EXHIBIT 10.25
EXECUTION COPY
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LOAN AND SECURITY AGREEMENT
by and among
HOLOGIC, INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as Lenders,
and
FOOTHILL CAPITAL CORPORATION,
as Agent
Dated as of September 21, 2001
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Table of Contents
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Page
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1. DEFINITIONS AND CONSTRUCTION........................................................ 1
1.1 Definitions.................................................................... 1
1.2 Accounting Terms............................................................... 24
1.3 Code........................................................................... 25
1.4 Construction................................................................... 25
1.5 Schedules and Exhibits......................................................... 25
2. LOAN AND TERMS OF PAYMENT........................................................... 25
2.1 Revolver Advances............................................................. 25
2.2 Term Loan..................................................................... 27
2.3 Borrowing Procedures and Settlements.......................................... 27
2.4 Payments...................................................................... 33
2.5 Overadvances.................................................................. 36
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations... 36
2.7 Cash Management............................................................... 37
2.8 Crediting Payments; Float Charge.............................................. 38
2.9 Designated Account............................................................ 38
2.10 Maintenance of Loan Account; Statements of Obligations........................ 39
2.11 Fees.......................................................................... 39
2.12 Letters of Credit............................................................. 40
2.13 Reserved...................................................................... 43
2.14 Capital Requirements.......................................................... 43
2.15 Joint and Several Liability of Borrowers...................................... 43
3. CONDITIONS; TERM OF AGREEMENT....................................................... 46
3.1 Conditions Precedent to the Initial Extension of Credit........................ 46
3.2 Conditions Subsequent to the Initial Extension of Credit....................... 49
3.3 Conditions Precedent to all Extensions of Credit............................... 49
3.4 Term........................................................................... 50
3.5 Effect of Termination.......................................................... 50
3.6 Early Termination by Borrowers................................................. 50
4. CREATION OF SECURITY INTEREST....................................................... 51
4.1 Grant of Security Interest..................................................... 51
4.2 Negotiable Collateral.......................................................... 52
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral......... 52
4.4 Delivery of Additional Documentation Required; Commercial Tort Claims.......... 53
4.5 Power of Attorney.............................................................. 53
4.6 Right to Inspect; Appraisals................................................... 54
4.7 Control Agreements............................................................. 54
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Table of Contents
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(Continued)
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5. REPRESENTATIONS AND WARRANTIES...................................................... 54
5.1 No Encumbrances............................................................... 54
5.2 Eligible Accounts............................................................. 54
5.3 Eligible Inventory............................................................ 55
5.4 Equipment..................................................................... 55
5.5 Location of Inventory and Equipment........................................... 56
5.6 Inventory Records............................................................. 56
5.7 Location of Chief Executive Office; FEIN...................................... 56
5.8 Due Organization and Qualification; Subsidiaries.............................. 56
5.9 Due Authorization; No Conflict................................................ 57
5.10 Litigation.................................................................... 57
5.11 No Material Adverse Change.................................................... 57
5.12 Fraudulent Transfer........................................................... 58
5.13 Employee Benefits............................................................. 58
5.14 Environmental Condition....................................................... 58
5.15 Brokerage Fees................................................................ 58
5.16 Intellectual Property......................................................... 58
5.17 Leases........................................................................ 58
5.18 Deposit Accounts.............................................................. 59
5.19 Complete Disclosure........................................................... 59
5.20 Indebtedness.................................................................. 59
6. AFFIRMATIVE COVENANTS............................................................... 59
6.1 Accounting System............................................................. 59
6.2 Collateral Reporting.......................................................... 59
6.3 Financial Statements, Reports, Certificates................................... 60
6.4 Guarantor Reports............................................................. 62
6.5 Return........................................................................ 62
6.6 Maintenance of Properties..................................................... 63
6.7 Taxes......................................................................... 63
6.8 Insurance..................................................................... 63
6.9 Location of Inventory and Equipment........................................... 64
6.10 Compliance with Laws.......................................................... 64
6.11 Leases........................................................................ 64
6.12 Brokerage Commissions......................................................... 64
6.13 Existence..................................................................... 64
6.14 Environmental................................................................. 64
6.15 Disclosure Updates............................................................ 65
6.16 Additional Investments........................................................ 65
7. NEGATIVE COVENANTS.................................................................. 65
7.1 Indebtedness.................................................................. 65
7.2 Liens......................................................................... 66
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Table of Contents
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(continued)
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7.3 Restrictions on Fundamental Changes........................................................................... 66
7.4 Disposal of Assets............................................................................................ 67
7.5 Change Name................................................................................................... 67
7.6 Guarantee..................................................................................................... 67
7.7 Nature of Business............................................................................................ 67
7.8 Prepayments and Amendments.................................................................................... 67
7.9 Change of Control............................................................................................. 67
7.10 Consignments.................................................................................................. 67
7.11 Distributions................................................................................................. 67
7.12 Accounting Methods............................................................................................ 68
7.13 Investments................................................................................................... 68
7.14 Transactions with Affiliates.................................................................................. 68
7.15 Suspension.................................................................................................... 68
7.16 Additional Investment......................................................................................... 68
7.17 Use of Proceeds............................................................................................... 68
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees............................ 69
7.19 Securities Accounts........................................................................................... 69
7.20 Financial Covenants........................................................................................... 69
7.21 Permitted Transactions........................................................................................ 69
7.22 Hologic Investment Account.................................................................................... 69
8. EVENTS OF DEFAULT................................................................................................... 69
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.............................................................................. 71
9.1 Rights and Remedies............................................................................................ 71
9.2 Remedies Cumulative............................................................................................ 73
10. TAXES AND EXPENSES.................................................................................................. 74
11. WAIVERS; INDEMNIFICATION............................................................................................ 74
11.1 Demand; Protest; etc.......................................................................................... 74
11.2 The Lender Group's Liability for Collateral................................................................... 74
11.3 Indemnification............................................................................................... 74
12. NOTICES............................................................................................................. 75
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.......................................................................... 76
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.......................................................................... 77
14.1 Assignments and Participations................................................................................ 77
14.2 Successors.................................................................................................... 79
15. AMENDMENTS; WAIVERS................................................................................................. 79
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Table of Contents
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(continued)
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15.1 Amendments and Waivers........................................................................................ 79
15.2 Replacement of Holdout Lender................................................................................. 80
15.3 No Waivers; Cumulative Remedies............................................................................... 81
16. AGENT; THE LENDER GROUP............................................................................................. 81
16.1 Appointment and Authorization of Agent........................................................................ 81
16.2 Delegation of Duties.......................................................................................... 82
16.3 Liability of Agent............................................................................................ 82
16.4 Reliance by Agent............................................................................................. 82
16.5 Notice of Default or Event of Default......................................................................... 83
16.6 Credit Decision............................................................................................... 83
16.7 Costs and Expenses; Indemnification........................................................................... 84
16.8 Agent in Individual Capacity.................................................................................. 84
16.9 Successor Agent............................................................................................... 85
16.10 Lender in Individual Capacity................................................................................. 85
16.11 Withholding Taxes............................................................................................. 85
16.12 Collateral Matters............................................................................................ 87
16.13 Restrictions on Actions by Lenders; Sharing of Payments....................................................... 88
16.14 Agency for Perfection......................................................................................... 89
16.15 Payments by Agent to the Lenders.............................................................................. 89
16.16 Concerning the Collateral and Related Loan Documents.......................................................... 89
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information.. 89
16.18 Several Obligations; No Liability............................................................................. 90
16.19 Legal Representation of Agent................................................................................. 91
17. GENERAL PROVISIONS................................................................................................... 91
17.1 Effectiveness.................................................................................................. 91
17.2 Section Headings............................................................................................... 91
17.3 Interpretation................................................................................................. 91
17.4 Severability of Provisions..................................................................................... 91
17.5 Amendments in Writing.......................................................................................... 91
17.6 Counterparts; Telefacsimile Execution.......................................................................... 91
17.7 Revival and Reinstatement of Obligations....................................................................... 92
17.8 Integration.................................................................................................... 92
17.9 Parent as Agent for Borrowers.................................................................................. 92
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LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
September 21, 2001 by and among, on the one hand, the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, a California
corporation, as agent for the Lenders ("Agent"), and, on the other hand,
HOLOGIC, INC., a Delaware corporation ("Parent"), FLUOROSCAN IMAGING SYSTEMS,
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INC., a Delaware corporation and a wholly-owned subsidiary of Parent
("FluoroScan"), and DIRECT RADIOGRAPHY CORP., a Delaware corporation and a
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wholly-owned subsidiary of Parent ("DRC" and, collectively with the Parent and
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FluoroScan, jointly, severally and jointly and severally, the "Borrowers" and
each a "Borrower").
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The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have
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the following definitions:
"Account Debtor" means any Person who is or who may become obligated under,
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with respect to, or on account of, an Account, chattel paper, or a General
Intangible.
"Accounts" means all of Borrowers' now owned or hereafter acquired right,
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title, and interest with respect to "accounts", as that term is defined from
time to time in the Code, and any and all supporting obligations in respect
thereof.
"Additional Documents" has the meaning set forth in Section 4.4.
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"Additional Investment" means an investment in any Borrower made by a
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Person other than another Borrower Party after the Closing Date in consideration
of (i) the sale of Stock of Parent, (ii) the issuance of Indebtedness by Parent
that is subordinated in payment and priority to all Obligations on terms
satisfactory to, and consented to in writing by, Agent in its Permitted
Discretion and (iii) the contributions to, or other investment in, the DRC Joint
Venture by a Person other than a Borrower Party on terms satisfactory to, and
consented to in writing by, Agent in its Permitted Discretion; provided,
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however, that if any Additional Investment requires the payment of interest or
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cash dividends (directly or indirectly) by a Borrower or any of its
Subsidiaries, such Additional Investment shall be on terms satisfactory to Agent
in its Permitted Discretion.
"Additional Investment Proceeds" means the net cash proceeds received by a
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Borrower as a result of one or more Additional Investments; provided, however,
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that with respect to any Additional Investment made by a Person or Persons in
consideration of subordinated Indebtedness issued by a Borrower, Additional
Investment Proceeds shall not include the amount of such proceeds equal to such
Person's or Persons' tax liability on the original issue discount accretion of
the instrument(s) evidencing such subordinated Indebtedness for the period
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commencing on the date of the issuance of such instrument and terminating on the
Maturity Date.
"Administrative Borrower" has the meaning set forth in Section 17.9.
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"Advances" has the meaning set forth in Section 2.1.
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"Affiliate" means, as applied to any Person, any other Person who, directly
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or indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, in any event: (a) any Person which owns directly or
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indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person, (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"Agent" means Foothill, solely in its capacity as agent for the Lenders
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hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by Agent from time
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to time as the account into which Borrowers shall make all payments to Agent for
the benefit of the Lender Group and into which the Lender Group shall make all
payments to Agent under this Agreement and the other Loan Documents; unless and
until Agent notifies the Administrative Borrower and the Lender Group to the
contrary, Agent's Account shall be that certain deposit account bearing account
number 323-266193 and maintained by Agent with The Chase Manhattan Bank, 4 New
Xxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA #000000000.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
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"Agent's Liens" means the Liens granted by Borrowers to Agent for the
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benefit of the Lender Group under this Agreement or the other Loan Documents.
"Agent-Related Persons" means Agent together with its Affiliates, officers,
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directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
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"Applicable Prepayment Premium" means, as of any date of determination, an
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amount equal to (a) during the period of time from and after the date of the
execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 3% times the sum of (i) the Maximum Revolver
Amount, plus (ii) the outstanding principal balance of the Term Loan on the
Closing Date, (b) during the period of time from and including the date that is
the first anniversary of the Closing Date up to the date that is the second
anniversary of the Closing Date, 2% times the sum of (i) the Maximum Revolver
Amount, plus (ii) the outstanding principal balance of the Term Loan on the
Closing Date, and (c) during the period of time from and
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including the date that is the second anniversary of the Closing Date up to the
Maturity Date, 1% times the sum of (i) the Maximum Revolver Amount, plus (ii)
the outstanding principal balance of the Term Loan on the Closing Date.
"Assignee" has the meaning set forth in Section 14.1.
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"Assignment and Acceptance" means an Assignment and Acceptance in the form
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of Exhibit A-1.
"Authorized Person" means any officer or other employee of the
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Administrative Borrower.
"Availability" means, as of any date of determination, if such date is a
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Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrowers are entitled to borrow as Advances under Section 2.1
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(after giving effect to all then outstanding Obligations and all sublimits and
reserves applicable hereunder).
"Bankruptcy Code" means the United States Bankruptcy Code, as in effect
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from time to time.
"Base Rate" means, the rate of interest announced from time to time within
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Xxxxx Fargo at its principal office in San Francisco as its "prime rate", with
the understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Base Rate Loan" means each portion of an Advance or the Term Loan that
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bears interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 0.5 percentage points.
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"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
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of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of any
Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the
past six years.
"Board of Directors" means the board of directors (or comparable managers)
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of the Parent or any committee thereof duly authorized to act on behalf thereof.
"Books" means all of each Borrower's now owned or hereafter acquired books
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and records (including all of its Records indicating, summarizing, or evidencing
its assets (including the Collateral) or liabilities, all of its Records
relating to its business operations or financial condition, and all of its goods
or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth in the
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preamble to this Agreement.
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"Borrower Party" means each of, and "Borrower Parties" means all of, the
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Guarantor and each of the Borrowers.
"Borrowing" means a borrowing hereunder consisting of Advances (or term
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loans, in the case of the Term Loan) made on the same day by the Lenders (or
Agent on behalf thereof), by Swing Lender in the case of a Swing Loan or by
Agent in the case of an Agent Advance, in each case, to the Administrative
Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1.
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"Borrowing Base Certificate" means a certificate in the form of
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Exhibit B-1.
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"Business Day" means any day that is not a Saturday, Sunday, or other day
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on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be capitalized for
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financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
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obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued or
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unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 1 year from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Xxxxx'x, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
Xxxxx'x, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
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"Cash Management Account" has the meaning set forth in Section 2.7(a).
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"Cash Management Agreements" means those certain cash management service
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agreements, in form and substance satisfactory to Agent, each of which is among
the Administrative Borrower, Agent, and one of the Cash Management Banks.
"Change of Control" means (a) any "person" or "group" (within the meaning
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of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
35%, or more, of the Stock of the Parent having the right to vote for the
election of members of the Board of Directors, or (b) a majority of the members
of the Board of Directors do not constitute Continuing Directors, or (c) any
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Borrower ceases to directly own and control 100% of the outstanding capital
Stock of each of its Subsidiaries extant as of the Closing Date; provided, that
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a merger or consolidation permitted pursuant to Section 7.21 shall not be deemed
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a Change of Control.
"Chattel Paper" means all of Borrowers' now owned or hereafter acquired
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right, title, and interest with respect to "chattel paper", including, without
limitation, "tangible chattel paper" and "electronic chattel paper", as such
terms are defined from time to time in the Code, and any and all supporting
obligations in respect thereof.
"Closing Date" means the date of the making of the initial Advance (or
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other extension of credit) hereunder or the date on which Agent sends Borrower a
written notice that each of the conditions precedent set forth in Section 3.1
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either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of Borrowers for
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the 2 year period following the Closing Date (on a year by year basis, and for
the 1 year period following the Closing Date, on a quarterly basis), in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent.
"Code" means the Massachusetts Uniform Commercial Code, as in effect from
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time to time.
"Collateral" means all of each Borrower's now owned or hereafter acquired
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right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Deposit Accounts,
(d) General Intangibles,
(e) Goods,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of each such Borrower that now or hereafter
come into the possession, custody, or control of any member of the Lender Group,
and
(j) the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
Deposit Accounts, or other tangible or intangible property
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resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"Collateral Access Agreement" means a landlord waiver, bailee letter, or
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acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in the Equipment or Inventory, in each case, in form and substance satisfactory
to Agent.
"Collections" means all cash, checks, notes, instruments, and other items
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of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrowers.
