AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May __, 2001
Among
ISOLYSER COMPANY, INC.
MICROTEK MEDICAL, INC.
THE GUARANTORS NAMED HEREIN,
THE LENDERS NAMED HEREIN,
and
THE CHASE MANHATTAN BANK (formerly known as
Chemical Bank), AS AGENT
TABLE OF CONTENTS
Page
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I. DEFINITIONS ..............................................................................................1
SECTION 1.01. Certain Defined Terms ......................................................................1
SECTION 1.02. Accounting Terms ...........................................................................21
II. THE LOANS ................................................................................................21
SECTION 2.01. Term Loan Commitments and Revolving Credit Commitments .....................................21
SECTION 2.02. Loans ......................................................................................22
SECTION 2.03. Notice of Loans ........................................................................... 25
SECTION 2.04. Notes; Repayment of Loans ................................................................. 25
SECTION 2.05. Interest on Loans ......................................................................... 28
SECTION 2.06. Fees ...................................................................................... 28
SECTION 2.07. Termination and Reduction of Revolving Credit Commitments and Term Loan Commitments ........28
SECTION 2.08. Interest on Overdue Amounts; Alternate Rate of Interest ....................................30
SECTION 2.09. Prepayment of Loans ........................................................................30
SECTION 2.10. Increased Costs ............................................................................35
SECTION 2.11. Change in Legality .........................................................................36
SECTION 2.12. Indemnity ..................................................................................37
SECTION 2.13. Pro Rata Treatment .........................................................................38
SECTION 2.14. Sharing of Setoffs .........................................................................39
SECTION 2.15. Taxes ......................................................................................40
SECTION 2.16. Payments and Computations ..................................................................43
SECTION 2.17. Issuance of Letters of Credit ............................................................. 43
SECTION 2.18. Payment of Letters of Credit; Reimbursement ............................................... 44
SECTION 2.19. Agent's Actions with respect to Letters of Credit ......................................... 46
SECTION 2.20. Letter of Credit Fees ..................................................................... 46
III. COLLATERAL SECURITY ..................................................................................... 47
SECTION 3.01. Security Documents ........................................................................ 47
SECTION 3.02. Filing and Recording .......................................................................47
IV. REPRESENTATIONS AND WARRANTIES .......................................................................... 48
SECTION 4.01. Organization, Legal Existence ............................................................. 48
SECTION 4.02. Authorization ............................................................................. 48
SECTION 4.03. Governmental Approvals .....................................................................49
SECTION 4.04. Binding Effect .............................................................................49
SECTION 4.05. Material Adverse Change ................................................................... 49
SECTION 4.06. Litigation; Compliance with Laws; etc. .................................................... 49
SECTION 4.07. Financial Statements ...................................................................... 49
SECTION 4.08. Federal Reserve Regulations ............................................................... 50
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SECTION 4.09. Taxes ......................................................................................51
SECTION 4.10. Employee Benefit Plans .................................................................... 51
SECTION 4.11. No Material Misstatements ................................................................. 53
SECTION 4.12. Investment Company Act; Public Utility Holding Company Act ................................ 53
SECTION 4.13. Security Interest .......... ...............................................................53
SECTION 4.14. Use of Proceeds ........................................................................... 54
SECTION 4.15. Subsidiaries .............................................................................. 54
SECTION 4.16. Title to Properties; Possession Under Leases; Trademarks .................................. 54
SECTION 4.17. Solvency .................................................................................. 55
SECTION 4.18. Permits, etc ...............................................................................56
SECTION 4.19. Compliance with Environmental Laws .........................................................56
SECTION 4.20. No Change in Credit Criteria or Collection Policies ........................................57
V. CONDITIONS OF CREDIT EVENTS ..............................................................................57
SECTION 5.01. All Credit Events ..........................................................................57
SECTION 5.02. First Borrowing ............................................................................58
VI. AFFIRMATIVE COVENANTS ....................................................................................61
SECTION 6.01. Legal Existence ............................................................................61
SECTION 6.02. Businesses and Properties ..................................................................61
SECTION 6.03. Insurance ..................................................................................62
SECTION 6.04. Taxes ......................................................................................62
SECTION 6.05. Financial Statements, Reports, etc. ........................................................63
SECTION 6.06. Litigation and Other Notices ...............................................................65
SECTION 6.07. ERISA ......................................................................................66
SECTION 6.08. Maintaining Records; Access to Properties and Inspections; Right to
Conduct of Field Examinations ..........................................................67
SECTION 6.09. Use of Proceeds ............................................................................68
SECTION 6.10. Fiscal Year-End ............................................................................68
SECTION 6.11. Further Assurances .........................................................................68
SECTION 6.12. Additional Grantors and Guarantors .........................................................68
SECTION 6.13. Environmental Laws .........................................................................69
SECTION 6.14. Pay Obligations to Lenders and Perform Other Covenants .....................................71
SECTION 6.15. Purchase Price Adjustments .................................................................71
VII. NEGATIVE COVENANTS .......................................................................................71
SECTION 7.01. Liens ......................................................................................72
SECTION 7.02. Sale and Lease-Back Transactions ...........................................................73
SECTION 7.03. Indebtedness ...............................................................................73
SECTION 7.04. Dividends, Distributions and Payments ......................................................74
SECTION 7.05. Consolidations, Mergers and Sales of Assets ................................................75
SECTION 7.06. Investments ................................................................................75
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SECTION 0.00.Xxxxxxx Expenditures ........................................................................76
SECTION 7.08. Leverage Ratio .............................................................................77
SECTION 7.09. EBITDA .....................................................................................77
SECTION 7.10. Business ...................................................................................77
SECTION 7.11. Sales of Receivables .......................................................................77
SECTION 7.12. Use of Proceeds ............................................................................77
SECTION 7.13. ERISA.......................................................................................78
SECTION 7.14. Accounting Changes .........................................................................78
SECTION 7.15. Prepayment or Modification of Subordinated Indebtedness;
Modification of Charter Documents ......................................................78
SECTION 7.16. Transactions with Affiliates. ..............................................................78
SECTION 7.17. Negative Pledges, Etc. .....................................................................79
VIII. EVENTS OF DEFAULT ........................................................................................79
IX. AGENT 83
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND OTHER COLLATERAL.....................................88
SECTION 10.01. Collection of Receivables; Management of Collateral ....................................88
SECTION 10.02. Receivables Documentation ..............................................................90
SECTION 10.03. Status of Receivables and Other Collateral ............. ...............................91
SECTION 10.04. Monthly Statement of Account ...........................................................92
SECTION 10.05. Collateral Custodian ...................................................................92
XI. MISCELLANEOUS ........ .93
SECTION 11.01. Notices ................................................................................93
SECTION 11.02. Survival of Agreement ..................................................................93
SECTION 11.03. Successors and Assigns; Participations ................................................ 94
SECTION 11.04. Expenses; Indemnity ......... ......................................................... 98
SECTION 11.05. Applicable Law ........... .............................................................99
SECTION 11.06. Right of Setoff ........................................................................99
SECTION 11.07. Payments on Business Days .............................................................100
SECTION 11.08. Waivers; Amendments ...................................................................100
SECTION 11.09. Severability ..........................................................................102
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc ...........................................102
SECTION 11.11. Confidentiality .......................................................................103
SECTION 11.12. Submission to Jurisdiction ............................................................103
SECTION 11.13. Counterparts; Facsimile Signature .....................................................104
SECTION 11.14. Headings and Terms Generally ..........................................................104
SECTION 11.15. Transitional Arrangements .............................................................105
XII. GUARANTEES ..............................................................................................105
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XIII. CONFIRMATION OF SECURITY DOCUMENTS ......................................................................107
EXHIBITS
EXHIBIT A Form of Term Note EXHIBIT B Form of Revolving Credit Note
EXHIBIT C Form of Opinion of Counsel EXHIBIT D Form of Security Agreement
EXHIBIT E Form of Assignment and Acceptance
EXHIBIT F Form of Pledge Agreement
EXHIBIT G Form of Security Agreement - Patent and Trademarks
SCHEDULES
SCHEDULE 1.01 Eligible Inventory Locations
SCHEDULE 2.01(a) Term Loan Commitments
SCHEDULE 2.01(b) Revolving Credit Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 Material Adverse Change
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws
SCHEDULE 4.15 Subsidiaries
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 6.05(g) Inventory Designations
SCHEDULE 6.05(j) Borrowing Base Certificate
SCHEDULE 6.13 Hazardous Materials
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of May __, 2001, among
ISOLYSER COMPANY, INC., a Georgia corporation ("Isolyser"), MICROTEK MEDICAL,
INC., a Delaware corporation ("Microtek"; and together with Isolyser, each a
"Borrower" and, jointly and severally, the "Borrowers"), the Guarantors named
herein and signatories hereto, the financial institutions from time to time
party hereto, initially consisting of those financial institutions named in
Schedules 2.01(a) and 2.01(b) annexed hereto (collectively, the "Lenders"), and
THE CHASE MANHATTAN BANK (formerly known as Chemical Bank), as agent for the
Lenders (in such capacity, the "Agent").
The Borrowers have applied to the Lenders for Loans (such term and all
other capitalized terms used in this paragraph having the respective meanings
ascribed to such terms above or hereinafter) up to an aggregate principal amount
of $17,500,000 in the form of (a) Term Loans to the Borrowers in an aggregate
principal amount not in excess of $0 outstanding and (b) Revolving Credit Loans
to the Borrowers at any time and from time to time prior to the Revolving Credit
Termination Date in an aggregate principal amount not in excess of $17,500,000
at any time outstanding. The proceeds of the Revolving Credit Loans shall be
used to refinance outstanding Obligations under the Isolyser Credit Agreement
and for working capital and general corporate purposes. The Grantors will
provide Collateral in accordance with the provisions of this Agreement and the
Security Documents. The Lenders are severally, and not jointly, willing to
extend such Loans to the Borrowers subject to the terms and conditions
hereinafter set forth. Accordingly, the Borrowers, the Guarantors, the Lenders
and the Agent hereby agree to amend and restate the Isolyser Credit Agreement to
read in its entirety as follows:
I. DEFINITIONS
SECTION 1.01. Certain Defined Terms. For purposes hereof, the following
terms shall have the meanings specified below: ---------------------
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (i) the LIBO Rate in
effect for such Interest Period and (ii) Statutory Reserves. For purposes
hereof, "Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency, or supplemental reserves)
1
to which any Lender is subject with respect to the Adjusted LIBO Rate for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" as
defined in Regulation D). Such reserve percentages shall include, without
limitation, those imposed under Regulation D or any other comparable regulation.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and as such
shall be deemed to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets which may be available from time to
time to any Lender under Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Affiliate" of any person shall mean any other person which, directly
or indirectly, controls or is controlled by or is under common control with such
person and, without limiting the generality of the foregoing, includes (i) any
person which beneficially owns or holds 5% or more of any class of voting
securities of such person or 5% or more of the equity interest in such person,
(ii) any person of which such person beneficially owns or holds 5% or more of
any class of voting securities or in which such person beneficially owns or
holds 5% or more of the equity interest in such person and (iii) any director,
officer or employee of such person. For the purposes of this definition, the
term "control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Alternate Base Loan" shall mean a Loan based on the Alternate Base
Rate in accordance with Article II hereof.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1%, and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. "Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Agent at its principal office in New York
City as its prime rate in effect at such time. "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the Assessment Rate. "Three-Month Secondary CD.
2
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Agent from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. "Statutory Reserves" shall mean a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the maximum reserve percentage
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal, established by the Board and any other banking authority to which
the Agent is subject for new negotiable nonpersonal time deposits in dollars of
over $100,000 with maturities approximately equal to three months. Statutory
Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage. "Assessment Rate" shall mean, for any day, the
annual assessment rate in effect on such day that is payable by a member of the
Bank Insurance Fund classified as "well-capitalized" and within supervisory
subgroup "B" (or comparable successor risk classification) within the meaning of
C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance
Corporation for insurance by such Corporation of time deposits made in dollars
at the offices of such member in the United States; provided that if, as a
result of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Agent to be representative of the
cost of such insurance to the Lenders. "Federal Funds Effective Rate" shall
mean, for any day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for the day of such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate,
or both, for any reason, including, the inability or failure of the Agent to
3
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Lending Office" shall mean, with respect to each Lender,
such Lender's Domestic Lending Office in the case of an Alternate Base Loan and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Loan.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee and accepted by the Agent, in
substantially the form of Exhibit E annexed hereto.
"Availability" shall mean at any time (i) the lesser at such time of
(x) the Total Revolving Credit Commitment and (y) the Borrowing Base, minus (ii)
the sum at such time of (x) the unpaid principal balance of, and accrued
interest and fees on the Revolving Credit Loans, minus (iii) without
duplication, all reserves established pursuant to this Agreement including,
without limitation, reserves relating to dilution or to reflect any deficiency
in, or absence of, any landlord's waiver and pursuant to Sections 7.01(b) and
7.01(c) hereof and (y) the Letter of Credit Usage.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States. "Borrowers" shall have the meaning assigned to such
term in the preamble to this Agreement.
"Borrowing Base" shall have the meaning assigned to such term in
Section 2.01(b) hereof.
"Business Day" shall mean any day, other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed, except that, if any determination of a "Business Day"
shall relate to a Eurodollar Loan, the term "Business Day" shall in addition
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market..
4
"Capitalized Lease Obligation" shall mean an obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with GAAP, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Agent
(or, for purposes of Section 2.10(b), by any lending office of such Lender or by
such Lender's or the Agent's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Closing Date" shall mean May __, 2001.
"Code" shall mean the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended from time to time.
"Collateral" shall mean all collateral and security as described in
the Security Documents.
"Commitment" shall mean, with respect to each Lender, the sum of the
Term Loan Commitment of such Lender as set forth in Schedule 2.01(a), and the
Revolving Credit Commitment of such Lender as set forth in Schedule 2.01(b), as
each may be adjusted from time to time pursuant to this Agreement including,
without limitation, Section 2.07.
"Commitment Fee" shall have the meaning set forth in Section 2.06(a)
hereof.
"Consolidated" shall mean, in respect of any person, as applied to any
financial or accounting term, such term determined on a consolidated basis in
accordance with GAAP (except as otherwise required herein) for the person and
all consolidated subsidiaries thereof.
"Contaminant" shall mean all Hazardous Materials and all those
substances which are regulated by or form the basis of liability under Federal,
state or local environmental, health and safety statutes or regulations, or any
other material or substance which constitutes a materialhealth, safety or
environmental hazard to any person or property.
5
"Credit Event" shall mean each borrowing and each issuance of a Letter
of Credit hereunder.
"Customer" shall mean and include the account debtor or obligor with
respect to any Receivable.
"Default" shall mean any condition, act or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"Deka Acquisition Agreement" shall mean the Asset Purchase Agreement
made as of February 9, 2001 by and among Microtek, Deka Medical, Inc., and all
of the stockholders of Deka Medical, Inc., set forth on the signature pages
thereto, as amended. "dollars" or the symbol "$" shall mean lawful currency of
the United States of America.
"Domestic Lending Office" shall mean, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name in Schedule 2.02 annexed hereto, or such other office of such Lender as
such Lender may from time to time specify to the Borrowers and the Agent.
"Eligible Inventory" shall mean inventory of the Borrowers or the
Guarantors comprised solely of raw materials and finished goods (and
specifically excluding work in process, supplies and costs not normally included
as costs of manufacturing inventory of the Borrowers or the Guarantors) which
is, in the opinion of the Agent, not obsolete, slow-moving or unmerchantable and
is and at all times shall continue to be acceptable to the Agent in all
respects; provided, however, that Eligible Inventory shall in no event include
inventory which (i)is on consignment, is not in conformity with the
representations and warranties made by the Borrowers under the Loan Documents or
is not located at one of the addresses for locations of Collateral set forth on
Schedule 1.01 hereto and with respect to which the Agent has not been granted
and has not perfected a valid, first priority security interest, (ii) is located
at a location not owned by the Borrower as to which the Agent has not received a
waiver, in form and substance satisfactory to the Agent, executed and delivered
by the landlord, bailee, warehouse or processor (as the case may be) or (iii)
which is in transit. Standards of eligibility may be fixed and revised from time
to time solely by the Agent. In determining eligibility, the Agent may, but need
not, rely on reports and schedules furnished by the Borrowers, but reliance by
6
the Agent thereon from time to time shall not be deemed to limit the right of
the Agent to revise standards of eligibility at any time as to both present and
future inventory of the Borrowers and the Guarantors. If the inventory is sold
under a licensed trademark, the Agent shall have obtained a waiver, in form and
substance satisfactory to the Agent, from the licensor with respect to the
rights of the Agent to use the trademark to sell or otherwise dispose of such
inventory.
"Eligible Receivables" shall mean Receivables created by the Borrowers
or the Guarantors in the ordinary course of business arising out of the sale or
lease of goods or rendition of services by the Borrowers or the Guarantors,
which are and at all times shall continue to be acceptable to the Agent in all
respects. Standards of eligibility may be fixed and revised from time to time
solely by the Agent in the Agent's reasonable business judgment. In general,
without limiting the foregoing, a Receivable shall in no event be deemed to be
an Eligible Receivable unless: (a) all payments due on the Receivable have been
invoiced and the underlying goods shipped or services performed, as the case may
be; (b) the payment due on the Receivable is not more than 60 days past due and
90 days past the invoice date; (c) the payments due on more than 50% of all
Receivables from the same Customer are less than 60 days past due and 90 days
past the invoice date; (d) the Receivable arose from a completed and bona fide
transaction (and with respect to a sale of goods, a transaction in which title
has passed to the Customer) which requires no further act under any
circumstances on the part of the Borrowers or the Guarantors in order to cause
such Receivable to be payable in full by the Customer (e) the Receivable is in
full conformity with the representations and warranties made by the Borrowers or
the Guarantors to the Agent and the Lenders with respect thereto and is free and
clear of all security interests and Liens of any nature whatsoever other than
any security interest deemed to be held by the Borrowers, the Guarantors or any
security interest created pursuant to the Security Documents or permitted by
Section 7.01 hereof; (f) the Receivable constitutes an "account" or "chattel
paper" within the meaning of the Uniform Commercial Code of the state in which
the Receivable is located; (g) the Customer has not asserted that the
Receivable, and the Borrowers or the Guarantors are not aware that the
Receivable, arises out of a xxxx and hold, consignment or progress billing
arrangement or is subject to any setoff, contras, net-out contract, offset,
deduction, dispute, credit, counterclaim or other defense arising out of the
transactions represented by the Receivables or independently thereof and the
Customer has finally accepted the goods from the sale out of which the
Receivable arose and has not objected to its liability thereon or returned,
rejected or repossessed any of such goods,except for complaints made or
7
goods returned in the ordinary course of business for which, in the case of
goods returned, goods of equal or greater value have been shipped in return; (h)
the Receivable arose in the ordinary course of business of the Borrowers or the
Guarantors; (i) the Customer is not (x) the United States government or the
government of any state or political subdivision thereof or therein, or any
agency or department of any thereof (provided, however, the Receivables due
under any Veterans Administration programs or any hospital owned or operated by
the United States government or the government of any state or political
subdivision thereof shall be deemed to be Eligible Receivables if they otherwise
meet the eligibility criteria set forth herein) or (y) an Affiliate of the
Borrowers or any subsidiary of any thereof or a supplier or creditor of the
Borrowers or the Guarantors or any subsidiary thereof (provided that such
Receivable shall only be ineligible to the extent of amounts payable by such
Borrower or subsidiary to such supplier or outstanding to such creditor); (j)
the Customer is a United States person or an obligor in the United States or an
obligor located in another jurisdiction if the applicable Receivable is covered
by a letter of credit or credit insurance in favor of, or assigned to, the Agent
in form and substance satisfactory to the Agent; (k) the Receivable complies
with all material requirements of all applicable laws and regulations, whether
Federal, state or local (including, without limitation, usury laws and laws,
rules and regulations relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices and
privacy); (l) to the knowledge of the Borrowers and the Guarantors, the
Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the Customer enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and by general equity principles; (m) the Receivable is denominated in
and provides for payment by the Customer in dollars; (n) the Receivable has not
been and is not required to be charged off or written off as uncollectible in
accordance with GAAP or the customary business practices of the Borrowers or the
Guarantors; (o) the Agent on behalf of the Lenders possesses a valid, perfected
first priority security interest in such Receivable as security for payment of
the Obligations; (p) the Receivable is not with respect to a Customer located in
New Jersey, Minnesota, Indiana or any other state denying creditors access to
its courts in the absence of a Notice of Business Activities Report or other
similar filing, unless Borrowers have either qualified as a foreign corporation
authorized to transact business in such state or have filed a Notice of Business
Activities Report or similar filing with the applicable state agency for the
then current year; (q) an event as described in paragraph (e) or (f) of Article
VIII has notoccurred with respect to the Customer; and (r) the Agent is
8
satisfied with the credit standing of the Customer in relation to the amount of
credit extended.
"Employee Note" shall mean the unsecured, subordinated, non-interest
bearing promissory notes of Microtek to the order of the persons identified on
Schedule 2.1(b)(iii) to the Deka Acquisition Agreement, in an original aggregate
principal amount not to exceed $1,250,000, all of which notes shall be in form
and substance satisfactory to the Agent.
"Environmental Claim" shall mean any written notice of violation,
claim, deficiency, demand, abatement or other order by any governmental
authority or any person for personal injury (including sickness, disease or
death), tangible or intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or deed or use restrictions, resulting from or based
upon (i) the existence, or the continuation of the existence, of a Release
(including, without limitation, sudden or non-sudden, accidental or
nonaccidental Releases), of, or exposure to, any Contaminant at, in, by or from
any of the properties of the Borrowers or their subsidiaries, (ii) the
environmental aspects of the transportation, storage, treatment or disposal of
Contaminants in connection with the operation of any of the properties of the
Borrowers or their subsidiaries or (iii) the violation, or alleged violation by
Borrowers or any of their subsidiaries, of any statutes, ordinances, orders,
rules, regulations, Permits or licenses of or from any governmental authority,
agency or court relating to environmental matters connected with any of the
properties of the Borrowers or their subsidiaries, under any applicable
Environmental Law.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss.9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C.ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.ss.6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C.ss.1251 et seq.), the Oil Pollution Act of 1990
(33 U.S.C. ss.2701 et seq.), the Safe Drinking Water Act (42 U.S.C.ss.300f, et
seq.), the Clear Air Act (42 U.S.C.ss.7401 et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C.ss.2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 X.X.X.xx. 136 et seq.), and the Occupational
Safety and Health Act (29 U.S.C.ss.651 et seq.), as such laws have been and
hereafter may be amended or supplemented, and any related or analogous present
or future Federal, state or local, statutes, rules, regulations, ordinances,
licenses, permits and interpretations and orders of regulatory and
administrative bodies.
9
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which together with any of the Borrowers or any subsidiary of any
thereof would be treated as a single employer under Section 302 of Title I or
Title IV of ERISA r with respect to Section 412 or Section 414(b), (c), (m) or
(o) of the Code.
"Eurodollar Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its
"Eurodollar Lending Office" opposite its name in Schedule 2.03 annexed
hereto (or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender as such Lender may from time to time specify to
the Borrowers and the Agent.
"Eurodollar Loan" shall mean a Loan based on the Adjusted LIBO Rate in
accordance with Article II hereof.
"Event of Default" shall have the meaning assigned to such term in
Article VIII hereof.
"Final Maturity Date" shall mean June 30, 2004.
"Financial Officer" shall mean, with respect to any person, the chief
financial officer or chief executive officer of such person.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time.
"Fiscal Year" shall mean the fiscal year of each of the Borrowers for
accounting purposes which in each case ends on December 31 of each year.
"Funded Debt" shall mean, with respect to any person, as of the date
of determination thereof, all Indebtedness (including Subordinated Indebtedness)
of such person and its subsidiaries on a Consolidated basis outstanding at such
time (including the current portion thereof) which matures more than one year
after the date of calculation (including amounts outstanding in the final year
of the Term Loan or any other Funded Debt), and any such Indebtedness maturing
within one year from such date of calculation which is renewable or extendable
at the option of the obligor to a date more than one year from such date and
including in any event the Revolving Credit Loans.
10
"Funds from Operations" shall mean, with respect to any person for any
period, the sum for such period of (i) Net Income plus (ii) depreciation of
tangible property plus (iii) amortization of intangible property plus (iv) for
the fiscal quarters ending March 31, 2001, June 30, 2001, and September 30, 2001
only, $9,200,000, which represents the restructuring charges incurred in the
fourth quarter of Fiscal Year 2000.
"GAAP" shall have the meaning assigned to such term in Section 1.02
hereof.
"Governmental Authority" shall mean the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
juridical, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Grantor" shall mean any Grantor, Pledgor or Debtor, as such terms are
as defined in any of the Security Documents.
"Guarantee" shall mean any obligation, contingent or otherwise, of any
person guaranteeing or having the economic effect of guaranteeing or giving
financial assistance in respect of the repayment of any Indebtedness or
obligation of any other person in any manner, whether directly or indirectly,
and shall include, without limitation, any obligation of such person, direct or
indirect, to (i) purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness or obligation, (ii) purchase property, securities or services for
the purpose of assuring the owner of such Indebtedness or obligation of the
payment of such Indebtedness or obligation, or (iii) maintain working capital,
equity capital, available cash or other financial condition of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or
obligation; provided, however, that the term Guarantee shall not include
endorsements for collection or collections for deposit, in either case in the
ordinary course of business.
"Guarantor" shall mean, collectively, the Borrowers and each
subsidiary thereof which is on the Closing Date or thereafter becomes a
guarantor of the Obligations.
