Execution Copy
EXHIBIT 10.9
================================================================================
$190,000,000
CREDIT AGREEMENT
among
EMPI, INC.,
EMPI CORP.,
as Borrower,
The Several Lenders from Time to Time Parties Hereto,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Documentation Agent,
and
JPMORGAN CHASE BANK,
as Administrative Agent and Syndication Agent
Dated as of November 24, 2003
================================================================================
X.X. Xxxxxx Securities Inc., as exclusive Joint Lead Arranger and Sole
Bookrunner
Wachovia Capital Markets, LLC, as exclusive Joint Lead Arranger
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS................................................................................ 1
1.1 Defined Terms................................................................................. 1
1.2 Other Definitional Provisions................................................................. 20
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS............................................................ 20
2.1 Term Commitments.............................................................................. 20
2.2 Procedure for Term Loan Borrowing............................................................. 21
2.3 Repayment of Term Loans....................................................................... 21
2.4 Revolving Commitments......................................................................... 21
2.5 Procedure for Revolving Loan Borrowing........................................................ 22
2.6 Repayment of Loans............................................................................ 22
2.7 Commitment Fees, etc.......................................................................... 23
2.8 Termination or Reduction of Revolving Commitments............................................. 23
2.9 Optional Prepayments.......................................................................... 23
2.10 Mandatory Prepayments and Commitment Reductions............................................... 23
2.11 Conversion and Continuation Options........................................................... 24
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches..................................... 25
2.13 Interest Rates and Payment Dates.............................................................. 25
2.14 Computation of Interest and Fees.............................................................. 26
2.15 Inability to Determine Interest Rate.......................................................... 26
2.16 Pro Rata Treatment and Payments............................................................... 26
2.17 Requirements of Law........................................................................... 28
2.18 Taxes......................................................................................... 29
2.19 Indemnity..................................................................................... 31
2.20 Illegality.................................................................................... 31
2.21 Change of Lending Office...................................................................... 31
2.22 Replacement of Lenders........................................................................ 31
SECTION 3. LETTERS OF CREDIT.......................................................................... 32
3.1 L/C Commitment................................................................................ 32
3.2 Procedure for Issuance of Letter of Credit.................................................... 32
3.3 Fees and Other Charges........................................................................ 32
3.4 L/C Participations............................................................................ 33
3.5 Reimbursement Obligation of the Borrower...................................................... 34
3.6 Obligations Absolute.......................................................................... 34
3.7 Letter of Credit Payments..................................................................... 34
3.8 Applications.................................................................................. 34
SECTION 4. REPRESENTATIONS AND WARRANTIES............................................................. 34
4.1 Financial Condition........................................................................... 35
4.2 No Change..................................................................................... 35
4.3 Existence; Compliance with Law................................................................ 35
4.4 Corporate Power; Authorization; Enforceable Obligations....................................... 36
4.5 No Legal Bar.................................................................................. 36
4.6 No Material Litigation........................................................................ 36
4.7 No Default.................................................................................... 36
4.8 Ownership of Property; Liens.................................................................. 36
4.9 Intellectual Property......................................................................... 36
4.10 Taxes......................................................................................... 37
4.11 Federal Regulations........................................................................... 37
4.12 Labor Matters................................................................................. 37
4.13 ERISA......................................................................................... 37
4.14 Investment Company Act........................................................................ 38
4.15 Subsidiaries.................................................................................. 38
4.16 Environmental Matters......................................................................... 38
4.17 Accuracy of Information, etc.................................................................. 39
4.18 Security Documents............................................................................ 39
4.19 Solvency...................................................................................... 40
4.20 Regulation H.................................................................................. 40
SECTION 5. CONDITIONS PRECEDENT....................................................................... 40
5.1 Conditions to Initial Extension of Credit..................................................... 40
5.2 Conditions to Each Extension of Credit........................................................ 42
SECTION 6. AFFIRMATIVE COVENANTS...................................................................... 43
6.1 Financial Statements.......................................................................... 43
6.2 Certificates; Other Information............................................................... 43
6.3 Payment of Obligations........................................................................ 44
6.4 Conduct of Business and Maintenance of Existence, etc......................................... 45
6.5 Maintenance of Property; Insurance............................................................ 45
6.6 Inspection of Property; Books and Records; Discussions........................................ 45
6.7 Notices....................................................................................... 45
6.8 Environmental Laws............................................................................ 46
6.9 Interest Rate Protection...................................................................... 46
6.10 Additional Collateral, etc.................................................................... 46
6.11 Further Assurances............................................................................ 48
6.12 Use of Proceeds............................................................................... 48
6.13 Title Insurance............................................................................... 48
SECTION 7. NEGATIVE COVENANTS......................................................................... 49
7.1 Financial Condition Covenants................................................................. 49
7.2 Indebtedness.................................................................................. 51
7.3 Liens......................................................................................... 52
7.4 Fundamental Changes........................................................................... 53
7.5 Disposition of Property................................................ 54
7.6 Restricted Payments.................................................... 54
7.7 Capital Expenditures................................................... 55
7.8 Investments............................................................ 55
7.9 Optional Payments and Modifications of Certain Debt Instruments........ 56
7.10 Transactions with Affiliates........................................... 57
7.11 Sales and Leasebacks................................................... 57
7.12 Changes in Fiscal Periods.............................................. 57
7.13 Negative Pledge Clauses................................................ 57
7.14 Clauses Restricting Subsidiary Distributions........................... 58
7.15 Lines of Business...................................................... 58
7.16 Limitations on Activities of Holdings.................................. 58
7.17 Limitation on Hedge Agreements......................................... 58
7.18 Changes in Jurisdictions of Organization; Name......................... 58
SECTION 8. EVENTS OF DEFAULT................................................... 59
SECTION 9. THE AGENTS.......................................................... 62
9.1 Appointment............................................................ 62
9.2 Delegation of Duties................................................... 62
9.3 Exculpatory Provisions................................................. 62
9.4 Reliance by Administrative Agent....................................... 62
9.5 Notice of Default...................................................... 63
9.6 Non-Reliance on Agents and Other Lenders............................... 63
9.7 Indemnification........................................................ 63
9.8 Agent in Its Individual Capacity....................................... 64
9.9 Successor Administrative Agent......................................... 64
9.10 Authorization to Release Liens and Guarantees.......................... 64
9.11 Documentation Agent and Syndication Agent.............................. 64
SECTION 10. MISCELLANEOUS....................................................... 64
10.1 Amendments and Waivers................................................. 64
10.2 Notices................................................................ 66
10.3 No Waiver; Cumulative Remedies......................................... 67
10.4 Survival of Representations and Warranties............................. 67
10.5 Payment of Expenses; Indemnification................................... 67
10.6 Successors and Assigns; Participations and Assignments................. 68
10.7 Adjustments; Set-off................................................... 70
10.8 Counterparts........................................................... 71
10.9 Severability........................................................... 71
10.10 Integration............................................................ 71
10.11 GOVERNING LAW.......................................................... 71
10.12 Submission To Jurisdiction; Waivers.................................... 71
10.13 Acknowledgments........................................................ 72
10.14 Confidentiality........................................................ 72
10.15 Release of Collateral and Guarantee Obligations........................ 73
10.16 Accounting Changes..................................................... 73
10.17 WAIVERS OF JURY TRIAL.................................................. 74
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.18(a)-1 UCC Filing Jurisdictions
4.18(a)-2 UCC Financing Statements to Remain on File
4.18(a)-3 UCC Financing Statements to be Terminated
4.18(b) Mortgage Filing Jurisdictions
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.8 Existing Investments
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Assumption
F Form of Legal Opinion of Xxxxxx & Xxxxxxx LLP
G Form of Exemption Certificate
H Form of Solvency Certificate
CREDIT AGREEMENT (this "Agreement"), dated as of November 24, 2003, among
Empi, Inc., a Minnesota corporation ("Holdings"), Empi Corp., a Minnesota
corporation (the "Borrower"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "Lenders"),
Wachovia Bank, National Association, as documentation agent (in such capacity,
the "Documentation Agent") and JPMorgan Chase Bank, as syndication agent (in
such capacity, the "Syndication Agent"), and as administrative agent.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/100 of 1%) equal to the greatest of (a) the Prime Rate in effect on such
day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by JPMorgan Chase Bank as its prime rate in
effect at its principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by JPMorgan Chase Bank in
connection with extensions of credit to debtors). Any change in the ABR due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
as of the opening of business on the effective day of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based upon
the ABR.
"Accounting Changes": as defined in Section 10.16.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": JPMorgan Chase Bank, as the administrative agent
for the Lenders under this Agreement and the other Loan Documents, together with
any of its successors and, for purposes of Section 9, shall include affiliates
of JPMorgan Chase Bank as the arranger of the Commitments.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 20% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent, the
Documentation Agent and the Administrative Agent.
"Aggregate Exposure": with respect to any Lender at any time, an amount
equal to (a) until the Closing Date, the aggregate amount of such Lender's
Commitments at such time and (b) thereafter, the sum of (i) the aggregate then
unpaid principal amount of such Lender's Term Loans and (ii) the amount of such
Lender's Revolving Commitment then in effect or, if the Revolving Commitments
have been terminated, the amount of such Lender's Revolving Extensions of Credit
then outstanding.
2
"Aggregate Exposure Percentage": with respect to any Lender at any time,
the ratio (expressed as a percentage) of such Lender's Aggregate Exposure at
such time to the total Aggregate Exposures of all Lenders at such time.
"Agreed Purposes": as defined in Section 10.14.
"Agreement": this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.
"Annual Operating Budget": as defined in Section 6.2(c).
"Applicable Margin": for each Type of Loan, the rate per annum set forth
under the relevant column heading below:
ABR Loans Eurodollar Loans
Revolving Loans 1.50% 2.50%
Term Loans 2.00% 3.00%
provided, that on and after the first Adjustment Date occurring after the
completion of the fiscal quarter of the Borrower ended March 31, 2004, the
Applicable Margins with respect to Revolving Loans and Term Loans will be
determined pursuant to the Pricing Grid.
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Approved Fund": as defined in Section 10.6(b).