"Commercial Tort Claim" means all of Borrowers' right, title, and interest
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with respect to any "commercial tort claim", as such term is defined from time
to time in the Code.
"Commitment" means, with respect to each Lender, its Revolver Commitment,
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its Term Loan Commitment, or its Total Commitment, as the context requires, and,
with respect to all Lenders, their Revolver Commitments, their Term Loan
Commitments, or their Total Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 or on the signature page of the Assignment
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and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
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"Compliance Certificate" means a certificate substantially in the form of
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Exhibit C-1 delivered by the chief financial officer of the Parent to Agent.
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"Continuing Director" means (a) any member of the Board of Directors who
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was a director (or comparable manager) of the Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
the Parent (as such terms are used in Rule 14a-11 under the Exchange Act) and
whose initial assumption of office resulted from such contest or the settlement
thereof.
"Control Agreement" means a control agreement, in form and substance
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satisfactory to Agent, executed and delivered by the applicable Borrower, Agent,
and the applicable securities intermediary with respect to a Securities Account
or bank with respect to a deposit account.
"Copyright Security Agreement" means a copyright security agreement
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executed and delivered by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.
"Daily Balance" means, with respect to each day during the term of this
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Agreement, the amount of an Obligation owed at the end of such day.
"Default" means an event, condition, or default that, with the giving of
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notice, the passage of time, or both, would be an Event of Default.
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"Defaulting Lender" means any Lender that fails to make any Advance (or
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other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3 days from
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and after the date the relevant payment is due, and (b) thereafter, at the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).
"Delaware Facility" means Borrowers' facility located at Building 600,
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Glasgow Business Center, Newark, Delaware.
"Delaware Facility Value" means the fair market value of the Delaware
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Facility as determined by a qualified appraisal company selected by Agent.
"Delaware Mortgage Documents" means the Assignment of Leases, the
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Environmental Indemnity Agreement, the Subordination, Non-Disturbance and
Attornment Agreements, the Tenant Estoppel Certificates, the Mortgage Policy
with respect to the Delaware Facility and other agreements or documents, each in
form and substance satisfactory to Agent, to be executed and delivered by Parent
in connection with the Mortgage on the Delaware Facility.
"Deposit Account" means any "deposit account" (as that term is defined from
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time to time in the Code) maintained by any Borrower.
"Designated Account" means account number 323869386 of the Administrative
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Borrower maintained with the Designated Account Bank, or such other deposit
account of the Administrative Borrower (located within the United States) that
has been designated as such, in writing, by the Administrative Borrower to
Agent.
"Designated Account Bank" means The Chase Manhattan Bank, whose office is
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located at 4 Xxx Xxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and whose ABA
number is 000000000.
"Dilution" means, as of any date of determination, a percentage, based upon
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the experience of the immediately prior 90 days, that is the result of dividing
the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to the Accounts during
such period, by (b) Borrowers' Collections with respect to Accounts during such
period (excluding extraordinary items) plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount
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sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and delivered
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by the Administrative Borrower to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is satisfactory to
Agent.
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"Document" means all of Borrowers' now owned or hereafter acquired right,
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title, and interest with respect to any "document" as that term is defined from
time to time in the Code, and any and all supporting obligations in respect
thereof.
"Dollars" or "$" means United States dollars.
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"DRC Joint Venture" means a sale, transfer, contribution or other
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disposition of the plate business of DRC by way of a joint venture, strategic
alliance, sale of stock or assets, or other similar arrangement among Parent,
DRC and one or more other Persons.
"Due Diligence Letter" means the due diligence letter sent by Agent's
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counsel to the Administrative Borrower, together with the Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, the Parent's and its
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Subsidiaries consolidated net earnings (or loss), minus extraordinary gains,
plus interest expense, income taxes, and depreciation and amortization for such
period, as determined in accordance with GAAP.
"Eligible Accounts" means those Accounts created by any one of the
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Borrowers in the ordinary course of its business, that arise out of such
Borrower's sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made by Borrowers
under the Loan Documents, and that are not excluded as ineligible by virtue of
one or more of the criteria set forth below; provided, however, that such
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criteria may be fixed and revised from time to time by Agent in Agent's
Permitted Discretion to address the results of any audit performed by Agent from
time to time after the Closing Date. In determining the amount to be included,
Eligible Accounts shall be calculated net of customer deposits and unapplied
cash remitted to Borrowers. Eligible Accounts shall not include the following:
---
(a) Accounts that the Account Debtor has failed to pay within 120 days
of original invoice date or Accounts with selling terms of more than 60 days;
(b) Accounts owed by an Account Debtor (or its Affiliates) where 51%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above;
(c) Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of any Borrower;
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional;
(e) Accounts that are not payable in Dollars;
8
(f) Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States, or (ii) is not
organized under the laws of the United States or any state thereof, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit satisfactory to
Agent (as to form, substance, and issuer or domestic confirming bank) that has
been delivered to Agent and is directly drawable by Agent, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Agent;
(g) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which the applicable
Borrower has complied, to the reasonable satisfaction of Agent, with the
Assignment of Claims Act, 31 USC (S) 3727), or (ii) any state of the United
States (exclusive, however, of (y) Accounts owed by any state that does not have
a statutory counterpart to the Assignment of Claims Act, or (z) Accounts owed by
any state that does have a statutory counterpart to the Assignment of Claims Act
as to which the applicable Borrower has complied to Agent's satisfaction);
(h) Accounts with respect to which the Account Debtor is a creditor of
any Borrower, has or has asserted a right of setoff (including, without
limitation, any warranty reserves, customer deposits and Accounts recorded by
Borrowers as deferred revenue in their financial statements), has disputed its
liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute;
(i) Accounts with respect to (A) an Account Debtor (other than PSS
World Medical, Inc.) whose total obligations owing to Borrowers exceed 10% of
all Eligible Accounts to the extent that the obligations owing by such Account
Debtor exceed such percentage and (B) PSS World Medical, Inc. to the extent that
the obligations owing by PSS World Medical, Inc. exceed the lesser of $3,800,000
or 20% of all Eligible Accounts (which dollar amount and percentage the Agent in
its Permitted Discretion may adjust from time to time);
(j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
Borrower has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor;
(k) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, or West Virginia (or any other state that
requires a creditor to file a business activity report or similar document in
order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such state), unless the
applicable Borrower has qualified to do business in New Jersey, Minnesota, West
Virginia, or such other states, or has filed a business activities report with
the applicable division of taxation, the department of revenue, or with such
other state offices, as appropriate, for the then-current year, or is exempt
from such filing requirement;
9
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition, including, without limitation, customer "short pays" and Accounts
with C.O.D. payment terms;
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien;
(n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor;
(o) Accounts that represent the right to receive progress payments or
other advance xxxxxxxx that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services; or
(p) Accounts not generated in the ordinary course of Borrowers'
primary businesses, including, without limitation, Accounts in respect of leases
of Borrowers' owned Real Property.
"Eligible Inventory" means Inventory of the Borrowers consisting of first
------------------
quality finished goods held for sale in the ordinary course of Borrowers'
business located at one of the business locations of the Borrowers set forth on
Schedule E-1 (or in-transit between any such locations), that complies with each
------------
of the representations and warranties respecting Eligible Inventory made by
Borrowers in the Loan Documents, and that is not excluded as ineligible by
virtue of the one or more of the criteria set forth below; provided, however,
-------- -------
that such criteria may be fixed and revised from time to time by Agent in its
Permitted Discretion to address the results of any audit or appraisal performed
by Agent from time to time after the Closing Date. In determining the amount to
be so included, after adjustments by Agent in its Permitted Discretion for xxxx-
ups of raw materials, Inventory shall be valued at the lower of cost or market
on a basis consistent with Borrowers' historical accounting practices. An item
of Inventory shall not be included in Eligible Inventory if:
---
(a) a Borrower does not have good, valid, and marketable title
thereto;
(b) it is not located at one of the locations in the United States set
forth on Schedule E-1 or in transit from one such location to another such
------------
location;
(c) it is located on real property leased by a Borrower, unless it is
subject to a Collateral Access Agreement executed by the lessor of such real
property;
(d) it is in the possession of a bailee, consignee contract
warehouseman or other third party, unless such third party in possession has
authenticated a record acknowledging that it holds possession of such item of
Inventory for the benefit of Agent and the other Lenders, and unless it is
segregated or otherwise separately identifiable from goods of others, if any,
stored on the premises;
(e) it is not subject to a valid and perfected first priority Agent's
Lien;
10
(f) it consists of goods returned or rejected by a Borrower's
customer;
(g) it consists of goods that are obsolete (including without
limitation goods constituting parts inventory for products no longer
manufactured by a Borrower) or slow moving, restrictive or custom items, work-
in-process, raw materials, or goods that constitute spare parts, packaging and
shipping materials, supplies used or consumed in a Borrower's business, xxxx and
hold goods, defective goods, "seconds," or Inventory acquired on consignment;
(h) it consists of goods related to Bennet Mammography Equipment, FG
Cardiac Systems or Full Field Digital Mammography Equipment products acquired
from Trex Medical Corporation; or
(i) it is not tracked by a perpetual system.
"Eligible Transferee" means (a) a commercial bank organized under the laws
-------------------
of the United States, or any state thereof, and having total assets in excess of
$250,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and
Administrative Borrower, and (f) during the continuation of an Event of Default,
any other Person approved by Agent; provided, that no GE Entity shall be an
--------
Eligible Transferee, except, subject to Section 3.6, in connection with an
-----------
acquisition by a GE Entity of Xxxxx Fargo, Foothill and/or any other Lender (or
its direct or indirect parent or holding company) or in connection with a bulk
sale by Foothill of its portfolio of financial accommodations; provided,
--------
further, that so long as (i) no Default or Event of Default has occurred and is
-------
continuing and (ii) the Maximum Revolver Amount is less than or equal to
$25,000,000 (or, following Borrowers' exercise of the Increase Option,
$30,000,000), a Person shall not be deemed an Eligible Transferee unless the
Administrative Borrower has consented thereto in writing, which consent shall
not be unreasonably withheld.
"Environmental Actions" means any complaint, summons, citation, notice,
---------------------
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of any Borrower or any predecessor in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
-----------------
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as
11
amended, or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, to the extent
binding on Borrowers, relating to the environment, employee health and safety,
or Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution
Control Act, 33 USC Section 1251 et seq.; the Toxic Substances Control Act, 15
-- ----
USC Section 2601 et seq.; the Clean Air Act, 42 USC Section 7401 et seq.; the
-- ---- -- ----
Safe Drinking Water Act, 42 USC Section 3803 et seq.; the Oil Pollution Act of
-- ----
1990, 33 USC Section 2701 et seq.; the Emergency Planning and the Community
-- ----
Right-to-Know Act of 1986, 42 USC Section 11001 et seq.; the Hazardous Material
-- ----
Transportation Act, 49 USC Section 1801 et seq.; and the Occupational Safety and
-- ----
Health Act, 29 USC Section 651 et seq. (to the extent it regulates occupational
-- ----
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Indemnity Agreement" means an indemnity agreement with
---------------------------------
respect to environmental liabilities relating to the Delaware Facility executed
and delivered by Parent and Agent in form and substance satisfactory to Agent.
"Environmental Liabilities and Costs" means all liabilities, monetary
-----------------------------------
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental Authority
------------------
for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter acquired right,
---------
title, and interest with respect to "equipment", as that term is defined from
time to time in the Code, including all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose employees are
---------------
treated as employed by the same employer as the employees of a Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which a Borrower is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any Person subject to ERISA that is a party to an arrangement with a
Borrower and whose employees are aggregated with the employees of a Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
---------------- ---------
"Excess Availability" means the amount, as of the date any determination
-------------------
thereof is to be made, equal to Availability minus the aggregate amount, if any,
of all trade payables of
12
Borrowers aged in excess of historical levels with respect thereto and all book
overdrafts in excess of historical practices with respect thereto, in each case
as determined by Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect from
-------------
time to time.
"Fee Letter" means that certain fee letter, dated as of even date herewith,
----------
between Borrowers and Agent, in form and substance satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
----
"Foothill" means Foothill Capital Corporation, a California corporation.
--------
"Funding Date" means the date on which a Borrowing occurs.
------------
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
-------------- -------------------
"GAAP" means generally accepted accounting principles as in effect from
----
time to time in the United States, consistently applied.
"GE Entity" means General Electric Capital Corporation or any Affiliate
---------
thereof.
"General Intangibles" means all of Borrowers' now owned or hereafter
-------------------
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Goods" means all of Borrowers' now owned or hereafter acquired right,
-----
title, and interest with respect to "goods", as that term is defined from time
to time in the Code, including, without limitation, any and all Inventory and
Equipment.
"Governing Documents" means, with respect to any Person, the certificate or
-------------------
articles of incorporation, by-laws, or other organizational documents of such
Person.
"Governmental Authority" means any federal, state, local, or other
----------------------
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor" means X-Ray Technology Corporation, a Delaware corporation.
---------
13
"Guaranty and Security Agreement" means the Guaranty and Security Agreement
-------------------------------
executed and delivered by Guarantor in favor of Agent, for the benefit of the
Lender Group, in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or listed in,
-------------------
or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hologic Investment" means Hologic Investment Corp., a Massachusetts
------------------
corporation and a wholly-owned Subsidiary of Parent.
"Hologic Investment Account" means account number 1119308001 maintained by
--------------------------
Hologic Investment with Xxxxxxx Xxxxx & Co.
"Increase Option" means the Borrowers' option to increase the Maximum
---------------
Revolver Amount to $30,000,000.
"Indebtedness" means (a) all obligations of a Borrower for borrowed money,
------------
(b) all obligations of a Borrower evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of a
Borrower in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all obligations of a Borrower under
Capital Leases, (d) all obligations or liabilities of others secured by a Lien
on any asset of a Borrower, irrespective of whether such obligation or liability
is assumed, (e) all obligations of a Borrower for the deferred purchase price of
assets (other than trade debt incurred in the ordinary course of a Borrower's
business and repayable in accordance with customary trade practices), and (f)
any obligation of a Borrower guaranteeing or intended to guarantee (whether
directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with
recourse to a Borrower) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
----------------------- ------------
"Indemnified Person" has the meaning set forth in Section 11.3.
------------------ ------------
"Insolvency Proceeding" means any proceeding commenced by or against any
---------------------
Person under any provision of the Bankruptcy Code or under any other state or
federal bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with creditors,
or proceedings seeking reorganization, arrangement, or other similar relief.
14
"Instruments" means all of Borrowers' now owned or hereafter acquired
-----------
right, title, and interest with respect to "instruments", including, without
limitation, any "promissory notes", as such terms are defined from time to time
in the Code, and any and all supporting obligations in respect thereof.
"Intangible Assets" means, with respect to any Person, that portion of the
-----------------
book value of all of such Person's assets that would be treated as intangibles
under GAAP.
"Inventory" means all Borrowers' now owned or hereafter acquired right,
---------
title, and interest with respect to "inventory", as that term is defined from
time to time in the Code, including, without limitation, goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor, goods that are furnished by a Borrower under a contract of
service, and raw materials, work in process, or materials used or consumed in a
Borrower's business.
"Investment" means, with respect to any Person, any investment by such
----------
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or hereafter
-------------------
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.
"Investment Reserve Account" has the meaning set forth in Section 6.17.
-------------------------- ------------
"Investment Reserve Amount" has the meaning set forth in the definition of
-------------------------
Additional Investment Proceeds.
"IRC" means the Internal Revenue Code of 1986, as in effect from time to
---
time.
"Issuing Lender" means Foothill or any other Lender that, at the request of
--------------
the Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.12.
------------
"L/C" has the meaning set forth in Section 2.12(a).
--- ---------------
"L/C Disbursement" means a payment made by the Issuing Lender pursuant to a
----------------
Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
--------------- ---------------
15
"Lender" and "Lenders" have the respective meanings set forth in the
------ -------
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
------------
"Lender Group" means, individually and collectively, each of the Lenders
------------
(including the Issuing Lender) and Agent.
