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D & K HEALTHCARE RESOURCES, INC.,
D & K PHARMACY SOLUTIONS, INC.,
DIVERSIFIED HEALTHCARE, LLC,
XXXXXX DRUG CO.,
MEDICAL & VACCINE PRODUCTS, INC.,
XXXXX HEALTHCARE SOLUTIONS, INC.,
XXXXX DISTRIBUTION, L.L.C.,
XXXXX HEARTLAND, L.L.C.,
AS BORROWERS
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SEVENTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated: January 7, 2005
$635,000,000
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FLEET CAPITAL CORPORATION
INDIVIDUALLY AND AS AGENT FOR EACH LENDER WHICH IS
OR BECOMES A PARTY HERETO,
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS SYNDICATION AGENT,
JPMORGAN CHASE BANK, N.A.
(FORMERLY KNOWN AS JPMORGAN CHASE BANK) AND
GENERAL ELECTRIC CAPITAL CORPORATION,
AS CO-DOCUMENTATION AGENT,
CONGRESS FINANCIAL CORPORATION AND
LASALLE BUSINESS CREDIT, LLC,
AS CO-AGENT,
BANC OF AMERICA SECURITIES LLC,
AS LEAD ARRANGER
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TABLE OF CONTENTS
Page
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SECTION 1. CREDIT FACILITY............................................................... 1
1.1. Loans........................................................................ 2
1.2. Letters of Credit; LC Guaranties............................................. 4
1.3. Incremental Last Out Loan.................................................... 4
1.4. All Loans to Constitute One Obligation; Joint and Several Liability.......... 5
1.5. Appointment of D&K as Borrower Representative................................ 5
1.6. Commitment Increase.......................................................... 5
SECTION 2. INTEREST, FEES AND CHARGES.................................................... 6
2.1. Interest..................................................................... 6
2.2. Computation of Interest and Fees............................................. 7
2.3. Fee Letter................................................................... 7
2.4. Letter of Credit and LC Guaranty Fees........................................ 8
2.5. Unused Line Fee.............................................................. 8
2.6. Reimbursement of Expenses.................................................... 9
2.7. Audit Fees................................................................... 9
2.8. Bank Charges................................................................. 10
2.9. Collateral Protection Expenses; Appraisals................................... 10
2.10. Payment of Charges........................................................... 10
2.11. No Deductions................................................................ 10
SECTION 3. LOAN ADMINISTRATION........................................................... 11
3.1. Manner of Borrowing Revolving Credit Loans/LIBOR Option...................... 11
3.2. Payments..................................................................... 13
3.3. Mandatory and Optional Prepayments........................................... 14
3.4. Application of Payments and Collections...................................... 15
3.5. All Loans to Constitute One Obligation....................................... 16
3.6. Loan Account................................................................. 16
3.7. Statements of Account........................................................ 16
3.8. Increased Costs.............................................................. 16
3.9. Sharing of Payments, Etc..................................................... 18
3.10. Effect On Prior Loans; Prior Loan and Security Agreement..................... 18
SECTION 4. TERM AND TERMINATION.......................................................... 19
4.1. Term of Agreement............................................................ 19
4.2. Termination.................................................................. 19
SECTION 5. SECURITY INTERESTS............................................................ 20
5.1. Security Interest in Collateral.............................................. 20
5.2. Other Collateral............................................................. 21
5.3. Lien Perfection; Further Assurances.......................................... 22
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5.4. Lien on Realty............................................................... 22
SECTION 6. COLLATERAL ADMINISTRATION..................................................... 23
6.1. General...................................................................... 23
6.2. Administration of Accounts................................................... 24
6.3. Administration of Inventory.................................................. 25
6.4. Administration of Equipment.................................................. 26
6.5. Payment of Charges........................................................... 26
SECTION 7. REPRESENTATIONS AND WARRANTIES................................................ 26
7.1. General Representations and Warranties....................................... 26
7.2. Continuous Nature of Representations and Warranties.......................... 33
7.3. Survival of Representations and Warranties................................... 34
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS........................................ 34
8.1. Affirmative Covenants........................................................ 34
8.2. Negative Covenants........................................................... 37
8.3. Specific Financial Covenants................................................. 44
SECTION 9. CONDITIONS PRECEDENT.......................................................... 45
9.1. Documentation................................................................ 45
9.2. No Default................................................................... 45
9.3. Other Conditions............................................................. 45
9.4. Availability................................................................. 45
9.5. No Litigation................................................................ 45
9.6. Diligence and Appraisal...................................................... 45
9.7. Material Adverse Effect...................................................... 46
9.8. Fees......................................................................... 46
9.9. Financial Information........................................................ 46
9.10. Capitalization............................................................... 46
9.11. Consent...................................................................... 46
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT............................ 46
10.1. Events of Default............................................................ 46
10.2. Acceleration of the Obligations.............................................. 49
10.3. Other Remedies............................................................... 49
10.4. Set Off and Sharing of Payments.............................................. 51
10.5. Remedies Cumulative; No Waiver............................................... 51
SECTION 11. AGENT........................................................................ 52
11.1. Authorization and Action..................................................... 52
11.2. Agent's Reliance, Etc........................................................ 52
11.3. Fleet and Affiliates......................................................... 53
11.4. Lender Credit Decision....................................................... 53
11.5. Indemnification.............................................................. 54
11.6. Rights and Remedies to be Exercised by Agent Only............................ 54
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11.7. Agency Provisions Relating to Collateral..................................... 54
11.8. Agent's Right to Purchase Commitments........................................ 55
11.9. Right of Sale, Assignment, Participations.................................... 55
11.10. Amendment.................................................................... 58
11.11. Resignation of Agent; Appointment of Successor............................... 58
11.12. Audit and Examination Reports; Disclaimer by Lenders......................... 59
11.13. Syndication Agent/Documentation Agent/Co-Agent............................... 59
SECTION 12. MISCELLANEOUS................................................................ 60
12.1. Power of Attorney............................................................ 60
12.2. Indemnity.................................................................... 61
12.3. Sale of Interest............................................................. 61
12.4. Severability................................................................. 61
12.5. Successors and Assigns....................................................... 61
12.6. Cumulative Effect; Conflict of Terms......................................... 61
12.7. Execution in Counterparts.................................................... 62
12.8. Notice....................................................................... 62
12.9. Consent...................................................................... 63
12.10. Credit Inquiries............................................................. 63
12.11. Time of Essence.............................................................. 63
12.12. Entire Agreement............................................................. 63
12.13. Interpretation............................................................... 63
12.14. Intentionally Omitted........................................................ 63
12.15. GOVERNING LAW; CONSENT TO FORUM.............................................. 63
12.16. WAIVERS BY BORROWERS......................................................... 64
12.17. Private Sale; Commercial Reasonableness...................................... 65
12.18. Confidentiality.............................................................. 65
12.19. Advertisement................................................................ 66
SECTION 13. CROSS GUARANTY............................................................... 66
13.1. Cross-Guaranty............................................................... 66
13.2. Waivers by Borrowers......................................................... 67
13.3. Benefit of Guaranty.......................................................... 67
13.4. Waiver of Subrogation, Etc................................................... 67
13.5. Election of Remedies......................................................... 68
13.6. Limitation................................................................... 68
13.7. Contribution with Respect to Guaranty Obligations............................ 69
13.8. Liability Cumulative......................................................... 69
SECTION 14. AMENDMENT AND RESTATEMENT OF EXISTING LOAN AND SECURITY AGREEMENT........... 70
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SEVENTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SEVENTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is
made as of this 7th day of January, 2005, by and among FLEET CAPITAL CORPORATION
("Fleet"), a Rhode Island corporation, individually as a Lender and as Agent
("Agent") for itself and each other financial institution which is or becomes a
party hereto (each such financial institution, including Fleet, is referred to
hereinafter individually as a "Lender" and collectively as the "Lenders"), the
LENDERS, D&K HEALTHCARE RESOURCES, INC., a Delaware corporation ("D&K"), D & K
PHARMACY SOLUTIONS, INC., a Delaware corporation ("D&K Pharmacy Solutions"),
XXXXXX DRUG CO., a South Dakota corporation ("Xxxxxx"), DIVERSIFIED HEALTHCARE,
LLC, a Kentucky limited liability company ("DH"), MEDICAL & VACCINE PRODUCTS,
INC. d/b/a DEVICTORIA MEDICAL, a Puerto Rico corporation ("MVP"), XXXXX
HEALTHCARE SOLUTIONS, INC., an Arkansas corporation ("Xxxxx"), XXXXX
DISTRIBUTION, L.L.C., an Arkansas limited liability company ("Xxxxx
Distribution"), XXXXX HEARTLAND, L.L.C., an Arkansas limited liability company
("Xxxxx Heartland"; D&K, D&K Pharmacy Solutions, Xxxxxx, XX, MVP, Xxxxx, Xxxxx
Distribution and Xxxxx Heartland are sometimes hereafter referred to
individually as a "Borrower" and collectively as "Borrowers").
RECITALS
WHEREAS, D&K, Xxxxxx, XX, MVP, Xxxxx, Xxxxx Distribution, Xxxxx
Heartland, myhca, RxDirect, Inc., Agent and certain of the Lenders signatory
hereto are parties to that certain Sixth Amended and Restated Loan and Security
Agreement (as supplemented, restated, amended or otherwise modified from time to
time, the "Prior Loan and Security Agreement"), dated as of March 28, 2003,
pursuant to which the Agent and the other Lenders party thereto provided to
Borrowers a revolving loan commitment of $600,000,000 (such commitment being
herein referred to as the "Prior Commitment" and the Loans and Obligations
outstanding pursuant thereto being herein referred to as the "Prior Loans"); and
WHEREAS, Borrowers desire that Lenders, among other things, provide
an additional incremental last out loan facility in the aggregate principal
amount of $35,000,000 to Borrowers and extend the maturity of the prior
revolving credit facility and Lenders are willing to provide Borrower with Loan
Commitments in that amount upon the terms and conditions set forth herein;
WHEREAS, capitalized terms used in this Agreement shall have the
meanings assigned to them in Appendix A, General Definitions. Accounting terms
not otherwise specifically defined herein shall be construed in accordance with
GAAP consistently applied. These Recitals shall be construed as part of the
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a credit facility of up to $635,000,000 (as the
Revolving Loan Commitment may be increased pursuant to Section 1.6) available
upon Borrower Representative's request therefor, as follows:
1.1 Loans.
1.1.1. Revolving Credit Loans. Each Lender agrees, severally and not
jointly, for so long as no Default or Event of Default exists, to make Revolving
Credit Loans in the aggregate to Borrowers from time to time during the period
from the date hereof to but not including the last day of the Term, as requested
by Borrower Representative in the manner set forth in subsection 3.1.1 hereof,
up to a maximum principal amount at any time outstanding equal to the lesser of
(i) such Lender's Revolving Loan Commitment minus the product of such Lender's
Revolving Loan Percentage and the LC Amount minus the product of such Lender's
Revolving Loan Percentage and reserves, if any and (ii) the product of such
Lender's Revolving Loan Percentage and an amount equal to the Borrowing Base at
such time minus the product of such Lender's Revolving Loan Percentage and the
LC Amount minus the product of such Lender's Revolving Loan Percentage and
reserves, if any. Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent shall reasonably deem
necessary or appropriate in its reasonable credit judgment, against the amount
of Revolving Credit Loans which Borrower Representative may otherwise request
under this subsection 1.1.1 including without limitation with respect to (i)
price adjustments, damages, unearned discounts, rebates, returned products or
other matters for which credit memoranda are issued in the ordinary course of
any Borrower's business; (ii) dilution related to Accounts; (iii) shrinkage,
spoilage and obsolescence of any Borrower's Inventory; (iv) slow moving
Inventory; (v) other sums chargeable against any Borrower's Loan Account as
Revolving Credit Loans under any section of this Agreement; (vi) amounts owing
by any Borrower to any Person to the extent secured by a Lien on, or trust over,
any Property of any Borrower other than Permitted Liens; (vii) amounts owing by
any Borrower in connection with Product Obligations; and (viii) such other
specific events, conditions or contingencies as to which Agent, in its
reasonable credit judgment, determines reserves should be established from time
to time hereunder. The Revolving Credit Loans shall be repayable in accordance
with the terms of the Revolving Notes and shall be secured by all of the
Collateral.
1.1.2. Overadvances. Insofar as Borrower Representative may request
and Agent or Majority Lenders (as provided below) may be willing in their sole
and absolute discretion to make Revolving Credit Loans to Borrowers at a time
when the unpaid balance of Revolving Credit Loans plus the sum of the LC Amount
plus the amount of LC Obligations that have not been reimbursed by Borrowers or
funded with a Revolving Credit Loan, plus reserves, exceeds, or would exceed,
with the making of any such Revolving Credit Loan, the Borrowing Base (any such
Loan or Loans being herein referred to individually as an "Overadvance" and
collectively, as "Overadvances"), Agent shall enter such Overadvances as debits
in the Loan Account. All Overadvances shall be repaid on demand, shall be
secured by the Collateral and shall bear interest as provided in this Agreement
for Revolving Credit Loans generally. Any Overadvance made pursuant to the terms
hereof shall be made by all Lenders ratably in accordance with their respective
Revolving Loan Percentages. Overadvances in the aggregate amount of $5,000,000
or less may, unless a Default or Event of Default has occurred and is
continuing, be made in the sole and absolute discretion of Agent. Overadvances
in an aggregate amount of more than $5,000,000 but less than $10,000,000 may,
unless a Default or an Event of Default has occurred and is continuing, be made
in the sole and
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absolute discretion of Majority Lenders. Overadvances in an aggregate amount of
$10,000,000 or more and Overadvances to be made after the occurrence and during
the continuation of a Default or an Event of Default shall require the consent
of all Lenders. The foregoing notwithstanding, in no event, unless otherwise
consented to by all Lenders, (w) shall any Overadvances be outstanding for more
than ninety (90) consecutive days, (x) after all outstanding Overadvances have
been repaid, shall Agent or Lenders make any additional Overadvances unless
thirty (30) days or more have expired since the last date on which any
Overadvances were outstanding, (y) shall Overadvances be outstanding on more
than one hundred twenty (120) days within any one hundred eighty day (180)
period or (z) shall Agent make Revolving Credit Loans on behalf of Lenders under
this subsection 1.1.2 to the extent such Revolving Credit Loans would cause a
Lender's share of the Revolving Credit Loans to exceed such Lender's Revolving
Loan Commitment minus such Lender's Revolving Loan Percentage of the LC Amount.
1.1.3. Use of Proceeds. The Revolving Credit Loans shall be used
solely for (i) the refinancing by Borrowers of their obligations under the Prior
Loan and Security Agreement held by Lenders that do not become Lenders
hereunder, (ii) Borrowers' working capital and general corporate purposes in a
manner consistent with the provisions of this Agreement and all applicable laws,
and (iii) other purposes permitted under this Agreement.
1.1.4. Swingline Loans. In order to reduce the frequency of
transfers of funds from Lenders to Agent for making Revolving Credit Loans and
for so long as no Default or Event of Default exists, Agent shall be permitted
(but not required) to make Revolving Credit Loans to Borrowers upon request by
Borrower Representative (such Revolving Credit Loans to be designated as
"Swingline Loans"); provided that the aggregate amount of Swingline Loans
outstanding at any time will not (i) exceed $30,000,000; (ii) when added to the
principal amount of Agent's other Revolving Credit Loans then outstanding plus
Agent's Revolving Loan Percentage of the LC Amount, exceed Agent's Revolving
Loan Commitment; or (iii) when added to the principal amount of all other
Revolving Credit Loans then outstanding plus the LC Amount, exceed the Borrowing
Base. Within the foregoing limits, Borrowers may borrow, repay and reborrow
Swingline Loans. All Swingline Loans shall be treated as Revolving Credit Loans
for purposes of this Agreement, except that, notwithstanding anything herein to
the contrary (other than as set forth in the next succeeding sentence), all
principal and interest paid with respect to Swingline Loans shall be for the
sole account of Agent in its capacity as the lender of Swingline Loans.
Notwithstanding the foregoing, not less frequently than once per month and not
more than 2 Business Days after (a) Lenders receive notice from Agent that a
Swingline Loan has been advanced in respect of a drawing under a Letter of
Credit or LC Guaranty or (b) in any other circumstance, demand is made by Agent
during the continuance of an Event of Default, each Lender shall irrevocably and
unconditionally purchase and receive from Agent, without recourse or warranty
from Agent, an undivided interest and participation in each Swingline Loan to
the extent of such Lender's Revolving Loan Percentage thereof, by paying to
Agent, in same day funds, an amount equal to such Lender's Revolving Loan
Percentage of such Swingline Loan.
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1.1.5. Agent Loans. Upon the occurrence and during the
continuance of an Event of Default, Agent, in its sole discretion, may
make Revolving Credit Loans on behalf of Lenders, in an aggregate amount
not to exceed $5,000,000, if Agent, in its reasonable business judgment,
deems that such Revolving Credit Loans are necessary or desirable (i) to
protect all or any portion of the Collateral, (ii) to enhance the
likelihood, or maximize the amount of, repayment of the Loans and the
other Obligations, or (iii) to pay any other amount chargeable to any
Borrower pursuant to this Agreement, including without limitation costs,
fees and expenses as described in Sections 2.6 and 2.7 (hereinafter,
"Agent Loans"); provided, that (a) in no event shall the maximum principal
amount of the Revolving Credit Loans exceed the aggregate Revolving Loan
Commitments and (b) Majority Lenders may at any time revoke Agent's
authorization to make Agent Loans (any such revocation must be in writing
and shall become effective prospectively upon Agent's receipt thereof).
Each Lender shall be obligated to advance its Revolving Loan Percentage of
each Agent Loan. If Agent Loans are made pursuant to the preceding
sentence, then (1) the Borrowing Base shall be deemed increased by the
amount of such permitted Agent Loans, but only for so long as Agent allows
such Agent Loans to be outstanding, and (2) all Lenders that have
committed to make Revolving Credit Loans shall be bound to make, or permit
to remain outstanding, such Agent Loans based upon their Revolving Loan
Percentages in accordance with the terms of this Agreement.
1.2. Letters of Credit; LC Guaranties.
Agent agrees, for so long as no Default or Event of Default exists
and if requested by Borrower Representative, to (i) issue its, or cause to be
issued by Bank or another Affiliate of Agent, on the date requested by Borrower
Representative, Letters of Credit for the account of such Borrower or (ii)
execute LC Guaranties by which Agent, Bank, or another Affiliate of Agent, on
the date requested by Borrower Representative, shall guaranty the payment or
performance by such Borrower of its reimbursement obligations with respect to
letters of credit and letters of credit issued for such Borrower's account by
other Persons in support of such Borrower's obligations (other than obligations
for the repayment of Money Borrowed); provided that the LC Amount shall not
exceed $50,000,000 at any time. No Letter of Credit or LC Guaranty may have an
expiration date later than three (3) days prior to the last day of the Term.
Notwithstanding anything to the contrary contained herein, each Borrower, Agent
and Lenders hereby agree that all LC Obligations and all obligations of such
Borrower relating thereto shall be satisfied by the prompt issuance of one or
more Revolving Credit Loans, which such Borrower hereby acknowledges are
requested and Lenders hereby agree to fund. In the event that Revolving Credit
Loans are not, for any reason, promptly made to satisfy all then existing LC
Obligations, each Lender hereby agrees to pay to Agent, on demand, an amount
equal to such LC Obligations multiplied by such Lender's Revolving Loan
Percentage, and until so paid, such amount shall be secured by the Collateral
and shall bear interest and be payable at a fluctuating rate equal to the
Applicable Margin then in effect plus the Base Rate. Immediately upon the
issuance of a Letter of Credit or an LC Guaranty under this Agreement, each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received from Agent, without recourse or warranty, an undivided interest and
participation therein equal to such LC Obligations multiplied by such Lender's
Revolving Loan Percentage.
1.3. Incremental Last Out Loan.
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Each Lender, severally and not jointly, agrees to make an
incremental last out loan (collectively, the "Incremental Last Out Loan") to
Borrowers on the Closing Date, in the aggregate principal amount of such
Lender's Incremental Last Out Loan Commitment, which shall be repayable in
accordance with the terms of the Incremental Last Out Loan Notes and this
Agreement and shall be secured by all of the Collateral. The proceeds of the
Incremental Last Out Loan shall be used solely for the purposes for which the
proceeds of the Revolving Credit Loans are authorized to be used. No Lender
shall have any obligation to fund an Incremental Last Out Loan Commitment after
the Closing Date. No payment with respect to the Incremental Last Out Loan may
be reborrowed.
1.4. All Loans to Constitute One Obligation; Joint and
Several Liability.
All Loans and all other Obligations of the Borrowers, including
Product Obligations, hereunder shall constitute one general joint and several
obligation of Borrowers, and shall be secured by Agent's Lien (for the benefit
of Agent and Lenders) upon all of the Collateral, and by all other Liens
heretofore, now or at any time or times hereafter granted by any Borrower to
Agent, for itself as a Lender and on behalf of the Lenders.
1.5. Appointment of D&K as Borrower Representative.
Borrowers hereby appoint D&K ("Borrower Representative") as their
agent and attorney-in-fact to take any action, execute any document or
instrument, consent or agree to any modification or amendment hereto or waiver
of or departure from any of the terms hereof, to perform any Obligation of any
Borrower hereunder, and to give or receive any notice by or to any Borrower
hereunder. Without limiting the generality of the foregoing, Borrower
Representative may request Loans or incur any other Obligations for the account
of any Borrower, may elect on behalf of the Borrowers to have interest accrued
pursuant to Section 2.1.3 hereof, shall prepare and deliver to Agent all reports
concerning the Collateral and all financial statements required by this
Agreement, and each Borrower shall be fully bound by the statements and actions
of Borrower Representative acting as agent hereunder. Agent and Lenders shall be
entitled to rely absolutely and without duty of inquiry or investigation upon
any agreement, request, communication or other notice given by Borrower
Representative hereunder. Any notice given by Agent or any Lender to Borrower
Representative shall be deemed given to all Borrowers, whether or not this
Agreement specifically so provides. This appointment of Borrower Representative
shall be irrevocable, and Agent and Lenders shall have no duty to act in
accordance with any direction given by any other Borrower. This provision is
intended, among other things, to protect Agent against inconsistent directions
given by individual Borrowers.
1.6. Commitment Increase.
From time to time after the Closing Date, the Revolving Loan
Commitments may be increased (but in no event in excess of $100,000,000 such
that the aggregate Loan Commitments shall at no time exceed $735,000,000) at the
option of the Borrowers pursuant to a proposed Commitment Increase if each of
the following conditions have been met:
(i) No Default or Event of Default shall exist;
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(ii) No more than one Commitment Increase may be made in any
twelve-month period and no Commitment Increase may be in an amount less than
$50,000,000;
(iii) Borrower Representative has forwarded to Agent a written
offer (the "First Offer Requirement") to Lenders (which Agent shall promptly
forward to each Lender) to provide the proposed Commitment Increase. Each
existing Lender shall have the right, but no obligation, to provide such
additional Revolving Loan Commitment pro rata in accordance with such existing
Lender's Revolving Loan Commitment Percentage within fourteen (14) days
following such notice and any portion of such requested Commitment Increase
which is not provided by any such existing Lender shall be available to the
other existing Lenders and shall be allocated among other existing Lenders as
Agent may determine. If existing Lenders elect not to provide the entire
Commitment increase, such remaining Commitment Increase may be provided by any
additional lending institution or institutions proposed by the Borrowers and
which are approved by Agent and which becomes a party to this Agreement pursuant
to documentation reasonably acceptable to Agent and prepared at the Borrowers'
expense;
(iv) The proposed Commitment Increase has been consented to in
writing by the Lenders whose increase in Revolving Loan Commitments, if any, in
the aggregate equals such proposed Commitment Increase (it being understood and
agreed that no Revolving Loan Commitment of a Lender may be increased hereunder
without such Lender's written consent);
(v) the proposed Commitment Increase, together with any prior
Commitment Increase, shall not exceed the Commitment Increase Cap; and
(vi) Agent shall have received amendments to this Agreement
and the Loan Documents, joinders, Revolving Notes, and all other agreements, fee
letters, documents and instruments reasonably satisfactory to Agent in its sole
discretion evidencing and setting forth the conditions of the Commitment
Increase.
Each of Borrowers, Lenders and Agent acknowledge and agree that each
Commitment Increase meeting the conditions set forth in this Section 1.6 (each,
a "Qualifying Commitment Increase") shall not require the consent of any Lender
other than those Lenders, if any, which have agreed to increase their Revolving
Loan Commitments in connection with such proposed Qualifying Commitment
Increase. Notwithstanding anything to the contrary set forth herein, Agent may
unilaterally amend Exhibit 1.1.1 to the Agreement after the occurrence of a
Qualifying Commitment Increase to reflect the then current Revolving Loan
Commitments without the consent of any Lender.
SECTION 2. INTEREST, FEES AND CHARGES
2.1. Interest.
2.1.1. Rates of Interest. Unless the Borrower Representative
exercises the LIBOR Option, interest shall accrue on all (but not a
portion of) the principal amount of the Revolving Credit Loans and the
Incremental Last Out Loan outstanding at the end of each day at a
fluctuating rate per annum equal to the Applicable Margin then in effect
plus the Base Rate. Said rate of interest shall increase or decrease by an
amount equal to
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any increase or decrease in the Base Rate, effective as of the opening of
business on the day that any such change in the Base Rate occurs. If
Borrower Representative exercises the LIBOR Option as provided in Section
2.1.2, interest shall accrue on all (but not any portion) of the principal
amount of the Revolving Credit Loans and the Incremental Last Out Loan
outstanding at the end of each day at a rate per annum equal to the
Applicable Margin then in effect plus LIBOR. Said rate of interest shall
increase or decrease by an amount equal to any increase or decrease in
LIBOR, effective as of the opening of business on the date that any such
change in LIBOR occurs. Interest on all of the Revolving Credit Loans and
the Incremental Last Out Loan shall accrue as a Base Rate Loan or a LIBOR
Loan, but not both.
2.1.2. LIBOR. Provided that as of the date of the LIBOR Request
no Default or Event of Default exists, Borrower Representative may give
Agent a LIBOR Request no later than 11:00 a.m. (Chicago, Illinois time) on
the Business Day prior to the date on which it elects to convert all (but
not any portion) of the Revolving Credit Loans and the Incremental Last
Out Loan from the Base Rate to LIBOR.
2.1.3. Default Rate of Interest. At the option of Agent or the
Majority Lenders, upon and after the occurrence of an Event of Default,
and during the continuation thereof, the principal amount of all Loans
shall bear interest at a rate per annum equal to 2.0% plus the interest
rate otherwise applicable thereto (the "Default Rate").
2.1.4. Maximum Interest. In no event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under the Notes and
charged or collected pursuant to the terms of this Agreement or pursuant
to the Notes exceed the highest rate permissible under any law which a
court of competent jurisdiction shall, in a final determination, deem
applicable hereto. If any provisions of this Agreement or the Notes are in
contravention of any such law, such provisions shall be deemed amended to
conform thereto (the "Maximum Rate"). If at any time, the amount of
interest paid hereunder is limited by the Maximum Rate, and the amount at
which interest accrues hereunder is subsequently below the Maximum Rate,
the rate at which interest accrues hereunder shall remain at the Maximum
Rate, until such time as the aggregate interest paid hereunder equals the
amount of interest that would have been paid had the Maximum Rate not
applied.