"Asset Sale": any Disposition of Property or series of related Dispositions
of Property (excluding any such Disposition permitted by clause (a), (b), (c),
(d), (g), (h) and (i) of Section 7.5 and any such Disposition which is a
Recovery Event) which yields gross proceeds to Holdings, the Borrower or any of
its Subsidiaries (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of 1% of the
consolidated total assets of Holdings at such time.
"Assignee": as defined in Section 10.6(b).
"Assignment and Assumption": an Assignment and Assumption, substantially in
the form of Exhibit E.
"Available Revolving Commitment": as to any Revolving Lender at any time,
an amount equal to the excess, if any, of (a) such Lender's Revolving Commitment
then in effect over (b) such Lender's Revolving Extensions of Credit then
outstanding.
"Benefitted Lender": as defined in Section 10.7(a).
"Billing Number": as defined in Section 7.16.
"Board": the Board of Governors of the Federal Reserve System of the United
States (or any successor).
"Borrower": as defined in the preamble hereto.
3
"Borrowing Date": any Business Day specified by the Borrower as a date on
which the Borrower requests the relevant Lenders to make Loans hereunder.
"Business": the development, manufacture, assembly, marketing, sale or
other distribution of medical devices, products and equipment, and the licensing
of related technology, used in the orthopedic rehabilitation, pain management,
physical therapy, incontinence treatment and rehabilitative medicine industries,
and the provision of billing services in connection with the foregoing and
related lines of business (excluding, in any event, the purchase or operation of
physical therapy clinics or similar operations).
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close,
provided, that with respect to notices and determinations in connection with,
and payments of principal and interest on, Eurodollar Loans, such day is also a
day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"Capital Expenditures": for any period, with respect to any Person, the
aggregate of all expenditures by such Person for the acquisition or leasing
(pursuant to a capital lease but excluding any amount representing capitalized
interest) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period) which are
required to be capitalized under GAAP on a balance sheet of such Person,
provided, that in any event the term "Capital Expenditures" shall exclude (i)
any Permitted Acquisition, (ii) any expenditures to the extent financed with the
proceeds of an Equity Issuance or Indebtedness (other than Loans) or any
Reinvestment Deferred Amount, (iii) any expenditures for the Ormed Rental Pool
and (iv) any expenditures for the Information Technology Upgrade in an aggregate
amount under this clause (iv) not to exceed $3,000,000 per fiscal year.
"Capital Lease Obligations": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation).
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of one year or less from the date of acquisition
issued by any Lender or by any commercial bank organized under the laws of the
United States or any state thereof having combined capital and surplus of not
less than $500,000,000; (c) commercial paper of an issuer rated at least A-2 by
S&P or P-2 by Xxxxx'x, or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing within
one year from the date of acquisition; (d) repurchase obligations of any Lender
or of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to securities
issued or fully guaranteed or insured by the United States government; (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or
4
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Xxxxx'x;(f) securities with maturities of one
year or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition; and (g) shares of money market mutual or similar
funds which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition; or (h) money market funds that (i) purport
to comply generally with the criteria set forth in SEC Rule 2a-7 under the
Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P or Aaa by
Xxxxx'x or carrying an equivalent rating by a nationally recognized rating
agency, and (iii) have portfolio assets of at least $5,000,000,000.
"Certificated Security": as defined in the Guarantee and Collateral
Agreement.
"Chattel Paper": as defined in the Guarantee and Collateral Agreement.
"Closing Date": the date on which the conditions precedent set forth in
Section 5.1 shall have been satisfied, which date is November 24, 2003.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all Property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.
"Commitment": as to any Lender, the sum of the Term Commitment and the
Revolving Commitment of such Lender.
"Commitment Fee Rate": 1/2 of 1% per annum.
"Commonly Controlled Entity": an entity, whether or not incorporated, that
is under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group that includes the Borrower and that is treated as a
single employer under Section 414 of the Code.
"Commonly Controlled Plan": as defined in Section 4.13(b).
"Compliance Certificate": a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit B.
"Confidential Information": as defined in Section 10.14.
"Consolidated Current Assets": at any date, all amounts (other than cash
and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite
the caption "total current assets" (or any like caption) on a consolidated
balance sheet of Holdings and its Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts that would, in
conformity with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of Holdings
and its Subsidiaries at such date, but excluding (a) the current portion of any
Indebtedness of Holdings and its Subsidiaries and (b) without duplication, all
Indebtedness consisting of Revolving Loans, to the extent otherwise included
therein.
"Consolidated EBITDA": of any Person for any period, Consolidated Net
Income of such Person and its Subsidiaries for such period plus, without
duplication and to the extent reflected as a
5
charge in the statement of such Consolidated Net Income for such period, the sum
of (a) income tax expense, (b) Consolidated Net Interest Expense of such Person
and its Subsidiaries, amortization or writeoff of debt discount and debt
issuance costs and commissions, discounts and other fees and charges associated
with Indebtedness (including commitment and administrative fees and charges with
respect to the Facilities), (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary or non-recurring expenses or losses
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on sales of
assets outside of the ordinary course of business), (f) any unusual non-cash or
other non-cash charges, expenses or losses, (g) restructuring and integration
costs, (h) stock-option based compensation expenses, (i) transaction fees and
expenses not to exceed 10% of Consolidated EBITDA in any fiscal year, (j)
extraordinary costs related to management options not to exceed $5,500,000
during the term of this Agreement and (k) all fees and expenses paid pursuant to
the Management Agreement and minus, to the extent included in the statement of
such Consolidated Net Income for such period, the sum of (a) interest income
(except to the extent deducted in determining Consolidated Net Interest
Expense), (b) any extraordinary or non-recurring income or gains (including,
whether or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets outside of
the ordinary course of business), (c) any unusual non-cash or other non-cash
income, all as determined on a consolidated basis and (d) in determining
Consolidated EBITDA for Holdings only, any Restricted Payments permitted under
Section 7.6(d)(A); provided, that for purposes of calculating Consolidated
EBITDA of Holdings and its Subsidiaries for any period, (i) the Consolidated
EBITDA (determined in accordance with GAAP) of any Person acquired by Holdings
or its Subsidiaries during such period shall be included on a pro forma basis
for such period (but assuming the consummation of such acquisition and the
incurrence or assumption of any Indebtedness in connection therewith occurred on
the first day of such period, and assuming any cost savings approved by the
Administrative Agent in its reasonable discretion if the consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the end of
the period preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for the period
in respect of which Consolidated EBITDA is to be calculated (x) have been
previously provided to the Administrative Agent and (y) either (1) have been
reported on without a qualification arising out of the scope of the audit by
independent certified public accountants of nationally recognized standing or
(2) have been found acceptable by the Administrative Agent and (ii) the
Consolidated EBITDA of any Person Disposed of by Holdings or its Subsidiaries
during such period shall be excluded for such period (assuming the consummation
of such Disposition and the repayment of any Indebtedness in connection
therewith occurred on the first day of such period).
"Consolidated Fixed Charge Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA of Holdings and its Subsidiaries for such period, minus
the aggregate amount actually paid by Holdings and its Subsidiaries in cash
during such period on account of Capital Expenditures to (b) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges": for any period, the sum (without duplication)
of (a) Consolidated Net Interest Expense of Holdings and its Subsidiaries for
such period and (b) provision for cash income taxes made by Holdings or any of
its Subsidiaries on a consolidated basis in respect of such period, including,
without limitation, Restricted Payments permitted under Section 7.6(d)(B).
"Consolidated Net Income": of any Person for any period, the consolidated
net income (or loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; provided, that in
calculating Consolidated Net Income of Holdings and its consolidated
Subsidiaries for any period, there shall be excluded (a) the income (or deficit)
of any Person accrued prior to the date it becomes a Subsidiary of Holdings or
is merged into or consolidated with Holdings or any of its Subsidiaries and (b)
the income (or deficit) of any Person (other than a Subsidiary
6
of Holdings) in which Holdings or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by
Holdings or such Subsidiary in the form of dividends or similar distributions.
"Consolidated Net Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA of Holdings and its Subsidiaries for such period to (b)
Consolidated Net Interest Expense of Holdings and its Subsidiaries for such
period.
"Consolidated Net Interest Expense": of any Person for any period, (a)
total cash interest expense (including that attributable to Capital Lease
Obligations) of such Person and its Subsidiaries for such period with respect to
all outstanding Indebtedness of such Person and its Subsidiaries, minus (b)
total cash interest income of such Person and its Subsidiaries for such period,
in each case determined in accordance with GAAP.
"Consolidated Total Leverage": at any date, the aggregate principal amount
of all Funded Debt of Holdings and its Subsidiaries at such date, minus the
amount of cash and Cash Equivalents, in an aggregate amount not to exceed
$5,000,000 at any time, held by Holdings and its Subsidiaries on such date in an
account with any of the Lenders, in each case determined on a consolidated basis
in accordance with GAAP.
"Consolidated Total Leverage Ratio": as at the last day of any period of
four consecutive fiscal quarters of Holdings, the ratio of (a) Consolidated
Total Leverage on such day to (b) Consolidated EBITDA of Holdings and its
Subsidiaries for such period.
"Consolidated Working Capital": at any date, the difference of (a)
Consolidated Current Assets on such date less (b) Consolidated Current
Liabilities on such date.
"Continuing Directors": the directors of Holdings on the Closing Date and
each other director of Holdings, if, in each case, such other director's
nomination for election to the board of directors of Holdings is recommended by
at least 51% of the then Continuing Directors or such other director receives
the vote of the Permitted Investors in his or her election by the shareholders
of Holdings.
"Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its Property is bound.
"Default": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Derivatives Counterparty": as defined in Section 7.6.
"Disposition": with respect to any Property, any sale, sale and leaseback,
assignment, conveyance, transfer or other effectively complete disposition
thereof. The terms "Dispose" and "Disposed of" shall have correlative meanings.
"Documentation Agent": as defined in the preamble hereto.
"Dollars" and "$": dollars in lawful currency of the United States.
"Domestic Subsidiary": any Subsidiary of the Borrower organized under the
laws of any jurisdiction within the United States.
7
"Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, codes, decrees or other legally enforceable requirements
(including, without limitation, common law) of any international authority,
foreign government, the United States, or any state, local, municipal or other
governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment, as has been, is
now, or may at any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses, approvals,
registrations, exemptions and other authorizations required under any
Environmental Law.
