1
LOAN AGREEMENT
2
LOAN AGREEMENT dated August 7, 1997 (the "Loan Agreement" or this
"Agreement") by and among PHARMACEUTICAL PRODUCT DEVELOPMENT, INC., a North
Carolina corporation (the "Borrower"), the subsidiaries and affiliates
identified on the signature pages hereto or hereafter joined as a Guarantor
hereunder (the "Guarantors", and together with the Borrower, the "Credit
Parties") and WACHOVIA BANK, N.A. (together with its endorsees, successors and
assigns, the "Bank").
W I T N E S S E T H
WHEREAS, the Borrower has requested a FIFTY MILLION ($50,000,000.00)
revolving credit facility for the purposes hereinafter set forth;
WHEREAS, the Bank has agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, and (ii)
one-half of one percent above the Federal Funds Rate for such day. For purposes
of determining the Base Rate for any day, changes in the Prime Rate shall be
effective on the date of each such change.
"Base Rate Loan" means Loans hereunder bearing interest at a rate
determined by reference to the Base Rate.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in Winston-Salem, North Carolina are authorized or
required by law to close; provided, however, that when used in connection with a
rate determination, borrowing or payment in respect of a LIBOR Rate Loan, the
term "Business Day"shall also exclude any day on which dealings in U.S. dollar
deposits are not carried out in the London interbank market.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act.
3
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Commitment" shall have the meaning assigned to it in Section 2.1
hereof.
"Commitment Period" means the period from and including the date hereof
to but excluding the earlier of (i) the Termination Date, or (ii) the date on
which the Commitment hereunder shall have been terminated in accordance with the
provisions hereof.
"Consolidated EBITDA" means, without duplication, for any fiscal period
for the Borrower and its subsidiaries on a consolidated basis, the sum of the
amounts for such fiscal period of: (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) taxes based on income of the Borrower and
its consolidated subsidiaries and actually paid by the Borrower and such
subsidiaries during such period, (iv) the sum of all depreciation expenses of
the Borrower and its consolidated subsidiaries for such period, and (v)
amortization expense, all as determined and computed in accordance with GAAP
applied on a consistent basis.
"Consolidated Fixed Charge Coverage Ratio" means, as of the last day of
any fiscal quarter for the Borrower and its subsidiaries on a consolidated
basis, the ratio of Consolidated Income Available for Fixed Charges to
Consolidated Fixed Charges.
"Consolidated Fixed Charges" means, for the applicable period for the
Borrower and its subsidiaries on a consolidated basis, the sum of Consolidated
Interest Expense plus rental and lease expense, in each case as determined in
accordance with GAAP applied on a consistent basis. Except as expressly provided
otherwise, the applicable period shall be for the four consecutive fiscal
quarters ending as of the date of determination.
"Consolidated Funded Debt" means Funded Debt of the Borrower and its
subsidiaries on a consolidated basis determined in accordance with GAAP.
"Consolidated Income Available for Fixed Charges" means, for any period
for the Borrower and its subsidiaries on a consolidated basis, the sum of
Consolidated Net Income plus Consolidated Interest Expense plus federal, state
and local income taxes paid plus rental and lease expense, in each case
determined in accordance with GAAP applied on a consistent basis. Except as
expressly provided otherwise, the applicable period shall be for the four
consecutive fiscal quarters ending as of the date of determination.
4
"Consolidated Interest Expense" means, for any period for the Borrower
and its subsidiaries on a consolidated basis, all interest expense, including
the amortization of debt discount and premium, the interest component under
capital leases and the implied interest component under securitization
transactions, in each case determined in accordance with GAAP applied on a
consistent basis. Except as expressly provided otherwise, the applicable period
shall be for the four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated Net Income" means, for any period for the Borrower and
its subsidiaries on a consolidated basis, net income as determined in accordance
with GAAP applied on a consistent basis, but excluding for purposes of
determining the Consolidated Fixed Charge Coverage Ratio and the Consolidated
Funded Debt to Consolidated EBITDA Ratio, (i) extraordinary gains or losses, and
any taxes on such excluded gains and any tax deductions or credits on account of
any such excluded losses, and (ii) one-time non-recurring charges associated
with mergers and acquisitions permitted hereunder. Except as expressly provided
otherwise, the applicable period shall be for the four consecutive fiscal
quarters ending as of the date of determination.
"Consolidated Operating Profits" means, for any period, the Operating
Profits of the Borrower and its subsidiaries on a consolidated basis.
"Consolidated Total Assets" means, at any time, the total assets of the
Borrower and its subsidiaries determined on a consolidated basis, as set forth
or reflected on the most recent consolidated balance sheet of the Borrower and
its subsidiaries on a consolidated basis, prepared in accordance with GAAP.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Credit Documents" means, collectively, this Agreement and the Note,
and all amendments and supplements thereto, modifications, extensions and
renewals thereof and replacements therefor.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower required by any Environmental Requirement.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
5
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with any
Environmental Requirement, including without limitation any complaints,
citations, demands or requests from any Environmental Authority or from any
other person or entity for correction of any violation of any Environmental
Requirement or any investigations concerning any violation of any Environmental
Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any subsidiary
or the Properties, including but not limited to any such requirement under
CERCLA or similar state legislation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law, including any rules or
regulations promulgated thereunder. Any reference to any provision of ERISA
shall also be deemed to be a reference to any successor provision or provisions
thereof.
"Eurodollar Reserve Percentage" means for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1 %) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.
"Event of Default" shall have the meaning assigned to such term in
Section 7.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System
6
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided
that (i) if the day for which such rate is to be determined is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if such rate is not so published for any day, the Federal
Funds Rate for such day shall be the average rate charged to Wachovia Bank, N.A.
on such day on such transactions.
"Funded Debt" means, as of any day for any Person, without duplication,
(i) all indebtedness for borrowed money, (ii) all indebtedness and obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations to pay the deferred purchase price of property or services (other
than trade accounts payable arising in the ordinary course of business), (iv)
all obligations as lessee under capital leases, (v) all obligations of
reimbursement relating to letters of credit, bankers' acceptances or other
similar instruments (whether or not then drawn and owing), (vi) all Guaranty
Obligations, (vii) the attributed principal amount of any securitization
transaction and (viii) all obligations under any synthetic lease, tax retention
operating lease, off-balance sheet loan or other similar off-balance sheet
financing product where the product is considered borrowed money indebtedness
for tax purposes, but is classified as an operating lease for purposes of GAAP.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis.
"Governmental Authority" means any federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guaranteed Obligations" means:
(a) All unpaid principal of and interest on (including,
without limitation, interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and other
obligations owing under this Agreement and interest accruing at the
then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in
such proceeding) the Loans and all other obligations and liabilities of
the Borrower to the Bank, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, the Note or any other document relating hereto, in each case
whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Bank that are
required to be paid by the Borrower pursuant to the terms of this
Agreement); and
7
(b) all other indebtedness, liabilities and obligations of any
kind or nature, now existing or hereafter arising, owing by the
Borrower to the Bank, arising under any interest rate protection
agreement, currency agreement or other agreement or arrangement,
whether primary, secondary, direct, contingent, or joint and several.
"Guaranty Obligation" means any obligation, contingent or otherwise,
directly or indirectly guaranteeing the indebtedness or other obligation of
another Person, including without limitation, (i) an agreement to purchase or
pay (or to supply or advance funds for the purchase or payment of) any such
indebtedness or other obligation (whether by way of partnership agreement,
keep-well agreement, comfort letter, maintenance agreement or the like), or (ii)
any arrangement entered into for the purpose of assuring payment of the
indebtedness or other obligation of another Person or otherwise protecting a
party from loss in respect thereof; provided that such term shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, or in any applicable state or local law or regulation, (b) hazardous
substances, as defined in CERCLA, or in any applicable state or local law or
regulation, (c) gasoline, or any other petroleum product or by-product, (d)
toxic substances, as defined in the Toxic Substances Control Act of 1976, or in
any applicable state or local law or regulation or (e) insecticides, fungicides,
or rodenticides, as defined in the Federal Insecticide, Fungicide, and
Rodenticide Act of 1975, or in any applicable state or local law or regulation,
as each such Act, statute or regulation may be amended from time to time.
"Interest Payment Date" means (a) as to any Base Rate Loan, the last
Business Day of each March, June, September and December to occur while such
Loan is outstanding, and (b) as to any LIBOR Rate Loan, the last day of such
Interest Period.
