take either or both of the following actions,
at the same or different times, (a) terminate the Commitments, (b) declare (i)
the Notes, both as to principal and interest, and (ii) all other Obligations, to
be forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, anything contained
herein or in the Notes to the contrary notwithstanding, (c) exercise any or all
other remedies under the Loan Documents and (d) so long as such Event of Default
shall have occurred and is continuing for at least sixty (60) days, record the
Collateral Mortgage provided that the recording of the Collateral Mortgage shall
not be deemed a waiver of any Event of Default then in existence; provided,
however, that if an event specified in Section 8.01(f) or (g) shall have
occurred, the Commitments shall automatically terminate and interest, principal
and amounts referred to in the preceding clauses (i) and (ii) shall be
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived, anything contained herein
or in the Notes to the contrary notwithstanding.
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.01. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder, under the Security Documents and the other Loan Documents with such
powers as are specifically delegated to the Administrative Agent by the terms of
this Agreement, the Security Documents and the other Loan Documents together
with such other powers as are reasonably incidental thereto. The Administrative
Agent shall not have any duties or responsibilities except those expressly set
forth in this Agreement, the Security Documents and the other Loan Documents and
shall not be a trustee for any Lender, nor is the Administrative Agent acting in
a fiduciary capacity of any kind under this Agreement, the Security Documents or
the other Loan Documents or in respect thereof or in respect of any Lender. The
Administrative Agent shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, the
Security Documents, or the other Loan Documents, in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement, the Security Documents or the other Loan Documents, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Security Documents or the other Loan Documents or any other
document referred to or provided for herein or therein or for the collectibility
of the Loans or for the validity, effectiveness or value of any interest or
security covered by the Security Documents or for the value of any collateral or
for the validity or effectiveness of any assignment, mortgage, pledge, security
agreement, financing statement, document or instrument, or for the filing,
recording, re-filing, continuing or re-recording of any thereof or for any
failure by the Company, or any of their respective Subsidiaries to perform any
of its obligations hereunder or under the other Loan Documents. The
Administrative Agent may take all actions by itself and/or it may employ agents
and attorneys-in-fact, and shall not be responsible, except as to money or the
securities received by it or its authorized agents, for the negligence or
misconduct of itself or its employees or of any such agents or
attorneys-in-fact, if such agents or attorneys-in-fact are selected by it with
reasonable care. Neither the Administrative Agent nor any of its directors,
officers, employees or agents shall be liable or
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responsible for any action taken or omitted to be taken by it or them hereunder,
under the Security Documents or the other Loan Documents or in connection
herewith or therewith, except for its or their own gross negligence or willful
misconduct.
SECTION 9.02. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement, the Security Documents or the other Loan Documents, the
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder, under the Security Documents or the other
Loan Documents in accordance with instructions signed by the Required Lenders,
or such other number of Lenders as is specified in Section 10.04 hereof, and
such instructions of the Required Lenders or other number of Lenders as
aforesaid and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders.
SECTION 9.03. EVENTS OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge of the occurrence of a Default unless the
Administrative Agent has received notice from a Lender or the Company specifying
such Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the
Lenders. The Administrative Agent shall (subject to Section 9.07 hereof) take
such action with respect to such Default as shall be directed by the Required
Lenders, except as otherwise provided in Section 10.04 hereof; provided that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may take such action, or refrain from taking such
action, with respect to such Default or an Event of Default as it shall deem
advisable in the best interest of the Lenders.
SECTION 9.04. RIGHTS AS A LENDER. With respect to its Commitment and
the Loans made by it, the Administrative Agent in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Administrative
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Administrative Agent in its individual capacity. The
Administrative Agent and its Affiliates may (without having to account therefor
to any Lender) accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with the Company, any Guarantor or any
of their respective Affiliates, if it were not acting as the Administrative
Agent, and the Administrative Agent may accept fees and other consideration from
the Company, any Guarantor or any of their respective Affiliates, for services
in connection with this Agreement, the Security Documents or any of the other
Loan Documents or otherwise without having to account for the same to the
Lenders.