"Equity Issuance": any issuance by any Group Member of its Capital
Stock in a public offering.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate screen (or otherwise on such screen),
the "Eurodollar Base Rate" shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent or, in the absence of such availability, by
reference to the rate at which the Administrative Agent is offered Dollar
deposits at or about 11:00 A.M., local time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where its
eurodollar and foreign currency and exchange operations are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
Eurodollar Base Rate
--------------------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
under a particular Facility the then current Interest Periods with respect to
all of which begin on the same date and end on the same later date (whether or
not such Loans shall originally have been made on the same day).
8
"Event of Default": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Excess Cash Flow": for any fiscal year of Holdings, the difference,
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) the amount of all non-cash charges (including
depreciation, amortization and deferred tax expense) deducted in arriving at
such Consolidated Net Income, (iii) the amount of the decrease, if any, in
Consolidated Working Capital for such fiscal year and (iv) the aggregate net
amount of non-cash loss on the Disposition of Property by Holdings and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in arriving at such
Consolidated Net Income minus, (b) the sum, without duplication, of (i) the
amount of all non-cash credits included in arriving at such Consolidated Net
Income (including, without limitation, deferred tax credits), (ii) the aggregate
amount actually paid by Holdings and its Subsidiaries in cash during such fiscal
year on account of Capital Expenditures permitted under this Agreement and
Permitted Acquisitions (other than to the extent any such Capital Expenditure or
Permitted Acquisition is made with the proceeds of Indebtedness or an Equity
Issuance or with the proceeds of any Reinvestment Deferred Amount), (iii) the
aggregate amount of all prepayments of Revolving Loans during such fiscal year
to the extent accompanying permanent optional reductions of the Revolving
Commitments and all optional prepayments of the Term Loans during such fiscal
year, (iv) the aggregate amount of all regularly scheduled principal payments of
Indebtedness (including, without limitation, the Term Loans) of Holdings and its
Subsidiaries made during such fiscal year (other than in respect of any
revolving credit facility to the extent there is not an equivalent permanent
reduction in commitments thereunder), (v) the amount of the increase, if any, in
Consolidated Working Capital for such fiscal year, (vi) the aggregate net amount
of non-cash gain on the Disposition of Property by Holdings and its Subsidiaries
during such fiscal year (other than sales of inventory in the ordinary course of
business), to the extent included in arriving at such Consolidated Net Income
and (vii) cash expenses excluded from the definition of Capital Expenditures
pursuant to the proviso thereto in connection with the Information Technology
Upgrade not in excess of $3,000,000 per fiscal year and the Ormed Rental Pool.
"Excess Cash Flow Application Date": as defined in Section 2.10(d).
"Excess Cash Flow Percentage": 50%.
"Excluded Foreign Subsidiaries": any Foreign Subsidiary in respect of
which either (a) the pledge of more than 66-2/3% of the Capital Stock of such
Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of (or the
granting by such Subsidiary of a Lien on its assets to secure) the Obligations,
would, in the good faith judgment of the Borrower, result in adverse tax
consequences to the Borrower, and, in any event, Empi Europe GmbH, Empi Germany
GmbH, Empi Ormed GmbH & Co. KG, and Medireha GmbH shall each constitute an
Excluded Foreign Subsidiary.
"Existing Credit Facility": the Credit Agreement, dated as of August
31, 1999 (as amended, supplemented or otherwise modified from time to time),
among EI Merger Corp., the Borrower, Xxxxxx Brothers Inc., as arranger, First
Union Capital Markets Corp., as syndication agent, Union Bank of California,
N.A., as documentation agent, the lenders party thereto from time to time and
Xxxxxx Commercial Paper Inc., as administrative agent.
"Facility": each of (a) the Term Commitments and the Term Loans made
thereunder (the "Term Facility") and (b) the Revolving Commitments and the
extensions of credit made thereunder (the "Revolving Facility").
9
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by JPMorgan Chase Bank from
three federal funds brokers of recognized standing selected by it.
"Fee Payment Date": (a) the third Business Day following the last day
of each March, June, September and December and (b) the last day of the
Revolving Commitment Period.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"FQ1", "FQ2", "FQ3" and "FQ4": when used with a numerical year
designation, means the first, second, third or fourth fiscal quarters,
respectively, of such fiscal year of Holdings (e.g., FQ1 2003 means the first
fiscal quarter of Holdings's 2003 fiscal year, which ended March 31, 2003).
"Funded Debt": with respect to any Person, all Indebtedness of such
Person of the types described in clauses (a) through (e) of the definition of
"Indebtedness" in this Section.
"Funding Office": the office of the Administrative Agent specified in
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United States
as in effect from time to time, except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in Section 4.1(b).
"GE Equity": GE Capital Equity Investments, Inc., a Delaware
corporation, and its successors and assigns.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any governmental entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and, as to any Lender, any securities exchange and any self
regulatory organization (including the National Association of Insurance
Commissioners).
"Group Members": the collective reference to Holdings, the Borrower
and their respective Subsidiaries.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor, substantially in the form of Exhibit A.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a guarantee, reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or by which
such Person becomes contingently liable for any Indebtedness, net worth, working
capital earnings, leases, dividends or other distributions upon the stock or
equity interests (the "primary obligations") of any other third Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary
10
obligation or any Property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (i) to purchase Property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (ii)
otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be such guaranteeing
person's maximum reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith.
"Guarantors": the collective reference to Holdings and the Subsidiary
Guarantors.
"Hedge Agreements": all interest rate swaps, caps or collar agreements
or similar arrangements entered into by the Borrower or its Subsidiaries
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
"Holdings": as defined in the preamble hereto.
"Immaterial Subsidiary": on any date, each of (a) Empi Canada, Inc.
and (b) any other subsidiary of Holdings that has less than 2.0% of consolidated
total assets of Holdings at such date in book value of total assets as reflected
on the most recent financial statements delivered pursuant to Section 6.1 prior
to such date.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of Property or services (other than (i)
trade payables and similar obligations incurred in the ordinary course of such
Person's business and (ii) earn-outs and other contingent payments in respect of
acquisitions except to the extent that the liability on account of any such
earn-out or contingent payment becomes fixed), (c) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments, (d)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to Property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such Property, in
which case only the lesser of the amount of such obligation and the fair market
value of such Property shall constitute Indebtedness), (e) all Capital Lease
Obligations of such Person, (f) all obligations of such Person, contingent or
otherwise, as an account party or applicant under acceptance, letter of credit
or similar facilities, (g) all obligations of such Person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any
Capital Stock of such Person, except for agreements with directors, officers and
employees to acquire such Capital Stock upon the death or termination of
employment of such director, officer or employee, (h) all Guarantee Obligations
of such Person in respect of obligations of the kind referred to in clauses (a)
through (f) above, and (i) all obligations of the kind referred to in clauses
(a) through (h) above secured by (or for which the holder of such obligation has
an existing right, contingent or otherwise, to be secured by) any Lien on
Property (including, without limitation, accounts and contract rights) owned by
such Person, whether or not such Person has assumed or become liable for the
payment of such obligation (and in the event such Person has not assumed or
become liable for payment of such obligation, only the lesser of the amount of
such obligation and the fair market value of such Property shall constitute
Indebtedness).
"Information Technology Upgrade": the implementation of Oracle
applications and other applications to support the Business, including
customization of programming, servers and other
11
hardware components, implementation services, application software, and data
storage to support the implementation.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Instrument": as defined in the Guarantee and Collateral Agreement.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to xxx at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any ABR Loan, the third Business
Day following the last day of each March, June, September and December to occur
while such Loan is outstanding and the final maturity date of such Loan, (b) as
to any Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period and (d) as to any Loan (other than any Revolving
Loan that is an ABR Loan), the date of any repayment or prepayment made in
respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six or (with the
consent of each affected Lender under the relevant Facility) nine or twelve
months thereafter, as selected by the Borrower in its notice of borrowing or
notice of conversion, as the case may be, given with respect thereto; and (b)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan and ending one, two, three or
six or (with the consent of each affected Lender under the relevant Facility)
nine or twelve months thereafter, as selected by the Borrower by irrevocable
notice to the Administrative Agent not later than 1:00 P.M., New York City time,
on the date that is three Business Days prior to the last day of the then
current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
scheduled Revolving Termination Date or beyond the date final payment is
due on the Term Loans shall end on the Revolving Termination Date or such
due date, as applicable; and
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month.
"Investments": as defined in Section 7.8.
12
"Issuing Lender": (a) JPMorgan Chase Bank or (b) any other Revolving
Lender from time to time designated by the Borrower as an Issuing Lender with
the consent of such other Revolving Lender and the Administrative Agent.
"Joint Lead Arrangers": X.X. Xxxxxx Securities Inc. and Wachovia
Capital Markets, LLC.
"L/C Commitment": $5,000,000.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
Lenders other than the applicable Issuing Lender.
"Lenders": as defined in the preamble hereto.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, collateral assignment,
encumbrance, lien (statutory or other), charge or other security interest or any
other security agreement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing). For the
avoidance of doubt, it is understood and agreed that any Loan Party may, as part
of its business, grant licenses to third parties to use Intellectual Property
owned or developed by a Loan Party. For purposes of this Agreement and the other
Loan Documents, such licensing activity shall not constitute a "Lien" on such
Intellectual Property. Each of the Administrative Agent and each Lender
understands that any such licenses may be exclusive to the applicable licensees,
and such exclusivity provisions may limit the ability of the Administrative
Agent to utilize, sell, lease or transfer the related Intellectual Property or
otherwise realize value from such Intellectual Property pursuant hereto.
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents, the
Applications and the Notes and any amendment, waiver, supplement or other
modification to any of the foregoing.
"Loan Parties": Holdings, the Borrower and each Subsidiary Guarantor.
"Majority Facility Lenders": with respect to any Facility, the holders
of more than 50% of the aggregate unpaid principal amount of the Term Loans or
the Total Revolving Extensions of Credit, as the case may be, outstanding under
such Facility (or, in the case of the Revolving Facility, prior to any
termination of the Revolving Commitments, the holders of more than 50% of the
Total Revolving Commitments).
"Majority Revolving Facility Lenders": the Majority Facility Lenders
in respect of the Revolving Facility.
"Management Agreement": the Management Agreement, dated as of August
31, 1999, by and among Holdings, the Sponsor and GE Equity, as in effect on the
Closing Date and as modified from time to time with the consent of the
Administrative Agent.