2.2. Computation of Interest and Fees.
Interest, Letter of Credit and LC Guaranty fees and Unused Line Fees
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days.
2.3. Fee Letter.
Borrowers shall pay to Agent and the Lead Arranger certain fees and
other amounts in accordance with the terms of the fee letter between Borrowers
and Agent dated December 12, 2004 (the "Fee Letter").
7
2.4. Letter of Credit and LC Guaranty Fees.
Borrowers shall pay to Agent:
(i) for standby Letters of Credit and LC Guaranties of standby
letters of credit, for the ratable benefit of Lenders, a per annum
fee equal to the Applicable Margin then in effect for LIBOR
Revolving Loans of the aggregate face amount of such Letters of
Credit and LC Guaranties outstanding from time to time during the
term of this Agreement, plus all normal and customary charges
associated with the issuance thereof, which fees and charges shall
be deemed fully earned upon issuance of each such Letter of Credit
or LC Guaranty, shall be due and payable on the first Business Day
of each month and shall not be subject to rebate or proration upon
the termination of this Agreement for any reason;
(ii) for documentary Letters of Credit and LC Guaranties of
documentary letters of credit, for the ratable benefit of Lenders, a
per annum fee equal to the Applicable Margin then in effect for
LIBOR Revolving Loans of the face amount of each such Letter of
Credit or LC Guaranty, payable upon the issuance of such Letter of
Credit or execution of such LC Guaranty and an additional per annum
fee equal to the Applicable Margin then in effect for LIBOR
Revolving Loans multiplied by the face amount of such Letters of
Credit or LC Guaranties payable upon each renewal thereof and each
extension thereof plus all normal and customary charges associated
with the issuance and administration of each such Letter of Credit
or LC Guaranty (which fees and charges shall be fully earned upon
issuance, renewal or extension (as the case may be) of each such
Letter of Credit or LC Guaranty, shall be due and payable on the
first Business Day of each month, and shall not be subject to rebate
or proration upon the termination of this Agreement for any reason);
and
(iii) with respect to all Letters of Credit and LC Guaranties,
for the account of Agent only, a per annum fronting fee equal to
0.125% of the aggregate face amount of such Letters of Credit and LC
Guaranties outstanding from time to time during the term of this
Agreement, which fronting fees shall be payable monthly in arrears
on the first Business Day of each month and shall not be subject to
rebate or proration upon the termination of this Agreement for any
reason.
2.5. Unused Line Fee.
Borrowers shall pay to Agent, for the ratable benefit of Lenders, a
fee (the "Unused Line Fee") equal to 0.375% per annum multiplied by the average
daily amount by which the Revolving Credit Maximum Amount exceeds the sum of (i)
the outstanding principal balance of the Revolving Credit Loans (including
Swingline Loans) plus (ii) the LC Amount. The Unused Line Fee shall be payable
monthly in arrears on the first day of each month hereafter.
8
2.6. Reimbursement of Expenses.
If, at any time or times regardless of whether or not an Event of
Default then exists, (i) Agent incurs out-of-pocket legal or accounting expenses
or any other costs or expenses in connection with (1) the negotiation and
preparation of this Agreement or any of the other Loan Documents (subject to the
terms of the Commitment Letter, dated December 12, 2004), any amendment of or
modification of this Agreement or any of the other Loan Documents, or any
syndication or attempted syndication of the Obligations (including, without
limitation, printing and distribution of materials to prospective Lenders and
all costs associated with bank meetings, but excluding any closing fees paid to
Lenders in connection therewith) or (2) the administration by Agent of this
Agreement or any of the other Loan Documents and the transactions contemplated
hereby and thereby; or (ii) Agent or any Lender incurs legal or accounting
expenses or any other costs or out-of-pocket expenses in connection with (1) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, any Lender, any Borrower or any other Person) relating to the Collateral,
this Agreement or any of the other Loan Documents or any Borrower's, any of its
Subsidiaries' or any Guarantor's affairs; (2) any attempt to enforce any rights
of Agent or any Lender against any Borrower or any other Person which may be
obligated to Agent or any Lender by virtue of this Agreement or any of the other
Loan Documents, including, without limitation, the Account Debtors; or (3) any
attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate
or otherwise dispose of or realize upon the Collateral to the extent permitted
by this Agreement; then all such legal and accounting expenses, other costs and
out of pocket expenses of Agent or any Lender, as applicable, shall be charged
to such Borrower; provided, that such Borrower shall not be responsible for such
costs and out-of-pocket expenses to the extent incurred because of the gross
negligence or willful misconduct of Agent or any Lender. All amounts chargeable
to Borrowers under this Section 2.6 shall be Obligations secured by all of the
Collateral, shall be payable on demand to Agent or such Lender, as the case may
be, and shall bear interest from the date such demand is made until paid in full
at the rate applicable to Base Rate Revolving Loans from time to time. Borrowers
shall also reimburse Agent for expenses incurred by Agent in its administration
of the Collateral to the extent and in the manner provided in Sections 2.9 and
2.10 hereof.
2.7. Audit Fees.
Borrowers shall pay to Agent audit fees in accordance with Agent's
current schedule of fees in effect from time to time in connection with audits
of the books and records and Properties of Borrowers and their Subsidiaries and
such other matters as Agent shall deem appropriate in its reasonable credit
judgment, plus all out-of-pocket expenses incurred by Agent in connection with
such audits, whether such audits are conducted by employees of Agent or by third
parties hired by Agent; provided that so long as no Event of Default has
occurred and is continuing and except in connection with Permitted Acquisitions,
Borrowers shall not be liable for such audit fees incurred in connection with
more than two (2) such audits during any fiscal year. Such audit fees and
out-of-pocket expenses shall be payable on the first day of the month following
the date of issuance by Agent of a request for payment thereof to Borrower
Representative. Agent may, in its discretion, provide for the payment of such
amounts by making appropriate Revolving Credit Loans to Borrower Representative
and charging Borrowers' Loan Accounts therefor.
9
2.8. Bank Charges.
Borrowers shall pay to Agent, on demand, any and all fees, costs or
expenses which Agent or any Lender pays to a bank or other similar institution
arising out of or in connection with (i) the forwarding to any Borrower or any
other Person on behalf of any Borrower, by Agent or any Lender, of proceeds of
Loans made to any Borrower pursuant to this Agreement and (ii) the depositing
for collection by Agent or any Lender of any check or item of payment received
or delivered to Agent or any Lender on account of the Obligations.
2.9. Collateral Protection Expenses; Appraisals.
All out-of-pocket expenses incurred in protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, and
any and all excise, property, sales, and use taxes imposed by any state,
federal, or local authority on any of the Collateral or in respect of the sale
thereof shall be borne and paid by Borrowers. If Borrowers fail to promptly pay
any portion thereof when due, Agent may, at its option, but shall not be
required to, pay the same and charge Borrowers therefor. In addition to
semi-annual Appraisals of Inventory as herein provided and appraisals obtained
in connection with Permitted Acquisitions, from time to time, if Agent or any
Lender determines that obtaining appraisals is necessary in order for it to
comply with applicable laws or regulations, and at any time that a Default or an
Event of Default shall have occurred and be continuing, Agent may, at Borrowers'
expense, obtain appraisals from appraisers (who may be personnel of Agent),
stating the then current fair market value of all or any portion of the real
estate or personal property of any Borrower or any of its Subsidiaries,
including without limitation the Inventory of such Borrower and its
Subsidiaries.
2.10. Payment of Charges.
All amounts chargeable to Borrowers under this Agreement shall be
Obligations secured by all of the Collateral, shall be, unless specifically
otherwise provided, payable on demand and shall bear interest from the date
demand was made or such amount is due, as applicable, until paid in full at the
rate applicable to the Base Rate Revolving Loans from time to time.
2.11. No Deductions.
Any and all payments or reimbursements made hereunder shall be made
free and clear of and without deduction for any and all taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto;
excluding, however, the following: taxes imposed on the income of Agent or any
Lender or franchise taxes by the jurisdiction under the laws of which Agent or
any Lender is organized or doing business or any political subdivision thereof
and taxes imposed on its income by the jurisdiction of Agent's or such Lender's
applicable lending office or any political subdivision thereof or franchise
taxes (all such taxes, levies, imposts, deductions, charges or withholdings and
all liabilities with respect thereto excluding such taxes imposed on net income,
herein "Tax Liabilities"). If any Borrower shall be required by law to deduct
any such Tax Liabilities from or in respect of any sum payable hereunder to
Agent or any Lender, then the sum payable hereunder shall be increased as may be
necessary so that, after all required deductions are made, Agent or such Lender
receives an amount equal to the sum it would have received had no such
deductions been made.
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SECTION 3. LOAN ADMINISTRATION.
3.1. Manner of Borrowing Revolving Credit Loans/LIBOR
Option.
Borrowings under the credit facility established pursuant to Section
1 hereof shall be as follows:
3.1.1. Loan Requests. A request for a Revolving Credit Loan
shall be made, or shall be deemed to be made, in the following manner: (i)
Borrower Representative may give Agent notice of its intention to borrow
no later than 11:00 a.m. (Chicago, Illinois time) on the proposed
borrowing date, in which notice Borrower Representative shall specify the
amount of the proposed borrowing of a Revolving Credit Loan (which shall
be no less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof except in the case of Swingline Loans (with respect to which there
shall be no minimum borrowing or integral amount)) and the proposed
borrowing date, which shall be a Business Day; provided, however, that no
such request may be made at a time when there exists a Default or an Event
of Default; and (ii) the becoming due of any amount required to be paid
under this Agreement, or the Notes, whether as interest or for any other
Obligation, shall be deemed irrevocably to be a request for a Revolving
Credit Loan on the due date in the amount required to pay such interest or
other Obligation.
3.1.2. Disbursement. Each Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each Loan requested, or
deemed to be requested, pursuant to subsection 3.1.1 as follows: (i) the
proceeds of each Revolving Credit Loan requested under subsection 3.1.1(i)
shall be disbursed by Agent in lawful money of the United States of
America in immediately available funds, in the case of the initial
borrowing, in accordance with the terms of the written disbursement letter
from Borrower Representative, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrower Representative and Agent from time to time or elsewhere if
pursuant to a written direction from Borrower Representative; and (ii) the
proceeds of each Revolving Credit Loan deemed requested under subsection
3.1.1(ii) shall be disbursed by Agent by way of direct payment of the
relevant interest or other Obligation. If at any time any Loan is funded
by Agent or Lenders in excess of the amount requested or deemed requested
by Borrower Representative, the applicable Borrowers that received the
proceeds of such Loan agree to repay the excess to Agent immediately upon
the earlier to occur of (a) such Borrower's discovery of the error and (b)
notice thereof to Borrower Representative from Agent or any Lender.
3.1.3. Payment by Lenders. Agent shall give to each Lender
prompt written notice by facsimile of the receipt by Agent from Borrower
Representative of any request for a Revolving Credit Loan. Each such
notice shall specify the requested date and amount of such Revolving
Credit Loan and the amount of each Lender's advance thereunder (in
accordance with its applicable Revolving Loan Percentage). Each Lender
shall, not later than 1:00 p.m. (Chicago time) on such requested date,
wire to a bank designated by Agent the amount of that Lender's Revolving
Loan Percentage of the requested Revolving Credit Loan. The failure of any
Lender to make the Revolving Credit Loans to be made by it shall not
release any other Lender of its obligations
11
hereunder to make its Revolving Credit Loan. Neither Agent nor any other
Lender shall be responsible for the failure of any other Lender to make
the Revolving Credit Loan to be made by such other Lender. The foregoing
notwithstanding, Agent, in its sole discretion, may from its own funds
make a Revolving Credit Loan on behalf of any Lender. In such event, the
Lender on behalf of whom Agent made the Revolving Credit Loan shall
reimburse Agent for the amount of such Revolving Credit Loan made on its
behalf, on a weekly (or more frequent, as determined by Agent in its sole
discretion) basis. In all events, Agent shall settle with Lenders all
Revolving Credit Loans made and payments received (excluding the Swingline
Loans, which shall be settled in accordance with Section 1.1.4, and
interest which shall be settled monthly), including fees, in accordance
with each Lender's Revolving Loan Percentage once per week or more
frequently as determined by Agent. On each settlement date, Agent will pay
to each Lender the net amount owing to such Lender in connection with such
settlement, including without limitation amounts relating to Loans, fees,
interest and other amounts payable hereunder. The entire amount of
interest attributable to such Revolving Credit Loan for the period from
the date on which such Revolving Credit Loan was made by Agent on such
Lender's behalf until Agent is reimbursed by such Lender, shall be paid to
Agent for its own account.
3.1.4. Authorization. Borrowers hereby irrevocably authorize
Agent, in Agent's sole discretion, to advance to Borrowers, and to charge
when due to Borrowers' Loan Account hereunder as a Revolving Credit Loan,
a sum sufficient to pay all interest accrued on the Obligations during the
immediately preceding month and to pay all fees, costs and expenses and
other Obligations at any time owed by Borrowers to Agent or any Lender
hereunder.
3.1.5. Letter of Credit and LC Guaranty Requests. A request
for a Letter of Credit or LC Guaranty shall be made in the following
manner: Borrower Representative may give Agent and Bank a written notice
of its request for the issuance of a Letter of Credit or LC Guaranty, not
later than 11:00 a.m. (Chicago, Illinois time), one Business Day before
the proposed issuance date thereof, in which notice Borrower
Representative shall specify the proposed issuer, issuance date and format
and wording for the Letter of Credit or LC Guaranty being requested (which
shall be satisfactory to Agent and the Person being asked to issue such
Letter of Credit or LC Guaranty); provided that no such request may be
made at a time when there exists a Default or Event of Default. Such
request shall be accompanied by an executed application and reimbursement
agreement in form and substance satisfactory to Agent and the Person being
asked to issue the Letter of Credit or LC Guaranty, as well as any
required resolutions.
3.1.6. Method of Making Requests. As an accommodation to
Borrowers, unless a Default or an Event of Default is then in existence,
(i) Agent shall permit telephonic or electronic requests for Revolving
Credit Loans to Agent, (ii) Agent and Bank may, in their discretion,
permit electronic transmittal of requests for Letters of Credit and LC
Guaranties to them, and (iii) Agent may, in Agent's discretion, permit
electronic transmittal of instructions, authorizations, agreements or
reports to Agent. Unless Borrower Representative specifically directs
Agent or Bank in writing not to accept or act upon telephonic or
electronic communications from Borrower
12
Representative, neither Agent nor Bank nor any Lender shall have any
liability to any Borrower for any loss or damage suffered by such Borrower
as a result of Agent's or Bank's honoring of any requests, execution of
any instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have
been sent to Agent or Bank by such Borrower, and neither Agent nor Bank
shall have any duty to verify the origin of any such communication or the
authority of the Person sending it. Each telephonic request for a
Revolving Credit Loan, Letter of Credit or LC Guaranty accepted by Agent
and Bank, if applicable, hereunder shall be promptly followed by a written
confirmation of such request from Borrower Representative to Lender and
Bank, if applicable.
3.1.7. Inability to Make LIBOR Loans. Notwithstanding any
other provision hereof, if any applicable law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender (for purposes of this
subsection 3.1.7, the term "Lender" shall include the office or branch
where such Lender or any corporation or bank then controlling such Lender
makes or maintains any LIBOR Loans) to make or maintain LIBOR Loans, or if
Agent is unable to determine LIBOR, or adverse or unusual conditions in,
or changes in applicable law relating to, the London interbank market make
it, in the reasonable judgment of Agent, impracticable to fund therein any
of the Revolving Credit Loans or Incremental Last Out Loan as LIBOR Loans,
or make the projected LIBOR unreflective of the actual costs of funds
therefor to any Lender, the obligation of Agent and Lenders to provide the
LIBOR Loans or convert the Base Rate Loans to LIBOR Loans hereunder shall
forthwith be suspended during the pendency of such circumstances and
Borrowers shall promptly upon request from Agent, convert all Loans to
Base Rate Loans.
3.2. Payments.
Except where evidenced by notes or other instruments issued or made
by Borrowers to any Lender and accepted by such Lender specifically containing
payment instructions that are in conflict with this Section 3.2 (in which case
the conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:
3.2.1. Principal. Principal on account of all Loans shall be
payable by Borrowers to Agent for the ratable benefit of the applicable
Lenders immediately upon the earliest of (i) the receipt by Agent or
Borrowers of any proceeds of any of the Collateral (except as otherwise
provided herein, including without limitation pursuant to subsections
3.3.1 and 6.4.2) to the extent of said proceeds, subject to Borrowers'
rights to reborrow the Revolving Credit Loans in compliance with
subsection 1.1.1 hereof; (ii) the occurrence of an Event of Default under
Section 10.1.8 or in consequence of which Agent or Majority Lenders elect
to accelerate the maturity and payment of the Obligations, or (iii)
termination of this Agreement pursuant to Section 4 hereof; provided,
however, that, if an Overadvance shall exist at any time, Borrowers shall,
on demand, repay the Overadvance. Each payment (including any principal
prepayment) by Borrowers on account of principal of all Loans shall be
applied in accordance with subsection 3.4.2.
13
3.2.2. Interest. Interest shall be due and payable on the
earliest of (i) the first calendar day of each month (for the immediately
preceding month), computed through the last calendar day of the preceding
month, (ii) the occurrence of an Event of Default in consequence of which
Agent or Majority Lenders elect to accelerate the maturity and payment of
the Obligations or (iii) termination of this Agreement pursuant to Section
4 hereof.
3.2.3. Costs, Fees and Charges. Costs, fees and charges
payable pursuant to this Agreement shall be payable by Borrowers to Agent
for itself or for the benefit of Lenders, as applicable, as and when
provided in Section 2 or Section 3 hereof, as applicable, to Agent or a
Lender, as applicable, or to any other Person designated by Agent or such
Lender in writing.
3.2.4. Other Obligations. The balance of the Obligations
requiring the payment of money, if any, shall be payable by Borrowers to
Agent for distribution to Lenders, as appropriate, as and when provided in
this Agreement, the Other Agreements or the Security Documents, or on
demand, whichever is later.
3.3. Mandatory and Optional Prepayments.
3.3.1. Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except as provided in subsections 6.4.2 and 8.2.9(i), (ii),
(iii), (iv), (v), (vi) and (viii), if any Borrower or any of its
Subsidiaries sells any of the Collateral or if any of the Collateral is
lost, damaged or destroyed or taken by condemnation, such Borrower shall,
unless otherwise agreed by Majority Lenders, pay to Agent for the ratable
benefit of Lenders as and when received by such Borrower or such
Subsidiary and as a mandatory prepayment of the Loans, as herein provided,
a sum equal to all proceeds (including insurance payments but net of costs
and taxes incurred in connection with such sale or event) received by such
Borrower or such Subsidiary from such sale, loss, damage, destruction or
condemnation. The applicable prepayments shall be applied in accordance
with subsection 3.4.2.
3.3.2. Other Proceeds. If any Borrower issues any additional
Indebtedness or obtains any additional equity in a manner permitted under
this Agreement or receives any tax refunds, indemnity payments, or pension
reversions, such Borrower shall pay to Agent for the ratable benefit of
Lenders, when and as received by such Borrower and as a mandatory
prepayment of the Obligations, a sum equal to 100% of such proceeds to
such Borrower. Any such prepayment shall be applied to the Loans in the
manner specified in subsection 3.4.2.
3.3.3. Optional Prepayments. So long as no Revolving Credit
Loan is outstanding, Borrowers may, at their option from time to time upon
not less than 3 days prior written notice to Agent, prepay all or a
portion of the Incremental Last Out Loan, provided that the amount of any
such prepayment is at least $5,000,000 and in integral multiples of
$1,000,000 in excess thereof, and that such prepayments are made ratably
with respect to all Incremental Last Out Loans. Each such prepayment shall
be applied to the principal due under the Incremental Last Out Loan. Such
prepayments shall be without premium or penalty.
14
3.3.4. Optional Reductions of Revolving Loan Commitments and
Incremental Last Out Loan. Borrowers may, at their option from time to
time upon not less than 3 Business Days' prior written notice to Agent,
terminate in whole or permanently reduce ratably in part, the unused
portion of the Revolving Loan Commitments, provided, however, that each
such partial reduction shall be in an amount of $5,000,000 or integral
multiples of $1,000,000 in excess thereof, provided that Borrowers shall
give Agent at least 10 Business Days' notice of any such reduction in
excess of $100,000,000. In addition, at any time after June 30, 2005,
Borrowers may, at their option from time to time upon not less than 3
Business Days' prior written notice to Agent, repay in full (but not in
part) in cash all outstanding principal and accrued interest under the
Incremental Last Out Loan so long as (i) Borrowers' Availability is
greater than $60,000,000 after giving effect to such prepayment, (ii) both
before and after giving effect to such prepayment, no Event of Default is
continuing, and (iii) Borrowers have a Fixed Charge Coverage Ratio, on a
Consolidated basis, for the most recently ended twelve-month period of not
less than 1.0 to 1.0. Such prepayments and/or such reductions shall be
without premium or penalty.
3.4. Application of Payments and Collections.
3.4.1. Collections. All items of payment received by Agent by
12:00 noon, Chicago, Illinois, time, on any Business Day shall be deemed
received on that Business Day. All items of payment received after 12:00
noon, Chicago, Illinois, time, on any Business Day shall be deemed
received on the following Business Day. If as the result of collections of
Accounts as authorized by subsection 6.2.4 hereof or otherwise, a credit
balance exists in the Loan Account, such credit balance shall not accrue
interest in favor of Borrowers, but shall be disbursed to Borrowers or
otherwise at Borrower Representative's direction in the manner set forth
in subsection 3.1.2, upon Borrower Representative's request at any time,
so long as no Default or Event of Default then exists. Agent may at its
option, offset such credit balance against any of the Obligations upon and
during the continuance of an Event of Default.
3.4.2. Apportionment, Application and Reversal of Payments.
Principal and interest payments shall be apportioned ratably among Lenders
(according to the unpaid principal balance of the Loans to which such
payments relate held by each Lender). All payments shall be remitted to
Agent and all such payments not relating to principal or interest of
specific Loans, or not constituting payment of specific fees, and all
proceeds of Accounts, or, except as provided in subsection 3.3.1, other
Collateral received by Agent, shall be applied, ratably, subject to the
provisions of this Agreement, first, to pay any fees, indemnities,
or expense reimbursements (other than amounts related to Product
Obligations) then due to Agent or Lenders from any Borrower; second, to
pay interest due from Borrowers in respect of all Revolving Credit
Loans, including Swingline Loans and Agent Loans; third, to pay or prepay
principal of Swingline Loans and Agent Loans; fourth, to pay or
prepay principal of the Revolving Credit Loans (other than
Swingline Loans and Agent Loans) and unpaid reimbursement obligations in
respect of Letters of Credit; fifth, to pay an amount to Agent equal to
all outstanding Letters of Credit, LC Guaranties and Letter of
Credit Obligations to be held as cash Collateral for such Obligations;
sixth, to pay interest due from Borrowers in respect of the
Incremental Last Out Loan; seventh, to pay or prepay principal of
the Incremental Last Out Loan;
15
eighth, to the payment of any other Obligation (other than amounts related
to Product Obligations) due to Agent or any Lender by any Borrower; and
ninth, to pay any principal, fees, indemnities or expense reimbursements
related to Product Obligations. After the occurrence and during the
continuance of an Event of Default, Agent shall have the continuing
exclusive right to apply and reapply any and all such payments and
collections received at any time or times hereafter by Agent or its agent
against the Obligations, in such manner as Agent may deem advisable
(provided that principal, fees, indemnities and expense reimbursements in
connection with Product Obligations shall be paid following the payment of
all other Obligations), notwithstanding any entry by Agent or any Lender
upon any of its books and records.
3.5. All Loans to Constitute One Obligation.
The Loans and the LC Amounts shall constitute one general Obligation
of Borrowers, and shall be secured by Agent's Lien upon all of the Collateral.
3.6. Loan Account.
Agent shall enter all Loans as debits to a loan account (the "Loan
Account") and shall also record in the Loan Account all payments made by
Borrowers on any Obligations and all proceeds of Collateral which are finally
paid to Agent, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers.
3.7. Statements of Account.
Agent will account to Borrower Representative monthly with a
statement of Loans, charges and payments made pursuant to this Agreement during
the immediately preceding month, and such account rendered by Agent shall be
deemed final, binding and conclusive upon such Borrower absent demonstrable
error unless Agent is notified by Borrower Representative in writing to the
contrary within 60 days of the date each accounting is received by Borrower
Representative. Such notice shall only be deemed an objection to those items
specifically objected to therein.
3.8. Increased Costs.
3.8.1. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having
the force of law) adopted or implemented after the date of this Agreement
and having general applicability to all banks or finance companies within
the jurisdiction in which any Lender operates (excluding, for the
avoidance of doubt, the effect of and phasing in of capital requirements
or other regulations or guidelines passed prior to the date of this
Agreement), or any interpretation or application thereof by any
governmental authority charged with the interpretation or application
thereof, or the compliance of such Lender therewith, shall:
(i) (1) subject such Lender to any tax with respect to this
Agreement (other than (a) any tax based on or measured by net income
or otherwise in the nature of a net income tax, including, without
limitation, any franchise tax or any similar tax based on capital,
net worth or comparable basis
16
for measurement and (b) any tax collected by a withholding on
payments and which neither is computed by reference to the net
income of the payee nor is in the nature of an advance collection of
a tax based on or measured by the net income of the payee) or (2)
change the basis of taxation of payments to such Lender of
principal, fees, interest or any other amount payable hereunder or
under any Loan Documents (other than in respect of (a) any tax based
on or measured by net income or otherwise in the nature of a net
income tax, including, without limitation, any franchise tax or any
similar tax based on capital, net worth or comparable basis for
measurement and (b) any tax collected by a withholding on payments
and which neither is computed by reference to the net income of the
payee nor is in the nature of an advance collection of a tax based
on or measured by the net income of the payee);
(ii) impose, modify or hold applicable any reserve (except
any reserve taken into account in the determination of the
applicable LIBOR), special deposit, assessment or similar
requirement against assets held by, or deposits in or for the
account of, advances or loans by, or other credit extended by, any
office of such Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve
System; or
(iii) impose on such Lender or the London interbank market
any other condition with respect to any Loan Document;
and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing or maintaining Loans hereunder or the result of
any of the foregoing is to reduce the rate of return on such Lender's
capital as a consequence of its obligations hereunder, or the result of
any of the foregoing is to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Loans, then, in
any such case, Borrowers shall pay such Lender, upon demand and
certification not later than sixty (60) days following Borrower
Representative's receipt of notice of the imposition of such increased
costs, such additional amount as will compensate such Lender for such
additional cost or such reduction, as the case may be, to the extent such
Lender has not otherwise been compensated, with respect to a particular
Loan, for such increased cost as a result of an increase in the Base Rate
or the LIBOR. An officer of the applicable Lender shall determine the
amount of such additional cost or reduced amount using reasonable
averaging and attribution methods and shall certify the amount of such
additional cost or reduced amount to Borrower Representative, which
certification shall include a written explanation of such additional cost
or reduction to Borrowers. Such certification shall be conclusive absent
manifest error. If a Lender claims any additional cost or reduced amount
pursuant to this Section 3.8, then such Lender shall use reasonable
efforts (consistent with legal and regulatory restrictions) to designate a
different lending office or to file any certificate or document reasonably
requested by Borrower Representative if the making of such designation or
filing would avoid the need for, or reduce the amount of, any such
additional cost or reduced amount and would not, in the sole discretion of
such Lender, be otherwise disadvantageous to such Lender. Any claims by a
Lender for compensation under this Section 3.8 shall be made upon Borrower
Representative no later than one hundred and eighty (180) days following
the adoption or implementation of any such law, rule, regulation policy
guidelines or directive.