"Hazardous Material" shall mean any pollutant, contaminant, chemical,
or industrial or hazardous, toxic or dangerous goods, waste, substance or
material, defined or regulated as such in (or for purposes of) any Environmental
11
Law and any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any fraction),
any radioactive substance and any polychlorinated biphenyls; provided, in the
event that any Environmental Law is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment; and provided, further, to the extent that the
applicable laws of any state establish a meaning for "hazardous material,"
"hazardous substance," "hazardous waste," "solid waste" or "toxic substance"
which is broader than that specified in any Federal Environmental Law, such
broader meaning shall apply.
"Indebtedness" shall mean, with respect to any person, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest charges
are customarily paid, (c) all obligations of such person for the deferred
purchase price of property or services, except current accounts payable arising
in the ordinary course of business and not overdue beyond such period as is
commercially reasonable for such person's business, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person and all Capitalized Lease Obligations, (e) all
payment obligations of such person with respect to interest rate, commodity
price or currency protection agreements, foreign currency exchange agreements or
other interest or currency exchange rate or commodity price hedging agreements,
(f) all obligations of such person as an account party under any letter of
credit or in respect of bankers' acceptances, (g) all obligations of any third
party secured by property or assets of such person (regardless of whether or not
such person is liable for repayment of such obligations), (h) all Guarantees of
such person and (i) the redemption price of all redeemable preferred stock of
such person, but only to the extent that such stock is redeemable at the option
of the holder or requires sinking fund or similar payments at any time prior to
the Final Maturity Date. The Indebtedness of any person shall include the
Indebtedness of any other entity (including any partnership in which such person
is a general partner) to the extent such person is liable therefor as a result
of such person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such person is
not liable therefor.
"Indemnitees" shall have the meaning assigned to such term in Section
11.04(c) hereof.
12
"Information" shall have the meaning assigned to such term in Section
11.11 hereof.
"Interest Margin" shall mean, with respect to any Loan, the amount as
set forth below as corresponds to the Leverage Ratio set forth below, initially
determined on December 31, 2000. The Interest Margin may be adjusted thereafter
following the delivery of the financial statements to the Agent required
pursuant to Section 6.05(a) or (b), as applicable, together with the
corresponding compliance certificates required pursuant to Section 6.05(e) and,
if the Borrowers believe they are entitled to a lower Interest Margin, a written
request for an Interest Margin adjustment, commencing with the financial
statements and certificates for the period ending September 30, 2001, or if the
Borrowers shall fail to timely deliver such statements and certificates for any
such period, then at the highest Interest Margin provided for herein, such
adjustments to be made (i) to a higher Interest Margin, at the discretion of the
Agent, or (ii) to a lower Interest Margin, within five (5) Business Days after
delivery of the Borrowers' request for an Interest Margin adjustment; provided,
however, that any adjustment shall not be effected with respect to any
Eurodollar Loan until the continuation or conversion thereof at its expiration:
Interest Interest
Margin for Margin for
Eurodollar Alternate
Leverage Ratio Loans Base Loans
-------------- ----- ----------
Less than 1.50:1.00 1.05 0.50
Equal to or greater than
1.50:1.00 but less than
2.25:1.00 2.00 1.00
Equal to or greater than
2.25:1.00 but less than
3.00:1.00 2.50 1.50
Equal to or greater than
3.00:1.00 3.00 2.00
On the Closing Date, (a) the Interest Margin for Eurodollar Loans
shall be 2.50% and (b) the Interest Margin for.
13
Alternate Base Loans shall be 1.50%; each of which may thereafter be adjusted in
accordance with the provisions hereof.
"Interest Payment Date" shall mean (i) in the case of an Alternate
Base Loan, the first Business Day of each month commencing June 1, 2001 (which
shall cover the period from May 1, 2001 for Loans outstanding under the Isolyser
Credit Agreement that are being continued and extended under this Agreement) and
(ii) with respect to any Eurodollar Loan (which shall include those outstanding
under the Isolyser Credit Agreement that are being continued and extended under
this Agreement), the last day of the Interest Period applicable thereto, and, in
addition, in respect of any Eurodollar Loan of more than three (3) months'
duration, each earlier day which is three (3) months after the first day of such
Interest Period.
"Interest Period" shall mean, as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is one (1), two (2), three (3) or six (6) months
thereafter, as the Borrowers may elect with respect to its Eurodollar Loans;
provided, however, that (x) if an Interest Period would end on a day that is not
a Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, with respect to Eurodollar Loans, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, (y) no Interest Period
shall end later than the Final Maturity Date and (z) interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"Isolyser Credit Agreement" shall mean the Credit Agreement dated as
of November 28, 1994, as amended and restated as of August 30, 1996, among
Isolyser and certain Affiliates as borrowers and guarantors, the lenders named
therein and the Agent, as further amended to the Closing Date.
"Lender" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Letter of Credit" shall have the meaning assigned to such term in
Section 2.17 hereof.
"Letter of Credit Usage" shall mean at any time, (i) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (ii) the
unreimbursed drawings at such time under all such Letters of Credit.
14
"Leverage Ratio" shall mean with respect to any person the ratio of
(i) Funded Debt, less cash, cash equivalents and investments permitted by
Section 7.06(a) through (e), at the end of any fiscal quarter to (ii) Funds from
Operations of such person for the four most recent consecutive fiscal quarters
ending at the end of such fiscal quarter.
"LIBO Rate" shall mean, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the rate at which dollar deposits approximately
equal in principal amount to the Agent's portion of such Eurodollar Loan and for
a maturity equal to the applicable Interest Period are offered in immediately
available funds to the principal London office of the Agent in the London
interbank market at approximately 11:00 A.M., London time, two (2) Business Days
prior to the first day of such Interest Period.
"Lien" shall mean, with respect to any asset, (i) any mortgage, lien,
pledge, encumbrance, charge or security interest in or on such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset, (iii) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities or (iv) any other right of or arrangement with
any creditor to have such creditor's claim satisfied out of such assets, or the
proceeds therefrom, prior to the general creditors of the owner thereof.
"Loan" shall mean the Term Loan or any Revolving Credit Loan.
"Loan Documents" shall mean this Agreement, each Security Document,
each Guarantee executed and delivered at any time with respect to the
Obligations, the Notes and each other document, instrument, or agreement now or
hereafter delivered to the Agent or any Lender in connection herewith or
therewith.
"Loan Party" shall mean each Borrower, each Grantor, each Guarantor
and each subsidiary thereof.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, assets, prospects, operations or financial or other condition of
any person or its subsidiaries, (ii) the ability of any Loan Party to perform or
pay the Obligations in accordance with the terms hereof or of any other.
15
Loan Document or (iii) the Agent's Lien on any material portion of the
Collateral or the priority of such Lien.
"Microtek Credit Agreement" shall mean the Credit Agreement dated as
of October 1, 1991, as amended and restated as of November 30, 1995 among
Microtek, the guarantors and lenders named therein and the Agent.
"Mortgages" shall mean the real property mortgages and/or deeds of
trust executed by the Grantor(s) at any time and from time to time in favor of
the Agent, for the benefit of the Lenders, as amended, modified or supplemented
from time to time.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Inventory" shall mean, at any time, the
aggregate value, computed at the lower of cost (on a FIFO basis) and current
market value, of Eligible Inventory of the Borrowers.
"Net Amount of Eligible Receivables" shall mean and include at any
time, without duplication, the gross amount of Eligible Receivables at such time
less (i) sales, excise or similar taxes and (ii) returns, discounts, claims,
credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"Net Income" shall mean, with respect to any person for any period,
the aggregate income (or loss) of such person for such period which shall be an
amount equal to net revenues and other proper items of income for such person
less the aggregate for such person of any and all items that are treated as
expenses under GAAP, and less Federal, state and local income taxes, but
excluding any extraordinary gains or losses or any gains or losses from the sale
or disposition of assets other than in the ordinary course of business, all
computed and calculated in accordance with GAAP.
"Notes" shall mean the Term Notes and the Revolving Credit Notes.
"Obligations" shall mean all obligations, liabilities and Indebtedness
of the Borrowers to the Lenders and the Agent, whether now existing or hereafter
created, direct or indirect, due or not, whether created directly or acquired by
assignment, participation or otherwise, including without limitation all
obligations, liabilities and Indebtedness of the Borrowers with respect to the
Security Documents and other Loan Documents, the principal of and interest on
the Revolving Credit Loans, the Term. Loans and the payment or performance of
16
all other obligations, liabilities, and Indebtedness of the Borrowers and the
other Loan Parties to the Lenders and the Agent hereunder, under the Letters of
Credit or under any one or more of the other Loan Documents (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, and interest that, but for the
filing of a petition in bankruptcy with respect to any Borrower, would accrue on
such obligations, whether or not a claim is allowed against such Borrower for
such interest in the related bankruptcy proceeding), including without
limitation all fees, costs, expenses and indemnity obligations hereunder and
thereunder.
"Other Taxes" shall have the meaning assigned to such term in Section
2.15(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any employee pension benefit plan within the
meaning of Section 3(2) of ERISA which is subject to the provisions of Title IV
of ERISA or Section 412 of the Code with respect to which any of the Borrowers
or any ERISA Affiliate has liability.
"Permits" shall have the meaning assigned to such term in Section 4.18
hereof. "person" shall mean any natural person, corporation, business trust,
limited liability company, association, company, joint venture, partnership,
limited liability partnership or Governmental Authority.
"Plan" shall mean any employee benefit plan other than a multiemployer
plan within the meaning of Section 3(3) of ERISA and which is maintained (in
whole or in part) for employees of the Borrowers, any subsidiary or any ERISA
Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement dated as of August
30, 1996 between the Grantors and the Agent, for the benefit of the Lenders, in
substantially the form of Exhibit F annexed hereto, as amended, modified or
supplemented from time to time.
"Protection Agreement" shall mean the Shareholder Protection Rights
Agreement between Isolyser and Suntrust Bank, as amended by the First Amendment
to Shareholder Protection Rights Agreement, as in effect on October 9, 1997.
17
"Receivables" shall mean and include all of the Borrowers' and
Guarantors' accounts, instruments, documents, chattel paper and general
intangibles, whether secured or unsecured, whether now existing or hereafter
created or arising, and whether or not specifically assigned to the Agent for
the ratable benefit of the Lenders.
"Register" shall have the meaning assigned to such term in Section
11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Release" shall mean any releasing, spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any
"Threatened Release," as defined in Environmental Law; provided, in
the event that any Environmental Law is amended so as to broaden the meaning of
any term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature with respect to any property of the Borrowers or their subsidiaries
(whether such property is owned, leased, subleased or used), including, without
limitation, with respect to Contaminants and the Release thereof.
"Repayment Date" shall have the meaning assigned to such term in
Section 2.04(c) hereof.
"Reportable Event" shall mean a Reportable Event as defined in Section
4043(b) of ERISA with respect to which the notice requirements have not been
waived.
18
"Required Lenders" shall mean Lenders having 67% of the Total
Commitment.
"Responsible Officer" shall mean, with respect to any person, any
president or chief executive officer, any financial vice president, or the chief
financial officer or controller, of such person.
"Revolving Credit Alternate Base Loan" shall mean a Revolving Credit
Loan that is an Alternate Base Loan.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Credit Loans hereunder and
participate in Letters of Credit in an aggregate amount at any time outstanding
not in excess of the amount opposite the name of such Lender in the column
entitled
"Revolving Credit Commitment" in the table appearing in Schedule
2.01(b), or if applicable, the amount set forth in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amount may be
(a) reduced from time to time pursuant to this Agreement including, without
limitation, Section 2.07 hereof and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 11.03 hereof.
"Revolving Credit Eurodollar Loan" shall mean a Revolving Credit Loan
that is a Eurodollar Loan.
"Revolving Credit Loan" shall mean a Revolving Credit Loan made
pursuant to Sections 2.01 and 2.02 hereof.
"Revolving Credit Notes" shall mean the Revolving Credit Notes of the
Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B annexed hereto, as amended, modified or
supplemented from time to time.
"Revolving Credit Termination Date" shall mean the earlier to occur of
(i) the Final Maturity Date and (ii) such date as the Revolving Credit Loans
shall otherwise be payable in full and the Revolving Credit Commitment shall
terminate, expire or be cancelled in accordance with the terms of this
Agreement.
"Security Agreement" shall mean the Amended and Restated Security
Agreement dated as of August 30, 1996, between the Grantor(s) and the Agent, for
the benefit of the Lenders, substantially in the form of Exhibit D annexed
hereto, as amended, modified or supplemented from time to time.
19
"Security Agreement - Patents and Trademarks" shall mean the Amended
and Restated Security Agreement and Mortgage - Patent and Trademarks, dated as
of August 30, 1996 between the Grantors and the Agent, for the benefit of the
Lenders, substantially in the form of Exhibit G annexed hereto, as hereafter
amended, modified or supplemented from time to time.
"Security Documents" shall mean the Security Agreement, the Mortgages,
the Pledge Agreement, the Security Agreement -Patents and Trademarks and each
other agreement now existing or hereafter created providing collateral security
for the payment or performance of any Obligations.
"Services Agreement" shall mean that certain Services Agreement, dated
as of January __, 2000 (and executed on January 21, 2000) by and between
Isolyser and MINDHARBOR, Inc. as in effect on June 30, 2000.
"Subordinated Indebtedness" shall mean, with respect to any of the
Borrowers, Indebtedness subordinated in right of payment to such person's
monetary obligations under this Agreement upon terms satisfactory to and
approved in writing by the Agent, to the extent it does not by its terms mature
or become subject to any mandatory prepayment or amortization of principal prior
to the Final Maturity Date, and shall in any event include the Indebtedness of
Microtek pursuant to the Employee Notes.
"Subsidiary" shall mean, with respect to any person, any corporation,
limited liability company, partnership, association or other business entity of
which securities or other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power are, at the time as of
which any determination is being made, owned or controlled, directly or
indirectly, by the parent of such person or one or more subsidiaries of the
parent of such person.
"Taxes" shall have the meaning assigned to such term in Section
2.15(a) hereof. "Term Alternate Base Loan" shall mean a Term Loan that is an
Alternate Base Loan.
"Term Eurodollar Loan" shall mean a Term Loan that is a Eurodollar
Loan.
"Term Loans" shall mean the Term Loans made pursuant to Sections 2.01
and 2.02.
20
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder in an aggregate amount
not in excess of the amount opposite the name of such Lender in the column
entitled "Term Loan Commitment" in the table appearing in Schedule 2.01(a), or
if applicable, the amount set forth in the Assignment and Acceptance pursuant to
which such Lender became a Lender hereunder, as such amount may be (a) reduced
from time to time pursuant to this Agreement including, without limitation,
Section 2.07 hereof and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 11.03 hereof.
"Term Notes" shall mean the Term Notes of the Borrowers, executed and
delivered as provided in Section 2.04, in substantially the form of Exhibit A
hereto, as amended, modified or supplemented from time to time.
"Total Commitment" shall mean the sum of the Lenders' Total Term Loan
Commitment and Total Revolving Credit Commitment, as the same may be reduced
from time to time pursuant to Section 2.07 hereof.
"Total Revolving Credit Commitment" shall mean the sum of the Lenders'
Revolving Credit Commitments, as the same may be reduced from time to time
pursuant to this Agreement, including, without limitation, Section 2.07.
"Total Term Loan Commitment" shall mean the sum of the Lenders' Term
Loan Commitments, as the same may be reduced from time to time pursuant to this
Agreement, including, without limitation, Section 2.07.
"Transactions" shall have the meaning assigned to such term in Section
4.02 hereof.
SECTION 1.02. Accounting Terms. Unless otherwise expressly provided
herein, each accounting term used herein shall have the meaning given it under
generally accepted accounting principles in effect from time to time in the
United States applied on a basis consistent with those used in preparing the
financial statements referred to in Section 6.05 hereof ("GAAP"); provided,
however, that each reference in Article VII hereof, or in the definition of any
term used in Article VII hereof, to GAAP shall mean GAAP as in effect on the
date hereof.
21
II. THE LOANS
SECTION 2.01. Term Loan Commitments and Revolving Credit Commitments. (a)
Subject to the terms and conditions herein set forth including, without
limitation, those set forth in Section 2.03 below, and relying upon the
representations and warranties herein set forth, each Lender, severally and not
jointly, agrees to make its Term Loan to the Borrowers on the Closing Date in an
amount not to exceed in the aggregate the amount of such Lender's Term Loan
Commitment set forth opposite its name in Schedule 2.01(a) annexed hereto.
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender, severally and not
jointly, agrees to make Revolving Credit Loans to the Borrowers, at any time and
from time to time from the date hereof to the Revolving Credit Termination Date,
in an aggregate principal amount at any time outstanding not to exceed the
amount of such Lender's Revolving Credit Commitment set forth opposite its name
in Schedule 2.01(b) annexed hereto, as such Revolving Credit Commitment may be
reduced from time to time in accordance with the provisions of this Agreement.
Not-withstanding the foregoing, the aggregate principal amount of Revolving
Credit Loans outstanding at any time to the Borrowers shall not exceed (1) the
lesser of (A) the Total Revolving Credit Commitment (as such amount may be
reduced pursuant to the terms of this Agreement including, without limitation,
Section 2.07 hereof) and (B) an amount equal to the sum of (i) up to eighty-five
percent (85%) of the Net Amount of Eligible Receivables of each of the
Borrowers, such percentage, as it relates to any Borrower, shall be subject to
reduction at any time by the Agent in its reasonable business judgment
including, without limitation, by reason of the Agent determining (based upon a
field examination) that the dilution percentage of such Borrower's Receivables
is in excess of five percent (5%), plus (ii) the lesser of (a) $8,500,000 and
(b) up to fifty percent (50%) of the Net Amount of Eligible Inventory minus such
reserves against inventory in amounts as the Agent may establish and revise from
time to time at the Agent's sole discretion (this clause 1 (B) referred to
herein as the "Borrowing Base"), minus (2) the Letter of Credit Usage at such
time (not to exceed $1,000,000 at any time). The Borrowing Base will be computed
monthly and a compliance certificate from a Responsible Officer of the Borrowers
presenting its computation will be delivered to the Agent in accordance with
Section 6.05 hereof. Subject to the foregoing and within the foregoing limits,
the Borrowers may borrow, repay (or, subject to the provisions of Section 2.09
hereof, prepay) and reborrow Revolving Credit Loans, on and after the date
hereof and prior to the Revolving Credit Termination Date, subject to the terms,
22
provisions and limitations set forth herein, including, without limitation, the
requirement that no Revolving Credit Loan shall be made hereunder if the amount
thereof exceeds the Availability outstanding at such time.
SECTION 2.02. Loans. (a) The Revolving Credit Loans made by the Lenders on
any date shall be in any minimum aggregate principal amount as may be requested
by the Borrowers; provided, however, that the Eurodollar Loans made on any date
shall be in a minimum aggregate principal amount of $1,000,000.
(b) Loans shall be made ratably by the Lenders in accordance with
their respective Term Loan Commitments or Revolving Credit Commitments, as the
case may be; provided, however, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its obligation to lend
hereunder. The Term Loans shall be made by the Lenders against delivery of Term
Notes, payable to the order of the Lenders, as referred to in Section 2.04. The
initial Revolving Credit Loans shall be made by the Lenders against delivery of
Revolving Credit Notes, payable to the order of the Lenders, as referred to in
Section 2.04 hereof.
(c) Each Loan shall be either an Alternate Base Loan or a Eurodollar
Loan as the Borrowers may request pursuant to Section 2.03 hereof. Each Lender
may fulfill its obligations under this Agreement by causing its Applicable
Lending Office to make such Loan; provided, however, that the exercise of such
option shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the term of the applicable Note. Not more than three (3) Term
Eurodollar Loans and three (3) Revolving Credit Eurodollar Loans may be
outstanding at any one time.
(d) Subject to the provisions of paragraph (e) below, each Lender
shall make its Term Loans and Revolving Credit Loans on the proposed dates
thereof by paying the amount required to the Agent in New York, New York in
immediately available funds not later than 12:00 noon, New York City time, and
the Agent shall as soon as practicable, but in no event later than 3:00 p.m.,
New York City time, credit the amounts so received to the general deposit
account of the Borrowers with the Agent in immediately available funds or, if
Loans are not to be made on such date because any condition precedent to a
borrowing herein specified is not met, return the amounts so received to the
respective Lenders.
(e) The Borrowers shall have the right at any time upon prior
irrevocable written, facsimile or telephonic notice (promptly confirmed by
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written or facsimile notice) to the Agent given in the manner and at the times
specified in Section 2.03 with respect to the Loans into which conversion or
continuation is to be made, to convert all or any portion of Eurodollar Loans
into Alternate Base Loans, to convert all or any portion of Alternate Base Loans
into Eurodollar Loans (specifying the Interest Period to be applicable thereto),
to convert the Interest Period with respect to all or any portion of any
Eurodollar Loans to another permissible Interest Period, and to continue all or
any portion of any Eurodollar Loans into a subsequent Interest Period of the
same duration, subject to the terms and conditions of this Agreement (including
the last sentence of Section 2.02(c) hereof) and to the following:
(i) in the case of a conversion or continuation of fewer
than all the Loans, the aggregate principal amount of Loans converted
or continued shall be in any minimum amount in the case of Alternate
Base Loans and shall not be less than $1,000,000 in the case of
Eurodollar Loans and shall be an integral multiple of $100,000;
(ii) accrued interest on a Loan (or portion thereof) being
converted or continued shall be paid by the Borrowers at the time of
conversion or continuation;
(iii) if any Eurodollar Loan is converted at any time other
than the end of an Interest Period applicable thereto, the Borrowers
shall make such payments associated therewith as are required pursuant
to Section 2.12;
(iv) any portion of a Revolving Credit Loan which is subject
to an Interest Period ending on a date that is less than three (3)
months prior to the Revolving Credit Termination Date may not be
converted into, or continued as, a Eurodollar Loan and shall be
automatically converted at the end of such Interest Period into an
Alternate Base Loan;
(v) any portion of a Term Eurodollar Loan required to be
paid on any Repayment Date occurring less than three (3) months after
the end of the then current Interest Period applicable to such Loan,
may not be converted into, or continued as, a Term Eurodollar Loan and
shall be automatically converted at the end of such Interest Period
into a Term Alternate Base Loan; and
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(vi) no Event of Default shall have occurred and be
continuing.
The Interest Period applicable to any Eurodollar Loan resulting from a
conversion shall be specified by the Borrowers in the irrevocable notice of
conversion delivered pursuant to this Section; provided, however, that if no
such Interest Period shall be specified, the Borrowers shall be deemed to have
selected an Interest Period of three (3) months' duration. If the Borrowers
shall not have given timely notice to continue any Eurodollar Loan into a
subsequent Interest Period (and shall not otherwise have given notice to convert
such Loan), such Loan (unless repaid or required to be repaid pursuant to the
terms hereof) shall, subject to (iv) and (v) above, automatically be converted
into an Alternate Base Loan. The Agent shall promptly advise the Lenders of any
notice given pursuant to this Section and of each Lender's portion of the
continuation or conversion hereunder.
SECTION 2.03. Notice of Loans. The Borrowers shall, through a Responsible
Officer of any of the Borrowers, give the Agent irrevocable written, facsimile
or telephonic notice (promptly confirmed by written or facsimile notice) of each
borrowing (including, without limitation, a conversion as permitted by Section
2.02(e) hereof) not later than 11:00 A.M., New York City time, (i) three (3)
Business Days before a proposed Eurodollar Loan borrowing or conversion and (ii)
on the same Business Day with respect to an Alternate Base Loan borrowing or
conversion (except that no such confirmation will be required, unless requested
by the Agent, to the extent that the proceeds of such borrowing are requested to
be disbursed to the Borrowers' controlled disbursement account maintained with
the Agent). Such notice shall specify (w) whether the Loans then being requested
are to be Term Loans or Revolving Credit Loans and whether they are to be
Alternate Base Loans or Eurodollar Loans, (x) the date of such borrowing (which
shall be a Business Day) and amount thereof and (y) if such Loans are to be
Eurodollar Loans, the Interest Period with respect thereto. If no election as to
the type of Loan is specified in any such notice, all such Loans shall be
Alternate Base Loans. If no Interest Period with respect to any Eurodollar Loan
is specified in any such notice, then an Interest Period of three (3) months'
duration shall be deemed to have been selected. The Agent shall promptly advise
the Lenders of any notice given pursuant to this Section 2.03 and of each
Lender's portion of the requested borrowing.
SECTION 2.04. Notes; Repayment of Loans. (a) The Term Loans made by a
Lender shall be evidenced by a single Term Note, duly executed on behalf of the
Borrowers, in substantially the form of Exhibit A annexed hereto, delivered and
payable to such Lender in a principal amount equal to its Term Loan Commitment
on such date.
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All Revolving Credit Loans made by a Lender to the Borrowers shall be
evidenced by a single Revolving Credit Note, duly executed on behalf of the
Borrowers, dated the Closing Date, in substantially the form of Exhibit B
annexed hereto, delivered and payable to such Lender in a principal amount equal
to its Revolving Credit Commitment in respect of the Borrowers on such date. The
outstanding balance of each Revolving Credit Loan, as evidenced by any such
Revolving Credit Note, shall mature and be due and payable on the Revolving
Credit Termination Date.
(b) Each Revolving Credit Note shall bear interest from its date on
the outstanding principal balance thereof, as provided in Section 2.05 hereof.
(c) The aggregate principal amount of the Term Loans, as evidenced by
the Term Notes, shall be payable in consecutive quarterly installments, which
shall be in the amount of $0 with a final payment on the Final Maturity Date in
such amount as shall constitute the payment in full of the Term Loans (the date
of each such repayment, a "Repayment Date"), and such payments shall be
distributed ratably among the Lenders in accordance with their respective Term
Loan Commitments.
To the extent not previously paid, the Term Loans shall be due and payable
on the Final Maturity Date. Each Term Note shall bear interest from its date on
the outstanding principal balance thereof, as provided in Section 2.05. All
principal payments in respect of the Term Loans shall be accompanied by accrued
interest on the principal amount being repaid to the date of payment. No
scheduled payment of principal in respect of the Term Loans shall be made to the
extent that a lesser principal payment would result in the payment in full of
the outstanding amount of the Term Loans, and such lesser amount is paid.
