EXHIBIT 10.1
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AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of January 17, 2002
Among
CHRONIMED INC.,
THE BANKS,
as defined herein,
and
U.S. BANK NATIONAL ASSOCIATION,
as a Bank and as Agent
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execution copy
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of January 17, 2002, is by
and between CHRONIMED INC., a Minnesota corporation (the "Borrower"), the banks
or financial institutions listed on the signature pages hereof or which
hereafter become parties hereto by means of assignment and assumption as
hereinafter described (individually referred to as a "Bank" or collectively as
the "Banks"), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association, as agent for the Banks (in such capacity, the "Agent").
Preliminary Statement
The Borrower and U.S. Bank National Association ("U.S. Bank") have
entered into a certain letter agreement, dated as of December 31, 1996 (as
thereafter amended, the "Existing Credit Agreement"), under which U.S. Bank made
certain loans to the Borrower. Such loans are secured by the Security Agreement,
as defined herein and as referred to in the Existing Credit Agreement (Third
Amendment). The Borrower and U.S. Bank have agreed that the other Banks named
herein shall become co-lenders with U.S. Bank and U.S. Bank shall act as
administrative agent for the Banks, all as more particularly described herein.
The Borrower, the Banks and the Agent have agreed that the Existing Credit
Agreement shall be amended to read as follows to govern the loans made under the
Existing Credit Agreement and other extensions of credit as hereinafter
provided.
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. In addition to the terms defined elsewhere
in this Agreement, the following terms shall have the following respective
meanings (and such meanings shall be equally applicable to both the singular and
plural form of the terms defined, as the context may require):
"Advance" means the portion of the outstanding Loans bearing interest
at an identical rate for an identical Interest Period, provided that all Prime
Rate Advances shall be deemed a single Advance. An Advance may be a "Eurodollar
Advance", or "Prime Rate Advance" (each, a "type" of Advance).
"Adverse Event" means the occurrence of any event that could have a
material adverse effect on the business, operations, property, assets or
condition (financial or otherwise) of the Borrower and the Subsidiaries as a
consolidated enterprise or on the ability of the Borrower or any other party
obligated thereunder to perform its obligations under the Loan Documents.
2
"Agent" means U.S. Bank National Association, as agent for the Banks
hereunder and as collateral agent under the Security Agreement and each
successor, as provided in Section 11.8, who shall act as Agent.
"Agent's Fee Letter" means a letter, dated as of January 17, 2002,
between the Borrower and the Agent pertaining to certain fees payable to the
Agent.
"Agreement" means this Credit Agreement, as it may be amended,
modified, supplemented, restated or replaced from time to time.
"Applicable Margin" shall mean (a) on and before receipt of the annual
financial statements of the Borrower for Fiscal Year 2002, 0.000% for Prime Rate
Advances, and (b) on and after receipt of such financial statements, the
percentages set forth below for the Cash Flow Leverage Ratios shown below for
the most recent Fiscal Quarter end for which financial statements have been
delivered:
Applicable Margin
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Cash Flow Prime Rate Eurodollar
Leverage Ratio: Advances: Advances:
-------------- -------- ----------
Greater than 2.25 to 1.00 1.000% 2.625%
Less than or equal
to 2.25 to 1.00 but
greater than 1.75 to 1.00 0.500% 2.500%
Less than or equal
to 1.75 to 1.00 but
greater than 1.25 to 1.00 0.000% 2.250%
Less than or equal
to 1.25 to 1.00 0.000% 2.000%
The Applicable Margin shall be applied on a quarterly basis, effective as of the
date 45 days after the end of each Fiscal Quarter based on the Cash Flow
Leverage Ratio as demonstrated by the quarterly financial statements of the
Borrower delivered for the Fiscal Quarter most recently ended, and as certified
by the Borrowers' financial officer. In the event that such financial statements
are not delivered as required by Section 8.1(a) or (b), the Applicable Margin
shall be the highest percentage set forth above for each type of Advance until
such time as such financial statements are delivered, after which time the
Applicable Margin shall be readjusted to the rate applicable to the Cash Flow
Leverage Ratio applicable to such statements.
3
"Asset Disposition" means any sale, transfer or other disposition of
any asset, other than assets held for purposes of investing cash, of the
Borrower or any Subsidiary in a single transaction or in a series of related
transactions (other than the sale of inventory in the ordinary course).
"Borrowing Base" means the sum of (a) an amount equal to 75% of the net
amount (as determined by the Bank after deduction of such reserves and
allowances as the Bank deems proper and necessary) of the Borrower's Eligible
Accounts; plus (b) an amount equal to 50% of the net value (the lower of the
cost, determined on a first in first out basis, or market value of such
Inventory, as determined by the Bank after deduction of such reserves and
allowances as the Bank deems proper and necessary) of the Borrower's and the
Subsidiary Guarantor's Eligible Inventory.
"Borrowing Base Certificate" means a certificate in the form of Exhibit
B signed as indicated thereon, setting forth the amount of the Borrowing Base.
"Business Day" means any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota and New York, New York and, with respect to
Eurodollar Advances, a day on which dealings in Dollars may be carried on by the
Agent in the interbank eurodollar market.
"Capital Expenditure" means any amount debited to the fixed asset
account on the consolidated balance sheet of the Borrower in respect of (a) the
acquisition (including, without limitation, acquisition by entry into a
Capitalized Lease), construction, improvement, replacement or betterment of
land, buildings, machinery, equipment or of any other fixed assets or
leaseholds, and (b) to the extent related to and not included in (a) above,
materials, contract labor and direct labor (excluding expenditures properly
chargeable to repairs or maintenance in accordance with GAAP).
"Capitalized Lease" means any lease which is or should be capitalized
on the books of the lessee in accordance with GAAP.
"Cash Flow Leverage Ratio" means the ratio, calculated for each
Measurement Period, of (a) the average principal amount of the Loans for such
Measurement Period plus the principal amount of Funded Debt (other than the
Loans) as of the last day of such Measurement Period, to (b) EBITDA for such
Measurement Period.
"Casualty Disposition" means loss of or damage to, or condemnation or
other taking of, any assets of the Borrower or any Subsidiary for which such
Person receives insurance proceeds, proceeds of a condemnation award or other
compensation.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute, together with regulations thereunder.
4
"Collateral Agent" means the "Collateral Agent" as defined in the
Security Agreement (initially, U.S. Bank).
"Commitment" means the maximum unpaid principal amount of the Loans of
all Banks which may from time to time be outstanding hereunder, being initially
$30,000,000, as the same may be reduced from time to time pursuant to Section
4.3 , or, if so indicated, the maximum unpaid principal amount of Loans of any
Bank (which amounts are set forth on the signature pages hereof or in the
relevant Assignment and Assumption Agreement for such Bank) and, as the context
may require, the agreement of each Bank to make Loans to the Borrower subject to
the terms and conditions of this Agreement up to its Commitment.
"Compliance Certificate" means a certificate in the form of Exhibit C,
duly completed and signed by an authorized officer of the Borrower.
"Consolidated Tangible Net Worth" means as of any date of
determination, the sum of the amounts set forth on the consolidated balance
sheet of the Borrower as the sum of the common stocks, preferred stock,
additional paid-in capital and retained earnings of the Borrower (excluding
treasury stock), less the book value of all assets of the Borrower and its
Subsidiaries that would be treated as intangibles under GAAP, including, without
limitation, all such items as goodwill, trademarks, trade names, service marks,
copyrights, patents, licenses, unamortized debt discount and unamortized
deferred charges.
"Default" means any event which, with the giving of notice to the
Borrower or lapse of time, or both, would constitute an Event of Default.
"EBIT" means, for any period of determination, the consolidated net
income of the Borrower and its Subsidiaries before provision for income taxes,
plus, to the extent subtracted in determining consolidated net income, Interest
Expense, as determined in accordance with GAAP, excluding (to the extent
included): (a) non-operating gains (including, without limitation, extraordinary
or nonrecurring gains, gains from the discontinuance of operations and gains
arising from the sale of assets other than inventory) during the applicable
period; and (b) one-time expenses related to restatement of the Borrower's
financial statements, as described on Schedule 1.1 attached hereto, and (c)
lease buy-out expenses, store closing expenses and moving, severance and other
relocation expenses related to consolidation of operations and the move of the
StatScript headquarters to Minneapolis, as described in reasonable detail in the
attachment to the Compliance Certificate for the relevant period of
determination.
"EBITDA" means, for any period of determination, EBIT plus, to the
extent subtracted in determining consolidated net income, depreciation and
amortization expense, as determined in accordance with GAAP.
5
"Eligible Account" shall mean each Account owing to the Borrower which
meets the following requirements:
(a) it is subject to a first-priority lien in favor of the Collateral
Agent under the Security Agreement;
(b) it is owned by the Borrower and is not subject to any assignment,
claim or Lien other than (i) a first priority Lien in favor of the
Collateral Agent, and (ii) other Liens consented to by the Agent in
writing;
(c) it is genuine and is in all respects what it purports to be;
(d) it arises from either (i) the performance of services by the
Borrower, which services have been fully performed and, if applicable,
acknowledged and/or accepted by the Account Debtor with respect
thereto; or (ii) the sale or lease of goods by the Borrower and such
goods comply with such Account Debtor's specifications (if any) and
have been shipped to, or delivered to and accepted by, such Account
Debtor and not been returned to the Borrower;
(e) it is evidenced by an invoice rendered to the Account Debtor with
respect thereto which (i) is dated not earlier than the date of
shipment or performance, and (ii) has payment terms acceptable to the
Agent;
(f) it is a valid, legally enforceable and unconditional obligation of
the Account Debtor with respect thereto and it is reduced in amount by
the amount of (i) accounts owing by the Borrower to the Account Debtor,
and (ii) checks outstanding payable to the Account Debtor and is not
subject to setoff, counterclaim, credit or allowance (except any credit
or allowance which has been deducted in computing the net amount of the
applicable invoice as shown in the original schedule or Borrowing Base
Certificate furnished to the Agent identifying or including such
Account) or adjustment by the Account Debtor with respect thereto, or
to any claim by such Account Debtor denying liability thereunder in
whole or in part, and such Account Debtor has not refused to accept any
of the goods or services which are the subject of such Account or
offered or attempted to return any of such goods;
(g) there are no proceedings or actions which are then threatened or
pending against the Account Debtor with respect thereto or to which
such Account Debtor is a party which might result in any material
adverse change in such Account Debtor's financial condition or in its
ability to pay any Account in full when due;
(h) it does not arise out of a contract or order which, by its terms,
forbids, restricts or makes void or unenforceable the assignment by the
Borrower to the Agent of such Account;
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(i) the Account Debtor with respect thereto is not a Subsidiary or
Related Party , or a director, officer, employee or agent of the
Borrower, any Subsidiary, or any Related Party;
(j) the Account Debtor with respect thereto is a resident or citizen of
and is located within the United States of America unless the sale of
goods giving rise to such Account is on letter of credit, banker's
acceptance or other credit support terms satisfactory to the Agent;
(k) it does not arise from a "sale on approval," "sale or return" or
"consignment," nor is it subject to any other repurchase or return
agreement;
(l) the Borrower has observed and complied with all laws of the
jurisdiction in which the Account Debtor with respect to such Account
is located which, if not observed or complied with would deny the
Borrower access to the courts of such jurisdiction;
(m) it arises in the ordinary course of the Borrower's business;
(n) if the Account Debtor with respect thereto is the United States of
America or any department, agency or instrumentality thereof (a
"Federal Governmental Authority"), or any state, county or local
Governmental Authority, or any department, agency or instrumentality
thereof, the Borrower has assigned its right to payment of such Account
Receivable to the Collateral Agent pursuant to the Assignment of Claims
Act of 1940 as amended in the case of the a Federal Governmental
Authority, or pursuant to applicable state law, if any, in all other
instances, and such assignment has been accepted and acknowledged by
the appropriate government officers;
(o) if it is evidenced by chattel paper or instruments, (i) the Agent
shall have specifically agreed to include such Account as an Eligible
Account Receivable, (ii) only payments then due and payable under such
chattel paper or instrument shall be included as an Eligible Account
and (iii) the originals of such chattel paper or instruments have been
assigned and delivered to the Collateral Agent;
(p) it has not remained unpaid more than 90 days after the original
invoice date; and
(q) the Account Debtor with respect thereto is not (i) insolvent or
dissolved, (ii) unable generally to pay its debts as they mature, or
(iii) subject to an assignment for the benefit of creditors, bankruptcy
or other insolvency proceeding.
An Account which is at any time an Eligible Account but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be an
Eligible Account. Further, with respect to any Account, if the Agent at any time
or times hereafter determines, in its sole and absolute discretion, that the
prospect of payment or performance by the Account Debtor with respect thereto is
or will be impaired for any reason whatsoever, notwithstanding anything to the
contrary contained above, such Account shall forthwith cease to be an Eligible
Account.
7
"Eligible Inventory" shall mean Inventory of the Borrower and the
Subsidiary Guarantor which meets the following requirements:
(a) it is subject to a first-priority lien in favor of the Collateral
Agent;
(b) it is owned by the Borrower or the Subsidiary Guarantor and is not
subject to any assignment, claim or Lien other than (i) a first
priority Lien in favor of the Collateral Agent, and (ii) other Liens
consented to by the Agent in writing;
(c) if held for sale or lease or furnishing under contracts of service,
it is (except as the Agent may otherwise consent in writing) new and
unused;
(d) except as the Agent may otherwise consent, it is not stored with a
bailee, warehouseman or similar party;
(e) the Agent has determined, in its sole and absolute discretion, that
it is not unacceptable due to age, type, category, quality and/or
quantity;
(f) it is not held by the Borrower or the Subsidiary Guarantor on
"consignment" and is not subject to any other repurchase or return
agreement;
(g) it complies with all standards imposed by any governmental agency
having regulatory authority over such goods and/or their use,
manufacture or sale;
(h) it is located within the continental United States; and
(i) it does not consist of branded packaging or promotional materials.
Inventory of a Borrower or the Subsidiary Guarantor which is at any time
Eligible Inventory but which subsequently fails to meet any of the foregoing
requirements shall forthwith cease to be Eligible Inventory.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute, together with regulations thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Advance" means an Advance designated as such in a notice of
borrowing under Section 2.3 or a notice of continuation or conversion under
Section 2.4.
8
"Eurodollar Interbank Rate" means the offered rate for deposits in
United States Dollars for delivery of such deposits on the first day of an
Interest Period of a Eurodollar Advance, for the number of days comprised
therein, quoted by the Agent from Page 3750 of the Dow Xxxxx Markets (Telerate)
screen as of approximately 11:00 a.m., London time, on the day that is two
Business Days preceding the first day of the Interest Period of such Eurodollar
Advance, or the rate for such deposits determined by the Agent at such time
based on such other published service of general application as shall be
selected by the Agent for such purpose; provided, that in lieu of determining
the rate in the foregoing manner, the Agent may determine the rate based on
rates offered to the Agent for deposits in United States Dollars in the
interbank eurodollar market at such time for delivery on the first day of the
Interest Period for the number of days comprised therein.
"Eurodollar Rate (Reserve Adjusted)" means a rate per annum calculated
for the Interest Period of a Eurodollar Advance in accordance with the following
formula:
ERRA = Eurodollar Interbank Rate
-------------------------
1.00 - ERR
In such formula, "ERR" means "Eurodollar Reserve Rate" and "ERRA" means
"Eurodollar Rate (Reserve Adjusted)", in each instance determined by the Agent
for the applicable Interest Period. The Agent's determination of all such rates
for any Interest Period shall be conclusive in the absence of manifest error.
"Eurodollar Reserve Rate" means a percentage equal to the daily average
during such Interest Period of the aggregate maximum reserve requirements
(including all basic, supplemental, marginal and other reserves), as specified
under Regulation D of the Federal Reserve Board, or any other applicable
regulation that prescribes reserve requirements applicable to Eurocurrency
liabilities (as presently defined in Regulation D) or applicable to extensions
of credit by the Agent the rate of interest on which is determined with regard
to rates applicable to Eurocurrency liabilities. Without limiting the generality
of the foregoing, the Eurocurrency Reserve Rate shall reflect any reserves
required to be maintained by the Agent against (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Interbank Rate is to
be determined, or (ii) any category of extensions of credit or other assets that
includes Eurodollar Advances.
"Event of Default" means any event described in Section 10.1.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fiscal Year" and "Fiscal Quarter" means, respectively, the fiscal
years and fiscal quarters used by the Borrower for reporting and tax purposes,
and shall be identified (a) in the case of Fiscal Years, by the calendar year in
which the last day falls (e.g., "Fiscal Year 2002" shall mean the Fiscal Year
9
ending on June 28, 2002), and (b) in the case of Fiscal Quarters, by the
sequential number of the Fiscal Quarter within the Fiscal Year identified (e.g.
"Fiscal Quarter 1 of Fiscal Year 2002" shall mean the Fiscal Quarter ending
September 28, 2001). The ending dates of Fiscal Quarters and Fiscal Years are
set forth on Schedule 7.5.
"Fixed Charge Coverage Ratio" means the ratio, calculated for each
Measurement Period, of:
(a) the remainder of EBITDA for such Measurement Period, minus the sum
of (i) the amount of Capital Expenditures for such Measurement Period
less the amount of financing of such Capital Expenditures by means of
seller financing, purchase money financing or a direct loan for the
exclusive purposes of financing such Capital Expenditures, (ii)
dividends and distributions in respect of the stock of the Borrower
paid during such Measurement Period, and (iii) income taxes paid during
such Measurement Period;
to
(b) the sum for such Measurement Period of (i) Interest Expense paid,
plus (ii) mandatory or scheduled principal payments of Funded Debt,
plus (iii) an amount equal to 1/5 of the average Loans during such
Measurement Period.
"Funded Debt" means, without duplication, all obligations of the
Borrower or a Subsidiary on a consolidated basis: (a) in respect of borrowed
money; (b) secured by a mortgage, pledge, security interest, lien or charge on
the assets of the Borrower or a Subsidiary, whether the obligation secured is
the obligation of the owner or another Person (provided that non-recourse
obligations will only be taken into account up to the fair market value of the
related property); (c) any obligation for the deferred purchase price of any
property or services evidenced by a note, payment contract (other than an
account payable arising in the ordinary course of business) or other instrument,
(d) any obligation as lessee under any Capitalized Lease; (e) all guaranties and
contingent or other legal obligations in respect to Funded Debt of other
Persons, excluding ordinary course endorsements; (f) net liabilities under any
interest rate swap, collar or other interest rate hedging agreement. and (g)
undertakings or agreements to reimburse or indemnify issuers of letters of
credit other than commercial letters of credit.
"GAAP" means generally accepted accounting principles as applied in the
preparation of the audited financial statement of the Borrower referred to in
Section 7.5.
"Indebtedness" means, without duplication, all obligations, contingent
or otherwise, which in accordance with GAAP should be classified upon the
obligor's balance sheet as liabilities, but in any event including the following
(whether or not they should be classified as liabilities upon such balance
sheet): (a) obligations secured by any mortgage, pledge, security interest,
lien, charge or other encumbrance existing on property owned or acquired subject
thereto, whether or not the obligation secured thereby shall have been assumed
and whether or not the obligation secured is the obligation of the owner or
another party; (b) any obligation on account of deposits or advances; (c) any
obligation
10
for the deferred purchase price of any property or services, except trade
accounts payable arising in the ordinary course of business, (d) any obligation
as lessee under any Capitalized Lease; (e) all guaranties, endorsements and
other contingent obligations in respect to Indebtedness of others; (f)
undertakings or agreements to reimburse or indemnify issuers of letters of
credit; and (g) net liabilities under any interest rate swap, collar or other
interest rate hedging agreement. For all purposes of this Agreement, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer.
"Interest and Lease Coverage Ratio" means the ratio, calculated for
each Measurement Period on a consolidated basis for the Borrower and its
Subsidiaries in accordance with GAAP, of:
(a) the sum for such Measurement Period of (i) EBIT, plus, (ii)
Operating Lease Expense;
to
(b) the sum for such Measurement Period of (i) Interest Expense, to the
extent paid in cash, plus, (ii) Operating Lease Expense.
"Interest Expense means, for any period of determination, the aggregate
consolidated amount, without duplication, of interest paid, accrued or scheduled
to be paid in respect of any Indebtedness of the Borrower and its Subsidiaries,
including in all cases interest expense determined in accordance with GAAP and
(a) all but the principal component of payments in respect of conditional sale
contracts, Capitalized Leases and other title retention agreements, (b)
commissions, discounts and other fees and charges with respect to letters of
credit and bankers' acceptance financings and (c) net costs under any interest
rate swap, collar or other interest rate hedging agreements, in each case
determined in accordance with GAAP.
"Interest Period" means, for any Eurodollar Advance, the period
commencing on the borrowing date of such Eurodollar Advance or the date a Prime
Rate Advance is converted into such Eurodollar Advance, or the last day of the
preceding Interest Period for such Eurodollar Advance, as the case may be, and
ending on the numerically corresponding day one, two, three or, six months
thereafter, as selected by the Borrower pursuant to Section 2.3 or Section 2.4;
provided, that:
(a) any Interest Period which would otherwise end on a day which is not
a Business Day shall end on the next succeeding Business Day unless
such next succeeding Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding
Business Day;
(b) any Interest Period which 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
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of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Termination Date.
"Investment" means the acquisition, purchase, making or holding of any
stock or other security, any loan, advance, contribution to capital, extension
of credit (except for trade and customer accounts receivable for inventory sold
or services rendered in the ordinary course of business and payable in
accordance with customary trade terms), any acquisitions of real or personal
property (other than real and personal property acquired in the ordinary course
of business) and any purchase or commitment or option to purchase stock or other
debt or equity securities of or any interest in another Person or any integral
part of any business or the assets comprising such business or part thereof.
"Liabilities" means all obligations and liabilities of the Borrower to
the Agent and the Banks under this Agreement and all other Loan Documents,
including without limitation obligations to pay principal, interest, fees,
expenses and other amounts, and all obligations of the Borrower to any of the
Banks under any swap, collar, cap, or other interest rate hedging agreement
between the Borrower and such Bank, including without limitation any such
obligations that arise after the filing of a petition by or against the Borrower
under the Bankruptcy Code, even if the obligations do not accrue because of the
automatic stay under Bankruptcy Code Section 362 or otherwise.
"Lien" means any security interest, mortgage, pledge, lien,
hypothecation, judgment lien or similar legal process, charge, encumbrance,
title retention agreement or analogous instrument or device (including, without
limitation, the interest of the lessors under Capitalized Leases and the
interest of a vendor under any conditional sale or other title retention
agreement).