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3.8.2. Within thirty (30) days after receipt by Borrower
Representative of written notice and demand from any Lender (an "Affected
Lender") for payment of additional amounts or increased costs as provided
in Section 3.8.1, Borrower Representative may, at its option, notify Agent
and such Affected Lender of its intention to replace the Affected Lender.
So long as no Default or Event of Default has occurred and is continuing,
Borrower Representative, with the consent of Agent, may obtain at
Borrowers' expense, a replacement Lender ("Replacement Lender") for the
Affected Lender, which Replacement Lender must be reasonably satisfactory
to Agent. If Borrowers obtain a Replacement Lender within ninety (90) days
following notice of their intention to do so, the Affected Lender must
sell and assign its Loans and Revolving Loan Commitments to such
Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and fees with
respect thereto through the date of such sale and such assignment shall
not require the payment of an assignment fee to Agent; provided, that
Borrowers shall have reimbursed such Affected Lender for the additional
amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment. Notwithstanding
the foregoing, Borrowers shall not have the right to obtain a Replacement
Lender if the Affected Lender rescinds its demand for increased costs or
additional amounts within 15 days following its receipt of Borrowers'
notice of intention to replace such Affected Lender. Furthermore, if
Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within ninety (90) days thereafter, Borrowers' rights
under this Section 3.8.2 shall terminate with respect to such Affected
Lender and Borrowers shall promptly pay all increased costs or additional
amounts demanded by such Affected Lender pursuant to Section 3.8.1.
3.9. Sharing of Payments, Etc.
If any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on
account of any Revolving Credit Loan or any Incremental Last Out Loan, as
applicable, made by it in excess of its ratable share of payments on account of
the Revolving Credit Loans or Incremental Last Out Loan, as applicable, made by
all Lenders, such Lender shall forthwith purchase from each other Lender such
participation in such Loan as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each other Lender; provided, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lenders the purchase price to the extent of
such recovery, together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Borrowers agree that any Lender so purchasing
a participation from another Lender pursuant to this Section 3.9 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrowers in the amount of such
participation. Notwithstanding anything to the contrary contained herein, all
purchases and repayments to be made under this Section 3.9 shall be made through
Agent.
3.10. Effect On Prior Loans; Prior Loan and Security
Agreement.
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The Prior Loans and Liens securing payment thereof shall in all
respects be continuing, and this Agreement shall not be deemed to evidence or
result in a novation or repayment and reborrowing of the Prior Loans. This
Agreement shall supersede the Prior Loan and Security Agreement. From and after
the Closing Date, this Agreement shall govern the terms of the Prior Loans. To
the extent not replaced by Loan Documents dated as of the Closing Date, Loan
Documents executed in connection with the Prior Loan and Security Agreement
(other than any such Loan Document that is specifically terminated by the
parties thereto) shall continue to be effective, and all references in those
prior Loan Documents to the "Sixth Amended and Restated Loan and Security
Agreement", the "Loan Agreement or the "Agreement" shall be deemed to refer to
this Agreement without further amendment thereof.
SECTION 4. TERM AND TERMINATION
4.1. Term of Agreement.
Subject to the right of Lenders to cease making Loans to Borrowers
during the continuance of any Default or Event of Default, this Agreement shall
be in effect through and including March 28, 2009 (the "Term"), unless
terminated as provided in Section 4.2 hereof.
4.2. Termination.
4.2.1. Termination by Lenders. Agent may, and at the direction
of Majority Lenders shall, terminate this Agreement without notice upon or
after the occurrence and during the continuance of an Event of Default.
4.2.2. Termination by Borrowers. Upon at least 30 days prior
written notice to Agent and Lenders, Borrower Representative, on behalf of
Borrowers, may, at their option, terminate this Agreement; provided,
however, no such termination shall be effective until Borrowers have paid
or collateralized to Agent's satisfaction all of the Obligations in
immediately available funds, all Letters of Credit and LC Guaranties have
expired, terminated or have been cash collateralized to Agent's
satisfaction and Borrowers have complied with Section 2.6. Any notice of
termination given by Borrower Representative shall be irrevocable unless
all Lenders otherwise agree in writing and no Lender shall have any
obligation to make any Loans or issue or procure any Letters of Credit or
LC Guaranties on or after the termination date stated in such notice.
Borrowers may elect to terminate this Agreement in its entirety only. No
section of this Agreement or type of Loan available hereunder may be
terminated singly.
4.2.3. Effect of Termination. All of the Obligations shall be
immediately due and payable upon the earlier of the (a) expiration of the
Term and (b) the termination date stated in any notice of termination of
this Agreement. All undertakings, agreements, covenants, warranties and
representations of each Borrower contained in the Loan Documents shall
survive any such expiration or termination, as applicable, and Agent shall
retain its Liens in the Collateral and Agent and each Lender shall retain
all of its rights and remedies under the Loan Documents notwithstanding
such expiration or termination, as applicable, until all Obligations have
been discharged or paid, in full, in immediately available funds,
including, without limitation, all Obligations under Section 2.6 resulting
from such expiration or termination, as applicable. Notwithstanding the
foregoing or the payment in full of the Obligations, Agent shall not be
required to
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terminate its Liens in the Collateral unless, with respect to any loss or
damage Agent may incur as a result of dishonored checks or other items of
payment received by Agent from any Borrower or any Account Debtor and
applied to the Obligations, Agent shall, at its option, (i) have received
a written agreement satisfactory to Agent, executed by such Borrower and
by any Person whose loans or other advances to such Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Agent and each
Lender from any such loss or damage or (ii) have retained cash Collateral
or other Collateral for such period of time as Agent, in its reasonable
discretion, may deem necessary to protect Agent and each Lender from any
such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1. Security Interest in Collateral.
To secure the prompt payment and performance to Agent and each
Lender of the Obligations, each Borrower hereby grants to Agent for the benefit
of itself and each Lender a continuing Lien upon all of such Borrower's assets,
including all of the following Property and interests in Property of such
Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) Accounts, including Health Care Insurance Receivables;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with
respect thereto, including, any and all licenses, options,
warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal
rights and indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
(ix) Financial Assets;
(x) Fixtures;
(xi) General Intangibles, including Payment Intangibles and
Software;
(xii) Goods (including all of its Equipment, Fixtures and
Inventory), and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and therefor;
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(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
(xvi) Investment Property;
(xvii) money (of every jurisdiction whatsoever);
(xviii) Letter-of-Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
(xxi) Software;
(xxii) Supporting Obligations;
(xxiii) Uncertificated Securities; and
(xxiv) to the extent not included in the foregoing, all
other personal property of any kind or description;
together with all books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer materials
and records and all records of purchases and sales of prescription drugs and
controlled substances required to be kept by the Federal or any state government
or agency thereof), writings, data bases, information and other property
relating to, used or useful in connection with, or evidencing, embodying,
incorporating, referring or pertaining to any of the foregoing, and all
Proceeds, products, offspring, rents, issues, profits and returns of and from
any of the foregoing; provided that to the extent that the provisions of any
lease or license of Computer Hardware and Software or Intellectual Property
expressly prohibit (which prohibition is enforceable under applicable law) any
assignment thereof, and the grant of a security interest therein, Agent will not
enforce its security interest in such Borrower's rights under such lease or
license (other than in respect of the Proceeds thereof) for so long as such
prohibition continues, it being understood that upon request of Agent, such
Borrower will in good faith use reasonable efforts to obtain consent for the
creation of a security interest in favor of Agent (and to Agent's enforcement of
such security interest) in Agent's rights under such lease or license.
5.2. Other Collateral.
5.2.1. Commercial Tort Claims. Each Borrower shall promptly
notify Agent in writing upon incurring or otherwise obtaining a Commercial
Tort Claim in excess of $1,000,000 after the Closing Date against any
third party and, upon request of Agent, promptly enter into an amendment
to this Agreement and do such other acts or things deemed appropriate by
Agent to give Agent a security interest in any such Commercial Tort Claim.
Each Borrower represents and warrants that as of the date of this
Agreement, to its knowledge, it does not possess any Commercial Tort
Claims.
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5.2.2. Other Collateral. Each Borrower shall promptly notify
Agent in writing upon acquiring or otherwise obtaining any Collateral
after the date hereof consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights or Electronic Chattel Paper and, upon the request
of Agent, promptly execute such other documents, and do such other acts or
things deemed appropriate by Agent to deliver to Agent control with
respect to such Collateral; promptly notify Agent in writing upon
acquiring or otherwise obtaining any Collateral after the date hereof
consisting of Documents or Instruments and, upon the request of Agent,
will promptly execute such other documents, and do such other acts or
things deemed appropriate by Agent to deliver to Agent possession of such
Documents which are negotiable and Instruments, and, with respect to
nonnegotiable Documents, to have such nonnegotiable Documents issued in
the name of Agent; and with respect to Collateral in the possession of a
third party, other than Certificated Securities and Goods covered by a
Document, obtain an acknowledgement from the third party that it is
holding the Collateral for the benefit of Agent.
5.3. Lien Perfection; Further Assurances.
Each Borrower shall execute such UCC-1 financing statements as are
required by the UCC and such other instruments, assignments or documents as are
necessary to perfect Agent's Lien upon any of the Collateral and shall take such
other action as may be required to perfect or to continue the perfection of
Agent's Lien upon the Collateral. Unless prohibited by applicable law, each
Borrower hereby authorizes Agent to execute and file any such financing
statement, including, without limitation, financing statements that indicate the
Collateral (i) as all assets of such Borrower or words of similar effect, or
(ii) as being of an equal or lesser scope, or with greater or lesser detail,
than as set forth in Section 5.1, on such Borrower's behalf. Each Borrower also
hereby ratifies its authorization for Agent to have filed in any jurisdiction
any like financing statements or amendments thereto if filed prior to the date
hereof. The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu thereof. At Agent's request, each Borrower shall
also promptly execute or cause to be executed and shall deliver to Agent any and
all documents, instruments and agreements deemed necessary by Agent, to give
effect to or carry out the terms or intent of the Loan Documents.
5.4. Lien on Realty.
The due and punctual payment and performance of the Obligations
shall also be secured by the Lien created by Mortgages upon all real Property of
Borrowers now or hereafter owned. Each Mortgage shall be executed by the
Borrowers in favor of Agent. Each Mortgage shall be duly recorded, at Borrowers'
expense, in each office where such recording is required to constitute a fully
perfected first Lien on the real Property covered thereby. Borrowers shall
deliver to Agent, at Borrowers' expense, mortgagee title insurance policies
issued by a title insurance company satisfactory to Agent, which policies shall
be in form and substance satisfactory to Agent and shall insure a valid first
Lien in favor of Agent, for the benefit of itself and the Lenders, on the
Property covered by each Mortgage, subject only to those exceptions reasonably
acceptable to Agent and its counsel. Borrowers shall deliver to Agent such other
documents, including, without limitation, as-built survey prints of the real
Property, as Agent and its counsel may request relating to the real Property
subject to the Mortgages.
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SECTION 6. COLLATERAL ADMINISTRATION
6.1. General.
6.1.1. Location of Collateral. All Collateral, other than
Inventory in transit and motor vehicles, will at all times be kept by
Borrowers and their Subsidiaries at one or more of the business locations
set forth in Exhibit 6.1.1 hereto, as updated by Borrowers providing prior
written notice to Agent of any new location.
6.1.2. Insurance of Collateral. Each Borrower shall maintain
and pay for insurance upon all Collateral wherever located and with
respect to the business of such Borrower and each of its Subsidiaries,
covering casualty, hazard, public liability, workers' compensation and
such other risks in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Each Borrower shall deliver certified
copies of such policies to Agent as promptly as practicable, with
satisfactory lender's loss payable endorsements, naming Agent as a loss
payee, assignee or additional insured, as appropriate, as its interest may
appear, and showing only such other loss payees, assignees and additional
insureds as are satisfactory to Agent. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less
than 10 days' prior written notice to Agent in the event of cancellation
of the policy for nonpayment of premium and not less than 30 days' prior
written notice to Agent in the event of cancellation of the policy for any
other reason whatsoever and a clause specifying that the interest of Agent
shall not be impaired or invalidated by any act or neglect of any
Borrower, any of its Subsidiaries or the owner of the Property or by the
occupation of the premises for purposes more hazardous than are permitted
by said policy. Borrower Representative agrees to deliver to Agent, as
promptly as rendered, true copies of all reports made in any reporting
forms to insurance companies. All proceeds of business interruption
insurance (if any) of any Borrower and its Subsidiaries shall be remitted
to Agent for application to the outstanding balance of the Revolving
Credit Loans.
Unless each Borrower provides Agent with evidence of the
insurance coverage required by this Agreement, Agent may purchase
insurance at such Borrower's expense to protect Agent's interests in the
Properties of such Borrower and its Subsidiaries. This insurance may, but
need not, protect the interests of such Borrower and its Subsidiaries. The
coverage that Agent purchases may not pay any claim that such Borrower or
any Subsidiary makes or any claim that is made against such Borrower or
any such Subsidiary in connection with said Property. Such Borrower may
later cancel any insurance purchased by Agent, but only after providing
Agent with evidence that such Borrower and its Subsidiaries have obtained
insurance as required by this Agreement. If Agent purchases insurance,
such Borrower will be responsible for the costs of that insurance,
including interest and any other charges Agent may impose in connection
with the placement of insurance, until the effective date of the
cancellation or expiration of the insurance. The costs of the insurance
may be added to the Obligations. The costs of the insurance may be more
than the cost of insurance that such Borrower and its Subsidiaries may be
able to obtain on their own.
6.1.3. Protection of Collateral. Neither Agent nor any Lender
shall be liable or responsible in any way for the safekeeping of any of
the Collateral or for any loss or damage thereto (except for reasonable
care in the custody thereof while any
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Collateral is in Agent's or any Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but
the same shall be at Borrowers' sole risk.
6.2. Administration of Accounts.
6.2.1. Records, Schedules and Assignments of Accounts. Each
Borrower shall keep accurate and complete records of its Accounts and all
payments and collections thereon and shall submit to Agent on such
periodic basis as Agent shall request a sales and collections report for
the preceding period, in form consistent with the reports currently
prepared by such Borrower with respect to such information. Concurrently
with the delivery of the Borrowing Base Certificate for the last week of
each month described in subsection 8.1.4, or more frequently as requested
by Agent, from and after the date hereof, each Borrower shall deliver to
Agent a detailed aged trial balance of all of its Accounts, specifying the
names, addresses, face values, dates of invoices and due dates for each
Account Debtor obligated on an Account so listed ("Schedule of Accounts"),
and upon Agent's request therefor, copies of proof of delivery and the
original copy of all documents, including, without limitation, repayment
histories and present status reports relating to the Accounts so scheduled
and such other matters and information relating to the status of then
existing Accounts as Agent shall request. If requested by Agent, each
Borrower shall execute and deliver to Agent formal written assignments of
all of its Accounts weekly or daily, which shall include all Accounts that
have been created since the date of the last assignment, together with
copies of invoices or invoice registers related thereto. No later than the
fifteenth (15th) day of each month, the Borrowers shall deliver to the
Agent an aging report with respect to accounts receivable and a listing of
accounts payable, in each case for the previous month.
6.2.2. Discounts, Allowances, Disputes. If any Borrower grants
any discounts, allowances or credits that are not shown on the face of the
invoice for the Account involved, such Borrower shall report such
discounts, allowances or credits, as the case may be, to Agent as part of
the next required Schedule of Accounts.
6.2.3. Account Verification. Any of Agent's officers,
employees or agents shall have the right, at any time or times hereafter,
in the name of Agent, any designee of Agent or any Borrower, to verify the
validity, amount or any other matter relating to any Accounts by mail,
telephone, electronic communication or otherwise. Each Borrower shall
cooperate fully with Agent in an effort to facilitate and promptly
conclude any such verification process; provided that such Account
verifications shall only be performed in conjunction with semi-annual
audits, or more frequently if (i) an Event of Default has occurred and is
continuing or (ii) in connection with Permitted Acquisitions.
6.2.4. Maintenance of Dominion Account. Borrowers shall
maintain a Dominion Account or Accounts pursuant to lockbox and blocked
account arrangements reasonably acceptable to Agent with such banks as may
be selected by Borrowers and be acceptable to Agent. Borrowers shall issue
to any such banks an irrevocable letter of instruction directing such
banks to deposit all payments or other remittances received in the lockbox
and blocked accounts to the Dominion Account for application on account
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of the Obligations as provided in subsection 3.2.1. All funds deposited in
any Dominion Account shall immediately become the property of Agent, for
the ratable benefit of Lenders, and Borrowers shall obtain the agreement
by such banks in favor of Agent to waive any recoupment, setoff rights,
and any security interest in, or against, the funds so deposited. Agent
assumes no responsibility for such lockbox and blocked account
arrangements, including, without limitation, any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder.
6.2.5. Collection of Accounts, Proceeds of Collateral. Each
Borrower agrees that all invoices rendered and other requests made by such
Borrower for payment in respect of Accounts shall contain a written
statement directing payment in respect of such Accounts to be paid to a
lockbox established pursuant to subsection 6.2.4. To expedite collection,
each Borrower shall endeavor in the first instance to make collection of
its Accounts for Agent. All remittances received by each Borrower on
account of Accounts, together with the proceeds of any other Collateral,
shall be held as Agent's property, for its benefit and the benefit of
Lenders, by such Borrower as trustee of an express trust for Agent's
benefit and such Borrower shall immediately deposit same in kind in the
Dominion Account. Agent retains the right at all times after the
occurrence and during the continuance of a Default or an Event of Default
to notify Account Debtors that a Borrower's Accounts have been assigned to
Agent and to collect such Borrower's Accounts directly in its own name, or
in the name of Agent's agent, and to charge the collection costs and
expenses, including attorneys' fees, to such Borrower.
6.2.6. Taxes. If an Account includes a charge for any tax
payable to any governmental taxing authority, Agent is authorized, in its
sole discretion, to pay the amount thereof to the proper taxing authority
for the account of any Borrower and to charge such Borrower therefor,
except for taxes that (i) are being actively contested in good faith and
by appropriate proceedings and with respect to which such Borrower
maintains reasonable reserves on its books therefor and (ii) would not
reasonably be expected to result in any Lien other than a Permitted Lien.
In no event shall Agent or any Lender be liable for any taxes to any
governmental taxing authority that may be due by any Borrower.
6.3. Administration of Inventory.
6.3.1. Records and Reports of Inventory. Each Borrower shall
keep records of its Inventory which records shall be complete and accurate
in all material respects. Each Borrower shall furnish to Agent Inventory
reports concurrently with the delivery of each Borrowing Base Certificate
described in subsection 8.1.4 or more frequently as reasonably requested
by Agent, which reports will be in such other format and detail as Agent
shall request and shall include a current list of all locations of such
Borrower's Inventory. Each Borrower shall conduct a physical inventory no
less frequently than annually and shall provide to Agent a report based on
each such physical inventory promptly thereafter, together with such
supporting information as Agent shall reasonably request. No Inventory
will at any time be misbranded or adulterated, and all Inventory shall
bear all labels and warnings required by all federal or state laws, rules
and regulations.
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6.3.2. Inventory Appraisal. Within 60 days after October 31
and April 30 of each year, and upon Agent's request during the existence
of a Default or an Event of Default, Borrower Representative, at
Borrowers' sole cost and expense, shall provide Agent with an Appraisal of
the Inventory in form and substance reasonably acceptable to Agent setting
forth the Net Orderly Liquidation Value of the Inventory.
6.4. Administration of Equipment.
6.4.1. Records and Schedules of Equipment. Each Borrower shall
keep records of its Equipment which shall be complete and accurate in all
material respects itemizing and describing the kind, type, quality,
quantity and book value of its Equipment and all dispositions made in
accordance with subsection 6.4.2 hereof, and upon request of Agent such
Borrower shall, and shall cause each of its Subsidiaries to, furnish Agent
with a current schedule containing the foregoing information on at least
an annual basis. Promptly after the request therefor by Agent, each
Borrower shall deliver to Agent any and all evidence of ownership, if any,
of any of its Equipment.
6.4.2. Dispositions of Equipment. No Borrower shall or shall
permit any of its Subsidiaries to sell, lease or otherwise dispose of or
transfer any of its respective Equipment or other fixed assets or any part
thereof without the prior written consent of Agent; provided, however,
that the foregoing restriction shall not apply, for so long as no Default
or Event of Default exists and is continuing, to (i) dispositions of
Equipment and other fixed assets which, in the aggregate during any
consecutive twelve-month period, have a fair market value or a book value,
which is $1,000,000 or less, provided that all proceeds thereof are
remitted to Agent for application to the Loans as provided in subsection
3.3.1, or (ii) replacements of Equipment or other fixed assets that are
substantially worn, damaged or obsolete with Equipment or other fixed
assets of like kind, function and value which are useful in the business
of any Borrower or one of its Subsidiaries, provided that the replacement
Equipment or other fixed assets shall be acquired within 90 days after any
disposition of the Equipment or other fixed assets that are to be replaced
and the replacement Equipment or other fixed assets shall be free and
clear of Liens other than Permitted Liens that are not Purchase Money
Liens.
6.5. Payment of Charges.
All amounts chargeable to Borrowers under Section 6 hereof shall be
Obligations secured by all of the Collateral, shall be payable on demand and
shall bear interest from the date such advance was made until paid in full at
the rate applicable to the Revolving Credit Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1. General Representations and Warranties.
To induce Agent and each Lender to enter into this Agreement and to
make advances hereunder, Borrowers jointly and severally warrant, represent and
covenant to Agent and each Lender that:
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7.1.1. Qualification. Each Borrower and each of its
Subsidiaries is a corporation, limited partnership or limited liability
company duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization. Each
Borrower and each of its Subsidiaries is duly qualified and is authorized
to do business and is in good standing as a foreign limited liability
company, limited partnership or corporation, as applicable, in each state
or jurisdiction listed on Exhibit 7.1.1 hereto and in all other states and
jurisdictions in which the failure of such Borrower or any of its
Subsidiaries to be so qualified could reasonably be expected to have a
Material Adverse Effect.
7.1.2. Power and Authority. Each Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Loan Documents to
which it is a party. The execution, delivery and performance of this
Agreement and each of the other Loan Documents have been duly authorized
by all necessary corporate or other relevant action and do not and will
not (i) require any consent or approval of the shareholders or members, as
applicable, of any Borrower or any of the shareholders, partners or
members, as the case may be, of any Subsidiary of such Borrower; (ii)
contravene any Borrower's or any of its Subsidiaries' charter, articles or
certificate of incorporation, partnership agreement, certificate of
formation, by-laws, limited liability agreement, operating agreement or
other organizational documents (as the case may be); (iii) violate, or
cause any Borrower or any of its Subsidiaries to be in default under, any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award in effect having applicability to any
Borrower or any of its Subsidiaries, the violation of which could
reasonably be expected to have a Material Adverse Effect; (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which any
Borrower or any of its Subsidiaries is a party or by which it or its
Properties may be bound or affected, the breach of or default under which
could reasonably be expected to have a Material Adverse Effect; or (v)
result in, or require, the creation or imposition of any Lien (other than
Permitted Liens) upon or with respect to any of the Properties now owned
or hereafter acquired by any Borrower or any of its Subsidiaries.
7.1.3. Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will
be, a legal, valid and binding obligation of each Borrower and each of its
Subsidiaries party thereto, enforceable against it in accordance with its
respective terms.
7.1.4. Capital Structure. Exhibit 7.1.4 hereto states, as of
the date hereof, (i) the correct name of each of the Subsidiaries and
Affiliates of each Borrower, its jurisdiction of incorporation or
organization and the percentage of its Voting Stock owned by such
Borrower, (ii) the name of each Borrower's and each of its Subsidiaries'
corporate or joint venture relationships and the nature of the
relationship, (iii) the number, nature and holder of all outstanding
Securities of each Borrower and the holder of Securities of each
Subsidiary of such Borrower and (iv) the number of authorized, issued and
treasury Securities of each Borrower. Each Borrower has good title to all
of the Securities it purports to own of each of such Subsidiaries, free
and clear in each case of any Lien other than Permitted Liens. All such
Securities have been duly issued and
27
are fully paid and non-assessable, except as set forth in Exhibit 7.1.4.
As of the date hereof, there are no outstanding options to purchase, or
any rights or warrants to subscribe for, or any commitments or agreements
to issue or sell any Securities or obligations convertible into, or any
powers of attorney relating to any Securities of any Borrower or any of
its Subsidiaries. Except as set forth on Exhibit 7.1.4, as of the date
hereof, there are no outstanding agreements or instruments binding upon
any Borrower's or any of its Subsidiaries' partners, members or
shareholders, as the case may be, relating to the ownership of its
Securities.
7.1.5. Names; Organization. No Borrower or any of its
Subsidiaries has been known as or has used any legal, fictitious or trade
names except those listed on Exhibit 7.1.5 hereto. Except as set forth on
Exhibit 7.1.5, no Borrower or any of its Subsidiaries has been the
surviving entity of a merger or consolidation or has acquired all or
substantially all of the assets of any Person. Each Borrower's and each of
its Subsidiaries' state(s) of incorporation or organization, Type of
Organization and Organizational I.D. Number is set forth on Exhibit 7.1.5.
The exact legal name of each Borrower and each of its Subsidiaries is set
forth on Exhibit 7.1.5.
7.1.6. Business Locations; Agent for Process. Each Borrower's
and each of its Subsidiary's chief executive office, location of books and
records and other places of business are as listed on Exhibit 6.1.1
hereto, as updated from time to time by such Borrower in accordance with
the provisions of subsection 6.1.1. During the preceding one-year period,
no Borrower or any of its Subsidiaries has had an office, place of
business or agent for service of process, other than as listed on Exhibit
6.1.1. All tangible Collateral is and will at all times be kept by each
Borrower and its Subsidiaries in accordance with subsection 6.1.1. Except
as shown on Exhibit 6.1.1, as of the date hereof, no Inventory is stored
with a bailee, distributor, warehouseman or similar party, nor is any
Inventory consigned to any Person.
7.1.7. Title to Properties; Priority of Liens. Each Borrower
and each of its Subsidiaries has good, indefeasible and marketable title
to and fee simple ownership of, or valid and subsisting leasehold
interests in, all of its real Property, and good title to all of the
Collateral and all of its other Property, in each case, free and clear of
all Liens except Permitted Liens. Each Borrower and each of its
Subsidiaries has paid or discharged all lawful claims which, if unpaid,
might become a Lien against any of such Borrower's or such Subsidiary's
Properties that is not a Permitted Lien. The Liens granted to Agent under
Section 5 hereof are first priority Liens, subject only to Permitted
Liens.