(d) Each Lender, or the Agent on its behalf, shall, and is hereby
authorized by the Borrowers to, endorse on the schedule attached to the Term
Note or Revolving Credit Note, as applicable, of such Lender (or on a
continuation of such schedule attached to such Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Loan to the
Borrowers from such Lender, as well as the date and amount of each payment and
prepayment with respect thereto; provided, however, that the failure of any
person to make such a notation on a Note shall not affect any obligations of the
Borrowers under such Note. Any such notation shall be conclusive and binding as
to the date and amount of such Loan or portion thereof, or payment or prepayment
of principal or interest thereon, absent manifest error.
26
(e) Each of the Borrowers shall be jointly and severally liable with
the other Borrower(s) for the Obligations, and each of the Obligations shall be
secured by all of the Collateral. Each of the Borrowers acknowledges that it is
a co-borrower hereunder and is jointly and severally liable under this Agreement
and the other Loan Documents. All Loans and Letters of Credit extended to any of
the Borrowers or requested by any of the Borrowers shall be deemed to be Loans
and Letters of Credit extended for each of the Borrowers, and each of the
Borrowers hereby authorizes each other of the Borrowers to effectuate Loans and
Letters of Credit on its behalf. Notwithstanding anything to the contrary
contained in this Agreement or any of the other Loan Documents, the Agent and
the Lenders shall be entitled to rely upon any request, notice or other
communication received by them from any of the Borrowers on behalf of all
Borrowers, and shall be entitled to treat their giving of any notice hereunder
to any of the Borrowers as notice to each and all Borrowers.
Each of the Borrowers agrees that the joint and several liability of the
Borrowers provided for in this subsection (e) shall not be impaired or affected
by any modification, supplement, extension or amendment or any contract or
agreement to which the other Borrower(s) may hereafter agree (other than an
agreement signed by the Agent and the Lenders specifically releasing such
liability), nor by any delay, extension of time, renewal, compromise or other
indulgence granted by the Agent or any Lender with respect to any of the
Obligations, nor by any other agreements or arrangements whatsoever with the
other Borrower(s) or with any other person, each of the Borrowers hereby waiving
all notice of such delay, extension, release, substitution, renewal, compromise
or other indulgence, and hereby consenting to be bound thereby as fully and
effectually as if it had expressly agreed thereto in advance. The liability of
each of the Borrowers is direct and unconditional as to all of the Obligations,
and may be enforced without requiring the Agent or any Lender first to resort to
any other right, remedy or security. Each of the Borrowers hereby expressly
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Obligations, the Notes, this Agreement or any other Loan
Document and any requirement that the Agent or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any of the Borrowers or any other person or any
Collateral.
Each of the Borrowers hereby irrevocably subordinates and makes junior to
the Obligations each of the other Borrower's."claims" (as defined in Section
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101(5) of the Bankruptcy Code) to which such Borrowers are or would be
entitledby virtue of the provisions of the first paragraph of this subsection
(e) or the performance of such Borrower's obligations thereunder including,
without limitation, any right of subrogation (whether contractual, under Section
509 of the Bankruptcy Code or otherwise), reimbursement, contribution,
exoneration or similar right, or indemnity, or any right of recourse to security
for any of the Obligations unless and until all of the Obligations to the Agent
and the Lenders have been indefeasibly paid in full.
SECTION 2.05. Interest on Loans.
(a) Subject to the provisions of Section 2.05(c) and Section 2.08
hereof, each Alternate Base Loan shall bear interest at a rate per annum equal
to the Alternate Base Rate plus the applicable Interest Margin.
(b) Subject to the provisions of Section 2.05(c) and Section 2.08
hereof, each Eurodollar Loan shall bear interest at a rate per annum equal to
the Adjusted LIBO Rate plus the applicable Interest Margin.
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date, the Revolving Credit Termination Date with
respect to outstanding Revolving Credit Loans and on the Final Maturity Date.
Interest on each Alternate Base Loan and Eurodollar Loan shall be computed based
on the number of days elapsed in a year of 360 days. The Agent shall determine
each interest rate applicable to the Loans and shall promptly advise the
Borrowers and the Lenders of the interest rate so determined.
SECTION 2.06. Fees. (a) The Borrowers shall pay each Lender, through
the Agent, (i) on the first Business Day of each January, April, July and
October commencing July, 2001, (ii) on the date of any reduction of the
Revolving Credit Commitments pursuant to Section 2.07 hereof and (iii) on the
Revolving Credit Termination Date, in immediately available funds, a commitment
fee (the "Commitment Fee") of three-eighths of one percent (3/8%) per annum on
the average daily unused amount of the Revolving Credit Commitment of such
Lender during the quarter (or shorter period commencing with the date hereof or
ending with the Revolving Credit Termination Date) ending on such date. The
Commitment Fee due to each Lender under this Section 2.06 shall commence to
accrue on the date hereof and cease to accrue on the earlier of (i) the
Revolving Credit Termination Date and (ii) the termination of the Revolving
Credit Commitment of such Lender pursuant to Section 2.07 hereof. The Commitment
Fee shall be calculated on the basis of the actual number of days elapsed in a
year of 360 days.
28
(b) The Borrower shall pay to the Agent for its own account an
administration fee of $35,000 per annum, payable on the Closing Date and each
anniversary thereof.
SECTION 2.07. Termination and Reduction of Revolving Credit Commitments and
Term Loan Commitments. (a) Upon at least three (3) Business Days' prior
irrevocable written notice (or facsimile notice promptly confirmed in writing)
to the Agent, the Borrowers may at any time in whole permanently terminate, or
from time to time in part permanently reduce, the Total Revolving Credit
Commitment, ratably among the Lenders in accordance with the amounts of their
Revolving Credit Commitments; provided, however, that the Total Revolving Credit
Commitment shall not be reduced at any time to an amount less than the Revolving
Credit Loans outstanding under the Revolving Credit Commitments and the Letter
of Credit Usage at such time. Each partial reduction of the Total Revolving
Credit Commitment shall be in a minimum of $500,000 or an integral multiple of
$100,000.
(b) Simultaneously with any termination or reduction of the Total
Revolving Credit Commitment pursuant to paragraph (a) of this Section 2.07, the
Borrowers shall pay to each Lender, through the Agent, the amount of the
Commitment Fee due and owing under Section 2.06(a) hereof through and including
the date of such termination or reduction on the amount of the Revolving Credit
Commitment of such Lender so terminated or reduced.
(c) The Revolving Credit Commitment of each Lender shall automatically
and permanently terminate on the Revolving Credit Termination Date, and all
Revolving Credit Loans still outstanding on such date shall be due and payable
in full together with accrued interest thereon.
(d) The Total Term Loan Commitment shall be permanently reduced by the
amount of any repayment or prepayment of the outstanding principal amount of the
Term Loans on the date of any such repayment or prepayment. In any event, all
amounts due and owing under the Total Term Loan Commitment shall be due and
payable on the Final Maturity Date.
(e) Simultaneously with (x) the termination of the Total Commitment
and repayment in full of the Obligations in accordance with this Agreement
including, without limitation, this Section 2.07 (referred to in this paragraph
(e) as a "Termination") or (y) any permanent reduction of the Total Revolving
Credit Commitment in accordance with this Agreement
29
including, without limitation, Section 2.07(a) above (referred to in this
paragraph (e) as a "Reduction"), at any time during the period from the Closing
Date to but not including June 30, 2003 the Borrowers shall pay to the Agent for
the ratable benefit of the Lenders (such amounts, "Prepayment Fees") the
following amounts: (i) from the Closing Date to but not including June 30, 2003,
an amount equal to one percent (1%) of (x) the Total Commitment then in effect
immediately prior to a Termination and (y) the amount of the Total Revolving
Credit Commitment so reduced in the event of a Reduction. No such Prepayment
Fees shall be due and owing to a Lender (other than The Chase Manhattan Bank) in
the event that the termination of such Lender's Total Revolving Credit
Commitment is a result of any actions permitted under Section 11.08(c) hereof.
SECTION 2.08. Interest on Overdue Amounts; Alternate Rate of Interest. (a)
If the Borrowers shall default in the payment of the principal of or interest on
any Loan or any other amount becoming due hereunder, by acceleration or
otherwise, and/or any other Default or Event of Default as a result of any
non-compliance with Article VII hereof shall occur the Borrowers shall on demand
from time to time pay interest, to the extent permitted by law, on all
Obligations outstanding up to the date of actual payment of such defaulted
amount (after as well as before judgment) and/or the cure or waiver of such
Default or Event of Default at a rate per annum equal to two percent (2%) in
excess of the interest rate applicable to Alternate Base Loans at such time
hereunder.
(b) In the event, and on each occasion, that on the day two (2)
Business Days prior to the commencement of any Interest Period for a Eurodollar
Loan the Agent shall have determined that dollar deposits in the amount of each
Eurodollar Loan are not generally available in the London interbank market, or
that the rate at which dollar deposits are being offered will not reflect
adequately and fairly the cost to any Lender of making or maintaining such
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Agent shall as soon as
practicable thereafter give written notice (or facsimile notice promptly
confirmed in writing) of such determination to the Borrowers and the Lenders,
and any request by the Borrowers for the making of a Eurodollar Loan pursuant to
Section 2.03 hereof or conversion or continuation of any Loan into a Eurodollar
Loan pursuant to Section 2.02 hereof shall, until the circumstances giving rise
to such notice no longer exist, be deemed to be a request for an Alternate Base
Loan. Each determination by the Agent made hereunder shall be conclusive absent
manifest error.
30
SECTION 2.09. Prepayment of Loans. (a) Subject to the terms and conditions
contained in this Section 2.09 and else-where in this Agreement, the Borrowers
shall have the right to prepay any Loan at any time in whole or from time to
time in part (except in the case of a Eurodollar Loan only on the last day of an
Interest Period) without penalty (except as otherwise provided for herein).
(b) On the date of any termination or reduction of the Total Revolving
Credit Commitment pursuant to Section 2.07(a) hereof or elsewhere in this
Agreement, the Borrowers shall pay or prepay so much of the Revolving Credit
Loans as shall be necessary in order that the Availability equals or exceeds
zero following such termination or reduction. Any prepayments required by this
paragraph (b) shall be applied to outstanding Revolving Credit Alternate Base
Loans up to the full amount thereof before they are applied to outstanding
Revolving Credit Eurodollar Loans; provided, however, that the Borrowers shall
not be required to make any prepayment of any Eurodollar Loan pursuant to this
Section until the last day of the Interest Period with respect thereto so long
as an amount equal to such prepayment is deposited by the Borrowers in a cash
collateral account with the Agent to be held in such account on terms
satisfactory to the Agent (if not previously applied, such cash collateral may
be applied by the Agent on the last day of the applicable Interest Period to
repay outstanding Eurodollar Loans as they become due).
(c) The Borrowers shall make prepayments of the Revolving Credit Loans
from time to time such that the Availability equals or exceeds zero at all
times. Any prepayments required by this paragraph (c) shall be applied to
outstanding Revolving Credit Alternate Base Loans up to the full amount thereof
before they are applied to outstanding Revolving Credit Eurodollar Loans;
provided, however, that the Borrowers shall not be required to make any
prepayment of any Eurodollar Loan pursuant to this Section until the last day of
the Interest Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrowers in a cash collateral account with the
Agent to be held in such account on terms satisfactory to the Agent (if not
previously applied, such cash collateral may be applied by the Agent on the last
day of the applicable Interest Period to repay outstanding Eurodollar Loans as
they become due).
(d) Within five (5) days of the sale of any of tangible property
subject to the Security Agreement (excluding sales of assets in the ordinary
course of business, sales of such property not in excess of $100,000 in the
aggregate during any Fiscal Year, and sales consented to by the Agent) subject
31
to Section 7.05 hereof and the SecurityAgreement, the Borrowers shall make a
mandatory prepayment of the Loans in an amount equal to 100% of the proceeds
received (net of taxes due and any reasonable expenses of sale), which proceeds
shall be applied as set forth in paragraph (f) below; provided, however, the
Borrowers may provide the Agent with notice (written or telephonic) within the
five (5) day period, that such proceeds shall be applied within 90 days of the
date of such sale to the acquisition by the Borrowers of capital assets useful
in the business of the Borrowers and having a fair market value (as determined
in good faith by the Borrowers) at least equal to that of the assets sold; and
provided further, that the mandatory prepayment required by this paragraph (d)
shall be made on the 91st day following the notice to the Agent, unless prior to
such date the Borrowers provide the Agent with (i) a description of the assets
acquired with such proceeds, and (ii) the location(s) where such assets will be
kept, at which time, the mandatory prepayment shall be paid as reduced by the
amount of such acquisition. Nothing contained in this paragraph (d) shall be or
be deemed to be a consent to the sale of any assets.
(e) (i) Except as provided in clause (ii) below, not later than the
five (5) days following the receipt by the Agent or any Borrower or any
subsidiary of any Borrower (x) of any net proceeds of any insurance required to
be maintained pursuant to Section 6.03 hereof on account of each separate loss,
damage or injury in excess of $500,000 (or, if there shall be continuing an
Event of Default, of any amount of net proceeds) to any Collateral of such
Borrower or such subsidiary, or (y) of any net proceeds of any business
interruption insurance required to be maintained pursuant to Section 6.03 hereof
in excess of $500,000 (or, if there shall be continuing an Event of Default, the
full amount of net proceeds), such Borrower or subsidiary shall notify the Agent
of such receipt in writing or by telephone promptly confirmed in writing, and
not later than the day following receipt by the Agent or such Borrower or
subsidiary of any such proceeds, there shall become due and payable a prepayment
of the Loans in an amount equal to 100% of such proceeds. Prepayments from such
net proceeds shall be applied as set forth in paragraph (f) below.
(ii) In the case of the receipt of net proceeds described in
clause (i) above with respect to the loss, damage or injury to any
asset of a Borrower or any subsidiary of a Borrower (other than net
proceeds of any business interruption insurance), the Borrowers may
elect, by written notice delivered to the Agent not later than the day
on which a prepayment would otherwise be required under clause (i), to
apply all or a portion of such net proceeds for the purpose of
replacing, repairing, restoring or rebuilding the relevant tangible
property, and, in such event, any required prepayment under clause (i)
32
above shall be reduced dollar for dollar by the amount of such
election. An election under this clause (ii) shall not be effective
unless: (x) at the time of such election there is continuing no Event
of Default; (y) the Borrowers shall have certified to the Agent that:
(1) the net proceeds of the insurance adjustment for such loss, damage
or injury, together with other funds available to the Borrowers shall
be sufficient to complete such replacement, repair, restoration or
rebuilding in accordance with all applicable laws, regulations and
ordinances; and (2) to the best knowledge of the Borrowers, no Event
of Default has arisen or will arise as a result of such loss, damage,
injury, replacement, repair or rebuilding; and (z) if the amount of
net proceeds in question exceeds $1,000,000, the Borrowers shall have
obtained the written consent of the Required Lenders to such election.
(iii) In the event of an election under clause (ii) above,
pending application of the net proceeds to the required replacement,
repairs, restoration or rebuilding, the Borrowers shall not later than
the time at which prepayment would have been, in the absence of such
election, required under clause (i) above, apply such net proceeds to
the prepayment of the outstanding principal balance, if any, of the
Revolving Credit Loans (not in permanent reduction of the Revolving
Credit Commitment), and deposit (the "Special Deposit") with the
Agent, the balance, if any, of such net proceeds remaining after such
application, pursuant to agreements in form, scope and substance
reasonably satisfactory to the Agent. The Special Deposit, together
with all earnings on such Special Deposit, shall be available to the
Borrowers solely for the replacement, repair, rebuilding or
restoration of the tangible property suffering the injury, loss or
damage in respect of which such prepayment and Special Deposit were
made or to such other purpose as to which the Required Lenders may
consent in writing; provided, however, that at such time as an Event
of Default shall occur, the balance of the Special Deposit and
earnings thereon may be applied by Agent to repay the Obligations in
such order as the Agent shall elect. The Agent shall be entitled to
require proof, as a condition to the making of any withdrawal from the
Special Deposit, that the proceeds of such withdrawal are being
applied for the purposes permitted hereunder.
(f) When making a prepayment, whether mandatory or otherwise, pursuant
to paragraph (a), (b), (c), (d) or (e) above, the Borrowers (other than as
provided in Section 10.01 hereof) shall furnish to the Agent, not later than
11:00 a.m. (New York City time) (i) three (3) Business Days prior to the date of
such prepayment of Alternate Base Loans and (ii) five (5) Business Days prior to
the date of such prepayment of Eurodollar Loans, written, facsimile or
telephonic notice (promptly confirmed by written or facsimile notice) of
33
prepayment which shall specify the prepayment date and the principal amount of
each Loan (or portion thereof) to be prepaid, which notice shall be irrevocable
and shall commit the Borrowers to prepay such Loan by the amount stated therein
on the date stated therein. All prepayments (other than as provided in Section
10.01 hereof) shall be accompanied by accrued interest on the principal amount
being prepaid to the date of prepayment. Prepayments made pursuant to paragraph
(d) above shall be applied first, to outstanding Term Alternate Base Loans in
the inverse order of their maturity up to the full amount thereof and then to
outstanding Term Eurodollar Loans in the inverse order of their maturity up to
the full amount thereof. Prepayments made pursuant to paragraph (e) above from
the proceeds of any insurance on account of any loss, damage or injury to the
Collateral shall be applied as follows: (A) first, to outstanding Term Alternate
Base Loans in the inverse order of their maturity up to the full amount thereof
and then to outstanding Term Eurodollar Loans in the inverse order of their
maturity up to the full amount thereof and, (B) second, to outstanding Revolving
Credit Alternate Base Loans up to the full amount thereof and then to Revolving
Credit Eurodollar Loans up to the full amount thereof; provided, however, that
if at the time of the making of any prepayment in accordance with clause (B),
there are undrawn Letters of Credit outstanding, then in the discretion of the
Agent, after payment in full of the outstanding Revolving Credit Loans, all or a
portion of any remaining amount required to be prepaid (not to exceed an amount
equal to the aggregate undrawn amount of all such outstanding Letters of Credit)
shall be deposited by the Borrowers in a cash collateral account to be held by
the Agent for the benefit of the Lenders for application by the Agent to the
payment of any drawing made under any such Letters of Credit. Prepayments made
pursuant to paragraph (e) above from the proceeds of any business interruption
insurance shall be applied as follows: (A) first, to outstanding Revolving
Credit Alternate Base Loans up to the full amount thereof and then to Revolving
Credit Eurodollar Loans up to the full amount thereof; provided, however, that
if at the time of the making of any prepayment in accordance with clause (A),
there are undrawn Letters of Credit outstanding, then in the discretion of the
Agent, after payment in full of the outstanding Revolving Credit Loans, all or a
portion of any remaining amount required to be prepaid (not to exceed an amount
equal to the aggregate undrawn amount of all such outstanding Letters of Credit)
shall be deposited by the Borrowers in a cash collateral account to be held by
the Agent for the benefit of the Lenders for application by the Agent to the
payment of any drawing made under any such Letters of Credit and, (B) second, to
outstanding Term Alternate Base Loans in the inverse order of their maturity up
to the full amount thereof and then to outstanding Term Eurodollar Loans in the
inverse order of their maturity up to the full amount thereof. Notwithstanding
34
the foregoing, the Borrowers shall not be required to make any prepayment of any
Term or Revolving Credit Eurodollar Loan required pursuant to this Section
2.09(f) until the last day of the Interest Period with respect thereto so long
as an amount equal to such prepayment is deposited by the Borrowers into a cash
collateral account with the Agent to be held in such account pursuant to terms
satisfactory to the Agent (if not previously applied, such cash collateral may
be applied by the Agent on the last day of the applicable Interest Periods to
repay outstanding Eurodollar Loans as they become due).
(g) All prepayments under this Section 2.09 shall be subject to
Section 2.12 hereof.
(h) Except as otherwise expressly provided in this Section 2.09,
payments with respect to any paragraph of this Section 2.09 are in addition to
payments made or required to be made under any other paragraph of this Section
2.09.
(i) All prepayments of the Term Loans under this Section 2.09 shall be
applied in the inverse order of the Repayment Dates. The amount of the Term
Loans prepaid may not be reborrowed.
SECTION 2.10. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or the Agent;
or
(ii) impose on any Lender or the Agent or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation; and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any
Eurodollar Loan (or of maintaining its obligation to make any such
Loan) or to increase the cost to such Lender or the Agent of
participating in, issuing or maintaining any Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or
the Agent hereunder (whether principal, interest or otherwise), then
the Borrowers will pay to such Lender or the Agent, as the case may
be, for such additional costs incurred or reduction suffered.
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(b) If any Lender or the Agent determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Agent's capital or on the capital of such
Lender's or the Agent's holding company, if any, as a consequence of this
Agreement or the Loans made by, or participation in Letters of Credit held by,
such Lender, or the Letters of Credit issued by the Agent, to a level below that
which such Lender or the Agent or such Lender's or the Agent's holding company
could have achieved but for such Change in Law (taking into consideration such
Lenders or the Agent's policies and the policies of such Lender's or the Agent's
holding company with respect to capital adequacy), then from time to time the
Borrowers will pay to such Lender or the Agent, as the case may be, such
additional amount or amounts as will compensate such Lender or the Agent or such
Lender's or the Agent's holding company for any such reduction suffered.
(c) A certificate of Lender or the Agent setting forth the amount or
amounts, supported by calculations in reasonable detail, necessary to compensate
such Lender or the Agent or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay
such lender or the Agent, as the case may be, the amount shown as due on any
such certificate within ten days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Agent to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's or the Agent's right to demand such compensation; provided that the
Borrowers shall not be required to compensate a Lender or the Agent pursuant to
this Section for any increased costs or reductions incurred more than 180 days
prior to the date that such Lender or the Agent, as the case may be, notifies
the Borrowers of the Change in Law giving rise to such increased costs or
reductions and of such Lender's or the Agent's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 180-day period referred
to above shall be extended to include the period of retroactive effect thereof.
(e) Any Lender claiming any additional amounts payable pursuant to
this Section 2.10 agrees to use its best efforts (consistent with legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, any such additional amounts and would not, in the reasonable judgment of
such Lender, be otherwise materially disadvantageous to such Lender.
36
SECTION 2.11. Change in Legality. (a) Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations to
make Eurodollar Loans as contemplated hereby, then, by written notice to
Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be
made by such Lender hereunder, whereupon the Borrowers shall be
prohibited from requesting Eurodollar Loans from such Lender hereunder
unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans, as the
case may be, made by it be converted to Alternate Base Loans, in which
event (A) all such Eurodollar Loans shall be automatically converted
to Alternate Base Loans as of the effective date of such notice as
provided in paragraph (b) below and (B) all payments of principal
which would otherwise have been applied to repay the converted
Eurodollar Loans shall instead be applied to repay the Alternate Base
Loans resulting from the conversion of such Eurodollar Loans.
(b) For purposes of Section 2.11(a) hereof, a notice to the Borrowers
by any Lender shall be effective, if lawful, on the last day of the then current
Interest Period or, if there are then two or more current Interest Periods, on
the last day of each such Interest Period, respectively; otherwise, such notice
shall be effective with respect to the Borrowers on the date of receipt by the
Borrowers.
SECTION 2.12. Indemnity. The Borrowers shall indemnify the Agent and each
Lender against any loss or reasonable expense (including, but not limited to,
any loss or reasonable expense sustained or incurred or to be sustained or
incurred by reason of or in connection with the execution and delivery or
assignment of, or payment under, any Letter of Credit, or in liquidating or
employing deposits from third parties acquired to affect or maintain any Loan or
part thereof as a Eurodollar Loan) which the Agent or such Lender may sustain or
incur as a consequence of the following events (regardless of whether such
events occur as a result of the occurrence of an Event of Default or the
exercise of any right or remedy of the Agent or the Lenders under this Agreement
or any other agreement, or at law): any failure of the Borrowers to fulfill on
the date of any Credit Event the applicable conditions set forth in Article V
hereof applicable to it; any failure of the Borrowers to borrow hereunder after
37
irrevocable notice of borrowing pursuant to Section 2.03 hereof has been given;
any payment, prepayment or conversion of a Eurodollar Loan on a date other than
the last day of the relevant Interest Period; any default in payment or
prepayment of the principal amount of any Loan or any part thereof or interest
accrued thereon, or with respect to any Letter of Credit as and when due and
payable (at the due date thereof, by irrevocable notice of prepayment or
otherwise); or the occurrence of an Event of Default. Without limiting the
foregoing, the Borrowers further agree to indemnify and hold harmless the Agent,
each Lender as well as their respective officers and directors, each person who
controls the Agent or Lender within the meaning of Section 15 of the Securities
Act of 1933 or any applicable state securities law and their respective
successors, from and against any and all claims, damages, losses, liabilities,
costs or expenses, joint or several, to which they or any of them may become
subject under any Federal or state securities law, rule or regulation, at common
law or otherwise, insofar as such claims, damages, losses, liabilities, costs or
expenses arise out of or are based upon the execution and delivery by the Agent
or any Lender of any Letter of Credit or the execution and delivery of any other
document in connection therewith. Such loss or reasonable expense shall include,
without limitation, an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the principal or other amount so paid,
prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to, in the case of a
Loan, the last day of the Interest Period for such Loan (or, in the case of a
failure to borrow, the Interest Period for such Loan which would have commenced
on the date of such failure to borrow), at the applicable rate of interest for
such Loan provided for herein over (ii) the amount of interest (as reasonably
determined by such Lender) that would be realized by such Lender in reemploying
the funds so paid, prepaid or converted or not borrowed in United States
Treasury obligations with comparable maturities for comparable periods. Any such
Lender shall provide to the Borrowers a statement, signed by an officer of such
Lender, explaining any loss or expense and setting forth, if applicable, the
computation pursuant to the preceding sentence, and such statement shall be
conclusive absent manifest error. The Borrowers shall pay such Lender the amount
shown as due on any such statement within ten (10) days after the receipt of the
same. The indemnities contained herein shall survive the expiration or
termination of this Agreement and of the Letters of Credit.