SECTION 9.05. INDEMNIFICATION. The Lenders shall indemnify the
Administrative Agent (to the extent not reimbursed by the Company under Section
10.03
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hereof), ratably in accordance with the aggregate principal amount of the Loans
made by the Lenders (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of this Agreement, the Security Documents or any of the other
Loan Documents or any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby and thereby (including, without
limitation, the costs and expenses which the Company are obligated to pay under
Section 10.03 hereof or under the applicable provisions of any other Loan
Document) or the enforcement of any of the terms hereof or of the Security
Documents, or of any other Loan Document, provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Administrative Agent.
SECTION 9.06. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and the Guarantors and decision to enter into this Agreement and that it
will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement, the Security Documents or the
other Loan Documents. The Administrative Agent shall not be required to keep
itself informed as to the performance or observance by the Company and the
Guarantors of this Agreement, the Security Documents or the other Loan Documents
or any other document referred to or provided for herein or therein or to
inspect the properties or books of the Company or any Guarantor. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Administrative Agent hereunder or under the
Security Documents, or the other Loan Documents, the Administrative Agent shall
not have any duty or ability to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Company, which may come into the possession of the Administrative Agent or any
of its Affiliates.
SECTION 9.07. FAILURE TO ACT. Except for action expressly required of
the Administrative Agent hereunder, or under the Security Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder or thereunder unless it shall be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action,
except for its own gross negligence or willful misconduct.
SECTION 9.08. RESIGNATION OF ADMINISTRATIVE AGENT. Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this Section 9.08, the Administrative Agent may resign (the "resigning Agent")
at any time by notifying the Lenders and the Company. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor, which
successor agent shall, provided no Event of Default has occurred
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and is continuing, be subject to the approval of the Company, such approval not
to be unreasonably withheld or delayed. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the resigning Agent gives notice of its resignation, then
the resigning Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be a bank with an office in New York, New York, or an Affiliate of
any such bank. Upon the acceptance of its appointment as Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent, and the resigning
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Company to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Company and
such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 10.03 shall continue in effect for the
benefit of such resigning Agent in respect of any actions taken or omitted to be
taken by it while it was acting as the Administrative Agent.
SECTION 9.09. SHARING OF COLLATERAL AND PAYMENTS. In the event that at
any time any Lender shall obtain payment in respect of a Note or interest
thereon, or receive any collateral in respect thereof, whether voluntarily or
involuntarily, through the exercise of a right of banker's lien, set-off or
counterclaim against the Company or otherwise, in a greater proportion than the
proportion received by any other Lender in respect of the corresponding Note
held by it or interest thereon, then the Lender so receiving such greater
proportionate payment shall purchase for cash from the other Lender or Lenders
such portion of each such other Lender's or Lenders' Loan, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such Lender receiving the proportionate
over-payment to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders each of which shall have a lien on its
ratable portion of the amount described hereinafter obtained from the Company;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from the Lender which received the proportionate
over-payment, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Company agree, to the extent they may do so under applicable law, that each
Lender so purchasing a portion of another Lender's Loan may exercise all rights
of payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including
telecopy), and unless otherwise expressly provided herein, shall be conclusively
deemed to have been received by a party hereto and to be effective on the day on
which delivered by hand to such party or one Business Day after being sent by
overnight mail to the address set forth below, or, in the case of telecopy
notice, when acknowledged as received, or if sent by registered or certified
mail, three
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(3) Business Days after the day on which mailed in the United States, addressed
to such party at such address:
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(a) if to the Administrative Agent, at
JPMorgan Chase Bank
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxxx, Relationship Manager
for Medical Action Industries Inc.
Telecopy: (000) 000-0000
(b) if to the Company, at
Medical Action Industries Inc.
000 Xxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx, President
Telecopy: 000-000-0000
With a copy to
Medical Action Industries Inc.