"Interest Period" means with respect to any LIBOR Rate Loan,
(i) initially, the period commencing on the date of borrowing
or conversion date, as the case may be, with respect to such LIBOR Rate
Loan and ending one, two or three months thereafter, as selected by the
Borrower in the notice of borrowing or notice of conversion given with
respect thereto; and
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Rate
Loan and ending one, two or three months thereafter, as selected by the
Borrower by irrevocable notice to the Bank not less than two Business
Days prior to the last day of the then current Interest Period with
respect thereto;
provided that the foregoing provisions are subject to the following:
8
(A) if any Interest Period pertaining to a LIBOR Rate Loan
would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on
the immediately preceding Business Day;
(B) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the relevant calendar month;
(C) if the Borrower shall fail to give notice as provided
above, the Borrower shall be deemed to have selected a Base Rate Loan
to replace the affected LIBOR Rate Loan as provided herein;
(D) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date; and
(E) no more than 12 Loans may be in effect at any time, and of
those 12 Loans, no more than 6 shall be LIBOR Rate Loans. For purposes
hereof, LIBOR Rate Loans with different Interest Periods shall be
considered as separate LIBOR Rate Loans, even if they shall begin on
the same date and have the same duration, although borrowings,
extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to
constitute a new LIBOR Rate Loan with a single Interest Period.
"LIBOR" applicable to any LIBOR Rate Loan means for the Interest Period
of such Loan the rate per annum determined on the basis of the rate for deposits
in U.S. dollars of amounts equal or comparable to the principal amount of such
Loan offered for a term comparable to such Interest Period, which rate appears
on the display designated as Page "3750" of the Telerate Service (or such other
page as may replace page 3750 of that service or such other service or services
as may be nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits), determined
as of 1:00 p.m. (New York time), 2 Euro-Dollar Business Days prior to the first
day of such Interest Period.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Bank pursuant to the following
formula:
LIBOR Rate = LIBOR
------------------------------------------------------------------
1.00 - Eurodollar Reserve Percentage
"LIBOR Rate Loan" means Loans hereunder bearing interest at a rate
determined by reference to the LIBOR Rate.
9
"Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, encumbrance, lien, preference or priority of any kind.
"Loan" means any loan or advance by the Bank under the Commitment.
"Material Subsidiary" means each subsidiary of the Borrower with either
a ten percent (10%) or greater revenue contribution to the total revenue of the
Borrower and its subsidiaries determined on a consolidated basis or control or
ownership of ten percent (10%) or more of the total assets of the Borrower and
its subsidiaries determined on a consolidated basis. All Material Subsidiaries
existing on the date of this Agreement are listed on Schedule I attached hereto.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Note" shall have the meaning given to such term in Section 2.5 hereof.
"Operating Profits" means, as applied to any Person for any period, the
operating income of such Person for such period, as determined in accordance
with GAAP.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Prime Rate"refers to that interest rate so denominated and set by the
Bank from time to time as an interest rate basis for borrowings. The Prime Rate
is but one of several interest rate bases used by the Bank and the Bank lends at
interest rates above and below the Prime Rate. A change in the Prime Rate shall
be effective on the date of such change.
"Pro Forma Basis" means, with respect to any transaction, that such
transaction shall be deemed to have occurred as of the first day of the four
fiscal quarter period ending as of the most recent fiscal quarter end preceding
the date of such transaction with
10
respect to which the Bank has received annual or quarterly financial statements
and accompanying officer's certificate.
"Properties" means all real property owned, leased or otherwise used or
occupied by the Borrower or any subsidiary, wherever located.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and bylaws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to any such Person or to which any of its material property is subject.
"Termination Date" means the date 364 days following the date of this
Agreement, or such later date not more than 364 days following the then
applicable Termination Date as to which the Bank may agree in its sole
discretion.
SECTION 2. LOANS.
2.1 Loans. During the Commitment Period, subject to the terms and
conditions hereof, the Bank agrees to make Loans to the Borrower from time to
time upon request of the Borrower; provided that immediately after each such
Loan is made, the aggregate principal amount of all outstanding Loans shall not
exceed FIFTY MILLION DOLLARS ($50,000,000) (the "Commitment"). The Loans
hereunder may consist of Base Rate Loans or LIBOR Rate Loans, or a combination
thereof. The obligation of the Bank to make Loans hereunder and to extend, or
convert Loans into, LIBOR Rate Loans is subject to the condition that the
Representations and Warranties set forth herein are true and correct in all
material respects. Within the limits set forth herein and in the Note, the
Borrower may borrow under this Section, repay or, to the extent permitted by
Section 2.7, prepay Loans and reborrow under this Section at any time during the
Commitment Period. The Bank shall have no obligation to advance funds in excess
of the amount of the Commitment.
2.2 Notices. Requests by the Borrower for Loans hereunder, and for
extensions or conversions of Loans hereunder, shall be made by written notice
(or telephone notice promptly confirmed in writing) by 11:00 a.m.,
Winston-Salem, North Carolina time on the Business Day of the requested Base
Rate borrowing, extension or conversion and at least two Business Days before
the requested LIBOR Rate borrowing, extension or conversion. Each request shall
be in a minimum principal amount of $1,000,000 in the case of LIBOR Rate Loans
and $100,000 in the case of Base Rate Loans and, in each case, integral
multiples of $100,000 in excess thereof, and shall specify the date of the
requested borrowing, extension or conversion, the aggregate amount to be
borrowed, extended or converted and if an extension or conversion, the Loan
which is being extended or converted, and whether the borrowing, extension or
conversion shall consist of LIBOR Rate Loans, Base Rate Loans or combination
thereof. If the Borrower shall fail to specify (A) the type of Loan requested
for a borrowing, the
11
request shall be deemed a request for a LIBOR Rate Loan with an Interest Period
of one month, or (B) the duration of the applicable Interest Period in the case
of LIBOR Rate Loans, the request shall be deemed to be a request for an Interest
Period of one month. Each request for a borrowing, extension or conversion
hereunder shall be deemed a reaffirmation that the Representations and
Warranties set forth herein are true and correct in all material respects as of
such date. Unless extended in accordance with the provisions hereof, LIBOR Rate
Loans shall be converted to Base Rate Loans at the end of the applicable
Interest Period. Notwithstanding anything to the contrary contained in this
Agreement, no LIBOR Rate Loan, or extension or conversion thereof, may be made
if there shall have occurred any condition or event which constitutes an Event
of Default or which with the giving or notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
2.3 Interest Rate. Loans outstanding hereunder shall bear interest at a
per annum rate equal to (i) the LIBOR Rate plus seven tenths percent (.70%) or
(ii) the Base Rate, as the Borrower may elect; provided that after the
occurrence and during the continuance of an Event of Default, the principal and,
to the extent permitted by law, interest on the Loans and any other amounts
owing hereunder shall bear interest, payable on demand, at a rate equal to the
Base Rate plus three percent (3%). Interest will be payable in arrears on each
Interest Payment Date.
2.4 Repayment. Unless sooner paid, the principal amount of all Loans
outstanding hereunder and all accrued and unpaid interest thereon shall be due
and payable in full upon the first of the following dates or events to occur:
(i) acceleration of the maturity of the Note in accordance with the remedies
contained in Section 7.2; or (ii) upon the expiration of the Commitment on the
Termination Date. From and after the date of such termination, no Loans shall be
made.
2.5 Note. The Loans shall be evidenced by a single promissory note of
the Borrower dated the Closing Date, payable to the order of the Bank in an
amount equal to the Commitment, in the form of Annex A hereto (as amended,
modified, extended, supplemented, renewed or replaced, the "Note").
2.6 Facility Fee. In consideration of the commitments hereunder, the
Borrower agrees from and after the date hereof to and including the Termination
Date, to pay to the Bank a facility fee (the "Facility Fee") equal to ten basis
points (.10%) per annum (calculated from the date hereof on the basis of a year
of 360 days and payable for the actual number of days elapsed) on the average
daily unused portion of the Commitment. The Facility Fee shall be payable by the
Borrower quarterly in arrears on the last day of each March, June, September and
December, commencing September 30, 1997, and on the Termination Date (provided
that should the Commitment be terminated at any time prior to the Termination
Date, the entire accrued and unpaid Facility Fee shall be paid on the date of
such termination).
12
2.7 Prepayments. Base Rate Loans may be prepaid in whole or in part at
any time without premium or penalty. LIBOR Rate Loans may not be prepaid in
whole or in part prior to the end of the applicable Interest Period. Amounts
prepaid may, subject to the terms and conditions hereof, be reborrowed.