"Letters of Credit" shall mean have the meaning set forth in Section
2.7.
"Letter of Credit Agreements" shall have the meaning set forth in
Section 2.7.
"Letter of Credit Obligations" means the aggregate amount of all
possible drawings under all Letters of Credit plus all amounts drawn under any
Letter of Credit and not reimbursed by the Borrower under the applicable Letter
of Credit Agreement.
"Loan Documents" means this Agreement, the Notes, the Subsidiary
Guaranty, the Security Agreement, the Subsidiary Security Agreement, each Letter
of Credit Agreement and each other instrument, document, guaranty, security
agreement, mortgage, or other agreement executed and delivered by the Borrower
or any guarantor or party granting security interests in connection with this
Agreement, the Loans or any collateral for the Loans.
"Measurement Period" means, for purposes of calculating the Cash Flow
Leverage Ratio, Fixed Charge Coverage Ratio, and Interest and Lease Coverage
Ratio:
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(a) The period ending on December 28, 2001, consisting of Fiscal
Quarter 1 plus Fiscal Quarter 2 of Fiscal Year 2002, with EBITDA, EBIT,
Capital Expenditures, dividends and distributions, income taxes paid,
Interest Expense, mandatory or scheduled payments of Funded Debt and
Operating Lease Expense for such Measurement Period, as applicable for
calculation of such Ratios, multiplied by 2;
(b) The period ending on March 29, 2002 consisting of Fiscal Quarter 1,
Fiscal Quarter 2, plus Fiscal Quarter 3 of Fiscal Year 2002, with
EBITDA, EBIT, Capital Expenditures, dividends and distributions, income
taxes paid, Interest Expense, mandatory or scheduled payments of Funded
Debt and Operating Lease Expense for such Measurement Period, as
applicable for calculation of such Ratios, multiplied by 4/3; and
(c) Each period of four consecutive Fiscal Quarters ending on and after
the ending date of Fiscal Year 2002.
"Net Casualty Proceeds" means, with respect to a Casualty Disposition,
the amount of insurance proceeds, proceeds of a condemnation award or other
compensation received by the Borrower or a Subsidiary, net of the Borrower's
good faith estimate of federal and state taxes, if any, payable with respect to
such Casualty Disposition, and net of amounts which the Borrower or such
Subsidiary elects within a reasonable period of time to reinvest in assets to
replace the assets lost, damaged or condemned.
"Net Issuance Proceeds" means, with respect to any sale or issuance by
the Borrower or any Subsidiary of any equity securities of the Borrower or any
Subsidiary to a Person other than the Borrower or a Subsidiary, cash or readily
marketable cash equivalents received therefrom, whether at the time of such sale
or issuance or subsequent thereto, net of all legal expenses, commissions and
other fees and all costs and expenses directly related to such sale or issuance.
"Net Sale Proceeds" means, with respect to any Asset Disposition, the
sum of cash or readily marketable cash equivalents received (including by way of
a cash generating sale or discounting of a note or account receivable)
therefrom, whether at the time of such disposition or subsequent thereto, net
of: (a) all legal, title and recording tax expenses, commissions and other fees
and all costs and expenses directly related to such Asset Disposition; (b) the
Borrower's good faith estimate of federal and state taxes payable in respect of
receipt of proceeds of such Asset Disposition; (c) all payments made by the
Borrower or any of its Subsidiaries on any Funded Debt which is secured by such
assets pursuant to a permitted Lien upon or with respect to such assets or which
must, by the terms of such Lien, in order to obtain a necessary consent to such
Asset Disposition, or by applicable law, be repaid out of the proceeds from such
Asset Disposition; and (d) amounts which the Borrower or such Subsidiary elects
within a reasonable period of time to reinvest in substantially similar assets.
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"Notes" shall have the meaning set forth in Section 2.5.
"Operating Lease Expense means, for any period of determination, the
aggregate consolidated amount, without duplication, of amounts paid under leases
of real or personal property that are not Capitalized Leases, including in all
cases operating lease expense determined in accordance with GAAP.
"Payment Date" means the Termination Date, plus (a) the last day of
each Interest Period for each Eurodollar Advance and, if such Interest Period is
in excess of three months after the first day of such Interest Period, and
thereafter each day three months after each succeeding Payment Date; and (b) the
last day of each March, June, September and December of each year for each Prime
Rate Advance and for any fees.
"PBGC" means the Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
"Percentage" means, as to any Bank, the proportion, expressed as a
percentage, that such Bank's Commitment bears to the total Commitments of all
Banks.
"Permitted Acquisitions" means acquisition by the Borrower of all or
substantially all of the assets or stock, membership interest or other equity
interests of another Person or Persons subject to the following: (a) no Default
or Event of Default shall have occurred and continued at the time of such
acquisition, (b) total consideration for such acquisitions (including cash paid,
notes issued, Indebtedness assumed and all other consideration) for such
acquisitions shall not exceed (i) $1,000,000 for acquisition of any one Person
or related group of Persons, (ii) $2,500,000 during any period of four
consecutive Fiscal Quarters, or (iii) $10,000,000 for all such acquisitions
after the date of this Agreement.
"Person" means any natural person, corporation, limited liability
company, partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Plan" means an employee benefit plan or other plan, maintained for
employees of the Borrower or of any ERISA Affiliate, and subject to Title IV of
ERISA or Section 412 of the Code.
"Prime Rate" means the rate of interest from time to time announced by
the Agent as its "prime rate." For purposes of determining any interest rate
which is based on the Prime Rate, such interest rate shall be adjusted each time
that the prime rate changes.
"Prime Rate Advance" means an Advance designated as such in a notice of
borrowing under Section 2.3 or a notice of continuation or conversion under
Section 2.4.
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"Related Party" means any Person (other than a Subsidiary): (a) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Borrower, (b) which
beneficially owns or holds 5% or more of the equity interest of the Borrower; or
(c) 5% or more of the equity interest of which is beneficially owned or held by
the Borrower or a Subsidiary. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any such waivers in accordance
with Section 412(d) of the Code.
"Required Banks" means those Banks whose total Percentage equals or
exceeds 66 2/3%, or if no Commitments remain in effect, whose share of principal
of the Loans constitutes at least 66 2/3% of the aggregate outstanding principal
of all Loans. Notwithstanding the foregoing, if there are only two Banks,
"Required Banks" shall mean both Banks.
"Security Agreement" means the Security Agreement, dated as of July 31,
2001, between the Borrower and the Agent, as amended and restated by the Amended
and Restated Security Agreement dated as of the date of this Credit Agreement,
as such agreement may hereafter be amended, modified, renewed or replaced from
time to time.
"Subsidiary" means any Person of which or in which the Borrower and its
other Subsidiaries own directly or indirectly 50% or more of: (a) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profit interest of such Person,
if it is a partnership, joint venture or similar entity, or (c) the beneficial
interest of such Person, if it is a trust, association or other unincorporated
organization.
"Subsidiary Guarantor" means Chronimed Holdings Inc., a Minnesota
corporation.
"Subsidiary Guaranty" means a Guaranty by the Subsidiary Guarantor in
the form of Exhibit D attached hereto, as such Guaranty may hereafter be
amended, modified, renewed or replaced from time to time.
"Subsidiary Security Agreement" means a Security Agreement between the
Subsidiary Guarantor and the Agent dated as of the date of this Credit
Agreement, as such agreement may hereafter be amended, modified, renewed or
replaced from time to time.
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"Termination Date" means the earliest of (a) January 16, 2003, (b) the
date on which the Commitments are terminated pursuant to Section 10.2 hereof or
(c) the date on which the Commitments are reduced to zero pursuant to Section
4.3 hereof.
Section 1.2 Accounting Terms and Calculations. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder (including,
without limitation, determination of compliance with financial ratios and
restrictions in Articles VIII and IX hereof) shall be made in accordance with
GAAP consistently applied. Any reference to "consolidated" financial terms shall
be deemed to refer to those financial terms as applied to the Borrower and its
Subsidiaries in accordance with GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding."
Section 1.4 Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided.
ARTICLE II TERMS OF LENDING
Section 2.1 The Commitments. Subject to the terms and conditions hereof
and in reliance upon the warranties of the Borrower herein, each Bank agrees,
severally and not jointly, to make loans (each, a "Loan" and, collectively, the
"Loans") to the Borrower from time to time from the date hereof until the
Termination Date, during which period the Borrower may repay and reborrow in
accordance with the provisions hereof, provided, that (a) the aggregate unpaid
principal amount of the Loans of any Bank at any one time outstanding shall not
exceed its Commitment, and (b) the aggregate unpaid principal amount of all
Loans of all Banks and the aggregate Letter of Credit Obligations outstanding
shall not exceed at any time the lesser of (i) the Commitments of all Banks, or
(ii) the Borrowing Base, determined as of the most recent monthly Borrowing Base
Certificate delivered by the Borrower to the Agent. The Loans shall be made by
the Banks on a pro rata basis, calculated for each Bank based on its Percentage.
Section 2.2 Advance Options. Prior to delivery of the annual financial
statements of the Borrower for Fiscal Year 2002, all Loans shall be Prime Rate
Advances. After such delivery, the Loans shall be constituted of Eurodollar
Advances and Prime Rate Advances, as shall be selected by the Borrower, except
as otherwise provided herein. Any combination of types of Advances may be
outstanding at the same time, except that the total number of outstanding
Eurodollar Advances shall not exceed 6 at any one time. Each Advance shall be in
a minimum amount of $500,000 or in an integral multiple of $100,000 above such
amount.
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Section 2.3 Borrowing Procedures.
(a) Request by Borrower. Any request by the Borrower for a Loan or
Letter of Credit shall be in writing, or by telephone promptly
confirmed in writing, and must be given so as to be received by the
Agent not later than:
(i) 10:00 a.m., Minneapolis time, on the Business Day of the
requested Loan, if the Loan shall be comprised of Prime Rate
Advances;
(ii) 10:00 a.m., Minneapolis time, three Business days prior
to the date of the requested Loan, if the Loan shall be, or
shall include, a Eurodollar Advance; or
(iii) 10:00 a.m., Minneapolis time, three Business days prior
to the date of any requested Letter of Credit.
Each request shall specify (1) the borrowing date (which shall be a
Business Day), (2) the amount of such Loan and the type or types of
Advances comprising such Loan, (3) if such Loan shall include
Eurodollar Advances, the initial Interest Periods for such Advances,
and (4) if a request for a Letter of Credit, the form of such Letter of
Credit and such other information as the Agent shall reasonably
request.
(b) Funding of Agent. The Agent shall promptly notify each other Bank
of the receipt of such request, the matters specified therein, and of
such Bank's Percentage of the requested Loans. On the date of the
requested Loans, each Bank shall provide its share of the requested
Loans to the Agent in immediately available funds not later than 1:00
p.m., Minneapolis time. Unless the Agent determines that any applicable
condition specified in Article VI has not been satisfied, the Agent
will make the requested Loans available to the Borrower at the Agent's
principal office in Minneapolis, Minnesota in immediately available
funds not later than 5:00 p.m. (Minneapolis time) on the lending date
so requested. If the Agent has made a Loan to the Borrower on behalf of
a Bank but has not received the amount of such Loan from such Bank by
the time herein required, such Bank shall pay interest to the Agent on
the amount so advanced at the overnight Federal Funds rate from the
date of such Loan to the date funds are received by the Agent from such
Bank, such interest to be payable with such remittance from such Bank
of the principal amount of such Loan (provided, however, that the Agent
shall not make any Loan on behalf of a Bank if the Agent has received
prior notice from such Bank that it will not make such Loan). If the
Agent does not receive payment from such Bank by the next Business Day
after the date of any Loan, the Agent shall be entitled to recover such
Loan, with interest thereon at the rate then applicable to the such
Loan, on demand, from the Borrower, without prejudice to the Agent's
and the Borrower's rights against such Bank. If such Bank pays the
Agent the amount herein required with interest at the overnight rate
before the Agent has recovered from the Borrower, such Bank shall be
entitled to the
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interest payable by the Borrower with respect to the Loan in question
accruing from the date the Agent made such Loan.
2.4 Continuation or Conversion of Loans. The Borrower may elect to (i)
continue any outstanding Eurodollar Advance from one Interest Period into a
subsequent Interest Period to begin on the last day of the earlier Interest
Period, or (ii) convert any outstanding Advance into another type of Advance (on
the last day of an Interest Period only, in the instance of a Eurodollar
Advance), by giving the Agent notice in writing, or by telephone promptly
confirmed in writing, given so as to be received by the Agent not later than:
(a) 10:00 a.m., Minneapolis time, on the Business Day of the requested
continuation or conversion, if the continuing or converted Advance
shall be a Prime Rate Advance; or
(b) 10:00 a.m., Minneapolis time, three Business days prior to the date
of the requested continuation or conversion, if the continuing or
converted Advance shall be a Eurodollar Advance.
Each notice of continuation or conversion of an Advance shall specify (i) the
effective date of the continuation or conversion date (which shall be a Business
Day), (ii) the amount and the type or types of Advances following such
continuation or conversion (subject to the limitation on amount set forth in
Section 2.2), and (iii) for continuation as, or conversion into, Eurodollar
Advances, the Interest Periods for such Advances. Absent timely notice of
continuation or conversion, the Agent may, at its option, convert the Advance
into a Prime Rate Advance, but until so converted, the Advance shall continue to
bear interest at the rate applicable thereto prior to expiration of the prior
Interest Period. No Advance shall be continued as, or converted into, a
Eurodollar Advance if the shortest Interest Period for such Advance may not
transpire prior to the Termination Date or if a Default or Event of Default
shall exist.
Section 2.5 The Notes. The Loans of each Bank shall be evidenced by a
promissory note of the Borrower (the "Notes"), substantially in the form of
Exhibit A hereto, in the amount of such Bank's Commitment originally in effect
and dated as of the date of this Agreement. The Banks shall enter in their
respective records the amount of each Loan and Advance, the rate of interest
borne by each Advance and the payments made on the Loans, and such records shall
be deemed conclusive evidence of the subject matter thereof, absent manifest
error.
Section 2.6 Funding Losses. In the event of (a) any failure of the
Borrower to borrow, continue or convert a Eurodollar Advance on a date specified
in a notice thereof, or (b) any payment (including, without limitation, any
payment pursuant to Section 4.2, 4.3 or 10.2), prepayment or conversion of any
Eurodollar Advance on a date other than the last day of the Interest Period for
such Advance, the Borrower agrees to pay each Bank's costs, expenses and
Interest Differential (as determined by such Bank) incurred as a result of such
event. The term "Interest Differential" shall mean that sum equal to the greater
of 0 or the financial loss incurred
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by each Bank resulting from such event, calculated as the difference between the
amount of interest such Bank would have earned (from like investments in the
Money Markets as of the first day of the Interest Period of the relevant
Advance) had such event not occurred and the interest the Bank will actually
earn (from like investments in the Money Markets as of the date of such event)
as a result of the redeployment of funds from such event. Because of the
short-term nature of this facility, the Borrower agrees that the Interest
Differential shall not be discounted to its present value. The term "Money
Markets" refers to one or more wholesale funding markets available to the Banks,
including negotiable certificates of deposit, commercial paper, eurodollar
deposits, bank notes, federal funds and others. Such determinations by each Bank
shall be conclusive in the absence of manifest error.
Section 2.7 Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement, the Borrower may, in addition to Loans provided for in
Section 2.1 hereof, request that the Agent issue letters of credit for
the account of the Borrower, by making such request as provided in
Section 2.3 hereof (such letters of credit as any of them may be
amended, supplemented, extended or confirmed from time to time, being
herein collectively called the `Letters of Credit'). The face amount of
the Letters of Credit outstanding at any time shall be limited so that
the aggregate Letter of Credit Obligations not exceed $5,000,000, and
the sum of Letter of Credit Obligations plus Loans under Section 2.1
shall not exceed at any time the lesser of (i) the Commitment of all
Banks, or (ii) the Borrowing Base. The Agent may, at its discretion,
elect to issue or decline to issue any requested Letter of Credit. Upon
the date of the issuance of a Letter of Credit, the Agent shall be
deemed, without further action by any party hereto, to have sold to
each Bank, and each Bank shall be deemed without further action by any
party hereto, to have purchased from the Agent, a participation, in a
percentage equal to such Bank's Percentage of such Letter of Credit and
the related Letter of Credit Obligations. No Letter of Credit issued
pursuant to this Agreement shall have an expiration date later than one
year from date of issuance or later than the Termination Date.
(b) Additional Provisions. The following additional provisions shall
apply to each Letter of Credit:
(i) Upon receipt of any request for a Letter of Credit, the
Agent shall notify each Bank of the contents of such request
and of such Bank's Percentage of the amount of such proposed
Letter of Credit.
(ii) No Letter of Credit may be issued if after giving effect
thereto the sum of (x) the aggregate outstanding principal
amount of Loans plus (y) the aggregate Letter of Credit
Obligations would exceed the Total Commitment. The
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Commitment of each Bank shall be deemed to be utilized for all
purposes hereof in an amount equal to such Bank's Percentage
of the Letter of Credit Obligations.
(iii) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment thereunder, Agent shall
promptly notify the Borrower and each Bank as to the amount to
be paid as a result of such demand and the payment date. If at
any time the Agent shall have made a payment to a beneficiary
of such Letter of Credit in respect of a drawing or in respect
of an acceptance created in connection with a drawing under
such Letter of Credit, each Bank will pay to Agent immediately
upon demand by the Agent at any time during the period
commencing after such payment until reimbursement thereof in
full by the Borrower, an amount equal to such Bank's
Percentage of such payment, together with interest on such
amount for each day from the date of demand for such payment
(or, if such demand is made after 2:00 a.m. Minneapolis time
on such date, from the next succeeding Business Day) to the
date of payment by such Bank of such amount at a rate of
interest per annum equal to the overnight Federal Funds rate
for such period.
(iv) The Borrower shall be irrevocably and unconditionally
obligated forthwith to reimburse the Agent for any amount paid
by the Agent upon any drawing under any Letter of Credit,
without presentment, demand, protest or other formalities of
any kind, all of which are hereby waived. Such reimbursement
may, subject to satisfaction of all conditions precedent and
to the available Commitment (after adjustment in the same to
reflect the elimination of the corresponding Letter of Credit
Obligation), be made by the borrowing of Loans. The Agent will
pay to each Bank such Bank's Percentage of all amounts
received from the Borrower for application in payment, in
whole or in part, of a Letter of Credit Obligation, but only
to the extent such Bank has made payment to the Agent in
respect of such Letter of Credit pursuant to clause (iii)
above.
(v) The Borrower will pay to Agent for the account of each
Bank in accordance with its Percentage letter of credit fee
with respect to each Letter of Credit equal to an amount,
calculated on the basis of face amount of each Letter of
Credit, in each case for the period from and including the
date of issuance of such Letter of Credit to and including the
date of expiration or termination thereof at a per annum rate
equal to the Applicable Margin for Eurodollar Advances
applicable from time to time, such fee to be due and payable
in advance on the date of the issuance thereof. The Agent will
pay to each Bank, promptly after receiving any payment in
respect of letter of credit fee referred to in this clause
(v), an amount equal to the product of such Bank's Percentage
times the amount of such fees. The Borrower shall also pay to
Agent at the Principal Office for the account of the Agent an
up-front issuance fee of 0.125% of the face amount of the
applicable
20
Letter of Credit. The Borrower shall pay to the Agent the
Agent's fees in connection with each Letter of Credit
(including amendment fees, negotiation fees and others) in
accordance with the Agent's standard fee schedule in effect
from time to time. All fees hereunder shall be computed on the
basis of a year of 360 days and paid for the actual number of
days elapsed.
(vi) The issuance by the Agent of each Letter of Credit shall,
in addition to the discretionary nature of this facility, be
subject to the conditions precedent that the Borrower shall
have executed and delivered such applications and other
instruments and agreements relating to such Letter of Credit
as the Agent shall have reasonably requested and are not
inconsistent with the terms of this Agreement (the `Letter of
Credit Agreements'). In the event of a conflict between the
terms of this Agreement and the terms of any Letter of Credit
Agreement, the terms hereof shall control.
(c) Indemnification and Release. The Borrower hereby indemnifies and
holds harmless the Agent and each Bank from and against any and all
claims and damages, losses, liabilities, costs or expenses which the
Agent or such Bank may incur (or which may be claimed against the Agent
or such Bank by any Person whatsoever), REGARDLESS OF WHETHER CAUSED IN
WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES,
in connection with the execution and delivery of any Letter of Credit
or transfer of or payment or failure to pay under any Letter of Credit;
provided that the Borrower shall not be required to indemnify any party
seeking indemnification for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by (x)
the willful misconduct or gross negligence of the party seeking
indemnification, or (y) by the failure by the party seeking
indemnification to pay under any Letter of Credit after the
presentation to it of a request required to be paid under applicable
law.
ARTICLE III INTEREST AND FEES
Section 3.1 Interest.
(a) Eurodollar Advances. The unpaid principal amount of each Eurodollar
Advance shall bear interest prior to maturity at a rate per annum equal
to the Eurodollar Rate (Reserve Adjusted) in effect for each Interest
Period for such Eurodollar Advance plus the Applicable Margin.
(b) Prime Rate Advances. The unpaid principal amount of each Prime Rate
Advance shall bear interest prior to maturity at a rate per annum equal
to the Prime Rate plus the Applicable Margin.
21
(c) Interest After Maturity. Any amount of the Loans not paid when due,
whether at the date scheduled therefor or earlier upon acceleration,
shall bear interest until paid in full at a rate per annum equal to the
greater of (i) 2.00% in excess of the rate applicable to the unpaid
principal amount immediately before it became due, or (ii) 3.00% in
excess of the Prime Rate in effect from time to time.
Section 3.2 Computation. Interest shall be computed on the basis of
actual days elapsed and a year of 360 days.
Section 3.3 Payment Dates. Accrued interest under Section 3.1(a) and
(b) shall be payable on the applicable Payment Dates. Accrued interest under
Section 3.1(c) shall be payable on demand.
Section 3.4 Agent's Fees. The Borrower shall pay to the Agent the fees
described in the Agent's Fee Letter.
ARTICLE IV PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION
OF THE CREDIT AND SETOFF
Section 4.1 Repayment. Principal of the Loans, together with all
accrued and unpaid interest thereon, shall be due and payable on the Termination
Date.
Section 4.2 Prepayments.