000 Xxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Satin, General Counsel
Telecopy: 000-000-0000
(c) if to any Lender, to its address set forth in the
signature page of this Agreement and to the person so designated;
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(d) as to each such party at such other address as such
party shall have designated to the other in a written notice complying as to
delivery with the provisions of this Section 10.01.
SECTION 10.02. EFFECTIVENESS; SURVIVAL. This Agreement shall become
effective on the date on which all parties hereto shall have signed a
counterpart copy hereof and shall have delivered the same to the Administrative
Agent. All representations and warranties made herein and in the other Loan
Documents and in the certificates delivered pursuant hereto or thereto shall
survive the making by the Lenders of the Loans, in each case, as herein
contemplated and the execution and delivery to the Lenders of the Notes
evidencing the Loans and shall continue in full force and effect so long as the
Obligations hereunder are outstanding and unpaid and the Commitments are in
effect. The obligations of the Company pursuant to Section 3.07, Section
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3.08, Section 3.09 and Section 10.03 shall survive termination of this Agreement
and payment of the Obligations.
SECTION 10.03. INDEMNITY AND EXPENSES. The Company agrees (a) to
indemnify, defend and hold harmless the Administrative Agent, each Lender and
their respective officers, directors, employees, and affiliates (each, an
"indemnified person") from and against any and all losses, claims, damages,
liabilities or judgments to which any such indemnified person may be subject and
arising out of or in connection with the Loan Documents, the financings
contemplated hereby, the use of any proceeds of such financings or any related
transaction or any claim, litigation, investigation or proceeding relating to
any of the foregoing, whether or not any of such indemnified persons is a party
thereto, and to reimburse each of such indemnified persons upon demand for any
legal or other expenses incurred in connection with the investigation or
defending any of the foregoing; provided that the foregoing indemnity will not,
as to any indemnified person, apply to losses, claims, damages, liabilities,
judgments or related expenses to the extent arising from the wilful misconduct
or gross negligence of such indemnified person, (b) to pay or reimburse the
Administrative Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the preparation and execution of and any amendment,
supplement or modification to this Agreement, the Notes any other Loan
Documents, and any other documents prepared in connection herewith or therewith,
and the consummation of the transactions contemplated hereby and thereby,
including without limitation, the reasonable fees and disbursements of Xxxxxxx
Xxxxx, P.C., counsel to the Administrative Agent, and (c) to pay or reimburse
each Lender and the Administrative Agent for all their costs and expenses
incurred in connection with the enforcement and preservation of any rights under
this Agreement, the Notes, the other Loan Documents, and any other documents
prepared in connection herewith or therewith, including, without limitation, the
reasonable fees and disbursements of counsel (including, without limitation,
in-house counsel) to the Administrative Agent and to the several Lenders,
including all such out-of-pocket expenses incurred during any work-out,
restructuring or negotiations in respect of the Obligations.
SECTION 10.04. AMENDMENTS AND WAIVERS. With the written consent of the
Required Lenders, the Administrative Agent and the Company may, from time to
time, enter into written amendments, supplements or modifications hereto for the
purpose of adding any provisions to this Agreement or the Notes or any of the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Company hereunder or thereunder, and with the written consent of the
Required Lenders, the Administrative Agent on behalf of the Lenders may execute
and deliver to the Company a written instrument waiving, on such terms and
conditions as the Administrative Agent may specify in such instrument, any of
the requirements of this Agreement or the Notes or any of the other Loan
Documents or any Event of Default; provided, however, that no such waiver and no
such amendment, or supplement or modification shall (a) extend the maturity of
any Note, or change the amortization schedule of any Term Note, or any
installment thereof, (b) reduce the amount payable or rate, or extend the time
of payment of interest, on any Note or any fees payable to the Lenders
hereunder, (c) reduce the principal amount of any Note, (d) amend, modify or
waive any provision of this Section 10.04, (e) amend or modify any provision
hereof specifying the percentage of Lenders required to waive, amend
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or modify any rights hereunder or make any determination granting consent
hereunder or reduce the percentage specified in the definition of Required
Lenders, (f) consent to the assignment or transfer by the Company or any
Guarantor of any of its rights or obligations under this Agreement or any other
Loan Document, (g) except as expressly permitted pursuant to this Agreement or
any other Loan Document release any significant collateral security granted to
the Administrative Agent under the Security Documents, (h) release any Guarantor
from its Guaranty, or (i) amend, waive or modify the provisions of Sections 7.06
and 7.12 with respect to the acquisition by the Company of any stock or assets
of an unaffiliated Person, in each case specified in clauses (a) through (i)
above without the written consent of all the Lenders; and provided, further,
that no such waiver and no such amendment, supplement or modification shall (I)
amend, modify, supplement or waive any provision of Section IX with respect to
the Administrative Agent without the written consent of the Administrative Agent
or (II) increase the amount of any Lenders' Commitment without the written
consent of such Lender. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Company, the Lenders, the Administrative Agent and all future holders
of the Notes.
