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EXHIBIT 10.4
$40,000,000 REVOLVING LINE OF CREDIT
LOAN AGREEMENT WITH THIRD NATIONAL
BANK IN NASHVILLE DATED OCTOBER 14,1994,
(THE "REVOLVING LOAN AGREEMENT")
AMENDMENT TO REVOLVING LOAN AGREEMENT DATED JUNE 30, 1995
SECOND AMENDMENT TO REVOLVING LOAN AGREEMENT DATED OCTOBER 11, 1995
THIRD AMENDMENT TO REVOLVING LOAN AGREEMENT DATED
AUGUST 1, 1996
FOURTH AMENDMENT TO REVOLVING LOAN AGREEMENT DATED JANUARY 31, 1997
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EXHIBIT 10.4
LOAN AGREEMENT
By and Between
SOFAMOR XXXXX GROUP, INC.
and
THIRD NATIONAL BANK IN NASHVILLE
$40,000,000.00 October 14, 1994
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INDEX
Article I. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Article II. The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.01 The Revolving Credit Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.02. Term Loan Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.03. Borrowing Procedure under Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.04. Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.05. Participation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.06. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.07. Conditions of Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.08. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.09. Right of Offset, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.10. Non-Use Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Article III. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.01. Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Article IV. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.01. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.02. Corporate Power and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.03. Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.04. No Legal Bar or Resultant Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.05. No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.06. Liabilities and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.07. Taxes; Governmental Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.08. Title, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.09. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.10. Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.11. Significant Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.12. No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.13. Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Article V. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.01. Initial Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.02. All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Article VI. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.01 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.02. Certificates of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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Section 6.03. Taxes and Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.04 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.05. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.06. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.07. Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.08. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.09. ERISA Information and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.10. Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.11. Acquired Subsidiaries' Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.01. Debts, Guaranties, and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.03. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.04. Dividends, Distributions, and Redemptions; Issuance of Stock . . . . . . . . . . . . . . . . . 15
Section 7.05. Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.06. Mergers, Dispositions, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.07. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.08. Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.09. No Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.10. Prepayment of Other Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.11. Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.12. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Article VIII. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.03. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Article IX. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.02. Deviation from Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.03. Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.04. Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.05. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.06. Renewal, Extension, or Rearrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.07. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.08. Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.09. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.10. Nature of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.11. Governance; Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.12. Titles of Articles, Sections, and Subsections . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.13. Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Section 9.14. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.15. Application of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.16. Costs, Expenses, and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.17. Governing Law; Consent to Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.18. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.19. Entire Agreement; No Oral Representations Limiting Enforcement . . . . . . . . . . . . . . . 22
Section 9.20. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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LOAN AGREEMENT
This Loan Agreement is executed by SOFAMOR XXXXX GROUP, INC., an Indiana
corporation ("Borrower") and THIRD NATIONAL BANK IN NASHVILLE, a national
banking association ("Lender"), as of the 14th day of October, 1994.
RECITALS:
A. Borrower has previously executed that certain $25,000,000 Line of
Credit Note dated June 23, 1994 as amended by a First Amendment to Line
of Credit Note dated July 28, 1994, and as amended by a Second
Amendment to Line of Credit Note dated September 29, 1994 (the "Interim
Note") in favor of Lender as the holder thereof.
B. Borrower and Lender are entering into this Loan Agreement to advance
additional credit to Borrower and, a portion of such credit shall be
used to prepay the Interim Note.
NOW, THEREFORE, Borrower and Lender agree as follows:
Article I. Definitions.
As used in this Agreement, the following terms shall have the following
meanings, unless the context expressly otherwise requires:
"Adjusted LIBOR Rate" means the LIBOR Rate adjusted to include
(if imposed upon Lender) the cost, in basis points, of any applicable
reserve requirements of the Board of Governors of the Federal Reserve
System (or any successor), applicable to "Eurocurrency Liabilities"
pursuant to Regulation D or other then-applicable regulations of the
Board of Governors.
"Advance" means any extension of credit made pursuant to this
Agreement and/or the Note. The terms "Advance" and "Loan" (or the
plural forms thereof) are used interchangeably in this Agreement.
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with, the Borrower, (ii) which beneficially owns
or holds 5% or more of any class of the Voting Stock of the Borrower,
or (iii) of which 5% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 5% or more of the equity interest)
is beneficially owned or held by the Borrower or another Affiliate.
"Agreement" means this Loan Agreement (including all exhibits
hereto) as the same may be modified, amended, or supplemented from time
to time.
"Business Day" means any day other than a Saturday, Sunday or
day on which commercial banks are authorized to close under the laws of
the State of Tennessee.
"Closing" means the time and place of the execution and/or
delivery of the Loan Documents.
"Closing Date" means the 14th day of October, 1994.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Conditions Precedent" means (unless waived in writing by
Lender) those matters or events that must be completed or must occur or
exist prior to Lender's being obligated to fund any Advance, including,
but not limited to, those matters described in Article V hereof.
"Debt" means, with respect to any Person, without duplication,
(a) the Indebtedness and all other indebtedness which in accordance
with GAAP would be classified on a balance sheet as indebtedness for
the repayment of borrowed money, (b) all indebtedness, contingent or
otherwise, for reimbursement of drafts drawn or available to be drawn
under letters of credit, (c) all deferred indebtedness which in
accordance with GAAP would be classified on a balance sheet as
indebtedness, for the payment of the purchase price of property or
assets purchased, (d) all capitalized lease obligations classified as
such under current criteria of FASB No. 13, (e) all guaranties, and (f)
all obligations of such Person to indemnify another Person to the
extent of the amount of indemnity, if any, which would be payable by
such Person at the time of determination of Debt. Each subsection's
determination of "Debt" under this paragraph shall constitute
indebtedness only if so classified under GAAP. The definition of "Debt"
shall exclude checks and drafts endorsed for collection in the ordinary
course of business.
"Default" or "Event of Default" means the occurrence of any of
the events specified in Section 8.01 hereof.
"Determination Date" means the day three Business Days before
the date fixed for a prepayment.
"Financial Statements" means (i) the financial statement or
statements of Borrower described or referenced in Section 6.01 hereof
and delivered to Lender pursuant to this Agreement.
"Fiscal Quarter" means each of the quarters of the Fiscal Year
ending on March 31, June 30, September 30, and December 31.
"Fiscal Year" means any twelve-month accounting period ending
December 31.
"GAAP" means generally accepted accounting principles applied
on a consistent basis.
"Guarantor" and "Guarantors" mean each and all of the
Significant Subsidiaries of Borrower.
"Guaranty" and "Guaranties" mean each and all of the guaranty
agreements executed by Guarantors in favor of Lender, in form and
substance as set forth in Exhibit B.
"Indebtedness" means any and all amounts and liabilities owing
or to be owing by Borrower to Lender from time to time whether now
existing or hereafter incurred, in connection with this Agreement
and/or the Note.
"Liabilities" means, with respect to any Person, all Debt and
all other items (including without limitation taxes accrued as
estimated) that, in accordance with GAAP, would be included in
determining total liabilities as shown on the liabilities side of a
balance sheet.
"LIBOR Rate" means the LIBOR rate of interest reported by the
Telerate Computer Service to which Lender subscribes, for 30-day
periods, as such rate changes daily. The LIBOR Rate shall be
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determined on the day of any borrowing hereunder to which the LIBOR
Rate Option applies, and on the first (1st) day of each month
thereafter (and such rate shall be "fixed" for the periods beginning on
the date of borrowing, or the first day of each month, whichever is
applicable, and ending on the last day of such month). The LIBOR Rate
may vary from month to month.
"Lien" means 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 the common law, statute, or contract,
and including, but not limited to, the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale, or trust receipt or a lease, consignment, or bailment
for security purposes.
"Loan" or "Loans" means any borrowing by Borrower under this
Agreement, including any renewal, amendment, extension, or modification
thereof.
"Loan Documents" means, collectively, each document, paper or
certificate executed, furnished or delivered in connection with this
Agreement (whether before, at, or after the Closing Date), including,
without limitation, this Agreement, the Note, the Negative Pledge, the
Guaranties, and all other documents, certificates, reports, and
instruments that this Agreement requires or that were executed or
delivered (or both) at Lender's request.
"Maturity Date" means October 15, 1995, with respect to the
Revolving Credit Loan (unless the Maturity Date is extended in writing
by the Lender) and with respect to a Term Loan, the 1, 2, or 3-year
period elected by Borrower in writing pursuant to the provisions of
Section 2.02 herein.
"Maximum Amount" means the principal amount of $40,000,000,
which is the maximum principal amount that may be outstanding at any
time under the Loan.
"Negative Pledge" means that certain Negative Pledge Agreement
dated as of the date hereof executed by Borrower and the Significant
Subsidiaries in favor of Lender, including all amendments and
restatements thereof.
"Net Income" means (for any period of computation thereof) the
consolidated net income before extraordinary items (but after giving
effect to the credit resulting from tax loss carry forwards) of the
Borrower for any period determined in conformity with GAAP.
"Note" means that certain Promissory Note in the form as set
forth in Exhibit A hereto, in the principal amount of up to
$40,000,000.00, including all amendments, extensions, increases and
restatements thereto and thereof, and all replacement and substitute
notes therefor.
"Obligations" means all of Borrower's undertakings in the Loan
Documents including, but not limited to, all agreements,
representations, warranties, and covenants. The term "Obligations"
includes the Indebtedness.
"Offering Proceeds" means all net cash proceeds or the net fair
market value of any tangible assets derived by Borrower or any
Significant Subsidiary through the issuance of any equity security
(other than in connection with any employee benefit plan or
compensatory arrangement generally available to employees).
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"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, government, or any agency or political subdivision
thereof, or any other form of entity.
"Prepayment Premium" means as of any Determination Date, to the
extent that the Reinvestment Yield on such Determination Date is lower
than the interest rate payable on or in respect of the Term Loan, the
excess, if any, of (a) the present value of the principal and interest
payments to be foregone by any prepayment (exclusive of accrued
interest on such Term Loan through the date of prepayment) for such
Term Loan to be prepaid, determined by discounting (monthly on the
basis of a 360-day year composed of twelve 30-day months), such
payments at a rate that is equal to the Reinvestment Yield over (b) the
aggregate principal amount of such Term Loan then to be prepaid. To the
extent that the Reinvestment Yield on any Determination Date is equal
to or higher than the interest rate payable with respect to such Term
Loan, the Prepayment Premium shall be zero.
"Principal Office" means the principal office of the Lender
located at 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000.
"Property" or "Properties" means any interest in any kind of
property or asset, whether real, personal, or mixed, or tangible or
intangible.