"Lender Group Expenses" means, if the Maximum Revolver Amount is less than
---------------------
or equal to $25,000,000, all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid or incurred by Agent, (b) fees or charges paid or
incurred by Agent in connection with Agent's transactions with Borrowers,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the amount of any limitation) contained in this Agreement, real estate
surveys, real estate title policies and endorsements, and environmental audits,
(c) costs and expenses incurred by Agent in the disbursement of funds to or for
the account of Borrowers (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by Agent to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of Agent related to
audit examinations of the Books to the extent of the fees and charges (and up to
the amount of any limitation) contained in this Agreement, (g) reasonable costs
and expenses of third party claims or any other suit paid or incurred by Agent
in enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or Agent's relationship with any
Borrower or any guarantor of the Obligations, (h) Agent's reasonable fees and
expenses (including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's
reasonable fees and expenses (including attorneys fees) incurred in terminating,
enforcing (including attorneys fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning any
Borrower or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
If the Maximum Revolver Amount is greater than $25,000,000, however,
"Lender Group Expenses" shall mean all (a) costs or expenses (including taxes,
----------------------
and insurance premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid or incurred by the Lender Group, (b) fees or charges
paid or incurred by Agent in connection with the Lender Group's transactions
with Borrowers, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement),
real estate
16
surveys, real estate title policies and endorsements, and environmental audits,
(c) costs and expenses incurred by Agent in the disbursement of funds to or for
the account of Borrowers (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Borrower or any guarantor of the
Obligations, (h) Agent's and each Lender's reasonable fees and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable fees and expenses (including attorneys fees) incurred
in terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such Lender,
---------------------
together with such Lender's Affiliates, and the officers, directors, employees,
and agents of such Lender.
"Letter(s) of Credit" means an L/C or an L/C Undertaking, as the context
-------------------
requires.
"Letter of Credit Rights" means all of Borrowers' now owned or hereafter
-----------------------
acquired right, title, and interest with respect to "letter of credit rights",
as that term is defined from time to time in the Code, and any and all
supporting obligations in respect thereof.
"Letter of Credit Usage" means, as of any date of determination, the
----------------------
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.
"Lien" means any interest in an asset securing an obligation owed to, or a
----
claim by, any Person other than the owner of the asset, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes and
also including reservations, exceptions, encroachments, easements, rights-of-
way, covenants, conditions, restrictions, leases, and other title exceptions and
encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
------------ ------------
17
"Loan Documents" means this Agreement, the Cash Management Agreements, the
--------------
Control Agreements, the Copyright Security Agreement, the Disbursement Letter,
the Due Diligence Letter, the Fee Letter, the Guaranty and Security Agreement,
the Letters of Credit, the Mortgages, the Delaware Mortgage Documents, the
Officers' Certificate, the Patent Security Agreement, the Parent Pledge
Agreement, the Trademark Security Agreement, any note or notes executed by
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by any
Borrower and the Lender Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change in the
-----------------------
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Borrowers taken as a whole, (b) a
material impairment of a Borrowers' ability, taken as a whole, to perform their
obligations under the Loan Documents to which it is a party or of the Lender
Group's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Agent's Liens
with respect to the Collateral.
"Maturity Date" has the meaning set forth in Section 3.4.
------------- -----------
"Maximum Revolver Amount" means (i) at any date of determination prior to
-----------------------
Borrowers' exercise of the Increase Option, $25,000,000 (ii) at any date of
determination following Borrowers' exercise of the Increase Option, $30,000,000.
"Moody's" means Xxxxx'x Investors Service, Inc.
-------
"Mortgages" means individually and collectively, one or more mortgages,
---------
deeds of trust, or deeds to secure debt, executed and delivered by Parent in
favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral and the
related improvements thereto.
"Negotiable Collateral" means all of Borrowers' now owned and hereafter
---------------------
acquired right, title, and interest with respect to any letters of credit,
Letter of Credit Rights, Instruments, drafts, Documents, and Chattel Paper, and
any and all supporting obligations in respect thereof.
"Net Liquidation Percentage" means the value of Borrowers' Inventory that
--------------------------
is estimated to be recoverable in an orderly liquidation of such Inventory, such
percentage to be determined from time to time by a qualified appraisal company
selected by Agent.
"Notice of Exercise of Increase Option" means a notice in the form of
-------------------------------------
Exhibit I-1.
-----------
"Obligations" means all loans (including the Term Loan), Advances, debts,
-----------
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or
18
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all Lender
Group Expenses that Borrowers are required to pay or reimburse by the Loan
Documents, by law, or otherwise. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Officers' Certificate" means the representations and warranties of
---------------------
officers form submitted by Agent to the Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section 14.1(e).
------------------ ---------------
"Overadvance" has the meaning set forth in Section 2.5.
----------- -----------
"Parent" has the meaning set forth in the preamble to this Agreement.
------
"Parent Pledge Agreement" means a stock pledge agreement, in form and
-----------------------
substance satisfactory to Agent, executed and delivered by each Borrower to
Agent with respect to the pledge of the Stock of Subsidiaries of Parent.
"Participant" has the meaning set forth in Section 14.1(e).
----------- ---------------
"Patent Security Agreement" means a patent security agreement executed and
-------------------------
delivered by each Borrower and Agent, the form and substance of which is
satisfactory to Agent.
"Payment Directive" means an irrevocable payment directive executed and
-----------------
delivered by Parent and Hologic Investment to Xxxxxxx Sachs.
"Permitted Discretion" means a determination made in good faith and in the
--------------------
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by Borrowers
----------------------
in the ordinary course of the applicable Borrower's business of Equipment that
is substantially worn, damaged, or obsolete, (b) sales by Borrowers of Inventory
to buyers in the ordinary course of business, (c) the use or transfer of money
or Cash Equivalents by Borrowers in a manner that is not prohibited by the terms
of this Agreement or the other Loan Documents, and (d) the licensing by
Borrowers, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of the applicable
Borrower's business.
"Permitted Investments" means (a) investments in Cash Equivalents, (b)
---------------------
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, and (d) investments by any Borrower in any other Borrower, provided
--------
that, if any such investment is in the form of Indebtedness, such Indebtedness
----
shall be subject to the terms and conditions of an intercompany subordination
agreement in form and substance satisfactory to Agent.
19
"Permitted Liens" means (a) Liens held by Agent for the benefit of Agent
---------------
and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
------------
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness permitted by the terms of
this Agreement and so long as such Lien attaches only to the asset purchased or
acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business of Borrowers and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or
other unemployment insurance, (h) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of business of
Borrowers and not in connection with the borrowing of money, (i) Liens granted
as security for surety or appeal bonds in connection with obtaining such bonds
in the ordinary course of business of Borrowers, (j) Liens resulting from any
judgment or award that is not an Event of Default hereunder, (k) Liens with
respect to the Real Property Collateral listed on Schedule P-1, as accepted by
------------
Agent, and (l) with respect to any Real Property that is not part of the Real
Property Collateral, easements, rights of way, and zoning restrictions that do
not materially interfere with or impair the use or operation thereof by
Borrowers.
"Permitted Protest" means the right of the applicable Borrower to protest
-----------------
any Lien (other than any such Lien that secures the Obligations), taxes (other
than payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the Books in such amount as is required under GAAP,
(b) any such protest is instituted promptly and prosecuted diligently by the
applicable Borrower in good faith, and (c) Agent is satisfied that, while any
such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
-------------------------------------
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of
$1,000,000.
"Permitted Transaction" has the meaning set forth in Section 7.21.
--------------------- ------------
"Person" means natural persons, corporations, limited liability companies,
------
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
----------------------------
Property.
"Pre-Effective Jurisdiction" means, as of any date, any state or other
--------------------------
jurisdiction in which Revised Article 9 is not effective.
"Projections" means Parent's forecasted (a) balance sheets, (b) profit and
-----------
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Parent's historical financial
20
statements, together with appropriate supporting details and a statement of
underlying assumptions substantially in the form of the projections previously
delivered to Agent.
"Pro Rata Share" means:
--------------
(a) with respect to a Lender's obligation to make Advances and receive
payments of principal, interest, fees, costs, and expenses with respect thereto,
the percentage obtained by dividing (i) such Lender's Revolver Commitment, by
(ii) the aggregate Revolver Commitments of all Lenders,
(b) with respect to a Lender's obligation to participate in Letters of
Credit, to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
(c) with respect to a Lender's obligation to make the Term Loan and receive
payments of interest, fees, and principal with respect thereto, the percentage
obtained by dividing (i) such Lender's Term Loan Commitment, by (ii) the
aggregate amount of all Lenders' Term Loan Commitments, and
(d) with respect to all other matters (including the indemnification
obligations arising under Section 16.7), the percentage obtained by dividing (i)
------------
such Lender's Total Commitment, by (ii) the aggregate amount of Total
Commitments of all Lenders; provided, however, that, in each case, in the event
-------- -------
all Commitments have been terminated, Pro Rata Share shall be determined
according to the Commitments in effect immediately prior to such termination.
"Purchase Money Indebtedness" means Indebtedness (other than the
---------------------------
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property now owned
-------------
or hereafter acquired by any Borrower and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real Property
------------------------
identified on Schedule R-1 and any Real Property hereafter acquired by a
------------
Borrower.
"Records" means information that is inscribed on a tangible medium or which
-------
is stored in an electronic or other medium and is retrievable in perceivable
form.
"Remedial Action" means all actions taken to (a) clean up, remove,
---------------
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
21
"Report" has the meaning set forth in Section 16.17.
------ -------------
"Required Availability" means Excess Availability and unrestricted cash and
---------------------
Cash Equivalents in an amount of not less than $10,000,000.
"Required Lenders" means, at any time, (a) Agent, and (b) Lenders whose Pro
----------------
Rata Shares aggregate 51% of the Total Commitments, or if the Commitments have
been terminated irrevocably, 51% of the Obligations then outstanding.
"Reserve Percentage" means, on any day, for any Lender, the maximum
------------------
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Restricted Payment" has the meaning set forth in Section 7.11.
------------------ ------------
"Revised Article 9" means revised Article 9 of the Uniform Commercial Code
-----------------
in the form or substantially in the form approved by the American Law Institute
and the National Conference of Commissioners on Uniform State Law and contained
in the 2000 official text of the Uniform Commercial Code.
"Revolver Commitment" means, with respect to each Lender, its Revolver
-------------------
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
------------
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
------------
"Revolver Usage" means, as of any date of determination, the sum of (a) the
--------------
then extant amount of outstanding Advances, plus (b) the then extant amount of
the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit, all
----------------------------
reimbursement obligations of Borrowers to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"S&P" means Standard & Poor's Rating Services, a division of the McGraw-
---
Hill Companies.
"SEC" means the United States Securities and Exchange Commission and any
---
successor thereto.
"Securities Account" means a "securities account" as that term is defined
------------------
in the Code.
22
"Settlement" has the meaning set forth in Section 2.3(f)(i).
---------- -----------------
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
--------------- -----------------
"Solvent" means, with respect to any Person on a particular date, that such
-------
Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"Stock" means all shares, options, warrants, interests (including, without
-----
limitation, any Borrower's interest in the DRC Joint Venture), participations,
or other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"Subordination, Non-Disturbance and Attornment Agreements" means the
--------------------------------------------------------
subordination, non-disturbance and attornment agreements executed and delivered
by each of Parent's tenants at the Delaware Facility, Parent and Agent, in form
and substance satisfactory to Agent.
"Subsidiary" of a Person means a corporation, partnership, limited
----------
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Swing Lender" means Foothill or any other Lender that, at the request of
------------
the Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
---------- -----------------
"Tangible Net Worth" means, as of any date of determination, the result of
------------------
(a) the total stockholder's equity of Parent and its Subsidiaries, minus (b) the
sum of (i) all Intangible Assets of Parent and its Subsidiaries, (ii) all of
Parent's prepaid expenses, and (iii) all amounts due to Parent and its
Subsidiaries from Affiliates.
"Taxes" has the meaning set forth in Section 16.11.
----- -------------
"Tenant Estoppel Certificates" means tenant estoppel certificates executed
----------------------------
and delivered to Agent by each of Parent's tenants at the Delaware Facility, in
form and substance satisfactory to Agent.
"Term Loan" has the meaning set forth in Section 2.2.
--------- -----------
"Term Loan Amount" means the lesser of (i) $2,361,000 or (ii) 80 percent of
----------------
the amount that is estimated to be recoverable in an orderly liquidation of
Borrowers' Equipment (excluding any equipment which the Agent believes, in its
Permitted Discretion, constitutes or might constitute a fixture) as determined
from time to time (subject to Section 4.6) by a qualified appraisal company
-----------
selected by Agent.
23
"Term Loan Commitment" means, with respect to each Lender, its Term Loan
--------------------
Commitment, and, with respect to all Lenders, their Term Loan Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
------------
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
------------
"Term Loan Margin" means 1.25 percentage points.
----------------
"Total Commitment" means, with respect to each Lender, its Total
----------------
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
------------
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
------------
"Trademark Security Agreement" means a trademark security agreement
----------------------------
executed and delivered by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.
"Trailing Four Quarter EBITDA" means EBITDA for the four fiscal quarter
----------------------------
period ended as of the date of the most recent Compliance Certificate.
"Trex Indebtedness" means the $25,000,000 Indebtedness incurred by the
-----------------
Parent in connection with the acquisition of the assets of Trex Medical
Corporation from Trex Medical Systems Corporation.
"Trex Mortgages" means, collectively, the mortgages on the Parent's
--------------
properties at each of 00 Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx and 00 Xxxxx Xxxxx
Xxxx, Xxxxxxx, Xxxxxxxxxxx, respectively, granted by the Parent to Trex Medical
Systems Corporation in connection with the Trex Indebtedness.
"Trex Note" means the Secured Promissory Note dated September 15, 2000 in
---------
the principal amount of $25,000,000 issued by the Parent to Trex Medical Systems
Corporation in connection with the Trex Indebtedness.
"Underlying Issuer" means a third Person which is the beneficiary of an L/C
-----------------
Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been issued
---------------------------
by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
----------------- ------------
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a national
-----------
banking association.
1.2 Accounting Terms. All accounting terms not specifically defined herein
----------------
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is
24
used in respect of a financial covenant or a related definition, it shall be
understood to mean Parent and its Subsidiaries on a consolidated basis unless
the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
----
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
------------
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to
any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). Any reference herein to any Person shall be
construed to include such Person's successors and assigns. Any requirement of a
writing contained herein or in the other Loan Documents shall be satisfied by
the transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
----------------------
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
-----------------
(a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
--------
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage less, as of any date of
determination, the then outstanding principal balance on the Term Loan, or (ii)
the Borrowing Base less the Letter of Credit Usage. For purposes of this
Agreement, "Borrowing Base," as of any date of determination, shall mean the sum
--------------
of:
(I) the lesser of
(A) 85% of the amount of Eligible Accounts, less the amount,
if any, of the Dilution Reserve, and
(B) an amount equal to Borrowers' Collections with respect
to Accounts for the immediately preceding 60 day period;
25
plus
----
(II) the lesser of
(A) 20% of the value of Eligible Inventory;
(B) 80% times the then extant Net Liquidation Percentage
times the book value of Borrowers' Inventory; and
(C) $1,000,000;
plus
----
(III) 50% of the Delaware Facility Value;
minus
-----
(IV) the aggregate amount of reserves, if any, established by
Agent under Section 2.1(b).
--------------
The Delaware Facility Value shall be included in the calculation of the
Borrowing Base only after (i) Parent's delivery of the Delaware Mortgage
Documents and (ii) the completion of Agent's due diligence review of the
Delaware Facility, the results of which are satisfactory to Agent in its
Permitted Discretion.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
-----------
Agent shall have the right to establish reserves against the Borrowing Base in
such amounts, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, including reserves with respect
to (i) sums that Borrowers are required to pay (such as taxes, assessments,
insurance premiums, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay under any Section of this
Agreement or any other Loan Document, and (ii) amounts owing by Borrowers to any
Person to the extent secured by a Lien on, or trust over, any of the Collateral
(other than any existing Permitted Lien set forth on Schedule P-1 which is
------------
specifically identified thereon as entitled to have priority over the Agent's
Liens), which Lien or trust, in the Permitted Discretion of Agent likely would
have a priority superior to the Agent's Liens (such as Liens or trusts in favor
of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral. In addition to the foregoing, Agent shall have the right to have the
Inventory reappraised by a qualified appraisal company selected by Agent from
time to time after the Closing Date for the purpose of redetermining the Net
Liquidation Percentage of the Eligible Inventory portion of the Collateral and,
as a result, redetermining the Borrowing Base.