SECTION 10.05. SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the benefit
of the Company, the Lenders, the Administrative Agent, all future holders of the
Notes and their respective successors and assigns, except that the Company may
not assign or transfer any of their rights or obligations under this Agreement
without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other financial institutions ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender hereunder. In the
event of any such sale by a Lender of participating interests to a Participant,
such Lender's obligations under this Agreement to the other parties under this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Agreement, and the Company and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement.
The Company agree that each Participant shall be entitled to the benefits of
Sections 3.07, 3.08 and 3.09 with respect to its participation in the
Commitments and in the Loans outstanding from time to time; provided, however,
that no Participant shall be entitled to receive any greater amount pursuant to
such sections than the Transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred. No Participant shall have the
right to consent to any amendment to, or waiver of, any provision of this
Agreement, except the transferor Lender may provide in its agreement with the
Participant that such Lender will not, without the consent of the Participant,
agree to any amendment or waiver described in clause (a) through clause (h) of
Section 10.04.
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(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Lender or any domestic banking affiliate thereof, and, with the consent of the
Administrative Agent, and, provided no Event of Default has occurred and is
continuing, the consent of the Company, such consent not to be unreasonably
withheld or delayed, to one or more additional banks or financial institutions
("Purchasing Lenders") all or any part of its rights and obligations under this
Agreement and the Notes pursuant to an Assignment and Acceptance Agreement,
executed by such Purchasing Lender, such transferor Lender and the
Administrative Agent, and delivered to the Administrative Agent for its
acceptance. Upon such execution, delivery and acceptance from and after the
effective date specified in such Assignment and Acceptance Agreement, (i) the
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance Agreement, have the rights and obligations of
a Lender hereunder with Commitments as set forth therein and (ii) the transferor
Lender thereunder shall, to the extent provided in such Assignment and
Acceptance Agreement, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance Agreement covering all or the
remaining portion of a transferor Lender's rights and obligations under this
Agreement, such transferor Lender shall cease to be a party hereto). Such
Assignment and Acceptance Agreement shall be deemed to amend this Agreement to
the extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of Commitment Proportions arising
from the purchase by such Purchasing Lender of all or a portion of the rights
and obligations of such transferor Lender under or in respect of this Agreement
and the Notes. On or prior to the effective date specified in such Assignment
and Acceptance Agreement, the Company, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Note, a new Note to the
order of such Purchasing Lender in an amount equal to the Commitments assumed by
it pursuant to such Assignment and Acceptance Agreement and, if the transferor
Lender has retained any Commitment hereunder, a new Note to the order of the
transferor Lender in an amount equal to such Commitment retained by it
hereunder. Such new Notes shall be in a principal amount equal to the principal
amount of such surrendered Note, shall be dated the date of the Note they
replace and shall otherwise be in the form of the Note replaced thereby. The
Note surrendered by the transferor Lender shall be returned by the
Administrative Agent to the Company marked "cancelled". Anything in this Section
10.05 to the contrary notwithstanding, no transfer to a Purchasing Lender shall
be made pursuant to this paragraph (c) if such transfer by any one transferor
Lender to any one Purchasing Lender (other than a Purchasing Lender which is a
Lender hereunder prior to such transfer) (x) is less than $2,000,000 of the
Commitments of such transferor Lender or (y) if less than all of the Commitment
of such transferor Lender is transferred, after giving effect to such transfer
the amount held by any Transferor Lender would be less than $2,000,000. Each
transfer to a Purchasing Lender shall be made in the same pro rata portion with
respect to the Revolving Credit Commitment and the Term Loan Commitments or, if
all or any portion of the Term Loan Commitments shall have expired, the Term
Loans.