(a) Optional Prepayments. The Borrower may prepay the Loans, in whole
or in part, at any time subject to the provisions of Section 2.6,
without any other premium or penalty. Each partial prepayment shall be
in a minimum amount of $500,000 or in an integral multiple of $100,000
above such amount. The Borrower shall give the Agent one Business Day's
prior notice of prepayment of a Eurodollar Advance and any prepayment
of a Eurodollar Advance shall be in an amount equal to the remaining
entire principal balance of such Eurodollar Advance.
(b) Mandatory Prepayment - Asset and Casualty Dispositions and Equity
Issuance. The Borrower shall prepay the Loans in the following amounts:
(i) Asset Dispositions. One Hundred Percent (100%) of the
aggregate Net Sale Proceeds realized upon all Asset
Disposition if such Net Sale Proceeds of any asset in a single
transaction or a series of related transactions exceeds
$100,000;
(ii) Casualty Dispositions. One Hundred Percent (100%) of the
aggregate Net Casualty Proceeds realized upon all Casualty
Dispositions if such Net Casualty Proceeds of any asset in a
single transaction or a series of related transactions exceeds
$100,000; and
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(iii) Equity Issuance. One Hundred Percent (100%) of the Net
Issuance Proceeds realized upon the sale by the Borrower or
such Subsidiary of any issuance of its equity securities in
excess of $1,000,000 on and after the date of this Agreement.
Prepayment under this Section 4.2(b) shall be made as soon as possible
following prompt determination of the amount thereof by the Borrower,
provided, that to the extent applied to Eurodollar Advances, such
amounts need not be paid by the Borrower until the end of the
applicable Interest Period. Prepayments under this subsection Section
4.2(b) shall be applied first, to any outstanding Prime Rate Advances,
and thereafter to any outstanding Eurodollar Advances.
(c) Mandatory Prepayment - Borrowing Base. If at any time the aggregate
unpaid principal amount of all Loans of all Banks and the aggregate
Letter of Credit Obligations outstanding shall exceed the lesser of (i)
the Commitments of all Banks, or (ii) the Borrowing Base, the Borrower
shall (x) prepay the Loans in the amount of such excess, and (y) if all
of the Loans are paid in full and such excess still exists, deliver
cash collateral for the Letter of Credit Obligations in the amount of
such excess to be held as described in Section 10.4.
Section 4.3 Reduction or Termination of Commitments. The Borrower may,
at any time, upon no less than three Business Days prior written or telephonic
notice received by the Agent, reduce the Commitments of all Banks, such
reduction to be in a minimum amount of $1,000,000 or an integral multiple
thereof and to be applied ratably to the Commitments of the respective Banks.
The Borrower may, at any time, upon not less than three Business Days prior
written notice to the Agent, terminate the Commitments in their entirety. Upon
termination of the Commitments pursuant to this Section, the Borrower shall pay
to the Agent for the account of the Banks the full amount of all outstanding
Loans, all accrued and unpaid interest thereon, and all other unpaid obligations
of the Borrower to the Banks hereunder. Upon any reduction in the Commitments
pursuant to this Section, the Borrower shall pay to the Agent for the account of
the Banks the amount, if any, by which the aggregate unpaid principal amount of
outstanding Loans exceeds the total Commitments of all Banks as so reduced.
Amounts so paid cannot be reborrowed. All prepayments described in this Section
shall be subject to the provisions of Section 2.6.
Section 4.4 Payments. Payments and prepayments of principal of, and
interest on, the Notes and all fees, expenses and other obligations under the
Loan Documents shall be made without set-off or counterclaim in immediately
available funds not later than 2:00 p.m., Minneapolis time, on the dates due at
the main office of the Agent in Minneapolis, Minnesota. Funds received on any
day after such time shall be deemed to have been received on the next Business
Day. The Agent shall promptly distribute in like funds to each Bank its
Percentage share of each such payment of principal and interest. Subject to the
definition of the term "Interest Period", whenever any payment to be made
hereunder or on the Notes shall be stated to be due on
23
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of any interest or fees.
Section 4.5 Proration of Payments. If any Bank or other holder of a
Loan shall obtain any payment or other recovery (whether voluntary, involuntary,
by application of offset, pursuant to the guaranty hereunder, or otherwise) on
account of principal of, interest on, or fees with respect to any Loan, or
payment of any Letter of Credit Obligations, in any case in excess of the share
of payments and other recoveries of other Banks or holders, such Bank or other
holder shall purchase from the other Banks or holders, in a manner to be
specified by the Agent, such participations in the Loans held by such other
Banks or holders as shall be necessary to cause such purchasing Bank or other
holder to share the excess payment or other recovery ratably with each of such
other Banks or holders; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Bank or holder, the purchase shall be rescinded and the purchase price restored
to the extent of such recovery, but without interest.
Section 4.6 Clean-Down Periods. The Borrower shall repay the Loans and
not borrow additional Loans so that the outstanding principal balance of all
Loans does not exceed (a) $5,000,000 for at least one Business Day of during
Fiscal Year 2002, and (b) $10,000,000 for at least one Business day during each
Fiscal Year thereafter.
ARTICLE V ADDITIONAL PROVISIONS RELATING TO LOANS
Section 5.1 Increased Costs. If, as a result of any law, rule,
regulation, treaty or directive, or any change therein or in the interpretation
or administration thereof, or compliance by the Banks with any request or
directive (whether or not having the force of law) from any court, central bank,
governmental authority, agency or instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to any Loan, the Notes
or the Commitments is imposed, modified or deemed applicable, or the
basis of taxation of payments to any Bank of interest or principal of
the Loans (other than taxes imposed on the overall net income of such
Bank by the jurisdiction in which such Bank has its principal office)
is changed;
(b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Bank is imposed, modified or deemed applicable;
(c) any increase in the amount of capital required or expected to be
maintained by any Bank or any Person controlling such Bank is imposed,
modified or deemed applicable; or
(d) any other condition affecting this Agreement or the Commitments is
imposed on any Bank or the relevant funding markets;
24
and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining the Loans, issuing or participating in the Letters of
Credit or extending its Commitment is increased, or the amount of any sum
receivable by such Bank hereunder or under the Notes in respect of any Loan is
reduced;
then, the Borrower shall pay to such Bank upon demand such additional amount or
amounts as will compensate such Bank (or the controlling Person in the instance
of (c) above) for such additional costs or reduction (provided that such Bank
have not been compensated for such additional cost or reduction in the
calculation of the Eurodollar Reserve Rate). Determinations by each Banks for
purposes of this Section 5.1 of the additional amounts required to compensate
such Bank shall be conclusive in the absence of manifest error. In determining
such amounts, the Banks may use any reasonable averaging, attribution and
allocation methods.
Section 5.2 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability. If the Agent determines (which determination shall
be conclusive and binding on the parties hereto) that:
(a) deposits of the necessary amount for the relevant Interest Period
for any Eurodollar Advance are not available in the relevant markets or
that, by reason of circumstances affecting such market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Interbank
Rate for such Interest Period;
(b) the Eurodollar Rate (Reserve Adjusted) will not adequately and
fairly reflect the cost to the Banks of making or funding the
Eurodollar Advance for a relevant Interest Period; or
(c) the making or funding of Eurodollar Advances has become
impracticable as a result of any event occurring after the date of this
Agreement which, in the opinion of the Agent, materially and adversely
affects such Advances or any Bank's Commitment or the relevant market;
the Agent shall promptly give notice of such determination to the Borrower, and
(i) any notice of a new Eurodollar Advance previously given by the Borrower and
not yet borrowed or converted shall be deemed to be a notice to make a Prime
Rate Advance, and (ii) the Borrower shall be obligated to either prepay in full
any outstanding Eurodollar Advances, without premium or penalty on the last day
of the current Interest Period with respect thereto or convert any such
Eurodollar Advance to a Prime Rate Advance on such last day.
Section 5.3 Changes in Law Rendering Eurodollar Advances Unlawful. If
at any time due to the adoption of any law, rule, regulation, treaty or
directive, or any change therein or in the interpretation or administration
thereof by any court, central bank, governmental authority,
25
agency or instrumentality, or comparable agency charged with the interpretation
or administration thereof, or for any other reason arising subsequent to the
date of this Agreement, it shall become unlawful or impossible for any Bank to
make or fund any Eurodollar Advance, the obligation of such Bank to provide such
Advance shall, upon the happening of such event, forthwith be suspended for the
duration of such illegality or impossibility. If any such event shall make it
unlawful or impossible for the Bank to continue any Eurodollar Advance
previously made by it hereunder, such Bank shall, upon the happening of such
event, notify the Agent and the Borrower thereof in writing, and the Borrower
shall, at the time notified by such Bank, either convert each such unlawful
Advance to a Prime Rate Advance or repay such Advance in full, together with
accrued interest thereon, subject to the provisions of Section 2.6.
Section 5.4 Discretion of the Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain its funding of all or any part of the Loans in
any manner it elects; it being understood, however, that for purposes of this
Agreement, all determinations hereunder shall be made as if the Banks had
actually funded and maintained each Eurodollar Advance during the Interest
Period for such Advance through the purchase of deposits having a term
corresponding to such Interest Period and bearing an interest rate equal to the
Eurodollar Interbank Rate for such Interest Period (whether or not any Bank
shall have granted any participations in such Advances).
ARTICLE VI CONDITIONS PRECEDENT
Section 6.1 Conditions of Initial Loan. The obligation of the Banks to
make the initial Loan hereunder shall be subject to the satisfaction of the
conditions precedent, in addition to the applicable conditions precedent set
forth in Section 6.2 below, that the Agent shall have received all of the
following, in form and substance satisfactory to the Agent, each duly executed
and certified or dated as of the date of this Agreement or such other date as is
satisfactory to the Agent:
(a) The Notes payable to each Bank executed by a duly authorized
officer of the Borrower.
(b) The Subsidiary Guaranty.
(c) The Amended and Restated Security Agreement (as described in the
definition of "Security Agreement") and the Subsidiary Security
Agreement, and each financing statement and other document requested by
the Agent to perfect the security interest of the Collateral Agent
thereunder, lien searches for each relevant jurisdiction, and each
further document (including landlord's or mortgagee's waivers and
insurance documents) required under the Security Agreement.
26
(d) Certificates of the Secretary or an Assistant Secretary of the
Borrower and of the Subsidiary Guarantor, attesting to and attaching
(i) a copy of the corporate resolution of the Borrower and Subsidiary
Guarantor authorizing the execution, delivery and performance of the
Loan Documents, (ii) an incumbency certificate showing the names and
titles, and bearing the signatures of, the officers of the Borrower and
Subsidiary Guarantor authorized to execute the Loan Documents, (iii) a
copy of the Articles or Certificate of Incorporation of the Borrower
and Subsidiary Guarantor with all amendments thereto, and (iv) a copy
of the By-Laws of the Borrower and Subsidiary Guarantor with all
amendments thereto.
(d) A Certificate of Good Standing for the Borrower and Subsidiary
Guarantor in the jurisdiction of its incorporation, certified by the
appropriate governmental officials.
(e) An opinion of counsel to the Borrower and Subsidiary Guarantor,
addressed to the Bank, in substantially the form of Exhibit E.
(f) The Borrowing Base Certificate for the month most recently ended
(or if ended less than 25 days before the closing date, the prior
month).
Section 6.2 Conditions Precedent to all Loans. The obligation of the
Bank to make any Loan hereunder (including the initial Loan) shall be subject to
the satisfaction of the following conditions precedent (and any request for a
Loan shall be deemed a representation by the Borrower that the following are
satisfied):
(a) Before and after giving effect to such Loan, the representation and
warranties contained in Article VII shall be true and correct, as
though made on the date of such Loan.
(b) Before and after giving effect to such Loan, no Default or Event of
Default shall have occurred and be continuing.
ARTICLE VII REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement, to
grant the Commitments and to make Loans hereunder, the Borrower represents and
warrants to the Agent and the Banks:
Section 7.1 Organization, Standing, Etc. The Borrower and each of its
corporate Subsidiaries are corporations duly incorporated and validly existing
and in good standing under the laws of the jurisdiction of their respective
incorporation and have all requisite corporate power and authority to carry on
their respective businesses as now conducted, to (in the instance of the
Borrower) enter into the Loan Documents and to perform its obligations under the
Loan Documents. The Borrower and each of its Subsidiaries are duly qualified and
in good standing as a foreign corporation in each
27
jurisdiction in which the character of the properties owned, leased or operated
by it or the business conducted by it makes such qualification necessary, and
where failure to so qualify would not constitute an Adverse Event.
Section 7.2 Authorization and Validity. The execution, delivery and
performance by the Borrower of the Loan Documents have been duly authorized by
all necessary corporate action by the Borrower, and the Loan Documents
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, subject to
limitations as to enforceability which might result from bankruptcy, insolvency,
moratorium and other similar laws affecting creditors' rights generally and
subject to limitations on the availability of equitable remedies.
Section 7.3 No Conflict; No Default. The execution, delivery and
performance by the Borrower of the Loan Documents will not (a) violate any
provision of any law, statute, rule or regulation or any order, writ, judgment,
injunction, decree, determination or award of any court, governmental agency or
arbitrator presently in effect having applicability to the Borrower, (b) violate
or contravene any provisions of the Articles (or Certificate) of Incorporation
or by-laws of the Borrower, or (c) result in a breach of or constitute a default
under any indenture, loan or credit agreement or any other agreement, lease or
instrument to which the Borrower is a party or by which it or any of its
properties may be bound or result in the creation of any Lien on any asset of
the Borrower or any Subsidiary. Neither the Borrower nor any Subsidiary is in
default under or in violation of any such law, statute, rule or regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, loan or credit agreement or other agreement, lease or instrument in
any case in which the consequences of such default or violation could constitute
an Adverse Event. No Default or Event of Default has occurred and is continuing.
Section 7.4 Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Loan Documents.
Section 7.5 Financial Statements and Condition. The Borrower's audited
consolidated and consolidating financial statements for Fiscal Year 2001, and
its unaudited consolidated and consolidating financial statements for Fiscal
Quarter 1 of Fiscal Year 2002, as heretofore furnished to the Banks, have been
prepared in accordance with GAAP on a consistent basis and fairly present the
financial condition of the Borrower and its Subsidiaries as at such dates and
the results of their operations and changes in financial position for the
respective periods then ended. As of the dates of such financial statements,
neither the Borrower nor any Subsidiary had any material obligation, contingent
liability, liability for taxes or long-term lease obligation which is not
reflected in such financial statements or in the notes thereto. Since the end of
Fiscal Year 2001, no Adverse Event has occurred. The dates of the last days of
the Borrower's Fiscal Quarters and Fiscal Years are set forth on Schedule 7.5.
28
Section 7.6 Litigation and Contingent Liabilities. Except as described
in Schedule 7.6, there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any of their properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which, if
determined adversely to the Borrower or such Subsidiary, could constitute an
Adverse Event. Except as described in Schedule 7.6, neither the Borrower nor any
Subsidiary has any contingent liabilities which are material to the Borrower and
the Subsidiaries as a consolidated enterprise.
Section 7.7 Compliance. The Borrower and its Subsidiaries are in
material compliance with all statutes and governmental rules and regulations
applicable to them.
Section 7.8 Environmental, Health and Safety Laws. There does not exist
any violation by the Borrower or any Subsidiary of any applicable federal, state
or local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which will or threatens to impose a material
liability on the Borrower or a Subsidiary or which would require a material
expenditure by the Borrower or such Subsidiary to cure. Neither the Borrower nor
any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or hazardous waste or substance into the
environment, the consequences of which non-compliance or remedial action could
constitute an Adverse Event.
Section 7.9 ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for which
the reporting requirements have been waived by regulations of the PBGC, has
occurred and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no event
or condition which would permit the institution of proceedings to terminate any
Plan under Section 4042 of ERISA. The current value of the Plans' benefits
guaranteed under Title IV or ERISA does not exceed the current value of the
Plans' assets allocable to such benefits.
Section 7.10 Regulation U. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry margin
stock or for any other purpose which would violate any of the margin
requirements of the Board of Governors of the Federal Reserve System.
Section 7.11 Ownership of Property; Liens. Each of the Borrower and the
Subsidiaries has good and marketable title to its real properties and good and
sufficient title to its other properties,
29
including all properties and assets referred to as owned by the Borrower and its
Subsidiaries in the audited financial statement of the Borrower referred to in
Section 7.5 (other than property disposed of since the date of such financial
statement in the ordinary course of business). None of the properties, revenues
or assets of the Borrower or any of its Subsidiaries is subject to a Lien,
except for (a) Liens disclosed in the financial statements referred to in
Section 7.5, (b) Liens listed on Schedule 7.11, or (c) Liens allowed under
Section 9.13.
Section 7.12 Taxes. Each of the Borrower and the Subsidiaries has filed
all federal, state and local tax returns required to be filed and has paid or
made provision for the payment of all taxes due and payable pursuant to such
returns and pursuant to any assessments made against it or any of its property
and all other taxes, fees and other charges imposed on it or any of its property
by any governmental authority (other than taxes, fees or charges the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of the Borrower). No tax Liens have been filed and no
material claims are being asserted with respect to any such taxes, fees or
charges. The charges, accruals and reserves on the books of the Borrower in
respect of taxes and other governmental charges are adequate.
Section 7.13 Trademarks, Patents. Each of the Borrower and the
Subsidiaries possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business, without known conflict with the rights of others.
Section 7.14 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Section 7.15 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.
Section 7.16 Subsidiaries. Schedule 7.16 sets forth as of the date of
this Agreement a list of all Subsidiaries and the number and percentage of the
shares of each class of capital stock owned beneficially or of record by the
Borrower or any Subsidiary therein, and the jurisdiction of incorporation of
each Subsidiary.
Section 7.17 Partnerships and Joint Ventures. Schedule 7.17 sets forth
as of the date of this Agreement a list of all partnerships or joint ventures in
which the Borrower or any Subsidiary is a partner (limited or general) or joint
venturer.
ARTICLE VIII AFFIRMATIVE COVENANTS
30
From the date of this Agreement and thereafter until the Commitments
are terminated or expire and the Loans and all other liabilities of the Borrower
to the Banks hereunder and under the Note have been paid in full, the Borrower
will do, and will cause each Subsidiary (except in the instance of Section 8.1)
to do, all of the following:
Section 8.1 Financial Statements and Reports. Furnish to the Banks:
(a) As soon as available and in any event within 90 days after the end
of each Fiscal Year of the Borrower, the annual audit report of the
Borrower and its Subsidiaries prepared on a consolidating and
consolidated basis and in conformity with GAAP, consisting of at least
statements of income, cash flow, changes in financial position and
stockholders' equity, and a consolidated balance sheet as at the end of
such Fiscal Year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified without
qualification by independent certified public accountants of recognized
standing selected by the Borrower and acceptable to the Bank, together
with any management letters, management reports or other supplementary
comments or reports to the Borrower or its board of directors furnished
by such accountants and the Borrower's report filed with the Securities
and Exchange Commission on Form 10K.
(b) As soon as available and in any event within 45 days after the end
of each Fiscal Year, an annual budget for the next Fiscal Year,
including anticipated expenditures and cash flows and other information
reasonably requested by the Agent.
(c) As soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year, a copy
of the unaudited financial statement of the Borrower and its
subsidiaries prepared in the same manner as the audit report referred
to in Section 8.1(a), signed by the Borrower's chief financial officer,
consisting of at least consolidated statements of income, cash flow,
changes in financial position and stockholders' equity for the Borrower
and the Subsidiaries for such Fiscal Quarter and for the period from
the beginning of such Fiscal Year to the end of such Fiscal Quarter,
and a consolidated balance sheet of the Borrower as at the end of such
Fiscal Quarter and the Borrower's report filed with the Securities and
Exchange Commission on Form 10Q.
(d) Together with the financial statements furnished by the Borrower
under Sections 8.1(a) and 8.1(c), a Compliance Certificate signed by
the chief financial officer of the Borrower stating that as at the date
of each such financial statement there did not exist any Default or
Event of Default or, if such Default or Event of Default existed,
specifying the nature and period of existence thereof and what action
the Borrower proposes to take with respect thereto.
(e) Within 30 days after the end of each month, a Borrowing Base
Certificate as of the end of such month.
31
(f) Immediately upon becoming aware of any Default or Event of Default,
a notice describing the nature thereof and what action the Borrower
proposes to take with respect thereto.
(g) Immediately upon becoming aware of the occurrence, with respect to
any Plan, of any Reportable Event (other than a Reportable Event for
which the reporting requirements have been waived by PBGC regulations)
or any "prohibited transaction" (as defined in Section 4975 of the
Code), a notice specifying the nature thereof and what action the
Borrower proposes to take with respect thereto, and, when received,
copies of any notice from PBGC of intention to terminate or have a
trustee appointed for any Plan.
(h) Promptly upon the mailing or filing thereof, copies of all
financial statements, reports and proxy statements mailed to the
Borrower's shareholders, and copies of all registration statements,
periodic reports and other documents filed with the Securities and
Exchange Commission (or any successor thereto) or any national
securities exchange.
(i) Immediately upon becoming aware of the occurrence thereof, notice
of the institution of any litigation, arbitration or governmental
proceeding, or the rendering of a judgment or decision in such
litigation or proceeding, which is material to the Borrower and its
Subsidiaries as a consolidated enterprise, and the steps being taken by
the Person(s) affected by such proceeding.
(j) Immediately upon becoming aware of the occurrence thereof, notice
of any violation as to any environmental matter by the Borrower or any
Subsidiary and of the commencement of any judicial or administrative
proceeding relating to health, safety or environmental matters (i) in
which an adverse determination or result could result in the revocation
of or have a material adverse effect on any operating permits, air
emission permits, water discharge permits, hazardous waste permits or
other permits held by the Borrower or any Subsidiary which are material
to the operations of the Borrower or such Subsidiary, or (ii) which
will or threatens to impose a material liability on the Borrower or
such Subsidiary to any Person or which will require a material
expenditure by the Borrower or such Subsidiary to cure any alleged
problem or violation.
(k) From time to time, such other information regarding the business,
operation and financial condition of the Borrower and the Subsidiaries
as any Bank may reasonably request.
Section 8.2 Corporate Existence. Subject to Section 9.1 in the instance
of a Subsidiary, maintain its corporate existence in good standing under the
laws of its jurisdiction of incorporation and its qualification to transact
business in each jurisdiction in which the character of the properties owned,
leased or operated by it or the business conducted by it makes such
qualification necessary and where failure to so qualify would constitute an
Adverse Event.