"Reinvestment Yield" means, with respect to a Term Loan Rate
Option determined by reference to U.S. Treasury yields, the yield as
set forth on page "USD" of the Bloomberg Financial Markets Service at
10:00 a.m. (Chicago time) on the Determination Date for actively traded
U.S. Treasury securities having a maturity equal to the Weighted
Average Life to the applicable Maturity Date of the Term Loan then
being prepaid, rounded to the nearest month, or if such yields shall
not be reported as of such time or the yields reported as of such time
are not ascertainable in accordance with the preceding clause, then the
arithmetic mean of the yields published in the statistical release
designated H.15(519) of the Board of Governors of the Federal Reserve
System under the caption "U.S. Government Securities-Treasury Constant
Maturities" (the "statistical release") for the maturity corresponding
to the remaining Weighted Average Life to the applicable Maturity Date
of the Term Loan then being prepaid as of the date of such prepayment
rounded to the nearest month. If no maturity exactly corresponding to
such rounded Weighted Average Life to the applicable Maturity Date
shall appear therein, yields for the two most closely corresponding
published maturities (one of which occurs prior and the other
subsequent to the Weighted Average Life to the applicable Maturity
Date) shall be calculated pursuant to the foregoing sentence and the
Reinvestment Yield shall be interpolated from such yields on a
straight-line basis (rounding, in each of such relevant periods, to the
nearest month). Reinvestment Yield means, with respect to a Term Loan
Rate Option determined by reference to Federal Home Loan Bank funds,
the yield as set forth on the Weekly Summary of FHLB Advance Rates on
the Determination Date for advances having a maturity equal to the
Weighted Average Life to the applicable Maturity Date of the Term Loan
then being prepaid. For purposes of calculating the Reinvestment Yield,
the most recent weekly statistical release published prior to the
applicable Determination Date shall be used.
"Revolving Credit Loan" means the Advances made on a revolving
credit basis under the Note, excluding the amounts converted to a Term
Loan under Section 2.02 hereof.
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"Share Repurchase Plan" means that certain Stock Repurchase
Program approved by the Board of Directors of Borrower on April 20,
1994.
"Significant Subsidiary" means any Subsidiary which has gross
assets (based on undepreciated historical cost) aggregating $250,000 or
more at any time (excluding Subsidiaries whose sole material assets
consist of stock in another Subsidiary). As of the date hereof, the
Significant Subsidiaries are the following Subsidiaries:
Xxxxx Medical, Inc.
Warsaw Orthopedic, Inc.
Sofamor Xxxxx Japan K.K.
Sofamor Xxxxx GmbH
Sofamor Xxxxx Asia Pacific Limited
Sofamor S.N.C.
Sofamor Italia S.r.l.
Sofamor Iberica S.A.
"Subsidiary" means any corporation (or other entity) of which
fifty-one percent (51%) or more of the issued and outstanding voting
stock (or other ownership interest therein) is owned or controlled
directly or indirectly, by the Borrower and/or by one or more of any
Subsidiaries of the Borrower.
"Tangible Net Worth" means (i) the aggregate amount of all
assets of the Borrower as may properly be classified as such under
GAAP, other than goodwill and such other assets as are properly
classified as "intangible assets" in accordance with GAAP, less (ii)
the aggregate amount of all Liabilities of the Borrower as may properly
be classified under GAAP. The net amount raised by Borrower in an
equity offering will be included in determining Borrower's Tangible Net
Worth for purposes of the financial covenant set forth in Section 7.12
(c) of this Agreement.
"Term Loan" means the portion of the Revolving Credit Loan
converted to a Term Loan by Borrower under the provisions of Section
2.02 hereof.
"Term Loan Rate" or "Term Loan Rate Option" means one of the
following rates as selected by Borrower under Section 2.02: (i) a
floating rate equal to three-quarters of one percent (.75%) per annum
above the 30- day Adjusted LIBOR Rate as such rate may change from time
to time; (ii) a fixed rate equal to one and two- tenths of one percent
(1.2%) in excess of the Federal Home Loan Bank Board's "Fixed Rate
Advances" rate applicable to the average life (as determined by the
weighted maturity of the applicable Term Loan) of the Term Loan for
amounts of $1,000,000 and integral multiples thereof (provided,
however, this option shall be available only if Federal Home Loan Bank
Board funds are available to Lender in the amount converted to a Term
Loan by Borrower); or (iii) one and three-tenths of one percent (1.3%)
in excess of the 1-year, 2-year, or 3- year (determined by the maturity
of the applicable Term Loan) U.S. Treasury yield (as published by the
Wall Street Journal) for amounts of $1,000,000 and integral multiples
thereof. The fixed Term Loan Rate under subsections (ii) and (iii) of
this paragraph shall be determined on the first Business Day following
Lender's receipt of Borrower's written election to convert all or a
portion of the outstanding Advance(s) of the Revolving Credit Loan to a
Term Loan.
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"Trailing Four Quarter Basis" means, with respect to any date,
the period that includes the twelve previous consecutive months of
Borrower (on a consolidated basis) ending the applicable date set forth
herein.
"Voting Stock" means securities of any class of a corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or persons
performing similar functions).
"Weighted Average Life to Maturity" means as applied to any
payment or prepayment of principal of the Term Loan, at any date, the
number of years obtained by dividing (a) the principal amount of the
Term Loan to be paid or prepaid into (b) the sum of the products
obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity, or other required payment,
including payment at final maturity, foregone by virtue of such payment
or prepayment, by (ii) the number of years (calculated to the nearest
1/12th) which would have elapsed between such date and the making of
such required payment.
Article II. The Loan.
Section 2.01 The Revolving Credit Loan. Subject to the conditions and
pursuant to the terms of the Loan Documents, and in reliance upon the
representations, warranties and covenants set forth in the Loan Documents,
Lender agrees to make Advances to Borrower on a revolving credit basis as a
Revolving Credit Loan pursuant to the Note in the aggregate principal amount of
up to $40,000,000, less any amounts converted to a Term Loan under Section 2.02
hereof. Each Advance hereunder as a Revolving Credit Loan, shall bear interest
from the date of such Advance at the 30-day Adjusted LIBOR Rate plus .625% per
annum, as such rate may change from time to time, until the Maturity Date or
until the principal amount of any such Advance(s) is converted to a Term Loan.
The terms, and provisions of repayment of the Revolving Credit Loan shall be as
set forth in the Note. Each of the provisions of the Note are incorporated
herein by reference. Interest on the Revolving Credit Loan shall be paid on the
first Business Day of each month in arrears commencing November 1, 1994. The
Revolving Credit Loan shall mature on the Maturity Date, at which time all
outstanding principal, accrued interest and fees (if any) under the Revolving
Credit Loan will be immediately due and payable. The Maximum Amount available
under the Revolving Credit Loan shall be automatically reduced by any amounts
that the Borrower converts to a Term Loan hereunder.
Section 2.02. Term Loan Option. From time to time until the Maturity
Date of the Revolving Credit Loan, Borrower shall have the option to convert all
or a portion of the outstanding principal amount of any Advance(s) previously
made on a revolving credit basis to a term loan (the "Term Loan(s)"). The
principal amount of such Term Loan(s) shall be amortized by equal quarterly
payments of principal over a one, two, or three-year period (commencing on the
first day of a calendar quarter following such conversion to a Term Loan) as
elected by Borrower. Borrower shall exercise its option to convert a revolving
credit Advance to a Term Loan in writing by delivery of a certificate in the
form set forth in Exhibit E, delivered to Borrower at least three (3) Business
Days prior to such conversion, specifying (i) the amount of the Term Loan; (ii)
the maturity date of the Term Loan (which shall be 1, 2, or 3-years from the
first day of the calendar quarter following the date of such conversion); (iii)
the Term Loan Rate Option elected by Borrower. Borrower shall have the right to
exercise its option to convert an Advance (previously made on a revolving credit
basis) to a Term Loan from time to time (until the Maturity Date of the
Revolving Credit Loan) in minimum denominations of $1,000,000 and integral
multiples thereof. Each Term Loan will mature on the applicable Maturity Date of
the Term Loan, at which time all outstanding principal, accrued interest, fees
and other charges (if any) under the Term Loan will be immediately
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due and payable. The Term Loan will bear interest at the Term Loan Rate Option
as elected by Borrower until its Maturity Date. The terms and provisions of
repayment of the Term Loan shall be as set forth in the Note. Interest and
principal shall be payable quarterly commencing on the first Business Day of the
calendar quarter following the conversion to a Term Loan.
Section 2.03. Borrowing Procedure under Loan. Until the Maturity Date
of the Revolving Credit Loan, the Borrower shall give the Lender written or
telephonic notice of the proposed borrowing prior to 1:00 p.m. Central Standard
(or Daylight) Time on the Business Day of such borrowing. The following persons
are authorized to request an Advance: E. Xxx Xxxxxxx, C.E.O., Xxxxx X. Xxxxxxxx,
President, Xxxxxxxx X. Xxxxxx, Chief Financial Officer, J. Xxxx Xxxxxxx,
Treasurer, or Xxxx X. Xxxxxxx, Xx., Assistant Treasurer. The Lender shall make
the Loan by wiring such Advance pursuant to the instructions of the Borrower, or
at the option of the Borrower, by depositing the funds being advanced into the
Borrower's operating account with the Lender no later than the close of the
Lender's business on the next Business Day. The giving of notice by the Borrower
that it is requesting the Loan shall constitute a warranty by the Borrower that,
as of the date notice is given and as of the date the Advance is made, the
officers of the Borrower do not have knowledge of any Event of Default as
defined herein; and that as of such dates, the representations and warranties
contained in Article IV are and will be true and correct, except as to changes
occurring after the date of this Agreement caused by transactions permitted
under this Agreement or as approved in writing by Lender.
Section 2.04. Prepayment Penalty. The outstanding principal amount of a
Term Loan may be prepaid, in whole or in part, at any time prior to its maturity
upon ten (10) days prior written notice to Lender. Each partial prepayment shall
be in a principal amount of not less than $500,000 and integral multiples of
$100,000 in excess thereof. Any Term Loan to which a fixed interest rate
described in Section 2.02 of the Loan Agreement applies, if prepaid, shall be
subject to a Prepayment Premium. The Prepayment Premium shall be due and payable
on the first Business Day subsequent to any such prepayment, whether prepayment
has been made at the option of the Borrower or upon acceleration. Any prepayment
shall be applied first to the interest accrued on the outstanding principal
balance of the Term Loan, and the remainder, if any, shall be applied to reduce
the outstanding principal balance of the Term Loan in the inverse order of
maturity. If Borrower prepays any portion of a Term Loan without specifying
whether the prepayment shall be applied to amounts bearing interest at a LIBOR
Rate or a fixed rate, such prepayment(s) shall be deemed to apply (after
application to fees and other charges and accrued interest) first to the fixed
rate Term Loan, then to a LIBOR rate Term Loan.