2.8 Capital Adequacy. If the Bank shall have reasonably determined that
the adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or administration thereof or compliance by the
Bank or any corporation controlling the Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
central bank or Governmental Authority made subsequent to the date hereof does
or shall have the effect of reducing the rate of return on the Bank's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which the Bank or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration the Bank's or such
corporation's policies with respect to capital adequacy) by an amount reasonably
deemed by the Bank to be material, then from time to time, within 15 days after
demand by the Bank, the Borrower shall pay to the Bank such additional amount as
shall be certified by the Bank as being required to compensate it for such
reduction. A certificate as to any additional amounts payable under this Section
submitted by the Bank (which certificate shall include a description in
reasonable detail of the basis for the computation) to the Borrower shall be
conclusive absent manifest error.
2.9 Inability to Determine Interest Rate. Notwithstanding any other
provision of this Agreement, if on or prior to the first day of any Interest
Period (i) the Bank shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR for such Interest Period, or (ii) the Bank shall reasonably
determine (which determination shall be conclusive and binding absent manifest
error) that the LIBOR Rate does not adequately and fairly reflect the cost of
funding LIBOR Rate Loans, the Bank shall forthwith give notice of such
determination to the Borrower, whereupon until the Bank notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, the
obligations of the Bank to make or maintain LIBOR Rate Loans shall be suspended.
In the event LIBOR Rate Loans are not available on account of operation of this
Section, the Bank will endeavor to provide an alternative index or reference
rate.
2.10 Illegality. Notwithstanding any other provision of this Agreement,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof, in each case occurring after the Closing
Date, by the relevant Governmental Authority shall make it unlawful or
impossible for the Bank to make or maintain LIBOR Rate Loans as contemplated by
this Agreement or to obtain in the interbank Eurodollar market through its LIBOR
Lending Office the funds with which to make such Loans, (a) the Bank shall
promptly notify the Borrower thereof, and (b) the obligations of the Bank to
make or maintain LIBOR Rate Loans shall forthwith be suspended until the Bank
shall give notice that the condition or situation which gave rise
13
to the suspension shall no longer exist. If the Bank shall determine that it may
not lawfully continue to maintain and fund any of its outstanding LIBOR Rate
Loans to maturity and shall so specify in its notice to the Borrower, then the
Borrower shall immediately prepay in full the then outstanding principal amount
of all LIBOR Rate Loans, together with accrued interest thereon, and
concurrently with prepaying each such LIBOR Rate Loan, the Borrower shall borrow
a Loan as a Base Rate Loan in an equal principal amount from the Bank and the
Bank shall make such Loan. The Borrower hereby agrees promptly to pay the Bank,
upon its demand, any additional amounts necessary to compensate the Bank for
actual and direct costs (but not including anticipated profits) reasonably
incurred in making any repayment or prepayment in accordance with this Section,
including, but not limited to, any interest or fees payable by the Bank to
lenders of funds obtained by it in order to make or maintain its LIBOR Rate
Loans hereunder. A certificate as to any additional amounts payable pursuant to
this Section submitted by the Bank to the Borrower shall be conclusive in the
absence of manifest error.
2.11 Requirements of Law. If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by the Bank with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the date hereof:
(i) shall subject the Bank to any tax, duty or other charge of
any kind whatsoever with respect to any LIBOR Rate Loan made by it, or
its obligation to make or maintain LIBOR Rate Loans, or change the
basis of taxation of payments to the Bank in respect thereof or its
obligation to make or maintain LIBOR Rate Loans (except for changes in
the rate of tax on the net income or franchise tax applicable to the
Bank);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of the Bank which is not otherwise
included in the determination of the LIBOR Rate hereunder; or
(iii) shall impose on the Bank any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to the Bank of
making or maintaining LIBOR Loans or to reduce any amount received or receivable
by the Bank hereunder or under the Note, then, in any such case, the Borrower
shall promptly pay the Bank, within 15 days after its demand, any additional
amounts necessary to compensate the Bank for such increased cost or reduced
amount receivable as determined by the Bank with respect to its LIBOR Rate
Loans. A certificate as to any additional amounts payable pursuant to this
Section submitted by the Bank (which certificate shall include a
14
description in reasonable detail of the basis for the computation) to the
Borrower shall be conclusive in the absence of manifest error.
2.12 Indemnity. The Borrower hereby agree to indemnify the Bank and to
hold the Bank harmless from, and to pay to the Bank such amounts as shall
compensate the Bank for, any funding loss or expense which the Bank may sustain
or incur (other than as a result of and to the extent the Bank's gross
negligence or willful misconduct) as a consequence of (a) default by the
Borrower in payment of the principal amount of or interest on any LIBOR Rate
Loan by the Bank in accordance with the terms hereof, (b) default by the
Borrower in accepting a LIBOR Rate Loan after the Borrower has given a notice in
accordance with the terms hereof, (c) default by the Borrower in making any
prepayment of a LIBOR Rate Loan after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a LIBOR Rate Loan, or the conversion thereof, on a day which is
not the last day of the Interest Period with respect thereto, in each case equal
to (i) the amount of interest which would have accrued on the amount so prepaid,
or not so paid, borrowed, converted or continued, for the period from the date
of such prepayment or of such failure to pay, borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to pay, borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure), in each case at the applicable rate of interest for such Loans
provided for herein, over (ii) the amount of interest (as reasonably determined
by the Bank) which would have accrued to the Bank on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
Eurodollar market. A certificate as to any additional amounts payable pursuant
to this subsection submitted by the Bank to the Borrower shall be conclusive in
the absence of manifest error.
2.13 Taxes. All payments made by the Borrower hereunder or under the
Note will be made free and clear of, and without deduction or withholding for,
any present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any Governmental
Authority or by any political subdivision or taxing authority thereof or therein
with respect to such payments (but excluding (i) any tax imposed on or measured
by the net income or profits of a Lender pursuant to the laws of the
jurisdiction in which it is organized or the jurisdiction in which the principal
office or applicable lending office of the Bank is located or any subdivision
thereof or therein and (ii) any franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of the Bank pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or its applicable lending office is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement or under the Note,
after withholding or deduction for or on account of any such Taxes, will not be
less than the amount provided for herein or in the Note. The
15
Borrower will furnish to the Bank as soon as practicable after the date the
payment of any Taxes is due pursuant to applicable law certified copies (to the
extent reasonably available and required by law) of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless, and
reimburse, the Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid by the Bank. The agreements in this subsection shall
survive termination of this Agreement and payment of the Note and all other
amounts payable hereunder.
2.14 Payments and Computations. Payments shall be made hereunder in
U.S. dollars in immediately available funds, without offset, deduction,
counterclaim or withholding of any kind at the offices of the Bank provided in
the notice section hereof. Payments received after 2:00 P.M. (Winston-Salem,
North Carolina time) will be given credit the next following Business Day.
Computations of interest hereunder shall be made on the basis of actual number
of days elapsed over a year of 360 days. Whenever any payment of principal of,
or interest on, the Loans or of the Facility Fee shall be due on a day which is
not a Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day, except in the case of any payment of principal of, or
interest on, LIBOR Rate Loans, if the next succeeding Business Day falls in
another calendar month, the date for payment thereof shall be the next preceding
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
SECTION 3. GUARANTY
3.1 Guaranty. Each of the Guarantors hereby jointly and severally
guarantees to the Bank as hereinafter provided the prompt payment of the
Guaranteed Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise and after giving effect to
any grace periods) strictly in accordance with the terms hereof. Each of the
Guarantors hereby further agrees that if any of the Guaranteed Obligations are
not paid in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise and after giving effect to any grace
periods), the Guarantor will promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Guaranteed Obligations, the same will be promptly paid in full
when due (whether at extended maturity, as a mandatory prepayment, by
acceleration or otherwise and after giving effect to any grace periods) in
accordance with the terms of such extension or renewal. This is a guaranty of
payment and not of collection.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents, to the extent the obligations of any
Guarantor as guarantor hereunder shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or transfers)
then the obligations of such Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
16
3.2 Obligations Unconditional. The obligations of the Guarantors under
Section 3.1 hereof are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of this Agreement or the
Note, or any other agreement or instrument referred to herein or therein or
relating hereto or thereto, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 3.2 that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Each of the Guarantors agrees
that it shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other guarantor for amounts paid under
this Guaranty until such time as the Bank has been paid in full under the Credit
Documents, the Commitment has been terminated, and no Person or Governmental
Authority shall have any right to request any return or reimbursement of funds
from the Bank in connection with monies received under the Credit Documents.