(c) If Parent sells the Delaware Facility before receiving at least
$10,000,000 in Additional Investment Proceeds, until Parent delivers evidence
satisfactory to Agent that it has received such Additional Investment Proceeds,
Agent may establish an additional $2,000,000 reserve against the Borrowing Base.
26
(d) So long as no Default or Event of Default has occurred and is
continuing, the Increase Option shall be deemed to be exercised by Borrowers
five Business Days after Agent's receipt of the Notice of Exercise of Increase
Option.
(e) The Lenders with Revolver Commitments shall have no obligation to
make additional Advances hereunder to the extent such additional Advances would
cause the Revolver Usage to exceed the Maximum Revolver Amount.
(f) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 Term Loan. Subject to the terms and conditions of this Agreement, on the
---------
Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
----
Loan") to Borrowers in an amount equal to such Lender's Pro Rata Share of the
----
Term Loan Amount. The Term Loan shall be repaid in equal monthly installments
equal to 1/60th of the Term Loan Amount commencing on the first Business Day of
the first month following the Closing Date.
The outstanding unpaid principal balance and all accrued and unpaid
interest under the Term Loan shall be due and payable on the date of termination
of this Agreement, whether by its terms, by prepayment, by acceleration or
otherwise. All amounts outstanding under the Term Loan shall constitute
Obligations.
2.3 Borrowing Procedures and Settlements.
------------------------------------
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 1:00 p.m. (Boston, Massachusetts
time) on the Business Day prior to the date that is the requested Funding Date,
such notice specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day; provided, however, that in the case
-------- -------
of a request for Swing Loan in an amount of $5,000,000, or less, such notice
will be timely received if it is received by Agent no later than 1:00 p.m.
(Boston, Massachusetts time) on the Business Day that is the requested Funding
Date) specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day. At Agent's election, in lieu of
delivering the above-described written request, any Authorized Person may give
Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing by an Authorized Person within 24
hours of the giving of such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
--------------
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
--------------
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
--------------
Borrowing; provided, however, that if Swing Lender declines in its sole
-------- -------
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
--------------
have the terms of Section 2.3(c) apply to such requested Borrowing.
--------------
27
(c) Making of Advances.
(i) In the event that Agent shall elect to have the terms of
this Section 2.3(c) apply to a requested Borrowing as described in Section
-------------- -------
2.3(b), then promptly after receipt of a request for a Borrowing pursuant
------
to Section 2.3(a), Agent shall notify the Lenders, not later than 4:00 p.m.
--------------
(Boston, Massachusetts time) on the Business Day immediately preceding the
Funding Date applicable thereto, by telecopy, telephone, or other similar
form of transmission, of the requested Borrowing. Each Lender shall make
the amount of such Lender's Pro Rata Share of the requested Borrowing
available to Agent in immediately available funds, to Agent's Account, not
later than 1:00 p.m. (Boston, Massachusetts time) on the Funding Date
applicable thereto. After Agent's receipt of the proceeds of such Advances
(or the Term Loan, as applicable), upon satisfaction of the applicable
conditions precedent set forth in Section 3 hereof, Agent shall make the
---------
proceeds thereof available to the Administrative Borrower on the applicable
Funding Date by transferring immediately available funds equal to such
proceeds received by Agent to the Administrative Borrower's Designated
Account; provided, however, that, subject to the provisions of Section
-------- ------- -------
2.3(i), Agent shall not request any Lender to make, and no Lender shall
------
have the obligation to make, any Advance (or its portion of the Term Loan)
if Agent shall have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
---------
requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing Date,
at least 1 Business Day prior to the date of such Borrowing, that such
Lender will not make available as and when required hereunder to Agent for
the account of Borrowers the amount of that Lender's Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such
amount available to Agent in immediately available funds on the Funding
Date and Agent may (but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a corresponding
amount. If and to the extent any Lender shall not have made its full amount
available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount
available to Agent, together with interest at the Defaulting Lender Rate
for each day during such period. A notice submitted by Agent to any Lender
with respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
Agent shall constitute such Lender's Advance on the date of Borrowing for
all purposes of this Agreement. If such amount is not made available to
Agent on the Business Day following the Funding Date, Agent will notify the
Administrative Borrower of such failure to fund and, upon demand by Agent,
Borrowers shall pay such amount to Agent for Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the
Advances composing such Borrowing. The failure of any Lender to make any
Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such
28
Funding Date, but no Lender shall be responsible for the failure of any
other Lender to make the Advance to be made by such other Lender on any
Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting Lender's
benefit, and, in the absence of such transfer to the Defaulting Lender,
Agent shall transfer any such payments to each other non-Defaulting Lender
member of the Lender Group ratably in accordance with their Commitments
(but only to the extent that such Defaulting Lender's Advance was funded by
the other members of the Lender Group) or, if so directed by the
Administrative Borrower and if no Default or Event of Default has occurred
and is continuing (and to the extent such Defaulting Lender's Advance was
not funded by the Lender Group), retain same to be re-advanced to Borrowers
as if such Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend to
Borrowers for the account of such Defaulting Lender the amount of all such
payments received and retained by it for the account of such Defaulting
Lender. Solely for the purposes of voting or consenting to matters with
respect to the Loan Documents, such Defaulting Lender shall be deemed not
to be a "Lender" and such Lender's Commitment shall be deemed to be zero.
This Section shall remain effective with respect to such Lender until (x)
the Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders, Agent,
and the Administrative Borrower shall have waived such Defaulting Lender's
default in writing, or (z) the Defaulting Lender makes its Pro Rata Share
of the applicable Advance and pays to Agent all amounts owing by Defaulting
Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve or excuse the
performance by Borrowers of their duties and obligations hereunder to Agent
or to the Lenders other than such Defaulting Lender. Any such failure to
fund by any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle the Administrative
Borrower at its option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Commitment of such Defaulting Lender, such
substitute Lender to be acceptable to Agent. In connection with the
arrangement of such a substitute Lender, the Defaulting Lender shall have
no right to refuse to be replaced hereunder, and agrees to execute and
deliver a completed form of Assignment and Acceptance Agreement in favor of
the substitute Lender (and agrees that it shall be deemed to have executed
and delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (including an assumption of
its Pro Rata Share of the Risk Participation Liability) without any premium
or penalty of any kind whatsoever; provided further, however, that any such
-------- ------- -------
assumption of the Commitment of such Defaulting Lender shall not be deemed
to constitute a waiver of any of the Lender Groups' or Borrowers' rights or
remedies against any such Defaulting Lender arising out of or in relation
to such failure to fund.
29
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.3(d) apply to a
--------------
requested Borrowing as described in Section 2.3(b), Swing Lender as a
--------------
Lender shall make such Advance in the amount of such Borrowing (any such
Advance made solely by Swing Lender as a Lender pursuant to this Section
-------
2.3(d) being referred to as a "Swing Loan" and such Advances being referred
------ ----------
to collectively as "Swing Loans") available to Borrowers on the Funding
-----------
Date applicable thereto by transferring immediately available funds to the
Administrative Borrower's Designated Account. Each Swing Loan is an Advance
hereunder and shall be subject to all the terms and conditions applicable
to other Advances, except that all payments on any Swing Loan shall be
payable to Swing Lender as a Lender solely for its own account (and for the
account of the holder of any participation interest with respect to such
Swing Loan). Subject to the provisions of Section 2.3(i), Agent shall not
--------------
request Swing Lender as a Lender to make, and Swing Lender as a Lender
shall not make, any Swing Loan if Agent has actual knowledge that (i) one
or more of the applicable conditions precedent set forth in Section 3 will
---------
not be satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (ii) the requested Borrowing
would exceed the Availability on such Funding Date. Swing Lender as a
Lender shall not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied on the
---------
Funding Date applicable thereto prior to making, in its sole discretion,
any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens, shall
constitute Advances and Obligations hereunder, and shall bear interest at
the rate applicable from time to time to Advances that are Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time in Agent's sole discretion, (1) after the occurrence and
during the continuance of a Default or an Event of Default, or (2) at any
time that any of the other applicable conditions precedent set forth in
Section 3 have not been satisfied, to make Advances to Borrowers on behalf
---------
of the Lenders that Agent, in its Permitted Discretion deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the Obligations, or
(C) to pay any other amount chargeable to Borrowers pursuant to the terms
of this Agreement, including Lender Group Expenses and the costs, fees, and
expenses described in Section 10 (any of the Advances described in this
----------
Section 2.3(e) shall be referred to as "Agent Advances"). Each Agent
-------------- --------------
Advance is an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that all payments on any
Agent Advance shall be payable to Agent solely for its own account (and for
the account of the holder of any participation interest with respect to
such Agent Advance).
(ii) The Agent Advances shall be repayable on demand and secured
by the Agent's Liens granted to Agent under the Loan Documents, shall
constitute Advances
30
and Obligations hereunder, and shall bear interest at the rate applicable
from time to time to Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion of
----------
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
----------
Lenders on a weekly basis, or on a more frequent basis if so determined by
Agent, (1) on behalf of Swing Lender, with respect to each outstanding
Swing Loan, (2) for itself, with respect to each Agent Advance, and (3)
with respect to Collections received, as to each by notifying the Lenders
by telecopy, telephone, or other similar form of transmission, of such
requested Settlement, no later than 5:00 p.m. (Boston, Massachusetts time)
on the Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the "Settlement
----------
Date"). Such notice of a Settlement Date shall include a summary statement
----
of the amount of outstanding Advances, Swing Loans, and Agent Advances for
the period since the prior Settlement Date. Subject to the terms and
conditions contained herein (including Section 2.3(c)(iii)): (y) if a
-------------------
Lender's balance of the Advances, Swing Loans, and Agent Advances exceeds
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, then Agent shall, by no later than 3:00
p.m. (Boston, Massachusetts time) on the Settlement Date, transfer in
immediately available funds to the account of such Lender as such Lender
may designate, an amount such that each such Lender shall, upon receipt of
such amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances, and (z) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances is less than such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, such Lender shall no later than 3:00 p.m. (Boston,
Massachusetts time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the Settlement Date,
its Pro Rata Share of the Advances, Swing Loans, and Agent Advances. Such
amounts made available to Agent under clause (z) of the immediately
preceding sentence shall be applied against the amounts of the applicable
Swing Loan or Agent Advance and, together with the portion of such Swing
Loan or Agent Advance representing Swing Lender's Pro Rata Share thereof,
shall constitute Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable thereto
to the extent required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the Advances,
Swing Loans, and Agent Advances is less than, equal to, or greater than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date,
31
Agent shall, as part of the relevant Settlement, apply to such balance the
portion of payments actually received in good funds by Agent with respect
to principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any such Lender after such application, such net amount
shall be distributed by Agent to that Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender any
payments received by Agent, that in accordance with the terms of this
Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share of the
Advances other than to Swing Loans, as provided for in the previous
sentence, Swing Lender shall pay to Agent for the accounts of the Lenders,
and Agent shall pay to the Lenders, to be applied to the outstanding
Advances of such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro Rata
Share of the Advances. During the period between Settlement Dates, Swing
Lender with respect to Swing Loans, Agent with respect to Agent Advances,
and each Lender (subject to the effect of letter agreements between Agent
and individual Lenders) with respect to the Advances other than Swing Loans
and Agent Advances, shall be entitled to interest at the applicable rate or
rates payable under this Agreement on the daily amount of funds employed by
Swing Lender, Agent, or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal amount of
the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than Swing Loans
and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances (including a
Swing Loan), the outstanding Revolver Usage does not exceed the
32
Borrowing Base by more than $5,000,000, (ii) after giving effect to such
Advances (including a Swing Loan), the outstanding Revolver Usage (except for
and excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount, and (iii) at the
time of the making of any such Advance (including any Swing Loan), Agent does
not believe, in good faith, that the Overadvance created by such Advance will be
outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrowers in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same terms
--------------
and conditions as any other Advance or Swing Loan, as applicable, except that
the rate of interest applicable thereto shall be the rate applicable to Advances
that are Base Rate Loans under Section 2.6(c) hereof without regard to the
--------------
presence or absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding paragraph,
regardless of the amount of, or reason for, such excess, Agent shall notify
Lenders as soon as practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses) unless Agent
determines that prior notice would result in imminent harm to the
Collateral or its value), and the Lenders with Revolver Commitments
thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers and intended to
reduce, within a reasonable time, the outstanding principal amount of the
Advances to Borrowers to an amount permitted by the preceding paragraph. In
the event Agent or any Lender disagrees over the terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof
shall be implemented according to the determination of the Required
Lenders.
(ii) Each Lender with a Revolver Commitment shall be obligated to
settle with Agent as provided in Section 2.3(f) for the amount of such
--------------
Lender's Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
Section 2.3(i), and any Overadvances resulting from the charging to the
--------------
Loan Account of interest, fees, or Lender Group Expenses.
2.4 Payments.
--------
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all payments
by Borrowers shall be made to Agent's Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 2:00
p.m. (Boston, Massachusetts time) on the date specified herein. Any payment
received by Agent later than 2:00 p.m. (Boston, Massachusetts time) shall
be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such following
Business Day.
33
(ii) Unless Agent receives notice from the Administrative
Borrower prior to the date on which any payment is due to the Lenders that
Borrowers will not make such payment in full as and when required, Agent
may assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent Borrowers do not make such payment in full to Agent on
the date when due, each Lender severally shall repay to Agent on demand
such amount distributed to such Lender, together with interest thereon at
the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents (including
letter agreements between Agent and individual Lenders), aggregate
principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to
which such payments relate held by each Lender) and payments of fees and
expenses (other than fees or expenses that are for Agent's separate
account, after giving effect to any letter agreements between Agent and
individual Lenders) shall be apportioned ratably among the Lenders having a
Pro Rata Share of the type of Commitment or Obligation to which a
particular fee relates. All payments shall be remitted to Agent and all
such payments (other than payments received while no Default or Event of
Default has occurred and is continuing and which relate to the payment of
principal or interest of specific Obligations or which relate to the
payment of specific fees), and all proceeds of Accounts or other Collateral
received by Agent, shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due to Agent under
-----
the Loan Documents, until paid in full;
(B) second, to pay any Lender Group Expenses then due to the Lenders
------
under the Loan Documents, on a ratable basis, until paid in full;
(C) third, to pay any fees then due to Agent (for its separate
-----
account, after giving effect to any letter agreements between
Agent and the individual Lenders) under the Loan Documents until
paid in full;
(D) fourth, to pay any fees then due to any or all of the Lenders
------
(after giving effect to any letter agreements between Agent and
individual Lenders) under the Loan Documents, on a ratable basis,
until paid in full;
(E) fifth, to pay interest due in respect of all Agent Advances,
-----
until paid in full;
(F) sixth, ratably to pay interest due in respect of the Advances
-----
(other than Agent Advances), the Swing Loans and the Term Loan
until paid in full;
34
(G) seventh, to pay the principal of all Agent Advances until paid in
-------
full;
(H) eighth, ratably to pay all principal amounts then due and payable
------
(other than as a result of an acceleration thereof) with respect
to the Term Loan until paid in full;
(I) ninth, to pay the principal of all Swing Loans until paid in
-----
full;
(J) tenth, to pay the principal of all Advances until paid in full;
-----
(K) eleventh, if an Event of Default has occurred and is continuing,
--------
to pay the outstanding principal balance of the Term Loan (in the
inverse order of the maturity of the installments due thereunder)
until the Term Loan is paid in full;
(L) twelfth, if an Event of Default has occurred and is continuing,
-------
to Agent, to be held by Agent, for the ratable benefit of Issuing
Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter of
Credit Usage until paid in full;
(M) thirteenth, to pay any other Obligations until paid in full; and
----------
(N) fourteenth, to Borrowers (to be wired to the Designated Account)
----------
or such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(h).