32
Section 8.3 Insurance. Maintain with financially sound and reputable
insurance companies such insurance as may be required by law and such other
insurance in such amounts and against such hazards as is customary in the case
of reputable corporations engaged in the same or similar business and similarly
situated.
Section 8.4 Payment of Taxes and Claims. File all tax returns and
reports which are required by law to be filed by it and pay before they become
delinquent all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including,
without limitation, those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; provided that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings, and as
long as the Borrower's or such Subsidiary's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with and adequate reserves with
respect thereto have been set aside on the Borrower's or such Subsidiary's books
in accordance with GAAP.
Section 8.5 Inspection. Permit any Person designated by the Agent (or,
following occurrence of an Event of Default, any Bank) to visit and inspect any
of its properties, corporate books and financial records, to examine and to make
copies of its books of accounts and other financial records, and to discuss the
affairs, finances and accounts of the Borrower and the Subsidiaries with, and to
be advised as to the same by, its officers at such reasonable times and
intervals as such Bank may designate. So long as no Event of Default exists, the
expenses of the Agent for one such examination per Fiscal Year shall be
reimbursed by the Borrower and the expense of any additional examinations shall
be at the expense of the Agent, and any such visits, inspections, and
examinations made while any Event of Default is continuing shall be at the
expense of the Borrower.
Section 8.6 Maintenance of Properties. Maintain its properties used or
useful in the conduct of its business in good condition, repair and working
order, and supplied with all necessary equipment, and make all necessary
repairs, renewals, replacements, betterments and improvements thereto, all as
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 8.7 Books and Records. Keep adequate and proper records and
books of account in which full and correct entries will be made of its dealings,
business and affairs.
Section 8.8 Compliance. Comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject.
Section 8.9 ERISA. Maintain each Plan in compliance with all material
applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code.
33
Section 8.10 Environmental Matters. Observe and comply with all laws,
rules, regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters to
the extent non-compliance could result in a material liability or otherwise
constitute or result in an Adverse Event.
ARTICLE IX NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Commitments
are terminated or expire and the Loans and all other liabilities of the Borrower
to the Banks hereunder and under the Note have been paid in full, the Borrower
will not, and will not permit any Subsidiary to, do any of the following:
Section 9.1 Merger. Merge or consolidate or enter into any analogous
reorganization or transaction with any Person; provided, however, any
wholly-owned Subsidiary may be merged with or liquidated into the Borrower (if
the Borrower is the surviving corporation) or any other wholly-owned Subsidiary.
Section 9.2 Sale of Assets. Sell, transfer, lease or otherwise convey
all or any substantial part of its assets except for sales and leases of
inventory in the ordinary course of business and except for sales or other
transfers by a wholly-owned Subsidiary to the Borrower or another wholly-owned
Subsidiary.
Section 9.3 Purchase of Assets. Purchase or lease or otherwise acquire
all or substantially all of the assets of any Person, except for (a) purchases
or other transfers by the Borrower or a wholly-owned Subsidiary from a
wholly-owned Subsidiary, and (b) Permitted Acquisitions made in accordance with
and subject to the limitations set forth in the definition thereof.
Section 9.4 Plans. Permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, permit
any Plan to terminate under any circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to any property, revenue or
asset of the Borrower or any Subsidiary or permit the underfunded amount of Plan
benefits guaranteed under Title IV of ERISA to exceed $100,000.
Section 9.5 Change in Nature of Business. Make any material change in
the nature of the business of the Borrower or such Subsidiary, as carried on at
the date hereof.
Section 9.6 Subsidiaries, Partnerships, Joint Ventures and Ownership of
Stock. Do any of the following: (a) form or acquire any corporation which would
thereby become a Subsidiary, except for any Permitted Acquisition; (b) form or
enter into any partnership as a limited or general partner or into any joint
venture; (c) permit any Subsidiary to purchase or otherwise acquire any shares
of the stock of the Borrower; or (d) take any action, or permit any Subsidiary
to take any action, which would result in
34
a decrease in the Borrower's or any Subsidiary's ownership interest in any
Subsidiary (including, without limitation, decrease in the percentage of the
shares of any class of stock owned).
Section 9.7 Other Agreements. Enter into any agreement, bond, note or
other instrument with or for the benefit of any Person other than the Banks
which would: (a) prohibit the Borrower or such Subsidiary from granting, or
otherwise limit the ability of the Borrower or such Subsidiary to grant, to the
Banks any Lien on any assets or properties of the Borrower or such Subsidiary;
or (b) be violated or breached by the Borrower's performance of its obligations
under the Loan Documents.
Section 9.8 Restricted Payments. Either: (a) purchase or redeem or
otherwise acquire for value any shares of the Borrower's or any Subsidiary's
stock, declare or pay any dividends thereon (other than stock dividends and
dividends payable solely to the Borrower), make any distribution on, or payment
on account of the purchase, redemption, defeasance or other acquisition or
retirement for value of, any shares of the Borrower's or any Subsidiary's stock
or set aside any funds for any such purpose (other than payment to, or on
account of or for the benefit of, the Borrower only); or (b) directly or
indirectly make any payment on, or redeem, repurchase, defease, or make any
sinking fund payment on account of, or any other provision for, or otherwise
pay, acquire or retire for value, any Indebtedness of the Borrower or any
Subsidiary that is subordinated in right of payment to the Loans (whether
pursuant to its terms or by operation of law), except for regularly-scheduled
payments of interest and principal (which shall not include payments
contingently required upon occurrence of a change of control or other event)
that are not otherwise prohibited hereunder or under the document or agreement
stating the terms of such subordination.
Section 9.9 Capital Expenditures. Make Capital Expenditures (exclusive
of any Permitted Acquisition or any portion thereof that may be deemed a Capital
Expenditure) in an amount exceeding $4,000,000 on a consolidated basis during
any period of four consecutive Fiscal Quarters.
Section 9.10 Leases. Enter into or permit to exist any arrangements for
the leasing by the Borrower or any of its Subsidiaries, as lessee, of any real
or personal property (or any interest therein) under leases (other than
Capitalized Leases) which require the payment by the Borrower and its
Subsidiaries on a consolidated bases of rental amounts in the aggregate in
excess of (a) $4,000,000 during any period of four consecutive Fiscal Quarters.
Section 9.11 Investments. Acquire for value, make, have or hold any
Investments, except:
(a) Investments outstanding on the date hereof and listed on Schedule
9.11;
(b) Travel advances to officers and employees in the ordinary course of
business;
(c) Investments in readily marketable direct obligations of the United
States of America having maturities of one year or less from the date
of acquisition;
35
(d) Certificates of deposit or bankers' acceptances, each maturing
within one year from the date of acquisition, issued by any commercial
bank organized under the laws of the United States or any State thereof
which has (i) combined capital, surplus and undivided profits of at
least $100,000,000, and (ii) a credit rating with respect to its
unsecured indebtedness from a nationally recognized rating service that
is satisfactory to the Bank;
(e) Commercial paper maturing within 270 days from the date of issuance
and given the highest rating by a nationally recognized rating service;
(f) Repurchase agreements relating to securities issued or guaranteed
as to principal and interest by the United States of America;
(g) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale of goods and services in the ordinary
course of business;
(h) share of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business;
(i) Permitted Acquisitions, made in accordance with and subject to the
limitations set forth in the definition thereof; and
(j) Investments outstanding on the date hereof in Subsidiaries by the
Borrower and other Subsidiaries.
Section 9.12 Indebtedness. Incur, create, issue, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness under this Agreement;
(b) Current liabilities, other than for borrowed money, incurred in the
ordinary course of business;
(c) Indebtedness existing on the date of this Agreement and disclosed
on Schedule 9.12 hereto;
(d) Indebtedness secured by Liens permitted under Section 9.13 hereof;
and
(e) Indebtedness consisting of endorsements for collection, deposit or
negotiation and warranties of products or services, in each case
incurred in the ordinary course of business.
Section 9.13 Liens. Create, incur, assume or suffer to exist any Lien
with respect to any property, revenues or assets now owned or hereafter arising
or acquired, except:
36
(a) Liens in connection with the acquisition of property after the date
hereof by way of purchase money mortgage, conditional sale or other
title retention agreement, Capitalized Lease or other deferred payment
contract, and attaching only to the property being acquired if the
Indebtedness secured thereby does not exceed the fair market value of
such property at the time of acquisition thereof nor $500,000 in the
aggregate for the Borrower and all Subsidiaries at any one time
outstanding;
(b) Liens existing on the date of this Agreement and disclosed on
Schedule 7.11 hereto;
(c) Deposits or pledges to secure payment of workers' compensation,
unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of the Borrower or a
Subsidiary;
(d) Liens for taxes, fees, assessments and governmental charges not
delinquent or to the extent that payments therefor shall not at the
time be required to be made in accordance with the provisions of
Section 8.4;
(e) Liens of carriers, warehousemen, mechanics and materialmen, and
other like Liens arising in the ordinary course of business, for sums
not due or to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 8.4;
and
(f) Deposits to secure the performance of bids, trade contracts,
leases, statutory obligations and other obligations of a like nature
incurred in the ordinary course of business.
Section 9.14 Contingent Liabilities. Either: (i) endorse, guarantee,
contingently agree to purchase or to provide funds for the payment of, or
otherwise become contingently liable upon, any obligation of any other Person,
except by the endorsement of negotiable instruments for deposit or collection
(or similar transactions) in the ordinary course of business, or (ii) agree to
maintain the net worth or working capital of, or provide funds to satisfy any
other financial test applicable to, any other Person.
Section 9.15 Unconditional Purchase Obligations. Enter into or be a
party to any contract for the purchase or lease of materials, supplies or other
property or services if such contract requires that payment be made by it
regardless of whether or not delivery is ever made of such materials, supplies
or other property or services.
Section 9.16 Transactions with Related Parties. Enter into or be a
party to any transaction or arrangement, including, without limitation, the
purchase, sale lease or exchange of property or the rendering of any service,
with any Related Party, except in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's or the applicable Subsidiary's
business and upon fair and
37
reasonable terms no less favorable to the Borrower or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not a Related
Party.
Section 9.17 Use of Proceeds. Permit any proceeds of the Loans to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Federal Reserve Board, as amended from time to
time, and furnish to any Bank, upon its request, a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in Regulation U.
Section 9.18 Tangible Net Worth. Permit its Consolidated Tangible Net
Worth at any time to be less than the sum of (a) $35,000,000, plus (b) 50% of
the aggregate amount of consolidated net income of the Borrower for Fiscal
Quarter 2 Fiscal Year 2002 and each Fiscal Quarter thereafter, on a cumulative
basis without giving effect to any net loss for any Fiscal Quarter.
Section 9.19 Cash Flow Leverage Ratio. Permit the Cash Flow Leverage
Ratio to exceed the following for the following Measurement Periods:
Measurement Period: Maximum Cash Flow Leverage Ratio:
------------------ --------------------------------
Measurement Period
ending December 28, 2001: 2.00 to 1.00
Each Measurement Period ending
thereafter: 2.50 to 1.00
Section 9.20 Interest and Lease Coverage Ratio. Permit the Interest and
Lease Coverage Ratio to be less than 2.00 to 1.00 for any Measurement Period.
Section 9.21 Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio to be less than 1.50 to 1.00 for any Measurement Period.
ARTICLE X EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an Event of Default:
(a) The Borrower shall fail to make when due, whether by acceleration
or otherwise, any payment of principal of or interest on the Note or
any fee or other amount required to be made to the Banks pursuant to
the Loan Documents;
38
(b) Any representation or warranty made or deemed to have been made by
or on behalf of the Borrower or any Subsidiary by any of the Loan
Documents or by or on behalf of the Borrower or any Subsidiary in any
certificate, statement, report or other writing furnished by or on
behalf of the Borrower to the Banks pursuant to the Loan Documents
shall prove to have been false or misleading in any material respect on
the date as of which the facts set forth are stated or certified or
deemed to have been stated or certified;
(c) The Borrower shall fail to comply with Section 8.2 hereof or any
Section of Article IX hereof;
(d) The Borrower or the Subsidiary Guarantor shall fail to comply with
any agreement, covenant, condition, provision or term contained in the
Loan Documents (and such failure shall not constitute an Event of
Default under any of the other provisions of this Section 10.1) and
such failure to comply shall continue for 30 calendar days after notice
thereof to the Borrower by the Bank;
(e) The Borrower or any Subsidiary shall become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall
consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver of the Borrower or such Subsidiary or for a
substantial part of the property thereof or, in the absence of such
application, consent or acquiescence, a custodian, trustee or receiver
shall be appointed for the Borrower or a Subsidiary or for a
substantial part of the property thereof and shall not be discharged
within 30 days;
(f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted
by or against the Borrower or a Subsidiary, and, if instituted against
the Borrower or a Subsidiary, shall have been consented to or
acquiesced in by the Borrower or such Subsidiary, or shall remain
undismissed for 30 days, or an order for relief shall have been entered
against the Borrower or such Subsidiary, or the Borrower or any
Subsidiary shall take any corporate action to approve institution of,
or acquiescence in, such a proceeding;
(g) Any dissolution or liquidation proceeding shall be instituted by or
against the Borrower or a Subsidiary and, if instituted against the
Borrower or such Subsidiary, shall be consented to or acquiesced in by
the Borrower or such Subsidiary or shall remain for 30 days
undismissed, or the Borrower or any Subsidiary shall take any corporate
action to approve institution of, or acquiescence in, such a
proceeding;
(h) A judgment or judgments for the payment of money in excess of the
sum of $1,000,000 in the aggregate shall be rendered against the
Borrower or a Subsidiary and the Borrower or such Subsidiary shall not
discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereof, prior to any execution
on such judgments by such judgment creditor, within 30 days from the
date of entry thereof, and within said period of
39
30 days, or such longer period during which execution of such judgment
shall be stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal;
(i) The institution by the Borrower or any ERISA Affiliate of steps to
terminate any Plan if in order to effectuate such termination, the
Borrower or any ERISA Affiliate would be required to make a
contribution to such Plan, or would incur a liability or obligation to
such Plan, in excess of $1,000,000, or the institution by the PBGC of
steps to terminate any Plan;
(j) The maturity of any Funded Debt of the Borrower (other than Funded
Debt under this Agreement) or a Subsidiary shall be accelerated, or the
Borrower or a Subsidiary shall fail to pay any such Funded Debt when
due or, in the case of such Funded Debt payable on demand, when
demanded, or any event shall occur or condition shall exist and shall
continue for more than the period of grace, if any, applicable thereto
and shall have the effect of causing, or permitting (any required
notice having been given and grace period having expired) the holder of
any such Funded Debt or any trustee or other Person acting on behalf of
such holder to cause, such Funded Debt to become due prior to its
stated maturity or to realize upon any collateral given as security
therefor;
(k) Any Loan Document shall not be, or shall cease to be, enforceable
in accordance with its terms or the Borrower or the Subsidiary
Guarantor shall disavow, contest, or attempt to disavow or contest, its
obligations thereunder; or
(l) Any Person, or group of Persons acting in concert, that owned less
than 5% of the shares of any voting class of stock of the Borrower
shall have acquired more than 25% of the shares of such voting stock.
Section 10.2 Remedies. If (a) any Event of Default described in
Sections 10.1(e), (f) or (g) shall occur with respect to the Borrower, the
Commitments shall automatically terminate and the outstanding unpaid principal
balance of the Notes, the accrued interest thereon and all other obligations of
the Borrower to the Banks and the Agent under the Loan Documents shall
automatically become immediately due and payable; or (b) any other Event of
Default shall occur and be continuing, then the Agent may take any or all of the
following actions (and shall take any or all of the following actions on
direction of the Required Banks): (i) declare the Commitments terminated,
whereupon the Commitments shall terminate, (ii) declare that the outstanding
unpaid principal balance of the Notes, the accrued and unpaid interest thereon
and all other obligations of the Borrower to the Banks and the Agent under the
Loan Documents to be forthwith due and payable, whereupon the Notes, all accrued
and unpaid interest thereon and all such obligations shall immediately become
due and payable, in each case without demand or notice of any kind, all of which
are hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding, (iii) exercise all rights and remedies under any other
instrument, document or agreement between the Borrower and the Agent or the
Banks, and (iv) enforce all rights and remedies under any applicable law.
40
Section 10.3 Offset. In addition to the remedies set forth in Section
10.2, upon the occurrence of any Event of Default or at any time thereafter
while such Event of Default continues, each Bank or any other holder of the Note
may offset any and all balances, credits, deposits (general or special, time or
demand, provisional or final), accounts or monies of the Borrower then or
thereafter with such Bank or such other holder, or any obligations of such Bank
or such other holder of the Note, against the Indebtedness then owed by the
Borrower to such Bank.
Section 10.4 Letters of Credit. In addition to the foregoing remedies,
if any Event of Default described in Sections 10.1(e), (f) or (g) shall occur,
or if any other Event of Default shall have occurred and the Agent shall have
declared that the principal balance of the Notes is due and payable, the
Borrower shall, upon demand by the Agent, pay to the Agent, as agent and bailee
for the Banks, an amount equal to all Letter of Credit Obligations. Such payment
shall be in immediately available funds or in similar cash collateral acceptable
to the Agent and shall be pledged to the Agent as agent and bailee for the
benefit of the Banks. Such amount shall be held by the Agent in a cash
collateral account until the outstanding Letters of Credit are terminated
without payment or are paid and Letter of Credit Obligations with respect
thereto are payable. In the event the Borrower defaults in the payment of any
Letter of Credit Obligations, the proceeds of the cash collateral account shall
be applied to the payment thereof. The Borrower acknowledges and agrees that the
Banks would not have an adequate remedy at law for failure by the Borrower to
pay immediately to the Agent the amount provided under this Section, and that
the Agent and the Banks shall have the right to require the Borrower to perform
specifically such undertaking whether or not any of the Letter of Credit
Obligations are due and payable. Upon the failure of the Borrower to make any
payment required under this Paragraph, the Agent, on behalf of the Banks, may
proceed to use all remedies available at law or equity to enforce the obligation
of the Borrower to pay or reimburse the Banks, including without limitation any
right the Agent or Banks may have to enforce any security interest in any
collateral for such obligations. The balance of any payment due under this
Section shall bear interest payable on demand until paid in full at a per annum
rate equal to the Reference Rate plus 2%.
ARTICLE XI
THE AGENT
Section 11.1 Appointment and Grant of Authority. Each Bank hereby
appoints the Agent, and the Agent hereby agrees to act, as agent under this
Agreement and each other Loan Document. The Agent shall have and may exercise
such powers under this Agreement and the other Loan Documents as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto. Each Bank hereby
authorizes, consents to, and directs the Borrower to deal with the Agent as the
true and lawful agent of such Bank to the extent set forth herein.
41
Section 11.2 Non-Reliance on Agent. Each Bank agrees that it has,
independently and without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Borrower and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement. The Agent shall not be required to keep informed as to the
performance or observance by the Borrower of this Agreement and the Loan
Documents or to inspect the properties or books of the Borrower. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its related companies) which may come into the Agent's possession.
Section 11.3 Responsibility of the Agent and Other Matters.
(a) The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and those duties and liabilities
shall be subject to the limitations and qualifications set forth in
this Section. The duties of the Agent shall be mechanical and
administrative in nature.
(b) Neither the Agent nor any of its directors, officers or employees
shall be liable for any action taken or omitted (whether or not such
action taken or omitted is within or without the Agent's
responsibilities and duties expressly set forth in this Agreement)
under or in connection with this Agreement, or any other instrument or
document in connection herewith, except for gross negligence or willful
misconduct. Without limiting the foregoing, neither the Agent nor any
of its directors, officers or employees shall be responsible for, or
have any duty to examine: (i) the genuineness, execution, validity,
effectiveness, enforceability, value or sufficiency of the Loan
Agreements; (ii) the collectibility of any amounts owed by the
Borrower; (iii) any recitals or statements or representations or
warranties in connection with this Agreement or the Notes; (iv) any
failure of any party to this Agreement to receive any communication
sent; or (v) the assets, liabilities, financial condition, results of
operations, business or creditworthiness of the Borrower.
(c) The Agent shall be entitled to act, and shall be fully protected in
acting upon, any communication in whatever form believed by the Agent
in good faith to be genuine and correct and to have been signed or sent
or made by a proper person or persons or entity. The Agent may consult
counsel and shall be entitled to act, and shall be fully protected in
any action taken in good faith, in accordance with advice given by
counsel. The Agent may employ agents and attorneys-in-fact and shall
not be liable for the default or
42
misconduct of any such agents or attorneys-in-fact selected by the
Agent with reasonable care. The Agent shall not be bound to ascertain
or inquire as to the performance or observance of any of the terms,
provisions or conditions of this Agreement or the Notes on the
Borrower's part.
Section 11.4 Action on Instructions. The Agent shall be entitled to act
or refrain from acting, and in all cases shall be fully protected in acting or
refraining from acting under this Agreement or the Notes or any other instrument
or document in connection herewith or therewith in accordance with instructions
in writing from (i) the Required Banks except for instructions which under the
express provisions hereof must be received by the Agent from all the Banks, and
(ii) in the case of such instructions, from all the Banks.
Section 11.5 Indemnification. To the extent the Borrower does not
reimburse and save the Agent harmless according to the terms hereof for and from
all costs, expenses and disbursements in connection herewith or with the other
Loan Documents, such costs, expenses and disbursements to the extent reasonable
shall be borne by the Banks ratably in accordance with their Percentages and the
Banks hereby agree on such basis (a) to reimburse the Agent for all such
reasonable costs, expenses and disbursements on request and (b) to indemnify and
save harmless the Agent against and from any and all losses, obligations,
penalties, actions, judgments and suits and other reasonable costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, other than as a consequence of actual gross
negligence or willful misconduct on the part of the Agent, arising out of or in
connection with this Agreement or the Notes or any instrument or document in
connection herewith or therewith, or any request of the Banks, including without
limitation the reasonable costs, expenses and disbursements in connection with
defending itself against any claim or liability, or answering any subpoena,
related to the exercise or performance of any of its powers or duties under this
Agreement or the other Loan Documents or the taking of any action under or in
connection with this Agreement or the Notes.
Section 11.6 U.S. Bank National Association and Affiliates. With
respect to U.S. Bank National Association's Commitment and any Loans by U.S.
Bank National Association under this Agreement and any Note and any interest of
U.S. Bank National Association in any Note, U.S. Bank National Association shall
have the same rights, powers and duties under this Agreement and such Note as
any other Bank and may exercise the same as though it were not the Agent. U.S.