SECTION 2.13. Pro Rata Treatment. (a) Except as permitted under Sections
2.10, 2.11 and 2.15 hereof, each borrowing, each payment or prepayment of
principal of the Notes, each payment of interest on the Notes, each payment
38
of any fee or other amount payable hereunder and each reduction of the Total
Revolving Credit Commitment and Total Term Loan Commitment shall be made pro
rata among the Lenders in the proportions that their Revolving Credit
Commitments bear to the Total Revolving Credit Commitment or that their Term
Loan Commitments bears to the Total Term Loan Commitment, as the case may be.
(b) Notwithstanding the occurrence or continuance of a Default or
Event of Default or other failure of any condition to the making of Loans or
occurrence of other Credit Events hereunder, unless the Agent shall have been
notified in writing by any Lender prior to the date of a proposed Credit Event
that such Lender will not make the amount that would constitute its pro rata
share of the borrowing on such date available to the Agent, the Agent may assume
that such Lender has made such amount available to the Agent on such date, and
the Agent may, in reliance upon such assumption, make available to the Borrowers
a corresponding amount. If such amount is made available to the Agent on a date
after such Credit Event date, such Lender shall pay to the Agent on demand an
amount equal to the product of (i) the daily average Federal funds rate during
such period as quoted by the Agent, times (ii) the amount of such Lender's pro
rata share of such borrowing, times (iii) a fraction the numerator of which is
the number of days that elapse from and including such Credit Event date to the
date on which such Lender's pro rata share of such borrowing shall have become
immediately available to the Agent and the denominator of which is 360. A
certificate of the Agent submitted to any Lender with respect to any amounts
owing under this subsection shall be conclusive in the absence of manifest
error. If such Lender's pro rata share of such Credit Event is not in fact made
available to the Agent by such Lender within three Business Days of such
borrowing date, the Agent (without releasing such Lender from any liability it
might have to the Agent or any Borrower by reason of the failure to fund) shall
be entitled to recover such amount with interest thereon at the rate per annum
applicable to the Loans hereunder, on demand, from the Borrowers.
SECTION 2.14. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrowers, including, but not limited to, a secured claim under Section 506
of Title 11 of the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, obtain
payment (voluntary or involuntary) in respect of a Note and exposure under the
Letter of Credit Usage held by it as a result of which the unpaid principal
portion of the Notes and exposure under the Letter of Credit Usage held by it
39
shall be proportionately less than the unpaid principal portion of the Notes and
exposure under the Letter of Credit Usage held by any other Lender, it shall be
deemed to have simultaneously purchased from such other Lender a participation
in the Notes and exposure under the Letter of Credit Usage held by such other
Lender, so that the aggregate unpaid principal amount of the Notes and exposure
under the Letter of Credit Usage and participations in Notes or exposure under
the Letter of Credit Usage held by it shall be in the same proportion to the
aggregate unpaid principal amount of all Notes or exposure under the Letter of
Credit Usage then outstanding as the principal amount of the Notes or exposure
under the Letter of Credit Usage held by it prior to such exercise of banker's
lien, setoff or counterclaim was to the principal amount of all Notes or
exposure under the Letter of Credit Usage outstanding prior to such exercise of
banker's lien, setoff or counterclaim; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.14
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustments restored without interest. The
Borrowers expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Note and exposure under the Letter of Credit
Usage deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrowers to such Lender as fully as if such Lender held a Note and
exposure under the Letter of Credit Usage in the amount of such participation.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrowers hereunder shall be made, in accordance with Section
2.16 hereof, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings in any such
case imposed by the United States or any political subdivision thereof,
excluding:
(i) in the case of the Agent and each Lender, taxes imposed
or based on its net income, and franchise or capital taxes imposed on
it, (A) if the Agent or such Lender is organized under the laws of the
United States or any political subdivision thereof and (B) if the
Agent or such Lender is not organized under the laws of the United
States or any political subdivision thereof, and its principal office
or Applicable Lending Office is located in the United States, and in
the case of both (A) and (B), withholding taxes payable with respect
to payments to the Agent or such Lender at its principal office or
Applicable Lending Office under laws (including, without limitation,
40
any treaty, ruling, determination or regulation) in effect on the date
hereof, but not any increase in withholding tax resulting from any
subsequent change in such laws (other than withholding with respect to
taxes imposed or based on its net income or with respect to franchise
or capital taxes), and
(ii) taxes (including withholding taxes) imposed by reason
of the failure of the Agent or any Lender, in either case that is
organized outside the United States, to comply with Section 2.15(f)
hereof (or the inaccuracy at any time of the certificates, documents
and other evidence delivered thereunder).
(all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrowers
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders or the Agent, (x) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including without limitation deductions applicable to additional sums payable
under this Section 2.15) such Lender or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (y) the Borrowers shall make such deductions and (z) the Borrowers shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrowers agree to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction (except as specified in clauses (a)(i)
and (ii)) on amounts payable under this Section 2.15) paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses which are not the result of the gross negligence or willful misconduct
of the Agent or any Lender) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor. If any Lender receives
a refund in respect of any Taxes or Other Taxes for which such Lender has
41
received payment from the Borrowers hereunder, such Lender shall promptly notify
the Borrowers of such refund and such Lender shall, within 30 days of receipt of
a request by the Borrowers, repay such refund to the Borrowers, provided that
the Borrowers, upon the request of such Lender, agree to return such refund
(plus any penalties, interest or other charges) to such Lender in the event such
Lender is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrowers in respect of any payment to any Lender, the
Borrowers will furnish to the Agent, at its address referred to in Section 11.01
hereof, such certificates, receipts and other documents as may be reasonably
required to evidence payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.15 shall
survive the payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrowers are located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrowers (with a copy to the Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrowers as will
permit such payments to be made without withholding or at a reduced rate. The
Borrowers shall be entitled to rely on such forms in their possession until
receipt of any revised or successor form. If the Agent or a Lender fails to
provide a certificate, document or other evidence required pursuant to this
Section 2.15(f), then (i) the Borrowers shall be entitled to deduct or withhold
on payments to the Agent or such Lender as a result of such failure, as required
by law, and (ii) the Borrowers shall not be required to make payments of
additional amounts with respect to such withheld Taxes pursuant to clause (x) of
Section 2.15(a) to the extent such withholding is required solely by reason of
the failure of the Agent or such Lender to provide the necessary certificate,
document or other evidence.
(g) Each Lender and the Agent shall use its best efforts to avoid or
minimize any amounts which might otherwise be payable pursuant to this
subsection 2.15 (including seeking refunds of any amounts that are reasonably
believed not to have been correctly or legally asserted); provided, however,
that such efforts shall not include the taking of any actions by such Lender or
the Agent that would result in any tax, costs or other expense to such Lender or
42
the Agent (other than a tax, cost or other expense for which such Lender or the
Agent shall have been reimbursed or indemnified by the Borrowers pursuant to
this Agreement or otherwise) or any action which would or might in the
reasonable opinion of such Lender or the Agent have an adverse effect upon its
business, operations or financial condition or otherwise be disadvantageous to
such Lender or the Agent.
SECTION 2.16. Payments and Computations. The Borrowers shall make each
payment hereunder and under any instrument delivered hereunder not later than
12:00 noon (New York City time) on the day when due in lawful money of the
United States (in freely transferable dollars) to the Agent at its offices at
1166 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000-0000 for the account of
the Lenders, in immediately available funds. The Agent may charge, when due and
payable, the Borrowers' account with the Agent for all interest, principal and
Commitment Fees or other fees owing to the Agent or the Lenders on or with
respect to this Agreement and/or the Loans and other Loan Documents. If at any
time there is not sufficient availability to cover any of the payments referred
to in the prior sentence, and in any event upon the occurrence of any Event of
Default, the Borrowers shall make any such payments upon demand. If at any time
insufficient funds are received by and available to the Agent to pay fully all
amounts of principal, unreimbursed drawings under Letters of Credit, interest
and fees then due hereunder, such funds shall be applied (i) first, towards
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due to
such parties, and (ii) second, towards payment of principal and unreimbursed
drawings under Letters of Credit then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed
drawings under Letters of Credit then due to such parties.
SECTION 2.17. Issuance of Letters of Credit. Upon the request of the
Borrowers, and subject to the conditions set forth in Article V hereof and such
other conditions to the opening of Letters of Credit as the Agent requires of
its customers generally, the Agent shall from time to time open standby and
commercial letters of credit (each, a "Letter of Credit") for the account of the
Borrowers, the aggregate undrawn amount of all outstanding Letters of Credit not
at any time to exceed $1,000,000; provided however that the face amount of any
Letter of Credit that the Borrowers may request the Agent to open at any time
shall not exceed the lesser of (A) the Total Revolving Credit Commitment at such
time (as such may have been reduced in accordance with the terms of this
Agreement) minus the unpaid principal amount of all Revolving Credit Loans
43
outstanding at such time minus the undrawn amount of all outstanding Letters of
Credit at such time, and (B) the Borrowing Base at such time minus the unpaid
principal amount of all Revolving Credit Loans outstanding at such time minus
the undrawn amount of all outstanding Letters of Credit at such time. The
issuance of each Letter of Credit shall be made on at least 5 Business Days'
prior written notice from the Borrowers to the Agent, at its Domestic Lending
Office, which written notice shall be an application for a Letter of Credit on
the Agent's customary form. The Agent shall not at any time be obligated to
issue any Letter of Credit if such issuance would conflict with, or cause the
Agent or any lender to exceed any limits imposed by, any applicable requirements
of law. The expiration date of any (i) commercial Letter of Credit shall not be
later than six (6) months from the date of issuance thereof and (ii) standby
Letter of Credit shall not be more than twelve (12) months from the date of
issuance thereof, and, in any event, no Letter of Credit shall have an
expiration date later than the Revolving Credit Termination Date. The Letters of
Credit shall be issued with respect of transactions occurring in the ordinary
course of business of the Borrowers.
SECTION 2.18. Payment of Letters of Credit; Reimbursement. Upon the
issuance of any Letter of Credit, the Agent shall notify each Lender of the
principal amount, the number, and the expiration date thereof and the amount of
such Lender's participation therein. By the issuance of a Letter of Credit
hereunder and without further action on the part of the Agent or the Lenders,
each Lender hereby accepts from the Agent a participation (which participation
shall be nonrecourse to the Agent) in such Letter of Credit equal to such
Lender's pro rata (based on its Revolving Credit Commitment) share of such
Letter of Credit, effective upon the issuance of such Letter of Credit. Each
Lender hereby absolutely and unconditionally assumes, as primary obligor and not
as a surety, and agrees to pay and discharge, and to indemnify and hold the
Agent harmless from liability in respect of, such Lender's pro rata share of the
amount of any drawing under a Letter of Credit. Each Lender acknowledges and
agrees that its obligation to acquire participations in each Letter of Credit
issued by the Agent and its obligation to make the payments specified herein,
and the right of the Agent to receive the same, in the manner specified herein,
are absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of a
Default or an Event of Default hereunder, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever. The
Agent shall review, on behalf of the Lenders, each draft and any accompanying
documents presented under a Letter of Credit and shall notify each Lender of any
such presentment. Promptly after it shall have ascertained that any draft and
any accompanying documents presented under such Letter of Credit appear on their
face to be in
44
substantial conformity with the terms and conditions of the Letter of Credit,
the Agent shall give telephonic or facsimile notice to the Lenders and the
Borrowers of the receipt and amount of such draft and the date on which payment
thereon will be made, and the Lenders shall, by 11:00 A.M., New York City time
on the date such payment is to be made, pay the amounts required to the Agent in
New York, New York in immediately available funds, and the Agent, not later than
3:00 p.m. on such day, shall make the appropriate payment to the beneficiary of
such Letter of Credit. If the Lenders shall pay any draft presented under a
Letter of Credit, then the Agent, on behalf of the Lenders, shall charge the
general deposit account of the Borrowers with the Agent for the amount thereof,
together with the Agent's customary overdraft fee in the event the funds
available in such account shall not be sufficient to reimburse the Lenders for
such payment and the Borrowers shall not otherwise have discharged such
reimbursement obligation by 11:00 a.m., New York City time, on the date of such
payment. If the Lenders have not been reimbursed with respect to such drawing as
provided above, the Borrowers shall pay to the Agent, for the account of the
Lenders, the amount of the drawing together with interest on such amount at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the rate applicable to Alternate Base Loans
hereunder plus two percent (2%), payable on demand. The obligations of the
Borrowers under this Section 2.18 to reimburse the Lenders and the Agent for all
drawings under Letters of Credit shall be joint and several, absolute,
unconditional and irrevocable and shall be satisfied strictly in accordance with
their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, setoff, defense or other right which
the Borrowers or any other person may at any time have against the beneficiary
under any Letter of Credit, the Agent or any Lender (other than the defense of
payment in accordance with the terms of this Agreement or a defense based on the
gross negligence or willful misconduct of the Agent or any Lender) or any other
person in connection with this Agreement or any other transaction;
(c) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
45
(d) payment by the Agent or any Lender under any Letter of Credit
against presentation of a draft or other document which does not comply with the
terms of such Letter of Credit; and
(e) any other circumstance or event whatsoever, whether or not similar
to any of the foregoing.
It is understood that in making any payment under any Letter of Credit
(x) the Agent's and any Lender's exclusive reliance on the documents presented
to it under such Letter of Credit as to any and all matters set forth therein,
including, without limitation, reliance on the amount of any draft presented
under such Letter of Credit, whether or not the amount due to the beneficiary
equals the amount of such draft and whether or not any document presented
pursuant to such Letter of Credit proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever and (y) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, not be deemed willful misconduct or gross
negligence of the Agent or any Lender.
SECTION 2.19. Agent's Actions with respect to Letters of Credit. Any Letter
of Credit may, in the discretion of the Agent or its correspondents, be
interpreted by them (to the extent not inconsistent with such Letter of Credit)
in accordance with the Uniform Customs and Practice for Documentary Credits of
the International Chamber of Commerce, as adopted or amended from time to time,
or any other rules, regulations and customs prevailing at the place where any
Letter of Credit is available or the drafts are drawn or negotiated. The Agent
and its correspondents may accept and act upon the name, signature, or act of
any party purporting to be the executor, administrator, receiver, trustee in
bankruptcy, or other legal representative of any party designated in any Letter
of Credit in the place of the name, signature, or act of such party.
SECTION 2.20. Letter of Credit Fees. The Borrowers agree to pay to the
Agent for the ratable benefit of the Lenders with respect to each (i) standby
Letter of Credit, a letter of credit fee equal to two percent (2%) of the face
amount thereof per annum payable to the Agent at its Domestic Lending Office
quarterly in advance in immediately available funds and (ii) commercial Letter
of Credit, a letter of credit fee equal to (x) one-half of one percent (1/2%) of
the face amount thereof with respect to any commercial Letter of Credit with an
46
xxxxxxxxxx.xxxx of not more than 90 days from the date of issuance thereof or
(y) with respect to any commercial Letter of Credit with an expiration date of
more than 90 days from the date of issuance thereof, a fee on the face amount
thereof equal to the product of two percent (2%) multiplied by a fraction having
a numerator equal to the number of days such letter of credit is to be
outstanding and a denominator of three hundred sixty (360), in each case payable
to the Agent at its Domestic Lending Office on the date of issuance of such
commercial Letter of Credit in immediately available funds. The Agent shall
disburse to each Lender such Lender's pro rata share of any payment of the
Letter of Credit fees referred to in the prior sentence in immediately available
funds within two (2) Business Days of the last day of the month during which the
Agent received any such payment. The Borrowers shall also pay to the Agent at
its Domestic Lending Office for the Agent's own account, issuance, processing
amendment and other standard fees charged by the Agent for such transactions.
III. COLLATERAL SECURITY
SECTION 3.01. Security Documents. The Obligations shall be secured by the
Collateral described in the Security Documents and are entitled to the benefits
thereof. The Borrowers shall duly execute and deliver, or cause each other
Grantor to duly execute and deliver the Security Documents, all consents of
third parties necessary to permit the effective granting of the Liens created in
such agreements, financing statements pursuant to the Uniform Commercial Code
and other documents, all in form and substance satisfactory to the Agent, as may
be reasonably required by the Agent to grant to the Agent on behalf of the
Lenders a valid, perfected and enforceable first priority Lien on and security
interest in (subject only to the Liens permitted under Section 7.01 hereof) the
Collateral.
SECTION 3.02. Filing and Recording. The Borrowers shall, at their sole cost
and expense, cause all instruments and documents given as evidence of security
pursuant to this Agreement to be duly recorded and/or filed or otherwise
perfected in all places necessary, in the opinion of the Agent, and take such
other actions as the Agent may reasonably request, in order to perfect and
protect the Liens of the Agent and Lenders in the Collateral. The Borrowers, to
the extent permitted by law, hereby authorize the Agent to file any financing
statement in respect of any Lien created pursuant to the Security Documents
which may at any time be required or which, in the opinion of the Agent, may at
any time be desirable although the same may have been executed only by the Agent
or, at the option of the Agent, to sign such financing statement on behalf of
the Borrowers and file the same, and the Borrowers hereby irrevocably designate
47
the Agent, its agents, representatives and designees as its agent and
attorney-in-fact for this purpose. In the event that any re-recording or
refiling thereof (or the filing of any statements of continuation or assignment
of any financing statement) is required to protect and preserve such Lien, the
Borrowers shall, at the Borrowers' cost and expense, cause the same to be
recorded and/or refiled at the time and in the manner requested by the Agent.
IV. REPRESENTATIONS AND WARRANTIES
Each of the Borrowers and each of the Guarantors jointly and severally
represents and warrants to each of the Lenders that both before and after giving
effect to the consummation of the Transactions:
SECTION 4.01. Organization, Legal Existence. Each of the Loan Parties and
their subsidiaries is a legal entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, has the
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as currently proposed to be conducted and is
qualified to do business in every jurisdiction where such qualification is
required (all such jurisdictions being listed in Schedule 4.01 annexed hereto).
Each of the Borrowers has the corporate power to execute, deliver and perform
its obligations under this Agreement and the other Loan Documents to which it is
a party, and with respect to the Borrowers to borrow hereunder and to execute
and deliver the Notes.
SECTION 4.02. Authorization. The execution, delivery and performance by
each of the Loan Parties of this Agreement and each of the other Loan Documents
to which it is a party, the borrowings hereunder by the Borrowers, the execution
and delivery by the Borrowers of the Notes and the grant of security interests
in the Collateral created by the Security Documents(collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation or the certificate or articles of incorporation
or other applicable constitutive documents or the by-laws of the Loan Parties,
or their respective subsidiaries, as the case may be, (B) any order of any
Governmental Authority binding upon the Loan Parties, or their respective
subsidiaries, or (C) any provision of any material indenture, agreement or other
instrument to which the Loan Parties, or their respective subsidiaries, or any
of their respective properties or assets are or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
48
lapse of time or both) a default under any material indenture, agreement or
other instrument referred to in (b)(i)(C) above or (iii) result in the creation
or imposition of any Lien of any nature whatsoever (other than in favor of the
Agent, for the benefit of the Lenders, as contemplated by this Agreement and the
Security Documents) upon any property or assets of the Loan Parties, or their
respective subsidiaries.
SECTION 4.03. Governmental Approvals. No registration or filing with,
consent or approval of, or other action by, any Governmental Authority is or
will be required in connection with the Transactions, other than any which have
been made or obtained.
SECTION 4.04. Binding Effect. This Agreement and each of the other Loan
Documents to which it is a party constitutes, and each of the Notes when duly
executed and delivered will constitute, a legal, valid and binding obligation of
the applicable Loan Party enforceable against such Loan Party in accordance with
its terms.
SECTION 4.05. Material Adverse Change. Except as set forth in Schedule 4.05
annexed hereto, there has been no material adverse change in the business,
assets, operations or financial condition of any Borrower or any of their
subsidiaries since December 31, 2000.
SECTION 4.06. Litigation; Compliance with Laws; etc. (a) Except as set
forth in Schedule 4.06(a) annexed hereto, there are not any actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending or, to the knowledge of any Responsible Officer of any Borrower overtly
threatened by written communication against or affecting any of the Loan Parties
or any of their subsidiaries or the businesses, assets or rights of any of the
Loan Parties or any of their subsidiaries (i) which involve any of the
Transactions or (ii) as to which it is probable (within the meaning of Statement
of Financial Accounting Standards No. 5) that there will be an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, materially impair the ability of any of the Loan Parties or any of
their subsidiaries to conduct business substantially as now conducted, or have a
Material Adverse Effect.
(b) Except as set forth in Schedule 4.06(b) annexed hereto, no Loan
Party or subsidiary thereof is in violation of any law, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or Governmental Authority which could reasonably be expected to have a
Material Adverse Effect.
49
SECTION 4.07. Financial Statements. (a) The Borrowers have heretofore
furnished to the Agent Consolidated balance sheets and statements of income and
cash flows of (x) Isolyser dated as of December 31, 2000 audited by and
accompanied by the opinion of independent public accountants and (y) Isolyser
dated as of February 28, 2001 prepared by management for the two month period
then ended. Such balance sheets and statements of income and cash flows present
fairly the Consolidated financial condition and results of operations of the
applicable person and its subsidiaries as of the dates and for the periods
indicated, and such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of such person and its subsidiaries, as of
the dates thereof.
(b) The Borrowers have heretofore furnished to the Agent monthly in
the case of Fiscal Years ending December 31, 2001 and annually for the next four
Fiscal Years projected income statements, balance sheets and cash flows of the
Borrowers on a Consolidated basis, together with a schedule confirming the
ability of the Borrowers to consummate the Transactions and demonstrating
prospective compliance with all financial covenants contained in this Agreement,
such projections disclosing all assumptions made by Borrowers in formulating
such projections and giving effect to the Transactions. The projections are
based upon reasonable estimates and assumptions, all of which are reasonable in
light of the conditions which existed at the time the projections were made,
have been prepared on the basis of the assumptions stated therein, and reflect
as of the Closing Date the reasonable estimate of the Borrowers of the results
of operations and other information projected therein.
(c) The financial statements referred to in this Section 4.07 have
been prepared in accordance with GAAP.
SECTION 4.08. Federal Reserve Regulations. (a) No Loan Party or subsidiary
thereof is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including, without limitation, Regulation T, U or X thereof. If requested by any
50
Lender, the Borrowers or any subsidiary of any thereof shall furnish to such
Lender a statement on Federal Reserve Form U-1 referred to in said Regulation U.
SECTION 4.09. Taxes. The Loan Parties and each of their respective
subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns which are required to be filed by it, on or prior to the
date hereof, other than tax returns in respect of taxes that (x) are not
franchise, capital or income taxes, (y) in the aggregate are not material and
(z) would not, if unpaid, result in the imposition of any material Lien on any
property or assets of any Loan Party or any of its subsidiaries. Each of the
Loan Parties and each of their subsidiaries has paid or caused to be paid all
taxes shown to be due and payable on such filed returns or on any assessments
received by it, other than (i) any taxes or assessments the validity of which
such Loan Party or such subsidiary is contesting in good faith by appropriate
proceedings, and with respect to which such Loan Party or such subsidiary shall,
to the extent required by GAAP have set aside on its books adequate reserves and
(ii) taxes other than income, capital or franchise taxes that in the aggregate
are not material and which would not, if unpaid, result in the imposition of any
material Lien on any property or assets of any Loan Party or any of their
subsidiaries. Except as set forth on Schedule 4.06(a), (i)no Federal income tax
returns of any Loan Party or any of their subsidiaries have been audited by the
United States Internal Revenue Service and (ii) none of the Loan Parties or
their subsidiaries thereof has as of the date hereof requested or been granted
any extension of time to file any Federal, state, local or foreign tax return,
other than in the ordinary course of business. None of the Loan Parties or their
subsidiaries are party to or have any obligation under any tax sharing
agreement.
SECTION 4.10. Employee Benefit Plans. With respect to the provisions of
ERISA:
(i) No Reportable Event has occurred or is continuing with
respect to any Pension Plan.
(ii) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) has occurred with
respect to any Plan subject to Part 4 of Subtitle B of Title I of
ERISA.
(iii) None of the Borrowers or any ERISA Affiliate is now,
or has been during the preceding five years, obligated to contribute
to a Pension Plan or a Multiemployer Plan. None of the Loan Parties or
any ERISA Affiliate has (A) ceased operations at a facility so as to
51
become subject to the provisions of Section 4062(e) of ERISA, (B)
withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, (C) ceased making contributions
to any Pension Plan subject to the provisions of Section 4064(a) of
ERISA to which any of the Loan Parties, any subsidiary or any ERISA
Affiliate made contributions, (D) incurred or caused to occur a
"complete withdrawal" (within the meaning of Section 4203 of ERISA) or
a "partial withdrawal" (within the meaning of Section 4205 of ERISA)
from a Multiemployer Plan that is a Pension Plan so as to incur
withdrawal liability under Section 4201 of ERISA (without regard to
subsequent reduction or waiver of such liability under Section 4207 or
4208 of ERISA), or (E) been a party to any transaction or agreement
under which the provisions of Section 4204 of ERISA were applicable.
(iv) No notice of intent to terminate a Pension Plan has
been filed, nor has any Plan been terminated pursuant to the
provisions of Section 4041(e) of ERISA.
(v) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Plan and no event has
occurred or condition exists which might constitute grounds under the
provisions of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any such Plan.