--------------
(iii) In each instance, so long as no Default or Event of Default
has occurred and is continuing, Section 2.4(b) shall not be deemed to apply to
--------------
any payment by Borrowers specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment
of all amounts owing under the Loan Documents according to the terms thereof,
including loan fees, service fees, professional fees, interest (and specifically
including interest accrued after the commencement of any Insolvency Proceeding),
default interest, interest on interest, and expense reimbursements, whether or
not the same would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any other Loan
-----------
Document, it is the intention of the parties hereto that such priority
provisions in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this Section 2.4 shall control and govern.
-----------
35
2.5 Overadvances. If, at any time or for any reason, the amount of
------------
Obligations owed by Borrowers to the Lender Group pursuant to Sections 2.1 and
----------------
2.12 is greater than either the Dollar or percentage limitations set forth in
----
Sections 2.1 or 2.12, (an "Overadvance"), Borrowers immediately shall pay to
-------------------- -----------
Agent, in cash, the amount of such excess, which amount shall be used by Agent
to reduce the Obligations in accordance with the priorities set forth in Section
-------
2.4(b). In addition, Borrowers hereby promise to pay the Obligations (including
------
principal, interest, fees, costs, and expenses) in Dollars in full to the Lender
Group as and when due and payable under the terms of this Agreement and the
other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
--------------------------------------------------------------
Calculations.
------------
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof as follows (i) if the relevant Obligation is a portion of the
Term Loan, at a per annum rate equal to the Base Rate plus the Term Loan Margin,
and (ii) otherwise, at a per annum rate equal to the Base Rate plus the Base
Rate Margin.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
-------
2.12(e)) which shall accrue at a rate equal to 1.0% per annum times the Daily
-------
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit) that
have been charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate equal to 3
percentage points above the per annum rate otherwise applicable hereunder,
and
(ii) the Letter of Credit fee provided for above shall be
increased to 3 percentage points above the per annum rate otherwise
applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Commitments are outstanding. Borrowers
hereby authorize Agent, from time to time without prior notice to Borrowers, to
charge such interest and fees, all Lender Group Expenses (as and when incurred),
the charges, commissions, fees, and costs provided for in Section 2.12(e) (as
---------------
and when accrued or incurred), the fees and costs provided for in Section 2.11
------------
(as and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including the installments due and payable with
respect to the Term Loan) to Borrowers' Loan Account, which amounts thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
compounded by being charged to Borrowers' Loan Account and shall
36
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
-------- -------
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
---------------
(a) Borrowers shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and shall
--------------- --------------------
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Cash Management Bank, and (ii) deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent directly by Account Debtors to a
Cash Management Bank) into a bank account in Agent's name (a "Cash Management
---------------
Account") at one of the Cash Management Banks.
-------
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank as agent or bailee-in-
possession for Agent, (ii) the Cash Management Bank has no rights of setoff or
recoupment or any other claim against the applicable Cash Management Account
other than for payment of its service fees and other charges directly related to
the administration of such Cash Management Account and for returned checks or
other items of payment, and (iii) it immediately will forward by daily sweep all
amounts in the applicable Cash Management Account to the Agent's Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, the Administrative Borrower may amend Schedule 2.7(a) or (b) to add
---------------
or replace a Cash Management Bank or Cash Management Account; provided, however,
-------- -------
that (i) such prospective
37
Cash Management Bank shall be satisfactory to Agent and Agent shall have
consented in writing in advance to the opening of such Cash Management Account
with the prospective Cash Management Bank, and (ii) prior to the time of the
opening of such Cash Management Account, Borrowers and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Borrowers shall close any of their Cash Management Accounts (and
establish replacement cash management accounts in accordance with the foregoing
sentence) promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent's
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts or Agent's liability under any Cash Management
Agreement with such Cash Management Bank is no longer acceptable in Agent's
reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which Borrowers are hereby deemed to have
granted a Lien to Agent.
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
--------------------------------
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 2:00 p.m. (Boston, Massachusetts time). If any payment item is received
into the Agent's Account on a non-Business Day or after 2:00 p.m. (Boston,
Massachusetts time) on a Business Day, it shall be deemed to have been received
by Agent as of the opening of business on the immediately following Business
Day. From and after the Closing Date, Agent shall be entitled to charge
Borrowers for 1 Business Day of `clearance' or `float' at the rate applicable to
Base Rate Loans under Section 2.6 on all Collections that are received by
-----------
Borrowers (regardless of whether forwarded by the Cash Management Banks to
Agent). This across-the-board 1 Business Day clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect of
the pricing of the financing of Borrowers and shall apply irrespective of
whether or not there are any outstanding monetary Obligations; the effect of
such clearance or float charge being the equivalent of charging 1 Business Day
of interest on such Collections. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
-----------
the exclusive benefit of Agent.
2.9 Designated Account. Agent is authorized to make the Advances and the
------------------
Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). The Administrative Borrower agrees to establish and
--------------
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by the Administrative
38
Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by
Agent and Borrower, any Advance, Agent Advance or Swing Loan requested by
Borrowers and made by Agent or the Lenders hereunder shall be made to the
Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
------------------------------------------------------
maintain an account on its books in the name of Borrowers (the "Loan Account")
------------
on which Borrowers will be charged with the Term Loan, all Advances (including
Agent Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder
or under the other Loan Documents, including, accrued interest, fees and
expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan
-----------
Account will be credited with all payments received by Agent from Borrowers or
for Borrowers' account, including all amounts received in the Agent's Account
from any Cash Management Bank. Agent shall render statements regarding the Loan
Account to the Administrative Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by the Administrative
Borrower, the Administrative Borrower shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and charges,
----
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) Unused Line Fee. On the first day of each month during the term
of this Agreement, an unused line fee in an amount equal to 0.5% per annum times
the result of (a) the Maximum Revolver Amount, less (b) the sum of (i) the
average Daily Balance of Advances that were outstanding during the immediately
preceding month, plus (ii) the average Daily Balance of the Letter of Credit
Usage during the immediately preceding month;
(b) Fee Letter Fees. As and when due and payable under the terms of
the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee
Letter; and
(c) Audit, Appraisal, and Valuation Charges. Subject to the
limitations on the number of audits and appraisals set forth in Section 4.6, for
-----------
the separate account of Agent, audit, appraisal, and valuation fees and charges
as follows (i) a fee of $750 per day, per auditor, plus out-of-pocket expenses
for each financial audit of a Borrower performed by personnel employed by Agent,
(ii) a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for
each appraisal of the Collateral performed by personnel employed by Agent, and
(iii) the actual charges paid or incurred by Agent if it elects to employ the
services of one or more third Persons to perform financial audits of Borrowers
or appraise the Collateral or any portion thereof.
39
2.12 Letters of Credit
-----------------
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
----
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
---------------
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer to be Xxxxx Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking), the
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or the beneficiary of the Underlying Letter of Credit,
as applicable), and such other information as shall be necessary to prepare,
amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect
to any Underlying Letter of Credit that is to be the subject of an L/C
Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base less
the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $2,500,000 (or, if there
is more than $250,000 in the Hologic Investment Account, $500,000), or
(iii) the Letter of Credit Usage would exceed the Maximum Revolver
Amount less the then extant amount of outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no later
than 1 year after the Maturity Date, and all such Letters of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. For all Letters of Credit with an expiry date later than the Maturity
Date, Borrowers shall provide cash collateral to be held by Agent in an amount
equal to 105% of the Letter of Credit Usage with respect to such Letters of
Credit. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 2:00 p.m. (Boston, Massachusetts time) on the date that such L/C
Disbursement is made, if the Administrative Borrower shall have received written
or telephonic notice of such L/C Disbursement prior to 1:00 p.m. (Boston,
Massachusetts time) on such date, or, if such notice has not been received by
Borrower prior to such time on such date,
40
then not later than 2:00 p.m. (Boston, Massachusetts time) on the Business Day
that the Administrative Borrower receives such notice, if such notice is
received prior to 1:00 p.m., Boston, Massachusetts time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
-----------
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
---------------
then to such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement pursuant to
Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its
----------------
Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection
on the same terms and conditions as if Borrowers had requested such Advance and
Agent shall promptly pay to Issuing Lender the amounts so received by it from
the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter
of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitment, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrowers on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrowers
for any reason. Each Lender with a Revolver Commitment acknowledges and agrees
that its obligation to deliver to Agent, for the account of the Issuing Lender,
an amount equal to its respective Pro Rata Share pursuant to this Section
-------
2.12(b) shall be absolute and unconditional and such remittance shall be made
-------
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
---------
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by the Issuing Lender in respect of such Letter
of Credit as provided in this Section, Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; provided, however, that no Borrower shall be obligated
-------- -------
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group. Each Borrower agrees to be bound by the Underlying
Issuer's regulations and interpretations of any Underlying Letter of Credit or
by Issuing Lender's interpretations of any L/C issued by Issuing Lender to or
for such Borrower's account, even
41
though this interpretation may be different from such Borrower's own, and each
Borrower understands and agrees that the Lender Group shall not be liable for
any error, negligence, or mistake, whether of omission or commission, in
following Borrowers' instructions or those contained in the Letter of Credit or
any modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
-------- -------
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender's instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrowers to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by each Borrower that, as of the Closing Date, the issuance charge
imposed by the prospective Underlying Issuer is .825% per annum times the face
amount of each Underlying Letter of Credit, that such issuance charge may be
changed from time to time, and that the Underlying Issuer also imposes a
schedule of charges for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or the
Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the Lender Group
any other condition regarding any Underlying Letter of Credit or any Letter of
Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is
42
reduced, notify the Administrative Borrower, and Borrowers shall pay on demand
such amounts as Agent may specify to be necessary to compensate the Lender Group
for such additional cost or reduced receipt, together with interest on such
amount from the date of such demand until payment in full thereof at the rate
then applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 Reserved.
--------
2.14 Capital Requirements. If, after the date hereof, any Lender
--------------------
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify the Administrative Borrower and Agent thereof. Following
receipt of such notice, Borrowers agree to pay such Lender on demand the amount
of such reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender's calculation thereof
and the assumptions upon which such calculation was based (which statement shall
be deemed true and correct absent manifest error). In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
2.15 Joint and Several Liability of Borrowers.
----------------------------------------
(a) Each of Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each of Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
------------
parties hereto that all the Obligations shall be the joint and several
obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in
43
accordance with the terms thereof, then in each such event the other Persons
composing Borrowers will make such payment with respect to, or perform, such
Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
------------
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each of
Borrowers assents to any other action or delay in acting or failure to act on
the part of any Agent or Lender with respect to the failure by any Person
composing Borrowers to comply with any of its respective Obligations, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 2.15 afford
------------
grounds for terminating, discharging or relieving any Person composing
Borrowers, in whole or in part, from any of its Obligations under this Section
-------
2.15, it being the intention of each Person composing Borrowers that, so long
----
as any of the Obligations hereunder remain unsatisfied, the Obligations of such
Person composing Borrowers under this Section 2.15 shall not be discharged
------------
except by performance and then only to the extent of such performance. The
Obligations of each Person composing Borrowers under this Section 2.15 shall not
------------
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Person composing Borrowers or any Agent or Lender. The joint and several
liability of the Persons composing Borrowers hereunder shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, constitution or place of formation of any
of the Persons composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to Agent
and Lenders that such Borrower is currently informed of the financial condition
of Borrowers and of all other circumstances which a diligent inquiry would
reveal and which bear upon the risk of
44
nonpayment of the Obligations. Each Person composing Borrowers further
represents and warrants to Agent and Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each Person
composing Borrowers hereby covenants that such Borrower will continue to keep
informed of Borrowers' financial condition, the financial condition of other
guarantors, if any, and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Obligations.
(g) Each of the Persons composing Borrowers waives all rights and
defenses arising out of an election of remedies by the Agent or any Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed the Agent's or such
Lender's rights of subrogation and reimbursement against such Borrower:
(h) Each of the Persons composing Borrowers waives all rights and
defenses that such Borrower may have because the Obligations are secured by Real
Property. This means, among other things:
(i) Agent and Lenders may collect from such Borrower without
first foreclosing on any Real or Personal Property Collateral pledged
by Borrowers.
(ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:
(A) The amount of the Obligations may be reduced only by
the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price.
(B) Agent and Lenders may collect from such Borrower even
if Agent or Lenders, by foreclosing on the Real Property
Collateral, has destroyed any right such Borrower may have to
collect from the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property.
(i) The provisions of this Section 2.15 are made for the benefit of
------------
the Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
------------
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons
45
composing Borrowers, or otherwise, the provisions of this Section 2.15 will
------------
forthwith be reinstated in effect, as though such payment had not been made.
(j) Each of the Persons composing Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(k) Each of the Persons composing Borrowers hereby agrees that, after
the occurrence and during the continuance of any Default or Event of Default,
the payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, xxx for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Borrower as trustee for the Agent, and the Agent shall deliver any such
amounts to the Administrative Agent for application to the Obligations in
accordance with Section 2.4(b).
--------------
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
-------------------------------------------------------
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before September 21, 2001;
(b) Agent shall have received all financing statements required by
Agent, duly executed by the applicable Borrowers, and Agent shall have
received searches reflecting the filing of all such financing statements;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
46
(i) the Guaranty and Security Agreement,
(ii) the Parent Pledge Agreement, together with the Payment
Directive and all certificates representing the shares of Stock
pledged thereunder, as stock powers with respect thereto endorsed in
blank,
(iii) the Patent Security Agreement,
(iv) the Copyright Security Agreement,
(v) the Trademark Security Agreement,
(vi) the Mortgage on the Delaware Facility together with marked
commitments to issue mortgagee title insurance policies for the
Delaware Facility issued by a title insurance company satisfactory to
Agent,
(vii) the Delaware Mortgage Documents,
(viii) Collateral Access Agreements with respect to Parent's
facilities at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx and 00 Xxxxx
Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx,
(ix) the Cash Management Agreements,
(x) the Fee Letter,
(xi) the Disbursement Letter,
(xii) the Officers' Certificate, and
(xiii) the Due Diligence Letter;
(d) Agent shall have received a certificate from the Secretary of
each Borrower Party attesting to the resolutions of such Borrower Party's Board
of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower Party is a party
and authorizing specific officers of Borrower to execute the same;
(e) Agent shall have received copies of each Borrower Party's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower Party;
(f) Agent shall have received a certificate of status with respect to
each Borrower Party, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
such Borrower Party, which certificate shall indicate that such Borrower Party
is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with respect to
each Borrower Party, each dated within 30 days of the Closing Date, such
certificates to be issued by
47
the appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such Borrower) in which its failure to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such Borrower Party is in good standing in such jurisdictions;
(h) Agent shall have received one or more certificates of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
-----------
and substance of which shall be satisfactory to Agent;
(i) Parent shall have used its best efforts to obtain a mortgagee waiver
with respect to its location at 00 Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx;
(j) Agent shall have received an opinion of counsel to the Borrower
Parties in form and substance satisfactory to Agent;
(k) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of the Parent) that all tax returns
required to be filed by Borrowers have been timely filed and all taxes upon
Borrowers or their properties, assets, income, and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest;
(l) Borrowers shall have the Required Availability after giving effect to
the initial extensions of credit hereunder;
(m) Agent shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of Borrowers' books and
records and verification of Borrowers' representations and warranties to the
Lender Group, the results of which shall be satisfactory to Agent, and (ii) an
inspection of each of the locations where Inventory is located, the results of
which shall be satisfactory to Agent;
(n) Agent shall have received completed reference checks with respect to
Borrowers' senior management, the results of which are satisfactory to
Agent in its sole discretion;
(o) Agent shall have received an appraisal of the Liquidation Percentage
applicable to Borrowers' Inventory and an appraisal of Borrowers' Equipment, the
results of which shall be satisfactory to Agent;
(p) Agent shall have received Borrowers' Closing Date Business Plan;
(q) Borrowers shall pay all Lender Group Expenses incurred in connection
with the transactions evidenced by this Agreement;
(r) Agent shall have received copies of each of the Trex Mortgages and the
Trex Note and other documents relating to the Trex Indebtedness, together with a
certificate of the Secretary of the Parent certifying each such document as
being a true, correct, and complete copy thereof;
48
(s) Borrowers shall have received all licenses, approvals or evidence
of other actions required by any Governmental Authority in connection with the
execution and delivery by Borrowers of this Agreement or any other Loan Document
or with the consummation of the transactions contemplated hereby and thereby;
and
(t) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
--------------------------------------------------------
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent certified
copies of the policies of insurance, together with the endorsements thereto, as
are required by Section 6.8, the form and substance of which shall be
satisfactory to Agent and its counsel; and
(b) within 30 days of the Closing Date, deliver to Agent (i)
appraisals of the Real Property Collateral satisfactory to Agent, (ii) mortgagee
title insurance policies (or marked commitments to issue the same) for the
Delaware Facility issued by a title insurance company satisfactory to Agent
(each a "Mortgage Policy" and, collectively, the "Mortgage Policies") in amounts
--------------- -----------------
satisfactory to Agent assuring Agent that the Mortgages on the Delaware Facility
are valid and enforceable mortgage Liens and that the Delaware Facility is free
and clear of all defects and encumbrances except Permitted Liens, and the
Mortgage Policies otherwise shall be in form and substance satisfactory to
Agent; and (iii) a phase-I environmental report and a real estate survey with
respect to the Delaware Facility. The environmental consultants and surveyors
retained for such reports or surveys, the scope of the reports or surveys, and
the results thereof shall be acceptable to Agent.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of
------------------------------------------------
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against
Borrower, Agent, any Lender, or any of their Affiliates;
49
(d) no Material Adverse Change shall have occurred; and
(e) if there is no more than $250,000 in the Hologic Investment Account
provided, that, if there is more than $250,000 in the Hologic Investment Account
--------
after giving effect to such extension of credit, (i) the amount of outstanding
Advances shall be zero, (ii) the Letter of Credit Usage shall be less than
$500,000 and (iii) Excess Availability shall be greater than $10,000,000.