7.1.8. Accounts. Agent may rely, in determining which Accounts
are Eligible Accounts, on all statements and representations made by any
Borrower with respect to any Account or Accounts. With respect to each of
the Accounts of each Borrower, whether or not such Account is an Eligible
Account, unless otherwise disclosed to Agent in writing:
(i) It is genuine and in all respects what it purports to
be, and it is not evidenced by a judgment;
28
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by such Borrower, in the
ordinary course of its business and in accordance with the terms and
conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between such
Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in
the duplicate invoice covering such sale or rendition of services, a
copy of which has been furnished or is available to Agent;
(iv) There are no facts, events or occurrences which in any
way impair the validity or enforceability of any Accounts or tend to
reduce the amount payable thereunder from the face amount of the
invoice and statements delivered or made available to Agent with
respect thereto;
(v) To the best of such Borrower's knowledge, the Account
Debtor thereunder (1) had the capacity to contract at the time any
contract or other document giving rise to the Account was executed
and (2) such Account Debtor is Solvent; and
(vi) To the best of such Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against the
Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9. Equipment. The Equipment of each Borrower and its
Subsidiaries is in good operating condition and repair, and all necessary
replacements of and repairs thereto shall be made so that the operating
efficiency thereof shall be maintained and preserved, reasonable wear and
tear excepted. No Borrower or any of its Subsidiaries will permit any
Equipment to become affixed to any real Property leased to such Borrower
or any of its Subsidiaries so that an interest arises therein under the
real estate laws of the applicable jurisdiction unless the landlord of
such real Property has executed a landlord waiver or leasehold mortgage in
favor of and in form reasonably acceptable to Agent, and such Borrower
will not permit any of the Equipment of such Borrower or any of its
Subsidiaries to become an accession to any personal Property other than
Equipment that is subject to first priority (except for Permitted Liens)
Liens in favor of Agent.
7.1.10. Financial Statements; Fiscal Year. The Consolidated
and unaudited consolidating balance sheets of each Borrower and its
Subsidiaries (including the accounts of all Subsidiaries of such Borrower
and their respective Subsidiaries for the respective periods during which
a Subsidiary relationship existed) as of October 31, 2004, and the related
statements of income, changes in shareholder's equity, and changes in
financial position for the periods ended on such dates, have been prepared
in accordance with GAAP, and present fairly in all material respects the
financial positions of such Borrower and such Subsidiaries, taken as a
whole, at such dates and the results of such Borrower's and such Persons'
operations, taken as a whole, for such periods. As of the date hereof,
since June 30, 2004, there has been no material adverse change in the
financial position of each Borrower and such Subsidiaries, taken as a
whole, as reflected
29
in the Consolidated balance sheet as of such date. As of the date hereof,
the fiscal year of each Borrower and each of its Subsidiaries ends on June
30 of each year.
7.1.11. Full Disclosure. The financial statements referred to
in subsection 7.1.10 hereof do not, nor does this Agreement or any other
written statement of any Borrower to Agent or any Lender contain any
untrue statement of a material fact or omit a material fact necessary to
make the statements contained therein or herein not misleading. There is
no fact which any Borrower has failed to disclose to Agent or any Lender
in writing which could reasonably be expected to have a Material Adverse
Effect.
7.1.12. Solvent Financial Condition. Each Borrower and each of
its Subsidiaries, is now and, after giving effect to the initial Loans to
be made and the initial Letters of Credit and LC Guaranties to be issued
hereunder and all related transactions, will be, Solvent.
7.1.13. Surety Obligations. Except as permitted by Section
8.2.3(ix) hereof, no Borrower or any of its Subsidiaries is obligated as a
surety or indemnitor under any surety or similar bond or other contract
issued or entered into or has entered into any agreement to assure
payment, performance or completion of performance of any undertaking or
obligation of any Person.
7.1.14. Taxes. D&K's federal tax identification number is
00-0000000. Xxxxxx'x federal tax identification number is 00-0000000. DH's
federal tax identification number is 00-00-0000000. MVP's federal tax
identification number is 00-0000000. D&K Pharmacy Solutions' federal tax
identification number is 00-0000000. Xxxxx'x federal tax identification
number is 00-0000000. Xxxxx Heartland's federal tax identification number
is 00-0000000. Xxxxx Distribution's federal tax identification number is
00-0000000. The federal tax identification numbers of each Borrower's
Subsidiaries are shown on Exhibit 7.1.14 hereto. Each Borrower and each of
its Subsidiaries has filed all federal, state and local tax returns and
other reports relating to taxes it is required by law to file, and has
paid, or made provision for the payment of, all taxes, assessments, fees,
levies and other governmental charges upon it, its income and Properties
as and when such taxes, assessments, fees, levies and charges are due and
payable, unless and to the extent any thereof are being actively contested
in good faith and by appropriate proceedings and such Borrower and each of
its Subsidiaries maintains reasonable reserves on its books therefor. The
provision for taxes on the books of each Borrower and its Subsidiaries is
adequate for all years not closed by applicable statutes, and for the
current fiscal year.
7.1.15. Brokers. Except as shown on Exhibit 7.1.15 hereto,
there are no claims for brokerage commissions, finder's fees or investment
banking fees in connection with the transactions contemplated by this
Agreement.
7.1.16. Patents, Trademarks, Copyrights and Licenses. Each
Borrower and each of its Subsidiaries owns, possesses or licenses or has
the right to use all the patents, trademarks, service marks, trade names,
copyrights, licenses and other Intellectual Property necessary for the
present and planned future conduct of its business without any known
conflict with the rights of others, except for such conflicts as could
30
not reasonably be expected to have a Material Adverse Effect. All such
patents, trademarks, service marks, tradenames, copyrights, licenses, and
other similar rights are included on Exhibit 7.1.16 hereto. No claim has
been asserted to any Borrower or any of its Subsidiaries which is
currently pending that their use of their Intellectual Property or the
conduct of their business does or may infringe upon the Intellectual
Property rights of any third party. To the knowledge of each Borrower and
except as set forth on Exhibit 7.1.16 hereto, as of the date hereof, no
Person is engaging in any activity that infringes in any material respect
upon such Borrower's or any of its Subsidiaries' material Intellectual
Property. Except as set forth on Exhibit 7.1.16, each Borrower's and each
of its Subsidiaries' (i) material trademarks, service marks, and
copyrights are registered with the U.S. Patent and Trademark Office or in
the U.S. Copyright Office, as applicable and (ii) material license
agreements and similar arrangements relating to its Inventory (1) permits,
and does not restrict, the assignment by such Borrower or any of its
Subsidiaries to Agent, or any other Person designated by Agent, of all of
such Borrower's or such Subsidiary's, as applicable, rights, title and
interest pertaining to such license agreement or such similar arrangement
and (2) would permit the continued use by such Borrower or such
Subsidiary, or Agent or its assignee, of such license agreement or such
similar arrangement and the right to sell Inventory subject to such
license agreement for a period of no less than 6 months after a default or
breach of such agreement or arrangement. The consummation and performance
of the transactions and actions contemplated by this Agreement and the
other Loan Document, including without limitation, the exercise by Agent
of any of its rights or remedies under Section 10, will not result in the
termination or impairment of any Borrower's or any of its Subsidiaries'
ownership or rights relating to its Intellectual Property, except for such
Intellectual Property rights the loss or impairment of which could not
reasonably be expected to have a Material Adverse Effect. Except as listed
on Exhibit 7.1.16 and except as could not reasonably be expected to have a
Material Adverse Effect, (i) no Borrower or any of its Subsidiaries is in
breach of, or default under, any term of any license or sublicense with
respect to any of its Intellectual Property and (ii) to the knowledge of
each Borrower, no other party to such license or sublicense is in breach
thereof or default thereunder, and such license is valid and enforceable.
7.1.17. Governmental Consents. Each Borrower and each of its
Subsidiaries has, and is in good standing with respect to, all
governmental consents, approvals, licenses, authorizations, permits,
certificates, inspections and franchises necessary to continue to conduct
its business as heretofore or proposed to be conducted by it and to own or
lease and operate its Properties as now owned or leased by it, except
where the failure to possess or so maintain such rights could not
reasonably be expected to have a Material Adverse Effect.
7.1.18. Compliance with Laws. Each Borrower and each of its
Subsidiaries has duly complied, and its Properties, business operations
and leaseholds are in compliance with, the provisions of all federal,
state and local laws, rules and regulations applicable to such Borrower or
such Subsidiary, as applicable, its Properties or the conduct of its
business, except for such non-compliance as could not reasonably be
expected to have a Material Adverse Effect, and there have been no
citations, notices or orders of noncompliance issued to such Borrower or
any of its Subsidiaries under any such law, rule or regulation, except
where such noncompliance could not reasonably be
31
expected to have a Material Adverse Effect. Each Borrower and each of its
Subsidiaries has established and maintains an adequate monitoring system
to insure that it remains in compliance in all material respects with all
federal, state and local rules, laws and regulations applicable to it. No
Inventory produced by the Borrowers has been produced in violation of the
Fair Labor Standards Act (29 U.S.C. Section 201 et seq.), as amended.
7.1.19. Restrictions. No Borrower or any of its Subsidiaries
is a party or subject to any contract or agreement which restricts its
right or ability to incur Indebtedness, other than as set forth on Exhibit
7.1.19 hereto, none of which prohibit the execution of or compliance with
this Agreement or the other Loan Documents by such Borrower or any of its
Subsidiaries, as applicable.
7.1.20. Litigation. Except as set forth on Exhibit 7.1.20
hereto, there are no actions, suits, proceedings or investigations
pending, or to the knowledge of any Borrower, threatened, against or
affecting such Borrower or any of its Subsidiaries, or the business,
operations, Properties, prospects, profits or condition of such Borrower
or any of its Subsidiaries which, singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. No Borrower or
any of its Subsidiaries is in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority
or arbitration board or tribunal, which, singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
7.1.21. No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this
Agreement or any Borrower's performance hereunder, constitute a Default or
an Event of Default. No Borrower or any of its Subsidiaries is in default
in (and no event has occurred and no condition exists which constitutes,
or which the passage of time or the giving of notice or both would
constitute, a default in) the payment of any Indebtedness to any Person
for Money Borrowed in excess of $500,000.
7.1.22. Leases. Exhibit 7.1.22 hereto is a complete listing of
all capitalized and operating personal property leases (in the case of
operating personal property leases, only to the extent such leases
individually require monthly rental payment in excess of $1,000) of each
Borrower and its Subsidiaries and all real property leases of each
Borrower and its Subsidiaries. Each Borrower and each of its Subsidiaries
is in full compliance with all of the terms of each of its respective
capitalized and operating leases, except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
7.1.23. Pension Plans. Except as disclosed on Exhibit 7.1.23
hereto, no Borrower or any of its Subsidiaries has any Plan. Each Borrower
and each of its Subsidiaries is in compliance with the requirements of
ERISA and the regulations promulgated thereunder with respect to each
Plan, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. No fact or situation that
could reasonably be expected to result in a material adverse change in the
financial condition of any Borrower and its Subsidiaries exists in
connection with any Plan. No Borrower or any of its Subsidiaries has any
withdrawal liability in connection with a Multiemployer Plan.
32
7.1.24. Trade Relations. Except as disclosed on Exhibit 7.1.24
hereto, there exists no actual or, to any Borrower's knowledge, threatened
termination, cancellation or limitation of, or any modification or change
in, the business relationship between such Borrower or any of its
Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of such
Borrower and its Subsidiaries, or with any material supplier, except in
each case, where the same could not reasonably be expected to have a
Material Adverse Effect, and there exists no present condition or state of
facts or circumstances which would prevent such Borrower or any of its
Subsidiaries from conducting such business after the consummation of the
transactions contemplated by this Agreement in substantially the same
manner in which it has heretofore been conducted.
7.1.25. Labor Relations. Except as described on Exhibit 7.1.25
hereto, as of the date hereof, no Borrower or any of its Subsidiaries is a
party to any collective bargaining agreement. There are no material
grievances, disputes or controversies with any union or any other
organization of any Borrower's or any of its Subsidiaries' employees, or
threats of strikes, work stoppages or any asserted pending demands for
collective bargaining by any union or organization, except those that
could not reasonably be expected to have a Material Adverse Effect.
7.1.26. Environmental Matters. Except as described on Exhibit
7.1.26 hereto, each Borrower and its Subsidiaries and/or each property,
operations and facility that any Borrower or any Subsidiary may own,
operate or control (i) is in compliance with, in all material respects,
all applicable Environmental Laws; (ii) is not subject to any judicial or
administrative proceeding or order alleging the violation of any
Environmental Law; (iii) has not received any written notice (1) that it
may be in violation of any Environmental Law, (2) threatening the
commencement of any proceeding relating to any Adverse Environmental
Condition, (3) alleging that it is or may be responsible (in whole or in
part) for any Adverse Environmental Condition, or (4) ordering or
directing any Borrower or any Subsidiary to take any action or refrain
from taking any action because of an Adverse Environmental Condition; (iv)
to the best of each Borrower's knowledge, is not the subject of any
federal, state or local investigation evaluating whether any
investigation, remedial action or other response is needed to respond to
an Adverse Environmental Condition; and (v) has not filed any notice
indicating or reporting any Adverse Environmental Condition except for
such notices or reports required by Environmental Laws as a result of
routine business operations.
7.2. Continuous Nature of Representations and
Warranties.
Each representation and warranty contained in this Agreement and the
other Loan Documents shall be continuous in nature and shall remain accurate,
complete and not misleading at all times during the term of this Agreement,
except for changes in the nature of any Borrower's or any of its Subsidiary's
business or operations that would render the information in any exhibit attached
hereto or to any other Loan Document either inaccurate, incomplete or
misleading, so long as Majority Lenders have consented to such changes or such
changes are expressly permitted by this Agreement. Without limiting the
generality of the foregoing, each Loan request made or deemed made pursuant to
subsection 3.1.1 hereof, and each Letter of Credit or LC Guaranty request made
under subsection 3.1.5 hereof, shall constitute the applicable Borrower's
reaffirmation, as of the
33
date of each such Loan, Letter of Credit or LC Guaranty request, of each
representation, warranty or other statement made or furnished to Agent or any
Lender by or on behalf of such Borrower, any Subsidiary of such Borrower, or any
Guarantor in this Agreement, any of the other Loan Documents, or any instrument,
certificate or financial statement furnished in compliance with or in reference
thereto.
7.3. Survival of Representations and Warranties.
All representations and warranties of each Borrower contained in
this Agreement or any of the other Loan Documents shall survive the execution,
delivery and acceptance thereof by Agent and each Lender and the parties thereto
and the closing of the transactions described therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1. Affirmative Covenants.
During the Term, and thereafter for so long as there are any
Obligations outstanding, each Borrower covenants that, unless otherwise
consented to by Majority Lenders, in writing, it shall:
8.1.1. Visits and Inspections; Agent Meeting. Permit
representatives of Agent from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and inspect the
Properties of such Borrower and each of its Subsidiaries, inspect, audit
(solely with respect to audits, absent (i) the occurrence of an Event of
Default or (ii) Permitted Acquisitions, not more than two (2) times in any
fiscal year) and make extracts from its books and records, and discuss
with its officers, its employees and its independent accountants, such
Borrower's and each of its Subsidiaries' business, assets, liabilities,
financial condition, business prospects and results of operations. Lenders
may accompany Agent on audits at such Lenders' expense.
8.1.2. Notices. Promptly notify Agent in writing of the
occurrence of any event or the existence of any fact which renders any
representation or warranty in this Agreement or any of the other Loan
Documents inaccurate, incomplete or misleading in any material respect as
of the date made or remade. In addition, each Borrower agrees to provide
Agent with prompt written notice of any change in the information
disclosed in any Exhibit hereto, in each case after giving effect to the
materiality limits and Material Adverse Effect qualifications contained
therein.
8.1.3. Financial Statements. Keep, and cause each of its
Subsidiaries to keep, adequate records and books of account with respect
to its business activities in which proper entries are made in accordance
with customary accounting practices reflecting all its financial
transactions; and cause to be prepared and furnished to Agent and each
Lender, the following, all to be prepared in accordance with GAAP applied
on a consistent basis, unless such Borrower's certified public accountants
concur in any change therein and such change is disclosed to Agent and is
consistent with GAAP:
(i) not later than 90 days after the close of each fiscal
year of Borrowers, unqualified (except for a qualification for a
change in accounting
34
principles with which the accountant concurs) audited financial
statements of Borrowers and their Subsidiaries as of the end of such
year, on a Consolidated and unaudited consolidating basis, certified
by a firm of independent certified public accountants of recognized
standing selected by Borrowers but acceptable to Agent and, within a
reasonable time thereafter a copy of any management letter issued in
connection therewith.
(ii) not later than 30 days after the end of each month
hereafter, including the last month of Borrowers' fiscal year,
unaudited interim financial statements of Borrowers and their
Subsidiaries as of the end of such month and of the portion of the
fiscal year then elapsed, on a Consolidated and unaudited
consolidating basis, certified by the principal financial officer of
Borrowers as prepared in accordance with GAAP but without footnotes
and fairly presenting in all material respects the financial
position and results of operations of Borrowers and their
Subsidiaries for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need
not contain notes.
(iii) together with each delivery of financial statements
pursuant to clauses (i) and (ii) of this subsection 8.1.3, a
management report (1) setting forth in comparative form the
corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the most recent
Projections for the current fiscal year delivered pursuant to
subsection 8.1.7 and (2) identifying the reasons for any significant
variations. The information above shall be presented in reasonable
detail and shall be certified by the chief financial officer of
Borrowers to the effect that such information fairly presents in all
material respects the results of operation and financial condition
of Borrowers and their Subsidiaries as at the dates and for the
periods indicated;
(iv) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial statements or
reports which Borrowers have made available to their Securities
holders and copies of any regular, periodic and special reports or
registration statements which Borrowers or any of their Subsidiaries
files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any
national securities exchange;
(v) upon request of Agent, copies of any annual report to
be filed with ERISA in connection with each Plan; and
(vi) such other data and information (financial and
otherwise) as Agent or any Lender, from time to time, may reasonably
request, bearing upon or related to the Collateral or Borrowers' or
any of their Subsidiaries' financial condition or results of
operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this subsection 8.1.3, each Borrower shall forward to Agent a
copy of the accountants' letter to such Borrower's management that is prepared
in connection with such financial statements and also shall
35
cause to be prepared and shall furnish to Agent a certificate of the aforesaid
certified public accountants certifying to Agent that, based upon their
examination of the financial statements of such Borrower and its Subsidiaries
performed in connection with their examination of said financial statements,
they are not aware of any Default or Event of Default, or, if they are aware of
such Default or Event of Default, specifying the nature thereof. Concurrently
with the delivery of the financial statements described in paragraph (i) and
(ii) of this subsection 8.1.3, or more frequently if reasonably requested by
Agent, each Borrower shall cause to be prepared and furnished to Agent a
Compliance Certificate in the form of Exhibit 8.1.3 hereto executed by the chief
financial officer of Borrower (a "Compliance Certificate").
8.1.4. Borrowing Base Certificates. On or before the second
Business Day of each week from and after the date hereof, Borrower
Representative shall deliver to Agent, in form acceptable to Agent, a
Borrowing Base Certificate as of the last day of the immediately preceding
week, with such supporting materials as Agent shall reasonably request. If
any Borrower deems it advisable, or Agent shall request, Borrower
Representative shall execute and deliver to Agent Borrowing Base
Certificates more frequently than weekly.
8.1.5. Landlord, Processor and Storage Agreements. Provide
Agent with copies of all agreements between any Borrower or any of its
Subsidiaries and any landlord, processor, distributor, warehouseman or
consignee which owns any premises at which any Collateral may, from time
to time, be kept.
8.1.6. Guarantor Financial Statements. Deliver or cause to be
delivered to Agent financial statements, if any, for each Guarantor (to
the extent not consolidated with the financial statements delivered to
Agent under subsection 8.1.3) in form and substance satisfactory to Agent
at such intervals and covering such time periods as Agent may request.
8.1.7. Projections. As soon as possible, but no later than 30
days after the close of each fiscal year of the Borrowers, deliver to
Agent monthly Projections for all Borrowers for the following year on a
Consolidated and consolidating basis.
8.1.8. Subsidiaries. Cause each Subsidiary of each Borrower,
whether now or hereafter in existence, promptly upon Agent's request
therefor, to execute and deliver to Agent a Guaranty Agreement and a
security agreement pursuant to which such Subsidiary guaranties the
payment of all Obligations and grants to Agent a first priority Lien
(subject only to Permitted Liens) on all of its Properties of the types
described in Section 5.1. Additionally, each Borrower shall execute and
deliver to Agent a pledge agreement pursuant to which such Borrower grants
to Agent a first priority Lien (subject only to Permitted Liens) with
respect to all of the issued and outstanding Securities of each such
Subsidiary and each Inactive Subsidiary.
8.1.9. Deposit and Brokerage Accounts. For each deposit
account or brokerage account that any Borrower at any time opens or
maintains, such Borrower shall, at Agent's request and option, pursuant to
an agreement in form and substance reasonably satisfactory to Agent, cause
the depository bank or securities intermediary, as applicable, to agree to
comply at any time with instructions from Agent to such
36
depository bank or securities intermediary, as applicable, directing the
disposition of funds from time to time credited to such deposit or
brokerage account, without further consent of such Borrower.
8.1.10. Interest Rate Protection. Borrowers shall maintain
interest rate protection in form, on terms and with parties acceptable to
Agent, for a notional amount of not less than $70,000,000.
8.1.11. Subordinations. Provide Agent with a debt
subordination agreement, in form and substance satisfactory to Agent,
executed by such Borrower and any Person who is an officer, director or
Affiliate of such Borrower to whom such Borrower is or hereafter becomes
indebted for Money Borrowed, subordinating in right of payment and claim
all of such Indebtedness and any future advances thereon to the full and
final payment and performance of the Obligations.
8.1.12. Further Assurances. Without limiting the generality of
the foregoing, if any of the Accounts, the face value of which exceeds
$10,000, arises out of a contract with the United States of America, or
any department, agency, subdivision or instrumentality thereof, Borrowers
shall promptly notify Agent thereof in writing and shall execute any
instruments and take any other action required or requested by Agent to
comply with the provisions of the Federal Assignment of Claims Act.
8.1.13. Centralized Inventory Purchasing. Substantially all of
the Borrowers' Inventory shall be ordered by D&K and the invoices for such
purchases shall be paid by D&K.
8.2. Negative Covenants.
During the Term, and thereafter for so long as there are any
Obligations outstanding, each Borrower covenants that, unless otherwise
consented to by Majority Lenders, in writing, it shall not:
8.2.1. Mergers; Consolidations; Acquisitions; Structural
Changes. Except as otherwise provided in this Section 8.2.1, merge or
consolidate, or permit any Subsidiary of such Borrower to merge or
consolidate, with any Person; nor change its or any of its Subsidiaries'
state of incorporation or organization, Type of Organization or
Organizational I.D. Number; nor change its or any of its Subsidiaries'
legal name; nor acquire, nor permit any of its Subsidiaries to acquire,
all or any substantial part of the Properties of any Person.
Notwithstanding the foregoing, D&K may acquire all or substantially all of
the assets or capital stock or ownership interest of any Person (the
"Target") (in each case, a "Permitted Acquisition") subject to the
satisfaction of each of the following conditions:
(i) Agent shall receive at least thirty (30) Business Days'
prior written notice of such proposed Permitted Acquisition, which
notice shall include a reasonably detailed description of such
proposed Permitted Acquisition;
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(ii) such Permitted Acquisition shall only involve assets
located in the United States and comprising a business, or those
assets of a business, of a wholesale drug or related service
industry;
(iii) such Permitted Acquisition shall be consensual and
shall have been approved by the Target's board of directors;
(iv) no additional Indebtedness, contingent obligations or
other liabilities shall be incurred, assumed or otherwise be
reflected on a consolidated balance sheet of Borrowers and Target
after giving effect to such Permitted Acquisition, except (1) Loans
made hereunder, (2) ordinary course trade payables and accrued
expenses, and (3) financing in favor of the Seller with respect to
such Permitted Acquisition so long as such financing consists of
Approved Seller Subordinated Financing;
(v) the sum of all amounts payable in connection with all
Permitted Acquisitions (including all transaction costs and all
Indebtedness and liabilities incurred or assumed in connection
therewith or otherwise reflected in a consolidated balance sheet of
Borrowers and Target) shall not exceed $15,000,000 in the aggregate
in any fiscal year of Borrowers;
(vi) the Target shall, for the trailing twelve-month period
preceding the date of the Permitted Acquisition, have net earnings
before interest expense, taxes, and allowances for depreciation and
amortization, all as determined in accordance with GAAP, of greater
than zero;
(vii) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than
Permitted Liens);
(viii) at or prior to the closing of any Permitted
Acquisition, Agent, for the benefit of itself and the Lenders, will
be granted a first priority perfected Lien (subject to Permitted
Liens) in all assets acquired pursuant thereto or in the assets and
capital stock of the Target, as applicable, and Borrowers and the
Target shall have executed such documents and taken such actions as
may be required by Agent in connection therewith, and if the
Permitted Acquisition involves the acquisition of stock or other
ownership interest of the Target, all documents, instruments and
agreements necessary or desirable to cause Target to be a Borrower
hereunder, including without limitation, amendments to this
Agreement, stock pledge agreements, and stock powers;
(ix) not less than ten (10) Business Days prior to any such
Permitted Acquisition, Borrower Representative shall have delivered
to Agent, in form and substance satisfactory to Agent:
(1) a pro forma consolidated balance sheet of Borrowers
and their Subsidiaries (including the Target) (the
"Acquisition Pro Forma"), based on the most recently delivered
monthly financial statements (pursuant to Section 8.1.3(ii))
and taking into account such Permitted Acquisition and the
funding of all Loans in connection therewith;
(2) updated versions of the most recently delivered
Projections covering the current fiscal year and the
subsequent fiscal year of
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Borrowers, commencing on the date of such Permitted
Acquisition and otherwise prepared in accordance with the
requirements of Section 8.1.3(iii) (the "Acquisition
Projections") and based upon historical financial data of
Borrowers and Target for the current fiscal year, taking into
account such Permitted Acquisition; and
(3) a certificate from the chief financial officer of
each Borrower to the effect that: (v) all of the requirements
set forth herein with respect to such Permitted Acquisition
have been satisfied; (w) each Borrower (after taking into
consideration all rights of contribution and indemnity such
Borrower has against other Borrowers and each other Subsidiary
of each Borrower) will be Solvent upon the consummation of the
Permitted Acquisition; (x) the Acquisition Pro Forma fairly
presents the financial condition of Borrowers (on a
consolidated basis) as of the date hereof after giving effect
to the Permitted Acquisition; (y) the Acquisition Projections
are reasonable estimates of the future financial performance
of Borrowers subsequent to the date thereof based upon the
historical performance of Borrowers and the Target and show
that Borrowers shall continue to be in compliance with the
financial covenants set forth in Section 8.3 thereafter; and
(z) Borrowers have completed their due diligence investigation
with respect to the Target and such Permitted Acquisition,
which investigation was conducted in a manner similar to that
which would have been conducted by a prudent purchaser of a
comparable business and the results of which investigation
were delivered to and reasonably acceptable to Agent;
(x) on or prior to the date of such Permitted Acquisition,
Agent shall have received, in form and substance satisfactory to
Agent, copies of the acquisition agreement and related agreements
and instruments, and all opinions, certificates, lien search results
and other documents reasonably requested by Agent;
(xi) at the time of such Permitted Acquisition and after
giving effect thereto, no Default or Event of Default shall have
occurred and be continuing; and
(xii) immediately following such Permitted Acquisition,
Borrowers shall have Availability of not less than $50,000,000.
Notwithstanding the foregoing, the Accounts and Inventory of a Target shall not
be included in Eligible Accounts and Eligible Inventory without (i) the
completion of an audit of such Accounts and Inventory by Agent (Agent agrees to
use its reasonable best efforts to complete its audit of such Accounts and
Inventory prior to the date of closing with respect to any such Permitted
Acquisition), (ii) delivery of an appraisal of the Inventory to Agent, and (iii)
the prior written consent of Agent.