13
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property or financial condition of the Borrower and its
subsidiaries taken as a whole, or (b) the validity or enforceability of the Loan
Documents or the material rights and remedies of the Administrative Agent and
the Lenders thereunder.
"Material Environmental Amount": an amount or amounts payable by the
Borrower and/or any of its Subsidiaries, in the aggregate in excess of
$2,000,000, for: costs to comply with any Environmental Law; costs of any
investigation, and any remediation, of any Material of Environmental Concern;
and compensatory damages (including, without limitation damages to natural
resources), punitive damages, fines and penalties pursuant to any Environmental
Law.
"Material Subsidiary" any Subsidiary that is not an Immaterial
Subsidiary.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity and any other substances, whether or not any such
substance is defined as hazardous or toxic under any Environmental Law, that is
regulated pursuant to or could give rise to liability under any Environmental
Law.
"Moody's": Xxxxx'x Investors Service.
"Mortgaged Properties": the owned real properties listed on Schedule
1.1B, as to which the Administrative Agent for the benefit of the Lenders shall
be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any Loan
Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded), as the same may be amended,
supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees, consulting fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset which
is the subject of such Asset Sale or Recovery Event (other than any Lien
pursuant to a Security Document) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements) and (b) in connection
with any Equity Issuance or issuance or sale of debt securities or instruments
or the incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants' fees,
consulting fees, underwriting discounts and commissions and other customary fees
and expenses actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.18(a).
"Non-U.S. Lender": as defined in Section 2.18(d).
14
"Note": any promissory note evidencing any Loan.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans, the
Reimbursement Obligations and all other obligations and liabilities of the
Borrower to the Administrative Agent or to any Lender (or, in the case of
Specified Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge
Agreement or (to the extent the Borrower so agrees in the applicable agreements
therefor) cash management arrangements with Lenders or any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise; provided, that (a)
obligations of the Borrower or any Subsidiary under any Specified Hedge
Agreement or cash management agreement (if applicable) shall be secured and
guaranteed pursuant to the Security Documents only to the extent that, and for
so long as, the other Obligations are so secured and guaranteed and (b) any
release of Collateral or Guarantors effected in the manner permitted by this
Agreement shall not require the consent of holders of obligations under
Specified Hedge Agreements or cash management agreement (if applicable).
"Ormed Rental Pool": equipment or devices manufactured for the purposes
of patient rentals that according to GAAP are required to be classified as
capital expenditures within property, plant and equipment on the consolidated
financial statements.
"Other Taxes": any and all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.
"Payment Amount": as defined in Section 3.5.
"Participant": as defined in Section 10.6(c).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisition": (i) any acquisition approved by the Required
Lenders or (ii) any acquisition by the Borrower or any of its Subsidiaries of
all or substantially all of the Capital Stock, or substantially all of the
assets, of any Person, or of all or substantially all of the assets constituting
a division, product line or business line of any Person, if such acquisition
described in this clause (ii) complies with the following criteria:
(a) No Default or Event of Default shall be in effect after giving
effect to such acquisition, and the Borrower shall have delivered to the
Administrative Agent a certificate executed on its behalf by a Responsible
Officer to such effect.
(b) After giving effect to the consummation of such acquisition and to
the incurrence of any Indebtedness associated therewith, the Borrower shall
be in pro forma compliance with
15
Section 7.1 (calculated as of the last day of the fiscal quarter immediately
preceding the fiscal quarter in which such acquisition is consummated, giving
pro forma effect to such acquisition and the issuance of the related
Indebtedness).
(c) The Person, division, product line or line of business acquired in
such acquisition (the "Target") shall be in the Business.
(d) Prior to the consummation of such acquisition (i) the
Administrative Agent shall have received (A) financial projections in
respect of the Target for the one-year period following the consummation of
such acquisition and (B) such financial information as it shall reasonably
request to demonstrate pro forma compliance with the financial criteria set
forth in paragraph (b) above, (ii) the Administrative Agent shall have
received final copies of the documentation to be executed in connection
with such acquisition, including all schedules and exhibits thereto and
(iii) the Administrative Agent shall have received notice of the closing
date for such acquisition; provided, that, such notice shall be given at
least five Business Days prior to such closing date unless doing so would
materially interfere with, or would cause materially adverse economic
consequences with respect to, the consummation of such acquisition.
(e) After giving effect to any such acquisition, the Available
Revolving Commitment shall be at least $5,000,000.
"Permitted Investors": the collective reference to the Sponsor, GE
Equity and their respective Affiliates and the directors, officers and other
employees of Holdings and its Subsidiaries.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan as defined in
Section 3(3) of ERISA and in respect of which the Borrower or any of its
Subsidiaries is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledged Securities": as defined in the Guarantee and Collateral
Agreement.
"Pledged Stock": as defined in the Guarantee and Collateral Agreement.
"Pricing Grid": the table set forth below.
===============================================================================================================
Consolidated Total Applicable Margin Applicable Margin for Applicable Margin for Applicable Margin
Leverage Ratio for Revolving Loans Revolving Loans that Term Loans that are for Term Loans that
that are Eurodollar are ABR Loans Eurodollar Loans are ABR Loans
Loans
---------------------------------------------------------------------------------------------------------------
**** 3.00:1.00 2.50% 1.50% 3.00% 2.00%
---------------------------------------------------------------------------------------------------------------
* 3.00:1.00 but 2.25% 1.25% 2.75% 1.75%
**** 2.50:1.00
* 2.50:1.00 2.00% 1.00% 2.75% 1.75%
===============================================================================================================
* denotes less than
**** denotes greater than or equal to
16
Changes in the Applicable Margin with respect to Revolving Loans or
Term Loans resulting from changes in the Consolidated Total Leverage Ratio shall
become effective on the date (the "Adjustment Date") on which financial
statements are delivered to the Lenders pursuant to Section 6.1 (but in any
event not later than the 45th day after the end of each of the first three
quarterly periods of each fiscal year or the 90th day after the end of each
fiscal year, as the case may be) and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any financial statements
referred to above are not delivered within the time periods specified above,
then, until such financial statements are delivered, Consolidated Total Leverage
Ratio as at the end of the fiscal period that would have been covered thereby
shall for the purposes of this definition be deemed to be greater than 3.00 to
1. In addition, at all times while an Event of Default set forth in Section 8(a)
or 8(f) shall have occurred and be continuing, the Consolidated Total Leverage
Ratio shall for the purposes of this Pricing Grid be deemed to be greater than
3.00 to 1. Each determination of the Consolidated Total Leverage Ratio pursuant
to this Pricing Grid shall be made for the periods and in the manner
contemplated by Section 7.1(a).
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of Holdings or any Subsidiary, in an amount for each such event
exceeding 1% of consolidated total assets of Holdings at such time.
"Refinancing": as defined in Section 5.1(b).
"Register": as defined in Section 10.6(b)(iv).
"Regulation H": Regulation H of the Board as in effect from time to
time.
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrower to reimburse
each Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of
Credit issued by such Issuing Lender.
"Reinvestment Deferred Amount": with respect to any Reinvestment Event,
the aggregate Net Cash Proceeds received by any Loan Party for its own account
in connection therewith that are not applied to prepay the Term Loans or reduce
the Revolving Commitments pursuant to Section 2.10 as a result of the delivery
of a Reinvestment Notice.
"Reinvestment Event": any Equity Issuance, Asset Sale or Recovery Event
in respect of which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that the Borrower (directly or indirectly through a Subsidiary)
intends and expects (a) with respect to Section 2.10(c), to use all or a
specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to
acquire assets useful in its business or (b) with respect to Section 2.10(a), to
use all or a specified portion of the Net Cash Proceeds of an Equity Issuance to
fund Capital Expenditures or Permitted Acquisitions; provided, that while an
Event of Default has occurred and is continuing, the Borrower may not use the
Net Cash Proceeds referred to in clause (a) above (or some portion thereof, as
specified in the applicable notice) upon receiving notification from the
Required Lenders to that effect.
17
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire assets
useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment Event,
the earlier of (i) the date occurring one year after such Reinvestment Event and
(ii) with respect to any portion of a Reinvestment Deferred Amount, the date on
which the Borrower shall have determined not to acquire assets useful in the
Borrower's business with such portion of such Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived.
"Representatives": as defined in Section 10.14.
"Required Lenders": at any time, the holders of more than 50% of (a)
until the Closing Date, the Commitments then in effect and (b) thereafter, the
sum of (i) the aggregate unpaid principal amount of the Term Loans then
outstanding and (ii) the Total Revolving Commitments then in effect or, if the
Revolving Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding.
"Required Prepayment Lenders": the Majority Facility Lenders in respect
of each Facility.
"Requirement of Law": as to any Person, any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
Property or to which such Person or any of its Property is subject.
"Responsible Officer": the chief executive officer, president or chief
financial officer of Holdings or the Borrower, and, with respect to financial
matters, the chief financial officer or Treasurer of Holdings or the Borrower.
"Restricted Payments": as defined in Section 7.6.
"Revolving Commitment": as to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and participate in Letters of Credit in
an aggregate principal and/or face amount not to exceed the amount set forth
under the heading "Revolving Commitment" opposite such Lender's name on Schedule
1.1A or in the Assignment and Assumption pursuant to which such Lender became a
party hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Revolving Commitments is $25,000,000.
"Revolving Commitment Period": the period from and including the
Closing Date to the Revolving Termination Date.
"Revolving Extensions of Credit": as to any Revolving Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held by such Lender then outstanding and (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding.
18
"Revolving Lender": each Lender that has a Revolving Commitment or that
holds Revolving Loans.
"Revolving Loans": as defined in Section 2.4(a).
"Revolving Percentage": as to any Revolving Lender at any time, the
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Loans then outstanding, provided,
that, in the event that the Revolving Loans are paid in full prior to the
reduction to zero of the Total Revolving Extensions of Credit, the Revolving
Percentages shall be determined in a manner designed to ensure that the other
outstanding Revolving Extensions of Credit shall be held by the Revolving
Lenders on a comparable basis.
"Revolving Termination Date": November 24, 2008.
"S&P": Standard & Poor's Ratings Group.
"SEC": the Securities and Exchange Commission (or successors thereto or
an analogous Governmental Authority).