3.4 Term. This Agreement shall become effective upon the execution and
----
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on September 21, 2004 (the "Maturity Date").
-------------
The foregoing notwithstanding, the Lender Group, upon the election of the
Required Lenders, shall have the right to terminate its obligations under this
Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
---------------------
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit) immediately shall become due
and payable without notice or demand. No termination of this Agreement,
however, shall relieve or discharge Borrowers of their duties, Obligations, or
covenants hereunder and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged and the
Lender Group's obligations to provide additional credit hereunder have been
terminated. When this Agreement has been terminated and all of the Obligations
have been fully and finally discharged and the Lender Group's obligations to
provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrowers' sole expense, execute and deliver any UCC
termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.
3.6 Early Termination by Borrowers. Borrowers have the option, at any
------------------------------
time upon 60 days prior written notice by the Administrative Borrower to Agent,
to terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including either (i) providing cash collateral
to be held by Agent for the benefit of those Lenders with a Revolver Commitment
in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender), in
full, together with the Applicable Prepayment Premium (to be allocated based
upon letter agreements between Agent and individual Lenders). If the
Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations (including either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender), in full, together with the Applicable Prepayment Premium, on the date
set forth as the date of termination of this Agreement in such notice, provided,
--------
however, that within 90 days of the Administrative Borrower's receipt of a
-------
notice that all, or any ratable part of all, of the Obligations, the Commitments
and the other rights
50
and obligations of any Lender hereunder, have been assigned, delegated or sold
to a GE Entity in connection with an acquisition by a GE Entity of Xxxxx Fargo,
Foothill and/or any other Lender (or its direct or indirect parent or holding
company) or in connection with a bulk sale by Foothill of its portfolio of
financial accommodations, Borrowers shall not be obligated to pay the Applicable
Prepayment Premium. In the event of the termination of this Agreement and
repayment of the Obligations at any time prior to the Maturity Date, for any
other reason, including (a) termination upon the election of the Required
Lenders to terminate after the occurrence of an Event of Default, (b)
foreclosure and sale of Collateral, (c) sale of the Collateral in any Insolvency
Proceeding, or (d) restructure, reorganization, or compromise of the
Obligations by the confirmation of a plan of reorganization or any other plan of
compromise, restructure, or arrangement in any Insolvency Proceeding, then, in
view of the impracticability and extreme difficulty of ascertaining the actual
amount of damages to the Lender Group or profits lost by the Lender Group as a
result of such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest.
--------------------------
(a) Each Borrower hereby grants to Agent, for the benefit of the
Lender Group, a continuing security interest in all of its right, title, and
interest in all currently existing and hereafter acquired or arising Personal
Property Collateral in order to secure prompt repayment of any and all of the
Obligations in accordance with the terms and conditions of the Loan Documents
and in order to secure prompt performance by Borrowers of each of their
covenants and duties under the Loan Documents. The Agent's Liens in and to the
Personal Property Collateral shall attach to all Personal Property Collateral
without further act on the part of Agent or Borrowers. Anything contained in
this Agreement or any other Loan Document to the contrary notwithstanding,
except for Permitted Dispositions, Borrowers have no authority, express or
implied, to dispose of any item or portion of the Collateral.
(b) The grant of the security interest in Section 4.1(a) above is
--------------
intended by each of the parties hereto to be a grant of a blanket security
interest in all of Borrowers' personal property. In applying the law of any Pre-
Effective Jurisdiction, Borrowers hereby grant to Agent, for the benefit of the
Lender Group, a continuing security interest in all of the Borrowers' right,
title and interest in, to and under the following property, whether now or
hereafter existing, owned or acquired by the Borrowers, which property shall be
deemed to be included in the definition of "Collateral":
----------
(i) all equipment of Borrowers, including all parts thereof and
all accessions, additions, attachments, improvements, substitutions and
replacements thereto and therefor and all accessories related thereto;
(ii) all inventory in all of its forms of Borrowers, including
(i) all raw materials and work in process therefor, finished goods thereof,
and materials used or
51
consumed in the manufacture or production thereof, (ii) all goods in which
Borrowers have an interest in mass or a joint or other interest or right of
any kind (including goods in which Borrowers have an interest or right as
consignee), and (iii) all goods which are returned to or repossessed by
Borrowers, and all accessions thereto, products thereof and documents
therefor;
(iii) all accounts, accounts receivable, loans, contracts,
contract rights, chattel paper, documents, instruments, investment property
and general intangibles (including tax refunds) of Borrowers, whether or
not arising out of or in connection with the sale or lease of goods or the
rendering of services;
(iv) all intellectual property collateral of Borrowers,
including goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies
due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement
claims, computer programs, information contained on computer disks or
tapes, software, or literature;
(v) all chattel paper, documents and instruments of Borrowers;
(vi) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing;
(vii) all of the Borrowers' other property and rights of every
kind and description and interests therein; and
(viii) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (i) through (vii) above, and, to the extent not otherwise included,
----------- -----
all payments under insurance (whether or not the Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss
or damage to or otherwise with respect to any of the foregoing Collateral).
4.2 Negotiable Collateral. In the event that any Collateral, including
---------------------
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Borrower, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable
-----------------------------------------------------------
Collateral. At any time after the occurrence and during the continuation of a
----------
Default or Event of Default, Agent or Agent's designee may (a) notify Account
Debtors of Borrowers that the Accounts, chattel paper, or General Intangibles
have been assigned to Agent or that Agent has a security interest therein, or
(b) collect the Accounts, chattel paper, or General Intangibles directly and
charge the collection costs and expenses to the Loan Account. Each Borrower
agrees that it will hold in trust for the Lender Group, as the Lender Group's
trustee, any Collections that it receives and
52
immediately will deliver said Collections to Agent or a Cash Management Bank in
their original form as received by the applicable Borrower.
4.4 Delivery of Additional Documentation Required; Commercial Tort Claims.
---------------------------------------------------------------------
At any time upon the request of Agent, Borrowers shall execute and deliver to
Agent, any and all financing statements, original financing statements in lieu
of continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Agent may request in its Permitted Discretion, in
--------------------
form and substance satisfactory to Agent, to perfect and continue perfected or
better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. Without limiting the foregoing, Borrowers shall give the Agent prompt
written notice of any Commercial Tort Claim of Borrowers not specifically
identified herein and grant to the Agent, for the benefit of the Lender Group, a
security interest therein and the proceeds thereof. To the maximum extent
permitted by applicable law, each Borrower authorizes Agent to execute any such
Additional Documents in the applicable Borrower's name and authorizes Agent to
file such executed Additional Documents in any appropriate filing office. In
addition, on such periodic basis as Agent shall require, Borrowers shall (a)
provide Agent with a report of all new patentable, copyrightable, or
trademarkable materials acquired or generated by Borrowers during the prior
period, (b) cause all patents, copyrights, and trademarks acquired or generated
by Borrowers that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Borrowers' ownership thereof, and (c) cause to be
prepared, executed, and delivered to Agent supplemental schedules to the
applicable Loan Documents to identify such patents, copyrights, and trademarks
as being subject to the security interests created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
-----------------
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
-----------
any of the documents described in Section 4.4, (b) at any time that an Event of
-----------
Default has occurred and is continuing, sign such Borrower's name on any invoice
or xxxx of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Borrower's name on any Collection item that may come into the
Lender Group's possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under such Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as each Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.
53
4.6 Right to Inspect; Appraisals. Agent and each Lender (through any of
----------------------------
their respective officers, employees, or agents) shall have the right, from time
to time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrowers' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
Without limiting the generality of the foregoing, Agent may, at Borrower's
expense, conduct, or cause to be conducted, (a) an appraisal of the Inventory
and an appraisal of the Equipment one time each during each calendar year
commencing on the Closing Date or an anniversary thereof, (b) field audits
and/or other field examinations four times during each calendar year commencing
on the Closing Date or an anniversary thereof, and (c) upon the occurrence, and
during the continuance, of a Default or Event of Default, such appraisals,
audits and/or other field examinations as Agent deems necessary.
4.7 Control Agreements. Each Borrower agrees that it will not transfer
------------------
assets out of any Securities Accounts other than as permitted under Section 7.19
------------
and, if to another securities intermediary, unless each of the applicable
Borrower, Agent, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other Investment Property
shall be modified by Borrowers without the prior written consent of Agent. Upon
the occurrence and during the continuance of a Default or Event of Default,
Agent may notify any securities intermediary to liquidate the applicable
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date, and at and as of the date of the making of each Advance
(or other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Each Borrower has good and indefeasible title to the
---------------
Collateral and the Real Property, free and clear of Liens except for Permitted
Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide existing
-----------------
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrowers' business, owed to Borrowers without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Eligible
Account, such Account is not:
(a) owed by an employee, Affiliate, or agent of a Borrower,
(b) on account of a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or on any other terms by reason of which the
payment by the Account Debtor may be conditional,
54
(c) payable in a currency other than Dollars,
(d) owed by an Account Debtor that has or has asserted a right of
setoff, has disputed its liability, or has made any claim with respect to its
obligation to pay the Account,
(e) owed by an Account Debtor that is subject to any Insolvency
Proceeding or is not Solvent or as to which a Borrower has received notice of an
imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
(f) on account of a transaction as to which the goods giving rise to
such Account have not been shipped and billed to the Account Debtor or the
services giving rise to such Account have not been performed and accepted by the
Account Debtor,
(g) a right to receive progress payments or other advance xxxxxxxx
that are due prior to the completion of performance by the applicable Borrower
of the subject contract for goods or services, and
(h) an Account that has not been billed to the customer.
5.3 Eligible Inventory. All Eligible Inventory is of good and
------------------
merchantable quality, free from defects. As to each item of Eligible Inventory,
such Inventory is
(a) owned by a Borrower free and clear of all Liens other than Liens
in favor of Agent,
(b) either located at one of the locations set forth on Schedule E-1
------------
or intransit from one such location to another such location,
(c) not located on real property leased by a Borrower or in a
contract warehouse, in each case, unless subject to a Collateral Access
Agreement executed by the lessor, the warehouseman, or other third party, as the
case may be, and unless segregated or otherwise separately identifiable from
goods of others, if any, stored on the premises,
(d) not goods that have been returned or rejected by Borrowers'
customers, and
(e) not goods that are obsolete or slow moving, restrictive or custom
items, work-in-process, or that constitute spare parts, packaging and shipping
materials, supplies used or consumed in Borrowers' business, xxxx and hold
goods, defective goods, "seconds," or Inventory acquired on consignment.
5.4 Equipment. All of the Equipment is used or held for use in Borrowers'
---------
business and is fit for such purposes. Without material exception,
none of the Equipment (including, without limitation, the Equipment set forth on
Schedule 5.4) is attached or affixed to real property in any manner which could
------------
reasonably be expected to cause such equipment to constitute a fixture under any
applicable law.
55
5.5 Location of Inventory and Equipment. The Inventory and Equipment are
-----------------------------------
located only at the locations identified on Schedule 5.5 and, except as set
------------
forth on Schedule 5.5, are not stored with a bailee, warehouseman or similar
------------
party.
5.6 Inventory Records. Each Borrower keeps correct and accurate records
-----------------
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 Location of Chief Executive Office; FEIN. The chief executive office
----------------------------------------
of each Borrower is located at the address indicated in Schedule 5.7 and each
------------
Borrower's FEIN is identified in Schedule 5.7.
------------
5.8 Due Organization and Qualification; Subsidiaries.
------------------------------------------------
(a) Each Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
---------------
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
---------------
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
---------------
each Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction
of their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the applicable Borrower. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and non-
assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
---------------
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
56
5.9 Due Authorization; No Conflict.
------------------------------
(a) As to each Borrower Party, the execution, delivery, and
performance by such Borrower Party of this Agreement and the Loan Documents to
which it is a party have been duly authorized by all necessary action on the
part of such Borrower Party.
(b) As to each Borrower Party, the execution, delivery, and
performance by such Borrower Party of this Agreement and the Loan Documents to
which it is a party do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to any Borrower Party, the
Governing Documents of any Borrower Party, or any order, judgment, or decree of
any court or other Governmental Authority binding on any Borrower Party, (ii)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any material contractual obligation of any
Borrower Party, including under the documents and instruments relating to the
Trex Indebtedness, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of any Borrower
Party, other than Permitted Liens, or (iv) except as set forth on Schedule
--------
5.9(b), require any approval of any Borrower Party's interestholders or any
------
approval or consent of any Person under any material contractual obligation of
any Borrower Party.
(c) Other than the filing of financing statements, fixture filings,
and Mortgages, the execution, delivery, and performance by each Borrower Party
of this Agreement and the Loan Documents to which such Borrower Party is a party
do not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
Person.
(d) As to each Borrower Party, this Agreement and the other Loan
Documents to which Borrower is a party, and all other documents contemplated
hereby and thereby, when executed and delivered by such Borrower Party will be
the legally valid and binding obligations of such Borrower Party, enforceable
against such Borrower Party in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
---------- -------------
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to
--------------------------
Borrowers that have been delivered by Borrowers or Guarantor to the Lender Group
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material
57
respects, Borrowers' (or Guarantor's, as applicable) financial condition as of
the date thereof and results of operations for the period then ended. There has
not been a Material Adverse Change with respect to Borrowers (or Guarantor, as
applicable) since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.
5.12 Fraudulent Transfer.
-------------------
(a) Each Borrower is Solvent.
(b) No transfer of property is being made by any Borrower and no
obligation is being incurred by any Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrowers.
5.13 Employee Benefits. None of Borrowers, any of their Subsidiaries, or
-----------------
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a)
----------------------- -------------
to Borrowers' knowledge, none of Borrowers' assets has ever been used by
Borrowers or by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any Hazardous Materials, where such
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of applicable Environmental Law, (b) to Borrowers'
knowledge, none of Borrowers' properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, (c) none of the Borrowers has received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any Real Property owned or operated by Borrowers, and (d) none of the
Borrowers has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by any Borrower resulting in the
releasing or disposing of Hazardous Materials into the environment.