(vi) With respect to each Pension Plan that is subject to
the provisions of Title I, Subtitle B, Part 3 of ERISA, the funding
method used in connection with such Plan is acceptable under ERISA,
and the actuarial assumptions and methods used in connection with
funding such Pension Plan satisfy the requirements of Section 302 of
ERISA. The assets of each such Pension Plan (other than the
Multiemployer Plans) are at least equal to the present value of the
greater of (i) accrued benefits (both vested and non-vested) under
such Plan, or (ii) "benefit liabilities" (within the meaning of
Section 4001(a)(16) of ERISA) under such Plan, in each case as of the
latest actuarial valuation date for such Plan (determined in
accordance with the same actuarial assumptions and methods as those
used by the Plan's actuary in its valuation of such Plan as of such
valuation date). No such Pension Plan has incurred any "accumulated
funding deficiency" (as defined in Section 412 of the Code), whether
or not waived.
(vii) There are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge of the
Borrowers or any ERISA Affiliate, which could reasonably be expected
to be asserted, against any Plan or the assets of any such Plan,
which, if adversely determined, could reasonably be expected to have a
52
Material Adverse Effect. No civil or criminal action brought pursuant
to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending
or threatened against any fiduciary or any Plan which, if adversely
determined, could reasonably be expected to have a Material Adverse
Effect. None of the Plans or any fiduciary thereof (in its capacity as
such) has been the direct or indirect subject of any audit,
investigation or examination by any governmental or quasi-governmental
agency which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
(viii) All of the Plans comply currently, and have complied
in the past, both as to form and operation, with their terms and with
the provisions of ERISA and the Code, and all other applicable laws,
rules and regulations except where the lack of compliance could not
reasonably be expected to have a Material Adverse Effect; all
necessary governmental approvals for the Plans have been obtained and
a favorable determination as to the qualification under Section 401(c)
of the Code of each of the Plans which is an employee pension benefit
plan (within the meaning of Section 3(2) of ERISA) has been made by
the Internal Revenue Service and a recognition of exemption from
federal income taxation under Section 501(a) of the Code of each of
the funded employee welfare benefit plans (within the meaning of
Section 3(1) of ERISA) has been made by the Internal Revenue Service,
and nothing has occurred since the date of each such determination or
recognition letter that would adversely affect such qualification.
SECTION 4.11. No Material Misstatements. No information, report, financial
statement, exhibit or schedule prepared or furnished by or on behalf of any Loan
Party to the Agent or any Lender in connection with any of the Transactions or
this Agreement, the Security Documents, the Notes or any other Loan Documents or
included therein contained or contains any material misstatement of fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 4.12. Investment Company Act; Public Utility Holding Company Act.
No Loan Party or subsidiary thereof is an "investment company" as defined in, or
is otherwise subject to regulation under, the Investment Company Act of 1940. No
Loan Party or subsidiary thereof is a "holding company" as that term is defined
in or is otherwise subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 4.13. Security Interest. Each of the Security Documents creates and
grants to the Agent, for the benefit of the Lenders, a legal, valid and
perfected first (except as permitted pursuant to Section 7.01 hereof)
53
priority Lien in the Collateral identified therein. Such collateral is not
subject to any other Liens whatsoever, except Liens permitted by Section 7.01
hereof.
SECTION 4.14. Use of Proceeds. (a) All proceeds of each borrowing under the
Revolving Credit Commitment on the Closing Date, if any, shall be used to
refinance outstanding Obligations under the Isolyser Credit Agreement.
(b) All proceeds of each subsequent borrowing under the Revolving
Credit Commitment after the Closing Date shall be used to provide for working
capital requirements of the Borrowers or for general corporate purposes of the
Borrowers.
SECTION 4.15. Subsidiaries. As of the Closing Date, Schedule 4.15 annexed
hereto sets forth each subsidiary of each Borrower, its jurisdiction of
incorporation, its capitalization and ownership of capital stock of each such
subsidiary.
SECTION 4.16. Title to Properties; Possession Under Leases; Trademarks. (a)
Each of the Loan Parties and each subsidiary has good and marketable title to,
or valid leasehold interest in, all of its respective properties and assets
shown on the most recent balance sheet referred to in Section 4.07(a) hereof and
all assets and properties acquired since the date of such balance sheet, except
for such properties as are no longer used or useful in the conduct of its
business or as have been disposed of in the ordinary course of business, and
except for minor defects in title that do not interfere with the ability of any
of the Loan Parties or any subsidiary thereof to conduct its business as now
conducted. All such assets and properties are free and clear of all Liens other
than those permitted by Section 7.01 hereof.
(b) Each of the Loan Parties and each of their subsidiaries has
complied with all obligations under all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect and
each of the Loan Parties and each of their subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
(c) Each of the Loan Parties and each of their subsidiaries owns or
controls all material trademarks, trademark rights, trade names, trade name
rights, copyrights, patents, patent rights and licenses which are necessary for
the conduct of the business of such Loan Party and such subsidiary. No Loan
Party nor any subsidiary thereof is infringing upon or otherwise acting
adversely to any of such trademarks, trademark rights, trade names, trade name
rights, copyrights, patent rights or licenses owned by any other person or
persons. There is no claim
or action by any such other person pending, or to the knowledge of any
Responsible Officer of any of the Loan Parties or any subsidiary thereof,
overtly threatened by written communication, against any Borrower or any
subsidiary thereof with respect to any of the rights or property referred to in
this Section 4.16(c) which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.17. Solvency. (a) The fair salable value of the assets of each
Borrower and its Consolidated subsidiaries is not less than the amount that will
be required to be paid on or in respect of the probable liability on the
existing debts and other liabilities (including contingent liabilities) of such
Borrower and its Consolidated subsidiaries, as they become absolute and mature.
(b) The assets of each Borrower and its Consolidated subsidiaries do
not constitute unreasonably small capital for such Borrower and its Consolidated
subsidiaries to carry out their business as now conducted and as proposed to be
conducted including the capital needs of such Borrower and its Consolidated
subsidiaries, taking into account the particular capital requirements of the
business conducted by such Borrower and its Consolidated subsidiaries and
projected capital requirements and capital availability thereof.
(c) No Borrower nor any subsidiary thereof intends to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be received by such Borrower and such subsidiary,
and of amounts to be payable on or in respect of debt of such Borrower and such
subsidiary). The cash flow of each Borrower and its Consolidated subsidiaries,
after taking into account all anticipated uses of the cash of such Borrower and
its Consolidated subsidiaries, will at all times be sufficient to pay all such
amounts on or in respect of debt of such Borrower and its Consolidated
subsidiaries when such amounts are required to be paid.
(d) No Borrower nor any subsidiary thereof believes that final
judgments against it in actions for money damages presently pending will be
rendered at a time when, or in an amount such that, it will be unable to satisfy
any such judgments promptly in accordance with their terms (taking into account
the maximum reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be rendered). The cash
flow of such Borrower and its Consolidated subsidiaries, after taking into
account all other anticipated uses of the cash of such Borrower and its
Consolidated subsidiaries (including the payments on or in respect of debt
referred to in paragraph (c) of this Section), will at all times be sufficient
to pay all such judgments promptly in accordance with their terms.
55
SECTION 4.18. Permits, etc. Except as would not reasonably be expected to
have a Material Adverse Effect, each Borrower and each of its subsidiaries
possesses all licenses, permits, approvals and consents, including, without
limitation, all environmental, health and safety licenses, permits, approvals
and consents (collectively, "Permits") of all Governmental Authorities as
required to conduct properly its business as presently conducted, each such
Permit is and will be in full force and effect, each of the Loan Parties and
each subsidiary is in compliance in all material respects with all such Permits,
and no event (including, without limitation, any violation of any law, rule or
regulation) has occurred which allows the revocation or termination of any such
Permit or any restriction thereon.
SECTION 4.19. Compliance with Environmental Laws. Except as disclosed in
Schedule 4.19 hereto: (i) the operations of the Loan Parties and their
subsidiaries comply in all material respects with all applicable Environmental
Laws; (ii) the Loan Parties and their subsidiaries and all of their present
facilities or operations, as well as to the knowledge of the Loan Parties and
their subsidiaries their past facilities or operations, are not subject to any
judicial proceeding or administrative proceeding or any outstanding written
order or agreement with any governmental authority or private party respecting
(a) any Environmental Law, (b) any Remedial Work, or (c) any Environmental
Claims arising from the Release of a Contaminant into the environment; (iii) to
the best of the knowledge of the Loan Parties and their subsidiaries, none of
their operations is the subject of any Federal or state investigation evaluating
whether any Remedial Work is needed to respond to a Release of any Contaminant
into the environment; (iv) none of the Loan Parties or any subsidiaries of the
Loan Parties nor any predecessor of any of the Loan Parties or any subsidiary of
any Loan Party has filed any notice under any Environmental Law indicating past
or present treatment, storage, or disposal of a Hazardous Material or reporting
a spill or Release of a Contaminant into the environment; (v) to the best of the
knowledge of the Loan Parties and their subsidiaries, none of the Loan Parties
or their subsidiaries has any contingent liability in connection with any
Release of any Contaminant into the environment; (vi) none of the operations of
the Loan Parties or their subsidiaries involve the generation, transportation,
treatment or disposal of Hazardous Materials in violation of any Environmental
Law; (vii) none of the Loan Parties nor their subsidiaries have disposed of any
Contaminant by placing it in or on the ground or waters of any premises owned,
leased or used by any of them and to the knowledge of the Loan Parties and their
56
subsidiaries neither has any lessee, prior owner, or other person; (viii) no
underground storage tanks or surface impoundments are on any property of the
Loan Parties and their subsidiaries; and (ix) no Lien in favor of any
governmental authority for (A) any liability under any Environmental Law or
regulations, or (B) damages arising from or costs incurred by such governmental
authority in response to a Release of a Contaminant into the environment, has
been filed or attached to the property of the Loan Parties and their
subsidiaries.
SECTION 4.20. No Change in Credit Criteria or Collection Policies. There
has been no material change in credit criteria or collection policies concerning
account receivables of any of the Borrowers since December 31, 2000. Without
duplication, all Eligible Receivables of the Borrowers are valid, binding and
enforceable obligations of account debtors and are not subject to any claims,
defenses or setoffs. All account receivables (other than Eligible Receivables)
are valid, binding and enforceable obligations of account debtors.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and issue Letters of Credit
hereunder shall be subject to the following conditions precedent:
SECTION 5.01. All Credit Events. On each date on which a Credit Event is to
occur:
(a) The Agent shall have received a notice of (or a request for the
issuance of a Letter of Credit pursuant to Section 2.17 hereof) borrowing as
required by Section 2.03 hereof.
(b) The representations and warranties set forth in Article IV hereof
and in any documents delivered herewith, including, without limitation, the Loan
Documents, shall be true and correct in all material respects with the same
effect as though made on and as of such date (except insofar as such
representations and warranties relate expressly to an earlier date).
(c) Each Borrower shall be in compliance with all the terms and
provisions contained herein on its part to be observed or performed, and at the
time of and immediately after such Credit Event no Default or Event of Default
shall have occurred and be continuing.
57
(d) The submission of a notice of borrowing or a request for the
issuance of a Letter of Credit shall be deemed a representation by the Borrowers
(i) as to the compliance with (b) and (c) above and (ii) with respect to each
Revolving Credit Loan and each Letter of Credit, demonstrating that after giving
effect thereto the Availability is zero or greater.
SECTION 5.02. First Borrowing. The obligations of the Lenders in
respect of the first Credit Event hereunder is subject to the following
additional conditions precedent:
(a) The Lenders shall have received the favorable written opinion of
counsel for the Borrowers and each of the Guarantors and Grantors, substantially
in the form of Exhibit C hereto, dated the Closing Date, addressed to the Agent
and the Lenders and satisfactory to the Agent.
(b) The Lenders shall have received (i) a certificate of the Secretary
of each Borrower, Grantor and Guarantor, dated the Closing Date and certifying
(A) that the copy of such person's By-laws attached to the Certificate of its
Secretary delivered on or about August 30, 1996 (the "Prior Closing Date") is a
true and complete copy of its By-Laws as in effect on the date of the
certificate delivered pursuant to this paragraph and such By-laws have not been
amended since the Prior Closing Date (B) that attached thereto is a true and
complete copy of a resolution adopted by such person's Board of Directors
authorizing the execution, delivery and performance of this Agreement, the other
Loan Documents and the Credit Events hereunder, as applicable, and that such
resolution has not been modified, rescinded or amended and is in full force and
effect, (C) that such person's certificate or articles of incorporation or
constitutive documents has not been amended since the date of the last amendment
thereto shown on the certificate of good standing delivered on the Prior Closing
Date from the Secretary of State of the state of its incorporation and (D) as to
the incumbency and specimen signature of each of such person's officers
executing this Agreement, the Notes, each Security Document or any other Loan
Document delivered in connection herewith or therewith, as applicable; (ii) a
certificate of another of such person's officers as to incumbency and signature
of its Secretary; and (iii) such other documents as the Agent or any Lender may
reasonably request.
(c) Each Lender shall have received its Revolving Credit Note duly
executed by the Borrowers, payable to its order and otherwise complying with the
provisions of Section 2.04 hereof.
58
(d) The Agent shall have received the Security Documents, each duly
executed by the applicable Grantors, together with any documents or certificates
to be delivered thereunder and updated endorsements for existing title insurance
policies satisfactory to the Agent.
(e) Each document (including, without limitation, each Uniform
Commercial Code financing statement) required by law or requested by the Agent
to be filed, registered or recorded in order to create in favor of the Agent for
the benefit of the Lenders a first priority perfected security interest in the
Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested. The Agent shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration or
recordation.
(f) The Agent shall have received the results of a search of tax and
other Liens, and judgments and of the Uniform Commercial Code filings made with
respect to each Borrower and each Grantor in the jurisdictions in which such
person's chief executive office is located. With respect to any Liens not
permitted pursuant to Section 7.01 hereof, the Agent shall have received
termination statements in form and substance satisfactory to it.
(g) The Lenders and the Agent shall have received and determined to be
in form and substance satisfactory to them:
(i) the most recent (dated within thirty (30) days of the
Closing Date) schedule and aging of accounts receivable and inventory
designations of the Borrowers;
(ii) evidence of the compliance by the Borrowers with
Section 6.03 hereof;
(iii) the financial statements described in Section 4.07
hereof;
(iv) evidence that the Transactions are in compliance with
all applicable laws and regulations;
(v) evidence of the compliance by the Borrowers with Section
6.13 hereof;
59
(vi) evidence of payment of an amendment fee in the amount
of $100,000 and all other fees owed to the Agent and the Lenders by
the Borrowers under this Agreement, the Commitment Letter or
otherwise;
(vii) evidence that all requisite third party consents
(including, without limitation, consents with respect to each of the
Borrowers and each of the Grantors and Guarantors) to the Transactions
have been received;
(viii) evidence that, except as disclosed on Schedule 4.05
annexed hereto, there has been no material adverse change in the
business, assets, operations or financial condition of any of the
Borrowers or any of their subsidiaries since December 31, 2000; and
(ix) evidence that there are no actions, suits or
proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority now pending or
threatened against or affecting any Borrower or any subsidiary thereof
or any of their respective businesses, assets or rights which involve
any of the Transactions.
(h) The Agent shall have received and had the opportunity to review
and determine to be in form and substance satisfactory to it a schedule of all
Liens, litigations and contingent liabilities with respect to the Borrowers,
their subsidiaries, Grantors or Guarantors.
(i) Xxxx Xxxxxxx LLP, counsel to the Agent, shall have received
payment in full for all legal fees charged, and all costs and expenses incurred,
by such counsel through the Closing Date in connection with the transactions
contemplated under this Agreement, the Security Documents and the other Loan
Documents and instruments in connection herewith and therewith.
(j) The corporate structure and capitalization of the Borrowers shall
be satisfactory to the Lenders in all respects.
(k) All legal matters in connection with the Transactions shall be
satisfactory to the Agent, the Lenders and their respective counsel in their
sole discretion.
(l) The Borrowers shall have executed and delivered to the Agent a
disbursement authorization letter with respect to the disbursement of the
proceeds of the Credit Events made on the Closing Date, in form and substance
satisfactory to the Agent;
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(m) The Agent shall have received a Certificate, substantially in the
form of Schedule 6.05(j) hereto, executed by the Financial Officer of the
Borrowers demonstrating compliance as at March 31, 2001 with the Availability
requirements.
(n) The Agent shall have received such other documents as the Lenders
or the Agent or Agent's counsel shall reasonably deem necessary.
VI. AFFIRMATIVE COVENANTS
Each of the Borrowers covenants and agrees with each Lender that, so long
as this Agreement shall remain in effect or the principal of or interest on any
Note, any amount under any Letter of Credit or any fee, expense or other
Obligation payable hereunder or in connection with any of the Transactions shall
be unpaid, it will, and will cause each of its subsidiaries and, with respect to
Section 6.07 hereof, each ERISA Affiliate, to:
SECTION 6.01. Legal Existence. Do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence.
SECTION 6.02. Businesses and Properties. At all times do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
the rights, licenses, Permits, franchises, patents, copyrights, trademarks and
trade names material to the conduct of its businesses; maintain and operate such
businesses in the same general manner in which they are presently conducted and
operated; maintain title to all inventory located in the Dominican Republic in
the name of one of the Borrowers; comply with all laws, rules, regulations and
governmental orders (whether Federal, state or local) applicable to the
operation of such businesses whether now in effect or hereafter enacted
(including, without limitation, all applicable laws, rules, regulations and
governmental orders relating to employment matters, public and employee health
and safety and all Environmental Laws) the lack of compliance with which would
have a Material Adverse Effect; take all actions which may be required to
obtain, preserve, renew and extend all Permits and other authorizations which
are material to the operation of such businesses; and at all times maintain,
preserve and protect all property material to the conduct of such businesses and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and
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proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 6.03. Insurance. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers, (b) maintain
such other insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with companies
similarly situated and in the same or similar businesses, provided, however,
that such insurance shall insure the property of the Borrowers and Grantors
against all risk of physical damage, including, without limitation, loss by
fire, explosion, theft, fraud and such other casualties as may be reasonably
satisfactory to the Agent, but in no event at any time in an amount less than
the replacement value of the Collateral, (c) maintain in full force and effect
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by any Borrower or any of its
subsidiaries, in such amount as the Agent shall reasonably deem necessary, (d)
maintain product liability and business interruption insurance to such extent as
is customary with companies similarly situated and in the same or similar
businesses (and to the extent business interruption insurance is so maintained,
assign such insurance to the Agent for its own benefit and the benefit of the
Lenders), and (e) maintain such other insurance as may be required by law or as
may be reasonably requested by the Agent for purposes of assuring compliance
with this Section 6.03. All insurance covering tangible personal property
subject to a Lien in favor of the Agent for its own benefit and for the benefit
of the Lenders granted pursuant to the Security Documents shall provide that, in
the case of each separate loss the full amount of insurance proceeds shall be
payable to the Agent and shall further provide for at least 30 days' prior
written notice to the Agent of the cancellation or substantial modification
thereof. The Agent shall be named as an additional insured on all other
insurance.
SECTION 6.04. Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon such
properties or any part thereof provided, however, that such payment and
discharge shall not be required with respect to (i) any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the applicable party,
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shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested tax, assessment, charge, levy or claims and enforcement of a Lien or
(ii) any tax, assessment, charge, levy or claims, the failure to pay and
discharge when due which, individually or in the aggregate would not have a
Material Adverse Effect.
SECTION 6.05. Financial Statements, Reports, etc. Furnish to the Agent,
with copies for each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i) Consolidated
and consolidating balance sheets and Consolidated and consolidating income
statements showing the financial condition of the Borrowers and their
subsidiaries as of the close of such Fiscal Year and the results of their
operations during such year, and (ii) a Consolidated and consolidating statement
of shareholders' equity and a Consolidated and consolidating statement of cash
flow, as of the close of such Fiscal Year, all the foregoing to be in
comparative form with the prior Fiscal Year and with respect to the Consolidated
financial statements to be audited by independent public accountants acceptable
to the Agent (which report shall not contain any qualification except with
respect to new accounting principles mandated by the Financial Accounting
Standards Board), and to be in form and substance acceptable to the Agent;
(b) within 45 days after the end of each of the first three (3) fiscal
quarters of the Borrowers, unaudited Consolidated and consolidating balance
sheets and Consolidated and consolidating income statements showing the
financial condition and results of operations of the Borrowers and their
subsidiaries as of the end of each such quarter, a Consolidated and
consolidating statements of shareholders' equity and a Consolidated and
consolidating statement of cash flow as of the end of each such fiscal quarter
prepared and certified by the Financial Officer of each of the Borrowers as
presenting fairly the financial condition and results of operations of the
Borrowers and their subsidiaries and as having been prepared in accordance with
GAAP, in each case subject to normal year-end audit adjustments;
(c) within 30 days after the end of each month unaudited
unconsolidated balance sheets and income statements showing the financial
condition and results of operations of the Borrowers as of the end of each such
month and for the year to date period, a statement of shareholders' equity and
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an unconsolidated statement of cash flow as of the end of each such month and
for the year to date period prepared and certified by the Financial Officer of
the Borrowers as presenting fairly the financial condition and results of
operations of the Borrowers and their subsidiaries and as having been prepared
in accordance with GAAP, in each case subject to normal year-end audit
adjustments and accompanied by a certificate of the Financial Officer certifying
that, to the best of his or her knowledge, no Default or Event of Default has
occurred (but not including calculations demonstrating compliance with the
covenants set forth in Sections 7.07, 7.08 and 7.09 hereof) and, if such a
Default or Event of Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with respect
thereto;
(d) promptly after the same become publicly available, copies of such
registration statements, annual, periodic and other reports, and such proxy
statements and other information, if any, as shall be filed by the Borrowers or
any subsidiaries with the Securities and Exchange Commission pursuant to the
requirements of the Securities Act of 1933 or the Securities Exchange Act of
1934;
(e) concurrently with any delivery under (a) or (b) above, a
certificate of the firm or person referred to therein (which certificate
furnished by the independent public accountants referred to in paragraph (a)
above may be limited to accounting matters and disclaim responsibility for legal
interpretations) certifying that to the best of its, his or her knowledge no
Default or Event of Default has occurred (including calculations demonstrating
compliance, as of the dates of the financial statements being furnished at such
time, with the covenants set forth in Sections 7.07, 7.08 and 7.09 hereof) and,
if such a Default or Event of Default has occurred, specifying the nature and
extent thereof and any corrective action taken or proposed to be taken with
respect thereto and, in the case of a certificate furnished by the independent
public accountants, stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financials referred to in
Section 4.07 and if any such change has occurred, specifying the effect of such
change on the financial statements accompanying its certificate; provided,
however, that any certificate delivered concurrently with (a) above shall be
signed by the Financial Officer of each of the Borrowers;
(f) as soon as available, but in no event later than 180 days after
the end of each Fiscal Year, a management letter prepared by the independent
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public accountants who reported on the financial statements delivered under (a)
above, with respect to the internal audit and financial controls of any Borrower
and its subsidiaries;
(g) within 15 days of the end of each fiscal month, an aging schedule
of the Receivables in the form of the aging schedule of Receivables dated March
31, 2001 previously furnished to the Agent, an aging schedule of payables in
form satisfactory to the Agent and a certificate, substantially in the form of
Schedule 6.05(g) hereto, executed by the Financial Officer of the Borrowers with
respect to inventory designations;
(h) within 30 days prior to the beginning of each Fiscal Year, a
summary of business plans and financial operation projections (including,
without limitation, with respect to capital expenditures) for the Borrowers and
their respective subsidiaries for such Fiscal Year (including monthly balance
sheets, statements of income and of cash flow) and annual projections through
the next two Fiscal Years prepared by management and in form, substance and
detail (including, without limitation, principal assumptions) satisfactory to
the Agent;
(i) as soon as practicable, copies of all reports, forms, filings,
loan documents and financial information submitted to its shareholders or, if
requested by the Agent, submitted to governmental agencies;
(j) within 15 days after the end of each fiscal month, a certificate,
substantially in the form of Schedule 6.05(j) hereto, executed by the Financial
Officer of the Borrowers demonstrating compliance as at the end of each month
with the Availability requirements; and
(k) such other information as the Agent or any Lender may reasonably
request regarding the Borrower's operations, business affairs and financial
condition, including, without limitation, monthly, or if so requested upon the
occurrence and continuance of any Event of Default or if a lockbox arrangement
shall at any time be established, daily, reports as to sales and collections and
debit and credit adjustments.
SECTION 6.06. Litigation and Other Notices. Give the Agent prompt written
notice of the following:
(a) the issuance by any court or Governmental Authority of any
injunction, order, decision or other restraint prohibiting, or having the effect
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of prohibiting, the making of the Loans or occurrence of other Credit Events, or
invalidating, or having the effect of invalidating, any provision of this
Agreement, the Notes or the other Loan Documents, or the initiation of any
litigation or similar proceeding seeking any such injunction, order, decision or
other restraint;
(b) the filing or commencement of any action, suit or proceeding
against any Borrower or any of its subsidiaries, whether at law or in equity or
by or before any court, arbitrator or Governmental Authority, (i) which is
material and is brought by or on behalf of any governmental agency or authority,
or in which injunctive or other equitable relief is sought or (ii) as to which
it is probable (within the meaning of Statement of Financial Accounting
Standards No. 5) that there will be an adverse determination and which, if
adversely determined, would (A) reasonably be expected to result in liability of
one or more Borrowers or a subsidiary thereof in an aggregate amount of $500,000
or more, not reimbursable by insurance, or (B) materially impairs the right of
any Borrower or a subsidiary thereof to perform its obligations under this
Agreement, any Note or any other Loan Document to which it is a party;
(c) any Default or Event of Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto;
(d) notices given or received (or copies thereof) with respect to any
Subordinated Indebtedness; and
(e) any development in the business or affairs of any Borrower or any
of its subsidiaries which has had or which is likely, in the reasonable judgment
of any Responsible Officer of such Borrower, to have, a Material Adverse Effect.