8.2.2. Loans. Make, or permit any Subsidiary of any Borrower
to make, any loans or other advances of money to any Person except for (i)
salary, travel advances, advances against commissions and other similar
advances in the ordinary course of business, (ii) loans to Persons other
than Borrowers not to exceed $1,000,000 to any Person or $2,500,000 in the
aggregate to all Persons, and (iii) intercompany loans in the
39
ordinary course of business, by a Borrower to any other Borrower, provided
that (1) each Borrower shall record all intercompany transactions on its
books and records in a manner reasonably satisfactory to Agent, (2) each
Borrower hereby agrees that each obligation owed to another Borrower is
subordinated in right of payment to the Obligations, (3) at the time any
such intercompany loan or advance is made by any Borrower and after giving
effect thereto, such Borrower shall be Solvent, and (4) no Default or
Event of Default would occur and be continuing after giving effect to any
such proposed intercompany loan.
8.2.3. Total Indebtedness. Create, incur, assume, or suffer to
exist, or permit any Subsidiary of such Borrower to create, incur or
suffer to exist, any Indebtedness, except:
(i) Obligations owing to Agent or any Lender under this
Agreement or any of the other Loan Documents;
(ii) Indebtedness, including without limitation
Subordinated Debt, existing on the date of this Agreement and listed
on Exhibit 8.2.3;
(iii) Permitted Purchase Money Indebtedness;
(iv) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in
the ordinary course of business;
(v) Guaranties of any Indebtedness permitted hereunder;
(vi) Indebtedness in respect of intercompany loans
permitted under subsection 8.2.2(iii);
(vii) obligations to pay Rentals permitted by subsection
8.2.18;
(viii) to the extent not included above, trade payables,
accruals and accounts payable in the ordinary course of business (in
each case to the extent not overdue) not for Money Borrowed;
(ix) Indebtedness consisting of obligations of any Borrower
or any Subsidiary of any Borrower as a surety or indemnitor under a
surety or similar bond or other contract issued or entered into, or
under any other agreement assuring payment, performance or
completion of performance of any undertaking of obligation of any
Person, in an aggregate amount at any time, which is not greater
than $1,500,000;
(x) Approved Seller Subordinated Financing to the extent
permitted by Section 8.2.1(iv)(C);
(xi) guaranty of the obligations of PBI in an amount not to
exceed $12,400,000 and solely to the extent necessary to facilitate
the repurchase by
40
D&K of all outstanding capital stock of PBI, provided that such
guaranty shall be secured solely with a pledge by D&K of the capital
stock in PBI; and
(xii) Indebtedness not included in paragraphs (i) through
(xi) above which does not exceed at any time, in the aggregate, the
sum of $5,000,000.
8.2.4. Affiliate Transactions. Enter into, or be a party to,
or permit any Subsidiary of such Borrower to enter into or be a party to,
any transaction with any Affiliate of such Borrower or any holder of any
Securities of such Borrower or any Subsidiary of such Borrower, including
without limitation any transaction involving management, consulting or
similar fees, except (i) in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's or such Subsidiary's business
and upon fair and reasonable terms which are fully disclosed to Agent and
are no less favorable to such Borrower or such Subsidiary than would be
obtained in a comparable arms-length transaction with a Person not an
Affiliate or Security holder of such Borrower, and (ii) as otherwise
permitted under this Agreement.
8.2.5. Limitation on Liens. Create or suffer to exist, or
permit any Subsidiary of such Borrower to create or suffer to exist, any
Lien upon any of its Property, income or profits, whether now owned or
hereafter acquired, except:
(i) Liens at any time granted in favor of Agent for the
benefit of Lenders;
(ii) Liens for taxes, assessments or governmental charges
(excluding any Lien imposed pursuant to any of the provisions of
ERISA) not yet due, or being contested in the manner described in
subsection 7.1.14 hereto, but only if in Agent's judgment such Lien
would not reasonably be expected to adversely affect Agent's rights
or the priority of Agent's Lien on any Collateral;
(iii) Liens arising in the ordinary course of the business
of such Borrower or any of its Subsidiaries by operation of law or
regulation, but only if payment in respect of any such Lien is not
at the time required and such Liens do not, in the aggregate,
materially detract from the value of the Property of such Borrower
or any of its Subsidiaries or materially impair the use thereof in
the operation of the business of such Borrower or any of its
Subsidiaries;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) such other Liens as appear on Exhibit 8.2.5 hereto;
(vi) Liens incurred or deposits made in the ordinary course
of business in connection with (1) worker's compensation, social
security, unemployment insurance and other like laws or (2) sales
contracts, leases, statutory obligations, work in progress advances
and other similar obligations not incurred in connection with the
borrowing of money or the payment of the deferred purchase price of
property;
41
(vii) reservations, covenants, zoning and other land use
regulations, title exceptions or encumbrances granted in the
ordinary course of business, affecting real Property owned or leased
by such Borrower or one of its Subsidiaries; provided that such
exceptions do not in the aggregate materially interfere with the use
of such Property in the ordinary course of such Borrower's or such
Subsidiary's business;
(viii) judgment Liens that do not give rise to an Event of
Default under subsection 10.1.15;
(ix) Liens securing intercompany loans permitted under
subsection 8.2.2(iii);
(x) such other Liens as Majority Lenders may hereafter
approve in writing; and
(xi) Liens on the capital stock of PBI owned by D&K solely
to the extent that such Liens secure the guaranty obligations of D&K
permitted under subsection (xi) of Section 8.2.3.
8.2.6. Payments and Amendments of Certain Debt.
(i) make or permit any Subsidiary of such Borrower to make
any payment of any part or all of any Subordinated Debt or take any
other action or omit to take any other action in respect of any
Subordinated Debt, except in accordance with the Subordination
Agreements relative thereto or the subordination provisions thereof;
or
(ii) amend or modify any agreement, instrument or document
evidencing or relating to any Subordinated Debt.
8.2.7. Distributions. Declare or make, or permit any
Subsidiary of Borrower to declare or make, any Distributions, except for
(i) dividends of Subsidiaries of Borrowers or Borrowers to D&K, provided
that D&K shall give Agent written notice describing the amount of such
dividend, (ii) dividends payable by D&K; provided that no Event of Default
has occurred and is continuing as of the date any such dividend is paid or
would result after giving effect thereto, (iii) Distributions consisting
of repurchases of D&K's common stock not to exceed $15,000,000, in the
aggregate in each fiscal year on or prior to June 30, 2006; provided that,
in the case of clause (iii), (a) no Event of Default has occurred and is
continuing as of the date of any such repurchase or would result after
giving effect thereto and (b) Borrowers shall have (1) Availability of not
less than $85,000,000 after giving effect thereto and (2) a Fixed Charge
Coverage Ratio, on a Consolidated basis, for the twelve-month period
ending on the last day of the most recently ended fiscal quarter of not
less than 1.25 to 1.00, and (iv) dividends payable by PBI to D&K and its
other stockholders consistent with past practices.
8.2.8. Intentionally Omitted.
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8.2.9. Disposition of Assets. Sell, lease or otherwise dispose
of any of, or permit any Subsidiary of any Borrower to sell, lease or
otherwise dispose of any of, its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of
any Person, except for:
(i) sales of Inventory in the ordinary course of business;
(ii) transfers of Property to such Borrower by a Subsidiary
of such Borrower and transfer of Property between Borrowers;
(iii) dispositions of Property that is substantially worn,
damaged, uneconomic or obsolete (subject to subsection 6.4.2
hereof);
(iv) dispositions of investments described in paragraphs
(iv), (v), (vi) and (vii) of the definition of the term "Restricted
Investments";
(v) a sale of the capital stock or all or substantially all
of the assets of Jaron, Inc., a Florida corporation;
(vi) other dispositions expressly authorized by this
Agreement;
(vii) sales of owned real estate; and
(viii) sales or dispositions of myhca (or all or
substantially all of its assets).
8.2.10. Securities of Subsidiaries. Permit any of its
Subsidiaries to issue any additional Securities except (i) to such
Borrower provided such Borrower immediately delivers such Securities to
Agent, for the benefit of the Lenders, and executes all necessary
documentation to pledge such Securities to Agent for the benefit of the
Lenders and (ii) for director's qualifying Securities.
8.2.11. Xxxx-and-Hold Sales, Etc. Make, or permit any
Subsidiary of such Borrower to make, a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval,
repurchase or return or consignment basis.
8.2.12. Restricted Investment. Make or have, or permit any
Subsidiary of any Borrower to make, any Restricted Investments in excess
of $5,000,000 in the aggregate. Notwithstanding the foregoing, the
Borrowers and the Subsidiaries shall not make any Restricted Investments
in PBI.
8.2.13. Subsidiaries and Joint Ventures. Create, acquire or
otherwise suffer to exist, or permit any Subsidiary of such Borrower to
create, acquire or otherwise suffer to exist, any Subsidiary or joint
venture arrangement not in existence as of the date hereof; provided that
any Borrower may create and permit to exist Subsidiaries so long as (i)
each such Subsidiary owns assets in an aggregate amount not to exceed
$10,000 at any time and (ii) each such Borrower executes and delivers all
pledge agreement amendments as are necessary to perfect Agent's first
priority Lien in such Subsidiary's capital stock or other equity interest
owned by such Borrower.
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8.2.14. Tax Consolidation. File or consent to the filing of
any consolidated income tax return with any Person other than D&K.
8.2.15. Organizational Documents. Agree to, or suffer to
occur, any amendment, supplement or addition to its or any of its
Subsidiaries' charter, articles or certificate of incorporation,
certificate of formation, limited partnership agreement, bylaws, limited
liability agreement, operating agreement or other organizational documents
(as the case may be), that would reasonably be expected to have a Material
Adverse Effect.
8.2.16. Fiscal Year End. Change, or permit any Subsidiary of
such Borrower to change, its fiscal year end.
8.2.17. Negative Pledges. Enter into any agreement limiting
the ability of such Borrower or any of its Subsidiaries to voluntarily
create Liens upon any of its Property except as otherwise provided herein.
8.2.18. Leases. Become, or permit any of its Subsidiaries to
become, a lessee under any operating lease (other than a lease under which
a Borrower or any of its Subsidiaries is lessor) of Property if the
aggregate Rentals payable during any current or future period of 12
consecutive months under the lease in question and all other leases under
which Borrowers or any of their Subsidiaries is then lessee would exceed
$10,000,000. The term "Rentals" means, as of the date of determination,
all payments, which the lessee is required to make by the terms of any
lease.
8.2.19. Jaron, IPD Holdings, Inc. and myhca. Permit any of
Jaron, Inc., a Florida corporation, IPD Holdings, Inc., a Delaware
corporation, or myhca to conduct any ongoing business activity or own any
assets with a fair market value in excess of $10,000.
8.2.20. Letter of Credit Agreement. Agree to, or suffer to
occur, any amendment, supplement or other modification to that certain
Letter of Credit Agreement dated as of June 30, 2004, between D&K and
General Electric Capital Corporation, a Delaware corporation, as agent.
8.3. Specific Financial Covenants.
During the Term, and thereafter for so long as there are any
Obligations outstanding, each Borrower covenants that, unless otherwise
consented to by Majority Lenders, in writing, it shall comply with all of the
financial covenants set forth in Exhibit 8.3 hereto. If GAAP changes from the
basis used in preparing the audited financial statements delivered to Agent by
any Borrower on or before the Closing Date, Borrower Representative will provide
Agent with certificates demonstrating compliance with such financial covenants
and will include, at the election of Borrower Representative or upon the request
of Agent, calculations setting forth the adjustments necessary to demonstrate
how Borrowers are also in compliance with such financial covenants based upon
GAAP as in effect on the Closing Date.
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SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Agent or
any Lender under the other sections of this Agreement, no Lender shall be
required to make any Loan, nor shall Agent be required to or issue or procure
any Letter of Credit or LC Guaranty unless and until each of the following
conditions has been and continues to be satisfied:
9.1. Documentation.
Agent shall have received, in form and substance satisfactory to
Agent and its counsel, a duly executed copy of this Agreement, amendments to the
Mortgages, Incremental Last Out Loan Notes, and the other Loan Documents,
together with such additional documents, instruments, opinions and certificates
as Agent and its counsel shall require in connection therewith from time to
time, all in form and substance satisfactory to Agent and its counsel.
9.2. No Default.
No Default or Event of Default shall exist.
9.3. Other Conditions.
Each of the conditions precedent set forth in the Loan Documents
shall have been satisfied.
9.4. Availability.
Agent shall have determined that immediately after Lenders have made
the initial Loans and after Agent has issued or procured the initial Letters of
Credit and LC Guaranties contemplated hereby and after Borrowers have paid (or,
if accrued, treated as paid) all closing costs incurred in connection with the
transactions contemplated hereby, and after taking into account all Existing
Obligations that are outstanding as of the Closing Date, Availability shall not
be less than $75,000,000 immediately following the Closing Date.
9.5. No Litigation.
No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.6. Diligence and Appraisal.
Agent shall have received an Appraisal and conducted an examination
of the Inventory, the form and substance of each shall be reasonably
satisfactory to Agent.
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9.7. Material Adverse Effect.
As of the Closing Date, in the reasonable judgment of the Agent, (i)
since October 31, 2004, there has not been any material adverse change in any
Borrower's business, assets, financial condition, income or prospects and no
event or condition exists which would be reasonably likely to result in any
Material Adverse Effect; and (ii) since October 31, 2004, there has not been a
material adverse change or material disruption in the financial banking or
capital markets, which would have a material adverse effect on the syndication
of the Loan Commitments.
9.8. Fees.
Borrowers shall have paid those fees due and payable on the Closing
Date as specified in the Fee Letter.
9.9. Financial Information.
Agent shall have received, each in form and substance satisfactory
to Agent, interim financial statements for Borrowers as of a date not more than
45 days prior to the Closing Date.
9.10. Capitalization.
Agent shall have determined that Borrowers are adequately
capitalized, that the fair saleable value of Borrowers' assets will exceed their
liabilities as of the Closing Date, and that Borrowers will have sufficient
working capital to pay their Indebtedness as it becomes due.
9.11. Consent.
Borrowers shall have obtained all governmental and third party
consents and approvals as may be necessary or appropriate in connection with
this Agreement and theother Loan Documents and the transactions contemplated
thereby.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1. Events of Default.
The occurrence of one or more of the following events shall
constitute an "Event of Default":
10.1.1. Payment of Obligations. Borrowers shall fail to pay
any of the Obligations hereunder or under any Note on the due date thereof
(whether due at stated maturity, on demand, upon acceleration or
otherwise).
10.1.2. Misrepresentations. Any representation, warranty or
other statement made or furnished to Agent or any Lender by or on behalf
of any Borrower, any Subsidiary of any Borrower or any Guarantor in this
Agreement, any of the other Loan Documents or any instrument, certificate
or financial statement furnished in compliance with or in reference
thereto proves to have been false or misleading in any material respect
when made, furnished or reaffirmed pursuant to Section 7.2 hereof.
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10.1.3. Breach of Specific Covenants. Any Borrower shall fail
or neglect to perform, keep or observe any covenant contained in Section
or subsection 5.2, 5.3, 5.4, 6.1.1, 6.1.2, 6.2.4, 6.2.5, 8.1.1, 8.1.2,
8.1.4 (provided that, no more than two (2) times during each fiscal year,
the Borrowers may fail to timely deliver the required Borrowing Base
Certificate; provided that, in such instances, such delivery shall occur
no later than two (2) Business Days following the date due), 8.1.9,
8.1.10, 8.2 or 8.3 hereof on the date that such Borrower is required to
perform, keep or observe such covenant or shall fail or neglect to
perform, keep or observe any covenant contained in Section 8.1.3 or 8.1.7
hereof within 5 days following the date on which such Borrower is required
to perform, keep or observe such covenant.
10.1.4. Breach of Other Covenants. Any Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this
Agreement (other than a covenant which is dealt with specifically
elsewhere in Section 10.1 hereof) and the breach of such other covenant is
not cured to Agent's satisfaction within 30 days after the sooner to occur
of such Borrower's receipt of notice of such breach from Agent or the date
on which such failure or neglect first becomes known to any officer of
such Borrower.
10.1.5. Default Under Security Documents or Other Agreements.
Any event of default shall occur under, or any Borrower, any of its
Subsidiaries or any other Guarantor shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any
of the Security Documents, or the Other Agreements and such default shall
continue beyond any applicable grace period.
10.1.6. Other Defaults. There shall occur any default or event
of default on the part of any Borrower, any Subsidiary of any Borrower or
any other Guarantor under any agreement, document or instrument to which
such Borrower, such Subsidiary of such Borrower or such Guarantor is a
party or by which such Borrower, such Subsidiary of such Borrower or such
Guarantor or any of its Property is bound, evidencing or relating to any
Indebtedness (other than the Obligations) with an outstanding principal
balance in excess of $500,000, if the payment or maturity of such
Indebtedness is or could be accelerated in consequence of such event of
default or demand for payment of such Indebtedness is made or could be
made in accordance with the terms thereof.
10.1.7. Uninsured Losses. Any material loss, theft, damage or
destruction of any portion of the Collateral having a fair market value of
$1,000,000, in the aggregate, if not fully covered (subject to such
deductibles and self-insurance retentions as Agent shall have permitted)
by insurance.
10.1.8. Insolvency and Related Proceedings. Any Borrower, any
Subsidiary of any Borrower or any other Guarantor shall cease to be
Solvent or shall suffer the appointment of a receiver, trustee, custodian
or similar fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed by or
against any Borrower, any Subsidiary of any Borrower or any other
Guarantor under U.S. federal bankruptcy laws (if against any Borrower, any
Subsidiary of any Borrower or any other Guarantor the continuation of such
proceeding for more than 60
47
days), or any Borrower, any Subsidiary of any Borrower or any other
Guarantor shall make any offer of settlement, extension or composition to
their respective unsecured creditors generally.
10.1.9. Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of any Borrower for a
period which materially adversely affects such Borrower's capacity to
continue its business on a profitable basis; or any Borrower shall suffer
the loss or revocation of any material license or permit now held or
hereafter acquired by such Borrower which is necessary to the continued or
lawful operation of its business; or any Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its
business affairs; or any material lease or agreement pursuant to which any
Borrower leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term, except any such
lease or agreement the cancellation or termination of which could not
reasonably be expected to have a Material Adverse Effect; or any material
portion of the Collateral shall be taken through condemnation or the value
of such Property shall be impaired through condemnation.
10.1.10. Change of Ownership. (i) any Person or group of
Persons (within the meaning of the Securities Exchange Act of 1934) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934,) of 30% or more of the issued and outstanding shares
of capital Stock of D&K having the right to vote for the election of
directors of D&K under ordinary circumstances; (ii) during any period of
twelve consecutive calendar months, individuals who at the beginning of
such period constituted the board of directors of D&K (together with any
new directors whose election by the board of directors of D&K or whose
nomination for election by the stockholders of D&K was approved by a vote
of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
other than death or disability to constitute a majority of the directors
then in office; (iii) D & K shall cease to own and control, beneficially
and of record 100% of the issued and outstanding Securities and Voting
Stock of the other Borrowers or (iv) each Borrower (other than D & K)
shall cease to own and control, beneficially and of record (directly or
indirectly), 100% of the issued and outstanding Securities and Voting
Stock of each of its Subsidiaries.
10.1.11. ERISA. A Reportable Event shall occur which, in
Agent's or the Majority Lenders' determination, constitutes grounds for
the termination by the Pension Benefit Guaranty Corporation of any Plan or
for the appointment by the appropriate United States district court of a
trustee for any Plan, or any Plan shall be terminated or any such trustee
shall be requested or appointed, or if any Borrower, any Subsidiary of any
Borrower or any other Guarantor is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from such Borrower's, such Subsidiary's or such Guarantor's
complete or partial withdrawal from such Plan and any such event could
reasonably be expected to have a Material Adverse Effect.
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10.1.12. Challenge to Agreement. Any Borrower, any Subsidiary
of any Borrower or any other Guarantor, or any Affiliate of any of them,
shall challenge or contest in any action, suit or proceeding the validity
or enforceability of this Agreement or any of the other Loan Documents,
the legality or enforceability of any of the Obligations or the perfection
or priority of any Lien granted to Agent.
10.1.13. Repudiation of or Default Under Guaranty Agreement.
Any Guarantor shall revoke or attempt to revoke the Guaranty Agreement
signed by such Guarantor, or shall repudiate such Guarantor's liability
thereunder or shall be in default under the terms thereof.
10.1.14. Criminal Forfeiture. Any Borrower, any Subsidiary of
any Borrower or any other Guarantor shall be criminally indicted or
convicted under any law that could lead to a forfeiture of any Property of
such Borrower, any Subsidiary of such Borrower or any other Guarantor.
10.1.15. Judgments. Any money judgments, writ of attachment or
similar processes (collectively, "Judgments") are issued or rendered
against any Borrower, any Subsidiary of any Borrower or any other
Guarantor, or any of their respective Property (i) in the case of money
Judgments, in an amount of $1,000,000 or more for all such Judgments, in
the aggregate, in each case in excess of any applicable insurance or other
contractual indemnity from a third party satisfactory to Agent with
respect to which the insurer has admitted liability, and (ii) in the case
of non-monetary Judgments, such Judgment or Judgments (in the aggregate)
could reasonably be expected to have a Material Adverse Effect, in the
case of clauses (i) and (ii) above, which Judgment is not stayed, released
or discharged within 60 days.
10.2. Acceleration of the Obligations.
Upon or at any time after the occurrence and during the continuance
of an Event of Default, (i) the Revolving Loan Commitments shall, at the option
of Agent orMajority Lenders be terminated and/or (ii) Agent may, or at the
direction of Majority Lenders shall, declare all or any portion of the
Obligations at once due and payable without presentment, demand protest or
further notice by Agent or any Lender, and Borrowers shall forthwith pay to
Agent, the full amount of such Obligations, provided, that upon the occurrence
of an Event of Default specified in subsection 10.1.8 hereof, the Revolving Loan
Commitments shall automatically be terminated and all of the Obligations shall
become automatically due and payable, in each case without declaration, notice
or demand by Agent or any Lender. In connection with any Letter of Credit issued
or guaranteed pursuant to this Agreement, Borrowers shall deliver to Agent cash
collateral in an amount equal to 105% of the LC Amount to be held interest-free
by Agent in the aggregate maximum amount of all Letters of Credit and LC
Guaranties then issued and outstanding. If Borrowers fail to so deliver such
cash collateral, Agent may sell Collateral pursuant to this Agreement and hold
the proceeds thereof as cash collateral.
10.3. Other Remedies.
Upon the occurrence and during the continuance of an Event of
Default, Agent shall have and may exercise from time to time the following other
rights and remedies:
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10.3.1. All of the rights and remedies of a secured party
under the UCC or under other applicable law, and all other legal and
equitable rights to which Agent or Lenders may be entitled, all of which
rights and remedies shall be cumulative and shall be in addition to any
other rights or remedies contained in this Agreement or any of the other
Loan Documents, and none of which shall be exclusive.
10.3.2. The right to take immediate possession of the
Collateral, and to (i) require Borrowers and each of their Subsidiaries to
assemble the Collateral, at Borrowers' expense, and make it available to
Agent at a place designated by Agent which is reasonably convenient to
both parties, and (ii) enter any premises where any of the Collateral
shall be located and to keep and store the Collateral on said premises
until sold (and if said premises be the Property of any Borrower or any
Subsidiary of any Borrower, such Borrower agrees not to charge, or permit
any of its Subsidiaries to charge, Agent for storage thereof).
10.3.3. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice
as may be required by law, in lots or in bulk, for cash or on credit, all
as Agent, in its sole discretion, may deem advisable. Agent may, at
Agent's option, disclaim any and all warranties regarding the Collateral
in connection with any such sale. Each Borrower agrees that 10 days'
written notice to Borrower Representative of any public or private sale or
other disposition of Collateral shall be reasonable notice thereof, and
such sale shall be at such locations as Agent may designate in said
notice. Agent shall have the right to conduct such sales on any Borrower's
or any of its Subsidiaries' premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable
law. Agent shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination
thereof, and Agent, on behalf of Lenders, may purchase all or any part of
the Collateral at public or, if permitted by law, private sale and, in
lieu of actual payment of such purchase price, may set off the amount of
such price against the Obligations. The proceeds realized from the sale of
any Collateral may be applied, after allowing 2 Business Days for
collection, first, to the costs, expenses and attorneys' fees incurred by
Agent in collecting the Obligations (excluding those associated with
Product Obligations to the extent Agent can reasonably allocate such
costs, expenses and attorneys' fees to the Product Obligations), in
enforcing the rights of Agent and Lenders under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing,
advertising for sale, selling and delivering any Collateral; second, to
the interest and fees due upon any of the Obligations (excluding Product
Obligations and accrued interest and fees under the Incremental Last Out
Loan); third, to the principal of the Obligations (excluding Product
Obligations and principal owing under the Incremental Last Out Loan);
fourth, to the interest and fees due upon the Incremental Last Out Loan;
fifth, to the principal of the Incremental Last Out Loan; and sixth, to
the principal, interest and fees of Product Obligations (including,
without limitation, all costs, expenses and attorneys' fees incurred by
Agent in collecting the Product Obligations and not previously paid). If
any deficiency shall arise, each Borrower and each Guarantor shall remain
jointly and severally liable to Agent and Lenders therefor. In the event
of a sale of Collateral on credit terms, the Borrowers' Obligations shall
be reduced only to the extent that Agent receives cash payment in respect
of such credit sale.
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10.3.4. Agent is hereby granted a license or other right to
use, without charge, each Borrower's and each of its Subsidiary's
Intellectual Property, including, without limitation, all labels, patents,
copyrights, licenses, rights of use of any name, trade secrets,
tradenames, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in completing,
advertising for sale and selling any Collateral and each Borrower's and
each of its Subsidiary's rights under all licenses and all franchise
agreements shall inure to Agent's benefit.
10.3.5. Agent may, at its option, require any Borrower to
deposit with Agent funds equal to 105% of the LC Amount and, if such
Borrower fails to promptly make such deposit, Agent may advance such
amount as a Revolving Credit Loan (whether or not an Overadvance is
created thereby). Each such Revolving Credit Loan shall be secured by all
of the Collateral and shall constitute a Base Rate Revolving Loan. Any
such deposit or advance shall be held by Agent as a reserve to fund future
payments on such LC Guaranties and future drawings against such Letters of
Credit. At such time as all LC Guaranties have been paid or terminated and
all Letters of Credit have been drawn upon or expired, any amounts
remaining in such reserve shall be applied against any outstanding
Obligations, or, if all Obligations have been indefeasibly paid in full,
returned to the applicable Borrower.
10.4. Set Off and Sharing of Payments.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, during the continuance of
any Event ofDefault, each Lender is hereby authorized by Borrowers at any time
or from time to time, with prior written consent of Agent and with reasonably
prompt subsequent notice to Borrower Representative (any prior or
contemporaneous notice to Borrower Representative being hereby expressly waived)
to set off and to appropriate and to apply any and all (i) balances held by such
Lender at any of its offices for the account of any Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to any Borrower
or its Subsidiaries), and (ii) other property at any time held or owing by such
Lender to or for the credit or for the account of any Borrower or any of its
Subsidiaries, against and on account of any of the Obligations. Any Lender
exercising a right to set off shall, to the extent the amount of any such set
off exceeds its Revolving Loan Percentage of the amount set off, purchase for
cash (and the other Lenders shall sell) interests in each such other Lender's
pro rata share of the Obligations as would be necessary to cause such Lender to
share such excess with each other Lender in accordance with their respective
Revolving Loan Percentages. Each Borrower agrees, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to amounts in excess of its pro rata share of the Obligations and upon doing so
shall deliver such excess to Agent for the benefit of all Lenders in accordance
with the Revolving Loan Percentages.