5.15 Brokerage Fees. Borrowers have not utilized the services of any
--------------
broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrowers in connection herewith.
5.16 Intellectual Property. Each Borrower owns, or holds licenses in, all
---------------------
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as Schedule 5.16 is a true, correct, and complete listing of all material
-------------
patents, patent applications, trademarks, trademark applications, copyrights,
and copyright registrations as to which Borrower is the owner or is an exclusive
licensee.
5.17 Leases. Borrowers enjoy peaceful and undisturbed possession under
------
all leases material to the business of Borrowers and to which Borrowers are
party or under which Borrowers are operating. All of such leases are valid and
subsisting and no material default by Borrowers exist under any of them.
58
5.18 Deposit Accounts. Set forth on Schedule 5.18 are all of the Deposit
---------------- -------------
Accounts of each Borrower, including, with respect to each depository (i) the
name and address of such depository, and (ii) the account numbers of the
accounts maintained with such depository.
5.19 Complete Disclosure. All factual information (taken as a whole)
-------------------
furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers in writing to Agent or any Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrowers' good faith best estimate of its future
performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
------------ -------------
of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrowers shall and shall cause each of their respective Subsidiaries to do all
of the following:
6.1 Accounting System. Maintain a system of accounting that enables
-----------------
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent (and if so requested by Agent,
--------------------
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
================================================================================
Weekly (a) a sales journal, collection journal, and credit register since
the last such schedule and a calculation of the Borrowing Base as
of such date,
(b) a calculation of Availability,
(c) notice of all returns, disputes, or claims, and
(d) the Borrowing Base Certificate;
================================================================================
59
================================================================================
Monthly (e) Inventory reports specifying each Borrower's cost of
its Inventory, by category and location, with supporting
detail as to finished goods;
--------------------------------------------------------------------------------
Monthly (not later (f) a detailed calculation of the Borrowing Base (including
than the 15th day detail regarding those Accounts that are not Eligible
of each month) Accounts),
(g) a detailed aging, by total, of the Accounts, together
with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Agent,
(h) a summary aging, by vendor, of Borrowers' accounts
payable and any book overdraft, and
(i) a calculation of Dilution for the prior month;
--------------------------------------------------------------------------------
Quarterly (j) a detailed list of each Borrower's customers, and
(k) a report regarding each Borrower's accrued, but unpaid,
ad valorem taxes;
--------------------------------------------------------------------------------
Upon request by (l) copies of invoices in connection with the Accounts,
Agent credit memos, remittance advices, deposit slips, shipping
and delivery documents in connection with the Accounts and,
for Inventory and Equipment acquired by Borrowers, purchase
orders and invoices, and
(m) such other reports as to the Collateral, or the
financial condition of Borrowers, as Agent may request.
================================================================================
If, as of any date of determination, Excess Availability is less than
$5,000,000, Borrowers shall provide the documents listed in the foregoing
clauses (a) through (c) to Agent on a daily basis.
----------- ---
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
-------------------------------------------
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45 days in
the case of a month that is the end of one of the first 3 fiscal quarters in a
fiscal year) after the end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period; and
60
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
(A) the financial statements delivered hereunder have been prepared
in accordance with GAAP (except for the lack of footnotes and being subject
to year-end audit adjustments) and fairly present in all material respects
the financial condition of Parent and its Subsidiaries,
(B) the representations and warranties of Borrowers contained in this
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of such certificate, as though made on and
as of such date (except to the extent that such representations and
warranties relate solely to an earlier date), and
(C) there does not exist any condition or event that constitutes a
Default or Event of Default (or, to the extent of any non-compliance,
describing such non-compliance as to which he or she may have knowledge and
what action Borrowers have taken, are taking, or propose to take with
respect thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
------------
demonstrating, in reasonable detail, compliance at the end of such period
with the applicable financial covenants contained in Section 7.20;
------------
(b) as soon as possible, but in any event within 45 days (90 days in
the case of the final fiscal quarter in a fiscal year) after the end of each
Parent's fiscal quarters, a detailed calculation of Borrowers' Trailing Four
Quarter EBITDA;
(c) as soon as available, but in any event within 90 days after the
end of each of Parent's fiscal years,
(i) financial statements of Parent and its Subsidiaries for
each such fiscal year, audited by Xxxxxx Xxxxxxxx or other independent
certified public accountants reasonably acceptable to Agent and certified,
without any qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management); and
(ii) a certificate of such accountants addressed to Agent and
the Lenders certifying as to the financial covenants set forth in Section
-------
7.20.
----
(d) as soon as available, but in any event within 30 days prior to
the start of each of Parent's fiscal years, copies of Borrowers' Projections, in
form and substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the forthcoming 3 years, year
by year, and for the forthcoming fiscal year, month by month, certified by the
chief financial officer of Parent as being such officer's good faith best
estimate of the financial performance of Parent and its Subsidiaries during the
period covered thereby;
(e) when filed by any Borrower,
61
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by any Borrower with the SEC,
(iii) copies of Borrowers' federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Parent to its
shareholders generally;
(f) if and when filed by any Borrower and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) any Borrower conducts business or is required to pay
any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change;
(g) as soon as a Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrowers propose to take with respect
thereto; and
(h) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrowers.
In addition to the financial statements referred to above, Borrowers agree
to deliver financial statements prepared on both a consolidated and
consolidating basis and agree that no Borrower, or any Subsidiary of a Borrower,
will have a fiscal year different from that of Parent. Borrowers agree that
their independent certified public accountants are authorized to communicate
with Agent and to release to Agent whatever financial information concerning
Borrowers that Agent reasonably may request. Each Borrower waives the right to
assert a confidential relationship, if any, it may have with any accounting firm
or service bureau in connection with any information requested by Agent pursuant
to or in accordance with this Agreement, and agrees that Agent may contact
directly any such accounting firm or service bureau in order to obtain such
information.
6.4 Guarantor Reports. Cause Guarantor to deliver its annual financial
-----------------
statements at the time when Parent provides its audited financial statements to
Agent and copies of all federal income tax returns as soon as the same are
available and in any event no later than 30 days after the same are required to
be filed by law.
6.5 Return. Cause returns and allowances, as between Borrowers and their
------
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the applicable Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower, the applicable Borrower promptly shall determine the reason for such
return and, if the applicable Borrower accepts such return, issue a credit
memorandum (with a copy to be sent to Agent) in the appropriate amount to such
Account
62
Debtor. If, at a time when an Event of Default has occurred and is continuing,
any Account Debtor returns any Inventory to any Borrower, the applicable
Borrower promptly shall determine the reason for such return and, if Agent
consents (which consent shall not be unreasonably withheld), issue a credit
memorandum (with a copy to be sent to Agent) in the appropriate amount to such
Account Debtor.
6.6 Maintenance of Properties. Maintain and preserve all of its
-------------------------
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
so as to prevent any loss or forfeiture thereof or thereunder.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
-----
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers
or any of their assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrowers
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating
that the applicable Borrower has made such payments or deposits. Borrowers shall
deliver satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which any Borrower is required to pay any such excise tax.
6.8 Insurance.
---------
(a) At Borrowers' expense, maintain insurance respecting their
respective property and assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Borrowers also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
or additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever.
(b) The Administrative Borrower shall give Agent prompt notice of any
loss covered by such insurance. Agent shall have the exclusive right to adjust
any losses payable under any such insurance policies in excess of $50,000,
without any liability to Borrowers whatsoever in respect of such adjustments.
Any monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations or shall be disbursed to the Administrative
Borrower under staged payment terms reasonably satisfactory to the Required
Lenders for application to the cost of repairs, replacements, or restorations.
Any such repairs, replacements, or restorations shall be effected
63
with reasonable promptness and shall be of a value at least equal to the value
of the items of property destroyed prior to such damage or destruction.
(c) Borrowers shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 6.8, unless Agent is included thereon as named insured with
-----------
the loss payable to Agent under a lender's loss payable endorsement or its
equivalent. The Administrative Borrower immediately shall notify Agent whenever
such separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and copies of such policies
promptly shall be provided to Agent.
6.9 Location of Inventory and Equipment. Keep the Inventory and Equipment
-----------------------------------
only at the locations identified on Schedule 5.5; provided, however, that the
------------ -------- -------
Administrative Borrower may amend Schedule 5.5 so long as such amendment occurs
------------
by written notice to Agent not less than 30 days prior to the date on which
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, the applicable Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Agent's Liens on such assets and also provides to Agent a Collateral Access
Agreement.
6.10 Compliance with Laws. Comply with the requirements of all applicable
--------------------
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any
------
leases to which any Borrower is a party or by which any Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
6.12 Brokerage Commissions. Pay any and all brokerage commission or
---------------------
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrower and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers' obtaining financing from the
Lender Group under this Agreement.
6.13 Existence. At all times preserve and keep in full force and effect
---------
any rights and franchises material to Borrowers' businesses, and, subject to
Section 7.21(d) each Borrower's valid existence and good standing.
---------------
6.14 Environmental.
-------------
(a) Keep any property either owned or operated by any Borrower free
of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance
64
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by any Borrower and take any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with applicable Environmental Law,
and (d) promptly provide Agent with written notice within 10 days of the receipt
of any of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of any Borrower, (ii) commencement
of any Environmental Action or notice that an Environmental Action will be filed
against any Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than 5 Business
------------------
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 Additional Investments.
----------------------
(a) On or before January 31, 2002, Parent shall have consummated one
or more Additional Investments, and shall have received at least $10,000,000 in
Additional Investment Proceeds as a result thereof.
(b) Parent shall cause any Additional Investment Proceeds that it
receives to be deposited (whether by wire transfer or otherwise) directly into
account number 323272274 maintained with the Designated Account Bank.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrowers will not and will not permit any of their respective Subsidiaries to
do any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
------------
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
-------------
(c) Permitted Purchase Money Indebtedness;
(d) Subordinated Indebtedness permitted under Section 7.21;
------------
65
(e) Guaranties made in connection with the sale of the Delaware
Facility only if the net proceeds received by the Parent from such sale exceed
$7,000,000 and in an aggregate amount of such guaranties do not exceed the
amount of the difference between the net proceeds received by Parent from such
sale and $7,000,000;
(f) Refinancings, renewals, or extensions of the Trex Indebtedness
or the Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
-----------
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's judgment, materially impair the prospects of repayment of the
Obligations by Borrowers or materially impair Borrowers' creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions that, taken as a whole, are materially more burdensome or restrictive
to the applicable Borrower, (iv) if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to the Obligations,
then the terms and conditions of the refinancing, renewal, or extension
Indebtedness must include subordination terms and conditions that are at least
as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness, and (v) in the case of any
refinancing of the Trex Indebtedness, (A) the interest rate thereon is not
increased, (B) payments of principal thereof are not accelerated, (C) the
aggregate annual principal and interest obligations thereon are less than or
equal to such obligations as of the date hereof unless the Agent in its
Permitted Discretion shall have consented in writing to the amount and terms of
such refinancing and (D) the Indebtedness incurred in connection with such
refinancing shall be secured solely by the Real Property which secures the Trex
Indebtedness as of the Closing Date.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
-----
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(f) and so long as the replacement Liens only encumber
--------------
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
-----------------------------------
(a) Other than as permitted by Section 7.21, enter into any merger,
------------
consolidation, reorganization, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
66
7.4 Disposal of Assets. Other than Permitted Dispositions and Permitted
------------------
Transactions, convey, sell, lease, license, assign, transfer, or otherwise
dispose of any of the assets of any Borrower.
7.5 Change Name. Change any Borrower's name, FEIN, corporate structure,
-----------
or identity, or add any new fictitious name; provided, however, that a Borrower
-------- -------
may change its name upon at least 30 days' prior written notice by the
Administrative Borrower to Agent of such change and so long as, at the time of
such written notification, such Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected the Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
---------
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent.
7.7 Nature of Business. Make any change in the principal nature of
------------------
Borrowers' business.
7.8 Prepayments and Amendments.
--------------------------
(a) Except in connection with a refinancing permitted by Section
-------
7.1(f), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
------
of any Borrower, other than the Obligations in accordance with this Agreement;
and
(b) Except in connection with a refinancing permitted by Section
-------
7.1(f), directly or indirectly, amend, modify, alter, increase, or change any of
------
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
--------
7.1(b), (c), (d) or (e).
------ --- --- ---
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
-----------------
any Change of Control.
7.10 Consignments. Consign any Inventory or sell any Inventory on xxxx and
------------
hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 Distributions. Except as expressly provided below, make or permit any
-------------
other Borrower to, directly or indirectly (a) declare, order, pay or make any
Restricted Payment or (b) except with respect to the Trex Indebtedness, set
aside any sum or property therefor or exercise any set-off or similar rights of
any Borrower, if any, with respect to any indebtedness for borrowed money owing
to any Person other than the Agent or the Lenders.
As used herein, the term "Restricted Payment" means (i) any cash dividend or
------------------
other cash distribution or payment, direct or indirect, on or on account of any
shares of any class of stock of the Borrowers now or hereafter outstanding; (ii)
any dividend or other distribution in respect of, or redemption, purchase or
other acquisition, direct or indirect, of any shares of any class of stock of
the Borrowers now or hereafter outstanding or of any warrants, options or rights
to purchase any such stock (including, without limitation, the repurchase of any
such stock, warrant, option or right or any refund of the purchase price thereof
in connection with the
67
exercise by the holder thereof of any right of rescission or similar remedies
with respect thereto, provided that the Parent may repurchase shares of its
--------
common stock from a holder thereof in accordance with Section 7.21; and (iii)
any direct salary, non-salary managerial fees, fee (consulting, management or
other), fringe benefit, allowance or other expense directly or indirectly paid
or payable by any Borrower (as compensation or otherwise) to any shareholder or
Affiliate of the Borrowers (other than to an employee, to the extent of such
----- ----
employee's compensation, provided that the terms of such compensation are
--------
approved by the applicable board of directors or the compensation committee
thereof) or any partner, shareholder or Affiliate thereof.
7.12 Accounting Methods. Modify or change its method of accounting (other
------------------
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrowers' accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or Borrowers'
financial condition.
7.13 Investments. Except for Permitted Investments, directly or
-----------
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
--------
however, that Borrowers shall not have Permitted Investments (other than in the
-------
Cash Management Accounts) in excess of $200,000 outstanding at any one time
unless the applicable Borrower and the applicable securities intermediary or
bank have entered into Control Agreements governing such Permitted Investments,
as Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments.
7.14 Transactions with Affiliates. Directly or indirectly enter into or
----------------------------
permit to exist any transaction with any Affiliate of any Borrower except for
transactions that are in the ordinary course of Borrowers' business, upon fair
and reasonable terms, that are fully disclosed to Agent, and that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a non-Affiliate, it being expressly agreed that no Borrower shall make any
payment, or otherwise transfer any amount, to Hologic Investment other than
transfers by Parent of Additional Investment Proceeds thereto; provided, that
--------
Parent transfer up to $500,000 to its foreign Subsidiaries solely for
restructuring purposes during fiscal year 2002.
7.15 Suspension. Suspend or go out of a substantial portion of its
----------
business.
7.16 Additional Investment. Fail to receive at least $10,000,000 in
---------------------
Additional Investment Proceeds by January 31, 2002.
7.17 Use of Proceeds. Use the proceeds of the Advances and the Term Loan
---------------
for any purpose other than (a) on the Closing Date, to pay transactional fees,
costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for working capital
purposes.
68
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
---------------------------------------------------------------------
with Bailees. Relocate its chief executive office to a new location without the
------------
Administrative Borrower providing 30 days' prior written notification thereof to
Agent and so long as, at the time of such written notification, the applicable
Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected the Agent's Liens and also provides to Agent a
Collateral Access Agreement with respect to such new location. The Inventory and
Equipment shall not at any time now or hereafter be stored with a bailee,
warehouseman, or similar party other than those third parties identified on
Schedule 5.5 without Agent's prior written consent.