Section 2.05. Participation Agreements. Lender may, at any time enter
into participation agreements with one or more participating banks or other
institutions, whereby Lender may sell all or a portion of this Loan.
Section 2.06. Use of Proceeds. The proceeds of the Loan hereunder shall
be used by the Borrower for general corporate purposes, including without
limitation, the financing of the acquisition of entities (subject to approval by
Lender under Section 7.07 hereof) by Borrower, the repayment of the Interim
Facility, for Borrower's capital expenditures and working capital purposes, and
for repurchase of Borrower's common stock pursuant to the terms of the Share
Repurchase Plan.
Section 2.07. Conditions of Lending. Notwithstanding any other
provision of this Agreement, the Lender shall not be obligated or required to
make any Advance under the Note unless each of the Conditions Precedent set
forth in this Agreement has been satisfied at the time the Advance is made or
such Conditions Precedent are waived by Lender in writing.
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Section 2.08. Term of Agreement. This Agreement shall be binding on
the Borrower so long as any portion of the Obligations described herein remains
outstanding.
Section 2.09. Right of Offset, Etc. The Borrower hereby agrees that, in
addition to (and without limitation of) any right of set-off, banker's lien or
counterclaim the Lender may otherwise have, the Lender (and any participant of
this Loan under Section 2.05) shall be entitled, at its option, to offset
balances held by it at any of its offices against any principal of or interest
on the Obligations hereunder which is not paid when due by reason of a failure
by the Borrower to make any payment when due to the Lender (regardless whether
such balances are then due to the Borrower), in which case it shall promptly
notify the Borrower, provided that its failure to give such notice shall not
affect the validity thereof.
Section 2.10. Non-Use Fee. As additional consideration for the Lender's
commitment to make the Loan hereunder and reservation of monies to fund the
Loan, the Borrower shall pay to the Lender on the first Business Day of each
Calendar Quarter, a fee in the amount of .125% per annum of the average daily
unused portion of the Maximum Amount of the Revolving Credit Loan during the
prior calendar quarter.
Article III. Guaranties.
Section 3.01. Guarantors. Repayment of all of the Indebtedness and
performance of the Obligations shall be guaranteed by the Guarantors pursuant to
guaranty agreements in substantially the form as set forth in Exhibit B, subject
to the provisions of Section 6.11 hereof.
Article IV. Representations and Warranties.
To induce Lender to enter this Agreement and extend credit under this
Agreement, Borrower covenants, represents, and warrants to Lender that as of the
date hereof and as of the Closing Date:
Section 4.01. Organization and Qualification. Borrower is a corporation
duly organized and existing under the laws of the State of Indiana, each of its
Subsidiaries is a corporation duly organized and existing under the laws of its
jurisdiction of incorporation, and Borrower and each of the Subsidiaries is
qualified to do business in all jurisdictions in which it conducts its business,
the failure to qualify in which would have a material adverse effect on the
business, Properties, operations or financial condition of the Borrower and its
Subsidiaries on a consolidated basis.
Section 4.02. Corporate Power and Authorization. Borrower is duly
authorized and empowered to execute, deliver, and perform under all Loan
Documents to which it is a party; and all other corporate and/or shareholder
action required for the due execution, delivery, and performance of the Loan
Documents has been duly and effectively taken.
Section 4.03. Binding Obligations. This Agreement is, the Note, and the
other Loan Documents when executed and delivered in accordance with this
Agreement will be, legal, valid and binding upon the Borrower, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency or similar laws relating to enforcement of creditors' rights and
general equity principles which may limit the specific enforcement of certain
remedies herein.
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Section 4.04. No Legal Bar or Resultant Lien. The Borrower's execution,
delivery and performance of the Loan Documents to which it is a party do not
constitute a default under, and will not violate any provisions of the articles
of incorporation or bylaws of Borrower, any contract, agreement, law,
regulation, order, injunction, judgment or decree to which Borrower is subject,
or result in the creation or imposition of any Lien upon any Properties of
Borrower, other than those contemplated by the Loan Documents, which violation,
creation or imposition would have a material adverse effect on the business,
Properties, operations or financial condition of the Borrower and its
Subsidiaries on a consolidated basis, or on the ability of the Borrower to
perform its obligations under this Agreement or any of the other Loan Documents.
Section 4.05. No Consent. Borrower's execution, delivery, and
performance of the Loan Documents do not require the consent or approval of any
other Person, which has not been obtained.
Section 4.06. Liabilities and Litigation. Except as described in
Exhibit G, there is no litigation, legal or administrative proceeding,
investigation, or other action of any nature pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any of its Subsidiaries,
not fully covered by insurance (except for deductibles allowable herein), that
may materially and adversely affect the business or the Properties of the
Borrower and its Subsidiaries on a consolidated basis, the ability of Borrower
to carry out the terms of the Loan Documents, or the ability of Borrower and its
Subsidiaries on a consolidated basis, to carry on its/their business as now
conducted.
Section 4.07. Taxes; Governmental Charges. Subject to Borrower's right
to contest taxes and assessments in Section 6.03 hereof, Borrower has filed or
caused to be filed all tax returns and reports required to be filed and has paid
all taxes, assessments, fees, and other governmental charges levied upon it or
upon any of its Properties or income, which are due and payable, in each case
the failure to file or pay which would have a material adverse effect on the
business, Properties, financial condition or operations of the Borrower and its
Subsidiaries on a consolidated basis, or on the ability of the Borrower to
perform its obligations under this Agreement or any of the other Loan Documents.
Section 4.08. Title, Etc. Borrower has good title to its owned
Properties, free and clear of all liens except those referenced or reflected in
the Financial Statements described in Section 4.13 hereof.
Section 4.09. No Default. Borrower is not in default in any respect
that materially adversely affects its business, Properties, operations, or
condition, financial or otherwise, of the Borrower and its Subsidiaries on a
consolidated basis, under any indenture, mortgage, deed of trust, credit
agreement, note, agreement, or other instrument to which Borrower is a party or
by which it or its Properties are bound. No party to any such indenture,
mortgage, deed of trust, credit agreement, note, agreement or other instrument
has declared a default thereunder which default would have a material adverse
effect on the business, Properties, financial condition or operations of the
Borrower and its Subsidiaries on a consolidated basis.
Section 4.10. Compliance with Laws, Etc. Borrower is not in violation
of any law, judgment, decree, order, ordinance, or governmental rule or
regulation to which Borrower or any of its respective Properties, is subject,
which violation would have a material adverse effect on the business,
Properties, financial condition or operations of the Borrower and its
Subsidiaries on a consolidated basis, or on the ability of the Borrower to
perform its obligations under this Agreement or any of the other Loan Documents.
Borrower is in compliance in all material respects with the applicable
provisions of ERISA. The Borrower has not incurred any "accumulated funding
deficiency" within the meaning of ERISA, and the Borrower has not incurred any
material liability to
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PBGC in connection with any plan, which deficiency or liability would be
materially adverse to the business, Properties, financial condition or
operations of the Borrower and its Subsidiaries, on a consolidated basis.
Section 4.11. Significant Subsidiaries. As of the date hereof, Borrower
has no Significant Subsidiaries other than the Significant Subsidiaries set
forth under the definition of "Significant Subsidiary" in Article I of this
Agreement.
Section 4.12. No Material Misstatements. No information, exhibit, or
report furnished or to be furnished by Borrower to Lender in connection with
this Agreement, contains as of the date thereof, or will contain as of the
Closing Date, any material misstatement of fact or failed or will fail to state
any material fact, the omission of which would render the statements therein
materially false or misleading.
Section 4.13. Financial Statement. The consolidated financial
statements dated December 31 1993, and June 30, 1994 previously delivered by
Borrower to Lender fairly and accurately presents the financial condition of
Borrower and its Subsidiaries as of such date and has been prepared in
accordance with generally accepted accounting principles consistently applied.
Since the date of that financial statement, there has been no material, adverse
change in the financial condition of the Borrower and its Subsidiaries.
Article V. Conditions Precedent.
Section 5.01. Initial Conditions. Lender's obligation to extend credit
hereunder is subject to the Conditions Precedent that Lender shall have received
(or agreed in writing to waive or defer receipt of) all of the following, each
duly executed, dated and delivered as of the Closing Date, in form and substance
satisfactory to Lender and its counsel:
(a) Note and Loan Documents. The Note of Borrower payable to
the order of Lender, the Guaranties, the Negative Pledge in the form
attached hereto as Exhibit D, and all other Loan Documents;
(b) Evidence Of All Corporate Action By The Borrower.
Certified copies of all corporate action taken by the Borrower,
including resolutions of its Board of Directors, authorizing the
execution, delivery, and performance of the Loan Documents to which it
is a party and each other document to be delivered pursuant to this
Agreement;
(c) Incumbency Certificate Of The Borrower. A certificate of
the Secretary of the Borrower certifying the names and true signatures
of the officers of the Borrower authorized to sign the Loan Documents
to which it is a party and the other documents to be delivered by the
Borrower under this Agreement;
(d) Opinion of Counsel For the Borrower and the Guarantors. An
opinion of counsel for the Borrower and the Guarantors in form and
substance satisfactory to the Lender.
(e) Evidence Of All Corporate Action By The Guarantors.
Certified (as of the date of delivery of their respective Guaranties)
copies of all corporate action taken by the Guarantors, authorizing the
execution, delivery, and performance of their respective Guaranties;
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(f) Incumbency Certificates Of The Guarantors. A certificate
of the secretary or assistant secretary of each of the Guarantors,
certifying the names and true signatures of the officers of the
Guarantors authorized to sign the respective Guaranties;
(g) Other Opinions, Approvals And Documents. The Lender shall
have received such other approvals, opinions or documents as the Lender
or its counsel may reasonably request;
(h) No Material Adverse Change. No material adverse changes in
the financial or other condition of Borrower or any of the Guarantors
shall have occurred since the date of this Agreement which, in the
opinion of Lender, is likely to materially adversely affect the ability
of Borrower to perform its obligations under this Agreement, or of the
Guarantors to perform their obligations under the Guaranties;
(i) Certificates of Good Standing. Certificates of good
standing of Borrower and each Guarantor from the states (or other
jurisdiction) of their incorporation and each state (or other
jurisdiction) in which Borrower and each Guarantor has qualified to do
business and is doing business;
(j) Charter and By-Laws. Copies of Borrower's and Guarantors'
by-laws and articles of incorporation, certified by the secretary of
Borrower or the respective Guarantor, as being true and complete copies
of the current by-laws, articles of incorporation of Borrower, and the
Guarantors, as applicable;
(k) Evidence of Insurance. Evidence of insurance as required
by Section 6.06 herein.