SECTION 6.07. ERISA. (a) Pay and discharge promptly any liability imposed
upon it pursuant to the provisions of Title IV of ERISA; provided, however, that
neither the Borrowers nor any ERISA Affiliate shall be required to pay any such
liability if (1) the amount, applicability or validity thereof shall be
diligently contested in good faith by appropriate proceedings, and (2) such
person shall have set aside on its books reserves which, in the opinion of the
independent certified public accountants of such person, are adequate with
respect thereto.
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(b) Deliver to the Agent, promptly, and in any event within 30 days,
after (i) the occurrence of any Reportable Event, a copy of the materials that
are filed with the PBGC, or the materials that would have been required to be
filed if the 30-day notice requirement to the PBGC was not waived, (ii) any
Borrower or any ERISA Affiliate or an administrator of any Pension Plan files
with participants, beneficiaries or the PBGC a notice of intent to terminate any
such Plan, a copy of any such notice, (iii) the receipt of notice by any
Borrower or any ERISA Affiliate or an administrator of any Pension Plan from the
PBGC of the PBGC's intention to terminate any Pension Plan or to appoint a
trustee to administer any such Plan, a copy of such notice, (iv) the filing
thereof with the Internal Revenue Service, if requested by the Agent, copies of
each annual report that is filed on Treasury Form 5500 with respect to any Plan,
together with certified financial statements (if any) for the Plan and any
actuarial statements on Schedule B to such Form 5500, (v) any Borrower or any
ERISA Affiliate knows or has reason to know of any event or condition which
might constitute grounds under the provisions of Section 4042 of ERISA for the
termination of (or the appointment of a trustee to administer) any Pension Plan,
an explanation of such event or condition, (vi) the receipt by any Borrower or
any ERISA Affiliate of an assessment of withdrawal liability under Section 4201
of ERISA from a Multi-employer Plan, a copy of such assessment, (vii) any
Borrower or any ERISA Affiliate knows or has reason to know of any event or
condition which might cause any one of them to incur a liability under Section
4062, 4063, 4064 or 4069 of ERISA or Section 412(n) or 4971 of the Code, an
explanation of such event or condition, and (viii) any Borrower or any ERISA
Affiliate knows or has reason to know that an application is to be, or has been,
made to the Secretary of the Treasury for a waiver of the minimum funding
standard under the provisions of Section 412 of the Code, a copy of such
application, and in each case described in clauses (i) through (iii) and (v)
through (vii) together with a statement signed by the Financial Officer setting
forth details as to such Reportable Event, notice, event or condition and the
action which such Borrower or such ERISA Affiliate proposes to take with respect
thereto.
SECTION 6.08. Maintaining Records; Access to Properties and Inspections;
Right to Conduct of Field Examinations. Maintain financial records in accordance
with accepted financial practices and, upon reasonable notice (which may be
telephonic), at all reasonable times and as often as any Lender may request,
permit any authorized representative designated by such Lender to
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visit and inspect the properties and financial records of the Borrowers and
their subsidiaries and to make extracts from such financial records at such
Lender's expense, and permit any authorized representative designated by such
Lender to discuss the affairs, finances and condition of the Borrowers and their
subsidiaries with the appropriate Financial Officer and such other officers as
the Borrowers shall deem appropriate and the Borrowers' independent public
accountants, as applicable. The Agent agrees that it shall schedule any meeting
with any such independent public accountant through the Borrowers and a
Responsible Officer of one or more Borrowers shall have the right to be present
at any such meeting. At the Borrowers' expense, the Agent shall have the right
to conduct field examination and appraisals of tangible personal property, as
often as it may reasonably request, including determining the existence and
condition of the accounts receivables, inventory, books and records of the
Borrowers and their subsidiaries and reviewing their compliance with the terms
and conditions of this Agreement and the other Loan Documents.
SECTION 6.09. Use of Proceeds. Use the proceeds of the Credit Events only
for the purposes set forth in Section 4.14 hereof.
SECTION 6.10. Fiscal Year-End. Cause its Fiscal Year to end on December 31
in each year.
SECTION 6.11. Further Assurances. Execute any and all further documents and
take all further actions which may be required under applicable law, or which
the Agent may reasonably request, to grant, preserve, protect and perfect the
first priority Lien created by the Security Documents in the Collateral.
SECTION 6.12. Additional Grantors and Guarantors. Promptly inform the Agent
of the creation or acquisition of any direct or indirect subsidiary (subject to
the provisions of Section 7.06 hereof) and (i) cause each direct or indirect
subsidiary not in existence on the date hereof as to which any Borrower or
subsidiary thereof owns at least a 60% ownership interest therein to enter into
a Guarantee in form and substance satisfactory to the Agent, and to execute the
Security Documents, as applicable, as a Grantor and cause each such subsidiary
to pledge its accounts receivable and all other assets pursuant to the Security
Agreement and the Borrowers shall, or shall cause their appropriate subsidiaries
to, pledge to the Agent pursuant to documentation in form and substance
satisfactory to the Agent, any equity interests of the Borrowers or such
subsidiaries in such subsidiary and (ii) with respect to each direct or indirect
subsidiary not in existence on the date hereof as to which any Borrower or
subsidiary thereof owns more than a 50% ownership interest but less than a 60%
ownership interest therein, the Borrowers shall, or shall cause their
appropriate subsidiaries to, pledge to the Agent pursuant to documentation in
form and substance satisfactory to the Agent, any equity interests of the
Borrowers or such subsidiaries in such subsidiary.
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SECTION 6.13. Environmental Laws. (a) Comply, and cause each of their
subsidiaries to comply, in all material respects with the provisions of all
Environmental Laws, and shall keep their properties and the properties of their
subsidiaries free of any Lien imposed pursuant to any Environmental Law. The
Borrowers shall not cause or suffer or permit, and shall not suffer or permit
any of their subsidiaries to cause or suffer or permit, the property of the
Borrowers or their subsidiaries to be used for the generation, production,
processing, handling, storage, transporting or disposal of any Hazardous
Material, except for Hazardous Materials used, generated, produced, processed,
handled, stored, transported or disposed of in the ordinary course of business
of the Borrowers and their subsidiaries and disclosed in Schedule 6.13 hereto,
in which case such Hazardous Materials shall be used, stored, generated, treated
and disposed of only in compliance with Environmental Law.
(b) Supply to the Agent copies of all Permits and all submissions by
the Borrowers or any of their subsidiaries to any governmental body and of the
reports of all environmental audits and of all other environmental tests,
studies or assessments (including the data derived from any sampling or survey
of asbestos, soil, or subsurface or other materials or conditions) that may be
conducted or performed (by or on behalf of the Borrowers or any of their
subsidiaries) on or regarding the properties owned, operated, leased or occupied
by the Borrowers or any of their subsidiaries or regarding any conditions that
might have been affected by Hazardous Materials on or Released or removed from
such properties. The Borrowers shall also permit and authorize, and shall cause
their subsidiaries to permit and authorize, the consultants, attorneys or other
persons that prepare such submissions or reports or perform such audits, tests,
studies or assessments to discuss such submissions, reports or audits with the
Agent and the Lenders.
(c) Promptly (and in no event more than two Business Days after the
Borrowers become aware or are otherwise informed of such event) provide oral and
written notice to the Agent upon the happening of any of the following:
(i) any Borrower, any subsidiary of any Borrower, or any
tenant or other occupant of any property of such Borrower or such
subsidiary receives notice of any claim, complaint, charge or notice
of a violation or potential violation of any Environmental Law;
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(ii) there has been a spill or other Release of Hazardous
Materials upon, under or about or affecting any of the properties
owned, operated, leased or occupied by any Borrower or any subsidiary
of any Borrower, or Hazardous Materials at levels or in amounts that
may have to be reported, remedied or responded to under Environmental
Law are detected on or in the soil or groundwater;
(iii) any Borrower or any subsidiary of any Borrower is or
may be liable for any costs of cleaning up or otherwise responding to
a Release of Hazardous Materials;
(iv) any part of the properties owned, operated, leased or
occupied by any Borrower or any subsidiary of any Borrower is or may
be subject to a Lien under any Environmental Law; or
(v) any Borrower or any subsidiary of any Borrower
undertakes any Remedial Work with respect to any Hazardous Materials.
(d) Timely undertake and complete any Remedial Work required by any
Environmental Law.
(e) Without in any way limiting the scope of Section 11.04(c) and in
addition to any obligations thereunder, each Borrower hereby indemnifies and
agrees to hold the Agent and the Lenders harmless from and against any
liability, loss, damage, suit, action or proceeding arising out of its business
or the business of its subsidiaries pertaining to Hazardous Materials,
including, but not limited to, claims of any governmental body or any third
person arising under any Environmental Law or under tort, contract or common
law. To the extent laws of the United States or any applicable state or local
law in which property owned, operated, leased or occupied by any Borrower or any
subsidiary of any Borrower is located provide that a Lien upon such property of
such Borrower or such subsidiary may be obtained for the removal of Hazardous
Materials which have been or may be Released, no later than sixty days after
notice is given by the Agent to such Borrower or such subsidiary, such Borrower
or such subsidiary shall deliver to the Agent a report issued by a qualified
third party engineer certifying as to the existence of any Hazardous Materials
located upon or beneath the specified property. To the extent any Hazardous
Materials located therein or thereunder either subject the property to Lien or
require removal to safeguard the health of any persons, the removal thereof
shall be an affirmative covenant of the Borrowers hereunder.
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(f) In the event that any Remedial Work is required to be performed by
any Borrower or any subsidiary of any Borrower under any applicable
Environmental Law, any judicial order, or by any governmental entity, such
Borrower or such subsidiary shall commence all such Remedial Work at or prior to
the time required therefor under such Environmental Law or applicable judicial
orders and thereafter diligently prosecute to completion all such Remedial Work
in accordance with and within the time allowed under such applicable
Environmental Laws or judicial orders.
SECTION 6.14. Pay Obligations to Lenders and Perform Other Covenants. (a)
Make full and timely payment of the Obligations, whether now existing or
hereafter arising, (b) duly comply with all the terms and covenants contained in
this Agreement (including, without limitation, the borrowing limitations and
mandatory prepayments in accordance with Article II hereof) in each of the other
Loan Documents, all at the times and places and in the manner set forth therein,
(c) except for the filing of continuation statements and the making of other
filings by the Agent as secured party or assignee, at all times take all actions
necessary to maintain the Liens and security interests provided for under or
pursuant to this Agreement and the Security Documents as valid and perfected
first Liens on the property intended to be covered thereby (subject only to
Liens expressly permitted hereunder) and supply all information to the Agent
necessary for such maintenance and (d) maintain Availability at zero or greater.
SECTION 6.15. Purchase Price Adjustments. In the event there is a reduction
in the purchase price pursuant to the terms of the Deka Acquisition Agreement,
and any Borrower receives a payment from Deka Medical, Inc., or from the escrow
fund established under the terms of the Deka Acquisition Agreement, such
Borrower shall, within five (5) Business Days of receipt thereof, make a
prepayment of the Loans in an amount equal to 100% of such payment received from
Deka Medical, Inc., or the escrow fund. Any such prepayment shall be applied in
the same manner as set forth in Section 2.09(f) for prepayments made pursuant to
paragraph (e) of Section 2.09.
VII. NEGATIVE COVENANTS
Each of the Borrowers covenants and agrees with each Lender that, so long
as this Agreement shall remain in effect or the principal of or interest on any
Note, any amount under any Letter of Credit, or any fee, expense or amount
payable hereunder or in connection with any of the Transactions shall be unpaid,
it will not and will not cause or permit any of its subsidiaries and, in the
case of Section 7.13 hereof, any ERISA Affiliate to, either directly or
indirectly (without the prior written consent of the Required Lenders):
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SECTION 7.01. Liens. Incur, create, assume or permit to exist any Lien on
any of its property or assets (including the stock of any direct or indirect
subsidiary or any real property), whether owned at the date hereof or hereafter
acquired, or assign or convey any rights to or security interests in any future
revenues, except:
(a) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits (not including
any lien described in Section 412(m) of the Code);
(b) Liens imposed by law, such as carriers', ware-housemen's,
mechanics', materialmen's and vendors' liens and other similar liens, incurred
in good faith in the ordinary course of business and securing obligations which
are not overdue for a period of more than 15 days or which are being contested
in good faith by appropriate proceedings as to which any Borrower or any of its
subsidiaries, as the case may be, shall, to the extent required by GAAP, have
set aside on its books adequate reserves;
(c) Liens securing the payment of taxes, assessments and governmental
charges or levies, that are not delinquent or if delinquent, do not aggregate
more than $500,000 and are being diligently contested in good faith by
appropriate proceedings (and as to which no proceeding has been commenced
against any property or assets of any Borrower or its subsidiaries or if
commenced has been stayed in a manner satisfactory to the Agent) and as to which
adequate reserves have been established in accordance with GAAP; provided,
however, that in no event shall the aggregate amount of such reserves be less
than the aggregate amount secured by such Liens;
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created, assumed
or permitted to exist and arising by, through or under a landlord or owner of
the leased property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
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(e) Liens upon any equipment acquired through the purchase or lease by
any Borrower or any of its subsidiaries which are created or incurred
contemporaneously with such acquisition to secure or provide for the payment of
any part of the purchase price of, or lease payments on, such equipment (but no
other amounts and not in excess of the purchase price or lease payments);
provided, however, that any such Lien shall not apply to any other property of
the Borrowers or any of their subsidiaries; and provided, further, that after
giving effect to such purchase or lease, compliance is maintained with Section
7.07 hereof;
(f) Liens existing on the date of this Agreement and set forth in
Schedule 7.01 annexed hereto but not the extension, renewal or refunding of the
Indebtedness secured thereby;
(g) Liens created in favor of the Agent for its own benefit and the
benefit of the Lenders; (h) Liens securing the performance of bids, tenders,
leases, contracts (other than for the repayment of borrowed money), statutory
obligations, surety, customs and appeal bonds and other obligations of like
nature, incurred as an incident to and in the ordinary course of business; (i)
judgment Liens securing judgments and decrees, which would not constitute an
Event of Default under paragraph (j) of Article VIII; or
(j) existing Liens securing the performance of Capitalized Lease
Obligations; provided, however the total amount to be payable under all
Capitalized Lease Obligations shall not exceed $1,000,000.
SECTION 7.02. Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby any Borrower or any of its
subsidiaries shall sell or transfer any property, real or personal, and used or
useful in its business, whether now owned or hereafter acquired, and there-after
rent or lease such property or other property which such Borrower or such
subsidiary intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
SECTION 7.03. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness other than (i) Indebtedness secured by Liens permitted under
Section 7.01, (ii) Indebtedness (including, without limitation, Guarantees)
existing on the date hereof and listed in Schedule 7.03 annexed hereto, but not
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the extension, renewal or refunding thereof, (iii) Indebtedness incurred
hereunder, (iv) Indebtedness to trade creditors incurred in the ordinary course
of business, (v) Guarantees constituting the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, (vi)
Guarantees of the Obligations and Guarantees of loans made to key employees in
connection with the exercise of stock options for Isolyser's stock provided that
the Indebtedness guaranteed does not exceed $200,000 in the aggregate at any one
time outstanding, (vii) purchase money Indebtedness to the extent permitted by
Sections 7.01(e) and 7.07 hereof, (viii) Subordinated Indebtedness, (ix)
Indebtedness of any subsidiary of Isolyser or any other Borrower (which is a
Guarantor) owing to Isolyser or such other Borrower, (x) Indebtedness of any
Borrower owing to any subsidiary of any Borrower (which is a Guarantor), (xi)
unsecured Indebtedness not in excess of $1,000,000 outstanding at any time (xii)
an unsecured promissory note of Microtek to the order of Xxxxxxxx Medical
Products, Inc. in the original principal amount of $675,000, but not the
modification, prepayment, increase, extension or refunding thereof without the
consent of the Agent or waiver of any right of setoff with respect thereto
without the consent of the Agent, (xii) the Employee Notes, but not the
modification, prepayment, increase, extension or refunding thereof without the
consent of the Agent or waiver of any right of setoff with respect thereto
without the consent of the Agent and (xiii) the deferred purchase price payable
under that certain Asset Purchase Agreement dated as of February 16, 2001 by and
among Isolyser, Advanced Microbial Solutions, LLC and Microbasix, LLC provided
that such deferred purchase price will not exceed $200,000 and 200,000 shares of
Isolyser common stock, subject to adjustments for stock splits, share dividends
and other customary anti-dilution protection mechanisms.
SECTION 7.04. Dividends, Distributions and Payments. Declare or pay,
directly and indirectly, any cash dividends or make any other distribution,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of its capital stock
or directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any subsidiary to purchase or acquire) any shares of any class
of its capital stock or set aside any amount for any such purpose other than (i)
dividends by any subsidiary of Isolyser or any other Borrower to Isolyser or
such other Borrower or any wholly-owned subsidiary of any thereof, (ii) so long
as no Event of Default has occurred or is continuing, redemption of shares of
Isolyser in connection with any exercise of stock options to purchase Isolyser
shares, (iii) the issuance of stock by MINDHARBOR, Inc. to its management in
accordance with the provisions of the Services Agreement; (iv) the repurchase
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from time to time by Isolyser of its issued and outstanding common stock;
provided that (x) no Event of Default shall have occurred and be continuing on
the date of any such stock repurchase or would occur after giving effect
thereto, (y) the aggregate number of shares repurchased shall not exceed 5% of
the number of shares of common stock issued and outstanding on June 30, 2000 and
(z) Isolyser shall not use proceeds of a Revolving Credit Loan to fund any such
repurchase; and (v) the implementation of the Protection Agreement in accordance
with its terms.
SECTION 7.05. Consolidations, Mergers and Sales of Assets. Alter its legal
structure or consolidate with or merge into any other person, or sell, lease,
transfer or assign to any persons or otherwise dispose of (whether in one
transaction or a series of transactions) any portion of its assets (whether now
owned or hereafter acquired), or sell any of its inventory other than in the
normal course of business, or permit another person to merge into it, or acquire
all or substantially all the capital stock or assets of any other person;
provided that MINDHARBOR, Inc. may issue stock to its management in accordance
with the provisions of the Services Agreement.
SECTION 7.06. Investments. Own, purchase or acquire any stock, obligations,
assets (not in the ordinary course of business) or securities of, or any
interest in, or make any capital contribution or loan or advance to, any other
person, or make any other investments, except:
(a) certificates of deposit, time deposits and money market accounts
in dollars of any commercial banks registered to do business in any state of the
United States (i) having capital, surplus and undivided profits in excess of
$500,000,000 and (ii) whose long-term debt rating is at least investment grade
as determined by either Standard & Poor's Ratings Group or Xxxxx'x Investors
Service, Inc. and certificates of deposit in dollars offered by money market
mutual funds meeting the criteria in (c) below;
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith and credit
of the United States;
(c) investments in money market mutual funds having assets in excess
of $2,500,000,000;
(d) commercial paper at the time of acquisition having the highest
rating obtainable from either Standard & Poor's Ratings Group or Xxxxx'x
Investors Service, Inc.;
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(e) federally tax exempt securities rated A or better by either
Standard & Poor's Ratings Group or Xxxxx'x Investors Service, Inc.;
(f) investments in the stock of any subsidiary of any of the
Borrowers;
(g) investments in any person to the extent permitted pursuant to
Section 7.03 hereof;
(h) advances of not more than $500,000 in the aggregate at any one
time outstanding to persons in the ordinary course of business in order to
enable such persons to procure materials necessary to produce products ordered
by the Borrowers or for other business purposes which will result in direct
benefits to the Borrowers;
(i) loans and advances by the Borrowers to subsidiaries of the
Borrowers incorporated in the United Kingdom, 65% of the capital stock of which
has been pledged to the Agent pursuant to a pledge agreement, in form and
substance satisfactory to the Agent, and as to which the Agent shall have a
first priority perfected security interest, provided that the aggregate amount
of such loans and advances at any time outstanding shall not exceed $1,000,000;
(j) investments in the stock of MINDHARBOR, Inc. and Global Resources,
Inc. and Consolidated Ecoprogress Technology, Inc. existing on the Closing Date,
but not any additional investments therein;
(k) loans and advances by the Borrowers to MINDHARBOR, Inc. and Global
Resources, Inc., and if pursuant to a promissory note, such note shall be in
form and substance satisfactory to the Agent, provided that the Agent shall have
a first priority perfected security interest therein and in any collateral
therefor, and further provided that the aggregate amount of such loans and
advances at any time outstanding shall not exceed $1,000,000; and
(l) subject to Section 6.12, investments in the stock of any person,
which as a result of such investment becomes a subsidiary of a Borrower;
provided that, in each case mentioned in (a), (b), (d) and (e) above, such
obligations shall mature not more than one year from the date of acquisition
thereof.
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SECTION 7.07. Capital Expenditures. Permit the aggregate amount of payments
made for capital expenditures including Capitalized Lease Obligations and
Indebtedness secured by Liens permitted under Section 7.01(e) hereof, to exceed
(i) $2,700,000 for the Fiscal Year ending on December 31, 2001, and (ii)
$2,500,000 for the Fiscal Year ending on December 31, 2002, and each Fiscal Year
thereafter.
SECTION 7.08. Leverage Ratio. Permit the Leverage Ratio of the Borrowers
and their subsidiaries on a Consolidated basis to be greater than (i)
3.50:1.00 for the fiscal quarter ending on Xxxxx 00, 0000, (xx) 3.50:1.00 for
the fiscal quarter ending on June 30, 2001,(iii) 2.50:1.00 for the fiscal
quarter ending on September 30, 2001, (iv) 2.00:1.00 for the fiscal quarter
ending on December 31, 2001 and each fiscal quarter thereafter through and
including the fiscal quarter ending on September 30, 2003 and (v) 1.50: 1.00 for
the fiscal quarter ending on December 31, 2003 and each fiscal quarter
thereafter.
SECTION 7.09. EBITDA. Permit EBITDA of the Borrowers and their subsidiaries
on a Consolidated basis to be less than (i) $700,000 for the one quarter period
ending on Xxxxx 00, 0000, (xx) $2,450,000 for the two quarter period ending on
June 30, 2001, (iii) $4,800,000 for the three quarter period ending on September
30, 2001, (iv) $8,000,000 for the four quarter periods ending on December 31,
2001, March 31, 2002, June 30, 2002 and September 30, 2002, (v) $10,000,000 for
the four quarter periods ending on December 31, 2002, March 31, 2003, June 30,
2003, and September 30, 2003, (vi) $11,000,000 for the four quarter period
ending on December 31, 2003 and each four quarter period thereafter. For
purposes hereof, EBITDA shall mean for the applicable period the sum of Net
Income, depreciation and amortization, federal, state and local income taxes and
interest expense for such period, computed and calculated in accordance with
GAAP.
SECTION 7.10. Business. Alter the nature of its business as operated on the
date of this Agreement in any material respect.
SECTION 7.11. Sales of Receivables. Sell, assign, discount, transfer,
or otherwise dispose of any accounts receivable, promissory notes, drafts or
trade acceptances or other rights to receive payment held by it, with or without
recourse, except (i) for the purpose of collection or settlement in the ordinary
course of business or (ii) the sale of any such accounts to the Agent for the
ratable benefit of the Lenders.
SECTION 7.12. Use of Proceeds. Permit the proceeds of any Credit Event to
be used for any purpose which entails a violation of, or is inconsistent with,
Regulation T, U or X of the Board, or for any purpose other than those set forth
in Section 4.14 hereof.
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SECTION 7.13. ERISA. (a) Engage in any transaction in connection with which
any Borrower or any ERISA Affiliate could be subject to either a material civil
penalty assessed pursuant to the provisions of Section 502 of ERISA or a
material tax imposed under the provisions of Section 4975 of the Code.
(b) Terminate any Pension Plan in a "distress termination" under
Section 4041 of ERISA, or take any other action which could result in a material
liability of any Borrower or any ERISA Affiliate to the PBGC.
(c) Fail to make payment when due of all amounts which, under the
provisions of any Plan, any Borrower or any ERISA Affiliate is required to pay
as contributions thereto, or, with respect to any Pension Plan, permit to exist
any material "accumulated funding deficiency" (within the meaning of Section 302
of ERISA and Section 412 of the Code), whether or not waived, with respect
thereto.
(d) Adopt an amendment to any Pension Plan requiring the provision of
security under Section 307 of ERISA or Section 401(a)(29) of the Code.
SECTION 7.14. Accounting Changes. Make, or permit any subsidiary to make
any change in their accounting treatment or financial reporting practices except
as required or permitted by GAAP or change the Fiscal Year from December 31.
SECTION 7.15. Prepayment or Modification of Subordinated Indebtedness;
Modification of Charter Documents. (a) Directly or indirectly prepay, redeem,
purchase or retire in advance of maturity any Indebtedness, including, without
limitation, any Subordinated Indebtedness, other than Indebtedness incurred
hereunder.
(b) Modify, amend or otherwise alter in any material respect the terms
and provisions of any Subordinated Indebtedness.
(c) Modify, amend or alter their certificates or articles of
incorporation.
SECTION 7.16. Transactions with Affiliates. Except as otherwise
specifically set forth in this Agreement, directly or indirectly purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or enter into any other transaction with, Affiliate or agent of any Borrower,
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except (a) at prices and on terms not less favorable to it than that which would
have been obtained in an arm's-length transaction with a non-affiliated third
party and (b) (i) the Services agreement dated June 1, 2000 between Isolyser and
Global Resources, Inc. and Addendum to same dated June 21, 2000 and (ii) the
Services Agreement dated January __, 2001 between Isolyser and MindHarbor, Inc.,
each as in effect on the Closing Date.