Without limiting the generality of the foregoing, it is agreed that, to the
fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of the Guarantors hereunder
which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of
the Guaranteed Obligations shall be changed or extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement or the Note or any other agreement or instrument
referred to herein or therein or relating hereto or thereto shall be
done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents or any other agreement or instrument referred to in
the Credit Documents shall be waived or any other guarantee of any of
the Guaranteed Obligations or any security therefor shall be released,
impaired, substituted, surrendered or exchanged in whole or in part or
otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Bank as security
for any of the Guaranteed Obligations shall fail to attach or be
perfected or shall be released or discharged in whole or in part;
(v) any of the Guaranteed Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any
17
Guarantor or any other guarantor) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any guarantor);
(vi) the Borrower may be granted indulgences generally;
(vii) any party liable for the payment of the Guaranteed
Obligations (including but not being limited to any Guarantor) may be
granted indulgences or released; or
(viii) the death, termination of existence, bankruptcy,
incapacity, lack of authority or disability of the Borrower or any one
or more of the Guarantors, and no claim need be asserted against the
personal representative, guardian, custodian, trustee or debtor in
bankruptcy or receiver of any deceased, incompetent, bankrupt or
insolvent Guarantor.
It is agreed that the Bank may release, discharge, compromise, or enter into any
accord and satisfaction with respect to any collateral or security for the
Guaranteed Obligations, or the liability of the Borrower or any of the
Guarantors, or any liability of any other person primarily or secondarily liable
on any of the Guaranteed Obligations, all without notice to or further assent by
the Guarantors, who shall remain bound hereon, notwithstanding any such
exchange, compromise, surrender, extension, renewal, acceleration, modification,
indulgence, release, discharge or accord and satisfaction.
With respect to its obligations hereunder, each of the Guarantors hereby
expressly waives (a) notice of acceptance of this Guaranty and of all extensions
or renewals of credit or other financial accommodations to the Borrower; (b)
diligence, presentment, demand for payment, protest, notice of dishonor and of
default and any and all other notices whatsoever which the Guarantors might
otherwise be entitled; (c) any requirement that the Bank exhaust any right,
power or remedy or proceed against any Person under this Agreement or the Note
or any other agreement or instrument referred to herein or therein or relating
hereto or thereto, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations; (d) any invalidity or
disability in whole or in part at the time of the acceptance of, or at any time
with respect to, any security for the Guaranteed Obligations or with respect to
any party primarily or secondarily liable for the payment of the Guaranteed
Obligations to the Bank; (e) the fact that any security for the Guaranteed
Obligations may at any time or from time to time be in default or be
inaccurately estimated or may deteriorate in value for any cause whatsoever; and
(f) demand for payment under this Guaranty.
3.3 Reinstatement. The obligations of the Guarantors under Section 3
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each of the Guarantors agrees that it will
indemnify the Bank on demand for all reasonable costs and
18
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Bank in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
3.4 Certain Additional Waivers. Without limiting the generality of the
provisions of this Section 3, each of the Guarantors hereby specifically waives
the benefits of N.C. Gen. Stat. Sec. 26-7 through 26-9, inclusive, or any
similar or subsequent law. Each of the Guarantors agrees that it shall have no
right of recourse to security for the Guaranteed Obligations, except through the
exercise of the rights of subrogation pursuant to Section 3.2 (and as set forth
in Section 3.2, each Guarantor has agreed that it has no right of subrogation
until such time as the Bank has been paid in full under the Credit Documents,
the Commitment has been terminated, and no Person or Governmental Authority
shall have any right to request any return or reimbursement of funds from the
Bank in connection with monies received under the Credit Documents).
3.5 Remedies. Each of the Guarantors agrees that, to the fullest extent
permitted by law, as between the Guarantors, on the one hand, and the Bank, on
the other hand, the Guaranteed Obligations may be declared to be forthwith due
and payable as provided in Section 7.2 hereof (and shall be deemed to have
become automatically due and payable in the circumstances provided in said
Section 7.2) for purposes of Section 3.1 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing the
Guaranteed Obligations from becoming automatically due and payable) as against
any other Person and that, in the event of such declaration (or the Guaranteed
Obligations being deemed to have become automatically due and payable), the
Guaranteed Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
Section 3.1.
3.6 Continuing Guarantee. The guarantee in this Section 3 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
3.7 Rights of Contribution. The Guarantors hereby agree, as among
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below), each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the succeeding provisions of this Section), pay to
such Excess Funding Guarantor an amount equal to such Guarantor's Pro Rata Share
(as defined below and determined, for this purpose, without reference to the
properties, assets, liabilities and debts of such Excess Funding Guarantor) of
such Excess Payment (as defined below). The payment obligation of any Guarantor
to any Excess Funding Guarantor under this Section shall be subordinate and
subject in right of payment to the prior payment in full of the obligations of
such Guarantor under the other provisions of this Section 3, and such Excess
Funding Guarantor shall not exercise any right or remedy with respect to such
excess until payment and satisfaction in full of all of such obligations. For
purposes hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any
obligations arising
19
under the other provisions of this Section 3 (hereafter, the "Guarantied
Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guarantied Obligations; (ii) "Excess Payment" shall mean, in
respect of any Guarantied Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guarantied Obligations; and
(iii) "Pro Rata Share", for the purposes of this Section, shall mean, for any
Guarantor, the ratio (expressed as a percentage) of (a) the amount by which the
aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Borrower and all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date
(if any Guarantor becomes a party hereto subsequent to the Closing Date, then
for the purposes of this Section such subsequent Guarantor shall be deemed to
have been a Guarantor as of the Closing Date and the information pertaining to,
and only pertaining to, such Guarantor as of the date such Guarantor became a
Guarantor shall be deemed true as of the Closing Date).
The provisions of this Section 3.7 are included in this Agreement
solely for the benefit of the Guarantors and shall not be effective until such
time as the Bank has been paid in full under the Credit Documents, the
Commitment has been terminated, and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Bank in
connection with monies received under the Credit Documents.
3.8 Joinder of Additional Guarantors. The Borrower shall, from time to
time after the date hereof, join all Material Subsidiaries (who are not already
listed as Guarantors hereunder) as Guarantors hereunder by causing each such
Material Subsidiary to execute in favor of the Bank a Joinder Agreement in the
form attached as Annex B.
SECTION 4. CONDITIONS
4.1 Conditions to Closing. The effectiveness of this Agreement is
conditioned upon satisfaction of the following:
(a) Receipt of a duly executed counterpart of this Agreement
signed by the Borrower and the duly executed Note, in form and
substance satisfactory to the Bank;
(b) Receipt of opinions of the general counsel for the
Borrower and the Guarantors in the form attached as Annex C hereto; and
20
(c) Receipt of corporate documentation for the Credit Parties,
including resolutions, bylaws, articles of incorporation, certificates
of good standing and certificates of incumbency.
4.2 Conditions to First Loan and All Subsequent Loans. The obligation
of the Bank to make the first Loan and any subsequent Loans hereunder is subject
to the satisfaction of the following conditions:
(a) Receipt of notice of borrowing;
(b) The fact that the Representations and Warranties set forth
herein are true on and as of the date such Loan is made;
(c) The fact that, immediately after such Loan is made, the
aggregate outstanding principal amount of all Loans will not exceed the
amount of the Commitment; and
(d) As to the first Loan hereunder, receipt of a certificate,
dated the date of the first Loan, signed by a principal financial
officer of the Borrower to the effect that (i) no condition or event
which constitutes an Event of Default or which with the giving or
notice or lapse of time or both would, unless cured or waived, become
an Event of Default has occurred and is continuing on the date of the
first Loan and (ii) the Representations and Warranties set forth herein
are true on and as of the date of the first Loan hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1 Financial Condition. The consolidated balance sheet of the Borrower
and its consolidated subsidiaries dated as of December 31, 1996 together with
related consolidated statements of income and cash flows, are complete and
correct in all material respects and present fairly the financial condition and
results from operations of the entities and for the periods specified, subject
in the case of interim company-prepared statements to normal year-end
adjustments.
5.2 No Change. Since the date of the financial statements identified
above, there have been no developments or events which have had, or are likely
to have, a material adverse effect on the Borrower or on the condition
(financial or otherwise), operations, business or prospects of the Borrower and
its subsidiaries taken as a whole.
5.3 Corporate Organization. Each of the Credit Parties is a corporation
duly organized, validly existing and in good standing under the laws of the
State of its incorporation, is qualified to do business in each jurisdiction
where failure to so qualify would have a material adverse effect on the Borrower
and its subsidiaries taken as a whole and is in compliance with all Requirements
of Law except to the extent that failure
21
to be in compliance would not have a material adverse effect on the Borrower and
its subsidiaries taken as a whole.