Section 5.02. All Borrowings. The Lender's obligations to extend credit
under the Note are subject to the following additional Conditions Precedent
which shall be met when an Advance is requested: (a) The representations of the
Borrower contained in Article IV are true and correct as of the date of the
requested Advance, with the same effect as though made on the date additional
funds are advanced; (b) There has been no material adverse change in the
Borrower's financial condition since the date of the last borrowing hereunder;
(c) No Event of Default has occurred and continues to exist; (d) No material
litigation (not disclosed in writing by the Borrower to the Lender prior to the
date of the execution and delivery of this Agreement) is pending or known to be
threatened against the Borrower, which is includable on Borrower's Financial
Statements by its auditors in accordance with GAAP, materially adversely
affecting the financial position or business of the Borrower and its
Subsidiaries on a consolidated basis or impairing the ability of the Borrower or
the Guarantors to perform their obligations under this Agreement or any other
Loan Documents.
Article VI. Affirmative Covenants.
Borrower covenants that, during the term of this Agreement (including
any extensions hereof) and until all Indebtedness shall have been finally paid
in full and all Obligations shall have been fully paid and discharged, Borrower
shall:
Section 6.01 Financial Statements and Reports. Furnish to Lender:
(a) Annual Reports. As soon as available, and in any event
within ninety (90) days after the close of each Fiscal Year, from the
present independent certified public accountants of Borrower or by such
other firm of independent public accountants as may be designated by
Borrower and be reasonably
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satisfactory to the Lender, the audited consolidated Financial
Statements of the Borrower and its Subsidiaries setting forth the
audited consolidated balance sheets (and unaudited consolidating
balance sheets prepared by Borrower) of Borrower and its Subsidiaries
at the end of such year, and the audited consolidated statements of
income, cash flow and retained earnings (and unaudited consolidating
statements of income, cash flows, and retained earnings) prepared by
Borrower of Borrower and its Subsidiaries for such year, setting forth
in each case in comparative form (beginning when comparative data are
available) the corresponding figures for the preceding Fiscal Year;
(b) Quarterly and Year-to-Date Reports. As soon as available
and in any event within forty-five (45) days after the end of each
Fiscal Quarter, the unaudited consolidated and consolidating balance
sheet of Borrower and its Subsidiaries as of the end of such Fiscal
Quarter and the unaudited consolidated and consolidating statement of
income of Borrower and its Subsidiaries for such Fiscal Quarter and for
the period from the beginning of the Fiscal Year to the close of such
quarter, all certified by the chief financial or chief accounting
officer of the Borrower as being true and correct to the best of his or
her knowledge;
(c) Annual Budgets. Within thirty (30) days after its Fiscal
Year end, annual budgets and projections for the ensuing Fiscal Year;
and
(d) Securities and Exchange Filings. At the same time as they
are filed with the Securities and Exchange Commission, copies of
Borrower's 10-Q and 10-K reports and any other filings made with the
Securities and Exchange Commission.
(e) Other Information. With reasonable promptness, such other
information as Lender may from time to time reasonably request.
All such balance sheets and other Financial Statements referred to in Sections
6.01(a) and (b) hereof shall conform to GAAP on a basis consistent with those of
previous Financial Statements.
Section 6.02. Certificates of Compliance. (a) Annual and Quarterly
Certificates. Concurrently with the furnishing of the annual Financial
Statements pursuant to Section 6.01(a) hereof and the quarterly Financial
Statements pursuant to Section 6.01(b) hereof, furnish or cause to be furnished
to Lender a certificate of compliance in the form of Exhibit C hereto, certified
by the president or chief accounting or financial officer of the Borrower,
stating that neither such officer nor the Borrower has obtained knowledge of any
Event of Default, or event which, after notice or lapse of time (or both), would
constitute an Event of Default or, if such officer or the Borrower has obtained
such knowledge, disclosing the nature, details, and period of existence of such
event.
Section 6.03. Taxes and Other Liens. Pay and discharge promptly all
taxes, assessments, and governmental charges or levies imposed upon it or upon
any of its income or Property as well as all claims of any kind (including
claims for labor, materials, supplies, and rent) which, if unpaid, might become
a Lien (other than Liens permitted under Section 7.02) upon any or all of its
Property, the failure to pay which might have material adverse effect on the
business, Properties, financial condition or operations of the Borrower and its
Significant Subsidiaries on a consolidated basis; provided, however, that
Borrower shall not be required to pay any such tax, assessment, charge, levy, or
claim if the amount, applicability, or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently conducted and if
Borrower shall establish reserves therefor adequate under GAAP.
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Section 6.04 Maintenance.
(a) Maintain its corporate existence;
(b) Maintain its Property in good and workable condition at
all times and make all repairs, replacements, additions, and
improvements to its Property reasonably necessary and proper to ensure
that the business carried on in connection with its Property may in all
respects material to the business, financial condition or operations of
the Borrower and its Subsidiaries on a consolidated basis, be conducted
properly and efficiently at all times.
Section 6.05. Further Assurances. Promptly cure any defects in the
creation, issuance, and delivery of the Loan Documents. Borrower at its expense
promptly will execute and deliver to Lender upon request all such other and
further documents, agreements, and instruments in compliance with or
accomplishment of the covenants and agreements of Borrower in the Loan
Documents, or to correct any omissions in the Loan Documents, or to state more
fully the Obligations and agreements set out in any of the Loan Documents, or to
file any notices, or to obtain any consents, all as may be reasonably necessary
or appropriate in connection therewith.
Section 6.06. Insurance. Maintain and continue to maintain, with
financially sound and reputable insurors, insurance reasonably satisfactory in
type, coverage and amount to Lender against such liabilities, casualties, risks,
and contingencies and in such types and amounts as is customary in the case of
corporations engaged in the same or similar businesses and similarly situated.
Such insurance presently includes: (i) general liability insurance with a total
limit of $2,000,000 and an each event limit of $1,000,000; (ii) umbrella excess
liability protection total limit coverage of $5,000,000 and an each event limit
of $5,000,00; (iii) property and casualty insurance in amounts of at least
$47,000,000 for its Indiana and Memphis facilities (including earthquake
insurance of $5,000,000 for the Indiana facility and the Memphis facility); (iv)
$15,000,000 excess "difference in conditions" policy including flood and
earthquake for the Memphis facility; and (v) products liability insurance with
coverage of no less than $20,000,000 for U.S./Canada operations, with
deductibles not greater than $75,000 per occurrence and $500,000 in the
aggregate and coverage for non-U.S./Canada operations of 80,000,000 French
Francs with deductibles not greater than 100,000 French Francs per occurrence
and 500,000 French Francs in the aggregate. Upon request of Lender, Borrower
will furnish or cause to be furnished to Lender from time to time a summary of
the insurance coverage of Borrower in form and substance satisfactory to Lender
and at least annually will furnish Lender copies of the applicable policies or
insurance binders evidencing such insurance.
Section 6.07. Right of Inspection. Permit any officer, employee, or
agent of Lender to visit and inspect any of the Property of Borrower, to examine
Borrower's books of record and accounts, to take copies and extracts from such
books of record and accounts, all at such reasonable times and upon reasonable
notice.
Section 6.08. Notice of Certain Events. Promptly notify Lender if
Borrower learns of the occurrence of (i) any event that constitutes an Event of
Default; or (ii) the receipt of any notice from, or the taking of any other
action by, the holder of any promissory note, debenture, or other evidence of
Debt of Borrower or of any security (as defined under the Securities Act of
1933, as amended) of Borrower, representing Debt in excess of $500,000, with
respect to a claimed default, together with a detailed statement by an officer
of Borrower specifying the notice given or other action taken by such holder and
the nature of the claimed default and what action Borrower is taking or proposes
to take with respect thereto; or (iii) any legal, judicial, or regulatory
proceedings affecting Borrower, not covered by insurance (which are included on
Borrower's Financial Statements by its auditors in accordance with GAAP) which,
if adversely determined, would have a material and adverse effect on the
business or the financial condition of Borrower; or (iv) any dispute between
Borrower and any governmental or regulatory
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authority or any other person, entity, or agency which, if adversely determined,
might materially interfere with the normal business operations of Borrower; or
(v) any material adverse changes, either individually or in the aggregate, in
the assets, liabilities, financial condition, business, operations, affairs, or
circumstances of Borrower from those reflected in the Financial Statements or
from the facts warranted or represented in any Loan Document.
Section 6.09. ERISA Information and Compliance. Comply in all respects
in which noncompliance might cause a material adverse effect on the business,
Properties, financial condition or operations of the Borrower and its
Significant Subsidiaries on a consolidated basis, with the Employee Retirement
and Income Security Act ("ERISA") and all other applicable laws governing any
pension or profit sharing plan or arrangement to which Borrower is a party.
Borrower shall provide Lender with notice of any "reportable event" or
"prohibited transaction" or the imposition of a "withdrawal liability" within
the meaning of ERISA.
Section 6.10. Management. Give notice to Lender of any change in the
senior management of Borrower. The term "senior management" shall include only
Borrower's President, Chairman, Chief Financial Officer or Treasurer.
Section 6.11. Acquired Subsidiaries' Guaranties. In the event a
Subsidiary has assets sufficient to be defined as a Significant Subsidiary
subsequent to the date hereof, or in the event of the acquisition of a
Subsidiary by Borrower subsequent to the date hereof which has assets sufficient
to be defined as a Significant Subsidiary, cause each new Significant Subsidiary
to execute a Guaranty (in the form attached as Exhibit B) and deliver to Lender
the related articles of incorporation, bylaws, certificates of good standing,
certificates of incumbency, and all other applicable items described in Article
V related thereto, within 90 days after the occurrence of such event.
ARTICLE VII. Negative Covenants.