(d) The Administrative Agent shall maintain at its address
referred to in Section 10.01 a copy of each Assignment and Acceptance Agreement
delivered to it and a register (the
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"Register") for the recordation of the names and addresses of the Lenders and
the commitments of, and principal amount of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error and the Company, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Company or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance Agreement
executed by a transferor Lender and a Purchasing Lender, together with payment
by the Purchasing Lender to the Administrative Agent of a registration and
processing fee of $3,500 if the Purchasing Lender is not a Lender prior to the
execution of an Assignment and Acceptance Agreement and $2,500 if the Purchasing
Lender is a Lender prior to the execution of an Assignment and Acceptance
Agreement, the Administrative Agent shall (i) accept such Assignment and
Acceptance Agreement, (ii) record the information contained therein in the
Register, and (iii) give prompt notice of such acceptance and recordation to the
Lenders and the Company.
(f) The Company authorizes each Lender (subject to Section 10.11)
to disclose to any Participant or Purchasing Lender (each, a "Transferee") and
any prospective Transferee any and all financial information in such Lender's
possession concerning the Company and the Guarantors which has been delivered to
such Lender by or on behalf of the Company or any Guarantor pursuant to this
Agreement or which has been delivered to such Lender by the Company in
connection with such Lender's credit evaluation of the Company and the
Guarantors prior to entering into this Agreement.
(g) If, pursuant to this Section 10.05, any interest in this
Agreement, a participation agreement, or any Note is transferred to any
transferee which is organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor Lender,
the Administrative Agent and the Company) that under applicable law and treaties
no taxes will be required to be withheld by the Administrative Agent, the
Company, or the transferor Lender with respect to any payments to be made to
such Transferee in respect of the Loans, (ii) to furnish to the Administrative
Agent, the transferor Lender and the Company either U.S. Internal Revenue
Service Form W-8ECI or U.S. Internal Revenue Service Form W-88BEN (wherein such
Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree (for the
benefit of the Administrative Agent, the transferor Lender and the Company) to
provide the Administrative Agent, the transferor Lender and the Company, a new
Form W-8ECI or Form W-88BEN upon the expiration or obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such Transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
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(h Any Lender may at any time pledge or assign or grant a
security interest in all or any part of its rights under this Agreement and its
Notes to a Federal Reserve Bank, provided that no such assignment shall release
the transferor Lender from its Commitment or its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party to this
Agreement.
SECTION 10.06. NO WAIVER; CUMULATIVE REMEDIES. Neither any failure nor
any delay on the part of any Lender or the Administrative Agent in exercising
any right, power or privilege hereunder or under any Note or any other Loan
Document shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise of any other right,
power or privilege. The rights, remedies, powers and privileges herein provided
or provided in the other Loan Documents are cumulative and not exclusive of any
rights, remedies powers and privileges provided by law.
SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW.