10.5. Remedies Cumulative; No Waiver.
All covenants, conditions, provisions, warranties, guaranties,
indemnities, and other undertakings of each Borrower contained in this Agreement
and the other LoanDocuments, or in any document referred to herein or contained
in any agreement supplementary hereto or in any schedule or in any guaranty
given to Agent or any Lender or contained in any agreement between any Lender
and any Borrower or between Agent and any Borrower heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of
51
the terms, covenants, conditions, or agreements of any Borrower herein
contained. The failure or delay of Agent or any Lender to require strict
performance by any Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and other Obligations owing or to become
owing from any Borrower to Agent and each Lender have been fully satisfied. None
of the undertakings, agreements, warranties, covenants and representations of
any Borrower contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Borrower under this Agreement or any other
Loan Documents shall be deemed to have been suspended or waived by Lenders,
unless such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Agent
and directed to such Borrower.
SECTION 11. AGENT
11.1. Authorization and Action.
Each Lender hereby appoints and authorizes Agent to take such action
on its behalf and to exercise such powers under this Agreement and the other
Loan Documents xxxxx delegated to Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. Each Lender
hereby acknowledges that Agent shall not have by reason of this Agreement
assumed a fiduciary relationship in respect of any Lender. In performing its
functions and duties under this Agreement, Agent shall act solely as agent of
Lenders and shall not assume, or be deemed to have assumed, any obligation
toward, or relationship of agency or trust with or for, Borrowers. As to any
matters not expressly provided for by this Agreement and the other Loan
Documents (including without limitation enforcement and collection of the
Notes), Agent may, but shall not be required to, exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders, whenever such instruction shall be requested by Agent or
required hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders; provided,
that Agent shall be fully justified in failing or refusing to take any action
which exposes Agent to any liability or which is contrary to this Agreement, the
other Loan Documents or applicable law, unless Agent is indemnified to its
satisfaction by the other Lenders against any and all liability and expense
which it may incur by reason of taking or continuing to take any such action. If
Agent seeks the consent or approval of the Majority Lenders (or a greater or
lesser number of Lenders as required in this Agreement), with respect to any
action hereunder, Agent shall send notice thereof to each Lender and shall
notify each Lender at any time that the Majority Lenders (or such greater or
lesser number of Lenders) have instructed Agent to act or refrain from acting
pursuant hereto.
11.2. Agent's Reliance, Etc.
Neither Agent, any Affiliate of Agent, nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
omitted to betaken by it or them under or in connection with this Agreement or
the other Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the
52
foregoing, Agent: (i) may treat each Lender party hereto as the holder of
Obligations until Agent receives written notice of the assignment or transfer of
such Lender's portion of the Obligations signed by such Lender and in form
reasonably satisfactory to Agent; (ii) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, (iii) makes
no warranties or representations to any Lender and shall not be responsible to
any Lender for any recitals, statements, warranties or representations made in
or in connection with this Agreement or any other Loan Documents; (iv) shall not
have any duty beyond Agent's customary practices in respect of loans in which
Agent is the only lender, to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the
other Loan Documents on the part of Borrowers, to inspect the property
(including the books and records) of Borrowers, to monitor the financial
condition of Borrowers or to ascertain the existence or possible existence or
continuation of any Default or Event of Default; (v) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (vi)
shall not be liable to any Lender for any action taken, or inaction, by Agent
upon the instructions of Majority Lenders pursuant to Section 11.1 hereof or
refraining to take any action pending such instructions; (vii) shall not be
liable for any apportionment or distributions of payments made by it in good
faith pursuant to Section 3 hereof; (viii) shall incur no liability under or in
respect of this Agreement or the other Loan Documents by acting upon any notice,
consent, certificate, message or other instrument or writing (which may be by
telephone, facsimile, telegram, cable or telex) believed in good faith by it to
be genuine and signed or sent by the proper party or parties; and (ix) may
assume that no Event of Default has occurred and is continuing, unless Agent has
actual knowledge of the Event of Default, has received notice from Borrower
Representative or any Borrower's independent certified public accountants
stating the nature of the Event of Default, or has received notice from a Lender
stating the nature of the Event of Default and that such Lender considers the
Event of Default to have occurred and to be continuing. In the event any
apportionment or distribution described in clause (vii) above is determined to
have been made in error, the sole recourse of any Person to whom payment was due
but not made shall be to recover from the recipients of such payments any
payment in excess of the amount to which they are determined to have been
entitled.
11.3. Fleet and Affiliates.
With respect to its commitment hereunder to make Loans, Fleet shall
have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Agent; and the terms "Lender," "Lenders" or "Majority Lenders" shall, unless
otherwise expressly indicated, include Fleet in its individual capacity as a
Lender. Fleet and its Affiliates may lend money to, and generally engage in any
kind of business with any Borrower and any Person who may do business with or
own Securities of any Borrower all as if Fleet were not Agent and without any
duty to account therefor to any other Lender.
11.4. Lender Credit Decision.
Each Lender acknowledges that it has, independently and without
reliance upon Agent or any other Lender and based on the financial statements
referred to herein and such
53
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. Agent shall not have any duty or
responsibility, either initially or on an ongoing basis, to provide any Lender
with any credit or other similar information regarding any Borrower.
11.5. Indemnification.
Lenders agree to indemnify Agent and Lead Arranger (to the extent
not reimbursed by Borrowers), in accordance with their respective Aggregate
Percentages, from andagainst any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against Agent or Lead Arranger, as applicable, in any way relating to
or arising out of this Agreement or any other Loan Document or any action taken
or omitted by Agent or Lead Arranger, as applicable, under this Agreement;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's or Lead Arranger's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse Agent and Lead Arranger promptly upon demand for its
ratable share, as set forth above, of any out-of-pocket expenses (including
attorneys' fees) incurred by Agent and Lead Arranger in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiation, legal proceedings or otherwise) of, or
legal advice in respect of rights or responsibilities under, this Agreement and
each other Loan Document, to the extent that Agent or Lead Arranger, as
applicable, is not reimbursed for such expenses by Borrowers. The obligations of
Lenders under this Section 11.5 shall survive the payment in full of all
Obligations and the termination of this Agreement. If after payment and
distribution of any amount by Agent and/or Lead Arranger to Lenders, any Lender
or any other Person, including any Borrower, any creditor of any Borrower, a
liquidator, administrator or trustee in bankruptcy, recovers from Agent and/or
Lead Arranger any amount found to have been wrongfully paid to Agent or Lead
Arranger, as applicable, or disbursed by Agent or Lead Arranger, as applicable,
to Lenders, then Lenders, in accordance with their respective Aggregate
Percentages, shall reimburse Agent or Lead Arranger, as applicable, for all such
amounts.
11.6. Rights and Remedies to be Exercised by Agent Only.
Each Lender agrees that, except as set forth in Section 10.4, no
Lender shall have any right individually (i) to realize upon the security
created by thisAgreement or any other Loan Document, (ii) to enforce any
provision of this Agreement or any other Loan Document, or (iii) to make demand
of any Borrower under this Agreement or any other Loan Document.
11.7. Agency Provisions Relating to Collateral.
Each Lender authorizes and ratifies Agent's entry into this
Agreement and the Security Documents for the benefit of Lenders. Each Lender
agrees that any actiontaken by Agent with respect to the Collateral in
accordance with the provisions of this Agreement or the Security Documents, and
the exercise by Agent of the powers set forth herein or therein, together
54
with such other powers as are reasonably incidental thereto, shall be authorized
and binding upon all Lenders. Agent is hereby authorized on behalf of all
Lenders, without the necessity of any notice to or further consent from any
Lender to take any action with respect to any Collateral or the Loan Documents
which may be necessary to perfect and maintain perfected Agent's Liens upon the
Collateral, for its benefit and the ratable benefit of Lenders. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to release any
Lien granted to or held by Agent upon any Collateral (i) upon termination of the
Agreement and payment and satisfaction of all Obligations; or (ii) constituting
property being sold or disposed of if Borrower Representative certifies to Agent
that the sale or disposition is made in compliance with subsection 8.2.9 hereof
(and Agent may rely conclusively on any such certificate, without further
inquiry); or (iii) constituting property in which any Borrower owned no interest
at the time the Lien was granted or at any time thereafter; or (iv) in
connection with any foreclosure sale or other disposition of Collateral after
the occurrence and during the continuation of an Event of Default or (v) if
approved, authorized or ratified in writing by Agent at the direction of all
Lenders. Upon request by Agent at any time, Lenders will confirm in writing
Agent's authority to release particular types or items of Collateral pursuant
hereto. Agent shall have no obligation whatsoever to any Lender or to any other
Person to assure that the Collateral exists or is owned by any Borrower or is
cared for, protected or insured or has been encumbered or that the Liens granted
to Agent herein or pursuant to the Security Documents 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 its rights, authorities and powers granted or available to
Agent in this Section 11.7 or in any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate, in its
sole discretion, but consistent with the provisions of this Agreement, including
given Agent's own interest in the Collateral as a Lender and that Agent shall
have no duty or liability whatsoever to any Lender.
11.8. Agent's Right to Purchase Commitments.
Agent shall have the right, but shall not be obligated, at any time
upon written notice to any Lender and with the consent of such Lender, which may
be granted orwithheld in such Lender's sole discretion, to purchase for Agent's
own account all of such Lender's interests in this Agreement, the other Loan
Documents and the Obligations, for the face amount of the outstanding
Obligations owed to such Lender, including without limitation all accrued and
unpaid interest and fees.
11.9. Right of Sale, Assignment, Participations.
Borrowers hereby consent to any Lender's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
this Agreement and anyof the other Loan Documents, or of any portion hereof or
thereof, including, without limitation, such Lender's rights, title, interests,
remedies, powers, and duties hereunder or thereunder subject to the terms and
conditions set forth below:
11.9.1. Sales, Assignments. Each Lender hereby agrees that,
with respect to any sale or assignment (i) no such sale or assignment
shall be for an amount of less than $5,000,000 and $1,000,000 increments
in excess of $5,000,000 or, if less, the entire
55
remaining Revolving Loan Commitment or Incremental Last Out Loan, as
applicable, of such Lender, (ii) each such sale or assignment shall be
made on terms and conditions which are customary in the industry at the
time of the transaction, (iii) Agent and, in the absence of a Default or
Event of Default, each Borrower, must consent, such consent not to be
unreasonably withheld, to each such assignment to a bank or lending
institution that is not a Lender to this Agreement (or an Affiliate of a
Lender to this Agreement), (iv) the assigning Lender or assignee Lender
shall pay to Agent a processing and recordation fee of $3,500 and any
out-of-pocket attorneys' fees and expenses incurred by Agent in connection
with any such sale or assignment (excluding sales or assignments by any
Lender to an Affiliate of such Lender) and (v) Agent, the assigning Lender
and the assignee Lender shall each have executed and delivered an
Assignment and Acceptance Agreement. After such sale or assignment has
been consummated (x) the assignee Lender thereupon shall become a "Lender"
for all purposes of this Agreement and (y) the assigning Lender shall have
no further liability for funding the portion of Revolving Loan Commitments
assumed by such other Lender.
11.9.2. Participations. Any Lender may grant participations in
its extensions of credit hereunder to any other Lender or other lending
institution (a "Participant"), provided that (i) no such participation
shall be for an amount of less than $5,000,000 and $1,000,000 increments
in excess of $5,000,000, (ii) no Participant shall thereby acquire any
direct rights under this Agreement, (iii) no Participant shall be granted
any right to consent to any amendment, except to the extent any of the
same pertain to (1) reducing the aggregate principal amount of, or
interest rate on, or fees applicable to, any Loan or (2) extending the
final stated maturity of any Loan or the stated maturity of any portion of
any payment of principal of, or interest or fees applicable to, any of the
Loans; provided, that the rights described in this subclause (2) shall not
be deemed to include the right to consent to any amendment with respect to
or which has the effect of requiring any mandatory prepayment of any
portion of any Loan or any amendment or waiver of any Default or Event of
Default, (iv) no sale of a participation in extensions of credit shall in
any manner relieve the originating Lender of its obligations hereunder,
(v) the originating Lender shall remain solely responsible for the
performance of such obligations, (vi) Borrowers and Agent 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, (vii) in no event shall any financial
institution purchasing the participation grant a participation in its
participation interest in the Loans without the prior written consent of
Agent, and, in the absence of a Default or an Event of Default, Borrowers,
which consents shall not unreasonably be withheld and (viii) all amounts
payable by any Borrower hereunder shall be determined as if the
originating Lender had not sold any such participation.
11.9.3. Certain Agreements of Borrowers. Each Borrower agrees
that (i) it will use its best efforts to assist and cooperate with each
Lender in any manner reasonably requested by such Lender to effect the
sale of participation in or assignments of any of the Loan Documents or
any portion thereof or interest therein, including, without limitation,
assisting in the preparation of appropriate disclosure documents and
making members of management available at reasonable times to meet with
and answer questions of potential assignees and Participants; and (ii)
subject to the provisions of
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Section 12.18 hereof, such Lender may disclose credit information
regarding any Borrower to any potential Participant or assignee.
11.9.4. Non U.S. Resident Transferees. If, pursuant to this
Section 11.9, any interest in this Agreement or any Loans is transferred
to any transferee which is organized under the laws of any jurisdiction
other than the United States or any state thereof, the transferor Lender
shall cause such transferee (other than any Participant), and may cause
any Participant, concurrently with and as a condition precedent to the
effectiveness of such transfer, to (i) represent to the transferor Lender
(for the benefit of the transferor Lender, Agent, and Borrowers) that
under applicable law and treaties no taxes will be required to be withheld
by Agent, Borrowers or the transferor Lender with respect to any payments
to be made to such transferee in respect of the interest so transferred,
(ii) furnish to the transferor Lender, Agent and Borrower Representative
either United States Internal Revenue Service Form W-8BEN or United States
Internal Revenue Service Form W-8ECI (wherein such transferee claims
entitlement to complete exemption from United States federal withholding
tax on all interest payments hereunder), and (iii) agree (for the benefit
of the transferor Lender, Agent and Borrowers) to provide the transferor
Lender, Agent and Borrower Representative a new Form W-8BEN or Form W-8ECI
upon the obsolescence of any previously delivered form and comparable
statements in accordance with applicable United States laws and
regulations and amendments duly executed and completed by such transferee,
and to comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.
11.9.5. Special Purpose Funding Vehicles. Notwithstanding
anything to the contrary contained herein, any Lender (a "Granting
Lender") may grant to a special purpose funding vehicle (a "SPC"),
identified as such in writing from time to time by the Granting Lender to
the Agent and the Borrowers, the option to provide to the Borrowers all or
any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrowers pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to make
any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting
Lender shall be obligated to make such Loan pursuant to the terms hereof.
The making of a Loan by an SPC hereunder shall utilize the Revolving Loan
Commitment of the Granting Lender to the same extent, and as if, such Loan
were made by such Granting Lender. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under
this Agreement (all liability for which shall remain with the Granting
Lender). In addition, notwithstanding anything to the contrary contained
in this subsection 11.9.5, any SPC may (i) with notice to, but without the
prior written consent of, the Borrowers and the Agent and without paying
any processing fee therefore, assign all or a portion of its interests in
any Loans to the Granting Lender or to any financial institutions
(consented to by the Borrowers and the Agent) providing liquidity and/or
credit support to or for the account of such SPC to support the funding or
maintenance of Loans and (ii) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This subsection 11.9.5 may not be
amended without he written consent of the SPC.
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11.10. Amendment.
No amendment or waiver of any provision of this Agreement or any
other Loan Document (including without limitation any Note), nor consent to any
departure by anyBorrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Lenders and Borrowers, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, that no amendment, waiver or
consent shall be effective, unless (i) in writing and signed by each Lender, do
any of the following: (1) increase or decrease (except (a) with respect to
participation and assignments permitted by Section 11.9 hereof or (b) increase
pursuant to Section 1.6 hereof) the aggregate Loan Commitments or any Lender's
Revolving Loan Commitment), (2) reduce the principal of, or interest on, any
amount payable hereunder or under any Note, other than those payable only to
Fleet in its capacity as Agent, which may be reduced by Fleet unilaterally, (3)
increase or decrease any interest rate, the Unused Line Fee, or other fees (to
the extent payable to Lenders generally) payable hereunder, (4) postpone any
date fixed for any payment of principal of, or interest on, any amounts payable
hereunder or under any Note or any fees payable hereunder to the Lenders
generally, other than those payable only to Fleet in its capacity as Agent,
which may be postponed by Fleet unilaterally, (5) increase any percentage
contained in the definition of the term Borrowing Base, (6) reduce the number of
Lenders that shall be required for Lenders or any of them to take any action
hereunder, (7) release or discharge any Person liable for the performance of any
obligations of any Borrower hereunder or under any of the Loan Documents, (8)
amend any provision of this Agreement that requires the consent of all Lenders
or consent to or waive any breach thereof, (9) amend the definition of the term
"Majority Lenders", (10) amend this Section 11.10, (11) release any substantial
portion of the Collateral, unless otherwise permitted pursuant to Section 11.7
hereof, (12) amend Section 3.4.2 or 10.3.3, or (13) increase the amount set
forth in Section 1.1.4(i), or (ii) in writing and signed by Agent in addition to
the Lenders required above to affect the rights or duties of Agent under this
Agreement, any Note or any other Loan Document. If a fee is to be paid by any
Borrower in connection with any waiver or amendment hereunder, the agreement
evidencing such amendment or waiver may, at the discretion of Agent (but shall
not be required to), provide that only Lenders executing such agreement by a
specified date may share in such fee (and in such case, such fee shall be
divided among the applicable Lenders on a pro rata basis without including the
interests of any Lenders who have not timely executed such agreement); provided
that Agent has timely delivered to all Lenders a final draft of the proposed
amendment.
11.11. Resignation of Agent; Appointment of Successor.
Agent may resign as Agent by giving not less than thirty (30) days'
prior written notice to Lenders and Borrowers. If Agent shall resign under this
Agreement,then, (i) subject to the consent of Borrowers (which consent shall not
be unreasonably withheld and which consent shall not be required during any
period in which a Default or an Event of Default exists), Majority Lenders shall
appoint from among Lenders a successor agent for Lenders or (ii) if a successor
agent shall not be so appointed and approved within the thirty (30) day period
following Agent's notice to Lenders and Borrowers of its resignation, then Agent
shall appoint a successor agent from among the Lenders who shall serve as Agent
until such time as Majority Lenders appoint a successor agent, subject to
Borrowers' consent as set forth above. Upon its appointment, such successor
agent shall succeed to the rights, powers and duties of Agent and the term
"Agent" shall mean such successor effective upon its appointment, and the former
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Agent's rights, powers and duties as Agent shall be terminated without any other
or further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the resignation of any Agent hereunder, the provisions of
this Section 11 shall inure to the benefit of such former Agent and such former
Agent shall not by reason of such resignation be deemed to be released from
liability for any actions taken or not taken by it while it was an Agent under
this Agreement.
11.12. Audit and Examination Reports; Disclaimer by
Lenders.
By signing this Agreement, each Lender:
(i) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each audit or examination
report (each a "Report" and collectively, "Reports") prepared by or on
behalf of Agent;
(ii) expressly agrees and acknowledges that Agent (1) does not make
any representation or warranty as to the accuracy of any Report, and (2)
shall not be liable for any information contained in any Report;
(iii) 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 Borrowers' books and records,
as well as on representations of Borrowers' personnel;
(iv) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its assignees and
participants, or use any Report in any other manner, in accordance with
the provisions of Section 12.18; and
(v) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (1) 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 (2)
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 attorney's fees and expenses) 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.
11.13. Syndication Agent/Documentation Agent/Co-Agent.
No Person holding the title of Syndication Agent, Documentation
Agent, Co-Agent or any similar title shall have any rights, powers, duties or
responsibilities in such capacity
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and no rights, powers, duties or responsibilities shall be read into this
Agreement or any other Loan Document or otherwise exist on behalf of or against
such entity, in its capacity as such.
SECTION 12. MISCELLANEOUS
12.1. Power of Attorney.
Each Borrower hereby irrevocably designates, makes, constitutes and
appoints Agent (and all Persons designated by Agent) as such Borrower's true and
lawfulattorney (and agent-in-fact), solely with respect to the matters set forth
in this Section 12.1, and Agent, or Agent's agent, may, without notice to such
Borrower and in such Borrower's or Agent's name, but at the cost and expense of
such Borrower:
12.1.1. At such time or times as Agent or said agent, in its
sole discretion, may determine, endorse such Borrower's name on any
checks, notes, acceptances, drafts, money orders or any other
evidence of payment or proceeds of the Collateral which come into
the possession of Agent or under Agent's control.
12.1.2. At such time or times upon or after the occurrence and
during the continuance of an Event of Default (provided that the
occurrence of an Event of Default shall not be required with respect
to clauses (iv), (vi), (viii), (ix) and (xii) below), as Agent or
its agent in its sole discretion may determine: (i) demand payment
of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise
all of such Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise,
discharge or release any of the Accounts or other Collateral or any
legal proceedings brought to collect any of the Accounts or other
Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or
times as Agent deems advisable, and at Agent's option, with all
warranties regarding the Collateral disclaimed; (iv) take control,
in any manner, of any item of payment or proceeds relating to any
Collateral; (v) prepare, file and sign such Borrower's name to a
proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi)
receive, open and dispose of all mail addressed to such Borrower and
notify postal authorities to change the address for delivery thereof
to such address as Agent may designate; (vii) endorse the name of
such Borrower upon any of the items of payment or proceeds relating
to any Collateral and deposit the same to the account of Agent on
account of the Obligations; (viii) endorse the name of such Borrower
upon any chattel paper, document, instrument, invoice, freight xxxx,
xxxx of lading or similar document or agreement relating to the
Accounts, Inventory and any other Collateral; (ix) use such
Borrower's stationery and sign the name of such Borrower to
verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any
data processing equipment and Computer Hardware and Software
relating to the Accounts, Inventory, Equipment and any other
Collateral; (xi) make and adjust claims under policies of insurance;
and (xii) do all other acts and things necessary, in Agent's
determination, to fulfill such Borrower's obligations under this
Agreement.
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The power of attorney granted hereby shall constitute a power
coupled with an interest and shall be irrevocable.
12.2. Indemnity.
Borrowers hereby agree, jointly and severally, to indemnify Agent,
Lead Arranger and each Lender (and each of their Affiliates) and hold Agent,
Lead Arranger andeach Lender (and each of their Affiliates) harmless from and
against any liability, loss, damage, suit, action or proceeding ever suffered or
incurred by any such Person (including reasonable attorneys fees and legal
expenses) as the result of any Borrower's failure to observe, perform or
discharge such Borrower's duties hereunder or arising out of or relating to this
Agreement, the Loan Documents, or the transactions contemplated hereby (except
those resulting from the gross negligence or intentional misconduct of any such
Person). In addition, Borrowers shall, jointly and severally, defend Agent, Lead
Arranger and each Lender (and each of their Affiliates) against and save it
harmless from all claims of any Person with respect to the Collateral (except
those resulting from the gross negligence or intentional misconduct of any such
Person). Without limiting the generality of the foregoing, these indemnities
shall extend to any claims asserted against Agent, Lead Arranger, or any Lender
(and each of their Affiliates) by any Person under any Environmental Laws by
reason of any Borrower's or any other Person's failure to comply with laws
applicable to solid or hazardous waste materials or other toxic substances.
Notwithstanding any contrary provision in this Agreement, the obligation of
Borrowers under this Section 12.2 shall survive the payment in full of the
Obligations and the termination of this Agreement.
12.3. Sale of Interest.
No Borrower may sell, assign or transfer any interest in this
Agreement, any of the other Loan Documents, or any of the Obligations, or any
portion thereof,including, without limitation, any Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder.
12.4. Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision ofthis Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
12.5. Successors and Assigns.
This Agreement, the Other Agreements and the Security Documents
shall be binding upon and inure to the benefit of the successors and assigns of
Borrowers, Agent and each Lender permitted under Section 11.9 hereof.
12.6.Cumulative Effect; Conflict of Terms.
The provisions of the Other Agreements and the Security Documents
are hereby made cumulative with the provisions of this Agreement. Except as
otherwise providedin any of the other Loan Documents by specific reference to
the applicable provision of this Agreement, if any
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provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
12.7. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
12.8. Notice.
Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing, return
receipt requested, by personal delivery against receipt, by overnight courier or
by facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given, delivered or received immediately when
delivered against receipt, one Business Day after deposit with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
If to Agent: Fleet Capital Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
If to Borrowers: c/o D & K Healthcare Resources, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx
Senior Vice President & CFO
Facsimile No.: (000) 000-0000
With a copy to: c/o D & K Healthcare Resources, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Vice President, Secretary and
General Counsel
Facsimile No.: (000) 000-0000
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or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent or a Lender pursuant to subsection 3.1.1 or
4.2.2 hereof shall not be effective until received by Agent or such Lender.
12.9.Consent.
Whenever Agent's, Majority Lenders' or all Lenders' consent is
required to be obtained under this Agreement, any of the Other Agreements or any
of the SecurityDocuments as a condition to any action, inaction, condition or
event, except as otherwise specifically provided herein, Agent, Majority Lenders
or all Lenders, as applicable, shall be authorized to give or withhold such
consent in their sole and absolute discretion and to condition its consent upon
the giving of additional Collateral security for the Obligations, the payment of
money or any other matter.
12.10. Credit Inquiries.
Borrowers hereby authorizes and permits Agent and each Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrowers or any of their Subsidiaries.
12.11. Time of Essence.
Time is of the essence of this Agreement, the Other Agreements and
the Security Documents.
12.12. Entire Agreement.
This Agreement and the other Loan Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.
12.13. Interpretation.
No provision of this Agreement or any of the other Loan Documents
shall be construed against or interpreted to the disadvantage of any party
hereto by any court or other governmental or judicial authority by reason of
such party having or being deemed to have structured or dictated such provision.
12.14. Intentionally Omitted.
12.15. GOVERNING LAW; CONSENT TO FORUM.
THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED IN AND
SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS;
PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY
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JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE
METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN UPON SUCH
COLLATERAL AND THE ENFORCEMENT OF AGENT'S OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM
OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS PART OF THE CONSIDERATION FOR NEW
VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF ANY BORROWER, AGENT OR ANY LENDER, EACH BORROWER HEREBY
CONSENTS AND AGREES THAT THE CIRCUIT COURT OF XXXX COUNTY, ILLINOIS, OR, AT
AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY BORROWER ON THE ONE HAND AND AGENT
OR ANY LENDER ON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER REPRESENTATIVE AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH BORROWER'S ACTUAL RECEIPT THEREOF OR 5 DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR ANY LENDER
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY AGENT OR ANY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH
FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY
OTHER APPROPRIATE FORUM OR JURISDICTION.