SECTION 7.17. Negative Pledges, Etc. Enter into any agreement (other
than this Agreement or any other Loan Document) which (a) prohibits the creation
or assumption of any Lien upon any of the Collateral, including, without
limitation, any hereafter acquired property, (b) specifically prohibits the
amendment or other modification of this Agreement or any other Loan Document or
(c) restricts or imposes any conditions upon the ability of any subsidiary to
pay dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Borrowers or any other
subsidiary or to guaranty Indebtedness of the Borrowers or any other subsidiary.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein called
"Events of Default"):
(a) any representation or warranty made or deemed made by any Loan
Party or subsidiary thereof in or in connection with this Agreement, any of the
Security Documents, the Notes or other Loan Documents or any Credit Events
hereunder, shall prove to have been incorrect in any material respect when made
or deemed to be made;
(b) default shall be made in the payment of any principal of any Note
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on any Note,
or any fee or any other amount payable hereunder, or under the Notes, Letters of
Credit, or any other Loan Document or in connection with any other Credit Event
or the Transactions when and as the same shall become due and payable;
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(d) default shall be made in the due observance or performance of any
covenant, condition or agreement to be observed or performed on the part of any
Loan Party pursuant to the terms of this Agreement, any of the Notes, any of the
Security Documents or any other Loan Document;
(e) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, liquidation,
reorganization or similar law, (ii) consent to the institution of, or fail to
contravene in a timely and appropriate manner, any such proceeding or the filing
of any such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for any Loan
Party or for a substantial part of its property or assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally to pay its debts
as they become due, (vii) be wound up or (viii) take corporate action for the
purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of any Loan Party, or of a substantial part of the property or assets
of any Loan Party, under Title 11 of the United States Code or any other Federal
state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for any Loan Party or for a substantial part of the property of any Loan Party,
or (iii) the winding-up or liquidation of any Loan Party; and such proceeding or
petition shall continue undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall continue unstayed and in effect for 30
days; (g) default shall be made with respect to any Indebtedness of any Loan
Party (excluding Indebtedness out-standing hereunder) which individually or in
the aggregate exceeds $250,000 if the effect of any such default shall be to
accelerate, or to permit the holder or obligee of any such Indebtedness (or any
trustee on behalf of such holder or obligee) at its option to accelerate, the
maturity of such Indebtedness;
(h) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by any Loan Party, any ERISA Affiliate, or an
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administrator of any Plan of a notice of intent to terminate such a Plan in a
"distress termination" under the provisions of Section 4041 of ERISA, (iii) the
receipt of notice by any Loan Party, any ERISA Affiliate, or an administrator of
a Plan that the PBGC has instituted proceedings to terminate (or appoint a
trustee to administer) such a Pension Plan, (iv) any other event or condition
exists which might, in the opinion of the Agent, constitute grounds under the
provisions of Section 4042 of ERISA for the termination of (or the appointment
of a trustee to administer) any Pension Plan by the PBGC, (v) a Pension Plan
shall fail to maintain the minimum funding standard required by Section 412 of
the Code for any plan year or a waiver of such standard is sought or granted
under the provisions of Section 412(d) of the Code, (vi) any Loan Party or any
ERISA Affiliate has incurred, or is likely to incur, a liability under the
provisions of Section 4062, 4063, 4064 or 4201 of ERISA, (vii) any Loan Party or
any ERISA Affiliate fails to pay the full amount of an installment required
under Section 412(m) of the Code, (viii) the occurrence of any other event or
condition with respect to any Plan which would constitute an event of default
under any other agreement entered into by any Loan Party or any ERISA Affiliate,
and in each case in clauses (i) through (viii) of this subsection (h), such
event or condition, together with all other such events or conditions, if any,
could subject any Loan Party or any ERISA Affiliate to any taxes, penalties or
other liabilities which, in the opinion of the Agent, could have a Material
Adverse Effect with respect to any Loan Party or any ERISA Affiliate;
(i) any Loan Party or any ERISA Affiliate (i) shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred any material
withdrawal liability to such Multiemployer Plan, and (ii) does not have
reasonable grounds for contesting such withdrawal liability and is not in fact
contesting such withdrawal liability in a timely and appropriate manner;
(j) a judgment (not reimbursed by insurance policies of any Loan
Party) or decree, order or arbitration award for the payment of money, a fine or
penalty which when taken together with all other such judgments, decrees, fines
and penalties shall exceed $500,000 shall be rendered by a court or other
tribunal against any Loan Party or non-monetary judgment, decree or order which
has or could reasonably be expected to have a Material Adverse Effect shall be
so rendered and (i) shall remain undischarged or unbonded for a period of 30
consecutive days during which the execution of such judgment, decree, fine or
penalty shall not have been stayed effectively or (ii) any judgment creditor or
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other person shall legally commence actions to levy upon assets or properties to
enforce such judgment, decree, fine or penalty;
(k) any material damage to, or loss, theft or destruction of, any
material Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other casualty
which causes, for more than thirty (30) consecutive days beyond the coverage
period of any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities at any facility of a
Loan Party or subsidiary thereof, if in the case of any of the foregoing, if any
such event or circumstance could have a Material Adverse Effect;
(l) this Agreement, any Note, any of the Security Documents, any
Guarantee or other Loan Documents shall for any reason cease to be, or shall be
asserted by any Loan Party or any subsidiary thereof not to be, a legal, valid
and binding obligation of any Loan Party or subsidiary thereof, enforceable in
accordance with its terms, or the Lien purported to be created by any of the
Security Documents shall for any reason cease to be, or be asserted by any Loan
Party or subsidiary thereof not to be, a valid, first priority perfected Lien
(except to the extent otherwise permitted under this Agreement or any of the
Security Documents); or
(m) the filing of any Lien for taxes exceeding individually or in the
aggregate $500,000;
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Agent may, and upon the written request of the Required Lenders shall, by
written notice (or facsimile notice promptly confirmed in writing) to the
Borrowers, take any or all of the following actions at the same or different
times: (i) terminate forthwith all or any portion of the Total Commitment and
the obligations of the Lenders to make Loans and the Agent to issue Letters of
Credit hereunder; (ii) demand that the Borrowers provide to the Lenders, and the
Borrowers upon such demand agree to provide, cash collateral in an amount equal
to the aggregate Letter of Credit Usage to be held by the Agent for its own
benefit and the ratable benefit of the Lenders on terms and pursuant to
documents and agreements satisfactory in all respects to the Agent; and (iii)
declare the Notes and any amounts then owing to the Lenders on account of
drawings under any Letters of Credit to be forthwith due and payable, whereupon
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the principal of such Notes, together with accrued interest and fees thereon and
any amounts then owing to the Lenders on account of drawings under any Letters
of Credit and other liabilities of the Borrowers accrued hereunder, shall become
forthwith due and payable both as to principal and interest, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrowers, anything contained herein or in the
Notes to the contrary notwithstanding; provided, however, that with respect to a
default described in paragraph (e) or (f) above, the Total Commitment and the
obligation of the Lenders to make Loans and of the Agent to issue Letters of
Credit shall automatically terminate and the principal of the Notes, together
with accrued interest and fees thereon and any amounts then owing to the Lenders
on account of drawings under any Letters of Credit and any other liabilities of
the Borrowers accrued hereunder shall automatically become due and payable, both
as to principal and interest, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrowers,
anything contained herein or in the Notes to the contrary notwithstanding.
IX. AGENT
In order to expedite the transactions contemplated by this Agreement, The
Chase Manhattan Bank is hereby appointed to act as Agent on behalf of the
Lenders. Each of the Lenders and each subsequent holder of any Note or issuer of
any Letter of Credit by its acceptance thereof, irrevocably authorizes the Agent
to take such action on its behalf and to exercise such actions and powers
hereunder and under the Security Documents and other Loan Documents as are
specifically delegated to or required of the Agent by the terms hereof and the
terms thereof together with such powers as are reasonably incidental thereto.
Neither the Agent nor any of its directors, officers, employees or agents shall
be liable as such for any action taken or omitted to be taken by it or them
hereunder or under any of the Security Documents and other Loan Documents or in
connection herewith or therewith (a) at the request or with the approval of the
Required Lenders (or, if otherwise specifically required hereunder or
thereunder, the consent of all the Lenders) or (b) in the absence of its or
their own gross negligence or willful misconduct.
The Agent is hereby expressly authorized on behalf of the Lenders, without
hereby limiting any implied authority, (a) to receive on behalf of each of the
Lenders any payment of principal of or interest on the Notes outstanding
hereunder and all other amounts accrued hereunder which are paid to the Agent,
and promptly to distribute to each Lender its proper share of all payments so
83
received, (b) to distribute to each Lender copies of all notices, agreements and
other material as provided for in this Agreement or in the Security Documents
and other Loan Documents as received by the Agent (c) to maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Loans, the Collateral and related matters, (d) to open and maintain bank
accounts and lock boxes as the Agent deems necessary and appropriate in
accordance with the Loan Documents with respect to the Collateral, (e) to take
all actions with respect to this Agreement and the Security Documents and other
Loan Documents as are specifically delegated to the Agent, and (f) to incur and
pay such expenses as the Agent may deem necessary or appropriate in connection
with the foregoing.
In the event that (a) any Borrower fails to pay when due the principal of
or interest on any Note, any amount payable under any Letter of Credit, or any
fee payable hereunder or (b) the Agent receives written notice of the occurrence
of a Default or an Event of Default (the Agent being deemed not to have
knowledge of any Default or Event of Default unless and until written notice
thereof is given to the Agent by any Borrower or a Lender), the Agent within a
reasonable time shall give written notice thereof to the Lenders, and shall take
such action with respect to such Event of Default or other condition or event as
it shall be directed to take by the Required Lenders; provided, however, that,
unless and until the Agent shall have received such directions, the Agent may
take such action or refrain from taking such action hereunder or under the
Security Documents or other Loan Documents with respect to a Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
The Agent shall not be responsible in any manner to any of the Lenders for
the effectiveness, enforceability, perfection, value, genuineness, validity or
due execution of this Agreement, the Notes or any of the other Loan Documents or
Collateral or any other agreements or certificates, requests, financial
statements, notices or opinions of counsel or for any recitals, statements,
warranties or representations contained herein or in any such instrument or be
under any obligation to ascertain or inquire as to the performance or observance
of any of the terms, provisions, covenants, conditions, agreements or
obligations of this Agreement or any of the other Loan Documents or any other
agreements on the part of the Borrowers and, without limiting the generality of
the foregoing, the Agent shall, in the absence of acknowledge to the contrary,
be entitled to accept any certificate furnished pursuant to this Agreement or
any of the other Loan Documents as conclusive evidence of the facts stated
therein and shall be entitled to rely on any note, notice, consent, certificate,
affidavit, letter, telegram, teletype message, statement, order or other
84
document which it believes in good faith to be genuine and correct and to have
been signed or sent by the proper person or persons. It is understood and agreed
that the Agent may exercise its rights and powers under other agreements and
instruments to which it is or may be a party, and engage in other transactions
with the Borrowers, as though it were not Agent of the Lenders hereunder.
The Agent shall promptly give notice to the Lenders of the receipt or
sending of any notice, schedule, report, projection, financial statement or
other document or information pursuant to this Agreement or any of the other
Loan Documents and shall promptly forward a copy thereof to each Lender.
Neither the Agent nor any of its directors, officers, employees or agents
shall have any responsibility to the Borrowers on account of the failure or
delay in performance or breach by any Lender other than the Agent of any of its
obligations hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or the Borrowers of any of their
respective obligations hereunder or in connection herewith.
The Agent may consult with legal counsel selected by it in connection with
matters arising under this Agreement or any of the other Loan Documents and any
action taken or suffered in good faith by it in accordance with the opinion of
such counsel shall be full justification and protection to it. The Agent may
exercise any of its powers and rights and perform any duty under this Agreement
or any of the other Loan Documents through agents or attorneys.
The Agent and the Borrowers may deem and treat the payee of any Note as the
holder thereof until written notice of transfer shall have been delivered as
provided herein by such payee to the Agent and the Borrowers.
With respect to the Loans made hereunder, the Notes issued to it and any
other Credit Event applicable to it, the Agent in its individual capacity and
not as an Agent shall have the same rights, powers and duties hereunder and
under any other agreement executed in connection herewith as any other Lender
and may exercise the same as though it were not the Agent, and the Agent and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrowers or other affiliate thereof as if it were not
the Agent.
Each Lender agrees (i) to reimburse the Agent in the amount of such
Lender's pro rata share (based on its Commitment hereunder) of any expenses
incurred for its benefit and for the benefit of the Lenders by the Agent,
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including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, not reimbursed by the Borrowers and
(ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, in the amount of its pro rata share,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as the Agent or any of them in any way relating to or
arising out of this Agreement or any of the other Loan Documents or any action
taken or omitted by it or any of them under this Agreement or any of the other
Loan Documents, to the extent not reimbursed by the Borrowers; provided,
however, that no Lender shall be liable to the Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgment, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent or any of its directors, officers, employees or agents.
The foregoing agreement shall survive the repayment of all Obligations and the
termination of this Agreement.
With respect to the release of Collateral, Lenders hereby irrevocably
authorize the Agent, at its option and in its discretion, to release any Lien
granted to or held by the Agent upon any property covered by this Agreement or
the other Loan Documents (i) upon termination of the Total Commitments and
payment and satisfaction of all Obligations; (ii) constituting property being
sold or disposed of in compliance with the provisions of this Agreement (and the
Agent may rely in good faith conclusively on any certificate delivered pursuant
to any of the Loan Documents, without further inquiry); or (iii) constituting
property leased to any of the Borrowers or any subsidiary under a lease which
has expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by the
applicable Borrower or such subsidiary to be, renewed or extended; provided,
however, that (x) the Agent shall not be required to execute any release on
terms which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release of such
Liens without recourse or warranty, and (y) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
any Loan Party, in respect of), all interests retained by any Loan Party,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the property covered by this Agreement or the
Loan Documents.
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With respect to perfecting Lenders' security interest in Collateral which,
in accordance with Article 9 of the Uniform Commercial Code or any comparable
provision of any Lien perfection statute in any applicable jurisdiction, can be
perfected only by possession, each Lender hereby appoints each other Lender as
its agent for the purpose of perfecting such interest. Should any Lender (other
than the Agent) obtain possession of any such Collateral, such Lender shall
notify the Agent, and, promptly upon the Agent's request, shall deliver such
Collateral to the Agent or in accordance with the Agent's instructions. Each
Lender agrees that it will not have any right individually to enforce or seek to
enforce this Agreement or any Loan Document or to realize upon any Collateral
for the Loans, it being understood and agreed that such rights and remedies may
be exercised only by the Agent.
In the event that a petition seeking relief under Title 11 of the United
States Code or any other Federal, state or foreign bankruptcy, insolvency,
liquidation or similar law is filed by or against any Loan Party, the Agent is
authorized to file a proof of claim on behalf of itself and the Lenders in such
proceeding for the total amount of Obligations owed by such Loan Party. With
respect to any such proof of claim which the Agent may file, each Lender
acknowledges that without reliance on such proof of claim, such Lender shall
make its own evaluation as to whether an individual proof of claim must be filed
in respect of such Obligations owed to such Lender and, if so, take the steps
necessary to prepare and timely file such individual claim.
Each Lender acknowledges that it has, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and any other Loan Document to which such Lender is party.
Each Lender also acknowledges that it will, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document, any related agreement or any document furnished hereunder.
Subject to the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by notifying the Lenders and the
Borrowers. Upon any such resignation, the Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
such Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank with an
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office (or an affiliate with an office) in New York, New York, having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent and the retiring Agent shall be discharged from
its duties and obligations hereunder and under each of the other Loan Documents.
The fees payable by the Borrowers to a successor Agent shall be the same as
those payable to its predecessor unless otherwise agreed as between the
Borrowers and such successor. After any Agent's resignation hereunder, the
provisions of this Article shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as Agent.
The Lenders hereby acknowledge that the Agent shall be under no duty to
take any discretionary action permitted to be taken by the Agent pursuant to the
provisions of this Agreement or any of the other Loan Documents unless it shall
be requested in writing to do so by the Required Lenders. The Lenders further
hereby acknowledge that the Agent is not acting as the fiduciary of, or the
trustee for, any of the Lenders and except as expressly set forth herein, the
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information communicated to the Agent by or relating to
the Borrowers or any of their respective subsidiaries.
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND OTHER COLLATERAL
SECTION 10.01. Collection of Receivables; Management of Collateral. (a)
Upon the occurrence and during the continuance of any Default or any Event of
Default, or if Availability shall at any time be less than $3,000,000, and if
the Agent in its sole discretion so requests, the Borrowers will, at their own
cost and expense, (i) arrange for remittances on Receivables to be made directly
to lockboxes designated by the Agent or in such other manner as the Agent may
direct, and (ii) promptly deposit, or cause to be deposited, all payments
received by the Borrowers on account of Receivables, whether in the form of
cash, checks, notes, drafts, bills of exchange, money orders or otherwise, in
one or more accounts designated by the Agent in precisely the form received (but
with any endorsements of the Borrowers necessary for deposit or collection),
subject to withdrawal by the Agent only, as hereinafter provided, and until such
payments are deposited, such payments shall be deemed to be held in trust by the
Borrowers for and as the Lenders' property and shall not be commingled with the
Borrowers' other funds. All remittances and payments that are deposited in
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accordance with the foregoing will, after one Business Day (or two Business Days
in the case of deposits that are made after 2:00 p.m., New York time), be
applied by the Agent to reduce the outstanding balance of the Revolving Credit
Loans, subject to final collection in cash of the item deposited.
Upon the occurrence and continuance of an Event of Default, the Agent may
send a notice of assignment and/or notice of the Agent's security interest to
any and all Customers or any third party holding or otherwise concerned with any
of the Collateral, and thereafter the Agent shall have the sole right to collect
the Receivables and/or take possession of the Collateral and the books and
records relating thereto. The Borrowers shall not, without the Agent's prior
written consent, grant any extension of the time of payment of any Receivable,
compromise or settle any Receivable for less than the full amount thereof,
release, in whole or in part, any person or property liable for the payment
thereof, or allow any credit or discount whatsoever thereon except, prior to the
occurrence and continuance of an Event of Default, as permitted by Section 10.03
hereof.
(b) (i) Each of the Borrowers hereby constitutes the Agent or the
Agent's designee as such Borrower's attorney-in-fact with power to endorse such
Borrower's name upon any notes, acceptances, checks, drafts, money orders or
other evidences of payment or Collateral that may come into its possession; to
sign such Borrower's name on any invoice or xxxx of lading relating to any
Receivables, drafts against Customers, assignments and verifications of
Receivables and notices to Customers; to send verifications of Receivables; upon
the occurrence of an Event of Default, to notify the Postal Service authorities
to change the address for delivery of mail addressed to such Borrower to such
address as the Agent may designate; and to do all other acts and things
necessary to carry out this Agreement. All acts of said attorney or designee are
hereby ratified and approved, and said attorney or designee shall not be liable
for any acts of omission or commission, for any error of judgment or for any
mistake of fact or law, provided that the Agent or its designee shall not be
relieved of liability to the extent it is determined by a final judicial
decision that its act, error or mistake constituted gross negligence or willful
misconduct. This power of attorney being coupled with an interest is irrevocable
until all of the Obligations are paid in full and this Agreement and the Total
Commitment is terminated.
(ii) The Agent, without notice to or consent of the
Borrowers, upon the occurrence and during the continuance of an Event
of Default, (A) may xxx upon or otherwise collect, extend the time of
payment of, or compromise or settle for cash credit or otherwise upon
any terms, any of the Receivables or any securities, instruments or
insurance applicable thereto and/or release the obligor thereon; (B)
is authorized and empowered to accept the return of the goods
represented by any of the Receivables; and (C) shall have the right to
receive, endorse, assign and/or deliver in its name or the name of any
of the Borrowers any and all checks, drafts and other instruments for
the payment of money relating to the Receivables, and each Borrower
hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed.
(c) Nothing herein contained shall be construed to constitute any
Borrower as agent of the Agent or any Lender for any purpose whatsoever, and the
Agent shall not be responsible or liable for any shortage, discrepancy, damage,
loss or destruction of any part of the Collateral wherever the same may be
located and regardless of the cause thereof (except to the extent it is
determined by a final judicial decision that the Agent's or a Lender's act or
omission constituted gross negligence or willful misconduct). The Agent and the
Lenders shall not, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof or for any damage resulting therefrom (except to the
extent it is determined by a final judicial decision that the Agent's or such
Lender's error, omission or delay constituted gross negligence or willful
misconduct). The Agent and the Lenders do not, by anything herein or in any
assignment or otherwise, assume any of the Borrowers' obligations under any
contract or agreement assigned to the Agent or the Lenders, and the Agent and
the Lenders shall not be responsible in any way for the performance by the
Borrowers of any of the terms and conditions thereof.
(d) If any of the Receivables includes a charge for any tax payable to
any governmental tax authority, the Agent is hereby authorized (but in no event
obligated) in its discretion to pay the amount thereof to the proper taxing
authority for the account of the applicable Borrower and to charge the
Borrowers' account therefor. The Borrowers shall notify the Agent if any
Receivables include any tax due to any such taxing authority and, in the absence
of such notice, the Agent shall have the right to retain the full proceeds of
such Receivables and shall not be liable for any taxes that may be due from any
Borrower by reason of the sale and delivery creating such Receivables.
SECTION 10.02. Receivables Documentation. The Borrowers will, in addition
to the monthly Receivables agings delivered pursuant to this Agreement, at such
intervals as the Agent may reasonably require, furnish, or cause to be
furnished, such further schedules and/or information as the Agent may require
relating to the Receivables, including, without limitation, sales invoices. In
addition, the Borrowers shall notify the Agent of any non-compliance in respect
of the representations, warranties and covenants contained in Section 10.03
hereof. The items to be provided under this Section 10.02 are to be in form
satisfactory to the Agent and are to be executed and delivered to the Agent from
time to time solely for its convenience in maintaining records of the
Collateral; the Borrowers' failure to give any of such items to the Agent shall
not affect, terminate, modify or otherwise limit the Agent's Lien or security
interest in the Collateral.
SECTION 10.03. Status of Receivables and Other Collateral. Each Borrower
covenants, represents and warrants that: (a) it shall be the sole owner, free
and clear of all Liens except in favor of the Agent or otherwise permitted
hereunder, of and fully authorized to sell, transfer, pledge and/or grant a
security interest in each and every item of said Collateral owned by it; (b) it
will not seek to qualify, or maintain the qualification of, a Receivable as an
Eligible Receivable unless such Receivable shall be a good and valid account
representing an undisputed bona fide indebtedness incurred or an amount
indisputably owed by the Customer therein named, for a fixed sum as set forth in
the invoice relating thereto with respect to an absolute sale and delivery upon
the specified terms of goods sold by a Borrower, or work, labor and/or services
theretofore rendered by a Borrower; (c) it will not seek to qualify, or maintain
the qualification of, a Receivable as an Eligible Receivable unless such
Receivable or portion thereof which it seeks to so qualify is not subject to any
defense, offset, counterclaim, discount or allowance (as of the time of its
creation) except as may be stated in the invoice relating thereto or discounts
and allowances as may be customary in such Borrower's business; (d) none of the
transactions underlying or giving rise to any Eligible Receivable shall violate
any applicable state or Federal laws or regulations, and all documents relating
to any Eligible Receivable shall be legally sufficient under such laws or
regulations and shall be legally enforceable in accordance with their terms
(subject as to enforcement of remedies to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally from time to time in effect and to general
principles of equity); (e) it will not seek to qualify, or maintain the
qualification of, a Receivable as an Eligible Receivable unless to the best of
its knowledge, each Customer, guarantor or endorser with respect to such
Receivable is solvent and will continue to be fully able to pay all Eligible
Receivables on which it is obligated in full when due; (f) it will not seek to
qualify, or maintain the qualification of, a Receivable as an Eligible
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Receivable unless all documents and agreements relating to such Receivable shall
be true and correct and in all respects what they purport to be; (g) it will not
seek to qualify, or maintain the qualification of, a Receivable as an Eligible
Receivable unless to the best of its knowledge, all signatures and endorsements
that appear on all documents and agreements relating to such Receivable shall be
genuine and all signatories and endorsers with respect thereto shall have full
capacity to contract; (h) it shall maintain books and records pertaining to the
Collateral in such detail, form and scope as are customary for businesses
similarly situated; (i) it will not seek to qualify, or maintain the
qualification of, a Receivable as an Eligible Receivable unless it shall have
immediately notified the Agent as to any accounts arising out of contracts with
the United States or any department, agency or instrumentality thereof, and
shall have executed any instruments and taken any steps required by the Agent in
order that all monies due or to become due under any such contract shall be
assigned to the Agent and notice thereof given to the United States Government
under the Federal Assignment of Claims Act; (j)it will not seek to qualify, or
maintain the qualification of, a Receivable as an Eligible Receivable unless it
will, immediately upon learning thereof, report to the Agent any material loss
or destruction of, or substantial damage to, any of the Collateral, and any
other matters affecting the value, enforceability or collectibility of any of
the Collateral; (k) if any amount payable under or in connection with any
Receivable is evidenced by a promissory note or other instrument, as such terms
are defined in the Uniform Commercial Code, such promissory note or instrument
shall be immediately pledged, endorsed, assigned and delivered to the Agent as
additional collateral; (l) it nor any other Borrower shall not re-date any
invoice or sale or make sales on extended dating beyond that customary in the
industry; (m) it and each other Borrower shall conduct a physical count of its
inventory at such intervals as the Agent may reasonably request and promptly
supply the Agent with a copy of such counts accompanied by a report of the value
(based on the lower of cost (on a FIFO basis or market value) of such inventory;
and (n) it nor any other Borrower is not nor shall it be entitled to pledge the
Lenders' credit on any purchases or for any purpose whatsoever.