------------
7.19 Securities Accounts. Establish or maintain any Securities Account
-------------------
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Except as provided in Section 6.17, Borrowers shall not
------------
transfer assets out of any Securities Account; provided, however, that, so long
-------- -------
as no Event of Default has occurred and is continuing or would result therefrom,
Borrowers may use such assets (and the proceeds thereof) to the extent not
prohibited by this Agreement.
7.20 Financial Covenants. Fail to observe or comply with any of the
-------------------
covenants set forth on Schedule 7.20.
-------------
7.21 Permitted Transactions. Notwithstanding anything herein to the
----------------------
contrary, Borrowers shall be permitted to engage in the transactions set forth
on Schedule 7.21 (each a "Permitted Transaction") so long as no Default or Event
------------- ---------------------
of Default has occurred and is continuing or would be caused by such Permitted
Transaction.
7.22 Hologic Investment Account. As of any date of determination, allow
--------------------------
the amount in the Hologic Investment Account to exceed $250,000, unless (a) the
amount of outstanding Advances is zero, (b) the Letter of Credit Usage does not
exceed $500,000, and (c) Excess Availability is greater than $10,000,000.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
----------------
8.1 If Borrowers fail to pay when due and payable, or when
declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses (except as provided in
Section 8.2(c)), or other amounts constituting Obligations);
--------------
8.2 (a) If Borrowers fail or neglect to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in Sections 6.2
------------
(Collateral Reporting), 6.7 (Tax Returns), 6.9 (Location of Inventory and
--- ---
Equipment), 6.10 (Compliance with Laws), or 6.11 (Leases) of this Agreement and
---- ----
such failure continues for a period of 5 Business Days;
69
(b) If Borrowers fail or neglect to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in Sections 6.1
------------
(Accounting System) or 6.6 (Maintenance of Properties) of this Agreement and
---
such failure continues for a period of 15 Business Days;
(c) If Borrowers fail to pay when due and payable any third party
Lender Group Expenses for which invoices are forwarded to Borrowers for payment
and such failure continues for a period of 3 Business Days; or
(d) If Borrowers fail or neglect to perform, keep, or observe any
other term, provision, condition, covenant, or agreement contained in this
Agreement, or in any of the other Loan Documents (giving effect to any grace
periods, cure periods, or required notices, if any, expressly provided for in
such Loan Documents); in each case, other than any such term, provision,
condition, covenant, or agreement that is the subject of another provision of
this Section 8, in which event such other provision of this Section 8 shall
--------- ---------
govern;
8.3 If any material portion of any Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by any Borrower or any of
its Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against any Borrower, or any
of its Subsidiaries, and any of the following events occur: (a) the applicable
Borrower or the Subsidiary consents to the institution of such Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 45 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, Agent (including
-------- -------
any successor agent) and each other member of the Lender Group shall be relieved
of its obligation to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
any Borrower or any of its Subsidiaries, or (e) an order for relief shall have
been entered therein;
8.6 If any Borrower or any of its Subsidiaries is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if any taxes or debts owing at any
time hereafter to any one or more of such entities becomes a Lien, whether
xxxxxx or otherwise, upon any Borrower's or any of its Subsidiaries' assets and
the same is not paid on the payment date thereof;
70
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of any Borrower's or any of its Subsidiaries' properties or
assets;
8.9 If there is a payment default in any material agreement (including,
without limitation, any agreement, document or instrument relating to the Trex
Indebtedness or any Additional Investment) to which any Borrower or any of its
Subsidiaries is a party or any non-payment default which (a) occurs at the final
maturity of the obligations thereunder, or (b) results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
the applicable Borrower's or its Subsidiaries' obligations thereunder, to
terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein;
8.10 If any Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to the Lender Group by
any Borrower, its Subsidiaries, or any officer, employee, agent,
or director of any Borrower or any of its Subsidiaries;
8.12 If the obligation of the Guarantor under the Guaranty and Security
Agreement is limited or terminated by operation of law or by the Guarantor;
8.13 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby;
8.14 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Borrower, or a proceeding shall be commenced by any
Borrower, or by any Governmental Authority having jurisdiction over any
Borrower, seeking to establish the invalidity or unenforceability thereof, or
Borrower shall deny that any Borrower has any liability or obligation purported
to be created under any Loan Document; or
8.15 If one or more judgments for which the applicable Borrower is not
insured and which are not subject to appeal in aggregate amount of $1,000,000 or
more are entered against the Borrowers and remain unpaid for more than 30 days.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
-------------------
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
71
(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of the Lender Group, but without affecting
any of the Agent's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit the Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in trust for the
Lender Group, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Borrower Party, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interests in the Collateral. Each Borrower agrees to assemble the
Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate which
is reasonably convenient to both parties. Each Borrower authorizes Agent to
enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Agent's
determination appears to conflict with the Agent's Liens and to pay all expenses
incurred in connection therewith and to charge Borrowers' Loan Account therefor.
With respect to any of Borrowers' owned or leased premises, each Borrower hereby
grants Agent a license to enter into possession of such premises and to occupy
the same, without charge, in order to exercise any of the Lender Group's rights
or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held by the
Lender Group (including any amounts received in the Cash Management Accounts),
or (ii) Indebtedness at any time owing to or for the credit or the account of
any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of
any Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral.
72
Each Borrower hereby grants to Agent a license or other right to use, without
charge, such Borrower's labels, patents, copyrights, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Personal Property Collateral, in completing
production of, advertising for sale, and selling any Personal Property
Collateral and such Borrower's rights under all licenses and all franchise
agreements shall inure to the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including Borrowers' premises)
as Agent determines is commercially reasonable. It is not necessary that the
Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give the Administrative Borrower (for the
benefit of the applicable Borrowers) a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the Personal Property
Collateral, the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or mailed, postage
prepaid, to the Administrative Borrower as provided in Section 12, at least
----------
10 days before the earliest time of disposition set forth in the notice; no
notice needs to be given prior to the disposition of any portion of the
Personal Property Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a recognized
market;
(l) Agent, on behalf of the Lender Group, may credit bid and
purchase at any public sale;
(m) The Lender Group shall have all other rights and remedies
available to it at law or in equity or pursuant to any other Loan Document; and
(n) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrowers. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to the Administrative Borrower (for the benefit of the
applicable Borrower or Borrowers).
9.2 Remedies Cumulative. The rights and remedies of the Lender Group
-------------------
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
73
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
-----------
type described in Section 6.8 and take any action with respect to such policies
-----------
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
---------------------
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Borrower hereby
-------------------------------------------
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and
---------------
hold the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
------------------
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto),
74
or any act, omission, event, or circumstance in any manner related thereto (all
the foregoing, collectively, the "Indemnified Liabilities"). The foregoing to
-----------------------
the contrary notwithstanding, Borrowers shall have no obligation to any
Indemnified Person under this Section 11.3 with respect to any Indemnified
------------
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE
OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER
PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as the Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or Agent, as the case may be, at its address
set forth below:
If to Administrative
Borrower: HOLOGIC, INC.
00 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Financial Officer
Fax No. (000) 000-0000
with copies to: BROWN, RUDNICK, FREED & GESMER, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Fax No. (000) 000-0000
If to Agent: FOOTHILL CAPITAL CORPORATION
Xxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. (000) 000-0000
75
with copies to: XXXXXX, XXXX & XXXXXXX
One Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx, P.C.
Fax No. (000) 000-0000
Agent and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
----------
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SUFFOLK,
COMMONWEALTH OF MASSACHUSETTS, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
-------- -------
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND THE
LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
----- --- ----------
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
-------------
(c) BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING
76
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
------------------------------
(a) Any Lender may, with the written consent of Agent (provided that
no written consent of Agent shall be required in connection with any assignment
and delegation by a Lender to an Eligible Transferee), assign and delegate to
one or more assignees (each an "Assignee") all, or any ratable part of all, of
--------
the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000; provided, however, that Borrowers and Agent may continue to deal
-------- -------
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to the Administrative Borrower and Agent by such
Lender and the Assignee, (ii) such Lender and its Assignee have delivered to the
Administrative Borrower and Agent an Assignment and Acceptance in form and
substance satisfactory to Agent, and (iii) the assignor Lender or Assignee has
paid to Agent for Agent's separate account a processing fee in the amount of
$5,000. Anything contained herein to the contrary notwithstanding, the consent
of Agent shall not be required (and payment of any fees shall not be required)
if such assignment is in connection with any merger, consolidation, sale,
transfer, or other disposition of all or any substantial portion of the business
or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor Lender
(with a copy to the Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to Section 11.3 hereof) and be released from its
------------
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance,
77
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other Loan Document furnished pursuant hereto, (2) such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of Borrowers or the performance or observance by
Borrowers of any of their obligations under this Agreement or any other Loan
Document furnished pursuant hereto, (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (4) such Assignee will,
independently and without reliance upon Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement, (5) such Assignee appoints and
authorizes Agent to take such actions and to exercise such powers under this
Agreement as are delegated to Agent, by the terms hereof, together with such
powers as are reasonably incidental thereto, and (6) such Assignee agrees that
it will perform all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent,
sell to one or more commercial banks, financial institutions, or other Persons
not Affiliates of such Lender (a "Participant") participating interests in its
-----------
Obligations, the Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents
------------------
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
-------- -------
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents)
78
supporting the Obligations hereunder in which such Participant is participating,
(D) postpone the payment of, or reduce the amount of, the interest or fees
payable to such Participant through such Lender, or (E) change the amount or due
dates of scheduled principal repayments or prepayments or premiums, and (v) all
amounts payable by Borrowers hereunder shall be determined as if such Lender had
not sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 Successors. This Agreement shall bind and inure to the benefit of the
----------
respective successors and assigns of each of the parties; provided, however,
-------- -------
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
------------
Section 14.1 hereof, no consent or approval by any Borrower is required in
------------
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and the Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
--------
however, that no such waiver, amendment, or consent shall, unless in writing and
-------
signed by all of the Lenders affected thereby and the Administrative Borrower
(on behalf of all Borrowers), do any of the following:
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(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend this Section or any provision of the Agreement providing
for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
-------------
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower from any obligation for the payment of
money, or
(j) change the definition of Borrowing Base or the definitions of
Eligible Accounts, Eligible Inventory, Maximum Revolver Amount, Term Loan
Amount, or change Section 2.1(b), or
--------------
(k) amend any of the provisions of Section 16.
----------
and, provided further, however, that no amendment, waiver or consent shall,
---------------- -------
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrowers, shall not require consent by or the agreement of Borrowers.
15.2 Replacement of Holdout Lender.
-----------------------------
(a) If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
a Lender ("Holdout Lender") fails to give its consent, authorization, or
agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to
the Holdout Lender, may permanently replace the Holdout Lender with one or more
substitute Lenders (each, a "Replacement Lender"), and the Holdout Lender shall
have no right to refuse to be replaced hereunder. Such notice to replace the
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Holdout Lender shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
------------
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender
-------------------------------
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that the Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby
--------------------------------------
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
----------
The provisions of this Section 16 are solely for the benefit of Agent, and the
----------
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole
81
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management accounts as Agent deems necessary and appropriate in accordance
with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under this
--------------------
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
-----------------
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or
82
counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed to
-------------------------------------
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or the Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
------------
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
--------- -------- -------
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the
---------------
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other
83
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
-----------------------------------
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
-------- -------
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make
----------------------------
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
84
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to
---------------
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
----------
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective
-----------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 Withholding Taxes.
-----------------
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
the Administrative Borrower:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder
(within the meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section 881(c)(3)(C) of the
IRC, and (B) a
85
properly completed IRS Form W-8BEN, before the first payment of any
interest under this Agreement and at any other time reasonably requested by
Agent or the Administrative Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed
IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or the
Administrative Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement and at
any other time reasonably requested by Agent or the Administrative
Borrower;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and the Administrative Borrower
of any change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of Borrowers to such Lender, such Lender agrees to
notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of Borrowers to such Lender. To the extent of such
percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no longer
valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders
86
under this subsection shall survive the payment of all Obligations and the
resignation or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments 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
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the branch or lending office of the
Lender participating in the transactions set forth herein) 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,
-----
each 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 any note, including any amount paid pursuant to this Section
-------
16.11(e) after withholding or deduction for or on account of any Taxes, will not
--------
be less than the amount provided for herein; provided, however, that Borrowers
-------- -------
shall not be required to increase any such amounts payable to Agent or any
Lender (i) that is not organized under the laws of the United States, if such
Person fails to comply with the other requirements of this Section 16.11, or
-------------
(ii) if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence. Borrowers will furnish to
Agent as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrowers.
16.12 Collateral Matters.
------------------
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if the
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
-----------
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower owned any interest at the time
the security interest was granted or at any time thereafter, or (iv)
constituting property leased to a Borrower under a lease that has expired or is
terminated in a transaction permitted under this Agreement. Except as provided
above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or the Administrative
Borrower at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 16.12; provided, however, that (1) Agent shall not be required to
------------- -------- -------
execute any document necessary to evidence such release on terms
87
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrowers in respect of)
all interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrowers or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
-------------------------------------------------------
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
--------
however, that if all or part of such excess payment received by the purchasing
-------
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest
88
except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as
---------------------
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and, promptly
upon Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by Agent
--------------------------------
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member of
----------------------------------------------------
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers
------------------------------------------------------------------
by Lenders; Other Reports and Information. By becoming a party to this
-----------------------------------------
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
------ -------
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
89
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
--------
however, that, unless prohibited by applicable law, statute, regulation, or
-------
court order, such Lender shall notify the Administrative Borrower of any request
by any court, governmental or administrative agency, or pursuant to any subpoena
or other legal process for disclosure of any such non-public material
information concurrent with, or where practicable, prior to the disclosure
thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request
of Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrowers, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of the
Administrative Borrower the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from the Administrative
Borrower, Agent promptly shall provide a copy of same to such Lender, and (z)
any time that Agent renders to the Administrative Borrower a statement regarding
the Loan Account, Agent shall send a copy of such statement to each Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain of
---------------------------------
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or
90
liability to any Participant of any other Lender. Except as provided in Section
-------
16.7, no member of the Lender Group shall have any liability for the acts or any
----
other member of the Lender Group. No Lender shall be responsible to any Borrower
or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its
behalf hereunder or in connection with the financing contemplated herein.
16.19 Legal Representation of Agent. In connection with the negotiation,
-----------------------------
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Xxxxxx, Xxxx &
Xxxxxxx ("CH&S") only has represented and only shall represent Foothill in its
capacity as Agent and as a Lender. Each other Lender hereby acknowledges that
CH&S does not represent it in connection with any such matters.
17. GENERAL PROVISIONS.
------------------
17.1 Effectiveness. This Agreement shall be binding and deemed effective
-------------
when executed by Borrowers, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein
----------------
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed against the Lender Group or Borrowers,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall
--------------------------
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a
---------------------
writing in accordance with Section 15.1.
------------
17.6 Counterparts; Telefacsimile Execution. This Agreement may be
-------------------------------------
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
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17.7 Revival and Reinstatement of Obligations. If the incurrence or
----------------------------------------
payment of the Obligations by any Borrower or the transfer to the Lender Group
of any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
-----------------
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrower
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8 Integration. This Agreement, together with the other Loan Documents,
-----------
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
-----------------------------
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full
-----------------------
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to Advances and Letters of Credit obtained
for the benefit of any Borrower and all other notices and instructions under
this Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group.
To induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
------------
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
BORROWERS:
---------
HOLOGIC, INC.,
as Borrower and Administrative Borrower
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx, Chief Financial Officer
FLUOROSCAN IMAGING SYSTEMS, INC.,
as Borrower
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx, Vice President-Finance
DIRECT RADIOGRAPHY CORP.,
as Borrower
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx, Vice President-Finance
AGENT:
-----
FOOTHILL CAPITAL CORPORATION, as Agent and as
Lender
By: /s/ Xxxxx Xxxx
-----------------------------------
Xxxxx Xxxx, Vice President
1
Table of Contents
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit I-1 Form of Notice of Increase Option
Schedule C-1 Commitments
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 5.4 Equipment
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 7.20 Financial Covenants
Schedule 7.21 Permitted Transactions
i