Bank National Association and its affiliates may accept deposits from, lend
money to, and generally engage, and continue to engage, in any kind of business
with the Borrower as if U.S. Bank National Association were not the Agent.
Section 11.7 Notice to Holder of Notes. The Agent may deem and treat
the payees of the Notes as the owners thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof has been filed with the
Agent. Any request, authority or consent of any holder
43
of any Note shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Note.
Section 11.8 Successor Agent. The Agent may resign at any time by
giving at least 30 days written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been appointed by the Required
Banks and shall have accepted such appointment within 30 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, but shall not
be required to, on behalf of the Banks, appoint a successor Agent.
ARTICLE XII MISCELLANEOUS
Section 12.1 No Waiver and Amendment. No failure on the part of the
Banks or the holder of the Notes to exercise and no delay in exercising any
power or right hereunder or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in any other instrument, document or
agreement delivered or to be delivered to the Banks hereunder or in connection
herewith are cumulative and not exclusive of any remedies provided by law. No
notice to or demand on the Borrower not required hereunder or under the Notes
shall in any event entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the right of the
Banks or the holder of the Notes to any other or further action in any
circumstances without notice or demand.
Section 12.2 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Borrower and the Agent upon direction of the required Banks and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless agreed to by the Agent and all of the Banks:
(a) increase the amounts of or extend the terms of the Commitments or
subject the Banks to any additional obligations;
(b) reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder;
(c) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder;
(d) change the definition of Required Banks or amend this Section 12.2
44
provided, further that amendments, waivers or consents affecting the rights of
the Agent shall also require the consent of the Agent.
Section 12.3 Assignments and Participations.
(a) Assignments. Each Bank shall have the right, subject to the further
provisions of this Sections 12.3, to sell or assign all or any part of
its Commitments, Loans, Notes, and other rights and obligations under
this Agreement and related documents (such transfer, and "Assignment")
to any commercial lender, other financial institution or other entity
(an "Assignee"). Upon such Assignment becoming effective as provided in
Section 12.3(b), the assigning Bank shall be relieved from the portion
of its Commitment, obligations to indemnify the Agent and other
obligations hereunder to the extent assumed and undertaken by the
Assignee, and to such extent the Assignee shall have the rights and
obligations of a "Bank" hereunder. Notwithstanding the foregoing,
unless otherwise consented to by the Borrower and the Agent, each
Assignment shall be in the initial principal amount of not less than
$5,000,000 in the aggregate for all Loans and Commitments assigned, or
an integral multiple of $1,000,000 if above such amount Each Assignment
shall be documented by an agreement between the assigning Bank and the
Assignee (an "Assignment and Assumption Agreement") substantially in
the form of Exhibit F attached hereto.
(b) Effectiveness of Assignments. An Assignment shall become effective
hereunder when all of the following shall have occurred: (i) the Agent
and the Borrower (or, following occurrence and during continuance of an
Event of Default, the Agent only and not the Borrower) shall have been
given notice of the Assignment and shall have given prior written
consent to such Assignment, unless the Assignee is already a Bank under
this Agreement, (ii) either the assigning Bank or the Assignee shall
have paid a processing fee of $5,000 to the Agent for its own account,
(iii) the Assignee shall have submitted the Assignment and Assumption
Agreement to the Agent with a copy for the Borrower, and shall have
provided to the Agent information the Agent shall have reasonably
requested to make payments to the Assignee, and (iv) the assigning Bank
and the Agent shall have agreed upon a date upon which the Assignment
shall become effective. Upon the Assignment becoming effective, (x) if
requested by the assigning Bank, the Agent and the Borrower shall make
appropriate arrangements so that new Notes are issued to the assigning
Bank and the Assignee; and (y) the Agent shall forward all payments of
interest, principal, fees and other amounts that would have been made
to the assigning Bank, in proportion to the percentage of the assigning
Bank's rights transferred, to the Assignee.
(c) Participations. Each Bank shall have the right, subject to the
further provisions of this Section 12.3, to grant or sell a
participation in all or any part of its Loans, Notes and Commitments (a
"Participation") to any commercial lender, other financial institution
or
45
other entity (a "Participant") without the consent of the Borrower, the
Agent of any other party hereto. The Borrower agrees that if amounts
outstanding under this agreement and the Notes are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to
have the right of setoff in respect of its Participation in amounts
owing under this Agreement and any Note to the same extent as if the
amount of its Participation were owing directly to it as a Bank under
this agreement or any note; provided, that such right of setoff shall
be subject to the obligation of such Participant to share with the
Banks, and the Banks agree to share with such Participant, as provided
in Section 4.5 hereof. The Borrower also agrees that each Participant
shall be entitled to the benefits of Article V with respect to its
Participation, provided, that no Participant shall be entitled to
receive any greater amount pursuant to such Sections than the
transferor Bank would have been entitled to receive in respect of the
amount of the Participation transferred by such transferor Bank to such
Participant had no such transfer occurred.
(d) Limitation of Rights of any Assignee or Participant.
Notwithstanding anything in the foregoing to the contrary, except in
the instance of an Assignment that has become effective as provided in
Section 12.3(b), (i) no Assignee or Participant shall have any direct
rights hereunder, (ii) the Borrower, the Agent and the Banks other than
the assigning or selling Bank shall deal solely with the assigning or
selling Bank and shall not be obligated to extend any rights or make
any payment to, or seek any consent of, the Assignee or Participant,
(iii) no Assignment or Participation shall relieve the assigning or
selling Bank from its Commitment to make Loans hereunder or any of its
other obligations hereunder and such Bank shall remain solely
responsible for the performance hereof, the (iv) no Assignee or
Participant, other than an affiliate of the assigning or selling Bank,
shall be entitled to require such Bank to take or omit to take any
action hereunder, except that such Bank may agree with such Assignee or
Participant that such Bank will not, without such Assignee's or
Participant's consent, take any action which would, in the case of any
principal, interest or fee in which the Assignee or Participant has an
ownership or beneficial interest: (w) extend the final maturity of any
Loans or extend the Termination Date, (x) reduce the interest rate on
the Loans, (y) forgive any principal of, or interest on, the Loans or
any fees, or (z) release all or substantially all of the Collateral for
the Loans.
(e) Tax Matters. No Bank shall be permitted to enter into any
Assignment or Participation with any Assignee or Participant who is not
a United States Person unless such Assignee or Participant represents
and warrants to such Bank that, as at the date of such Assignment or
Participation, it is entitled to receive interest payments without
withholding or deduction of any taxes and such Assignee or Participant
executes and delivers to such Bank on or before the date of execution
and delivery of documentation of such Participation or Assignment, a
United States Internal Revenue Service Form W8BEN or W8ECI, or any
successor to either of such forms, as appropriate, properly completed
and claiming complete exemption from withholding and deduction of all
Federal Income
46
Taxes. A "United States Person" means any citizen, national or resident
of the United States, any corporation or other entity created or
organized in or under the laws of the United States or any political
subdivision hereof or any estate or trust, in each case that is not
subject to withholding of United States Federal income taxes or other
taxes on payment of interest, principal or fees hereunder.
(f) Information. Each Bank may furnish any information concerning the
Borrower in the possession of such Bank from time to time to Assignees
and Participants and potential Assignees and Participants.
(g) Federal Reserve Bank. Nothing herein stated shall limit the right
of any Bank to assign any interest herein and in any Note to a Federal
Reserve Bank.
Section 12.4 Costs, Expenses and Taxes; Indemnification.
(a) The Borrower agrees, whether or not any Advance is made hereunder,
to pay on demand: (i) all costs and expenses of the Agent (including
the reasonable fees and expenses of counsel and paralegals for such
persons who may be employees of such persons) incurred in connection
with the preparation, execution and delivery of the Loan Documents and
the preparation, negotiation and execution of any and all amendments to
each thereof, and (ii) all costs and expenses of the Agent and each of
the Banks incurred after the occurrence of an Event of Default in
connection with the enforcement of the Loan Documents. The Borrower
agrees to pay, and save the Banks harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution
or delivery of the Loan Documents. The Borrower agrees to indemnify and
hold the Banks harmless from any loss or expense which may arise or be
created by the acceptance in good faith by the Agent of telephonic or
other instructions for making Advances or disbursing the proceeds
thereof.
(b) The Borrower agrees to defend, protect, indemnify, and hold
harmless the Agent and each and all of the Banks, each of their
respective Affiliates and each of the respective officers, directors,
employees and agents of each of the foregoing (each an "Indemnified
Person" and, collectively, the "Indemnified Persons") from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation, the fees
and disbursements of counsel to such Indemnified Persons in connection
with any investigative, administrative or judicial proceeding, whether
direct, indirect or consequential and whether based on any federal or
state laws or other statutory regulations, including, without
limitation, securities and commercial laws and regulations, under
common law or at equitable cause, or on contract or otherwise, the
capitalization of the Borrower, the Commitments, the making of,
management of and participation in the Advances or the use or intended
use of the proceeds of the Advances, provided that the Borrower shall
have no obligation under this Section 12.4(b) to an Indemnified Person
47
with respect to any of the foregoing to the extent resulting from the
gross negligence or willful misconduct of such Indemnified Person or
arising solely from claims between one such Indemnified Person and
another such Indemnified Person. The indemnity set forth herein shall
be in addition to any other obligations or liabilities of the Borrower
to each Indemnified Person under the Loan Documents or at common law or
otherwise.
(c) The obligations of the Borrower under this Section 12.4 shall
survive any termination of this Agreement.
Section 12.5 Notices. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent under Article II hereof shall be deemed to have been
given only when received by the Agent.
Section 12.6 Successors. This Agreement shall be binding upon the
Borrower, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Banks and the Agent and the
successors and assigns of the Banks. The Borrower shall not assign its rights or
duties hereunder without the written consent of the Banks.
Section 12.7 Severability. Any provision of the Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 12.8 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Borrower has
one or more Subsidiaries.
Section 12.9 Captions. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
Section 12.10 Entire Agreement. The Loan Documents embody the entire
agreement and understanding between the Borrower, the Banks and the Agent with
respect to the subject matter hereof and thereof. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
48
Section 12.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.12 Governing Law. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.
Section 12.13 Consent to Jurisdiction. AT THE OPTION OF THE BANKS, THIS
AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. XXXX, MINNESOTA; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE BANKS AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 12.14 Waiver of Jury Trial. THE BORROWER, THE BANKS AND THE
AGENT EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
(signature pages follows)
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above.
CHRONIMED INC.
By:_______________________________
Title:____________________________
00000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
` Attention: Xx. Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Signature Page 1
Commitments:
------------
$20,000,000 U.S. BANK NATIONAL ASSOCIATION,
as Agent and a Bank
By:_________________________________
Title:______________________________
000 Xxxxx Xxxxx Xx.
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Signature Page 2
$10,000,000 M&I XXXXXXXX & ILSLEY BANK,
as a Bank
By:__________________________________
Title:_______________________________
and
By:__________________________________
Title:_______________________________
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Signature Page 3
EXHIBITS
Exhibit Contents
------- --------
A Form of Note
B Borrowing Base Certificate
C Compliance Certificate
D Subsidiary Guaranty
E Form of Legal Opinion
F Assignment and Assumption
Schedules
7.5 Fiscal Quarter and Fiscal Year ending dates
7.6 Litigation (Section 7.6)
Contingent Liabilities (Section 7.6)
7.11 Existing Liens (Sections 7.11 and 9.13)
7.16 Subsidiaries (Section 7.16)
7.17 Partnerships/Joint Ventures (Section 7.17)
9.11 Investments (Section 9.11)
9.12 Existing Indebtedness (Section 9.12)
EXHIBIT A
PROMISSORY NOTE
$__________ Minneapolis, Minnesota: January 17, 2002
FOR VALUE RECEIVED, the undersigned CHRONIMED INC., a Minnesota
corporation (the "Borrower"), promises to pay to the order of ___________ (the
"Bank"), on the Termination Date, or other due date or dates determined under
the Credit Agreement hereinafter referred to, the principal sum of
_________________ DOLLARS ($__________), or if less, the then aggregate unpaid
principal amount of the Loans (as such terms are defined in the Credit
Agreement) as may be borrowed by the Borrower from the Bank under the Credit
Agreement. All Loans and all payments of principal shall be recorded by the
holder in its records which records shall be conclusive evidence of the subject
matter thereof, absent manifest error.
The Borrower further promises to pay to the order of the Bank interest
on the aggregate unpaid principal amount hereof from time to time outstanding
from the date hereof until paid in full at the rates per annum which shall be
determined in accordance with the provisions of the Credit Agreement. Accrued
interest shall be payable on the dates specified in the Credit Agreement.
All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the office of U.S. Bank National Association, at 000 Xxxxx Xxxxx Xx.,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, or at such other place as may be designated
by the Agent to the Borrower in writing.
This Note is the Note referred to in, and evidences indebtedness
incurred under, a Credit Agreement dated as of January 17, 2002 (herein, as it
may be amended, modified or supplemented from time to time, called the "Credit
Agreement") among the Borrower, the Banks, as defined therein (including the
Bank) and U.S. Bank National Association, as Agent, to which Credit Agreement
reference is made for a statement of the terms and provisions thereof, including
those under which the Borrower is permitted and required to make prepayments and
repayments of principal of such indebtedness and under which such indebtedness
may be declared to be immediately due and payable.
All parties hereto, whether as makers, endorsers or otherwise,
severally waive presentment, demand, protest and notice of dishonor in
connection with this Note.
This Note is made under and governed by the internal laws of the State
of Minnesota.
CHRONIMED INC.
By:_____________________________________
Title:___________________________________
Exhibit B
Form of Borrowing Base Certificate
[date]
To: The Agent and Banks party
to the Credit Agreement described herein
M&I Xxxxxxxx & Ilsley Bank
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
U.S. Bank National Association
000 Xxxxx Xxxxx Xx.
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Ladies/Gentlemen:
Reference is made to that certain Amended and Restated Credit
Agreement, dated as of January 17, 2002 (as amended from time to time, the
"Credit Agreement"), among Chronimed Inc. (the "Borrower"), the Banks named
therein and U.S. BANK NATIONAL ASSOCIATION, as Agent (the "Agent"). Terms not
otherwise expressly defined herein shall have the meanings set forth in the
Credit Agreement.
As required pursuant to Section 8.1(e) of the Credit Agreement, the
Borrower hereby certifies that as of _____________, 20__, the Borrowing Base is
calculated as follows:
Eligible Accounts:
-----------------
Total Accounts: $_______
less:
----
Ineligibles: $_______
Contra accounts: $_____
Government: $_____
Affiliates: $_____
Past 90 days: $_____
Others: $_____
x 0.75 = $_______
Eligible Inventory:
Total Inventory: $_______
less:
----
Ineligible: $_______
(specify types)
x 0.50 = $_______
Total Borrowing Base: $_______
Outstanding Loans: $_______
Availability (or shortfall) $_______
Chronimed Inc.
By:_____________________________
Title:__________________________
Exhibit C
Form of Compliance Certificate
[date]
To: The Agent and Banks party
to the Credit Agreement described herein
M&I Xxxxxxxx & Xxxxxx Bank
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
U.S. Bank National Association
000 Xxxxx Xxxxx Xx.
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Ladies/Gentlemen:
Reference is made to that certain Amended and Restated Credit
Agreement, dated as of January 17, 2002 (as amended from time to time, the
"Credit Agreement"), among Chronimed Inc. (the "Borrower"), the Banks named
therein and U.S. BANK NATIONAL ASSOCIATION, as Agent (the "Agent"). Terms not
otherwise expressly defined herein shall have the meanings set forth in the
Credit Agreement.
As required pursuant to Section 8.1(d) of the Credit Agreement, the
Borrower hereby certifies that as of _____________, 20__ (the "Statement Date"),
the following is true, correct and accurate in all respects:
1. The financial statements submitted herewith are true, correct and
complete.
2. No Default and no Event of Default, has occurred and continued;
3. All representations and warranties of the Borrower contained in
Article VII of the Credit Agreement are true and correct, as though
made on such date;
4. Covenant compliance is demonstrated as follows:
Section 9.9 Capital Expenditures.
Capital Expenditures for the period of four
consecutive Fiscal Quarters ending on the
Statement Date: $________
(Required: not more than $4,000,000)
Section 9.10 Leases.
------
Lease payments (operating leases) for the period of four
consecutive Fiscal Quarters ending on the Statement Date:
$__________
(Required: not more than $4,000,000 for any 4-quarter period)
Section 9.18 Tangible Net Worth.
Consolidated Tangible Net Worth: $________
(Required: $35,000,000, increased as provided in Section 9.18)
Section 9.19 Cash Flow Leverage Ratio.
Average principal amount of Loans
for Measurement Period: $________
plus
Principal amount of Funded Debt (other
than the Loans) on the last day of such
Measurement Period: $________
Total: $________
to
EBITDA for Measurement Period ending on
the Statement Date: $________
Ratio: ____ to 1.00
(Required: See Section 9.19)
Section 9.20 Interest and Lease Coverage Ratio.
EBIT for Measurement Period: $_______
plus
Operating Lease Expense for Measurement
Period: $_______
to
Interest Expense (cash) for Measurement
Period : $_______
plus
Operating Lease Expense for Measurement
Period: $_______
Ratio: ____ to 1.00
(Required: See Section 9.20)
Section 9.21 Fixed Charge Coverage Ratio.
EBITDA for Measurement Period : $_____
less
Unfinanced Capital Expenditures: $_____
Dividends and distributions: $_____
Cash taxes: $_____
Remainder $_______
to
Interest Expense: $_____
Mandatory payment of Funded Debt: $_____
1/5 of average Loans for
Measurement Period: $_____
Total: $______
Ratio: ____ to 1.00
(Required: See Section 9.21)
5. A statement showing calculation of "EBIT" in reasonable detail is
attached.
Chronimed Inc.
By:_____________________________
Title:__________________________
Calculation of EBIT
Net Income (before provision for income taxes): $________
Interest Expense: $________
One time expenses under (b) of the definition: $________
(further described on Schedule 1.1 to the Credit Agreement)
Expenses under (c) of the definition: $________
Total: $________
less: non-operating gains: $_______
Describe expenses under (c):_________________________________________
Exhibit D
Subsidiary Guaranty
Attach gpm draft
EXHIBIT E
Opinion of Counsel
Exhibit F
ASSIGNMENT AND ASSUMPTION AGREEMENT
(Chronimed Inc.)
This Agreement, dated as of the date set forth in Item I (each
reference to an "Item" herein shall be deemed to refer to such Item on Schedule
I hereto), is made by the party named in Item II, (the "Assignor") to the entity
named in Item III (the "Assignee").
Preliminary Statement
The Assignor has entered into a Credit Agreement dated as of January
17, 2002, as amended thereafter (the "Credit Agreement") among CHRONIMED INC.
(the "Borrower"), certain lenders including the Assignor (collectively, the
"Bank Group") and U.S. BANK NATIONAL ASSOCIATION, as Agent, under which the
Assignor has agreed to make Revolving Loans and Term Loans, and to issue or
participate in the risk of issuance of Letters of Credit, in each instance in
amounts of up to those set forth in Item IV (such amount equals the original
commitment of the Assignor and may have been, or may be, reduced or increased by
other assignments by, or to, the Assignor, and will be reduced by the assignment
under this Agreement) and the Bank Group has agreed to make Revolving Loans and
Term Loans, and to issue or participate in the risk of issuance of Letters of
Credit, in each instance in amounts of up to those set forth in Item V. Such
Revolving Loans and Term Loans are sometimes called the "Loans" hereinafter;
such Letters of Credit are sometimes called the "Letters of Credit" hereinafter;
the Loans, the Bank's participation in the Letters of Credit, and the Bank's
participation in any unreimbursed drawing under any Letter of Credit or any
advance or loans made in connection with drawings under any Letter of Credit are
sometimes called the "Advances" or each "Advance,, hereinafter. Unless the
context clearly indicates otherwise, all other terms used in this Agreement
shall have the meanings given them by, and shall be construed as set forth in
the Credit Agreement.
In consideration of the premises and the mutual covenants contained
herein, the Assignor and the Assignee hereby covenant and agree as follows:
1. Assignment and Assumption. Subject to the terms and conditions of
this Agreement, the Assignor and the Assignee agree that:
(a) the Assignor hereby sells, transfers, assigns and delegates to the
Assignee, in consideration of entry by the Assignee into this Agreement
[and of Payment by the Assignee to the Assignor of the amount set forth
in Item VI]; and
(b) the Assignee hereby purchases, assumes and undertakes from the
Assignor, without recourse and without representation or warranty
(except as expressly provided in this Agreement)
a share equal to the percentage set forth in Item VII (expressed as a percentage
of the aggregate Advances and Commitments of the Bank Group) of the Assignor's
commitments, loans, participations, rights, benefits, obligations, liabilities
and indemnities under and in connection with the Credit Agreement and all of the
Advances, including without limitation the right to receive payment of
principal, and interest on such percentage of the Assignor's Advances, and the
obligation to fund all future Advances and drawings under the Letters of Credit
in respect of such assignment, and to indemnify the Agent or any other party
under the Credit Agreement and to pay all other amounts payable by a Bank (in
such percentage of the aggregate obligations of the Bank Group) under or in
connection with the Credit Agreement.
The interest of the Assignor under the Credit Agreement (including the
portion of the Assignor's Advances and all such commitments, loans,
participations, rights, benefits, obligations, liabilities and indemnities)
which the Assignee purchases and assumes hereunder is hereinafter referred to as
its "Assigned Share". The day upon which the Assignee shall make the payment
described in the prior paragraph is hereinafter referred to as the "Funding
Date". Upon completion of the assignment hereunder, the Assignor will have the
revised share of the total Loans and Commitments of the Bank Group set fort in
Item VIII.
2. Future Payments. The Assignor shall notify the Agent to make all
payments with respect to the Assigned Share after the Funding Date directly to
the Assignee. The Assignor and Assignee agree and acknowledge that all payment
of interest, fees, letter of credit commissions and other fees accrued up to,
but not including, the Funding Date are the property of the Assignor, and not
the Assignee. The Assignee shall, upon payment of any interest, fees, letter of
credit commissions or other fees, remit to the Assignor all of such interest,
fees, letter of credit commissions an other fees accrued u to, but not
including, the Funding Date.
3. No Warranty or Recourse. The sale, transfer, assignment and
delegation of the Assigned Share is made without warranty or recourse against
the Assignor of any kind, except that the Assignor warrants that it has not sold
or otherwise transferred any other interest in the Assigned Share to any other
party. The Assignor may, however, have sold and may hereafter sell
Participations in, or may have assigned or may hereafter assign, portions of its
interest in the Advances and the Credit Agreement that in the aggregate
(together with the portion assigned hereby), do not exceed 100% of the
Assignor's interest in the Advances and the Credit Agreement.