Borrower covenants and agrees that, during the term of this Agreement and
any extensions hereof and until the Indebtedness has been paid and satisfied in
full, unless Lender shall otherwise first consent in writing, Borrower will not,
and will not allow or suffer any of its Significant Subsidiaries to,:
Section 7.01. Debts, Guaranties, and Other Obligations. Incur, create,
assume, suffer to exist or in any manner become or be liable with respect to any
Debt; provided that subject to all other provisions of this Article, the
foregoing prohibitions shall not apply to: (a) any Debt (and refinancings
thereof) reflected on Borrower's financial statements for the periods ending
December 31, 1993 and June 30, 1994; (b) indebtedness incurred under this
Agreement or any other loan agreement between Borrower and Lender; (c) trade
indebtedness incurred in the ordinary course of business not to exceed amounts
historically and customarily incurred by Borrower (or its Significant
Subsidiaries, as applicable); (d) any subordinate indebtedness in form, amount
and substance reasonably approved in advance in writing by the Lender (which
approval shall not be unreasonably withheld) and subordinated by subordination
agreements reasonably satisfactory to Lender; (e) Debt of a corporation acquired
by the Borrower or a Significant Subsidiary subsequent to the date of this
Agreement, which Debt was incurred prior to such acquisition and is outstanding
on the date of such acquisition; (f) intercompany Debt arising solely among
Borrower and its Subsidiaries that is not otherwise prohibited under Section
7.09 of this Agreement; and (g) other indebtedness (including final judgments
not covered by insurance and capital expenditures of Borrower and its
Significant Subsidiaries) not to exceed $5,000,000.00 in the aggregate for
Borrower and its Subsidiaries, excepting such other indebtedness approved by
Lender in writing. Lender's response to a request for additional indebtedness
under this Section shall be delivered within fifteen (15) business days after
receipt of Borrower's written request.
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Section 7.02. Liens. Grant any Lien in, or otherwise encumber, any of its
Properties or assets or permit any of the Significant Subsidiaries to grant any
Lien in, or otherwise encumber, any of such Significant Subsidiary's Properties
or assets, except for (i) Liens now existing (including Liens existing on the
date of acquisition of any corporation subsequently acquired by Borrower as a
Significant Subsidiary in accordance with this Agreement); (ii) liens for taxes
not yet due and payable or which are being actively contested in good faith by
appropriate proceedings; (iii) Liens arising in favor of the Lender; (iv) Liens
incurred or pledges and deposits made in connection with worker's compensation,
unemployment insurance, old age pensions, social security and public liability
laws and similar legislation; (v) statutory liens of landlords and other liens
imposed by law, such as carriers', warehousemen's, mechanics', materialmen's and
vendor's liens, incurred in the ordinary course of business; (vi) zoning
restrictions, easements, licenses, reservations, restrictions on the use or
transfer of real property which do not in the aggregate materially detract from
the value of the property or assets of the Borrower and its Significant
Subsidiaries taken as a whole, or materially impair the use of such property or
assets in the operations of the business of the Borrower or any Significant
Subsidiary; (vii) attachment, judgment or similar liens so long as the finality
of any judgments related thereto in excess of $250,000.00 in the aggregate is
being contested in good faith, and for which adequate reserves have been
provided in the financial statements of the Borrower; (viii) liens securing any
property for rent or hire or any deferred purchase price for any property; (ix)
liens arising from set offs; and (x) renewals and extensions of liens described
in subsections (i) through (ix) above.
Section 7.03. Investments. Subject to any limitations otherwise
provided in this Agreement but excepting transactions allowed under Section 7.07
hereof, make investments in any Person, except that, the foregoing restriction
shall not apply to: (a) investments in direct obligations of the United States
of America or any agency thereof; (b) investments in certificates of deposit
having maturities of less than one year, or repurchase agreements issued by
commercial banks in the United States of America having capital and surplus in
excess of $50,000,000, or commercial paper of the highest quality; (c)
investments in money market funds so long as the entire investment therein is
fully insured or so long as the fund is a fund operated by a commercial bank of
the type specified in (b) above; and (d) investments made pursuant to the
Investment Policy of Borrower dated August of 1994 (or amendments or
restatements thereof without material changes in risk) which is attached hereto
as Exhibit F.
Section 7.04. Dividends, Distributions, and Redemptions; Issuance of
Stock. Declare or pay any dividend (other than dividends payable solely in
common stock of Borrower or dividends payable from a Subsidiary to Borrower), or
purchase, redeem, or otherwise retire or acquire for value any of its stock now
or hereafter outstanding, except pursuant to the Share Repurchase Plan, or
return any capital to its stockholders, or make any distribution of its assets
to its stockholders as such, in excess of Fifty percent (50%) of the aggregate
Net Income (as defined in accordance with GAAP) of Borrower and its
Subsidiaries, on a consolidated basis, for such Fiscal Year.
Section 7.05. Nature of Business. Suffer or permit any material
adverse change to be made in the character of its business as carried on at the
Closing Date.
Section 7.06. Mergers, Dispositions, Etc. (a) Sell, assign, lease,
transfer, or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its Property, or the Property (whether
now owned or hereafter acquired) of any of its Significant Subsidiaries, to any
Person; or (b) consolidate with or merge into, or permit any Significant
Subsidiary to consolidate with or merge into, any other corporation or entity,
unless the Borrower or a Significant Subsidiary is the surviving entity and has
a Tangible Net Worth equal to or greater than Borrower or Significant Subsidiary
prior to such consolidation or merger; (c) suffer or permit in whole or in part
dissolution or liquidation of Borrower or any Significant Subsidiary (except in
a transaction permitted by
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clause (b) immediately preceding and except, with regard to a Significant
Subsidiary, but not with regard to the Borrower, in a transaction permitted by
clause (a) immediately preceding); or (d) permit a reorganization or sale of
securities that would cause Borrower to no longer maintain control of a
Significant Subsidiary (other than any Significant Subsidiary subject to a
transaction permitted under clauses (a), (b) or (c) immediately preceding).
Section 7.07. Acquisitions. Without the written approval of Lender
(which shall not be unreasonably withheld), acquire the assets of or the shares
of an unrelated entity or form a joint venture (or partnership) with an
unrelated entity, during the term hereof, provided, that the foregoing shall not
apply to acquisitions (or joint ventures) in a business related to Borrower's
current activities with a purchase price (or capital contribution) aggregating
$10,000,000 or less in any twelve-month period. In the event Borrower shall
request Lender to approve an acquisition or joint venture under this Section,
Borrower shall supply to Lender at least fifteen (15) days prior to such
acquisition or capital contribution, historical audited (if prepared) financial
statements of the entity to be acquired (or the entity to be a joint venturer)
for the two prior fiscal years, the most recent unaudited report of the entity
to be acquired (or the entity to be a joint venturer), and revised internal
projections of Borrower (on a consolidated basis) including the entity to be
acquired (or joint venture) such other financial information reasonably
requested by Lender.
Section 7.08. Disposition of Assets. Dispose of any of its assets or
any assets of any of its Significant Subsidiaries, other than as permitted under
Section 7.06, assets which are obsolete, insignificant or depleted, and other
than in the ordinary course of Borrower's (or the respective Significant
Subsidiary's, as applicable) present business upon terms not materially adverse
to Borrower (or the applicable Significant Subsidiary), and in any event only
for full and adequate consideration.
Section 7.09. No Loans. Excepting loans approved by Lender in writing
(Lender's response to a request by Borrower under this Section shall be
delivered within fifteen (15) business days following receipt of Borrower's
written request), make any loans, advances or extensions of credit to any person
or entity, except for such loans, advances or extensions (i) set forth in the
10-K report of the Borrower dated December 31, 1993 and June 30, 1994, filed
with the Securities and Exchange Commission and delivered to the Lender; and
(ii) loans aggregating $1,000,000 or less at any time.
Section 7.10. Prepayments of Other Debts. Without the written consent
of Lender (which consent will not be unreasonably withheld) prepay any Debt
(excluding trade payables) to any Person.
Section 7.11. Sales and Leasebacks. Enter into any arrangement,
directly or indirectly, with any Person by which Borrower shall sell or transfer
any Property (which in the aggregate shall exceed in value $500,000), whether
now owned or hereafter acquired, and by which Borrower shall then or thereafter
rent or lease as lessee such Property or any part thereof or other Property that
Borrower intends to use for substantially the same purpose or purposes as the
Property sold or transferred.
Section 7.12. Financial Covenants. On a consolidated basis for
Borrower and its Subsidiaries:
(a) Maximum Debt to Tangible Net Worth. Permit the ratio of
Debt to Tangible Net Worth to exceed .75 to 1.0 at any time from the
Closing Date through December 31, 1995, and than .65 to 1.0 at any time
after December 31, 1995 until the Maturity Date.
(b) Interest Coverage. Permit the ratio of its Net Income
before interest, taxes, and rent under operating leases (as classified
under current criteria of FASB No. 13) to its interest on all Debt and
rents
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under operating leases to be less than 3.0 to 1.0, based upon a
Trailing Four Quarter Basis (calculated on the last day of each Fiscal
Quarter), from the Closing Date through the Maturity Date.
(c) Tangible Net Worth. Permit, at any time, Tangible Net
Worth to be less than the following amounts for the periods indicated
below:
Time Periods Minimum Tangible Net Worth
------------ --------------------------
From the Closing Date
through December 30, 1994 $72,000,000
From December 31, 1994
through December 30, 1995 $85,000,000 plus Offering Proceeds received in any equity
offerings, plus 50% of net earnings for the Fiscal Year
ending December 31, 1995, less amounts paid under the Share
Repurchase Plan (1994 Required Net Worth).
From December 31, 1995
through December 30, 1996 1994 Required Net Worth plus Offering Proceeds received in
any equity offerings, plus 50% of net earnings for the Fiscal
Year ending December 31, 1995 (1995 Required Net Worth)
From December 31, 1996
through December 30, 1997 1995 Required Net Worth plus Offering Proceeds received in
any equity offerings, plus 50% of net earnings for the Fiscal
Year ending December 31, 1996 (1996 Required Net Worth)
From December 31, 1997
to Maturity 1996 Required Net Worth plus Offering Proceeds received in
any equity offerings, plus 50% of net earnings for the Fiscal Year
ending December 31, 1997
(d) Earnings. Fail to have positive earnings (pre-tax),
measured on a Trailing Four Quarter Basis, and calculated on the last
day of each Fiscal Quarter.
Article VIII. Events of Default.