SECTION 10.04. Monthly Statement of Account. The Agent shall render to the
Borrowers each month a statement of the Borrowers' account, which shall
constitute an account stated and shall be deemed to be correct and accepted by
and be binding upon the Borrowers (absent manifest error) unless the Agent
receives a written statement of the Borrowers' exceptions within 30 days after
such statement was rendered to the Borrowers.
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SECTION 10.05. Collateral Custodian. Upon the occurrence and continuance of
an Event of Default, the Agent may at any time and from time to time employ and
maintain in the premises of the Borrowers a custodian selected by the Agent who
shall have full authority to do all acts necessary to protect the Agent's and
Lenders' interests and to report to the Agent thereon. The Borrowers hereby
agree to cooperate with any such custodian and to do whatever the Agent may
reasonably request to preserve the Collateral. All costs and expenses incurred
by the Agent by reason of the employment of the custodian shall be charged to
the Borrowers' account and added to the Obligations.
XI. MISCELLANEOUS
SECTION 11.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices,
consents and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service or mailed by certified
or registered mail or sent by telecopy addressed,
(a) if to all or any of the Borrowers, Guarantors, or Grantors, at 000
Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (and if by U.S. Mail, to X.X. Xxx
0000, Xxxxxxxx, Xxxxxxxxxxx 39704)Fax: 000-000-0000, Attention: Mr. Xxx Xxx,
Chief Financial Officer, with a copy to Xxxxxx Xxxxxx Xxxxxxx, 2800 One Atlantic
Center, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000 Fax:
000-000-0000, Attention: Xxxxxxx X. Xxx, Esq.;
(b) if to the Agent, at The Chase Manhattan Bank, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Fax: 000-000-0000, Attention: Isolyser Credit
Executive, with a copy to Xxxx Xxxxxxx LLP at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 Fax: 000-000-0000, Attention: Xxxxxxx X. Xxxxxxx, Esq.; and (c) if to
any Lender, at the address (or telecopy number) set forth below its name in
Schedule 2.01 annexed hereto or in the Assignment and Acceptance pursuant to
which such Lender became a party hereto.
Any party hereto may change its address or telecopy number for notices and other
communications by notice to the other parties. All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt if hand
delivered or three days after being sent by registered or certified mail,
postage prepaid, return receipt requested, if by mail, or upon receipt if by any
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telex, facsimile or other telecommunications equipment, in each case addressed
to such party as provided in this Section 11.01 or in accordance with the latest
unrevoked direction from such party.
SECTION 11.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Borrower or any subsidiary thereof
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement, any of the Security Documents, any Guarantee or
any other Loan Document, shall be considered to have been relied upon by the
Lenders and shall survive the making by the Lenders of the Loans and the
execution and delivery to the Lenders of the Notes and the occurrence of any
other Credit Event and shall continue in full force and effect as long as the
principal of or any accrued interest on the Notes or any other fee or amount
payable under the Notes or this Agreement or any other Loan Document is
outstanding and unpaid and so long as the Total Commitment has not been
terminated.
SECTION 11.03. Successors and Assigns; Participations. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Loan Party, any ERISA Affiliate,
any subsidiary of any thereof, the Agent or the Lenders, that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Without limiting the generality of the foregoing, the
Borrowers specifically confirm that any Lender may at any time and from time to
time pledge or otherwise rant a security interest in any Loan or any Note (or
any part thereof) to any Federal Reserve Bank. No Borrower may assign or
transfer any of its rights or obligations hereunder without the written consent
of all the Lenders.
(b) Each Lender, without the consent of the Borrowers or the Agent,
may sell participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit Commitment and Term Loan
Commitment) and the Loans owing to it and undrawn Letters of Credit and the
Notes held by it; provided, however, that (i) such Lender's obligations under
this Agreement (including, without limitation, its Revolving Credit Commitment
and Term Loan Commitment) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) the banks or other entities buying participations shall be
entitled to the cost protection provisions contained in Sections 2.10(a) (except
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to 95 the extent that application of such Section 2.10(a) to such banks and
entities would cause the Borrowers to make duplicate payments thereunder), 2.12
and 2.16 hereof, but only to the extent any of such Sections would be available
to the Lender which sold such participation, and (iv) the Borrowers, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement; provided, further, however, that such Lender shall retain the sole
right and responsibility to enforce the obligations of the Loan Parties relating
to the Loans, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement, other than
amendments, modifications or waivers with respect to decreasing any fees payable
hereunder or the amount of principal or the rate of interest payable on the
Loans, or extending the dates fixed for any payment of principal of or interest
on, the Loans or increasing or extending the Commitments or the release of all
Collateral.
(c) Each Lender may assign by novation, to any one or more banks or
other entities without the prior written consent of the Borrowers but with the
prior written consent of the Agent, all or a portion of its interests, rights
and obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Revolving Credit Commitment and Term
Loan Commitment and the same portion of the Loans and undrawn Letters of Credit
at the time owing to it and the Note or Notes held by it), provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all of the assigning Lender's rights and obligations under this
Agreement, which shall include the same percentage interest in the Loans,
Letters of Credit and Notes, (ii) the amount of the Revolving Credit Commitment
and Term Loan Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall be in a minimum
principal amount of $2,000,000 (unless to another Lender, in which event there
shall be no minimum requirement) in the aggregate for the Revolving Credit
Commitment and Term Loan Commitment of such Lender, (iii) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register (as defined below), an Assignment and Acceptance,
together with any Note subject to such assignment and a processing and
recordation fee of $5,000 and (iv) the Assignee, if it shall not be a Lender,
shall deliver to the Agent an Administrative Questionnaire in the form provided
to such Assignee by the Agent. Upon such execution, delivery, acceptance and
recording and after receipt of the written consent of the Agent, from and after
the effective date specified in each Assignment and Acceptance, which effective
date shall be at least five (5) Business Days after the execution thereof, (x)
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the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and under the other Loan Documents and (y) the Lender which is
assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.10, 2.12, 2.16 and 11.04, as well as any fees accrued for
its account hereunder and not yet paid).
(d) By executing and delivering an Assignment and Acceptance, the
Lender which is assignor thereunder and the assignee thereunder confirm to, and
agree with, each other and the other parties hereto as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereunder free and clear of any adverse claim, and that
its Commitment and the outstanding balance of its Loans and participations in
Letters of Credit, in each case without giving effect to assignments thereof
which have not become effective, are as set forth in such Assignment and
Acceptance, such Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, perfection, genuineness, sufficiency or value of this
Agreement, the other Loan Documents or any Collateral with respect thereto or
any other instrument or document furnished pursuant hereto or thereto; (ii) such
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Loan Party or the performance or
observance by any Loan Party of any of their respective obligations under this
Agreement, any Guarantees or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance and confirms that it has received a copy of this
Agreement, any Guarantees and of the other Loan Documents, together with copies
of financial statements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as the Agent on its behalf and to exercise such powers under this
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Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in Section
11.01 hereof a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders and the
Revolving Credit Commitment and Term Loan Commitment of, and principal amount of
the Loans owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Agent and the Lenders may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrowers or
any Lender at any reasonable time and from time to time upon reasonable prior
notice. Effective upon the assignment of an interest hereunder, Schedules
2.01(a) and (b) shall be amended by the Agent to reflect such assignment.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee together with any Note or Notes subject to such
assignment, any processing and recordation fee and, if required, an
Administrative Questionnaire and the written consent to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is
precisely in the form of Exhibit E annexed hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Lenders and the Borrowers. Within
five (5) Business Days after receipt of such notice, the Borrowers, at their own
expense, shall execute and deliver to the Agent in exchange for each surrendered
Note or Notes a new Note or Notes to the order of such assignee in an amount
equal to its portion of the Term Loan Commitment and Revolving Credit
Commitment, assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained any Term Loan Commitment and Revolving Credit
Commitment hereunder, a new Note or Notes to the order of the assigning Lender
in an amount equal to the Term Loan Commitment and Revolving Credit Commitment
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, or, with respect to the Term Notes, the principal amount of the
Term Notes outstanding at such time as evidenced by the Term Note or Notes shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A and Exhibit B. Notes
surrendered to the Borrowers shall be cancelled by the Borrowers.
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(g) Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to the Borrowers furnished to such
Lender by or on behalf of the Borrowers in connection with this Agreement;
provided, however, that prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential Information relating to the Borrowers
received from such Lender.
SECTION 11.04. Expenses; Indemnity. (a) Each Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Agent in connection with the
preparation of this Agreement and the other Loan Documents or with any
amendments, modifications, waivers, extensions, renewals, renegotiations or
"workouts" of the provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by the Agent or any of the
Lenders in connection with the enforcement or protection of its rights in
connection with this Agreement or any of the other Loan Documents or with the
Loans made or the Notes or Letters of Credit issued hereunder, or in connection
with any pending or threatened action, proceeding, or investigation relating to
the foregoing, including but not limited to the reasonable fees and
disbursements of counsel for the Agent and ongoing field examination expenses
and charges, and, in connection with such enforcement or protection, the
reasonable fees and disbursements of counsel for the Lenders. The Borrower
further indemnifies the Lenders from and agrees to hold them harmless against
any documentary taxes, assessments or charges made by any governmental authority
by reason of the execution and delivery of this Agreement or the Notes.
(b) Each Borrower indemnifies the Agent and each Lender and their
respective directors, officers, employees and agents against, and agrees to hold
the Agent, each Lender and each such person harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees and expenses, incurred by or asserted against the Lender or any such person
arising out of, in any way connected with, or as a result of (i) the use of any
of the proceeds of the Loans, (ii) this Agreement, the Guarantees, any of the
Security Documents or the other documents contemplated hereby or thereby, (iii)
the performance by the parties hereto and thereto of their respective
obligations hereunder and thereunder (including but not limited to the making of
98
the Total Commitment) and consummation of the transactions contemplated hereby
and thereby, (iv) breach of any representation or warranty, or (v) any claim,
litigation, investigation or proceedings relating to any of the foregoing,
whether or not the Agent, any Lender or any such person is a party thereto;
provided, however, that such indemnity shall not, as to the Agent or any Lender,
apply to any such losses, claims, damages, liabilities or related expenses to
the extent that they result from the gross negligence or willful misconduct of
the Agent or any Lender.
(c) Each Borrower indemnifies, and agrees to defend and hold harmless
the Agent and the Lenders and their respective officers, directors,
shareholders, agents and employees (collectively, the "Indemnitees") from and
against any loss, cost, damage, liability, lien, deficiency, fine, penalty or
expense (including, without limitation, reasonable attorneys' fees and
reasonable expenses for investigation, removal, cleanup and remedial costs and
modification costs incurred to permit, continue or resume normal operations of
any property or assets or business of the Borrowers or any subsidiary thereof)
arising from a violation of, or failure to comply with any Environmental Law and
to remove any Lien arising therefrom except to the extent caused by the gross
negligence or willful misconduct of any Indemnitee, which any of the Indemnitees
may incur or which may be claimed or recorded against any of the Indemnitees by
any person.
(d) The provisions of this Section 11.04 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or the Notes, or any investigation made by or on
behalf of the Agent or any Lender. All amounts due under this Section 11.04
shall be payable on written demand therefor.
SECTION 11.05. Applicable Law. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES
THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION.
SECTION 11.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, upon the request of the Required Lenders each Lender
shall and is hereby authorized at any time and from time to time, to the fullest
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extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of any Borrower against any and all of the obligations of the Borrowers
now or hereafter existing under this Agreement and the Notes held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or the Notes and although such obligations may be
unmatured. Each Lender agrees to notify promptly the Agent and the Borrowers
after any such setoff and application made by such Lender, but the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of each Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which may be
available to such Lender.
SECTION 11.07. Payments on Business Days. (a) Should the principal of or
interest on the Notes or any fee or other amount payable hereunder become due
and payable on other than a Business Day, payment in respect thereof may be made
on the next succeeding Business Day (except as otherwise specified in the
definition of "Interest Period"), and such extension of time shall in such case
be included in computing interest, if any, in connection with such payment. (b)
All payments by any Borrower hereunder and all Loans made by the Lenders
hereunder shall be made in lawful money of the United States of America in
immediately available funds at the office of the Agent set forth in Section
11.01 hereof.
SECTION 11.08. Waivers; Amendments. (a) No failure or delay of any Lender
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, pre-clude
any other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Lenders hereunder are cumulative and not
exclusive of any rights or remedies which they may otherwise have. No waiver of
any provision of this Agreement or the Notes nor consent to any departure by any
Borrower therefrom shall in any event be effective unless the same shall be
authorized as provided in paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Borrower in any case shall entitle it to
any other or further notice or demand in similar or other circumstances. Each
holder of any of the Notes shall be bound by any amendment, modification, waiver
or consent authorized as provided. herein, whether or not
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such Note shall have been marked to indicate such amendment, modification,
waiver or consent.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or by the Borrowers and
the Agent with the consent of the Required Lenders; provided, however, that no
such agreement shall increase the Revolving Credit Commitment or Term Loan
Commitment of any Lender without the prior written consent of such Lender; and
provided further, however, that no such agreement shall (i) change the principal
amount of, or extend or advance the maturity of or the dates for the payment of
principal of or interest on, any Note or reduce the rate of interest on any Note
or decrease any fees payable pro rata to the Lenders, (ii) change the Revolving
Credit Commitment or Term Loan Commitment of any Lender or amend or modify the
provisions of this Section, Section 2.06, Section 2.13, Section 4.14 or Section
11.04 hereof or the definition of "Required Lenders," or (iii) release any
material portion of Collateral, in each case without the prior written consent
of each Lender affected thereby and provided, further, however, that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Agent under this Agreement or the other Loan Documents without the written
consent of the Agent. Each Lender and holder of any Note shall be bound by any
modification, amendment or waiver authorized in accordance with this Section
regardless of whether its Notes shall be marked to make reference thereto, and
any consent by any Lender or holder of a Note pursuant to this Section shall
bind any person subsequently acquiring a Note from it, whether or not such Note
shall be so marked.
(c) In the event that the Borrowers request, with respect to this
Agreement or any other Loan Document, an amendment, modification or waiver and
such amendment, modification or waiver would require the unanimous consent of
all of the Lenders in accordance with Section 11.08(b) above, or at any time
that the only Lenders are The Chase Manhattan Bank and one other Lender and the
consent of both Lenders is required, and such amendment, modification or waiver
is agreed to in writing by the Borrowers and the Required Lenders but not by all
of the Lenders, or by The Chase Manhattan Bank but not the other Lender where
there are only two Lenders, as applicable, then notwithstanding anything to the
contrary in Section 11.08(b) above, with the written consent of the Borrowers
and such Required Lenders, or The Chase Manhattan Bank, as applicable, the
Borrowers and Required Lenders or The Chase Manhattan Bank, as applicable, may,
but shall not be obligated to, amend this Agreement without the consent of the
Lender or Lenders who did not agree to the proposed amendment, modification or
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waiver (the "Minority Lenders") solely to provide for (i) the termination of the
Revolving Credit Commitment and Term Loan Commitment of each Minority Lender,
(ii) the assignment in accordance with Section 11.03 hereof to one or more
persons of each Minority Lender's interests, rights and obligations under this
Agreement (including, without limitation, all of such Minority Lender's
Revolving Credit Commitment and Term Loan Commitment as well as its portion of
all outstanding Loans and undrawn Letters of Credit and the Note or Notes held
by such Minority Lender) and the other Loan Documents and/or an increase in the
Revolving Credit Commitment and Term Loan Commitment of one or more Required
Lenders, or The Chase Manhattan Bank, as applicable, in each case so that after
giving effect thereto the Total Revolving Credit Commitment and Total Term Loan
Commitment shall be in the same amounts as prior to the events described in this
paragraph, (iii) the repayment to the Minority Lenders in full of all Loans
outstanding and accrued interest thereon at the time of the assignment and/or
increase in Commitments described in clause (ii) above with the proceeds of
Loans made by such persons who are to become Lenders by assignment or with the
proceeds of Loans made by Required Lenders or The Chase Manhattan Bank, as
applicable, who have agreed to increase their Revolving Credit Commitment and/or
Term Loan Commitment, (iv) the payment to the Minority Lenders by the Borrowers
of all fees and other compensation due and owing such Minority Lenders under the
terms of this Agreement and the other Loan Documents and (v) such other
modifications as the Required Lenders or The Chase Manhattan Bank, as
applicable, and Borrowers shall deem necessary in order to effect the changes
specified in clauses (i) through (iv) hereof.
SECTION 11.09. Severability. In the event any one or more of the provisions
contained in this Agreement or in the Notes or any of the other Loan Documents
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall not in any way be affected or impaired thereby.
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc. (a) This
Agreement, the Notes and the other Loan Documents constitute the entire contract
between the parties hereto relative to the subject matter hereof. Any previous
agreement among the parties hereto with respect to the Transactions is
superseded by this Agreement, the Notes and the other Loan Documents. Except as
expressly provided herein or in the Notes or the Loan Documents (other than this
Agreement), nothing in this Agreement, the Notes or in the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, the Notes or the other Loan Documents.
102
(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
(c) Except as prohibited by law, each party hereto hereby waives any
right it may have to claim or recover in any litigation referred to in paragraph
(b) of this Section 11.10 any special, indirect, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual or
direct damages.
(d) Each party hereto (i) certifies that no representative, agent or
attorney of any Lender has represented, expressly or otherwise, that such Lender
would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that it has been induced to enter into this Agreement, the
Notes or the other Loan Documents, as applicable, by, among other things, the
mutual waivers and certifications herein.
SECTION 11.11. Confidentiality. The Agent and each of the Lenders agree to
keep confidential (and to cause their respective officers, directors, employees,
agents and representatives to keep confidential) all information, materials and
documents furnished to the Agent or any Lender (the "Information").
Notwithstanding the foregoing, the Agent and each Lender shall be permitted to
disclose Information (i) to such of its officers, directors, employees, agents
and representatives as need to know such Information in connection with its
participation in any of the Transactions or the administration of this Agreement
or the other Loan Documents; (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
governmental agency or authority; (iii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this Agreement,
(B) becomes available to the Agent or such Lender on a non-confidential basis
from a source other than any Loan Party or (C) was available to the Agent or
such Lender on a non-confidential basis prior to its
103
disclosure to the Agent or such Lender by any Loan Party; (iv) to the extent any
Loan shall have consented to such disclosure in writing; (v) in connection with
the sale of any Collateral pursuant to the provisions of any of the other Loan
Documents; or (vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12. Submission to Jurisdiction. (a) Any legal action or
proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, each of the Loan Parties hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts.
(b) Each of the Loan Parties hereby irrevocably waive, in connection
with any such action or proceeding, any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions. (c) Each of the Loan
Parties hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to each such person,
as the case may be, at its address set forth in Section 11.01 hereof. (d)
Nothing herein shall affect the right of the Agent or any Lender to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against any Loan Party in any other jurisdiction.
SECTION 11.13. Counterparts; Facsimile Signature. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective
when copies hereof which, when taken together, bear the signatures of each of
the parties hereto shall be delivered to the Agent. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed signature page hereto.
SECTION 11.14. Headings and Terms Generally. Article and Section headings
and the Table of Contents used herein are for convenience of reference only and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
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The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any person shall be construed to
include such person's successors and assigns, (c) the words "herein", "hereof'
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 11.15. Transitional Arrangements. (a) This Agreement shall
supersede the Isolyser Credit Agreement in its entirety, except that all
Collateral thereunder and security interests granted shall continue for the
benefit of all Obligations under this Agreement.
(b) Upon its receipt of its Note or Notes hereunder on the Closing
Date, each Lender will promptly return to the Borrowers, marked "Cancelled", any
note of the Borrowers held by such Lender pursuant to the Isolyser Credit
Agreement.
(c) All commitment, agent's and other fees and expenses owing or
accruing under or in respect of the Isolyser Credit Agreement shall be paid in
full on the Closing Date, and all interest owing or accruing under the Isolyser
Credit Agreement shall be calculated as of the Closing Date (prorated in the
case of any fractional periods), but shall be paid on the initial Interest
Payment Date under this Agreement.
105
XII. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor and not
merely as a surety, jointly and severally with each other Guarantor, the due and
punctual payment of the principal of and interest on each of the Notes, when and
as due, whether at maturity, by acceleration, by notice of prepayment or
otherwise, and the due and punctual payment and performance of all other
Obligations. Each Guarantor further agrees that the Obligations may be extended
and renewed, in whole or in part, without notice to or further assent from it,
and that it will remain bound upon its guarantee notwithstanding any extension
or renewal of any Obligations.
Each Guarantor waives presentment to, demand of payment from and protest to
the Borrowers of any of the Obligations, and also waives notice of acceptance of
its guarantee and notice of protest for nonpayment. The obligations of a
Guarantor hereunder shall not be affected by (a) the failure of any Lender or
the Agent to assert any claim or demand or to enforce any right or remedy
against the Borrowers or any other Guarantor under the provisions of this
Agreement, the Notes or any of the other Loan Documents or otherwise; (b) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Agreement, the Notes, any of the other Loan Documents, any guarantee or
any other agreement; (c) the release of any security held by the Agent for the
Obligations or any of them; (d) the failure of any Lender or the Agent to
exercise any right or remedy against any other Guarantor of the Obligations; or
(e) the failure of any Lender or the Agent to take, register, perfect or
preserve any security for any of the Obligations.
Each Guarantor further agrees that its guarantee constitutes a guarantee of
payment when due and not of collection, and waives any right to require that any
resort be had by the Agent or any Lender to any security (including, without
limitation, any Collateral) held for payment of the Obligations or to any
balance of any deposit account or credit on the books of any Lender or the Agent
in favor of any Borrower or any other person.
The obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
106
not be discharged or impaired or otherwise affected by the failure of the Agent
or any Lender to assert any claim or demand or to enforce any remedy under this
Agreement, the Notes or under any other Loan Document, any guarantee or any
other agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might otherwise in any
manner or to any extent vary the risk or reduce or extinguish the liability of
such Guarantor or otherwise operate as a discharge of such Guarantor as a matter
of law or equity.
Each Guarantor further agrees that its guarantee shall be a continuing
guarantee and shall stand as a guarantee of full and final payment and
performance of all Obligations from time to time and shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Obligation is rescinded or must
otherwise be returned by the Agent or any Lender upon the bankruptcy or
reorganization of any Borrower or otherwise.
Each Guarantor hereby waives and releases in favor of the Lenders and the
Agent all rights of subrogation against or in respect of each the Borrowers and
its property and all rights of indemnification, contribution and reimbursement
from each Borrower and its property, in each case in connection with this
guarantee and any payments made hereunder, and regardless of whether such rights
arise by operation of law, pursuant to contract or otherwise until such time as
the Obligations have been fully and finally performed and paid.
If, in any action to enforce this guaranty or any proceeding to allow or
adjudicate a claim under this guaranty, a court of competent jurisdiction
determined that enforcement of this guaranty against any Guarantor for the full
amount of the Obligations is not lawful under, or would be subject to avoidance
under, Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code or any applicable
provision of comparable state law, the liability of such Guarantor under this
guaranty shall be limited to the maximum amount lawful and not subject to
avoidance under such law.
Each Loan Party agrees that in the event a payment shall be made by any
Loan Party (the "Claiming Loan Party") under this Agreement or any other Loan
Document or assets of such Claiming Loan Party shall be sold pursuant to any
mortgage, security agreement or similar instrument or agreement to satisfy a
claim of the Lenders or Agent, each other Loan Party (a "Contributing Loan
Party") shall indemnify the Claiming Loan Party in an amount equal to the amount
of such payment or the greater of the book value or the fair market value of
such assets, as the case may be, multiplied by a fraction of which the numerator
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shall be the net worth of the Contributing Loan Party on the date hereof and the
denominator shall be the aggregate net worth of all the Loan Parties on the date
hereof.
XIII. CONFIRMATION OF SECURITY DOCUMENTS
Each Loan Party hereby irrevocably and unconditionally confirms in favor of
the Agent and the Lenders that it consents to the terms and conditions of this
Agreement as it has been amended and restated as of the date hereof, and that
each Security Document to which such Loan Party is a party shall continue in
full force and effect and is and shall continue to be applicable to all of the
Obligations and to this Agreement.
IN WITNESS WHEREOF, the Borrowers, Guarantors, the Agent and the Lenders
have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
Borrowers:
ISOLYSER COMPANY, INC.
By:
---------------------------------------
Name:
Title:
MICROTEK MEDICAL, INC.
By:
---------------------------------------
Name:
Title:
Guarantors:
ISOLYSER - MSI, INC., formerly
known as MEDSURG INDUSTRIES, INC.
By:
---------------------------------------
Name:
Title:
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Lenders:
THE CHASE MANHATTAN BANK, as Lender
By:
----------------------------------------
Name:
Title:
Agent:
THE CHASE MANHATTAN BANK, as Agent
By:
---------------------------------------
Name:
Title:
109
SCHEDULE 2.01(a)
TERM LOAN COMMITMENTS
---------------------
Approximate Percentage
of Total Term
Lender Term Loan Commitment Loan Commitment
------ -------------------- ---------------
The Chase Manhattan Bank
1166 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Isolyser Credit
Executive $0 N/A
SCHEDULE 2.01(b)
Schedule 2.01(b) to Credit Agreement
Revolving Credit Commitments
----------------------------
Approximate Percentage
Revolving of Total
Lender Credit Commitment Revolving Credit Commitment
------ ----------------- ---------------------------
The Chase Manhattan Bank
1166 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Isolyser Credit
Executive $17,500,000 100%
SCHEDULE 2.02
Domestic Lending Offices
------------------------
Lender Domestic Lending Office
------ -----------------------
The Chase Manhattan Bank The Chase Manhattan Bank
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Isolyser Credit Executive
SCHEDULE 2.03
Eurodollar Lending Offices
--------------------------
Lender Eurodollar Lending Office
------ -------------------------
The Chase Manhattan Bank The Chase Manhattan Bank
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Isolyser Credit Executive