5.4 Enforceable Obligation. Each of the Credit Parties has the power
and authority and legal right to enter into, deliver and perform under this
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by them of this Agreement. This Agreement constitutes a
legal, valid and binding obligation of each of the Credit Parties enforceable
against them in accordance with its terms except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
5.5 Legal Proceedings. No claim, litigation or proceeding before any
arbitrator or Governmental Authority is pending, or to the knowledge of the
Credit Parties, threatened which if adversely determined would reasonably be
expected to have a material adverse effect on the Borrower and its subsidiaries
taken as a whole.
5.6 No Default. No Event of Default or event or condition which with
notice or lapse of time, or both, would constitute an Event of Default,
presently exists.
5.7 Federal Regulations. No part of the proceeds of the Loans hereunder
will be used, directly or indirectly, for any purpose in violation of Regulation
U of the Board of Governors of the Federal Reserve System, as amended, modified
or replaced.
5.8 Compliance with ERISA. (a) The Borrower and each member of the
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC or a Plan under Title
IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled
Group is or ever has been obligated to contribute to any Multiemployer Plan.
5.9 Taxes. There have been filed on behalf of the Borrower and its
subsidiaries all Federal, state and local income, excise, property and other tax
returns which are required to be filed by them and all taxes due pursuant to
such returns or pursuant to any assessment received by or on behalf of the
Borrower or any subsidiary have been paid. The charges, accruals and reserves on
the books of the Borrower and its subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate. United
States income tax returns of the Borrower and its subsidiaries have been
examined and closed through the fiscal year ended December 31, 1995.
5.10 Environmental Matters. (a) Neither the Borrower nor any subsidiary
is subject to any Environmental Liability which is likely to have a material
adverse effect on
22
the business, financial position, results of operations or prospects of the
Borrower or any of its subsidiaries and neither the Borrower nor any subsidiary
has been designated as a potentially responsible party under CERCLA or under
any state statute similar to CERCLA. None of the Properties have been
identified on any current or proposed (i) National Priorities List under
40 C.F.R. Section 300, (ii) CERCLIS list or (iii) any list arising from a state
statute similar to CERCLA.
(b) No Hazardous Materials have been or are being used,
produced, manufactured, processed, generated, stored, disposed of, managed at,
or shipped or transported to or from the Properties or are otherwise present at,
on, in or under the Properties, or, to the best of the knowledge of the
Borrower, at or from any adjacent site or facility, except for Hazardous
Materials, such as cleaning solvents, pesticides and other materials used,
produced, manufactured, processed, generated, stored, disposed of, and managed
in the ordinary course of business in compliance with all applicable
Environmental Requirements.
SECTION 6. COVENANTS
The Borrower and the Guarantors covenant and agree to:
6.1 Financial Statements. Furnish, or cause to be furnished,
to the Bank:
(a) Annual Audited Statements. As soon as available, but in
any event within 90 days after the end of each fiscal year, audited
consolidated and company-prepared consolidating balance sheets of the
Borrower and its subsidiaries and related statements audited
consolidated and company-prepared consolidating statements of income,
retained earnings and cash flows, audited by Coopers & Xxxxxxx, or
other independent public accounting firm reasonably acceptable to the
Bank, setting forth comparative information for the previous year, and
reported without a "going concern" or like qualification or exception,
or qualification indicating limitation of the scope of the audit; and
(b) Quarterly Statements. As soon as available, and in any
event within 45 days after the end of each fiscal quarter, a
company-prepared consolidated and consolidating balance sheet of the
Borrower and its subsidiaries and related company-prepared consolidated
and consolidating statements of income, retained earnings and cash
flows for the quarter and for the portion of the year with comparative
information for the corresponding periods for the previous year.
All such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and in
accordance with GAAP throughout the periods
23
reflected therein (except as approved by such accountants and disclosed therein)
and further accompanied by a description of, and an estimation of the effect on
the financial statements on account of, a change in the application of
accounting principles from a prior period.
(c) Other Information. Promptly upon request, such additional
financial and other information as the Bank may reasonably request from
time to time.
6.2 Certificates and Notices. Furnish, or cause to be furnished, and
give notice to the Bank:
(a) Officer's Certificate. Concurrently with the annual and
quarterly financial statements referenced above, a certificate of a
responsible officer of the Borrower stating that to the best of his
knowledge and belief, (i) the financial statements fairly present in
all material respects the financial condition of the parties to which
such statements relate and (ii) the Borrower and the Guarantors are in
compliance with the provisions of this Agreement in all material
respects and no Event of Default, or event or condition which with
notice or lapse of time, or both, would constitute an Event of Default
exists hereunder (together with a financial covenant calculation
worksheet demonstrating compliance therewith in reasonable detail and a
complete listing of all of the Borrower's Material Subsidiaries or a
statement that since submission of the previous financial statements
there has been no change to the Borrower's Material Subsidiaries).
(b) Public and Other Information. Copies of reports and
information which the Borrower or its subsidiaries sends to its
stockholders or files with the Securities and Exchange Commission, and
any other financial or other information as the Bank may reasonably
request.
(c) Notice of Default. Promptly, upon becoming aware thereof,
notice of the occurrence of an Event of Default hereunder.
6.3 Compliance with Laws; Payment of Taxes. The Borrower will, and will
cause each of its subsidiaries and each member of the Controlled Group to,
comply with applicable laws (including but not limited to ERISA), regulations
and similar requirements of governmental authorities (including but not limited
to PBGC), except where the necessity of such compliance is being contested in
good faith through appropriate proceedings. The Borrower will, and will cause
each of its subsidiaries to, pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which, if unpaid, might become a lien against the property of the Borrower or
any subsidiary, except liabilities being contested in good faith and against
which, if requested by the Bank, the Borrower will set up reserves satisfactory
to the Bank.
24
6.4 Books and Records. The Credit Parties will keep proper books and
records in conformity with GAAP and all Requirements of Law and permit the Bank
upon reasonable notice to visit and inspect such books and records.
6.5 Financial Covenants.
(a) Ratio of Consolidated Funded Debt to Consolidated EBITDA.
As of the last day of each fiscal quarter, the ratio of Consolidated
Funded Debt to Consolidated EBITDA for such fiscal quarter and the
immediately preceding three fiscal quarters (on a rolling four fiscal
quarter basis), will not exceed 3.0 to 1.0.
(b) Consolidated Fixed Charge Coverage Ratio. As of the last
day of each fiscal quarter, the Consolidated Fixed Charge Coverage
Ratio shall be not less than 2.0:1.0.
6.6 Incurrence of Consolidated Funded Debt. The Borrower will not, nor
will it permit any of its subsidiaries to, create, assume, incur or suffer to
exist any Consolidated Funded Debt except:
(a) capital lease obligations and Consolidated Funded Debt
incurred to provide all or a portion of the purchase price or cost of
construction of an asset, provided that (i) such Funded Debt when
incurred will not exceed the purchase price or cost of construction of
the asset, and (ii) no such Funded Debt shall be refinanced for a
principal amount in excess of the principal balance outstanding thereon
at the time of such refinancing; and
(b) other Consolidated Funded Debt not to exceed $50,000,000.
6.7 Restriction on Liens. The Borrower will not, nor will it permit any
of its subsidiaries to, create, assume, incur or suffer to exist any Lien on any
property or asset of any kind, real or personal, tangible or intangible, now
owned or hereafter acquired by it or assign or subordinate any present or future
right to receive assets except:
(a) Liens securing capital lease obligations and other
purchase money Funded Debt permitted under Section 6.6(a);
(b) Liens securing taxes, assessments or governmental charges
or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons; provided that (A) with
respect to Liens securing state and local taxes, such taxes are not yet
payable, (B) with respect to Liens securing claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and the like,
such liens are unfiled and no other action has been taken to enforce
the same, or (C) with respect to taxes, assessments or
25
governmental charges or levies or claims or demand secured by such
Liens, payment is not at the time required;
(c) Liens not securing indebtedness which are incurred in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance, unemployment insurance, social security and
other like laws;
(d) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereto are being contested
in good faith by appropriate proceedings; and
(e) zoning restrictions, easements, licenses, reservations,
covenants, conditions, waivers, restrictions on the use of property or
other minor encumbrances or irregularities of title which do not
materially impair the use of any property in the operation or business
of the Borrower or such subsidiary or the value of such property for
the purpose of such business.