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any Property of any
Loan Party to secure the obligations and liabilities of any Loan Party under any
Loan Document.
"Senior Holdings Notes": the senior unsecured notes of Holdings in the
aggregate principal amount of $25,500,000 issued initially in favor of each of
the Sponsor and GE Equity pursuant to, and subject to the terms and conditions
contained in, the Note Purchase Agreement, dated as of August 31, 1999, by and
among Empi, MPI Holdings, L.L.C. and GE Equity.
"Single Employer Plan": any Plan that is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent": with respect to any Person, as of any date of determination,
(a) the amount of the "present fair saleable value" of the assets of such Person
will, as of such date, exceed the amount of all "liabilities of such Person,
contingent or otherwise", as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts become
absolute and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business and (d)
such Person will be able to pay its debts as they mature. For purposes of this
definition,(i) "debt" means liability on a "claim", and (ii) "claim" means any
(x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to an equitable
remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
19
"Specified Cash Management Arrangement": as defined in the Guarantee
and Collateral Agreement.
"Specified Hedge Agreement": any Hedge Agreement (a) entered into by
(i) the Borrower or any of its Subsidiaries and (ii) any Lender or any affiliate
thereof at the time such Hedge Agreement was entered into, as counterparty and
(b) that has been designated by such Lender and the Borrower, by notice to the
Administrative Agent, as a Specified Hedge Agreement. The designation of any
Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the
Lender or affiliate thereof that is a party thereto any rights in connection
with the management or release of any Collateral or of the obligations of any
Guarantor under the Guarantee and Collateral Agreement. For the avoidance of
doubt, all Hedge Agreements in existence on the Closing Date between the
Borrower or any of its Subsidiaries and any Lender shall constitute Specified
Hedge Agreements.
"Sponsor": TC Group L.L.C., a Delaware limited liability company, and
any Affiliates thereof.
"Subordinated Debt": unsecured Indebtedness of Holdings or the
Borrower; provided, that (a) such Indebtedness shall be subordinated, pursuant
to subordination provisions reasonably acceptable to the Administrative Agent,
to the obligations of the Borrower or Holdings, as the case may be, under this
Agreement and the other Loan Documents, (b) such Indebtedness shall not be
guaranteed by any Subsidiary of the Borrower (provided, that such Indebtedness
may be guaranteed by the Subsidiary acquired in a Permitted Acquisition, if the
obligations of such Subsidiary under such guarantee are subordinated to the
obligations of such Subsidiary under the Loan Documents pursuant to
subordination provisions reasonably acceptable to the Administrative Agent) and
(c) the other terms and conditions of such Indebtedness are reasonably
acceptable to the Administrative Agent.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than any
Excluded Foreign Subsidiary.
"Syndication Agent": as defined in the preamble hereto.
"Term Commitment": as to any Lender, the obligation of such Lender, if
any, to make a Term Loan to the Borrower in a principal amount not to exceed the
amount set forth under the heading "Term Commitment" opposite such Lender's name
on Schedule 1.1A. The original aggregate amount of the Term Commitments is
$165,000,000.
"Term Lender": each Lender that has a Term Commitment or that holds a
Term Loan.
"Term Loan": as defined in Section 2.1.
"Term Percentage": as to any Term Lender at any time, the percentage
which such Lender's Term Commitment then constitutes of the aggregate Term
Commitments (or, at any time after
20
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Term Loans then outstanding constitutes of the aggregate principal
amount of the Term Loans then outstanding).
"Total Revolving Commitments": at any time, the aggregate amount of the
Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.
"Transferee": any Assignee or Participant.
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.
"United States": the United States of America.
"Vehicles": as defined in the Guarantee and Collateral Agreement.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is a
Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate
or other document made or delivered pursuant hereto or thereto, (i) accounting
terms relating to Holdings, the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP, (ii)
the words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation", and (iii) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Commitments. Subject to the terms and conditions hereof, each
Term Lender severally agrees to make a term loan (a "Term Loan") to the Borrower
on the Closing Date in an amount not to exceed the amount of the Term Commitment
of such Lender. The Term Loans may from
21
time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and
notified to the Administrative Agent in accordance with Sections 2.2 and 2.11.
2.2 Procedure for Term Loan Borrowing. The Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, on the day of the
anticipated Closing Date) requesting that the Term Lenders make the Term Loans
on the Closing Date and specifying the amount to be borrowed. The Term Loans
made on the Closing Date shall initially be ABR Loans. Upon receipt of such
notice the Administrative Agent shall promptly notify each Term Lender thereof.
Not later than 1:00 P.M., New York City time, on the Closing Date each Term
Lender shall make available to the Administrative Agent at the Funding Office an
amount in immediately available funds equal to the Term Loan or Term Loans to be
made by such Lender. The Administrative Agent shall credit the account of the
Borrower on the books of such office of the Administrative Agent with the
aggregate of the amounts made available to the Administrative Agent by the Term
Lenders in immediately available funds.
2.3 Repayment of Term Loans. The Term Loan of each Term Lender shall
mature in twenty-four (24) consecutive quarterly installments, commencing on
March 31, 2004, each of which shall be in an amount equal to such Lender's Term
Percentage multiplied by the amount set forth below opposite such installment:
Installment Principal Amount
----------- ----------------
March 31, 2004 $412,500
June 30, 2004 $412,500
September 30, 2004 $412,500
December 31, 2004 $412,500
March 31, 2005 $412,500
June 30, 2005 $412,500
September 30, 2005 $412,500
December 31, 2005 $412,500
March 31, 2006 $412,500
June 30, 2006 $412,500
September 30, 2006 $412,500
December 31, 2006 $412,500
March 31, 2007 $412,500
June 30, 2007 $412,500
September 30, 2007 $412,500
December 31, 2007 $412,500
March 31, 2008 $412,500
June 30, 2008 $412,500
September 30, 2008 $412,500
December 31, 2008 $412,500
March 31, 2009 $39,187,500
June 30, 2009 $39,187,500
September 30, 2009 $39,187,500
November 24, 2009 $39,187,500
2.4 Revolving Commitments. (a) Subject to the terms and conditions
hereof, each Revolving Lender severally agrees to make revolving credit loans
("Revolving Loans") to the Borrower from time to time during the Revolving
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Percentage of the L/C Obligations
then
22
outstanding does not exceed the amount of such Lender's Revolving Commitment.
During the Revolving Commitment Period the Borrower may use the Revolving
Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The
Revolving Loans may from time to time be Eurodollar Loans or ABR Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 2.11.
(b) The Borrower shall repay all outstanding Revolving Loans on the
Revolving Termination Date.
2.5 Procedure for Revolving Loan Borrowing. The Borrower may borrow
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 1:00 P.M., New York City time, (a) three Business Days prior to the
requested Borrowing Date, in the case of Eurodollar Loans, or (b) on the
requested Borrowing Date, in the case of ABR Loans) (provided that any such
notice of a borrowing of ABR Loans under the Revolving Facility to finance
payments required by Section 3.5 may be given not later than 1:00 P.M., New York
City time, on the date of the proposed borrowing), specifying (i) the amount and
Type of Revolving Loans to be borrowed, (ii) the requested Borrowing Date and
(iii) in the case of Eurodollar Loans, the respective amounts of each such Type
of Loan and the respective lengths of the initial Interest Period therefor. Any
Revolving Loans made on the Closing Date shall initially be ABR Loans. Each
borrowing under the Revolving Commitments shall be in an amount equal to (x) in
the case of ABR Loans, $250,000 or a whole multiple of $100,000 in excess
thereof (or, if the then aggregate Available Revolving Commitments are less than
$250,000, such lesser amount) and (y) in the case of Eurodollar Loans, $500,000
or a whole multiple of $500,000 in excess thereof. Upon receipt of any such
notice from the Borrower, the Administrative Agent shall promptly notify each
Revolving Lender thereof. Each Revolving Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the Funding Office prior to 2:00 P.M., New York City
time (or 3:30 P.M., New York City time in the case of same-day borrowings of ABR
Loans) on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Revolving Lenders and in like funds
as received by the Administrative Agent.
2.6 Repayment of Loans. (a) The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of the appropriate
Revolving Lender or Term Lender, as the case may be, (i) the then unpaid
principal amount of each Revolving Loan of such Revolving Lender outstanding on
the Revolving Termination Date (or on such earlier date on which the Loans
become due and payable pursuant to Section 8) and (ii) the principal amount of
each outstanding Term Loan of such Term Loan Lender in installments according to
the relevant amortization schedule set forth in Section 2.3 (or on such earlier
date on which the Loans become due and payable pursuant to Section 8). The
Borrower hereby further agrees to pay interest on the unpaid principal amount of
the Loans from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum, and on the dates, set forth in Section
2.13.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
23
(c) The Administrative Agent, on behalf of the Borrower, shall maintain the
Register pursuant to Section 10.6(b)(iv), and a subaccount therein for each
Lender, in which shall be recorded (1) the amount of each Loan made hereunder
and any Note evidencing such Loan, the Type of such Loan and each Interest
Period applicable thereto, (2) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (3) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.6(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
2.7 Commitment Fees, etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from and including the Closing Date to the last day of the
Revolving Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on each Fee
Payment Date, commencing on the first such date to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees in the
amounts and on the dates as set forth in any fee agreements with the
Administrative Agent.
2.8 Termination or Reduction of Revolving Commitments. The Borrower shall
have the right, upon not less than two Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided that no such
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would exceed
the Total Revolving Commitments. Any such reduction shall be in an amount equal
to $1,000,000, or a whole multiple thereof, and shall reduce permanently the
Revolving Commitments then in effect.
2.9 Optional Prepayments. The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent no later than 1:00
P.M., New York City time, three Business Days prior thereto, in the case of
Eurodollar Loans, and no later than 1:00 P.M., New York City time, one Business
Day prior thereto, in the case of ABR Loans, which notice shall specify the date
and amount of prepayment and whether the prepayment is of Eurodollar Loans or
ABR Loans; provided, that if a Eurodollar Loan is prepaid on any day other than
the last day of the Interest Period applicable thereto, the Borrower shall also
pay any amounts owing pursuant to Section 2.19. Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with (except in the case of
Revolving Loans that are ABR Loans) accrued interest to such date on the amount
prepaid. Partial prepayments of Term Loans and Revolving Loans shall be in an
aggregate principal amount of $250,000 or a whole multiple of $100,000 in excess
thereof (in the case of prepayments of ABR Loans) or $500,000 or a whole
multiple of $500,000 in excess thereof (in the case of prepayments of Eurodollar
Loans) and shall be subject to the provisions of Section 2.16.