12.16. WAIVERS BY BORROWERS.
EACH BORROWER WAIVES (I) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND
EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM
OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE
OBLIGATIONS OR THE COLLATERAL; (II) PRESENTMENT, DEMAND AND PROTEST AND NOTICE
OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE,
SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS,
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INSTRUMENTS , CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR ANY
LENDER ON WHICH ANY BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND
CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR
TO AGENT'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO
EXERCISE ANY OF AGENT'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF AND (vi) EXCEPT
AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO AGENT'S AND EACH LENDER'S ENTERING INTO THIS AGREEMENT
AND THAT AGENT AND EACH LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS
FUTURE DEALINGS WITH BORROWERS. EACH BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
12.17. Private Sale; Commercial Reasonableness.
The Borrowers acknowledge that a significant portion of the Collateral consists
of prescription drugs and controlled substances that are subject to applicable
federal and state regulations which, among other things, restrict the right to
sell and purchase such drugs and controlled substances to certain licensed or
otherwise authorized Persons. In view of these restrictions on the ability to
sell and purchase such Collateral, the Borrowers acknowledge that a public sale
of such Collateral under the UCC would be legally impossible or otherwise
impractical. Accordingly, the Borrowers agree that a private sale of any such
Collateral, and any other Collateral sold in connection therewith, shall not be
deemed a commercially unreasonable sale under the UCC by virtue of the Agent
selling, or offering to sell, such Collateral only to Persons who are licensed
or otherwise authorized to purchase such Collateral. The Borrowers further
recognize that, in connection with the disposition of such Collateral subject to
federal and state regulations, the Agent may incur additional costs and expenses
such as, by way of example and not as a limitation, obtaining certain federal
and state licenses or other authorizations to permit the Agent to sell or
purchase such Collateral, retaining the services of auctioneers or other persons
licensed or otherwise authorized to dispose of such Collateral, retaining legal
counsel and experts in the area of prescription drugs and controlled substances
to advise Agent on the disposition of such Collateral, and verifying that any
purchasers of such Collateral are licensed or otherwise authorized to acquire
such Collateral. Any such reasonable additional costs and expenses incurred by
the Agent shall be added to the Obligations and be payable on demand and shall
not affect the commercial reasonableness of any such sale. Borrowers hereby
agree to cooperate with any such sale to the extent reasonably requested by
Agent.
12.18. Confidentiality.
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Agent and Lenders agree to take and to cause its Affiliates to take
normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
Borrowers and provided to them by the Borrower Representative, Borrowers or any
Subsidiary, under this Agreement or any other Loan Document, and neither Agent
nor any Lender shall use any such information other than in connection with or
in enforcement of this Agreement and the other Loan Documents or in connection
with other business now or hereafter existing or contemplated with the Borrowers
or any Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by Agent,
or (ii) was or becomes available on a non-confidential basis from a source other
than the Borrowers, provided that such source is not bound by a confidentiality
agreement with the Borrowers or any Subsidiary known to Agent or such Lender;
provided, however, that Agent or any Lender may disclose such information (i) at
the request or pursuant to any requirement of any governmental authority to
which Agent or such Lender is subject or in connection with an examination of
Agent or such Lender by any such authority; (ii) pursuant to subpoena or other
court process, provided that Agent shall use reasonable efforts to provide prior
notice of such disclosure to Borrowers; (iii) when required to do so in
accordance with the provisions of any applicable requirement of law; (iv) to the
extent reasonably required in connection with any litigation or proceeding to
which Agent or such Lender or any of their respective Affiliates may be party;
(v) to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Loan Document; (vi) to Agent's or any
Lender's independent auditors and other professional advisors; (vii) to any
participant or assignee, actual or potential, provided that such Person agrees
in writing to keep such information confidential to the same extent required of
the Agent and Lenders hereunder; (viii) as to Agent or any Lender or any of
their respective Affiliates, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrowers or any
Subsidiary is party or is deemed a party with Agent, any Lender, or any of their
respective Affiliates; and (ix) to the Affiliates of Agent or any Lender.
12.19. Advertisement.
Agent, following consultation with the Borrowers, may publish the
name of any Borrower and the amount of the credit facility provided hereunder in
any "tombstone" or comparable advertisement which Agent elects to publish.
SECTION 13. CROSS GUARANTY
13.1. Cross-Guaranty.
Each Borrower hereby agrees that such Borrower is jointly and
severally liable for, and hereby absolutely and unconditionally guarantees to
Agent and Lenders and their respective successors and assigns, the full and
prompt payment (whether at stated maturity, by acceleration or otherwise) and
performance of, all Obligations owed or hereafter owing to Agent and Lenders by
each other Borrower. Each Borrower agrees that its guaranty obligation hereunder
is a continuing guaranty of payment (in cash) and performance and not of
collection, that its obligations under this Section 13 shall not be discharged
until payment and performance, in full, of the Obligations has occurred, and
that its obligations under this Section 13 shall be absolute and unconditional,
irrespective of, and unaffected by:
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13.1.1. The genuineness, validity, regularity, enforceability
or any future amendment of, or change in, this Agreement, any other Loan
Document or any other agreement, document or instrument to which any
Borrower is or may become a party;
13.1.2. The absence of any action to enforce this Agreement
(including this Section 13) or any other Loan Document or the waiver or
consent by Agent and Lenders with respect to any of the provisions
thereof;
13.1.3. The existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action,
or the absence of any action, by Agent and Lenders in respect thereof
(including the release of any such security);
13.1.4. The insolvency of any Borrower; or
13.1.5. Any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor.
Each Borrower shall be regarded, and shall be in the same position,
as principal debtor with respect to the Obligations guaranteed hereunder.
13.2. Waivers by Borrowers.
Each Borrower expressly waives all rights it may have now or in the
future under any statute, or at common law, or at law or in equity, or
otherwise, to compel Agent or Lenders to marshal assets or to proceed in respect
of the Obligations guaranteed hereunder against any other Borrower, any other
party or against any security for the payment and performance of the Obligations
before proceeding against, or as a condition to proceeding against, such
Borrower. It is agreed among each Borrower, Agent and Lenders that the foregoing
waivers are of the essence of the transaction contemplated by this Agreement and
the other Loan Documents and that, but for the provisions of this Section 13 and
such waivers, Agent and Lenders would decline to enter into this Agreement.
13.3. Benefit of Guaranty.
Each Borrower agrees that the provisions of this Section 13 are for
the benefit of Agent and Lenders and their respective successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between any
other Borrower and Agent or Lenders, the obligations of such other Borrower
under the Loan Documents.
13.4. Waiver of Subrogation, Etc.
Notwithstanding anything to the contrary in this Agreement or in any
other Loan Document, and except as set forth in Section 13.7, each Borrower
hereby expressly and irrevocably waives any and all rights at law or in equity
to subrogation, reimbursement, exoneration, contribution, indemnification or set
off and any and all defenses available to a surety, guarantor or accommodation
co-obligor until the Obligations have been paid in full in cash. Each Borrower
acknowledges and agrees that this waiver is intended to benefit Agent and
Lenders and shall not limit or otherwise affect such Borrower's liability
hereunder or the enforceability of this Section 13, and that Agent, Lenders and
their respective successors and
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assigns are intended third party beneficiaries of the waivers and agreements set
forth in this Section 12.3.
13.5. Election of Remedies.
If Agent or any Lender may, under applicable law, proceed to realize
its benefits under any of the Loan Documents giving Agent or such Lender a Lien
upon any Collateral, whether owned by any Borrower or by any other Person,
either by judicial foreclosure or by non-judicial sale or enforcement, Agent or
any Lender may, at its sole option, determine which of its remedies or rights it
may pursue without affecting any of its rights and remedies under this Section
13. If, in the exercise of any of its rights and remedies, Agent or any Lender
shall forfeit any of its rights or remedies, including its right to enter a
deficiency judgment against any Borrower or any other Person, whether because of
any applicable laws pertaining to "election of remedies" or the like, each
Borrower hereby consents to such action by Agent or such Lender and waives any
claim based upon such action, even if such action by Agent or such Lender shall
result in a full or partial loss of any rights of subrogation that each Borrower
might otherwise have had but for such action by Agent or such Lender. Any
election of remedies that results in the denial or impairment of the right of
Agent or any Lender to seek a deficiency judgment against any Borrower shall not
impair any other Borrower's obligation to pay the full amount of the
Obligations. In the event Agent or any Lender shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or the Loan Documents,
Agent or such Lender may bid all or less than the amount of the Obligations and
the amount of such bid need not be paid by Agent or such Lender but shall be
credited against the Obligations. The amount of the successful bid at any such
sale, whether Agent, Lender or any other party is the successful bidder, shall
be conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 13, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Agent or any Lender might otherwise be entitled but for such
bidding at any such sale.
13.6. Limitation.
Notwithstanding any provision herein contained to the contrary, each
Borrower's liability under this Section 13 (which liability is in any event in
addition to amounts for which such Borrower is primarily liable hereunder) shall
be limited to an amount not to exceed as of any date of determination the
greater of:
13.6.1. The net amount of all Loans advanced to any other
Borrower under this Agreement and then re-loaned or otherwise transferred
to, or for the benefit of, such Borrower; and
13.6.2. The amount that could be claimed by Agent and Lenders
from such Borrower under this Section 13 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law after
taking into account, among other things, such Borrower's right of
contribution and indemnification from each other Borrower under Section
13.7.
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13.7. Contribution with Respect to Guaranty
Obligations.
13.7.1. To the extent that any Borrower shall make a payment
under this Section 13 of all or any of the Obligations (other than Loans
made to that Borrower for which it is primarily liable) (a "Guarantor
Payment") that, taking into account all other Guarantor Payments then
previously or concurrently made by any other Borrower, exceeds the amount
that such Borrower would otherwise have paid if each Borrower had paid the
aggregate Obligations satisfied by such Guarantor Payment in the same
proportion that such Borrower's "Allocable Amount" (as defined below) (as
determined immediately prior to such Guarantor Payment) bore to the
aggregate Allocable Amounts of each Borrower as determined immediately
prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of
the Loan Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each
other Borrower for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Guarantor
Payment.
13.7.2. As of any date of determination, the "Allocable
Amount" of any Borrower shall be equal to the maximum amount of the claim
that could then be recovered from such Borrower under this Section 13
without rendering such claim voidable or avoidable under Section 548 of
Chapter 11 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law.
13.7.3. This Section 13.7 is intended only to define the
relative rights of Borrowers and nothing set forth in this Section 13.7 is
intended to or shall impair the obligations of Borrowers, jointly and
severally, to pay any amounts as and when the same shall become due and
payable in accordance with the terms of this Agreement, including Section
13.1. Nothing contained in this Section 13.7 shall limit the liability of
any Borrower to pay the Loans made directly or indirectly to that Borrower
and accrued interest, fees and expenses with respect thereto for which
such Borrower shall be primarily liable.
13.7.4. The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
13.7.5. The rights of the indemnifying Borrowers against other
Borrowers under this Section 13.7 shall only be exercisable upon the full
and indefeasible payment in cash of the Obligations and the termination of
the Loan Commitments.
13.8. Liability Cumulative.
The liability of Borrowers under this Section 13 is in addition to
and shall be cumulative with all liabilities of each Borrower to Agent and
Lenders under this Agreement and the other Loan Documents to which such Borrower
is a party or in respect of any Obligations or obligation of the other
Borrowers, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
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SECTION 14. AMENDMENT AND RESTATEMENT OF
EXISTING LOAN AND SECURITY AGREEMENT
14.1. The parties hereto agree that, on the Closing Date, the
following transactions shall be deemed to occur automatically, without further
action by any party hereto:
14.1.1. the Prior Loan and Security Agreement shall be deemed
to be amended and restated in its entirety in the form of this Agreement;
14.1.2. all Existing Obligations (including, without
limitation, all Prior Loans) outstanding on the Closing Date shall, to the
extent not paid on the Closing Date, in all respects be continuing and
shall be deemed to be Obligations outstanding hereunder and all Prior
Loans outstanding on the closing Date consisting of "Revolving Credit
Loans", "Letters of Credit" or "LC Guaranties" under, and as such quoted
terms are defined in, the Prior Loan and Security Agreement shall be
deemed and shall constitute, respectively, Revolving Credit Loans, Letters
of Credit and LC Guaranties hereunder;
14.1.3. the Guaranty Agreements and other Security Documents,
including the Liens created thereunder in favor of Agent for the benefit
of Agent and Lenders or in favor of Agent and Lenders, as applicable, and
securing payment of the Existing Obligations, as amended and restated on
the Closing Date, shall remain in full force and effect with respect to
the Obligations and are hereby reaffirmed; and
14.1.4. all references in the Loan Documents to the Prior Loan
and Security Agreement shall be deemed to refer to this Agreement as it
may from time to time be amended, restated, supplemented or otherwise
modified.
14.2. Each Lender hereunder that was a party to the Prior Loan and
Security Agreement immediately prior to the Closing Date agrees that its "Loan
Commitments" (as defined in the Prior Loan and Security Agreement) shall be
replaced with the Loan Commitments of such Lender hereunder. On the Closing
Date, the Revolving Credit Loans then outstanding shall be allocated to each
such Lender in accordance with its Revolving Loan Percentage. On the Closing
Date, each Lender shall make payments to, or receive payments from, the Agent
such that each Lender shall have funded its Aggregate Percentage of each Loan
for which such Lender has a Loan Commitment.
[Signature Pages Follow]
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IN WITNESS WHEREOF, this Agreement has been duly executed on the day
and year specified at the beginning of this Agreement.
D&K HEALTHCARE RESOURCES, INC.
By _____________________________
Name Xxxxxx X. Xxxxxx
Title Senior Vice President and CFO
D & K PHARMACY SOLUTIONS, INC.
By _____________________________
Name Xxxxxx X. Xxxxxx
Title Vice President and Treasurer
XXXXXX DRUG CO.
By _____________________________
Name Xxxxxx X. Xxxxxx
Title Vice President and Treasurer
DIVERSIFIED HEALTHCARE, LLC
By _____________________________
Name Xxxxxx X. Xxxxxx
Title Vice President and Treasurer
MEDICAL & VACCINE PRODUCTS, INC. d/b/a
DEVICTORIA MEDICAL
By _____________________________
Name Xxxxxx X. Xxxxxx
Title Vice President and Treasurer
XXXXX DISTRIBUTION, L.L.C.
By _____________________________
Name Xxxxxx X. Xxxxxx
Title Vice President and Treasurer
[Signature Page to Seventh Amended and Restated Loan and Security Agreement]
S-1
XXXXX HEALTHCARE SOLUTIONS, INC.
By _____________________________
Name Xxxxxx X. Xxxxxx
Title Vice President and Treasurer
XXXXX HEARTLAND, L.L.C.
By ____________________________
Name Xxxxxx X. Xxxxxx
Title Vice President and Treasurer
APPENDIX A
GENERAL DEFINITIONS
When used in the Seventh Amended and Restated Loan and Security
Agreement dated as of January 7, 2005, by and among Fleet Capital Corporation,
individually and as Agent, the other financial institutions which are or become
parties thereto, D&K Healthcare Resources, Inc., D & K Pharmacy Solutions, Inc.,
Diversified Healthcare, LLC, Xxxxxx Drug Co., Medical & Vaccine Products, Inc.
(d/b/a Devictoria Medical), Xxxxx Healthcare Solutions, Inc., Xxxxx
Distribution, L.L.C. and Xxxxx Heartland, L.L.C., (i) the terms Account,
Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit Account,
Document, Electronic Chattel Paper, Equipment, Financial Asset, Fixture, General
Intangibles, Goods, Health Care Insurance Receivables, Instruments, Inventory,
Investment Property, Letter-of-Credit Rights, Payment Intangibles, Proceeds,
Security, Security Entitlement, Software, Supporting Obligations and
Uncertificated Security have the respective meanings assigned thereto under the
UCC; (ii) all terms reflecting Collateral having the meanings assigned thereto
under the UCC shall be deemed to mean such Property, whether now owned or
hereafter created or acquired by any Borrower or in which any Borrower now has
or hereafter acquires any interest; (iii) capitalized terms which are not
otherwise defined have the respective meanings assigned thereto in said Seventh
Amended and Restated Loan and Security Agreement and Exhibit 8.3 thereto; and
(iv) the following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or
on account of any Account, Contract Right, Chattel Paper or General
Intangible.
Adjusted Net Earnings from Operations - has the meaning ascribed to
it in Exhibit 8.3 hereto.
Adverse Environmental Condition - (i) any release, spill, emission,
leaking, pumping, injection, presence, deposit, abandonment, disposal,
discharge, dispersal, emission, leaching or migration in, into, on, or
emanating from the indoor or outdoor environment (including, without
limitation, the air, ground, water, groundwater, or any surface) of any
substance, chemical, material, pollutant, hazardous material, gas, odor or
audible noise related to the conduct of a Borrower's or any of its
Subsidiaries' businesses; (ii) any complaint, citation, notice of
violation, request for information, claim, demand order by any
governmental authority or any person for the personal injury, property
damage, damage to the environment, or adverse effect on the environmental
resulting from (i) above; and (iii) the violation, or alleged violation
of, or liability under any applicable Environmental Law, permits,
approvals, directives, injunctions, orders, licenses or judgments of, by
or from any governmental authority, agency, person or court relating to
environmental matters connected with any Borrower's or any of its
Subsidiaries' businesses.
Affiliate - a Person (other than a Subsidiary): (i) which directly
or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 10% or more of any class of the Voting Stock of
a Person; or (iii) 10% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 10% or more of the equity interest) of
which is beneficially owned or held by a Person or a Subsidiary of a
Person.
Agent - Fleet Capital Corporation in its capacity as agent for the
Lenders under the Agreement and any successor in that capacity appointed
pursuant to Section 11.11 of the Agreement.
Agent Loans - as defined in subsection 1.1.5 of the Agreement.
Aggregate Percentage - with respect to each Lender, the percentage
equal to the quotient of (i) such Lender's Loan Commitment divided by (ii)
the aggregate of all Loan Commitments.
Agreement - the Seventh Amended and Restated Loan and Security
Agreement referred to in the first sentence of this Appendix A, all
Exhibits thereto and this Appendix A, as each of the same may be amended
from time to time.
Applicable Margin - from the Closing Date to, but not including, the
first Adjustment Date (as hereinafter defined), the percentages set forth
below with respect to the Base Rate Revolving Loan, the Base Rate
Incremental Last Out Loan, the LIBOR Revolving Loan and the LIBOR
Incremental Last Out Loan:
Base Rate Revolving Loan 0.50%
Base Rate Incremental Last Out Loan 3.25%
LIBOR Revolving Loan 2.25%
LIBOR Incremental Last Out Loan 5.00%
The percentages set forth above for Revolving Credit Loans will be
adjusted on the fifteenth day of the month following the most recently
ended fiscal quarter during the Term (provided such Applicable Margin
shall be deemed adjusted effective on the first day of such month),
commencing with the month ending June 30, 2005 (each such date an
"Adjustment Date"), effective prospectively, by reference to the
applicable "Financial Measurement" (as defined below) for the quarter most
recently ending in accordance with the following:
Base Rate Revolving LIBOR Revolving
Availability Loan Loan
------------ ---- ----
< or = $75,000,000 0.75% 2.50%
< $75,000,000, but < or = $150,000,000 0.50% 2.25%
> $150,000,000, but < or = $200,000,000 0.25% 2.00%
> $200,000,000 0.00% 1.75%
provided that, (i) if an Event of Default has occurred and has not been
cured or waived, the interest rate shall automatically adjust to the
highest interest rate set forth above, effective immediately upon the
occurrence of such Event of Default until such Event of Default has been
cured or waived. For purposes hereof, "Financial Measurement" shall
mean the Borrowers' Availability calculated by Agent based on the average
Availability for each Business Day during the most recently ended fiscal
quarter.
Appraisal - an appraisal delivered by Borrower Representative to
Agent within 60 days after October 31st and April 30th of each year
setting forth the Net Orderly Liquidation Value of Inventory of each
Borrower, in form and substance and prepared by an independent appraiser,
acceptable to Agent.
Approved Seller Subordinated Financing - with respect to any
Indebtedness provided by any Seller or any other party in connection with
a Permitted Acquisition so long as :
(i) the principal amount of such Indebtedness does not exceed the
greater of (1) 20% of the total consideration paid by D&K for the Target;
or (2) $2,000,000;
(ii) such Indebtedness is a completely unsecured obligation of D &
K; and
(iii) such Indebtedness is a Subordinated Debt subject to
Subordination Agreements.
Assignment and Acceptance Agreement - an assignment and acceptance
agreement in form and content reasonably acceptable to Agent pursuant to
which a Lender assigns to another Lender all or any portion of any of such
Lender's Revolving Loan Commitment as permitted pursuant to the terms of
this Agreement.
Availability - the amount of additional money which Borrowers are
entitled to borrow from time to time as Revolving Credit Loans, such
amount being the difference derived when the sum of the principal amount
of Revolving Credit Loans then outstanding (including any amounts which
Agent or any Lender may have paid for the account of any Borrower pursuant
to any of the Loan Documents and which have not been reimbursed by such
Borrower), the LC Amount and any reserves is subtracted from the Borrowing
Base. If the amount outstanding is equal to or greater than the Borrowing
Base, Availability is $0.
Bank - Fleet National Bank.
Base Rate - the rate of interest announced or quoted by Bank from
time to time as its prime rate for commercial loans, whether or not such
rate is the lowest rate charged by Bank to its most preferred borrowers;
and, if such prime rate for commercial loans is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
Base Rate Loan - a Base Rate Incremental Last Out Loan and a Base
Rate Revolving Loan.
Base Rate Revolving Loan - the Revolving Credit Loans that bear
interest by reference to the Base Rate in effect from time to time.
Base Rate Incremental Last Out Loan - the Incremental Last Out Loan
that bears interest by reference to the Base Rate in effect from time to
time.
Borrowers - collectively, D&K, D&K Pharmacy Solutions, Xxxxxx, XX,
MVP, Xxxxx, Xxxxx Distribution and Xxxxx Heartland, and "Borrower" shall
mean any one of them.
Borrowing Base - as to all Borrowers on a Consolidated basis and as
at any date of determination thereof, an amount equal to the lesser of:
(i) the Revolving Credit Maximum Amount; or
(ii) an amount equal to the sum of
(1) 85% of the net amount of Eligible Accounts
outstanding at such date; plus
(2) the least of (a) 70% of an amount equal to the sum
of the Revolving Credit Maximum Amount plus the
aggregate principal amount outstanding under the
Incremental Last Out Loan, (b) 70% of the net
amount of Eligible Inventory at such date, or (c)
85% of the Net Orderly Liquidation Value Factor
multiplied by all Eligible Inventory at such date,
minus
(3) the amount, if any, by which the sum of clause
(ii)(2) of this definition and the aggregate
outstanding principal balance of the Incremental
Last Out Loan exceeds 92.5% of the Net Orderly
Liquidation Value Factor multiplied by all
Eligible Inventory at such date, minus
(4) such reserves against the Borrowing Base
established by the Agent in its reasonable credit
judgment.
The limitations set forth in the immediately preceding sentence and
each of the advance rates set forth above may be adjusted downward by
Agent, as Agent shall deem necessary or appropriate in its reasonable
credit judgment. For purposes hereof, (a) the net amount of Eligible
Accounts at any time shall be the face amount of such Eligible Accounts
less any and all returns, rebates, discounts (which may, at Agent's
option, be calculated on shortest terms), credits, allowances or excise
taxes of any nature at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with such Accounts at such
time and (b) the amount of Eligible Inventory shall be determined on a
first-in, first-out, lower of cost or market basis, net of cash discounts,
in accordance with GAAP.
Borrower Representative - has the meaning set forth in Section 1.4
hereof.
Borrowing Base Certificate - a certificate by a responsible officer
of Borrowers, substantially in the form of Exhibit 8.1.4 (or another form
acceptable to Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof, all in such detail as
shall be satisfactory to Agent. All calculations of the Borrowing Base in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by Borrowers and certified to Agent; provided, that
Agent shall
have the right to review and adjust, in the exercise of its sole judgment,
any such calculation after giving notice thereof to Borrowers, (1) to
reflect its reasonable estimate of declines in value of any of the
Collateral described therein, and (2) to the extent that Agent determines
that such calculation is not in accordance with this Agreement.
Business Day - any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of Missouri or the State of
Illinois or is a day on which banking institutions located in either of
such states are closed.
Capital Expenditures - expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations. Notwithstanding the foregoing, expenditures made or
liabilities incurred with respect to any Parata pill dispensing machines
shall be excluded from the definition of "Capital Expenditures" to the
extent the transfer of such machine by D&K or its Subsidiary, as
applicable, to D&K's or its Subsidiary's respective customer is treated as
an operating lease under GAAP.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied or waived by Agent and the
initial Loan is made or the initial Letter of Credit or LC Guaranty is
issued under the Agreement.
Collateral - all of the Property and interests in Property described
in Section 5 of the Agreement, and all other Property and interests in
Property that now or hereafter secure the payment and performance of any
of the Obligations.
Commitment Increase - as defined in the definition of the term "Loan
Commitments."
Commitment Increase Cap - as defined in the definition of the term
"Loan Commitments."
Compliance Certificate - as defined in subsection 8.1.3 of the
Agreement.
Computer Hardware and Software - all of Borrowers' rights (including
rights as licensee and lessee) with respect to (i) computer and other
electronic data processing hardware, including all integrated computer
systems, central processing units, memory units, display terminals,
printers, computer elements, card readers, tape drives, hard and soft disk
drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware; (ii)
all Software and all software programs designed for use on the computers
and electronic data processing hardware described in clause (i) above,
including all operating system software, utilities and application
programs in any form (source code and object code in magnetic tape, disk
or hard copy format or any other listings whatsoever); (iii) any firmware
associated with any of the foregoing; and (iv) any documentation for
hardware, Software and firmware
described in clauses (i), (ii) and (iii) above, including flow charts,
logic diagrams, manuals, specifications, training materials, charts and
pseudo codes.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Contract Right - any right of any Borrower to payment under a
contract for the sale or lease of goods or the rendering of services,
which right is at the time not yet earned by performance.
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets
shown on a balance sheet at such date in accordance with GAAP, except that
amounts due from Affiliates and investments in Affiliates and prepaid
expenses shall be excluded therefrom.
Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Derivative Obligations - every obligation of a Person under any
forward contract, futures contract, exchange contract, swap, option or
other financing agreement or arrangement (including, without limitation,
caps, floors, collars and similar agreement), the value of which is
dependent upon interest rates, currency exchange rates, commodities or
other indices.
Distribution - in respect of any Person means and includes: (i) the
payment of any dividends or other distributions on Securities (except
distributions in such Securities) and (ii) the redemption or acquisition
of Securities of such Person, as the case may be, unless made
contemporaneously from the net proceeds of the sale of Securities.
Dominion Account - a special bank account or accounts of Agent
established by Borrowers pursuant to subsection 6.2.4 of the Agreement at
banks selected by Borrowers, but acceptable to Agent in its sole
discretion, and over which Agent shall have sole and exclusive access and
control for withdrawal purposes.
EBITDA - has the meaning ascribed to it in Exhibit 8.3 hereto.
Eligible Account - an Account arising in the ordinary course of the
business of any Borrower from the sale of goods or rendition of services
which Agent, in its reasonable judgment, deems to be an Eligible Account.