6.8 Mergers and Acquisitions. The Borrower will not, nor will it permit
any of its subsidiaries to, enter into a transaction of merger or consolidation,
nor will it acquire all or substantially all of the capital stock (or other
equity interest) or assets of any other Person, except:
(a) in the case of transactions of mergers and consolidation,
(i) if a Credit Party is a party to the transaction, it shall be the
surviving corporation, (ii) if the Borrower is a party to the
transaction, it shall be the surviving corporation, and (iii) if the
transaction is with a Person other than the Borrower or any of its
subsidiaries, the Borrower shall demonstrate compliance with the
financial covenants on a Pro Forma Basis; and
(b) in all other cases, the Borrower shall demonstrate
compliance with the financial covenants on a Pro Forma Basis.
6.9 Investments. The Borrower will not, nor will it permit any of its
subsidiaries to, make loans or advances or otherwise make an investment in or
capital contribution to, (collectively an "Investment") any other Person,
except:
(a) cash and cash equivalents and other publicly traded equity
and debt instruments reasonably acceptable to the Bank;
(b) loans and advances to officers, directors, employees and
shareholders not to exceed in the aggregate $2,000,000;
(c) Investments in and to a Credit Party or any wholly-owned
subsidiary of the Borrower; and
26
(d) other Investments in an aggregate principal amount (on a
cost basis) at any time of up to $5,000,000.
6.10 Sales of Assets. The Borrower will not, nor will it permit any
subsidiary to, sell, lease or otherwise transfer all or any substantial part of
its assets to, any other Person, or discontinue or eliminate any business line
or segment, provided that the foregoing limitation shall not prohibit, during
any fiscal quarter, a transfer of assets or the discontinuance or elimination of
a business line or segment (in a single transaction or in a series of related
transactions) unless the aggregate assets to be so transferred or utilized in a
business line or segment to be so discontinued, when combined with all other
assets transferred, and all other assets utilized in all other business lines or
segments discontinued, during such fiscal quarter and the immediately preceding
seven fiscal quarters, either (x) constituted more than 20% of Consolidated
Total Assets at the end of the eighth fiscal quarter immediately preceding such
fiscal quarter, or (y) contributed more than 20% of Consolidated Operating
Profits during the eight fiscal quarters immediately preceding such fiscal
quarter.
6.11 Maintenance of Existence. The Borrower shall, and shall cause each
subsidiary to, maintain its corporate existence and carry on its business in
substantially the same manner and in substantially the same fields as such
business is now carried on and maintained.
6.12 Use of Proceeds. The proceeds of the Loans will be used by the
Borrower for general working capital purposes and acquisitions.
SECTION 7. EVENTS OF DEFAULT
7.1 Event of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Agreement:
(a) the Borrower shall fail to pay when due any principal of
any Loan or shall fail to pay any interest on any Loan within five
Business Days after such interest shall become due, or shall fail to
pay any fee or other amount payable hereunder within five Business Days
after such fee or other amount becomes due; or
(b) the Borrower or any Guarantor shall fail to observe or
perform any covenant or agreement contained in this Agreement (other
than those covered by clause (a) above); or
(c) any representation, warranty, certification or statement
made by the Credit Parties in Section 5 or in any certificate,
financial statement or other document delivered pursuant to this
Agreement shall prove to
27
have been incorrect in any material respect when made (or deemed made);
or
(d) the Borrower, any Guarantor or any subsidiary shall fail
to make any payment in respect of Funded Debt outstanding (other than
the Note) when due or within any applicable grace period; or
(e) any event or condition shall occur which results in the
acceleration of the maturity of Funded Debt outstanding of the
Borrower, any Guarantor or any subsidiary or the purchase of such
Funded Debt by the Borrower (or its designee) or such Guarantor (or its
designee) or such subsidiary (or its designee) prior to the scheduled
maturity thereof or enables (or, with the giving of notice or lapse of
time or both, would enable) the holders of such Funded Debt or any
Person acting on such holders' behalf to accelerate the maturity
thereof or require the purchase thereof by the Borrower (or its
designee) or such Guarantor (or its designee) or such subsidiary (or
its designee) prior to the scheduled maturity thereof, without regard
to whether such holders or other Person shall have exercised or waived
their right to do so;
(f) the Borrower or any Guarantor or any subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; or
(g) an involuntary case or other proceeding shall be commenced
against the Borrower or any Guarantor or any subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
any Guarantor or any subsidiary under the federal bankruptcy laws as
now or hereafter in effect; or
(h) the Borrower or any member of the Controlled Group shall
fail to pay when due any material amount which it shall have become
liable to
28
pay to the PBGC or to a Plan under Title IV of ERISA; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause
a trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or Plans
to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within 30 days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or the
Borrower or any other member of the Controlled Group shall enter into,
contribute or be obligated to contribute to, terminate or incur any
withdrawal liability with respect to, a Multiemployer Plan; or
(i) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $1,000,000.00 shall be rendered
against the Borrower or any Guarantor or any subsidiary and such
judgment or order shall continue unsatisfied and unstayed for a period
of 30 days; or
(j) a federal tax lien in excess of $100,000.00 shall be filed
against the Borrower under Section 6323 of the Code or a lien of the
PBGC shall be filed against the Borrower under Section 4068 of ERISA
and in either case such lien shall remain undischarged for a period of
25 days after the date of filing; or
(k) (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of the
voting stock of the Borrower; or (ii) as of any date a majority of the
Board of Directors of the Borrower consists of individuals who were not
either (A) directors of the Borrower as of the corresponding date of
the previous year, (B) selected or nominated to become directors by the
Board of Directors of the Borrower of which a majority consisted of
individuals described in clause (A), or (C) selected or nominated to
become directors by the Board of Directors of the Borrower of which a
majority consisted of individuals described in clause (A) and
individuals described in clause (B).
7.2 Remedies. Upon the occurrence of an Event of Default, and at any
time thereafter, the Bank may immediately terminate the Commitment which shall
thereupon terminate, and by notice to the Borrower (i) declare the unpaid
principal of the Note, together with any accrued and unpaid interest owing
thereon, to be, and the Note and the outstanding Loans and all other
indebtedness or obligations owing hereunder or under any of the other Credit
Documents or in connection herewith or therewith, shall thereupon become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower, and (ii) enforce
any other rights and interests available under the Credit Documents or at law,
including
29
rights of set off. Notwithstanding the foregoing, in the case of an Event of
Default described in clauses (f) or (g) of Section 7.1 relating to bankruptcy
and insolvency, the Note, the Loans, and all accrued interest, fees and other
indebtedness and other amounts owing hereunder or under any of the other Credit
Documents to the Bank shall become immediately due and payable without
presentment, demand, protest or the giving of any notice or other action by the
Bank, all of which are hereby waived by the Borrower.
SECTION 8. MISCELLANEOUS
8.1 Notices. Notices and other communications shall be effective, and
duly given, (i) when received, (ii) when transmitted by telecopy or other
facsimile device to the numbers set out below if transmitted before 5:00 p.m. on
a Business Day, or otherwise on the next following Business Day, (iii) the day
following the day on which delivered prepaid to a reputable national overnight
air courier service, or (iv) the third Business Day following the day sent by
certified or registered mail postage prepaid, in each case to the parties at the
address shown below, or at such other address as may be specified by written
notice to the other parties:
Borrower: Pharmaceutical Product Development, Inc.
0000 00xx Xxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Bank: Wachovia Bank, X.X.
Xxxx Xxxxxx Xxx 00000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Xx. Xxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
8.2 Right of Set-Off. In addition to other rights now or hereafter
available to the Bank under the Credit Documents or under applicable law, the
Bank may, after the occurrence of an Event of Default, exercise rights of
set-off and may appropriate and apply any and all deposits (general and
specific) or other amounts held or owing by the Bank to the Note and the Loans
and other amounts owing by the Borrower or any Guarantor hereunder or under the
other Credit Documents, regardless of whether the Note and the Loans or such
other amounts are contingent or unmatured, without presentment, demand, protest
or notice of any kind (any such rights of presentment, demand, protest or notice
being hereby waived).
8.3 Benefit of Agreement. This Agreement shall be binding upon, and
shall inure to the benefit of, the respective successors and permitted assigns
of the parties
30
hereto; provided that neither the Borrower nor any Guarantor may assign or
transfer any its obligations or interests without prior written consent of the
Bank.
8.4 No Waiver. No failure or delay on the part of the Bank in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Bank, on the one hand, and the
Credit Parties, on the other hand, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
under any other Credit Document preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder or thereunder.
The rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies which the Bank would otherwise have.
8.5 Payment of Expenses. The Borrower agrees to: (i) pay all reasonable
out-of-pocket costs and expenses of the Bank in connection with (A) negotiation,
preparation, execution and delivery of the Credit Documents (including
reasonable fees and expenses of Bank counsel) and any amendments, waivers or
consents relating to the Credit Documents and (B) enforcement of the Credit
Documents and the documents and instruments referred to therein (including,
without limitation, in connection with any such enforcement, the reasonable fees
and disbursements of counsel for the Bank); (ii) pay and hold the Bank harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to the Bank) to pay such taxes;
and (iv) indemnify the Bank, its officers, directors, employees and
representatives from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of any investigation,
litigation or other proceeding (whether or not the Bank is a party thereto)
related to the entering into and/or performance of any Credit Document or the
use of proceeds of the Loan (including other extensions of credit) hereunder or
the consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified).
8.6 Amendments. Neither this Agreement nor any of the other Credit
Documents may be amended or modified, nor shall consents or waivers be effective
except with the written consent of the parties hereto.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same agreement. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
31
8.8 Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
8.9 Survival. The indemnities and payment obligations hereunder,
including those set out in Sections 2.8, 2.9, 2.10, 2.11, 2.12, 2.13 and 8.5,
and the representations and warranties made herein or in connection herewith
shall survive the making and repayment of the Loans and termination of
Commitment hereunder.
8.10 Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed by and construed in accordance with the
laws of the State of North Carolina.
8.11. Consent to Jurisdiction. The Borrower and each Guarantor (a)
submits to personal jurisdiction in the State of North Carolina, the courts
thereof and the United States District Courts sitting therein, for the
enforcement of this Agreement, the Note and the other Credit Documents, (b)
waives any and all personal rights under the law of any jurisdiction to object
on any basis (including, without limitation, inconvenience of forum) to
jurisdiction or venue within the State of North Carolina for the purpose of
litigation to enforce this Agreement, the Note or the other Credit Documents,
and (c) agrees that service of process may be made upon it by personal delivery
or certified or registered mail in the manner prescribed in Section 8.1 for the
giving of notice to the Borrower (the address for notices to each Guarantor
being set forth on the signature pages hereof). Nothing herein contained,
however, shall prevent the Bank from bringing any action or exercising any
rights against any security and against the Borrower or any Guarantor
personally, and against any assets of the Borrower or any Guarantor, within any
other state or jurisdiction.
8.12 Participations. The Bank shall have the right, at its sole
discretion and at any time or from time to time, to invite participations to
participate in the Loans and the Borrower agrees to execute any documents
reasonably requested by the Bank in connection with any such participation(s).
The Bank may disclose to any participants or prospective participants any
information or other data or material in the Bank's possession relating to the
Borrower, its subsidiaries, the Guarantors, the Loans, and/or the Credit
Documents, without further consent of, or notice to the Borrower.
[The Remainder of this Page Intentionally Left Blank]
32
IN WITNESS WHEREOF, this Loan Agreement has been executed this day by
duly authorized officers of the undersigned parties.
BORROWER: PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.,
a North Carolina corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
Address for Notice:
0000 00xx Xxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Phone: (000) 000-0000
Attest: Fax: (000) 000-0000
Xxxx X. Xxxxxxxxx, Xx.
----------------------
Secretary
[Corporate Seal]
33
IN WITNESS WHEREOF, this Loan Agreement has been executed this day by
duly authorized officers of the undersigned parties.
GUARANTORS: PPD PHARMACO, INC., a Texas corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
Address for Notice:
0000 00xx Xxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Phone: (000) 000-0000
Attest: Fax: (000) 000-0000
/s/ Xxxx X. Xxxxxxxxx, Xx.
--------------------------
Secretary
[Corporate Seal]
APBI ENVIRONMENTAL SCIENCES GROUP, INC.,
a Virginia corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
Address for Notice:
0000 00xx Xxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Phone: (000) 000-0000
Attest: Fax: (000) 000-0000
/s/ Xxxx X. Xxxxxxxxx, Xx.
--------------------------
Secretary
[Corporate Seal]
34
IN WITNESS WHEREOF, this Loan Agreement has been executed this day by
duly authorized officers of the undersigned parties.
BANK: WACHOVIA BANK, N.A.
By: /s/ Xxxxxxx Xxxx IV
-------------------
Name: Xxxxxxx Xxxx IV
Title: Assistant Vice President
35
Schedule I
List of Material Subsidiaries
PPD PHARMACO, INC., a Texas corporation
APBI ENVIRONMENTAL SCIENCES GROUP, INC., a Virginia corporation
36
ANNEX A
PROMISSORY NOTE
$50,000,000.00 July ____, 1997
FOR VALUE RECEIVED, the undersigned, PHARMACEUTICAL PRODUCT
DEVELOPMENT, INC., a North Carolina corporation (the "Borrower"), promises to
pay to the order of WACHOVIA BANK, N.A., its endorsees, successors and assigns
(the "Bank") on or before the Termination Date the principal sum of FIFTY
MILLION AND NO/100 DOLLARS ($50,000,000.00) or, if less, the aggregate unpaid
principal amount of all Loans made by the Bank to the Borrower, in lawful money
of the United States in immediately available funds at the office of the Bank as
provided in the Loan Agreement referenced below or as otherwise directed by the
Bank pursuant to the terms of the Loan Agreement, together with interest, in
like money and funds, on the unpaid principal amount hereof at the rates and on
the dates as set forth in the Loan Agreement.
This Note is issued pursuant to, and is entitled to the benefits of,
the Loan Agreement dated as of the date hereof (as the same may be amended or
modified and in effect from time to time, the "Loan Agreement") among the
Borrower, the Guarantors identified therein and the Bank, to which Loan
Agreement reference is hereby made for a statement of the terms and conditions
under which this Note may be prepaid or its maturity date accelerated.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Loan Agreement.
In the event payment of amounts due hereunder are accelerated under the
terms of the Loan Agreement, all such amounts shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which are hereby waived.
TIME IS OF THE ESSENCE OF THIS CONTRACT. In addition and not in
limitation of the foregoing and the provisions of the Loan Agreement, the
Borrower further agrees to pay all expenses of collection, including reasonable
attorneys' fees, if this Note shall be collected by law or through an attorney
at law, or in bankruptcy, receivership or other court proceedings.
This Note shall be governed by and construed in accordance with the
laws of the State of North Carolina. This Note is intended to be effective as an
instrument executed under seal.
37
PRESENTMENT, DEMAND, PROTEST, NOTICE OF DISHONOR AND NOTICE OF ANY KIND
ARE HEREBY WAIVED BY THE BORROWER.
Executed under hand and seal of the Borrower on the date first above
written.
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.,
a North Carolina corporation
By:
----------------------
Name: ____________________
Title: ___________________
Attest:
---------------------------
_________________ Secretary
[Corporate Seal]
38
ANNEX B
Form of Joinder Agreement
THIS JOINDER AGREEMENT (the "Agreement"), dated as of _________, 19__,
is by and between _________________________________________________________, a
________________ (the "Applicant Guarantor"), and WACHOVIA BANK, N.A. under that
certain Loan Agreement dated as of July ____, 1997 (as amended, modified,
supplemented, renewed and extended, the "Loan Agreement") by and among
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC., a North Carolina corporation, as
Borrower, and the other Guarantors identified therein and Wachovia Bank, N.A.
All of the defined terms in the Loan Agreement are incorporated herein by
reference.
The Applicant Guarantor is a Material Subsidiary and desires to become
a Guarantor under the Loan Agreement.
Accordingly, the Applicant Guarantor hereby agrees as follows with the
Bank:
1. The Applicant Guarantor hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Applicant Guarantor will be deemed
to be a party to the Loan Agreement and a "Guarantor" for all purposes of the
Loan Agreement and the other Credit Documents, and shall have all of the
obligations of a Guarantor thereunder as if it had executed the Loan Agreement
and the other Credit Documents. The Applicant Guarantor agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Documents,
including without limitation (i) all of the affirmative and negative covenants
set forth in Section 6 the Loan Agreement and (ii) all of the undertakings and
waivers set forth in Section 3 of the Loan Agreement. Without limiting the
generality of the foregoing terms of this paragraph 1, the Applicant Guarantor
hereby (A) jointly and severally together with the other Guarantors, guarantees
to the Bank as provided in Section 3 of the Loan Agreement, the prompt payment
and performance of the Guaranteed Obligations in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof
and (B) agrees that if any of the Guaranteed Obligations are not paid or
performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise), the Applicant Guarantor will, jointly
and severally together with the other Guarantors, promptly pay and perform the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of such extension
or renewal.