Section 8.01. Events of Default. Any of the following events shall
be considered an Event of Default as those terms are used in this Agreement:
(a) Borrower fails to make payment within ten (10) days of the
due date of any payment of interest, principal or other amount(s) on
the Note or due hereunder or under any of the Loan Documents; or
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(b) Failure by Borrower to pay to Lender within ten (10) days
from the due date thereof any principal, interest or other amount due
on any other indebtedness of Borrower to Lender, now existing or
hereafter owing or arising; or
(c) Should any representation or warranty contained herein or
made by or furnished on behalf of Borrower or any of the Subsidiaries
in connection herewith be false or misleading in any material respect
as of the date made; or
(d) Failure to perform or observe any covenant, or agreement,
duty or obligation (other than those for which an Event of Default is
specifically listed in this Section 8.01, contained in this Agreement
within thirty (30) days after Lender sends written notice to Borrower
specifying such non-performance, however, an Event of Default under
this Subsection (d) caused by force xxxxxx shall not constitute an
Event of Default if Borrower is diligently engaged in curing such Event
of Default; or
(e) A Receiver, custodian, liquidator, or trustee of Borrower
or of any Significant Subsidiary, or of any of its respective Property,
is appointed by the order or decree of any court or agency or
supervisory authority having jurisdiction; or Borrower or any
Significant Subsidiary is adjudicated bankrupt or insolvent; or any of
the Property of Borrower or any Significant Subsidiary is sequestered
by court order or a petition is filed against Borrower and/or any
Significant Subsidiary under any state or federal bankruptcy,
reorganization, debt arrangement, insolvency, readjustment of debt,
dissolution, liquidation, or receivership law of any jurisdiction,
whether now or hereafter in effect (and if made involuntarily against
Borrower or such Significant Subsidiary, without the consent or
cooperation of Borrower or any Significant Subsidiary, is not dismissed
within 90 days of the filing thereof) (it being acknowledged and agreed
that no notice requirement on the part of Lender, and no cure period
except for the 90 days in which Borrower or the applicable Significant
Subsidiary may obtain a dismissal of an involuntary bankruptcy
petition, shall apply to this Subsection 8.01(e)); or
(f) Borrower or any Significant Subsidiary files a petition in
voluntary bankruptcy or to seek relief under any provision of any
bankruptcy, reorganization, debt arrangement, insolvency, readjustment
of debt, dissolution, or liquidation law of any jurisdiction, whether
now or hereafter in effect, or consents to the filing of any petition
against it under any such law (it being acknowledged and agreed that no
notice requirement on the part of Lender, and no cure period, shall
apply to this Subsection 8.01(f)); or
(g) Borrower or any Significant Subsidiary makes an assignment
for the benefit of its creditors, or admits in writing its inability to
pay its debts generally as they become due, or consents to the
appointment of a receiver, trustee, or liquidator of Borrower (or any
Significant Subsidiary) or of all or any part of its Properties (it
being acknowledged and agreed that no notice requirement on the part of
Lender, and no cure period, shall apply to this Subsection 8.01 (g));
(h) If final judgment for the payment of money in excess of
$5,000,000 (in any twelve-month period during the term hereof) is
rendered by any court or other governmental authority against Borrower
unless such judgment is covered by insurance in excess of such amount;
or
(i) A default under the Negative Pledge Agreement.
Section 8.02. Remedies. Upon the happening of any Event of Default
set forth above, with the exception of those events set forth in Section
8.01(e) and 8.01(f): (i) Lender may declare the entire principal amount of all
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Indebtedness then outstanding, including interest accrued thereon, to be
immediately due and payable without presentment, demand, protest, notice of
protest, or dishonor or other notice of default of any kind, all of which
Borrower hereby expressly waives, (ii) at Lender's sole discretion and option,
all obligations of Lender under this Agreement shall immediately cease and
terminate unless and until Lender shall reinstate such obligations in writing;
or (iii) Lender may bring an action to protect or enforce its rights under the
Loan Documents or seek to collect the Indebtedness and/or enforce the
Obligations by any lawful means.
Upon the happening of any event specified in Section 8.01(e) and Section
8.01(f): (i) all Indebtedness, including all principal. accrued interest, and
other charges or monies due in connection therewith shall be immediately and
automatically due and payable in full, without presentment, demand, protest, or
dishonor or other notice of any kind, all of which Borrower hereby expressly
waives, (ii) all obligations of Lender under this Agreement shall immediately
cease and terminate unless and until Lender shall reinstate such obligations in
writing; or (iii) Lender may bring an action to protect or enforce its rights
under the Loan Documents or seek to collect the Indebtedness and/or enforce the
Obligations by any lawful means.
Section 8.03. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, Lender is authorized, at any time and from
time to time, without notice to Borrower (any such notice being expressly waived
by Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Lender to or for the credit or the account of Borrower against
any and all of the Obligations, irrespective of whether or not Lender shall have
accelerated the Indebtedness or made any demand under this Agreement or the
Notes and although such obligations may be unmatured.
Article IX. General Provisions.
Section 9.01. Notices. All communications under or in connection with
this Agreement or any of the other Loan Documents shall be in writing and shall
be mailed by first class certified mail, postage prepaid, or otherwise sent by
telex, telegram, telecopy, or other similar form of rapid transmission confirmed
by mailing (in the manner stated above) a written confirmation at substantially
the same time as such rapid transmission, or personally delivered to an officer
of the receiving party. All such communications shall be mailed, sent, or
delivered as follows:
(a) if to Borrower, to its address shown below, or to such
other address as Borrower may have furnished to Lender in writing:
Sofamor Xxxxx Group, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxxx, Xx.
With a copy to Mr. J. Xxxx Xxxxxxx
Xx. Xxxxxxx X. Xxxxx, Xx.
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(b) if to Lender, to its address shown below, or to such other
address or to such individual's or department's attention as it may
have furnished Borrower in writing:
with a copy to:
Third National Bank in Nashville Third National Bank in Nashville
0000 Xxxxxx Xxxxxx, Xxxxx 000 000 Xxxxxx Xxxxxx, Xxxxx
Xxxxxxx, Xxxxxxxxx 00000 Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxx Attn: Xx. X.X. Xxxxx
Department: Regional Department: Regional
Any communication so addressed and mailed by certified mail shall be deemed to
be given three (3) days after such mailing.
Section 9.02. Deviation from Covenants. The procedure to be followed by
Borrower to obtain the consent of Lender to any deviation from the covenants
contained in this Agreement or any other Loan Document shall be as follows:
(a) Borrower shall send a written notice to Lender setting
forth (i) the covenant(s) relevant to the matter, (ii) the requested
deviation from the covenant(s) involved, and (iii) the reason for the
requested deviation from the covenant(s); and
(b) Lender, within a reasonable time, will send a written
notice to Borrower, signed by an authorized officer of Lender,
permitting or refusing the request, but in no event will any deviation
from the covenants of this Agreement or any other Loan Document be
effective without the express prior written consent of Lender. Lender's
failure to provide such written notice shall be deemed a refusal of
such request.
Section 9.03. Invalidity. In the event that any one or more of the
provisions contained in any Loan Document for any reason shall be held invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of any Loan Document.
Section 9.04. Survival of Agreements. All representations and
warranties of Borrower in this Agreement and all covenants and agreements in
this Agreement not fully performed before the Closing Date of this Agreement
shall survive the Closing.
Section 9.05. Successors and Assigns. Borrower may not assign its
rights or delegate its duties under this Agreement or any other Loan Document.
All covenants and agreements contained by or on behalf of Borrower in any Loan
Document shall bind the Borrower's successors and assigns and shall inure to the
benefit of Lender and its successors and assigns. In the event that Lender sells
participations in Indebtedness to participating lenders, each of such
participating lenders shall have the rights of set-off against such Indebtedness
and similar rights or Liens to the same extent available to Lender, except as
otherwise provided in this Agreement.
Section 9.06. Renewal, Extension, or Rearrangement. All provisions of
this Agreement relating to Indebtedness shall apply with equal force and effect
to each and all promissory notes executed hereafter which in whole or in part
represent a renewal, extension for any period, increase, or rearrangement of any
part of the Indebtedness originally represented by any part of such other
Indebtedness.
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Section 9.07. Waivers. Pursuant to T.C.A. Section 00-00-000, no action
or course of dealing on the part of Lender, its officers, employees,
consultants, or agents, nor any failure or delay by Lender with respect to
exercising any right, power, or privilege of Lender under the Note, this
Agreement, or any other Loan Document shall operate as a waiver thereof, except
as otherwise provided in this Agreement. Lender may from time to time waive any
requirement hereof, including any of the Conditions Precedent; however no waiver
shall be effective unless in writing and signed by the Lender. The execution by
Lender of any waiver shall not obligate Lender to grant any further, similar, or
other waivers.
Section 9.08. Cumulative Rights. Rights and remedies of Lender under
each Loan Document shall be cumulative, and the exercise or partial exercise of
any such right or remedy shall not preclude the exercise of any other right or
remedy.
Section 9.09. Construction. This Agreement, the Note, and the other
Loan Documents constitute a contract made under and shall be construed in
accordance with and governed by the laws of the State of Tennessee.
Section 9.10. Nature of Commitment. With respect to the Loan and the
Advances, Lender's obligation to make the Loan or any Advances shall be deemed
to be pursuant to a contract to make a loan or to extend debt financing or
financial accommodations to or for the benefit of Borrower within the meaning of
Sections 365(c)(2) and 365(e)(2)(B) of the United States Bankruptcy Code, 11
U.S.C. Section 101 et seq.
Section 9.11. Governance; Exhibits. The terms of this Agreement shall
govern if determined to be in conflict with the terms or provisions in any other
Loan Document. The exhibits attached to this Agreement are incorporated in this
Agreement and shall be considered a part of this Agreement except that in the
event of any conflict between an exhibit and this Agreement or another Loan
Document, the provisions of this Agreement or the Loan Document, as the case may
be, shall prevail over the exhibit.
Section 9.12. Titles of Articles, Sections, and Subsections. All titles
or headings to articles, sections, subsections, or other divisions of this
Agreement or the exhibits to this Agreement are only for the convenience of the
parties and shall not be construed to have any effect or meaning with respect to
the other content of such articles, sections, subsections, or other divisions,
such other content being controlling with respect to the agreement between the
parties.
Section 9.13. Time of Essence. Time is of the essence with regard to
each and every provision of this Agreement.
Section 9.14. Remedies. All remedies for which this Agreement and all
other Loan Documents provide for Lender shall be in addition to all other
remedies available to Lender under the principles of law and equity, and
pursuant to any other body of law, statutory or otherwise.
Section 9.15. Application of Prepayments. Prepayments shall be applied
at Lender's sole discretion (i) first to accrued interest under any of the
Obligations as determined by Lender and (ii) second to reduce principal of any
of the Obligations, all in such manner as determined by Lender.