4. Covenants and Warranties. To induce the other to enter into this
Agreement, each of the Assignee and the Assignor warrants and covenants with
respect to itself that:
(a) Existence. It is, in the case of the Assignee, a ________________
organized under the laws of _________________ and it is, in the case of
the Assignor, a ___________ duly existing under the laws of
_____________;
(b) Authority. It is duly authorized to execute, deliver and perform
this Agreement;
(c) No Conflict. The execution, delivery and performance of this
Agreement do not conflict with any provision of law or of the charter
or by-laws (or equivalent constituent documents) of such party, or of
any agreement binding upon it; and
(d) Valid and Binding. All acts, conditions and things required to be
done and performed and to have occurred prior to the execution,
delivery and performance of this Agreement, and to constitute the same
the legal, valid and binding obligation of such party enforceable
against such party in accordance with its terms, have been done and
performed and have occurred in due and strict compliance with all
applicable laws.
5. Covenants and Warranties by the Assignee. To induce the Assignor to
enter into this Agreement, the Assignee warrants and covenants that (a) it is
purchasing and assuming the Assigned Share in the course of making loans in the
ordinary course of its commercial lending business, and (b) it has,
independently and without reliance upon the Assignor, and based upon such
financial statements and other documents and information as it has deemed
appropriate, made its own credit analysis an decision to engage in this purchase
and transfer of the Assigned Share. The Assignee acknowledges that the Assignor
has not made and does not make any representations or warranties or assume any
responsibility with respect to the validity, genuineness, enforceability or
collectibility of the Advances, the Credit Agreement or any related instrument,
document or agreement.
6. Promissory Note. The Notes of the Assignor shall be delivered to the
Agent or Borrower at such time and by such means as the Assignor and the Agent
or Borrower shall agree, with the request by the Assignor that the Borrower
issue new notes payable to the Assignor and to the Assignee to reflect the
assignment of the Assigned Share hereunder.
7. Payments to the Assignor. All amounts payable to the Assignor in
U.S. Dollars shall be paid by transfer of federal funds to the Assignor, ABA No.
, Account No. Attention: Reference: [Borrower].
8. Other Transactions. The Assignee shall have no interest in any
property in the Assignor's possession or control, or in any deposit held or
other indebtedness owing by the Assignor, which may be or become collateral for
or otherwise available for payment of the Advances by reason of the general
description of secured obligations contained in any security agreement or other
agreement or instrument held by the Assignor or by reason of the right of
set-off, counterclaim or otherwise, except that if such interest is provided for
in provisions of the Credit Agreement regarding sharing of set-off, the Assignee
shall have the same rights as any other lender that is a party to the Credit
Agreement. The Assignor and its affiliates may accept deposits from, lend money
to, act as trustee under indentures for an generally engage in any kind
of business with the Borrower, and any person who may do business with or own
securities of the Borrower, or any of the Borrower's subsidiaries. The Assignee
shall have no interest in any property taken as security for any other loans or
any other credits extended to the Borrower or any of its subsidiaries by the
Assignor to the Borrower.
9. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Assignor and the Assignee.
10. Expenses. In the event of any action to enforce the provisions of
this Agreement against a party hereto, the prevailing party shall be entitled to
recover all costs and expenses incurred in connection therewith including,
without limitation, attorneys' fees and expenses, including allocable cost of
in-house legal counsel and staff.
11. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE 0F MINNESOTA.
12. Amendments, Changes and Modifications. This Agreement may not be
amended, changed, modified, altered, or terminated except by an agreement in
writing signed by the Assignor and the Assignee or their permitted successors or
assigns).
13. Withholding Taxes. The Assignee (a) represents and warrants to the
Assignor, the Agent and the Borrower that under applicable law and treaties no
tax will be required to be withheld by the Assignor with respect to any payments
to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized
under the laws of any jurisdiction other than the United States or any State
thereof) to the Assignor, the Agent and the Borrower prior to the time that the
Agent or Borrower is required to make any payment of principal, interest or fees
hereunder either U.S. Internal Revenue Service Form W8ECI or W8BEN and agrees to
provide new Forms upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Assignee, and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
14. Entire Agreement. This Agreement sets forth the entire
understanding of the parties except for the consents contemplated hereby, and
supersedes any and all prior agreements, arrangements, and understandings
relating to the subject matter hereof. No representation, promise, inducement or
statement of intent has been made by any party which is not embodied in this
Agreement, and no party shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not expressly set
forth herein.
15. Counterparts. This Agreement may be executed by the Assignor and
the Assignee in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on their behalf by their duly authorized officers as of the date and
year first above written.
Address: [Assignor]
By:___________________________
____________________(print name)
Title:_________________________
Address: [Assignee]
By:___________________________
____________________(print name)
Title:_________________________
[Consents required to become effective AS provided in Section 12.3 of the Credit
Agreement:
Consented to this ____ day
of _____________, 20___.
U.S. Bank National Association, as Agent
By:__________________________________
__________________________(print name)
Title:________________________________
Consented to this ____ day
of _________________, 20____.
CHRONIMED INC., as Borrower
By:_________________________________
__________________________(print name)
Title:_______________________________]
Schedule I
to
Assignment and Assumption
Item I: Date of Assignment:
Item II: Assigning Bank (the "Assignor"):
Item III: Assignee (the "Assignee"):
Item IV: Initial Total Commitment of the Assignor:
Revolving Loans:
Term Loans:
Letters of Credit:
Item V: Bank Group's Initial Total Commitment:
Revolving Loans:
Term Loans:
Letters of Credit:
Item VI: Payment to the Assignor on Funding Date:
Item VII: Percentage Assigned: ________%
(Expressed as a percentage of the total aggregate Commitments
of the Bank Group, carry out to 10 decimal places; upon
effectiveness of the Assignment as provide in the Credit
Agreement, this will constitute the Assignee's "Percentage"
Item VIII: Revised Percentage of the Assignor: _____________%
(carry out to 10 decimal places; upon effectiveness of the
Assignment as provided in the Credit Agreement, this will
constitute the Assignor's "Percentage")
Schedule 1.1
Expenses related to restatement of financial statements
(see definition of "EBIT")
Schedule 7.5
Fiscal Quarter and Fiscal Year ending dates (Section 7.5)
Fiscal Year 2001: June 29, 2001
Fiscal Year 2002
Fiscal Quarter 1 Fiscal Year 2002: September 28, 2001
Fiscal Quarter 2 Fiscal Year 2002: December 28, 2001
Fiscal Quarter 3 Fiscal Year 2002 March 29, 2002
Fiscal Quarter 4 Fiscal Year 2002
and Fiscal Year 2002: June 28, 2002
Fiscal Year 2003
Fiscal Quarter 1 Fiscal Year 2003: September 28, 2002
Fiscal Quarter 2 Fiscal Year 2003: December 28, 2002
Fiscal Quarter 3 Fiscal Year 2003 March 28, 2003
Fiscal Quarter 4 Fiscal Year 2003
and Fiscal Year 2003: June 27, 2003
Fiscal Year 2004
Fiscal Quarter 1 Fiscal Year 2004: October 3, 2003
Fiscal Quarter 2 Fiscal Year 2004: January 1, 2004
Fiscal Quarter 3 Fiscal Year 2004 April 4, 2004
Fiscal Quarter 4 Fiscal Year 2004
and Fiscal Year 2004: July 2, 2004
Thereafter: Schedule will be provided by Borrower if relevant.
Schedule 7.6
Litigation (Section 7.6)
Contingent Liabilities (Section 7.6)
Borrower, its Chief Executive Officer, and Chief Financial Officer have been
named as defendants in the matter In Re Chronimed Inc. Securities Litigation,
01-CV-1092 (DWF/AJB)(D.Minn.2000). In Re Chronimed is a shareholder class action
in which plaintiffs allege violations of the Securities Exchange Act of 1934
associated with Borrowers restatement of its financial statements for fiscal
year 2000 and portions of fiscal year 2001. Defendants have brought a motion to
have the action dismissed and a ruling is anticipated in early 2002. Defendants
have denied any wrongdoing, assert that the case is wholly without merit, and
are vigorously defending themselves. Plaintiffs have not quantified their
damages claims. Borrower's insurer has accepted defense of this matter with
reservation of rights. An adverse judgment in this action could have a material
impact on Borrower.
Schedule 7.11
Existing Liens (Sections 7.11 and 9.13)
None
Schedule 7.16
Subsidiaries (Section 7.16)
Chronimed Holdings Inc., dba StatScript Pharmacy, a Minnesota corporation.
Borrower owns all issued and outstanding shares of Chronimed Holdings Inc.
Schedule 7.17
Partnerships/Joint Ventures (Section 7.17)
Schedule 9.11
Investments (Section 9.11)
Schedule 9.12
Existing Indebtedness (Section 9.12)
PROMISSORY NOTE
$10,000,000 Minneapolis, Minnesota: January 17, 2002
FOR VALUE RECEIVED, the undersigned CHRONIMED INC., a Minnesota
corporation (the "Borrower"), promises to pay to the order of M&I XXXXXXXX &
XXXXXX BANK (the "Bank"), on the Termination Date, or other due date or dates
determined under the Credit Agreement hereinafter referred to, the principal sum
of TEN MILLION DOLLARS ($10,000,000), or if less, the then aggregate unpaid
principal amount of the Loans (as such terms are defined in the Credit
Agreement) as may be borrowed by the Borrower from the Bank under the Credit
Agreement. All Loans and all payments of principal shall be recorded by the
holder in its records which records shall be conclusive evidence of the subject
matter thereof, absent manifest error.
The Borrower further promises to pay to the order of the Bank interest
on the aggregate unpaid principal amount hereof from time to time outstanding
from the date hereof until paid in full at the rates per annum which shall be
determined in accordance with the provisions of the Credit Agreement. Accrued
interest shall be payable on the dates specified in the Credit Agreement.
All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the office of U.S. Bank National Association, at 000 Xxxxx Xxxxx Xx.,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, or at such other place as may be designated
by the Agent to the Borrower in writing.
This Note is the Note referred to in, and evidences indebtedness
incurred under, a Credit Agreement dated as of January 17, 2002 (herein, as it
may be amended, modified or supplemented from time to time, called the "Credit
Agreement") among the Borrower, the Banks, as defined therein (including the
Bank) and U.S. Bank National Association, as Agent, to which Credit Agreement
reference is made for a statement of the terms and provisions thereof, including
those under which the Borrower is permitted and required to make prepayments and
repayments of principal of such indebtedness and under which such indebtedness
may be declared to be immediately due and payable.
All parties hereto, whether as makers, endorsers or otherwise,
severally waive presentment, demand, protest and notice of dishonor in
connection with this Note.
This Note is made under and governed by the internal laws of the State
of Minnesota.
CHRONIMED INC.
By:_____________________________________
Title:___________________________________
PROMISSORY NOTE
$20,000,000 Minneapolis, Minnesota: January 17, 2002
FOR VALUE RECEIVED, the undersigned CHRONIMED INC., a Minnesota
corporation (the "Borrower"), promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION (the "Bank"), on the Termination Date, or other due date or dates
determined under the Credit Agreement hereinafter referred to, the principal sum
of TWENTY MILLION DOLLARS ($20,000,000), or if less, the then aggregate unpaid
principal amount of the Loans (as such terms are defined in the Credit
Agreement) as may be borrowed by the Borrower from the Bank under the Credit
Agreement. All Loans and all payments of principal shall be recorded by the
holder in its records which records shall be conclusive evidence of the subject
matter thereof, absent manifest error.
The Borrower further promises to pay to the order of the Bank interest
on the aggregate unpaid principal amount hereof from time to time outstanding
from the date hereof until paid in full at the rates per annum which shall be
determined in accordance with the provisions of the Credit Agreement. Accrued
interest shall be payable on the dates specified in the Credit Agreement.
All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the office of U.S. Bank National Association, at 000 Xxxxx Xxxxx Xx.,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, or at such other place as may be designated
by the Agent to the Borrower in writing.
This Note is the Note referred to in, and evidences indebtedness
incurred under, a Credit Agreement dated as of January 17, 2002 (herein, as it
may be amended, modified or supplemented from time to time, called the "Credit
Agreement") among the Borrower, the Banks, as defined therein (including the
Bank) and U.S. Bank National Association, as Agent, to which Credit Agreement
reference is made for a statement of the terms and provisions thereof, including
those under which the Borrower is permitted and required to make prepayments and
repayments of principal of such indebtedness and under which such indebtedness
may be declared to be immediately due and payable.
All parties hereto, whether as makers, endorsers or otherwise,
severally waive presentment, demand, protest and notice of dishonor in
connection with this Note.
This Note is made under and governed by the internal laws of the State
of Minnesota.
CHRONIMED INC.
By:_____________________________________
Title:___________________________________
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement"), dated
as of January 17, 2002, is entered into between U.S. BANK NATIONAL ASSOCIATION
(the "Agent") and CHRONIMED INC. (the "Borrower").
Preliminary Statement:
The Borrower and U.S. Bank National Association ("U.S. Bank") entered
into a Security Agreement, dated as of July 31, 2001 (the "Existing Security
Agreement"), to secure all obligations of the Borrower to U.S. Bank, including
those under the letter agreement, dated as of December 31, 1996 (as thereafter
amended, the "Existing Credit Agreement"), under which U.S. Bank made certain
loans to the Borrower. The Borrower and U.S. Bank have agreed to amend and
restate the Existing Credit Agreement by an Amended and Restated Revolving
Credit Agreement, dated as of January 17, 2002 (as thereafter amended, modified,
extended, renewed or restated from time to time, the "Credit Agreement"). The
Borrower and U.S. Bank have further agreed that the other Banks named in the
Credit Agreement shall become co-lenders with U.S. Bank and U.S. Bank shall act
as administrative agent for the Banks, all as more particularly described
therein. The Borrower, the Banks and the Agent have agreed that the Existing
Security Agreement shall be amended to read as follows to secure the loans made
by the Banks under the Credit Agreement, obligations of the Borrower to the
Agent under the Credit Agreement and other extensions of credit as hereinafter
provided.
Section 1 - Definitions and Interpretation.
Section 1.1 Terms in Credit Agreement. Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Credit
Agreement.
Section 1.2 Terms defined in Uniform Commercial Code. "Account",
"Account Debtor", "Chattel Paper", "Deposit Account", "Document", "General
Intangibles", "Health-care-insurance receivables", "Instrument", "Inventory",
"Investment Property", "Letter-of-Credit Rights", "Proceeds" and "Supporting
Obligations" shall have the meanings set forth in the Minnesota Uniform
Commercial Code (for purposes of this Agreement, such terms may be capitalized,
even if not capitalized in the Minnesota Uniform Commercial Code), provided,
that if any additional goods, property or rights shall be included in such terms
under Section 2 hereof, such terms shall be construed to include such additional
goods, property or rights.
Section 1.3 Interpretation. A reference to a Section, Exhibit or
Schedule is, unless otherwise stated, a reference to a section hereof, or an
exhibit or schedule hereto, as the case may be. Section captions used in this
Agreement are for convenience only, and shall not affect the
construction of this Agreement. The word "including" shall, in each instance, be
deemed to mean "including but not limited to".
Section 2 Grant of Security Interest. As security for the payment of
all Liabilities, the Borrower hereby assigns to the Agent and grants to the
Agent, for the benefit of the Agent and the Banks, a continuing security
interest in the following personal property of the Borrower, including without
limitation the following, whether now owned or hereafter arising or acquired
(collectively, the "Collateral"):
(a) Accounts, including all other rights and interests (including all
liens and security interests) that the Borrower may at any time have by
law or agreement against any Account Debtor or other obligor obligated
to make any such payment or against any of the property of such Account
Debtor or other obligor and including Health-care-insurance
receivables;
(b) Inventory, including goods that are returned, repossessed, stopped
in transit or which otherwise come into the possession of the Borrower;
(c) General Intangibles, including payment intangibles, inventions,
designs, patents, patent applications, design patents, design patent
applications, trademarks, trademark applications, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, rights to indemnification and rights
under warranties;
(d) Chattel Paper, Instruments and Documents;
(e) Investment Property;
(f) Deposit Accounts;
(g) Letter-of-Credit rights;
(h) Supporting Obligations;
(i) books, correspondence, credit files, records, invoices, manuals,
service records and programs, other papers and documents, computer
records, runs, software, systems, procedures, disks, tapes and other
storage media relating to any of the Collateral, including any of the
foregoing in the possession or control of any service, consultant, or
outside vendor;
(j) to the extent relating to the Collateral, Proceeds, including all
policies, claims to payment under, and proceeds of any and all
insurance policies payable to the Borrower, or
on behalf of the Borrower's property, whether or not such policies are
issued to or owned by the Borrower and whether or not the Agent is
named as loss payee or additional insured, including any credit
insurance.
Notwithstanding the foregoing, the Collateral shall not include any medical
records that cannot be pledged under applicable law.
Section 3 - Representations and Warranties
The Borrower represents and warrants to the Agent and the Banks that:
Section 3.1 Organization, Names and Organization Number. The Borrower
is an entity of the type identified on Schedule A, organized under the laws of
the jurisdiction identified on Schedule A. The organization identification
number, if any, and the federal taxpayer identification number of the Borrower
are set forth on Schedule A. The Borrower does business solely under its own
name and the trade names and styles, if any, set forth on Schedule A (which
includes any name used within the past 5 years).
Section 3.2 Owner, No Other Financing Statements. The Borrower is and
will be the lawful owner of all Collateral, free of all liens and claims
whatsoever, other than the security interest hereunder, and those shown on
Schedule B. No financing statement (other than any which may have been filed on
behalf of the Agent) covering any of the Collateral is on file in any public
office, except those listed on Schedule B.
Section 3.3 Offices and Locations. The Borrower's chief place of
business and chief executive office and the office where it keeps its books and
records concerning the Collateral, and the originals of all Chattel Paper,
Instruments and Documents are located at its address set forth on the signature
page hereof.
Section 3.4 Locations Inventory. All of the Inventory existing on the
date of the Agreement is located at the places specified in Schedule C. The
Borrower will immediately notify the Agent of any additional state in which any
item of Inventory is hereafter located.
Section 4 - Sale and Collection
4.1 Sale in Ordinary Course. Until the occurrence of an Event of
Default, the Borrower may, in the ordinary course of its business, sell, lease,
or consume (if raw materials) Inventory and furnish Inventory under contracts of
service.
4.2 Collection of Collateral. Until such time as the Agent shall notify
the Borrower of the revocation of such authority, the Borrower will endeavor to
collect, as and when due, all
amounts due with respect to any of the Collateral, and shall take any action in
connection with such collection as the Agent may reasonably request.
4.3 Refunds. The Borrower may grant, in the ordinary course of its
business, any refund or allowance to any Account Debtor to which it may be
lawfully entitled, and may accept, in connection therewith, the return of goods,
the sale or lease of which shall have given rise to Accounts.
Section 4.4 Collection by the Agent. The Agent may, but shall not be
obligated to, following any Event of Default (a) notify any parties obligated on
any of the Collateral to make payment directly to the Agent, (b) enforce
collection of any of the Collateral by suit or otherwise, and (c) surrender,
release, exchange, compromise, extend or renew all or any part of the
Collateral. Following the occurrence of any Event of Default, if requested by
the Agent, the Borrower will, at its own expense, notify all parties obligated
on any of the Collateral to make all payments thereunder directly to the Agent.
Section 4.5 Transmittal of Items to the Agent. The Borrower will, upon
request of the Agent following an Event of Default, upon receipt, transmit and
deliver to the Agent, in the form received, all cash, checks, drafts, and any
other form of payment (properly endorsed, where required, so that such items may
be collected by the Agent) received as proceeds of any of the Collateral. The
Agent is authorized to endorse, in the name of the Borrower, any item received
by the Agent constituting a proceed of any of the Collateral. After such request
by the Agent, any such items received by the Borrower will not be commingled
with any other of its funds or property, but will be held separate and apart
from its own funds or property and upon express trust for the Agent until
delivered to the Agent.
Section 5 - Agreements of Borrower
The Borrower agrees that, unless otherwise agreed in writing by the
Agent, it will:
Section 5.1 Schedules and Reports. Furnish to the Agent, in form and
detail satisfactory to the Agent: (a) written notice of any event causing loss,
material damage or depreciation in value of any of the Collateral, describing,
and specifying the amount of, such loss, damage or depreciation; and (b) from
time to time, as the Agent may request, such additional schedules, certificates
and reports concerning the Collateral, including the Account Debtors obligated
thereon, as the Agent may request.
Section 5.2 Inspection. Permit the Agent and its agents or its
designees, from time to time, to inspect and evaluate the Collateral, and to
inspect, audit and make copies of all books and records constituting or
otherwise concerning the Collateral, and will, upon request of the Agent,
deliver to the Agent all of such records which pertain to the Collateral and all
Account Debtors.
The Borrower will reimburse the Agent upon demand for all reasonable costs and
expenses incurred by the Agent, its agents or its designees in the course of
such inspection and evaluation.
Section 5.3 Financing Statements and Filing. Upon request of the Agent,
execute such financing statements and other documents (and pay the cost of
recording the same in all offices requested by the Agent) and do such other acts
as the Agent may from time to time request to establish and maintain a valid
perfected security interest in the Collateral. The Borrower agrees that any
carbon, photographic or other reproduction of this Agreement or of any such
financing statement shall be sufficient for filing as a financing statement. The
Borrower authorizes the Agent to file any financing statements describing the
Collateral that do not require the manual signature of the Borrower.
Section 5.4 Locations and Notices. Maintain and keep (a) all Inventory
at the locations shown on Schedule C and at such other locations of which the
Borrower shall have given the Agent notice in writing before inventory is
maintained at such locations; (b) except as delivered to the Agent from time to
time, all Chattel Paper, Instruments and Documents, and all records included as
Collateral or otherwise concerning the Collateral, at the address shown on the
signature page and not duplicate any records regarding any Collateral at any
other address; and (c) the location of its chief office at the address shown on
the signature page.
Section 5.5 Names. Not do business under any other name other than
those shown on Schedule B.
Section 5.6 Notation on Records. Upon request of the Agent, stamp on
its records concerning the Collateral a notation, in form satisfactory to the
Agent, of the security interest of the Agent hereunder, and xxxx conspicuously
each Document, Chattel Paper, Instrument or contract included in the Collateral
with a legend, in form and substance satisfactory to the Agent, indicating that
such Document, Chattel Paper, Instrument or contract is subject to the security
interest of the Agent.