2.10 Mandatory Prepayments and Commitment Reductions. (a) Unless the
Required Prepayment Lenders shall otherwise agree, if any Capital Stock shall be
issued by any Loan Party in a
24
public offering, then, unless a Reinvestment Notice shall be delivered in
respect thereof, an amount equal to 50% of the Net Cash Proceeds thereof shall
be applied on the date of such issuance toward the prepayment of the Term Loans
as set forth in Section 2.10(e); provided, that, notwithstanding the foregoing,
on each Reinvestment Prepayment Date the Term Loans shall be prepaid by an
amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event, as set forth in Section 2.10(e).
(b) Unless the Required Prepayment Lenders shall otherwise agree, if any
Indebtedness shall be incurred by any Loan Party (excluding any Indebtedness
incurred in accordance with Section 7.2), an amount equal to 100% of the Net
Cash Proceeds thereof shall be applied on the date of the receipt of such Net
Cash Proceeds toward the prepayment of the Term Loans and the reduction of the
Revolving Commitments as set forth in Section 2.10(e).
(c) Unless the Required Prepayment Lenders shall otherwise agree, if on any
date any Loan Party shall for its own account receive Net Cash Proceeds from any
Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be
delivered in respect thereof, such Net Cash Proceeds shall be applied on such
date toward the prepayment of the Term Loans and the reduction of the Revolving
Commitments as set forth in Section 2.10(e); provided, that, notwithstanding the
foregoing, on each Reinvestment Prepayment Date the Term Loans shall be prepaid,
and/or the Revolving Commitments shall be reduced, by an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event,
as set forth in Section 2.10(e).
(d) Unless the Required Prepayment Lenders shall otherwise agree, if, for
any fiscal year of the Borrower commencing with the fiscal year ending December
31, 2004, there shall be Excess Cash Flow, the Borrower shall, on the relevant
Excess Cash Flow Application Date, apply the Excess Cash Flow Percentage of such
Excess Cash Flow toward the prepayment of the Term Loans as set forth in Section
2.10(e). Each such prepayment shall be made on a date (an "Excess Cash Flow
Application Date") no later than five days after the date on which the financial
statements of the Borrower referred to in Section 6.1(a), for the fiscal year
with respect to which such prepayment is made, are required to be delivered to
the Lenders.
(e) Amounts to be applied in connection with prepayments and Commitment
reductions made pursuant to Sections 2.10(b) and (c) above shall be applied,
first, to the prepayment of the Term Loans in accordance with Section 2.16(b)
until paid in full and, second, to reduce permanently the Revolving Commitments.
Any such reduction of the Revolving Commitments shall be accompanied by
prepayment of the Revolving Loans to the extent, if any, that the Total
Revolving Extensions of Credit exceed the amount of the Total Revolving
Commitments as so reduced, provided that if the aggregate principal amount of
Revolving Loans then outstanding is less than the amount of such excess (because
L/C Obligations constitute a portion thereof), the Borrower shall, to the extent
of the balance of such excess, replace outstanding Letters of Credit and/or
deposit an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
reasonably satisfactory to the Administrative Agent. The application of any
prepayment pursuant to Section 2.10 shall be made, first, to ABR Loans and,
second, to Eurodollar Loans. Each prepayment of the Loans under Section 2.10
(except in the case of Revolving Loans that are ABR Loans) shall be accompanied
by accrued interest to the date of such prepayment on the amount prepaid.
2.11 Conversion and Continuation Options. (a) The Borrower may elect from
time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent prior irrevocable notice of such election no later than
1:00 P.M., New York City time, on the Business Day preceding the proposed
conversion date, provided that any such conversion of Eurodollar Loans may only
be made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to
25
convert ABR Loans to Eurodollar Loans by giving the Administrative Agent prior
irrevocable notice of such election no later than 1:00 P.M., New York City time,
on the third Business Day preceding the proposed conversion date (which notice
shall specify the length of the initial Interest Period therefor), provided that
no ABR Loan under a particular Facility may be converted into a Eurodollar Loan
when any Event of Default has occurred and is continuing and the Administrative
Agent or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such conversions. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan under a particular Facility may be continued as such
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations, and
provided, further, that if the Borrower shall fail to give any required notice
as described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted to
ABR Loans on the last day of such then expiring Interest Period. Upon receipt of
any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans and all
selections of Interest Periods shall be in such amounts and be made pursuant to
such elections so that (a) after giving effect thereto, the aggregate principal
amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal
to $500,000 or a whole multiple of $500,000 in excess thereof and (b) no more
than nine Eurodollar Tranches shall be outstanding at any one time.
2.13 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR
plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
applicable to ABR Loans under the Revolving Facility plus 2%, and (ii) if all or
a portion of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate then applicable
to ABR Loans under the relevant Facility plus 2% (or, in the case of any such
other amounts that do not relate to a particular Facility, the rate then
applicable to ABR Loans under the Revolving Facility plus 2%), in each case,
with respect to clauses (i) and (ii) above, from the date of such non-payment
until such amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.
26
2.14 Computation of Interest and Fees. (a) Interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to ABR Loans the rate of interest
on which is calculated on the basis of the Prime Rate, the interest thereon
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be presumptively correct in
the absence of manifest error. The Administrative Agent shall, at the request of
the Borrower, deliver to the Borrower a statement showing the quotations used by
the Administrative Agent in determining any interest rate pursuant to Section
2.13(a).
2.15 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be presumptively correct absent manifest error) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that by
reason of any changes arising after the date of this Agreement the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
certified by such Lenders) of making or maintaining their affected Loans
during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as ABR Loans,
(y) any Loans under the relevant Facility that were to have been converted on
the first day of such Interest Period to Eurodollar Loans shall be continued as
ABR Loans and (z) any outstanding Eurodollar Loans under the relevant Facility
shall be converted, on the last day of the then-current Interest Period with
respect thereto, to ABR Loans. Until such notice has been withdrawn by the
Administrative Agent (which action the Administrative Agent will take promptly
after the conditions giving rise to such notice no longer exist), no further
Eurodollar Loans under the relevant Facility shall be made or continued as such,
nor shall the Borrower have the right to convert Loans under the relevant
Facility to Eurodollar Loans.
2.16 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower
from the Lenders hereunder, each payment by the Borrower on account of any
commitment fee and any reduction of the Commitments of the Lenders shall be made
pro rata according to the respective Term Percentages or Revolving Percentages,
as the case may be, of the relevant Lenders. Each payment (other than
prepayments) in respect of principal or interest in respect of the Term Loans
and each payment in respect of fees payable hereunder shall be applied to the
amounts of such obligations owing to the Term Lenders pro rata according to the
respective amounts then due and owing to such Lenders.
27
(b) Each optional prepayment of the Term Loans shall be applied as
specified by the Borrower. Each mandatory prepayment by the Borrower on account
of principal of and interest on the Term Loans shall be made pro rata according
to the respective outstanding principal amounts of the Term Loans then held by
the Term Lenders (except as otherwise provided in Section 2.10(e)). Each
mandatory prepayment by the Borrower shall be applied pro rata to the Term Loans
based upon the respective then remaining principal amounts thereof and shall be
applied, first, to any installments coming due within 12 months of the date of
such prepayment and, second, ratably to the respective remaining installments
thereof. Amounts prepaid on account of the Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Revolving Loans shall be made pro rata
according to the respective outstanding principal amounts of the Revolving Loans
then held by the Revolving Lenders. Each payment in respect of Reimbursement
Obligations in respect of any Letter of Credit shall be made to the Issuing
Lender that issued such Letter of Credit.
(d) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 2:00 P.M., New
York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
(e) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon, at a rate
equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation, for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the Administrative Agent shall give notice of such fact to the
Borrower and the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans under
the relevant Facility, on demand, from the Borrower. Nothing herein shall be
deemed to limit the rights of the Administrative Agent or the Borrower against
any defaulting Lender.
(f) Unless the Administrative Agent shall have been notified in writing by
the Borrower prior to the date of any payment due to be made by the Borrower
hereunder that the Borrower will not make such payment to the Administrative
Agent, the Administrative Agent may assume that the Borrower
28
is making such payment, and the Administrative Agent may, but shall not be
required to, in reliance upon such assumption, make available to the Lenders
their respective pro rata shares of a corresponding amount. If such payment is
not made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
2.17 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority first made, in each
case, subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.18 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition not otherwise
contemplated hereunder;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit, or to reduce any amount receivable hereunder
in respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender, within ten Business Days after the Borrower's receipt of a reasonably
detailed invoice therefor (showing with reasonable detail the calculations
thereof), any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable. If any Lender becomes entitled to
claim any additional amounts pursuant to this Section, it shall promptly notify
the Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority first made, in each
case, subsequent to the date hereof shall have the effect of reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder or under or in respect of any Letter of Credit to a level
below that which such Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's or
such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Borrower (with a copy to the Administrative Agent) of a
reasonably detailed written request therefor (consistent with the detail
29
provided by such Lender to similarly situated borrowers), the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such corporation for such reduction.
(c) A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be presumptively correct in the absence of manifest
error. Notwithstanding anything to the contrary in this Section, the Borrower
shall not be required to compensate a Lender pursuant to this Section for any
amounts incurred more than nine months prior to the date that such Lender
notifies the Borrower of such Lender's intention to claim compensation therefor;
provided that, if the circumstances giving rise to such claim have a retroactive
effect, then such nine-month period shall be extended to include the period of
such retroactive effect. The obligations of the Borrower pursuant to this
Section shall survive the termination of this Agreement and the payment of the
Obligations.