SECTION 10.08. SUBMISSION TO JURISDICTION; JURY WAIVER. THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN
THE XXXXX XX XXX XXXX, XXXXXX XX XXX XXXX, XXXXXX OF NASSAU OR COUNTY OF SUFFOLK
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR
STATE COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO HEREIN OR THEREIN OR THE SUBJECT MATTER HEREOF THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH FEDERAL OR STATE COURTS. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY AGREES NOT TO (I) SEEK AND HEREBY WAIVES THE RIGHT
TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION
OR JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH
JUDGMENT OR (II) ASSERT ANY COUNTERCLAIM IN ANY SUCH SUIT, ACTION OR PROCEEDING
UNLESS SUCH COUNTERCLAIM CONSTITUTES A COMPULSORY OR MANDATORY COUNTERCLAIM
UNDER APPLICABLE RULES OF CIVIL PROCEDURE. THE COMPANY AGREES THAT SERVICE OF
PROCESS
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MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES
SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT. EXCEPT AS PROHIBITED
BY LAW, THE COMPANY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO IN THIS SECTION 10.08, ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. THE COMPANY (I) CERTIFIES THAT NEITHER THE LENDER NOR ANY
REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS OR THE OTHER WAIVERS CONTAINED IN THIS AGREEMENT
AND (II) ACKNOWLEDGES THAT IN ENTERING INTO THIS AGREEMENT, THE NOTES AND THE
OTHER LOAN DOCUMENTS, THE LENDER IS RELYING UPON, AMONG OTHER ITEMS, THE WAIVERS
AND CERTIFICATIONS CONTAINED IN THIS SECTION 10.08.
SECTION 10.09. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement, any Note or any other Loan Document should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
SECTION 10.10. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, the Administrative Agent and each Lender are each
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Administrative Agent or any Lender to or for the credit or
the account of the Company against any and all of the Obligations of the Company
now and hereafter existing under this Agreement and the Notes held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or any Note and although such obligations may be unmatured.
The rights of the Administrative Agent and each Lender under this Section 10.09
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which they may have.
SECTION 10.11. CONFIDENTIALITY. The Administrative Agent and each of
the Lenders agree that it will not disclose without the prior consent of the
Company (other than to affiliates of such Lenders and their respective
directors, employees, auditors, counsel or other professional advisors and their
respective counsel who are advised of the need to maintain the confidentiality
thereof) any Confidential Information (as defined below) with respect to the
Company or any Guarantor which is furnished by the Company or any Guarantor;
provided that any Lender may disclose any such information (a) that is or has
become generally available to
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the public; (b) as may be required or appropriate (i) in any report, statement
or testimony submitted to any municipal, state or federal or other governmental
regulatory body having or claiming to have jurisdiction over such Lender or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors or (ii) in connection with any request or requirement of any such
regulatory body; (c) as may be required or appropriate in response to any
summons or subpoena or in connection with any litigation; (d) to comply with any
law, order, regulation or ruling applicable to such Lender; and (e) to any
prospective Transferee in connection with any contemplated transfer of any of
the Notes or any interest therein by such Lender; provided that such prospective
Transferee agrees to be bound by this Section 10.11 to the same extent as such
Lender. As used herein "Confidential Information" shall mean information with
respect to the Company or any Guarantor which is not generally available to the
public other than such information which after the date hereof becomes generally
available to the public through no fault or action by any Lender or becomes
available to a Lender on a nonconfidential basis from a source other than the
Company or any Guarantor which to such Lender's knowledge is not prohibited from
disclosing such information by any contractual, legal or fiduciary obligation
owed to the Company or any Guarantor. In the event of disclosure pursuant to the
preceding clauses (b), (c) and (d) (other than in connection with bank
executions and reporting to bank regulatory authorities) the disclosing Lender
shall to the extent permitted by applicable law, make commercially reasonable
efforts to notify the Company of the disclosure in advance thereof
SECTION 10.11. HEADINGS. Section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
SECTION 10.12. CONSTRUCTION. This Agreement is the result of
negotiations between, and has been reviewed by, the Company, the Administrative
Agent, the Lenders and their respective counsel. Accordingly, this Agreement
shall be deemed to be the product of each party hereto, and no ambiguity shall
be construed in favor of or against either the Company or the Administrative
Agent, or any Lender.
SECTION 10.13. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
taken together, shall constitute one and the same instrument.
[next page is signature page]
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IN WITNESS WHEREOF, the Company, the Administrative Agent and the
Lenders have caused this Agreement to be duly executed by their duly authorized
officers, as of the day and year first above written.
MEDICAL ACTION INDUSTRIES INC.
By: /s/ Xxxx Xxxxxxxxx
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Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer/President
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