Section 5.7 Delivery of Collateral. Upon request of the Agent, deliver
to the Agent all Documents, Instruments and Chattel Paper, duly endorsed to be
payable to the Agent, or accompanied by duly executed instruments of transfer or
assignment in form and substance satisfactory to the Agent, with full recourse
to the Borrower.
Section 5.8 Transfer, Sale or Security Interest. Except as expressly
authorized under Section 4.1 hereof (subject to the limits therein), not sell,
lease, transfer, consume, assign or otherwise dispose of, or create or permit to
exist any lien on or security interest (other than the Agent's security
interest) in, any Collateral.
Section 5.9 Insurance. Keep all Inventory insured against loss, damage,
theft and other risks, with amounts and insurance companies, and under policies,
satisfactory to the Agent, which
policies shall provide that loss thereunder shall be payable to the Agent as its
interest may appear (and the Agent may apply any proceeds of such insurance
which may be received by it toward payment of Liabilities, whether or not due,
in such order of application as the Agent may determine), and such policies or
certificates thereof shall, if the Agent so requests, be deposited with the
Agent.
Section 5.10 Payment of Taxes, etc. Pay, when due, all taxes,
assessments, governmental charges and other similar charges levied against any
of the Collateral, except and so long as the Borrower is contesting such taxes,
assessments or charges in good faith and, by appropriate proceedings and the
Borrower has set aside on its books such reserves or other appropriate
provisions therefor as may be required by generally accepted accounting
principles, and so long as no enforcement action is being taken that would
interfere with the Borrower's use of such Collateral or the enforcement of the
Agent's rights hereunder.
Section 5.11 Waivers. Upon request of the Agent, obtain and deliver to
the Agent waivers in form and substance satisfactory to the Agent of any claim
to any Collateral by any landlord or mortgagee of any property where Inventory
is located.
Section 6 - Agent's Duties and Power of Attorney
Section 6.1 Agent's Performance of Agreements and Reimbursement. The
Agent may, from time to time, at its option, perform any agreement of the
Borrower hereunder which the Borrower shall fail to perform and take any other
action which the Agent deems necessary for the maintenance or preservation of
the Collateral or its interest therein, and the Borrower shall reimburse the
Agent for all expenses of the Agent in connection with the foregoing, together
with interest thereon at the highest rate of interest borne by any of the
Liabilities at such time from the date incurred until reimbursed by the
Borrower.
Section 6.2 Power of Attorney. The Borrower hereby irrevocably appoints
the Agent as the Borrower's attorney-in-fact, with full authority in the place
and stead of the Borrower and in the name of the Borrower, the Agent or
otherwise, from time to time in the Agent's discretion, to take any action and
to execute any instrument which the Agent may deem advisable to accomplish the
purposes of Section 6.1 and to exercise any right and remedy upon the occurrence
of an Event of Default. The Borrower hereby ratifies all that such attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is irrevocable and is coupled with an interest.
Section 6.3 No Liability on Collateral; Indemnity. The rights and
powers of the Agent hereunder are conferred solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such rights
or powers. The Agent does not in any way assume any of the Borrower's
obligations under, or with respect to, the Collateral. The Borrower shall remain
liable with respect to the Collateral to the same extent as if this Agreement
had not been executed.
The Borrower agrees to indemnify and hold harmless the Agent against any and all
liabilities, claims, damages, actions, proceedings, losses or other obligations
arising in connection with or on account of any of the Collateral.
Section 6.4 Care of Collateral. Except for the safe custody of any
Collateral in its possession, the Agent shall have no duty as to any Collateral
or as to the taking of any steps to preserve rights against any other party. The
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Agent accords its own property,
or is accorded treatment complying with any provision of any other document
setting forth a standard of care for such Collateral.
Section 7 - Event of Default and Remedies
Whenever an Event of Default shall be existing:
Section 7.1 Liabilities Due and Payable. All of the Liabilities may
(notwithstanding any provisions of any of the Loan Documents), at the option of
the Agent, and without demand or notice of any kind, be declared, and thereupon
immediately shall become, due and payable.
Section 7.2. Deposits, etc. The Agent may, from time to time, without
demand or notice of any kind, appropriate and apply toward the payment of such
of the Liabilities, and in such order of application, as the Agent may from time
to time elect, any and all balances, credits, deposits (general or special, time
or demand, provisional or final), accounts or moneys of or in the name of the
Borrower then or thereafter with the Agent.
Section 7.3 Assembly of Collateral. Upon demand of the Agent, the
Borrower shall assemble, at its expense, all Collateral at a convenient place
acceptable to the Agent.
Section 7.4 Use and Sale of Collateral. The Agent may, to the fullest
extent permitted by applicable law, without notice, hearing or process of law of
any kind, (a) enter upon any premises where any of the Collateral may be located
and take possession of and remove such Collateral; (b) use or license, on an
exclusive or non-exclusive basis, any General Intangibles throughout the world
for such term or terms, on such conditions, and in such manner, as the Agent
shall in its sole discretion determine, without compensation to the Borrower;
(c) sell any or all of the Collateral, free of all rights and claims of the
Borrower therein and thereto; and (d) bid for and purchase any or all of such
Collateral at any such sale.
Section 7.5 Additional Provisions on Sale. Any sale of Collateral may
be in one or more parcels at public or private sales, at any of the Agent's
offices or elsewhere, for cash, on credit, or for future delivery, and upon such
other terms as the Agent may reasonably believe are commercially reasonable. The
Agent shall not be obligated to make any sale of Collateral
regardless of notice of sales having been given, and the Agent may adjourn any
public or private sale from time to time by announcement made at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 7.6 Waiver by Borrower. The Borrower hereby expressly waives,
to the fullest extent permitted by applicable law, any and all notices,
advertisements, hearings or process of law in connection with the exercise by
the Agent of any of its rights and remedies upon an Event of Default. Any
notification of intended disposition of any of the Collateral required by law
shall be deemed reasonably and properly given if given at least five days before
such disposition.
Section 7.7 Proceeds of Collateral. Any proceeds of any disposition by
the Agent of any of the Collateral may be applied by the Agent to the payment of
expenses in connection with the Collateral, including reasonable attorneys' fees
and legal expenses, and any balance of such proceeds may be applied by the Agent
toward the payment of such of the Liabilities, and in such order of application,
as the Agent may from time to time elect.
Section 7.8 Recourse to Collateral; Remedies not Exclusive. The Agent
may resort to the Collateral for payment of any of the Liabilities, whether or
not the Agent shall have resorted to any other property securing the Liabilities
or shall have proceeded against the Borrower or any other party obligated to pay
or perform the Liabilities. The Agent's exercise of rights hereunder shall not
prevent the Agent's exercise of any other rights it may have upon the occurrence
of an Event of Default under any other Loan Documents or otherwise, and one
exercise of rights hereunder shall not prevent any subsequent exercise of rights
of the Agent hereunder, under any Loan Documents or otherwise.
Section 7.9 Other Rights. The Agent may exercise from time to time any
other rights and remedies available to it under any Loan Document and under all
applicable law.
Section 8 - General Provisions
Section 8.1 Reimbursement of Expenses. The Borrower shall reimburse the
Agent upon demand for all costs and expenses, including reasonable fees of
attorneys for the Agent (who may be employees of the Agent) and legal expenses,
incurred by the Agent in seeking to collect or enforce any rights under the
Collateral and its rights hereunder and, in case of an Event of Default, in
seeking to collect each Loan Document and the Liabilities.
Section 8.2 Notices. Any notice from the Borrower to the Agent or from
the Agent to the Borrower shall be given, and deemed received, as provided in
the Credit Agreement.
Section 8.3 Waivers and Amendments. No failure or delay on the part of
the Agent in the exercise of any power, right or remedy, and no course of
dealing between the Borrower and the Agent, shall operate as a waiver of such
power, right or remedy, nor shall any single or partial
exercise of any power, right or remedy preclude other or further exercise
thereof or the exercise of any other power, right or remedy. No notice to or
demand on the Borrower not required hereunder shall in any event entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Agent to any other or
further action in any circumstances without notice or demand. No amendment,
modification or waiver of, or consent with respect to, any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed and delivered by the Agent. Any waiver of any provision of this
Agreement, and any consent to any departure by the Borrower from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which given.
Section 8.4 Remedies Cumulative. The remedies provided for herein are
cumulative and not exclusive of any remedies which may be available to the Agent
at law or in equity.
Section 8.5 Termination of Agreement. Unless sooner terminated by the
Agent, this Agreement shall terminate when all of the Loan Documents shall have
expired or been terminated and all Liabilities shall have been paid in full.
This Agreement shall continue notwithstanding that there may be, from time to
time, no outstanding loans or extensions of credit from the Agent to the
Borrower. Any return of Collateral upon termination of this Agreement and any
instruments of transfer or termination shall be at the expense of the Borrower
and shall be without warranty by, or recourse against, the Agent.
Section 8.6 Successors and Assigns. This Agreement shall be binding
upon the Borrower, its successors and assigns (and, if an individual, the
Borrower's heirs, estate and personal representatives), and shall inure to the
benefit of, and be enforceable by, the Agent and its successors, transferees,
and assigns. Without limiting the generality of the foregoing, the Agent may
assign or otherwise transfer all or any portion of the Liabilities to any other
person or entity and may similarly transfer all or any portion of its rights
under this Agreement to such person or entity.
Section 8.7 Choice of Law. This Agreement has been delivered at
Minneapolis, Minnesota, and shall be construed in accordance with and governed
by the laws of the State of Minnesota.
Section 8.8 Severance. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 8.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
Section 8.10 Consent to Jurisdiction. AT THE OPTION OF THE AGENT, THIS
AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING
IN MINNEAPOLIS OR ST. XXXX, MINNESOTA; AND THE BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN
ANOTHER JURISDICTION OR VENUE ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT, THE AGENT AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
Section 8.11 Waiver of Notice and Hearing. THE BORROWER HEREBY WAIVES
ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE AGENT
OF ITS RIGHTS TO POSSESSION OF THE COLLATERAL WITHOUT JUDICIAL PROCESS OR OF ITS
RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR
HEARING.
Section 8.12 Waiver of Jury Trial. THE BORROWER AND THE AGENT EACH
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT A JURY.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
CHRONIMED INC.
By:______________________________
Its:______________________________
Address:
00000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx
Vice President - Finance
U.S. BANK NATIONAL ASSOCIATION
By:______________________________
Its:______________________________
Address:
000 0xx Xxx. X.
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
SCHEDULE A
TO
SECURITY AGREEMENT
BETWEEN
CHRONIMED INC.
AND
U.S. BANK NATIONAL ASSOCIATION
1. Type of entity: Corporation.
2. Jurisdiction of Organization: Minnesota
3. Organizational Identification Number: 4W-676
4. Federal Taxpayer Identification Number: 00-0000000
5. Trade Names and Trade Styles used by the Borrower during the past 5 years:
Chronimed Holdings Inc. d/b/a/ Statscript
Clinical Partners
Home Direct Medical Services
British American Medical
Los Feliz Drugs
MEDgenesis Inc.
Clinical Services Inc.
Red Circle Ventures Inc.
SCHEDULE B
TO
SECURITY AGREEMENT
BETWEEN
CHRONIMED INC.
AND
U.S. BANK NATIONAL ASSOCIATION
Other Security Interests:
Holder: Amount Secured: Financing Statement:
One Financing Statement naming First Commercial Bank as secured party covering
certain specified equipment subject to a master equipment lease.
SCHEDULE C
TO
SECURITY AGREEMENT
BETWEEN
CHRONIMED INC.
AND
U.S. BANK NATIONAL ASSOCIATION
Locations at which Inventory is kept:
Location: Type of Inventory
See Attached List pharmaceutical products
GUARANTY
FOR VALUE RECEIVED and in consideration of entry by the Banks (as
defined in the Credit Agreement) and U.S. BANK NATIONAL ASSOCIATION, as agent
for the Banks (in such capacity, together with it successors and assigns, called
the "Agent") into that certain Credit Agreement, dated as of January 17, 2002
(as thereafter amended, modified, extended, renewed, restated or replaced from
time to time called the "Credit Agreement") among the Banks, the Agent and
CHRONIMED INC., a Minnesota corporation (hereinafter called the "Debtor"),
CHRONIMED HOLDINGS INC., a Minnesota corporation (the "Guarantor") hereby
unconditionally guarantees the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, of all obligations of
the Debtor to the Banks or the Agent under the Credit Agreement, each Note
issued thereunder, and each other Loan Document (as defined therein), including
without limitation all future advances, and all obligations to reimburse the
Agent for drawings under all Letters of Credit, and all of such obligations that
arise after the filing of a petition by or against the Debtor under the
Bankruptcy Code, even if the obligations do not accrue because of the automatic
stay under Bankruptcy Code Section 362 or otherwise (all such obligations being
hereinafter collectively called the "Liabilities"), and the Guarantor further
agrees to pay all expenses (including attorneys' fees and legal expenses) paid
or incurred by the Banks or Agent in endeavoring to collect the Liabilities, or
any part thereof, and in enforcing this guaranty.
The Guarantor agrees that, in the event of the dissolution or
insolvency of the Debtor or the Guarantor, or the inability of the Debtor or the
Guarantor to pay debts as they mature, or an assignment by the Debtor or the
Guarantor for the benefit of creditors, or the institution of any proceeding by
or against the Debtor or the Guarantor alleging that the Debtor or the Guarantor
is insolvent or unable to pay debts as they mature, and if such event shall
occur at a time when any of the Liabilities may not then be due and payable, the
Guarantor will pay to the Agent forthwith the full amount which would be payable
hereunder by the Guarantor if all Liabilities were then due and payable.
As additional security for the payment of all of the Liabilities and
all obligations of the Guarantor hereunder (collectively, the "Guaranty
Obligations"), the Guarantor grants to the Agent for the benefit of itself and
the Banks a security interest in, a lien on, and an express contractual right to
set off against, each deposit account and all deposit account balances, cash and
any other property of the Guarantor now or hereafter maintained with, or in the
possession of, the Agent. Upon the occurrence of any default hereunder (as
described in the immediately preceding paragraph), the Agent may: (a) refuse to
allow withdrawals from any such deposit account; (b) apply the amount of such
deposit account balances and the other assets of the Guarantor described above
to the Guaranty Obligations; and (c) offset any other obligation of the Agent
against the Guaranty Obligations; all whether or not the Guaranty Obligations
are then due or have been accelerated and all without any advance or
contemporaneous notice or demand of any kind to the Guarantor, such notice and
demand being expressly waived.
This guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of the Guarantor or that
at any time or from time to time all Liabilities may have been paid in full).
The Guarantor further agrees that, if at any time all or any part of
any payment theretofore applied by the Agent or the Banks to any of the
Liabilities is or must be rescinded or returned by the Agent or the Banks for
any reason whatsoever (including, without limitation, the insolvency, bankruptcy
or reorganization of the Debtor), such Liabilities shall, for the purposes of
this guaranty, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence, notwithstanding such
application by the Agent or the Banks, and this guaranty shall continue to be
effective or be reinstated, as the case may be, as to such Liabilities, all as
though such application by the Agent or the Banks had not been made.
The Agent and the Banks may, from time to time, at their sole
discretion and without notice to the Guarantor, take any or all of the following
actions: (a) be granted a security interest in any property to secure any of the
Liabilities or the Guaranty Obligations, (b) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to the Guarantor,
with respect to any of the Liabilities, (c) extend or renew for one or more
periods (whether or not longer than the original period), alter or exchange any
of the Liabilities, or release or compromise any obligation of any nature of any
other obligor with respect to any of the Liabilities, (d) release its security
interest in, or surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Liabilities or any
obligation hereunder, or extend or renew for one or more periods (whether or not
longer than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property, and
(e) resort to the Guarantor for payment of any of the Liabilities, whether or
not the Agent and the Banks (i) shall have resorted to any property securing any
of the Liabilities or (ii) shall have proceeded against any other obligor
primarily or secondarily obligated with respect to any of the Liabilities (all
of the actions referred to in preceding clauses (i) and (ii) being hereby
expressly waived by the Guarantor).
Any amounts received by the Agent and the Banks from whatsoever source
on account of the Liabilities may be applied by it toward the payment of such of
the Liabilities, and in such order of application, as the Agent may from time to
time elect.
Until such time as this guaranty shall have been discontinued and the
Agent and the Banks shall have received payment of the full amount of all
Liabilities and of all obligations of the Guarantor hereunder, no payment made
by or for the account of the Guarantor pursuant to this guaranty shall entitle
the Guarantor by subrogation or otherwise to any payment by the Debtor or from
or out of any property of the Debtor and the Guarantor shall not exercise any
right or remedy against the Debtor or any property of the Debtor by reason of
any performance by the Guarantor of this guaranty.
The Guarantor hereby expressly waives: (a) notice of the acceptance by
the Agent or the Banks of this guaranty, (b) notice of the existence or creation
or non-payment of all or any of the Liabilities, (c) presentment, demand, notice
of dishonor, protest, and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon the Liabilities or any part
thereof, any obligation hereunder, or any security for, or guaranty of, any of
the foregoing.
Each Bank may from time to time without notice to the Guarantor, assign
or transfer its Percentage (as defined in the Credit Agreement) or any or all of
the Liabilities or any interest therein; and, notwithstanding any such
assignment or transfer or any subsequent assignment or transfer thereof, such
Liabilities shall be and remain Liabilities for the purposes of this guaranty,
and each and every immediate and successive assignee or transferee of any of the
Liabilities or of any interest therein shall, to the extent of the interest of
such assignee or transferee in the Liabilities, be entitled to the benefits of
this guaranty to the same extent as if such assignee or transferee were such
Bank.
Unless the Agent shall otherwise consent in writing, the Agent shall
have the sole right to enforce this Guaranty, as Agent as provided in the Credit
Agreement, for the benefit of the Agent and the Banks (including any transferee,
as provided in the prior paragraph).
The Guarantor hereby warrants to the Agent and the Banks that the
Guarantor now has, and will continue to have independent means of obtaining
information concerning the affairs, financial condition and business of the
Debtor. Neither the Agent nor the Bank shall have any duty or responsibility to
provide the Guarantor with any credit or other information concerning the
affairs, financial condition or business of the Debtor which may come into the
Agent's or the Bank's possession.
No delay on the part of the Agent or any Bank in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Agent or any Bank of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy; nor shall
any modification or waiver of any of the provisions of this guaranty be binding
upon the Agent or any Bank except as expressly set forth in a writing duly
signed and delivered on behalf of the Agent and the Required Banks (as defined
in the Credit Agreement). No action of the Agent or the Banks permitted
hereunder shall in any way affect or impair the rights of the Agent or the Banks
and the obligations of the Guarantor under this guaranty. For the purposes of
this guaranty, Liabilities shall include all obligations of the Debtor to the
Agent or the Banks specified as Liabilities, notwithstanding any right or power
of the Debtor or anyone else to assert any claim or defense as to the invalidity
or unenforceability of any such obligation, and no such claim or defense shall
affect or impair the obligations of the Guarantor hereunder. The obligations of
the Guarantor under this guaranty shall be absolute and unconditional
irrespective of any circumstance whatsoever which might constitute a legal or
equitable discharge or defense of the Guarantor. The Guarantor hereby
acknowledges that there are no conditions to the effectiveness of this guaranty.
This guaranty shall be binding upon the Guarantor, and upon the
successors and assigns of the Guarantor.
Wherever possible, each provision of this guaranty shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this guaranty.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS GUARANTY SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.
THE AGENT AND THE BANKS (BY ACCEPTING THIS GUARANTY) AND THE GUARANTOR
HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
AT THE OPTION OF THE AGENT, THIS GUARANTY MAY BE ENFORCED IN ANY
FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST. XXXX,
MINNESOTA; AND THE GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN
THE EVENT THE GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS GUARANTY THE AGENT, AT ITS OPTION, SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
SIGNED AND DELIVERED as of January 17, 2002.
CHRONIMED HOLDINGS, INC.
By:____________________________
Title:_________________________
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of January 17,
2002, is entered into between U.S. BANK NATIONAL ASSOCIATION (the "Agent") and
CHRONIMED HOLDINGS INC. (the "Company").
Preliminary Statement:
CHRONIMED INC. (the "Borrower"), the Banks named therein, and U.S. Bank
National Association, as Agent (the "Agent") have entered into an Amended and
Restated Revolving Credit Agreement, dated as of January 17, 2002 (as thereafter
amended, modified, extended, renewed or restated from time to time, the "Credit
Agreement"). It is a condition to entry into the Credit Agreement and inclusion
of certain assets of the Company into the Borrowing Base that the Company enter
into a Guaranty, dated as of January 17, 2002 (as thereafter amended, modified,
extended, renewed or restated from time to time,the "Guaranty") of the
obligations of the Borrower to the Banks and the Agent and enter into this
Agreement and grant the security interests hereunder to secure the Guaranty and
the loans made by the Banks under the Credit Agreement, obligations of the
Borrower to the Banks and the Agent under the Credit Agreement and other
extensions of credit as hereinafter provided.
Section 1 - Definitions and Interpretation.
Section 1.1 Terms in Credit Agreement. Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Credit
Agreement, provided, that the term "Liabilities" shall mean (a) the Liabilities
as defined in the Credit Agreement, plus (b) all obligations and liabilities of
the Company under this Agreement, plus (c) the "Liabilities" as defined in the
Guaranty.
Section 1.2 Terms defined in Uniform Commercial Code. "Account",
"Account Debtor", "Chattel Paper", "Deposit Account", "Document", "General
Intangibles", "Health-care-insurance receivables", "Instrument", "Inventory",
"Investment Property", "Letter-of-Credit Rights", "Proceeds" and "Supporting
Obligations" shall have the meanings set forth in the Minnesota Uniform
Commercial Code (for purposes of this Agreement, such terms may be capitalized,
even if not capitalized in the Minnesota Uniform Commercial Code), provided,
that if any additional goods, property or rights shall be included in such terms
under Section 2 hereof, such terms shall be construed to include such additional
goods, property or rights.
Section 1.3 Interpretation. A reference to a Section, Exhibit or
Schedule is, unless otherwise stated, a reference to a section hereof, or an
exhibit or schedule hereto, as the case may be. Section captions used in this
Agreement are for convenience only, and shall not affect the construction of
this Agreement. The word "including" shall, in each instance, be deemed to mean
"including but not limited to".