Without limiting the generality of the foregoing, no Account shall be an
Eligible Account if:
(i) it arises out of a sale made or services rendered by any
Borrower to a Subsidiary of such Borrower or an Affiliate of such
Borrower or to a Person controlled by an Affiliate of such Borrower;
or
(ii) except for Extended Dating Receivables, it remains unpaid
more than 30 days after the due date shown on the invoice or 60 days
after the original invoice date, whichever is earlier; or
(iii) the total unpaid Accounts of the Account Debtor exceed
40% of the net amount of all Eligible Accounts, but only to the
extent of such excess; or
(iv) any covenant, representation or warranty contained in the
Agreement with respect to such Account has been breached; or
(v) the Account Debtor is also a creditor or supplier of any
Borrower or any Subsidiary of such Borrower, or the Account Debtor
has disputed liability with respect to such Account, or the Account
Debtor has made any claim with respect to any other Account due from
such Account Debtor to any Borrower or any Subsidiary of such
Borrower, or the Account is subject to a rebate or otherwise is or
may become subject to right of setoff by the Account Debtor,
provided, that any such Account shall be eligible to the extent such
amount thereof exceeds such contract, dispute, claim, setoff or
similar right; or
(vi) the Account Debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws, as now
constituted or hereafter amended, has been filed against the Account
Debtor, or if the Account Debtor has failed, suspended business,
ceased to be Solvent, or consented to or suffered a receiver,
trustee, liquidator or custodian to be appointed for it or for all
or a significant portion of its assets or affairs; or
(vii) it arises from a sale made or services rendered to an
Account Debtor outside the United States, unless the sale is (1) to
an Account Debtor located in Puerto Rico or (2) to an Account Debtor
located in Ontario or any other province of Canada in which the
Personal Property Security Act has been adopted in substantially the
same form as currently in effect in Ontario or (3) on letter of
credit, guaranty or acceptance terms, in each case acceptable to
Agent in its sole judgment; or
(viii) (1) it arises from a sale to the Account Debtor on a
xxxx-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
cash-on-delivery, consignment, or any other repurchase or return
basis; or (2) it is subject to a reserve established by any Borrower
for potential returns or refunds, to the extent of such reserve; or
(ix) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless the applicable
Borrower assigns its right to payment of such Account to Agent, in a
manner satisfactory to Agent, in its sole judgment, so as to comply
with the Assignment of Claims Act of 1940 (31 U.S.C. Section 203 et
seq., as amended); or
(x) it is not at all times subject to Agent's duly perfected,
first priority security interest or is subject to a Lien that is not
a Permitted Lien; or
(xi) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by the
applicable Borrower and accepted by the Account Debtor or the
Account otherwise does not represent a final sale; or
(xii) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(xiii) the applicable Borrower or a Subsidiary of such
Borrower has made any agreement with the Account Debtor for any
extension, compromise, settlement or modification of the Account or
deduction therefrom, except for discounts or allowances which are
made in the ordinary course of business for prompt payment and which
discounts or allowances are reflected in the calculation of the face
value of each invoice related to such Account; or
(xiv) 25% or more of the Accounts owing from the Account
Debtor are not Eligible Accounts hereunder; or
(xv) the applicable Borrower has made an agreement with the
Account Debtor to extend the time of payment thereof;
(xvi) it represents service charges, late fees or similar
charges; or
(xvii) it represents customer deposits.
Eligible Inventory - Inventory of any Borrower (other than packaging
materials and supplies, tooling, samples and literature) which Agent, in
its reasonable judgment, deems to be Eligible Inventory. Without limiting
the generality of the foregoing, no Inventory shall be Eligible Inventory
if:
(i) it is not finished goods which meet the specifications of
the purchase order or contract for such Inventory, if any; or
(ii) it is not in good, new and saleable condition; or
(iii) it is slow-moving, morgue Inventory, obsolete or
unmerchantable; or
(iv) it does not meet all standards imposed by any
governmental agency or authority; or
(v) it does not conform in all respects to any covenants,
warranties and representations set forth in the Agreement; or
(vi) it is not at all times subject to Agent's duly perfected,
first priority security interest or is subject to a Lien that is not
a Permitted Lien; or
(vii) it is not situated at a location in compliance with the
Agreement, provided that Inventory situated at a location not owned
by the applicable Borrower will be Eligible Inventory only if Agent
has received a satisfactory
landlord's agreement or bailee letter, as applicable, with respect
to such location; or
(viii) it is in transit from a supplier; or
(ix) it consists of supplies or labels.
For purposes of this definition, "morgue Inventory" means, as of any date
of determination, Inventory which is within 6 months of its stated
expiration date.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, orders and consent decrees relating to health,
safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal Property
(other than Inventory) of every kind and description used in any
Borrower's operations or owned by any Borrower in which any Borrower has
an interest, whether now owned or hereafter acquired by any Borrower and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
thereof.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Existing Obligations - "Obligations", as defined in the Prior Loan
and Security Agreement.
Extended Dating Receivables - Accounts arising from sales to new
customers with due dates specified in the applicable invoices of more than
30 days, but less than 180 days, after the original invoice date in an
aggregate amount not to exceed $2,000,000.
Fee Letter - as defined in Section 2.3 of the Agreement.
First Offer Requirement - as defined in Section 1.6 of the
Agreement.
Fixed Charge Coverage Ratio - has the meaning ascribed to it in
Exhibit 8.3 hereto.
Fixed Charges - has the meaning ascribed to it in Exhibit 8.3
hereto.
GAAP - generally accepted accounting principles in the United States
of America in effect from time to time.
Guarantors - Jaron, Inc., a Florida corporation, IPD Holdings, Inc.,
a Delaware corporation, Tykon, Inc., a Wisconsin corporation, VC Services,
Inc., a Minnesota
corporation, myhca and each other Person who now or hereafter guarantees
payment or performance of the whole or any part of the Obligations.
Guaranty Agreements - the Guaranty Agreement which is to be executed
on the Closing Date by any Guarantor, in form and substance satisfactory
to Agent, together with each other guaranty hereafter executed by any
Guarantor.
Inactive Subsidiary - means any Subsidiary of any Borrower which
does not conduct any ongoing business activity and which does not own any
assets with a fair market value in excess of $100,000. At any time that an
Inactive Subsidiary either (i) commences any business activity or (ii)
owns assets with a fair market value in excess of $100,000, such Inactive
Subsidiary shall automatically constitute a Subsidiary and Borrowers shall
promptly, and shall promptly cause such Subsidiary to, comply with Section
8.1.8 hereof. Notwithstanding the foregoing, at no time shall a Subsidiary
be permitted to become an Inactive Subsidiary.
Incremental Last Out Loan - the Loan described in subsection 1.3 of
the Agreement.
Incremental Last Out Loan Commitment - with respect to any Lender,
the amount of such Lender's Incremental Last Out Loan Commitment pursuant
to subsection 1.3 of the Agreement, as set forth on Exhibit 1.1.1 to the
Agreement or any Assignment and Acceptance Agreement executed by such
Lender, minus all Incremental Last Out Loan payments paid to such Lender.
On the date hereof, the aggregate Incremental Last Out Loan Commitments
shall be in an aggregate principal amount equal to $35,000,000.
Incremental Last Out Loan Notes - the Secured Promissory Notes to be
executed by Borrowers on or about the Closing Date in favor of each
applicable Lender to evidence its Incremental Last Out Loan, which shall
be in the form of Exhibit 1.1(b) to the Agreement, together with any
replacement or successor notes therefor.
Incremental Last Out Loan Percentage - with respect to each Lender,
the percentage equal to the quotient of such Lender's Incremental Last Out
Loan Commitment divided by the aggregate of all Incremental Last Out Loan
Commitments.
Indebtedness - as applied to a Person means, without duplication:
(i) all items which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Indebtedness
is to be determined, including, without limitation, Capitalized
Lease Obligations;
(ii) all obligations of other Persons which such Person has
guaranteed;
(iii) all reimbursement obligations in connection with letters
of credit or letter of credit guaranties issued for the account of
such Person;
(iv) Derivative Obligations; and
(v) in the case of any Borrower (without duplication), the
Obligations.
Intellectual Property - all past, present and future: trade secrets,
know-how and other proprietary information; trademarks, internet domain
names, service marks, trade dress, trade names, business names, designs,
logos, slogans (and all translations, adaptations, derivations and
combinations of the foregoing) indicia and other source and/or business
identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been
or may hereafter be issued thereon throughout the world; copyrights
(including copyrights for computer programs) and copyright registrations
or applications for registrations which have heretofore been or may
hereafter be issued throughout the world and all tangible property
embodying the copyrights, unpatented inventions (whether or not
patentable); patent applications and patents; industrial design
applications and registered industrial designs; license agreements related
to any of the foregoing and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, computer
software, source codes, object codes, executable code, data, databases and
other physical manifestations, embodiments or incorporations of any of the
foregoing; the right to xxx for all past, present and future infringements
of any of the foregoing; all other intellectual property; and all common
law and other rights throughout the world in and to all of the foregoing.
Interest Expense - has the meaning ascribed to it in Exhibit 8.3
hereto.
LC Amount - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Agent or any Affiliate
of Agent shall guaranty the payment or performance by any Borrower of its
reimbursement obligation under any letter of credit.
LC Obligations - Any Obligations that arise from any draw against
any Letter of Credit or against any Letter of Credit supported by an LC
Guaranty.
Lead Arranger - Banc of America Securities LLC.
Letter of Credit - any standby or documentary letter of credit
issued by Agent or any Affiliate of Agent for the account of any Borrower.
LIBOR - as applicable to any LIBOR Loan, a fluctuating rate of
interest per annum equal to the rate per annum (rounded upward, if
necessary, to the nearest 1/8 of one percent) as determined on the basis
of the offered rates for deposits in U.S. dollars, for one-month interest
periods, which appears on the Telerate page 3750 as of 11:00 a.m. (London
time) on each Business Day; provided, however, if the rate described above
does not appear on the Telerate System on any applicable interest
determination date, the LIBOR shall be the rate (rounded upwards as
described above, if necessary) for deposits in U.S. dollars for an
interest period of one month on the Reuters Page "LIBO" (or such other
page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on each Business
Day. If both the Telerate and Reuters systems are unavailable, then the
rate for that date will be determined on the basis of the offered rates
for deposits in U.S. dollars for a one-month interest period which are
offered by four (4) major banks in the London interbank market at
approximately 11:00 a.m. (London time), on each Business Day. The
principal London office of each of the major London banks so selected will
be requested to provide a quotation of its U.S. dollar deposit offered
rate. If at least two (2) such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in U.S. dollars to
leading European banks for a one-month interest period offered by major
banks in New York City at approximately 11:00 a.m. (New York City time),
on each Business Day. In the event that Agent is unable to obtain any such
quotation as provided above, it will be determined that LIBOR cannot be
determined. In the event that the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with respect to LIBOR
deposits of Bank then for any period during which such Reserve Percentage
shall apply, LIBOR shall be equal to the amount determined above divided
by an amount equal to 1 minus the Reserve Percentage.
LIBOR Incremental Last Out Loan - the Incremental Last Out Loan
specified in a LIBOR Request which, as of the date of the LIBOR Request
has met the conditions for basing interest on LIBOR in Section 3.1 of the
Agreement.
LIBOR Loan - a LIBOR Revolving Loan and Incremental Last Out Loan,
as applicable.
LIBOR Option - the option granted pursuant to Section 2.1.2 of the
Agreement to have the interest on all but not less than all of the
principal amount of the Revolving Credit Loans and the Incremental Last
Out Loan based on LIBOR.
LIBOR Request - a notice in writing (or by telephone confirmed
electronically or by telecopy or other facsimile transmission on the same
day as the telephone request) from Borrower Representative to Agent
requesting that interest on the Revolving Credit Loans and the Incremental
Last Out Loan be based on LIBOR.
LIBOR Revolving Loan - the Revolving Credit Loans specified in a
LIBOR Request which, as of the date of the LIBOR Request, has met the
conditions for basing interest on LIBOR in Section 3.1 of the Agreement.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien"
shall also include rights of seller under conditional sales contracts or
title retention agreements, reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, any Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional sale
agreement or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Agent
pursuant to Section 3.6 of the Agreement.
Loan Commitment - with respect to any Lender, the amount of such
Lender's Revolving Loan Commitment and Incremental Last Out Loan
Commitment, as such Loan Commitments may be increased, reduced, amortized
or adjusted from time to time in accordance with the Agreement; provided
that, upon satisfaction of the conditions to the increase in Revolving
Loan Commitments specified in Section 1.6, Revolving Loan Commitments may
be increased in the aggregate amount not to exceed $100,000,000 (each such
increase being the "Commitment Increase" and the aggregate amount of all
such increases permitted hereunder being the "Commitment Increase Cap")
such that the aggregate Loan Commitments at any time shall not exceed
$735,000,000.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loans - all loans and advances of any kind made by Agent, any
Lender, or any Affiliate of Agent or any Lender, pursuant to the
Agreement.
London Banking Day - any date on which commercial banks are open for
business in London, England.
Majority Lenders - as of any date, Lenders holding 51% of the Loan
Commitments determined on a combined basis and following the termination
of the Loan Commitments, Lenders holding 51% or more of the outstanding
Loans, LC Amounts and LC Obligations not yet reimbursed by any Borrower or
funded with a Revolving Credit Loan; provided, that (i) in each case, if
there are 2 or more Lenders with outstanding Loans, LC Amounts, unfunded
and unreimbursed LC Obligations, Incremental Last Out Loan or Revolving
Loan Commitments, at least 2 Lenders shall be required to constitute
Majority Lenders; and (ii) prior to termination of the Loan Commitments,
if any Lender breaches its obligation to fund any requested Loan, for so
long as such breach exists, its voting rights hereunder shall be
calculated with reference to its outstanding Loans, LC Amounts and
unfunded and unreimbursed LC Obligations, rather than its Loan Commitment.
Material Adverse Effect - (i) a material adverse effect on the
business, condition (financial or otherwise), operation, performance or
properties of Borrowers and their Subsidiaries taken as a whole, (ii) a
material adverse effect on the rights and remedies of Agent or Lenders
under the Loan Documents, or (iii) the material impairment of the ability
of any Borrower or any of its Subsidiaries to perform its obligations
hereunder or under any Loan Document.
Money Borrowed - means, (i) Indebtedness arising from the lending of
money by any Person to any Borrower or any of its Subsidiaries; (ii)
Indebtedness, whether or not in any such case arising from the lending by
any Person of money to any Borrower or any of its Subsidiaries, (1) which
is represented by notes payable or drafts accepted that evidence
extensions of credit, (2) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (3) upon which
interest charges are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment for Property; (iii)
Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of any Borrower or any of its
Subsidiaries under
any guaranty of obligations that would constitute Indebtedness for Money
Borrowed under clauses (i) through (iii) hereof, if owed directly by any
Borrower or any of its Subsidiaries. Money Borrowed shall not include
trade payables or accrued expenses.
Mortgages - the mortgages or deeds of trust executed by any Borrower
on or about the Closing Date in favor of Agent, for the benefit of itself
and Lenders, by which such Borrower has granted to Agent, as security for
the Obligations, a Lien upon the real Property of such Borrower located at
000 X. 0xx Xx. Xxxxxxxxxxx, XX 00000 and 000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000, together with all mortgages, deeds of trust and
comparable documents now or at any time hereafter securing the whole or
any part of the Obligations.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3)
of ERISA.
myhca - myhca, Inc., a Texas corporation.
Net Orderly Liquidation Value - with respect to Inventory, the
orderly liquidation value of such Inventory (less estimated liquidation
expenses, taking into account the regulatory costs of selling Inventory
that includes controlled substances and other drugs that may be sold only
by licensed distributors through specific channels of distribution), as
determined by reference to the most recent Appraisal thereof delivered to
Agent pursuant to Section 6.3.2, which is satisfactory to Agent in its
reasonable credit judgment.
Net Orderly Liquidation Value Factor - the ratio of the Net Orderly
Liquidation Value of Inventory to the book value of Inventory, expressed
as a percentage. The Net Orderly Liquidation Value Factor shall be
determined as of the Closing Date based on the Appraisal delivered prior
to the Closing Date and shall be updated annually as new Appraisals are
received.
Notes - the Revolving Notes and the Incremental Last Out Loan Notes.
Obligations - all Loans, the LC Amounts and all other advances,
debts, liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or payable
from any Borrower to Agent, for its own benefit, from any Borrower to
Agent for the benefit of any Lender, from any Borrower to any Lender or
from any Borrower to Bank or any other Affiliate of Agent, of any kind or
nature, present or future, whether or not evidenced by any note, guaranty
or other instrument, whether arising under the Agreement or any of the
other Loan Documents or any agreement governing Product Obligations,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, primary or secondary, due or to become due, now
existing or hereafter arising and however acquired, including, without
limitation, any Product Obligations owing to Agent, any Lender, Bank or
any Affiliate of Bank or Agent or any Lender.
Organizational I.D. Number - with respect to any Person, the
organizational identification number assigned to such Person by the
applicable governmental unit or agency of the jurisdiction of organization
of such Person.
Other Agreements - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed
by any Borrower, any Subsidiary of any Borrower or any other third party
and delivered to Agent or any Lender in respect of the transactions
contemplated by the Agreement, including, without limitation, the Fee
Letter.
Overadvance - as defined in subsection 1.1.2 of the Agreement.
PBI - Pharmaceutical Buyers, Inc., an Arkansas corporation.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5
of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness
of any Borrower incurred after the date hereof which is secured by a
Purchase Money Lien and the principal amount of which, when aggregated
with the principal amount of all other such Indebtedness and Capitalized
Lease Obligations of any Borrower and its Subsidiaries at the time
outstanding, does not exceed $10,000,000. For the purposes of this
definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases (as opposed to operating leases) shall be
computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of any Borrower or any of its Subsidiaries that is covered by
Title IV of ERISA.
Prior Commitments - as defined in the first recital of the
Agreement.
Prior Loan and Security Agreement - as defined in the first recital
of the Agreement.
Prior Loans - as defined in the first recital of the Agreement.
Product Obligations - every obligation of each Borrower under and in
respect of any one or more of the following types of services or
facilities extended to such Borrower by Bank, Agent, any Lender or any
Affiliate of Bank, Agent or any Lender: (i) credit cards, (ii) cash
management or related services including the automatic clearing house
transfer of funds for the account of such Borrower pursuant to agreement
or overdraft, (iii) cash management, including controlled disbursement
services and (iv) Derivative Obligations.
Projections - Borrowers' forecasted Consolidated and consolidating
(i) balance sheets, (ii) profit and loss statements, (iii) cash flow
statements, and (iv) Availability, all prepared on a consistent basis with
the historical financial statements of Borrowers and their Subsidiaries,
together with appropriate supporting details and a statement of underlying
assumptions.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within 10 days prior to or after
the acquisition of any fixed assets for the purpose of financing all or
any part of the purchase price thereof, and (iii) any renewals, extensions
or refinancings thereof, but not any increases in the principal amounts
thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness secured
by such Lien.
Qualifying Commitment Increase - as defined in Section 1.6 of the
Agreement.
Rentals - as defined in subsection 8.2.18 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(c) of
ERISA.
Reserve Percentage - the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed on member banks of the Federal Reserve System against
"Euro-currency Liabilities" as defined in Regulation D.
Restricted Investment - any investment made in cash or by delivery
of Property to any Person, whether by acquisition of stock, Indebtedness
or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following:
(i) investments by any Borrower, to the extent existing on the
Closing Date, in one or more Subsidiaries of such Borrower;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of any Borrower or any
of its Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature
within one year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one
year from the date of acquisition and fully insured by the Federal
Deposit Insurance Corporation;
(vi) investments in commercial paper given the highest rating
by a national credit rating agency and maturing not more than 270
days from the date of creation thereof;
(vii) investments in money market, mutual or similar funds
having assets in excess of $100,000,000 and the investments of which
are limited to investment grade securities;
(viii) intercompany loans permitted under subsection
8.2.2(iii) of the Agreement;
(ix) investments existing on the date hereof and listed on
Exhibit 8.2.12 hereto; and
(x) investments otherwise expressly permitted pursuant to the
Agreement.
Revolving Credit Loan - a Loan made by any Lender pursuant to
Section 1.1.1 of the Agreement.
Revolving Credit Maximum Amount - $600,000,000, as such amount may
be reduced from time to time (or increased from time to time pursuant to
Section 1.6 hereof) pursuant to the terms of the Agreement.
Revolving Loan Commitment - with respect to any Lender, the amount
of such Lender's Revolving Loan Commitment pursuant to subsection 1.1.1 of
the Agreement, as set forth on Exhibit 1.1.1 to the Agreement or any
Assignment and Acceptance Agreement executed by such Lender; provided
that, upon satisfaction of the conditions to the increase in Revolving
Loan Commitments specified in Section 1.6, Revolving Loan Commitments may
be increased in the aggregate amount not to exceed $100,000,000 such that
the aggregate Loan Commitments at any time shall not exceed $735,000,000.
Revolving Loan Percentage - with respect to each Lender, the
percentage equal to the quotient of such Lender's Revolving Loan
Commitment divided by the aggregate of all Revolving Loan Commitments.
Revolving Note - the Secured Promissory Note to be executed by
Borrowers on or about the Closing Date in favor of each Lender to evidence
the Revolving Credit Loans, which shall be in the form of Exhibit 1.1(a)
to the Agreement, together with any replacement or successor notes
therefor.
Schedule of Accounts - as defined in Section 6.2.1 of the Agreement.
Security Documents - the Guaranty Agreements, the Mortgages and all
other instruments and agreements now or at any time hereafter securing the
whole or any part of the Obligations.
Seller - any seller of assets, stock or ownership interests in
connection with a Permitted Acquisition.
Solvent - as to any Person, that such Person (i) owns Property whose
fair saleable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay
all of its Indebtedness as such
Indebtedness matures and (iii) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is
about to engage.
Subordinated Debt - Indebtedness of any Borrower or any Subsidiary
of such Borrower that is subordinated to the Obligations in a manner and
on terms and conditions satisfactory to Agent in its sole discretion,
including, without limitation, any Indebtedness payable to a Seller in
connection with a Permitted Acquisition, and contains terms, including
without limitation, payment terms, satisfactory to Agent in its sole
discretion.
Subordination Agreements - the Subordination Agreements, in form and
substance and on terms and conditions satisfactory to Agent in its sole
discretion, relating to each of the notes evidencing the Subordinated Debt
between Agent and the holders of such notes.
Subsidiary - any Person of which another Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination. Notwithstanding the foregoing, (i) the
definition of Subsidiary shall not include SourceTenn, LLC and any
Inactive Subsidiary and (ii) PBI shall not be deemed to be a Subsidiary
for purposes of Section 8.2.
Swingline Loans - as defined in subsection 1.1.4 of the Agreement.
Term - as defined in Section 4.1 of the Agreement.
Type of Organization - with respect to any Person, the kind or type
of entity by which such Person is organized, such as a corporation or
limited liability company.
UCC - the Uniform Commercial Code as in effect in the State of
Illinois on the date of this Agreement, as it may be amended or otherwise
modified.
Unused Line Fee - as defined in Section 2.5 of the Agreement.
Voting Stock - Securities of any class or classes of a corporation,
limited partnership or limited liability company or any other entity the
holders of which are ordinarily, in the absence of contingencies, entitled
to vote with respect to the election of corporate directors (or Persons
performing similar functions).
Xxxxx - Xxxxx HealthCare Solutions, Inc., an Arkansas corporation.
Xxxxx Distribution - Xxxxx Distribution, L.L.C., an Arkansas limited
liability company.
Xxxxx Heartland - Xxxxx Heartland, L.L.C., an Arkansas limited
liability company.
OTHER TERMS. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
LIST OF EXHIBITS
Exhibit 1.1(a) Form of Revolving Note
Exhibit 1.1(b) Form of Incremental Last Out Loan Note
Exhibit 1.1.1 Loan Commitments
Exhibit 6.1.1 Business Locations
Exhibit 7.1.1 Jurisdictions in which each Borrower and each Subsidiary is Authorized to do Business
Exhibit 7.1.4 Capital Structure and Stock Option Plans of each Borrower and each Subsidiary
Exhibit 7.1.5 Names; Organization
Exhibit 7.1.14 Tax Identification Numbers of Subsidiaries
Exhibit 7.1.15 Brokers' Fees
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19 Contracts Restricting Right to Incur Debts
Exhibit 7.1.20 Litigation
Exhibit 7.1.22 Capitalized and Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.24 Trade Relations
Exhibit 7.1.25 Labor Relations
Exhibit 7.1.26 Environmental Laws
Exhibit 8.1.3 Form of Compliance Certificate
Exhibit 8.1.4 Form of Borrowing Base Certificate
Exhibit 8.2.3 Existing Indebtedness
Exhibit 8.2.5 Permitted Liens
Exhibit 8.2.12 Permitted Investments
Exhibit 8.3 Financial Covenants
EXHIBIT 8.3
FINANCIAL COVENANTS
DEFINITIONS
ADJUSTED NET EARNINGS FROM OPERATIONS - with respect to any fiscal
period, means the net earnings (or loss) after provision for income taxes
for such fiscal period of Borrowers, as reflected on the financial
statements of Borrowers supplied to Agent pursuant to the Agreement, but
excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of any Borrower accrued prior
to the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the assets
of which have been acquired in any manner by a Borrower, realized by
such corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a
Subsidiary of a Borrower) in which any Borrower has an ownership
interest unless such net earnings shall have actually been received
by a Borrower in the form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of a
Borrower which for any reason is unavailable for payment of
dividends to such Borrower;
(vii) the earnings of any Person to which any assets of a
Borrower shall have been sold, transferred of disposed of, or into
which a Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date of
such transaction;
(viii) any gain arising from the acquisition of any securities
issued by a Borrower;
(ix) any gain arising from extraordinary or non-recurring
items; and
(x) any non-cash loss arising from extraordinary or
non-recurring items, other than write-downs of Accounts or
Inventory.
EBITDA - with respect to the most recent twelve-month period then
ended, the sum of Borrowers' Adjusted Net Earnings from Operations before
Interest Expense, income taxes, and allowances for depreciation and amortization
for such period, all as determined for Borrowers and their Subsidiaries on a
Consolidated basis and in accordance with GAAP.
Exhibit 8.3 - Page 1
FIXED CHARGE COVERAGE RATIO - with respect to the most recent
twelve-month period then ended, the ratio of (i) EBITDA for such period minus
the sum of (1) any provision for (plus any benefit from) income taxes included
in the determination of net earnings (or loss) for such period plus (2)
non-financed Capital Expenditures during such period, to (ii) Fixed Charges for
such period, all as determined for Borrowers and their Subsidiaries on a
Consolidated basis and in accordance with GAAP.
FIXED CHARGES - with respect to the most recent twelve-month period
then ended, the sum of: (i) scheduled principal payments required to be made
during such period in respect to Indebtedness for Money Borrowed (including the
principal portion of Capitalized Lease Obligations), plus (ii) Interest Expense
for such period, all as determined for Borrowers and their Subsidiaries on a
Consolidated basis and in accordance with GAAP, plus (iii) Distributions other
than repurchases of common stock permitted in accordance with clause (c) of
Section 8.2.7.
INTEREST EXPENSE - with respect to the most recent twelve-month
period then ended, interest expense incurred for such period, including without
limitation the interest portion of Capitalized Lease Obligations, plus the
Letter of Credit and LC Guaranty fees owing for such period, all as determined
for Borrowers and their Subsidiaries on a Consolidated basis and in accordance
with GAAP.
COVENANT
FIXED CHARGE COVERAGE RATIO. If Availability is less than (i)
$50,000,000 at any time for more than three (3) consecutive Business Days or
(ii) $45,000,000 at any time, then, at all times thereafter (subject to the
following proviso), Borrowers shall not permit the Fixed Charge Coverage Ratio,
on a Consolidated basis, for the most recent twelve month period then ended to
be less than 1.0 to 1.0; provided, however, that Borrowers shall not be required
to maintain such Fixed Charge Coverage Ratio upon and at such time (if at all)
that Availability equals or exceeds $50,000,000 for five (5) consecutive
Business Days.
Ex. 8.3 - Page 2