39
2. The Applicant Guarantor acknowledges and confirms that it has
received a copy of the Loan Agreement and the Schedules and Exhibits thereto.
The information on the Schedules to the Loan Agreement are amended to provide
the information shown on the attached Schedule A.
3. The Applicant Guarantor hereby waives acceptance by the Bank of the
guaranty by the Applicant Guarantor under Section 3 of the Loan Agreement upon
the execution of this Joinder Agreement by the Applicant Guarantor.
4. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
5. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Applicant Guarantor has caused this Joinder
Agreement to be duly executed by its authorized officers for the benefit of the
Bank as of the day and year first above written.
APPLICANT GUARANTOR
By:
----------------------
Name: ____________________
Title: ___________________
Attest:
---------------------------
_________________ Secretary
[Corporate Seal]
Address for Notices:
_________________________
_________________________
Attn:
Telephone: ______________
Telecopy: _______________
Acknowledged and accepted:
WACHOVIA BANK, N.A.
By:
---------------------
Name: ___________________
Title: __________________
40
Wachovia Bank, N.A.
July ___, 1997
Page 1
ANNEX C
[Closing Date]
Wachovia Bank, X.X.
Xxxx Xxxxxx Xxx 00000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Re: $50 Million Loan Agreement dated as of the date hereof (the "Loan
Agreement") among Pharmaceutical Product Development, Inc., a North
Carolina corporation, the Guarantors identified therein and Wachovia
Bank, N.A. Terms used but not otherwise defined shall have the meanings
provided in the Loan Agreement.
Ladies and Gentlemen:
I serve as General Counsel to Pharmaceutical Product Development, Inc.,
a North Carolina corporation (the "Borrower"), and those subsidiaries of the
Borrower which are Guarantors under the Loan Agreement (collectively with the
Borrower, the "Credit Parties").
This opinion is given in accordance with the requirements of Section
4.1(b) of the Loan Agreement.
In my capacity as General Counsel, I have participated in the
preparation of the Loan Agreement and the other Credit Documents, and have
examined copies of each of the foregoing documents executed by the Credit
Parties. I also have examined such certificates, documents and records, and have
made such examination of law, as I have deemed necessary to enable me to render
the opinions expressed below. In addition, I have examined and relied as to
matters of fact upon representations and warranties contained in the Credit
Documents and in certificates, copies of which have been furnished to you, in
connection with the Credit Documents.
For purposes of paragraph 4 below, I have assumed that the Credit
Documents are the legal, valid and binding obligations of the parties thereto
other than the Credit Parties, enforceable against them in accordance with their
respective terms.
The opinions expressed below are limited to matters governed by the
internal laws of the State of North Carolina and the federal laws of the United
States of America.
41
Wachovia Bank, N.A.
July ___, 1997
Page 2
Whenever the phrase "to the best of my knowledge" is used herein, it
refers to my actual knowledge learned by me in my position as General Counsel to
the Credit Parties without investigation.
Based on the foregoing, and subject to the qualifications stated
herein, I am of the opinion that:
1. Each of the Credit Parties is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation as identified in the Loan Agreement and is qualified to carry on
its business in the manner as contemplated under the Credit Documents and as now
conducted.
2. Each of the Credit Parties has all requisite corporate power and
authority, and the legal right, to make, execute, deliver and perform the Loan
Agreement and the other Credit Documents to which it is a party and to borrow
and accept extensions of credit or give a guaranty in respect thereof, as
appropriate, and has taken all necessary corporate action to authorize the
execution, delivery and performance of the Loan Agreement and other Credit
Documents to which it is a party.
3. No consent or authorization of, filing with, notice to or other
similar act by or in respect of, any federal court or Governmental Authority or
any other Person is required to be obtained or made by or on behalf of any
Credit Party on or prior to the date hereof in connection with the execution,
delivery or performance of the Credit Documents, except for consents, approvals,
authorizations or other actions as have been obtained or made.
4. To the best of my knowledge, no claim, litigation or proceeding
before an arbitrator or governmental authority is pending or threatened which,
if adversely determined, would reasonably be expected to have a material adverse
effect on the Borrower and its subsidiaries taken as a whole.
5. The Loan Agreement, and each of the other Credit Documents to which
it is a party, have been duly executed and delivered by each Credit Party and
constitute the legal, valid and binding obligations of each Credit Party,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
6. The execution, delivery and performance by each Credit Party of the
Loan Agreement and the other Credit Documents to which it is a party, the
borrowings and
42
Wachovia Bank, N.A.
July ___, 1997
Page 3
guaranties thereunder and the use of the proceeds thereof will not violate or
otherwise contravene the articles of incorporation or bylaws of any of the
Credit Parties or any Requirement of Law, or, to the best of my knowledge, any
contractual obligation of any of the Credit Parties.
The opinions expressed herein do not purport to cover, and I express no
opinion with respect to, the applicability of Section 548 of the federal
Bankruptcy Coder or any comparable provision of state law, including any
provisions related to fraudulent conveyances. I call your attention to the fact
that certain cases have held that an obligation of a corporation incurred to
purchase such corporation's stock is subordinate to the claims of general
creditors upon the bankruptcy or insolvency of the corporation. In addition, I
express no opinion as to whether a subsidiary may guarantee, become a joint and
several obligor or otherwise become liable for, or pledge its assets to secure,
indebtedness incurred by its parent or other subsidiary of its parent except to
the extent that such subsidiary may be determined to have benefited from the
incurrence of such indebtedness by its parent or such other subsidiary, or as to
whether such benefit may be measured other than by the extent to which the
proceeds of the indebtedness incurred by its parent or such other subsidiary are
directly or indirectly made available to such subsidiary for its corporate
purposes.
This opinion is rendered solely for your benefit, and the benefit of
your successors and assigns, in connection with the transactions described
above. This opinion may not be used or relied upon by any other person without
my prior written consent.
Sincerely yours,
Xxxx X. Xxxxxxxxx, Xx.
General Counsel
cc: Xx. Xxxx X. Xxxxxx
43
PROMISSORY NOTE
44
$50,000,000.00 August 7, 1997
FOR VALUE RECEIVED, the undersigned, PHARMACEUTICAL PRODUCT
DEVELOPMENT, INC., a North Carolina corporation (the "Borrower"), promises to
pay to the order of WACHOVIA BANK, N.A., its endorsees, successors and assigns
(the "Bank") on or before the Termination Date the principal sum of FIFTY
MILLION AND NO/100 DOLLARS ($50,000,000.00) or, if less, the aggregate unpaid
principal amount of all Loans made by the Bank to the Borrower, in lawful money
of the United States in immediately available funds at the office of the Bank as
provided in the Loan Agreement referenced below or as otherwise directed by the
Bank pursuant to the terms of the Loan Agreement, together with interest, in
like money and funds, on the unpaid principal amount hereof at the rates and on
the dates as set forth in the Loan Agreement.
This Note is issued pursuant to, and is entitled to the benefits of,
the Loan Agreement dated as of the date hereof (as the same may be amended or
modified and in effect from time to time, the "Loan Agreement") among the
Borrower, the Guarantors identified therein and the Bank, to which Loan
Agreement reference is hereby made for a statement of the terms and conditions
under which this Note may be prepaid or its maturity date accelerated.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Loan Agreement.
In the event payment of amounts due hereunder are accelerated under the
terms of the Loan Agreement, all such amounts shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which are hereby waived.
TIME IS OF THE ESSENCE OF THIS CONTRACT. In addition and not in
limitation of the foregoing and the provisions of the Loan Agreement, the
Borrower further agrees to pay all expenses of collection, including reasonable
attorneys' fees, if this Note shall be collected by law or through an attorney
at law, or in bankruptcy, receivership or other court proceedings.
This Note shall be governed by and construed in accordance with the
laws of the State of North Carolina. This Note is intended to be effective as an
instrument executed under seal.
45
PRESENTMENT, DEMAND, PROTEST, NOTICE OF DISHONOR AND NOTICE OF ANY KIND
ARE HEREBY WAIVED BY THE BORROWER.
Executed under hand and seal of the Borrower on the date first above
written.
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.,
a North Carolina corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President & Treasurer
Attest:
/s/ Xxxx X. Xxxxxxxxx, Xx.
--------------------------
Secretary
[Corporate Seal]