Section 9.16. Costs, Expenses, and Taxes. Borrower agrees to pay on
demand all out-of-pocket costs and expenses of Lender (including the reasonable
fees and out-of-pocket expenses of counsel for Lender) incurred by
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Lender in connection with the preparation of the Loan Documents or the
enforcement, or protection of Lender's rights under the Loan Documents. In
addition, Borrower agrees to pay, and to hold Lender harmless from all liability
for, any taxes (excluding taxes levied or apportioned upon Lender's income,
revenues, or assets) which may be payable in connection with the execution or
delivery of this Agreement, the Advances, or the issuance of the Note or any
other Loan Documents. Borrower, upon request, promptly will reimburse Lender for
all amounts expended, advanced, or incurred by Lender to satisfy any obligation
of Borrower under this Agreement or any other Loan Documents, or to protect the
Properties or business of Borrower or to collect the obligations, or to enforce
the rights of Lender under this Agreement or any other Loan Document, which
amounts will include all court costs, attorney's fees, fees of auditors and
accountants, and investigation expenses reasonably incurred by Lender in
connection with any such matters, together with interest thereon at the rate
applicable to past due principal and interest as set forth in the Loan Documents
but in no event in excess of the maximum lawful rate of interest permitted by
applicable law on each such amount. All obligations for which this Section
provides shall survive any termination of this Agreement.
Section 9.17. Governing Law; Consent to Forum. This Agreement has been
negotiated, executed and delivered at and shall be deemed to have been made in
Nashville, Tennessee. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Tennessee. As part of the
consideration for new value received, and regardless of any present or future
domicile or principal place of business of Borrower or Lender, Borrower hereby
consents and agrees that any Tennessee state courts sitting in Davidson County,
Tennessee, or, at Lender's option, the United States District Court for the
Middle District of Tennessee, shall have jurisdiction to hear and determine any
claims or disputes between Borrower and Lender pertaining to this Agreement.
Section 9.18. Counterparts. This Agreement may be executed by
counterpart signature pages, and it shall not be necessary that the signatures
of all parties be contained on any one counterpart; each counterpart shall be
deemed an original, but all of them together shall constitute one and the same
instrument.
Section 9.19. Entire Agreement; No Oral Representations Limiting
Enforcement. This Agreement represents the entire agreement between the parties
hereto except for such other agreements set forth in the Loan Documents, and any
and all oral statements heretofore made regarding the matters set forth herein
are merged herein.
Section 9.20. Amendments. The parties hereto agree that this Agreement
may not be modified or amended except in writing signed by the parties hereto.
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IN WITNESS WHEREOF, the undersigned, by and through their duly
authorized officers execute this Loan Agreement as of the day and date first set
forth above.
BORROWER:
SOFAMOR XXXXX GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Title: President and Chief Operating Officer
---------------------------------------
LENDER:
THIRD NATIONAL BANK IN NASHVILLE
By: /s/ Xxxxx X. Xxxx
------------------------------------------
Title: Assistant Vice President
---------------------------------------
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AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT TO LOAN AGREEMENT (this "Amendment") is entered into by
and between SOFAMOR XXXXX GROUP, INC., an Indiana corporation ("Borrower") and
THIRD NATIONAL BANK IN NASHVILLE, a national banking association ("Lender"), to
be effective as of June 30, 1995.
W I T N E S S E T H:
WHEREAS, Borrower and Lender previously entered into that certain loan
agreement dated as of October 14, 1994 (the "Loan Agreement"), in connection
with a certain credit facility from Lender to Borrower in the original principal
amount of up to $40,000,000 as described therein; and
WHEREAS, Borrower has requested that Lender make certain amendments to
the Loan Agreement, as set forth herein; and
WHEREAS, subject to certain terms and conditions, Lender has agreed to
make certain amendments to the Loan Agreement as described herein; and
WHEREAS, the parties desire to amend the Loan Agreement as set forth
herein;
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties agree as follows:
1. Subsection 7.12(a) of the Loan Agreement, the "Maximum Debt to
Tangible Net Worth" section, is deleted.
2. Subsection 7.12(b) of the Loan Agreement, the "Interest Coverage"
section, is re-lettered as subsection 7.12(a) and is amended and restated to
read as follows:
(a) EBITDA to Debt Service. Permit its ratio of EBITDA to Debt
Service to be less than 1.0 to 1.0 measured on a Trailing Four-Quarter
Basis (calculated on the last day of each Fiscal Quarter), beginning
with the Fiscal Quarter ending June 30, 1995, through the Maturity
Date.
As used herein, "EBITDA" means Earnings before interest, taxes,
depreciation and amortization, and "Earnings" means net income as such
term is used in accordance with GAAP, less the one-time charge to net
income taken by the Borrower for the Fiscal Quarter ended March 31,
1995 due to Borrower's acquisition and licensing of technology from
Genetics Institute, Inc. ("GI") pursuant to the terms of a certain Deal
Summary dated February of 1995.
30
Also as used herein, "Debt Service" means all amounts payable
or to be paid during the twelve months following any date of
measurement, in connection with debt and capitalized lease obligations
of the Borrower or its Subsidiaries, including without limitation notes
payable, short-term obligations, current maturities of long-term debt
and capitalized lease obligations, plus interest, fees and expenses on
any of the foregoing, plus all Indebtedness outstanding from time to
time (including without limitation interest, fees and expenses).
3. Subsection 7.12(c) of the Loan Agreement, the "Tangible Net Worth"
section, is re-lettered as subsection 7.12(b) and is amended by changing the
reference therein to the amount "$85,000,000" (appearing in the Minimum Tangible
Net Worth column for the period December 31, 1994 through December 30, 1995) to
read: "$70,000,000". The other provisions in such subsection shall remain
unchanged.
4. Subsection 7.12(d) of the Loan Agreement is re-lettered as
subsection 7.12(c) but is otherwise unchanged.
5. Except as amended herein, all other terms, provisions, agreements,
covenants, representations and warranties in the Loan Agreement shall remain in
full force and effect, and Borrower hereby reaffirms all of its duties,
obligations, covenants, agreements, representations and warranties in the Loan
Agreement and the other documents executed and delivered from time to time in
connection therewith and/or in connection with any indebtedness or obligation of
Borrower to Lender, direct or contingent, in existence from time to time.
6. Borrower represents that its acquisition and licensing of
technology from Genetics Institute, Inc. ("GI") was made in accordance with the
terms of the Deal Summary dated February, 1995 and disclosed to Lender.
7. Borrower represents, warrants and covenants that no Event of Default
has occurred and is continuing under the Loan Agreement and that no event has
occurred and no claim, offset, defense or other condition exists that would
relieve Borrower of any of its obligations to the Lender under the Loan
Agreement, as amended hereby.
8. Borrower reaffirms its representations and represents that all such
representations and warranties set forth in the Loan Agreement are true and
correct as of the date of this Amendment.
9. This Amendment shall be governed by Tennessee law.
10. Borrower represents that the execution and performance of this
Amendment have been duly authorized by all necessary and appropriate corporate
action.
- 2 -
31
11. This Amendment shall not become effective until the execution
hereof by both parties.
IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of the date set forth above.
LENDER: BORROWER:
THIRD NATIONAL BANK IN NASHVILLE SOFAMOR XXXXX GROUP, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ J. Xxxx Xxxxxxx
------------------------------- -------------------------------
Title: Assistant Vice President Title: Vice President and Treasurer
--------------------------- -----------------------------
- 3 -
32
SECOND AMENDMENT TO LOAN AGREEMENT
AND FIRST AMENDMENT TO REVOLVING CREDIT AND OPTIONAL TERM NOTE
THIS SECOND AMENDMENT TO LOAN AGREEMENT AND FIRST AMENDMENT TO
REVOLVING CREDIT AND OPTIONAL TERM NOTE (this "Amendment") is entered into this
the 11th day of October, 1995 by and between SOFAMOR XXXXX GROUP, INC., an
Indiana corporation ("Borrower") and THIRD NATIONAL BANK IN NASHVILLE, a
national banking association ("Lender").
RECITALS:
A. Borrower and Lender previously entered into that certain loan
agreement dated as of October 14, 1994 (as amended, the "Loan Agreement"), in
connection with a certain credit facility from Lender to Borrower in the
original principal amount of up to $40,000,000, and in connection therewith
Borrower executed that certain Revolving Credit and Optional Term Note (the
"Note") in the principal amount of up to $40,000,000.
B. Borrower and Lender previously executed that certain Amendment to
Loan Agreement (the "First Amendment") effective June 30, 1995.
C. Borrower and Lender have agreed to further amend the Loan Agreement
and to amend the Note as set forth herein in order to extend the maturity
thereof.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties agree as follows:
1. Article I of the Loan Agreement concerning "Definitions" is amended
by the deletion of the reference to "October 15, 1995," under the definition of
"Maturity Date," and "October 15, 1996" is inserted in lieu thereof as the new
Maturity Date.
2. The Note is amended by changing the reference therein to "October
15, 1995" as the Maturity Date to read "October 15, 1996" as the new Maturity
Date.
3. Except as specifically amended herein, all other terms and
provisions in the Loan Agreement and the Note shall remain in full force and
effect.
4. Borrower represents, warrants and covenants that no Event of Default
has occurred and is continuing under the Loan Agreement and that no event has
occurred and no claim, offset, defense or other condition exists that would
relieve Borrower of any of its obligations to the Lender under the Loan
Agreement, as amended hereby.
33
5. This Amendment shall be governed by Tennessee law.
6. Borrower represents that the execution and performance of this
Amendment have been duly authorized by all necessary and appropriate corporate
action.
7. This Amendment may be executed in multiple counterparts.
IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of the date first set forth above.
BORROWER:
--------
SOFAMOR XXXXX GROUP, INC.
By: /s/ J. Xxxx Xxxxxxx
---------------------------------------
Title: Vice President and Treasurer
------------------------------------
LENDER:
------
THIRD NATIONAL BANK IN NASHVILLE
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Title: Vice President
------------------------------------
- 2 -
34
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (the "Amendment") is entered
into this the 1st day of August, 1996 by and between SOFAMOR XXXXX GROUP, INC.,
an Indiana corporation (the "Borrower") and SUNTRUST BANK, NASHVILLE, N.A.,
formerly Third National Bank in Nashville, a national banking association (the
"Lender").
RECITALS:
A. Borrower and Lender previously entered into that certain loan
agreement dated as of October 14, 1995 (as amended from time to time, the "Loan
Agreement"), in connection with a certain credit facility from Lender to
Borrower in the original principal amount of up to $40,000,000. Borrower and
Lender amended the Loan Agreement pursuant to an Amendment to Loan Agreement
effective June 30, 1995. Borrower and Lender further amended the Loan Agreement
pursuant to a Second Amendment to Loan Agreement and First Amendment to
Revolving Credit Optional Term Note dated October 11, 1995.