Section 2 Grant of Security Interest. As security for the payment of
all Liabilities, the Company hereby assigns to the Agent and grants to the
Agent, for the benefit of the Agent and the Banks, a continuing security
interest in the following personal property of the Company, including without
limitation the following, whether now owned or hereafter arising or acquired
(collectively, the "Collateral"):
(a) Accounts, including all other rights and interests (including all
liens and security interests) that the Company may at any time have by
law or agreement against any Account Debtor or other obligor obligated
to make any such payment or against any of the property of such Account
Debtor or other obligor and including Health-care-insurance
receivables;
(b) Inventory, including goods that are returned, repossessed, stopped
in transit or which otherwise come into the possession of the Company;
(c) General Intangibles, including payment intangibles, inventions,
designs, patents, patent applications, design patents, design patent
applications, trademarks, trademark applications, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, rights to indemnification and rights
under warranties;
(d) Chattel Paper, Instruments and Documents;
(e) Investment Property;
(f) Deposit Accounts;
(g) Letter-of-Credit rights;
(h) Supporting Obligations;
(i) books, correspondence, credit files, records, invoices, manuals,
service records and programs, other papers and documents, computer
records, runs, software, systems, procedures, disks, tapes and other
storage media relating to any of the Collateral, including any of the
foregoing in the possession or control of any service, consultant, or
outside vendor;
(j) to the extent relating to the Collateral, Proceeds, including all
policies, claims to payment under, and proceeds of any and all
insurance policies payable to the Company, or on behalf of the
Company's property, whether or not such policies are issued to or
owned by the Company and whether or not the Agent is named as loss
payee or additional insured, including any credit insurance.
Notwithstanding the foregoing, the Collateral shall not include any medical
records that cannot be pledged under applicable law.
Section 3 - Representations and Warranties
The Company represents and warrants to the Agent and the Banks that:
Section 3.1 Organization, Names and Organization Number. The Company is
an entity of the type identified on Schedule A, organized under the laws of the
jurisdiction identified on Schedule A. The organization identification number,
if any, and the federal taxpayer identification number of the Company are set
forth on Schedule A. The Company does business solely under its own name and the
trade names and styles, if any, set forth on Schedule A (which includes any name
used within the past 5 years).
Section 3.2 Owner, No Other Financing Statements. The Company is and
will be the lawful owner of all Collateral, free of all liens and claims
whatsoever, other than the security interest hereunder, and those shown on
Schedule B. No financing statement (other than any which may have been filed on
behalf of the Agent) covering any of the Collateral is on file in any public
office, except those listed on Schedule B.
Section 3.3 Offices and Locations. The Company's chief place of
business and chief executive office and the office where it keeps its books and
records concerning the Collateral, and the originals of all Chattel Paper,
Instruments and Documents are located at its address set forth on the signature
page hereof.
Section 3.4 Locations Inventory. All of the Inventory existing on the
date of the Agreement is located at the places specified in Schedule C. The
Company will immediately notify the Agent of any additional state in which any
item of Inventory is hereafter located.
Section 4 - Sale and Collection
4.1 Sale in Ordinary Course. Until the occurrence of an Event of
Default, the Company may, in the ordinary course of its business, sell, lease,
or consume (if raw materials) Inventory and furnish Inventory under contracts of
service.
4.2 Collection of Collateral. Until such time as the Agent shall notify
the Company of the revocation of such authority, the Company will endeavor to
collect, as and when due, all
amounts due with respect to any of the Collateral, and shall take any action in
connection with such collection as the Agent may reasonably request.
4.3 Refunds. The Company may grant, in the ordinary course of its
business, any refund or allowance to any Account Debtor to which it may be
lawfully entitled, and may accept, in connection therewith, the return of goods,
the sale or lease of which shall have given rise to Accounts.
Section 4.4 Collection by the Agent. The Agent may, but shall not be
obligated to, following any Event of Default (a) notify any parties obligated on
any of the Collateral to make payment directly to the Agent, (b) enforce
collection of any of the Collateral by suit or otherwise, and (c) surrender,
release, exchange, compromise, extend or renew all or any part of the
Collateral. Following the occurrence of any Event of Default, if requested by
the Agent, the Company will, at its own expense, notify all parties obligated on
any of the Collateral to make all payments thereunder directly to the Agent.
Section 4.5 Transmittal of Items to the Agent. The Company will, upon
request of the Agent following an Event of Default, upon receipt, transmit and
deliver to the Agent, in the form received, all cash, checks, drafts, and any
other form of payment (properly endorsed, where required, so that such items may
be collected by the Agent) received as proceeds of any of the Collateral. The
Agent is authorized to endorse, in the name of the Company, any item received by
the Agent constituting a proceed of any of the Collateral. After such request by
the Agent, any such items received by the Company will not be commingled with
any other of its funds or property, but will be held separate and apart from its
own funds or property and upon express trust for the Agent until delivered to
the Agent.
Section 5 - Agreements of Company
The Company agrees that, unless otherwise agreed in writing by the
Agent, it will:
Section 5.1 Schedules and Reports. Furnish to the Agent, in form and
detail satisfactory to the Agent: (a) written notice of any event causing loss,
material damage or depreciation in value of any of the Collateral, describing,
and specifying the amount of, such loss, damage or depreciation; and (b) from
time to time, as the Agent may request, such additional schedules, certificates
and reports concerning the Collateral, including the Account Debtors obligated
thereon, as the Agent may request.
Section 5.2 Inspection. Permit the Agent and its agents or its
designees, from time to time, to inspect and evaluate the Collateral, and to
inspect, audit and make copies of all books and records constituting or
otherwise concerning the Collateral, and will, upon request of the Agent,
deliver to the Agent all of such records which pertain to the Collateral and all
Account Debtors. The Company will reimburse the Agent upon demand for all
reasonable costs and
expenses incurred by the Agent, its agents or its designees in the course of
such inspection and evaluation.
Section 5.3 Financing Statements and Filing. Upon request of the Agent,
execute such financing statements and other documents (and pay the cost of
recording the same in all offices requested by the Agent) and do such other acts
as the Agent may from time to time request to establish and maintain a valid
perfected security interest in the Collateral. The Company agrees that any
carbon, photographic or other reproduction of this Agreement or of any such
financing statement shall be sufficient for filing as a financing statement. The
Company authorizes the Agent to file any financing statements describing the
Collateral that do not require the manual signature of the Company.
Section 5.4 Locations and Notices. Maintain and keep (a) all Inventory
at the locations shown on Schedule C and at such other locations of which the
Company shall have given the Agent notice in writing before inventory is
maintained at such locations; (b) except as delivered to the Agent from time to
time, all Chattel Paper, Instruments and Documents, and all records included as
Collateral or otherwise concerning the Collateral, at the address shown on the
signature page and not duplicate any records regarding any Collateral at any
other address; and (c) the location of its chief office at the address shown on
the signature page.
Section 5.5 Names. Not do business under any other name other than
those shown on Schedule B.
Section 5.6 Notation on Records. Upon request of the Agent, stamp on
its records concerning the Collateral a notation, in form satisfactory to the
Agent, of the security interest of the Agent hereunder, and xxxx conspicuously
each Document, Chattel Paper, Instrument or contract included in the Collateral
with a legend, in form and substance satisfactory to the Agent, indicating that
such Document, Chattel Paper, Instrument or contract is subject to the security
interest of the Agent.
Section 5.7 Delivery of Collateral. Upon request of the Agent, deliver
to the Agent all Documents, Instruments and Chattel Paper, duly endorsed to be
payable to the Agent, or accompanied by duly executed instruments of transfer or
assignment in form and substance satisfactory to the Agent, with full recourse
to the Company.
Section 5.8 Transfer, Sale or Security Interest. Except as expressly
authorized under Section 4.1 hereof (subject to the limits therein), not sell,
lease, transfer, consume, assign or otherwise dispose of, or create or permit to
exist any lien on or security interest (other than the Agent's security
interest) in, any Collateral.
Section 5.9 Insurance. Keep all Inventory insured against loss, damage,
theft and other risks, with amounts and insurance companies, and under policies,
satisfactory to the Agent,
which policies shall provide that loss thereunder shall be payable to the Agent
as its interest may appear (and the Agent may apply any proceeds of such
insurance which may be received by it toward payment of Liabilities, whether or
not due, in such order of application as the Agent may determine), and such
policies or certificates thereof shall, if the Agent so requests, be deposited
with the Agent.
Section 5.10 Payment of Taxes, etc. Pay, when due, all taxes,
assessments, governmental charges and other similar charges levied against any
of the Collateral, except and so long as the Company is contesting such taxes,
assessments or charges in good faith and, by appropriate proceedings and the
Company has set aside on its books such reserves or other appropriate provisions
therefor as may be required by generally accepted accounting principles, and so
long as no enforcement action is being taken that would interfere with the
Company's use of such Collateral or the enforcement of the Agent's rights
hereunder.
Section 5.11 Waivers. Upon request of the Agent, obtain and deliver to
the Agent waivers in form and substance satisfactory to the Agent of any claim
to any Collateral by any landlord or mortgagee of any property where Inventory
is located.
Section 6 - Agent's Duties and Power of Attorney
Section 6.1 Agent's Performance of Agreements and Reimbursement. The
Agent may, from time to time, at its option, perform any agreement of the
Company hereunder which the Company shall fail to perform and take any other
action which the Agent deems necessary for the maintenance or preservation of
the Collateral or its interest therein, and the Company shall reimburse the
Agent for all expenses of the Agent in connection with the foregoing, together
with interest thereon at the highest rate of interest borne by any of the
Liabilities at such time from the date incurred until reimbursed by the Company.
Section 6.2 Power of Attorney. The Company hereby irrevocably appoints
the Agent as the Company's attorney-in-fact, with full authority in the place
and stead of the Company and in the name of the Company, the Agent or otherwise,
from time to time in the Agent's discretion, to take any action and to execute
any instrument which the Agent may deem advisable to accomplish the purposes of
Section 6.1 and to exercise any right and remedy upon the occurrence of an Event
of Default. The Company hereby ratifies all that such attorney shall lawfully do
or cause to be done by virtue hereof. This power of attorney is irrevocable and
is coupled with an interest.
Section 6.3 No Liability on Collateral; Indemnity. The rights and
powers of the Agent hereunder are conferred solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such rights
or powers. The Agent does not in any way assume any of the Company's obligations
under, or with respect to, the Collateral. The Company shall remain
liable with respect to the Collateral to the same extent as if this Agreement
had not been executed. The Company agrees to indemnify and hold harmless the
Agent against any and all liabilities, claims, damages, actions, proceedings,
losses or other obligations arising in connection with or on account of any of
the Collateral.
Section 6.4 Care of Collateral. Except for the safe custody of any
Collateral in its possession, the Agent shall have no duty as to any Collateral
or as to the taking of any steps to preserve rights against any other party. The
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Agent accords its own property,
or is accorded treatment complying with any provision of any other document
setting forth a standard of care for such Collateral.
Section 7 - Event of Default and Remedies
Whenever an Event of Default shall be existing:
Section 7.1 Liabilities Due and Payable. All of the Liabilities may
(notwithstanding any provisions of any of the Loan Documents), at the option of
the Agent, and without demand or notice of any kind, be declared, and thereupon
immediately shall become, due and payable.
Section 7.2. Deposits, etc. The Agent may, from time to time, without
demand or notice of any kind, appropriate and apply toward the payment of such
of the Liabilities, and in such order of application, as the Agent may from time
to time elect, any and all balances, credits, deposits (general or special, time
or demand, provisional or final), accounts or moneys of or in the name of the
Company then or thereafter with the Agent.
Section 7.3 Assembly of Collateral. Upon demand of the Agent, the
Company shall assemble, at its expense, all Collateral at a convenient place
acceptable to the Agent.
Section 7.4 Use and Sale of Collateral. The Agent may, to the fullest
extent permitted by applicable law, without notice, hearing or process of law of
any kind, (a) enter upon any premises where any of the Collateral may be located
and take possession of and remove such Collateral; (b) use or license, on an
exclusive or non-exclusive basis, any General Intangibles throughout the world
for such term or terms, on such conditions, and in such manner, as the Agent
shall in its sole discretion determine, without compensation to the Company; (c)
sell any or all of the Collateral, free of all rights and claims of the Company
therein and thereto; and (d) bid for and purchase any or all of such Collateral
at any such sale.
Section 7.5 Additional Provisions on Sale. Any sale of Collateral may
be in one or more parcels at public or private sales, at any of the Agent's
offices or elsewhere, for cash, on credit, or for future delivery, and upon such
other terms as the Agent may reasonably believe are
commercially reasonable. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sales having been given, and the Agent may
adjourn any public or private sale from time to time by announcement made at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
Section 7.6 Waiver by Company. The Company hereby expressly waives, to
the fullest extent permitted by applicable law, any and all notices,
advertisements, hearings or process of law in connection with the exercise by
the Agent of any of its rights and remedies upon an Event of Default. Any
notification of intended disposition of any of the Collateral required by law
shall be deemed reasonably and properly given if given at least five days before
such disposition.
Section 7.7 Proceeds of Collateral. Any proceeds of any disposition by
the Agent of any of the Collateral may be applied by the Agent to the payment of
expenses in connection with the Collateral, including reasonable attorneys' fees
and legal expenses, and any balance of such proceeds may be applied by the Agent
toward the payment of such of the Liabilities, and in such order of application,
as the Agent may from time to time elect.
Section 7.8 Recourse to Collateral; Remedies not Exclusive. The Agent
may resort to the Collateral for payment of any of the Liabilities, whether or
not the Agent shall have resorted to any other property securing the Liabilities
or shall have proceeded against the Company or any other party obligated to pay
or perform the Liabilities. The Agent's exercise of rights hereunder shall not
prevent the Agent's exercise of any other rights it may have upon the occurrence
of an Event of Default under any other Loan Documents or otherwise, and one
exercise of rights hereunder shall not prevent any subsequent exercise of rights
of the Agent hereunder, under any Loan Documents or otherwise.
Section 7.9 Other Rights. The Agent may exercise from time to time any
other rights and remedies available to it under any Loan Document and under all
applicable law.
Section 8 - General Provisions
Section 8.1 Reimbursement of Expenses. The Company shall reimburse the
Agent upon demand for all costs and expenses, including reasonable fees of
attorneys for the Agent (who may be employees of the Agent) and legal expenses,
incurred by the Agent in seeking to collect or enforce any rights under the
Collateral and its rights hereunder and, in case of an Event of Default, in
seeking to collect each Loan Document and the Liabilities.
Section 8.2 Notices. Any notice from the Company to the Agent or from
the Agent to the Company shall be given, and deemed received, as provided in the
Credit Agreement, to the address on the signature page of this Agreement.
Section 8.3 Waivers and Amendments. No failure or delay on the part of
the Agent in the exercise of any power, right or remedy, and no course of
dealing between the Company and the Agent, shall operate as a waiver of such
power, right or remedy, nor shall any single or partial exercise of any power,
right or remedy preclude other or further exercise thereof or the exercise of
any other power, right or remedy. No notice to or demand on the Company not
required hereunder shall in any event entitle the Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of the Agent to any other or further action in any
circumstances without notice or demand. No amendment, modification or waiver of,
or consent with respect to, any provision of this Agreement shall in any event
be effective unless the same shall be in writing and signed and delivered by the
Agent. Any waiver of any provision of this Agreement, and any consent to any
departure by the Company from the terms of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose
for which given.
Section 8.4 Remedies Cumulative. The remedies provided for herein are
cumulative and not exclusive of any remedies which may be available to the Agent
at law or in equity.
Section 8.5 Termination of Agreement. Unless sooner terminated by the
Agent, this Agreement shall terminate when all of the Loan Documents shall have
expired or been terminated and all Liabilities shall have been paid in full.
This Agreement shall continue notwithstanding that there may be, from time to
time, no outstanding loans or extensions of credit from the Agent to the
Company. Any return of Collateral upon termination of this Agreement and any
instruments of transfer or termination shall be at the expense of the Company
and shall be without warranty by, or recourse against, the Agent.
Section 8.6 Successors and Assigns. This Agreement shall be binding
upon the Company, its successors and assigns (and, if an individual, the
Company's heirs, estate and personal representatives), and shall inure to the
benefit of, and be enforceable by, the Agent and its successors, transferees,
and assigns. Without limiting the generality of the foregoing, the Agent may
assign or otherwise transfer all or any portion of the Liabilities to any other
person or entity and may similarly transfer all or any portion of its rights
under this Agreement to such person or entity.
Section 8.7 Choice of Law. This Agreement has been delivered at
Minneapolis, Minnesota, and shall be construed in accordance with and governed
by the laws of the State of Minnesota.
Section 8.8 Severance. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 8.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
Section 8.10 Consent to Jurisdiction. AT THE OPTION OF THE AGENT, THIS
AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING
IN MINNEAPOLIS OR ST. XXXX, MINNESOTA; AND THE COMPANY CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE COMPANY COMMENCES ANY ACTION IN
ANOTHER JURISDICTION OR VENUE ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT, THE AGENT AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
Section 8.11 Waiver of Notice and Hearing. THE COMPANY HEREBY WAIVES
ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE AGENT
OF ITS RIGHTS TO POSSESSION OF THE COLLATERAL WITHOUT JUDICIAL PROCESS OR OF ITS
RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR
HEARING.
Section 8.12 Waiver of Jury Trial. THE COMPANY AND THE AGENT EACH WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT A JURY.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
CHRONIMED HOLDINGS INC.
By:______________________________
Its:_____________________________
Address:
00000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx
Vice President - Finance
U.S. BANK NATIONAL ASSOCIATION
By:______________________________
Its:_____________________________
Address:
000 0xx Xxx. X.
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
SCHEDULE A
TO
SECURITY AGREEMENT
BETWEEN
CHRONIMED HOLDINGS INC.
AND
U.S. BANK NATIONAL ASSOCIATION
1. Type of entity: Corporation.
2. Jurisdiction of Organization: Minnesota
3. Organizational Identification Number: 9F-428
4. Federal Taxpayer Identification Number: ______
5. Trade Names and Trade Styles used by the Company during the past 5 years:
Statscript Pharmacy
SCHEDULE B
TO
SECURITY AGREEMENT
BETWEEN
CHRONIMED HOLDINGS INC.
AND
U.S. BANK NATIONAL ASSOCIATION
Other Security Interests:
Holder: Amount Secured: Financing Statement:
-------------------------
SCHEDULE C
TO
SECURITY AGREEMENT
BETWEEN
CHRONIMED HOLDINGS INC.
AND
U.S. BANK NATIONAL ASSOCIATION
Locations at which Inventory is kept:
Location: Type of Inventory
See Attached List pharmaceutical products
CHRONIMED HOLDINGS, INC.
SECRETARY'S CERTIFICATE
I, Xxxxxxx X. Xxxxxxxxx, do hereby certify that I am the duly elected
and qualified Secretary and the keeper of the records and corporate seal of
CHRONIMED HOLDINGS, INC., a corporation organized and existing under the laws of
the State of Minnesota, and that the following is a true and correct copy of
certain resolutions duly adopted at a meeting of the Board of Directors thereof,
convened and held in accordance with law and by-laws of said corporation, and
that such resolutions are now in full force and effect, unamended, unaltered and
unrepealed, and are not in contravention of, or in conflict with, the by-laws or
the charter or articles of incorporation of said corporation:
WHEREAS, there has been presented to this meeting a form of Guaranty of
this Corporation in favor of the Banks (as defined in the Credit Agreement) and
U.S. BANK NATIONAL ASSOCIATION, as agent for the Banks (in such capacity,
together with it successors and assigns, called the "Agent") under that certain
Credit Agreement, dated as of January 17, 2002 (as thereafter amended, modified,
extended, renewed, restated or replaced from time to time called the "Credit
Agreement") among the Banks, the Agent and CHRONIMED, INC., a Minnesota
corporation (hereinafter called the "Debtor"), guarantying the Liabilities, as
defined in such Guaranty, and obligating this Corporation to pay the Guaranty
Obligations, as defined in such Guaranty;
WHEREAS, it is in the best interests of this Corporation to guarantee
the Liabilities, as provided for in the form of Guaranty presented to this
meeting;
NOW, THEREFORE, BE IT RESOLVED, that this Corporation guarantee all of
the Liabilities, whether now or hereafter existing, of the Debtor, as provided
for in such Guaranty;
FURTHER RESOLVED, that the Chief Executive Officer and the Treasurer of
this Corporation, individually or collectively, be and they hereby are
authorized and directed to execute, in the name and on behalf of this
Corporation, and deliver a Guaranty of this Corporation substantially in the
form of the Guaranty presented to this meeting, except for such changes,
additions and deletions as to any or all of the terms and provisions thereof as
the officer(s) executing such Guaranty on behalf of this Corporation shall deem
proper, such execution by such officer(s) of a Guaranty of this Corporation to
be conclusive evidence that such officer(s) deem(s) all of the terms and
provisions thereof to be proper;
FURTHER RESOLVED, that the Chief Executive Officer and Treasurer of
this Corporation, individually or collectively, be and they hereby are
authorized and directed to execute and deliver such other documents and to take
such other action from time to time in the name and
on behalf of this Corporation as such officer(s) deem(s) necessary or
appropriate to carry out the foregoing resolutions;
FURTHER RESOLVED, that the Secretary or any other officer of this
Corporation be and he hereby is authorized to certify to the Agent and the Banks
a copy of these resolutions and the names and signatures of this Corporation's
officers or employees hereby authorized to act in the premises, and the Agent
and the Banks are authorized to rely upon such certificate until formally
advised by a like certificate of any changes therein, and are hereby authorized
to rely upon any such additional certificates.
I FURTHER CERTIFY THAT the following persons have been appointed or
elected and are now acting as officers or employees of said Corporation in the
capacity set before their respective names:
Title Name Signature
----- ---- ---------
Chief Executive Officer Xxxxx X. Xxxxxxxxxxx
Treasurer Xxxxxxx X. Xxxxx
Secretary Xxxxxxx X. Xxxxxxxxx
I FURTHER CERTIFY THAT the Articles of Incorporation attached hereto as
Exhibit A and the Bylaws attached hereto as Exhibit B are, respectively, true,
complete and correct copies of this Corporation's Articles of Incorporation,
duly filed with the Secretary of State of the state of Minnesota, and the Bylaws
of this Corporation, which Articles and Bylaws have been duly adopted by this
Corporation and are presently in full force and effect.
IN WITNESS WHEREOF, I have subscribed my name as Secretary as of
January 17, 2002.
-------------------------------------
Secretary
CHRONIMED HOLDINGS INC.