2.18 Taxes. (a) Except as required by applicable law, all payments made
by the Borrower under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income taxes, levies, imposts, duties, charges, fees, deductions, withholdings
or Other Taxes, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent
or any Lender as a result of a present or former connection between the
Administrative Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Administrative Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes
are required to be withheld from any amounts payable to the Administrative Agent
or any Lender hereunder, the amounts so payable to the Administrative Agent or
such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes and
Other Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement, provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender's failure to comply with the requirements of paragraph (d) or (e) of this
Section or (ii) that are United States withholding taxes imposed on amounts
payable to such Lender at the time such Lender becomes a party to this
Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph (and
subject to Section 10.6(c), in the case of payments made to a Lender for the
account of any Participant, the Borrower shall not be required to increase any
amounts payable to such Lender for the account of such Participant with respect
to any Non-Excluded Taxes that are United States withholding taxes imposed on
amounts payable to such Lender for the account of such Participant at the time
such Participant purchases the related participation, except to the extent that
the Lender who transferred such interest to the Participant was entitled, at the
time of the transfer, to receive additional amounts from the Borrower with
respect to such Non-Excluded Taxes pursuant to this paragraph).
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the Administrative Agent or Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof if such receipt is obtainable, or, if not,
such other evidence of payment as may reasonably be required by the
Administrative Agent or such Lender. If the
30
Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this Section shall
survive the termination of this Agreement and the payment of the Obligations.
(d) Each Lender (or Transferee) that is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) (a "Non-US Lender")
shall deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Borrower and to the Lender from which the related
participation shall have been purchased) (i) two accurate and complete copies of
IRS Form W-8ECI or W-8BEN, or, (ii) in the case of a Non-U.S. Lender claiming
exemption from United States federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest" a statement
substantially in the form of Exhibit G and two accurate and complete copies of
IRS Form W-8BEN, or any subsequent versions or successors to such forms, in each
case properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, United States federal withholding
tax on all payments by the Borrower under this Agreement and the other Loan
Documents. Such forms shall be delivered by each Non-U.S. Lender on or before
the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the United States taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-United States withholding tax under the law of any jurisdiction other than
the United States in which the Borrower is located, or under any treaty to which
such jurisdiction is a party, with respect to payments under this Agreement
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law or reasonably requested by the
Borrower, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate, provided, that such Lender is legally entitled to complete,
execute and deliver such documentation.
(f) If the Administrative Agent or any Lender determines, in good
faith, that it has received a refund of any Non-Excluded Taxes or Other Taxes as
to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.18, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.18 with
respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent or such
Lender in the event the Administrative Agent or such Lender is required to repay
such refund to such Governmental Authority, provided the Borrower shall not be
required to repay to the Administrative Agent or the Lender an amount in excess
of the amount paid over by such party to the Borrower pursuant to this Section.
This paragraph shall not be construed to require the Administrative Agent or any
Lender to make available its
31
tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.
2.19 Indemnity. The Borrower agrees to indemnify each Lender for, and
to hold each Lender harmless from, any loss or expense (other than lost profits)
that such Lender may actually sustain or incur as a consequence of (a) default
by the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Borrower in
making any prepayment of or conversion from Eurodollar Loans after the Borrower
has given a notice thereof in accordance with the provisions of this Agreement
or (c) the making of a prepayment or conversion of Eurodollar Loans on a day
that is not the last day of an Interest Period with respect thereto. A
reasonably detailed certificate as to (showing in reasonable detail the
calculation of) any amounts payable pursuant to this Section submitted to the
Borrower by any Lender shall be presumptively correct in the absence of manifest
error. This covenant shall survive the termination of this Agreement and the
payment of the Obligations.
2.20 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof, in each case, first made after the date hereof, shall make
it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated
by this Agreement, such Lender shall promptly give notice thereof to the
Administrative Agent and the Borrower, and (a) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert ABR Loans to Eurodollar Loans shall be suspended during the period of
such illegality and (b) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to ABR Loans on the respective
last days of the then current Interest Periods with respect to such Loans or
within such earlier period as required by law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 2.19.
2.21 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.17, 2.18(a) or
2.20 with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no material economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of the Borrower or the rights of
any Lender pursuant to Section 2.17, 2.18(a) or 2.20.
2.22 Replacement of Lenders. The Borrower shall be permitted to replace
with a financial institution any Lender that (a) requests reimbursement for
amounts owing pursuant to Section 2.17 or 2.18 or gives a notice of illegality
pursuant to Section 2.20, (b) defaults in its obligation to make Loans
hereunder, or (c) that has refused to consent to any waiver or amendment with
respect to any Loan Document that has been consented to by the Required Lenders,
provided, that (i) such replacement does not conflict with any Requirement of
Law, (ii) no Event of Default shall have occurred and be continuing at the time
of such replacement, (iii) prior to any such replacement, such Lender shall have
taken no action under Section 2.21 so as to eliminate the continued need for
payment of amounts owing pursuant to Section 2.17 or 2.18 or to eliminate such
illegality pursuant to Section 2.20, (iv) the replacement financial institution
shall purchase, at par, all Loans and other amounts owing to such replaced
Lender on or prior to the date of replacement, (v) the Borrower shall be liable
to such replaced Lender under Section 2.19 (as though Section 2.19 were
applicable) if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement
32
financial institution, if not already a Lender, shall be reasonably satisfactory
to the Administrative Agent, (vii) the replaced Lender shall be obligated to
make such replacement in accordance with the provisions of Section 10.6
(provided, that the Borrower shall be obligated to pay (or cause to be paid) the
registration and processing fee referred to therein), (viii) the Borrower shall
pay all additional amounts (if any) required pursuant to Section 2.17 or 2.18,
as the case may be, in respect of any period prior to the date on which such
replacement shall be consummated, and (ix) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower, the Administrative Agent
or any other Lender shall have against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Revolving Lenders set
forth in Section 3.4(a), agrees to issue letters of credit ("Letters of Credit")
for the account of the Borrower or any of its Subsidiary Guarantors on any
Business Day during the Revolving Commitment Period in such form as may be
approved from time to time by the Issuing Lender; provided that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment
or (ii) the aggregate amount of the Available Revolving Commitments would be
less than zero. Each Letter of Credit shall (i) be denominated in Dollars and
(ii) expire no later than the earlier of (x) the first anniversary of its date
of issuance and (y) the date that is five Business Days prior to the Revolving
Termination Date, provided that any Letter of Credit with a one-year term may
provide for the renewal thereof for additional one-year periods (which shall in
no event extend beyond the date referred to in clause (y) above).
(b) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit if such issuance would conflict with, or cause the Issuing
Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the reasonable satisfaction of the Issuing
Lender, and such other certificates, documents and other papers and information
as the Issuing Lender may reasonably request. Upon receipt of any Application,
the Issuing Lender will process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans under the Revolving Facility
(minus the fronting fee referred to below), on the face amount of such Letter of
Credit shared ratably among the Revolving Lenders and payable quarterly in
arrears on each Fee Payment Date after the issuance date. In addition, the
Borrower shall pay to the Issuing Lender for its own account a fronting fee on
the aggregate face amount of all outstanding Letters
33
of Credit issued by it of 1/4 of 1% per annum, payable quarterly in arrears on
each Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions set forth below, for such L/C Participant's own account
and risk an undivided interest equal to such L/C Participant's Revolving
Percentage in the Issuing Lender's obligations and rights under and in respect
of each Letter of Credit and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving Percentage of the amount of such draft, or any
part thereof, that is not so reimbursed. Each L/C Participant's obligation to
pay such amount shall be absolute and unconditional and shall not be affected by
any circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such L/C Participant may have against the Issuing Lender, the
Borrower or any other Person for any reason whatsoever, (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any of
the other conditions specified in Section 5, (iii) any adverse change in the
financial condition of the Borrower, (iv) any breach of this Agreement or any
other Loan Document by the Borrower, any other Loan Party or any other L/C
Participant or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to ABR Loans under the Revolving Facility. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
34
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse each Issuing Lender the Business Day following the date on which the
Issuing Lender notifies the Borrower of the date and amount of a draft presented
under any Letter of Credit and paid by such Issuing Lender for the amount of (a)
such draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment (the amounts
described in the foregoing clauses (a) and (b) in respect of any drawing,
collectively, the "Payment Amount"). Each such payment shall be made to the
Issuing Lender at its address for notices referred to herein in Dollars and in
immediately available funds. Interest shall be payable on any such amounts from
the date on which the relevant draft is paid until payment in full at the rate
set forth (x) in, until the second Business Day next succeeding the date of the
relevant notice, Section 2.13(b) and (y) in, thereafter, Section 2.13(c).
3.6 Obligations Absolute. The Borrower's obligations under this Section
3 shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that the Borrower
may have or have had against the Issuing Lender, any beneficiary of a Letter of
Credit or any other Person. The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee, or any other events
or circumstances that, pursuant to applicable law or the applicable customs and
practices promulgated by the International Chamber of Commerce, are not within
the responsibility of the Issuing Lender, except for errors or omissions found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of the Issuing
Lender or its employees or agents. The Issuing Lender shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Issuing Lender or its employees or
agents. The Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards or care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, Holdings and the Borrower hereby jointly
35
and severally represent and warrant to the Administrative Agent and each Lender
which representations and warranties shall be deemed made on the Closing Date
(immediately before and immediately after giving effect to the Refinancing) and
on the date of each borrowing of Loans or issuance of a Letter of Credit
hereunder) that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of Holdings and its consolidated Subsidiaries as at September 30,
2003 (the "Pro Forma Balance Sheet"), copies of which have heretofore been
furnished to each Lender, has been prepared giving effect (as if such events had
occurred on such date) to (i) the consummation of the Refinancing, (ii) the
Loans to be made on the Closing Date and the use of proceeds thereof and (iii)
the payment of fees and expenses in connection with the foregoing. The Pro Forma
Balance Sheet has been prepared based on the best information available to
Holdings as of the date of delivery thereof, and presents fairly on a pro forma
basis the estimated financial position of Holdings and its consolidated
Subsidiaries as at September 30, 2003, assuming that the events specified in the
preceding sentence had actually occurred at such date subject to normal year-end
adjustments and the absence of footnotes.