B. In connection with the execution of the Loan Agreement, the Borrower
executed that certain Revolving Credit and Optional Term Note (as amended from
time to time, the "Note") in the original principal amount of $40,000,000. The
Note was amended pursuant to the Second Amendment to Loan Agreement and First
Amendment to Revolving Credit and Optional Term Note dated October 11, 1995.
C. Concurrently herewith the Borrower and Lender have amended the Note
pursuant to a Second Amendment to Revolving Credit and Optional Term Note dated
as of the date hereof.
D. Borrower and Lender have agreed to make certain amendments to the
Loan Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties agree as follows:
1. Section 1 of the Loan Agreement concerning "Definitions," is amended
as follows:
The term "Maturity Date" is deleted and the following is substituted in
lieu thereof to extend the maturity of the Loan:
"Maturity Date" means October 15, 1997 with repect to
the Revolving Credit Loan (unless the Maturity Date is extended
in writing by the Lender) and with respect to a Term Loan, the
1, 2 or 3-year period elected by Borrower in writing pursuant
to the provisions of Section 2.02 herein.
35
The term "Maximum Amount" is deleted and the following is substituted
in lieu thereof to increase the principal amount available under the
Loan Agreement to $50,000,000:
"Maximum Amount" means the principal amount of
$50,000,000, which is the maximum principal amount that may be
outstanding at any time under the Loan.
The term "Note" is deleted and the following is substituted in lieu
thereof, with the Exhibit A to the Loan Agreement being amended
accordingly to increase the principal amount to $50,000,000:
"Note" means that certain Promissory Note in the form
set forth in Exhibit A hereto in the principal amount of up to
$50,000,000, including all amendments, extensions, increases
and restatements thereto and thereof, and all replacements and
substitute notes therefor.
The term "Significant Subsidiary" is amended by adding the following
entities thereto:
Sofamor Xxxxx Canada, Inc.
Sofamor Xxxxx Nevada, Inc.
Surgical Navigation Technologies, Inc.
Sofamor Xxxxx Benelux S.A.
2. Section 2.01 of the Loan Agreement concerning the "Revolving Credit
Loan," is amended by deleting the reference therein to $40,000,000 and
the term "$50,000,000" is substituted in lieu thereof.
3. Section 7.01(g) of the Loan Agreement concerning "Debts, Guaranties,
and Other Obligations," is amended to delete the reference therein to
$5,000,000, and the term "$15,000,000" is substituted in lieu thereof.
4. Section 7.09 concerning "No Loans," is amended to delete the reference
therein to $1,000,000 and the term "$2,000,000" is substituted in lieu
thereof.
5. Except as amended herein, all other terms, provisions, agreements,
covenants, representations and warranties in the Loan Agreement shall
remain in full force and effect, and Borrower hereby reaffirms all of
its duties, obligations, covenants, agreements, representations and
warranties in the Loan Agreement.
36
6. Borrower represents, warrants and covenants that no Event of Default
has occurred and is continuing under the Loan Agreement and that no
event has occurred or other condition exists that would relieve
Borrower of any of its obligations to the Lender under the Loan
Agreement, as amended.
7. This Amendment shall be governed by Tennessee law.
8. Borrower represents that the execution and performance of this
Amendment have been duly authorized by all necessary and appropriate
corporate action.
9. This Amendment may be executed in multiple counterparts.
IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of the date set forth above.
LENDER: BORROWER:
------ --------
SUNTRUST BANK, NASHVILLE, N.A. SOFAMOR XXXXX GROUP, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ J. Xxxx Xxxxxxx
------------------------- --------------------------------
Title: Vice President Title: Vice President and Treasurer
---------------------- ------------------------------
37
FOURTH AMENDMENT TO LOAN AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AGREEMENT (the "Amendment") is entered
into this the 31st day of January, 1997 by and between SOFAMOR XXXXX GROUP,
INC., an Indiana corporation (the "Borrower") and SUNTRUST BANK, NASHVILLE,
N.A., a national banking association (the "Lender").
RECITALS:
A. Borrower and Lender previously entered into that certain loan
agreement dated as of October 14, 1994 (as amended from time to time, the "Loan
Agreement"), in connection with a certain credit facility from Lender to
Borrower in the original principal amount of up to $40,000,000. Borrower and
Lender amended the Loan Agreement pursuant to an Amendment to Loan Agreement
effective June 30, 1995. Borrower and Lender further amended the Loan Agreement
pursuant to a Second Amendment to Loan Agreement and First Amendment to
Revolving Credit Optional Term Note dated October 11, 1995. Borrower and Lender
further amended the Loan Agreement pursuant to a Third Amendment to Loan
Agreement dated August 1, 1996.
B. In connection with the execution of the Loan Agreement, the Borrower
executed that certain Revolving Credit and Optional Term Note (as amended from
time to time, the "Note") in the original principal amount of $40,000,000. The
Note was amended pursuant to the Second Amendment to Loan Agreement and First
Amendment to Revolving Credit and Optional Term Note dated October 11, 1995, and
further amended pursuant to the Second Amendment to Revolving Credit and
Optional Term Note dated August 1, 1996.
C. Concurrently herewith the Borrower and Lender have amended the Note
pursuant to a Third Amendment to Revolving Credit and Optional Term Note dated
as of the date hereof.
D. Borrower and Lender have agreed to make certain amendments to the
Loan Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties agree as follows:
1. Section 1 of the Loan Agreement concerning "Definitions," is amended
as follows:
The definition of "EBITDA" is added as follows:
"EBITDA" means Earnings before interest expense,
taxes, depreciation and amortization, all calculated on a
consolidated basis
38
in accordance with GAAP. The term "Earnings" shall mean net
income on a consolidated basis as such term is determined in
accordance with GAAP, excluding the one-time deduction of a
reserve for litigation expenses in an amount of $50,000,000 in
the Fiscal Quarter ending December 31, 1996.
The term "Funded Debt" is added as follows:
"Funded Debt" means, without duplication, the sum of
(a) all indebtedness of Borrower and its Subsidiaries on a
consolidated basis for borrowed money, (b) all purchase money
indebtedness of Borrower and its Subsidiaries, (c) the
principal portion of all obligations of Borrower and its
Subsidiaries under capital leases, (d) commercial letters of
credit and the maximum amount of all performance and standby
letters of credit issued or bankers's acceptance facilities
created for the account of Borrower or its Subsidiaries,
including, without duplication, all unreimbursed draws
thereunder, (e) all guaranty obligations of Borrower and its
Subsidiaries, (f) all Funded Debt of any partnership, limited
liability company or unincorporated joint venture to the extent
that Borrower or any of its Subsidiaries is legally obligated
with respect thereto, net of any assets of such partnership,
limited liability company or joint venture and (g) liability
under any bond, indenture, note or similar instrument. Funded
Debt shall exclude existing notes payable by Borrower to
Genetics Institute and that certain Non-Negotiable,
Subordinated Convertible Note dated January 11, 1994 executed
by Borrower in favor of Xxxx X. Xxxxxxxxx.
The term "Maximum Amount" is deleted and the following is substituted
in lieu thereof to increase the principal amount available under the
Loan Agreement to $60,000,000:
"Maximum Amount" means the principal amount of
$60,000,000, which is the maximum principal amount that may be
outstanding at any time under the Loan.
The term "Note" is deleted and the following is substituted in lieu
thereof, with the Exhibit A to the Loan Agreement amended accordingly
to increase the principal amount to $60,000,000:
"Note" means that certain Promissory Note in the form
set forth in Exhibit A hereto in the principal amount of up to
$60,000,000, including all amendments, extensions, increases
and
39
restatements thereto and thereof, and all replacements and
substitute notes therefor.
2. Section 2.01 of the Loan Agreement concerning the "Revolving Credit
Loan," is amended by deleting the reference therein to $50,000,000 and
the term "$60,000,000" is substituted in lieu thereof.
3. Section 7.12 of the Loan Agreement concerning "Financial Covenants" is
deleted, and the following is substituted in lieu thereof:
Section 7.12 Financial Covenants. On a consolidated
basis for Borrower and its Subsidiaries:
(a) Ratio of Funded Debt to EBITDA. Permit its ratio
of Funded Debt to EBITDA (measured on a Trailing Four-Quarter
Basis) to be more than 1.0 to 1.0, determined on the last day
of each Fiscal Quarter.
(b) Tangible Net Worth. Permit, at any time,
Tangible Net Worth to be less than the following amounts for
the periods indicated below:
Time Periods Minimum Tangible Net Worth
----------------------------------------------------------
From December 31, 1996
through December 30, 1997 $50,000,000
From December 31, 1997
through December 30, 1998 $50,000,000 plus Offering
Proceeds received in any equity
offerings, plus 50% of net
earnings for the Fiscal Year
ending December 31, 1997 (1997
Required Net Worth).
40
From December 31, 1998
through December 30, 1999 1997 Required Net Worth plus
Offering Proceeds received in
any equity offerings, plus 50%
of net earnings for the Fiscal
Year ending December 31, 1998
(1998 Required Net Worth)
From December 31, 1999
through December 30, 2000 1998 Required Net Worth plus
Offering Proceeds received in
any equity offerings, plus 50%
of net earnings for the Fiscal
Year ending December 31, 1999
(1999 Required Net Worth)
From December 31, 2000
to Maturity 1999 Required Net Worth
plus Offering Proceeds received
in any equity offerings, plus
50% of net earnings for the
Fiscal Year ending December 31,
2000
(c) Earnings. Fail to have net income of
$5,000,000 for any Fiscal Quarter, beginning with the Fiscal
Quarter ending March 31, 1997.
4. The amendments set forth in Section 3 of this Amendment shall be
effective as of December 31, 1996. All other amendments set forth
herein shall be effective as of the date of this Amendment.
5. Except as amended herein, all other terms, provisions, agreements,
covenants, representations and warranties in the Loan Agreement shall
remain in full force and effect, and Borrower hereby reaffirms all of
its duties, obligations, covenants, agreements, representations and
warranties in the Loan Agreement.
6. Borrower represents, warrants and covenants that no Event of Default
has occurred and is continuing under the Loan Agreement and that no
event has occurred or other condition exists that would relieve
Borrower of any of its obligations to the Lender under the Loan
Agreement, as amended.
7. This Amendment shall be governed by Tennessee law.
8. Borrower represents that the execution and performance of this
Amendment have been duly authorized by all necessary and appropriate
corporate action.
9. This Amendment may be executed in multiple counterparts.
41
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
LENDER: BORROWER:
------ --------
SUNTRUST BANK, NASHVILLE, N.A. SOFAMOR XXXXX GROUP, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ J. Xxxx Xxxxxxx
------------------------- ---------------------------------
Title: Vice President Title: Vice President and Treasurer
---------------------- -------------------------------