(b) The audited consolidated balance sheets of Holdings and its
consolidated Subsidiaries as at December 31, 2000, December 31, 2001 and
December 31, 2002, and the related consolidated statements of income and of cash
flows for the fiscal years ended on such dates, reported on by and accompanied
by an unqualified report from Xxxxxx Xxxxxxxx LLP (with respect to the financial
statements for the 2000 and 2001 fiscal years) and Ernst & Young LLP (with
respect to the financial statements for the 2002 fiscal year), present fairly in
all material respects the consolidated financial condition of Holdings and its
consolidated Subsidiaries as at such date, and the consolidated results of its
operations and its consolidated cash flows for the respective fiscal years then
ended. The unaudited consolidated balance sheet of Holdings and its consolidated
Subsidiaries as at September 30, 2003, and the related unaudited consolidated
statements of income and cash flows for the nine-month period ended on such
date, present fairly in all material respects the consolidated financial
condition of Holdings and its consolidated Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
nine-month period then ended (subject to normal year-end audit adjustments and
the absence of notes). All such financial statements have been prepared in
accordance with GAAP. Except as set forth in Schedule 4.1(b), Holdings, the
Borrower and its Subsidiaries do not have, as of September 30, 2003, any
material Guarantee Obligations, contingent liabilities and liabilities for
taxes, including without limitation any material interest rate or foreign
currency swap or exchange transaction or other material obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from December 31, 2002 to and
including the date hereof there has been no Disposition by any Group Member of
any material part of its business or property.
4.2 No Change. Since December 31, 2002, there has been no event,
development or circumstance that has had or will have a Material Adverse Effect.
4.3 Existence; Compliance with Law. Each of Holdings, the Borrower and
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
power and authority, and the legal right, to own and operate its Property, to
lease the Property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such qualification
except to the extent that the failure to be so qualified or in good standing
would not have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except, in each case, to the extent that any such failure
could not reasonably be expected to have a Material Adverse Effect.
36
4.4 Corporate Power; Authorization; Enforceable Obligations. Each Loan
Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow or have Letters of Credit issued hereunder. Each Loan
Party has taken all necessary corporate or other action to authorize the
execution, delivery and performance of the Loan Documents to which it is a party
and, in the case of the Borrower, to authorize the borrowings on the terms and
conditions of this Agreement. Except as would not have a Material Adverse
Effect, no consent or authorization of, filing with, notice to or other act by
or in respect of, any Governmental Authority or any other Person is required in
connection with the Refinancing, the borrowings hereunder or the execution,
delivery, performance, validity or enforceability of this Agreement or any of
the other Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect or the
failure to obtain which could not reasonably be expected to have a Material
Adverse Effect and (ii) the filings referred to in Section 4.18. Each Loan
Document has been duly executed and delivered on behalf of each Loan Party that
is a party thereto. This Agreement constitutes, and each other Loan Document
upon execution will constitute, a legal, valid and binding obligation of each
Loan Party that is a party thereto, enforceable against each such Loan Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not (a) violate
the organizational or governing documents of any of the Loan Parties, (b) except
as would not have a Material Adverse Effect, violate any Requirement of Law or
(c), except as would not have a Material Adverse Effect, any Contractual
Obligation of Holdings, the Borrower or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
4.6 No Material Litigation. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of Holdings or the Borrower, reasonably likely to be commenced within
a reasonable time period against Holdings, the Borrower or any of its
Subsidiaries or against any of their Properties or revenues which, taken as a
whole, are material (a) with respect to any of the Loan Documents, or (b) that
would reasonably be expected to have a Material Adverse Effect.
4.7 No Default. Neither Holdings, the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of Holdings, the Borrower and
its Subsidiaries has title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to, or a valid leasehold interest in, all
its other Property in each case, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, and none of such
Property is subject to any Lien except as permitted by Section 7.3. Schedule
1.1B lists all real property which is owned or leased by any Loan Party as of
the Closing Date.
4.9 Intellectual Property. Each of Holdings, the Borrower and its
Subsidiaries owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted, except where the failure
to do so could not reasonably be expected to have a Material Adverse
37
Effect. No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of, or any Loan
Party's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect. No material claim has
been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does Holdings or the Borrower know of any valid basis for any such
claim, in each case, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect. The use of Intellectual Property by
Holdings, the Borrower and its Subsidiaries does not infringe on the rights of
any Person in a manner that could reasonably be expected to have a Material
Adverse Effect.
4.10 Taxes. Each of Holdings, the Borrower and its Subsidiaries has
filed or caused to be filed all federal and other material tax returns that are
required to be filed and has paid all taxes shown to be due and payable on said
returns and all other taxes, fees or other charges imposed on it or any of its
Property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which any reserves required in conformity with GAAP have been
provided on the books of Holdings, the Borrower or its Subsidiaries, as the case
may be), except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
4.11 Federal Regulations. No part of the proceeds of any Loans, and no
other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the regulations of the Board. If
requested by any Lender (through the Administrative Agent) or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1 referred to in Regulation U.
4.12 Labor Matters. There are no strikes or other labor disputes
against Holdings, the Borrower or any of its Subsidiaries pending that could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of Holdings, the Borrower and its Subsidiaries have
not been in violation of the Fair Labor Standards Act or any other applicable
Requirement of Law dealing with such matters that could reasonably be expected
to have a Material Adverse Effect. All payments due from Holdings, the Borrower
or any of its Subsidiaries on account of employee health and welfare insurance
that could reasonably be expected to have a Material Adverse Effect if not paid
have been paid or accrued as a liability on the books of Holdings, the Borrower
or the relevant Subsidiary.
4.13 ERISA. (a) Except as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect: neither a
Reportable Event nor an "accumulated funding deficiency" (within the meaning of
Section 412(a) of the Code or Section 302(a)(2) of ERISA) has occurred during
the five-year period prior to the date on which this representation is made with
respect to any Plan, and each Plan has complied in all material respects with
the applicable provisions of ERISA and the Code; no termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period; the present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits; neither the Borrower nor any of
its Subsidiaries has had a complete or partial withdrawal from any Multiemployer
Plan that has resulted or could reasonably be expected to result in a liability
under ERISA; neither the Borrower nor any of its Subsidiaries would become
subject to any liability under ERISA if the Borrower or such Subsidiary were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made; and no
Multiemployer Plan is in Reorganization or Insolvent.
38
(b) The Borrower and its Subsidiaries have not incurred, and do not
reasonably expect to incur, any liability under ERISA or the Code with respect
to any plan within the meaning of Section 3(3) of ERISA which is subject to
Title IV of ERISA that is maintained by a Commonly Controlled Entity (other than
Borrower and its Subsidiaries) (a "Commonly Controlled Plan") merely by virtue
of being treated as a single employer under Title IV of ERISA with the sponsor
of such plan that would reasonably be likely to have a Material Adverse Effect
and result in a direct obligation of the Borrower and its Subsidiaries to pay
money.
4.14 Investment Company Act. No Loan Party is an "investment company",
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
4.15 Subsidiaries. (a) The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of the Borrower at the date of this Agreement.
Schedule 4.15 sets forth as of the Closing Date the name and jurisdiction of
incorporation of each Subsidiary and, as to each Subsidiary, the percentage of
each class of Capital Stock owned by each Loan Party.
(b) As of the Closing Date, there are no outstanding subscriptions,
options, warrants, calls, rights or other agreements or commitments (other than
stock options granted to officers, employees or directors and directors'
qualifying shares) of any nature relating to any Capital Stock of Holdings, the
Borrower or any other Loan Party.
4.16 Environmental Matters. Other than exceptions to any of the
following that would not reasonably be expected to have a Material Adverse
Effect:
(a) the Borrower and its Subsidiaries: (i) are, and within the period
of all applicable statutes of limitation have been, in compliance with all
applicable Environmental Laws; (ii) hold all Environmental Permits (each of
which is in full force and effect) required for any of their current
operations or for any property owned, leased, or otherwise operated by any
of them; and (iii) are, and within the period of all applicable statutes of
limitation have been, in compliance with all of their Environmental
Permits.
(b) Materials of Environmental Concern are not present at, on, under,
in, or about any real property now or formerly owned, leased or operated by
the Borrower or any of its Subsidiaries, or at any other location
(including, without limitation, any location to which Materials of
Environmental Concern have been sent for re-use or recycling or for
treatment, storage or disposal) which could reasonably be expected to (i)
give rise to liability of the Borrower or any of its Subsidiaries under any
applicable Environmental Law or otherwise result in costs to the Borrower
or any of its Subsidiaries, (ii) interfere with the Borrower's or any of
its Subsidiaries' continued operations or (iii) impair the fair saleable
value of any real property owned or leased by the Borrower or any of its
Subsidiaries.
(c) there is no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or relating
to any Environmental Law to which the Borrower or any of its Subsidiaries
is, or to the knowledge of the Borrower or any of its Subsidiaries will be,
named as a party that is pending or, to the knowledge of the Borrower or
any of its Subsidiaries, reasonably likely to be commenced within a
reasonable amount of time.
(d) neither the Borrower nor any of its Subsidiaries has received any
written request for information, or been notified that it is a potentially
responsible party under or relating to the
39
federal Comprehensive Environmental Response, Compensation, and Liability
Act or any similar Environmental Law, or with respect to any Materials of
Environmental Concern.
(e) neither the Borrower nor any of its Subsidiaries has entered into
or agreed to any consent decree, order, or settlement or other agreement,
or is subject to any judgment, decree, or order or other agreement, in any
judicial, administrative, arbitral, or other forum for dispute resolution,
relating to compliance with or liability under any Environmental Law or
with respect to any Materials of Environmental Concern.
(f) neither the Borrower nor any of its Subsidiaries has assumed or
retained, by contract or operation of law, any liabilities of any kind,
fixed or contingent, known or unknown, under any Environmental Law or with
respect to any Materials of Environmental Concern.
4.17 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document or any certificate
furnished to the Administrative Agent or the Lenders or any of them, by or on
behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents when taken as a
whole, contained as of the date such statement, information, or certificate was
so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount.
4.18 Security Documents. (a) The Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein (including any proceeds of any item of Collateral). In the
case of the Pledged Securities described in the Guarantee and Collateral
Agreement, when any stock certificates or notes, as applicable, representing
such Pledged Securities are delivered to the Administrative Agent, and in the
case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements in appropriate form are filed in the
offices specified on Schedule 4.18(a)-1 (which financing statements have been
duly completed and executed and delivered to the Administrative Agent) and such
other filings as are specified on Schedule 3 to the Guarantee and Collateral
Agreement are made, the Administrative Agent shall have a fully perfected Lien
on, and security interest in, all right, title and interest of the Loan Parties
in such Collateral (including any proceeds of any item of Collateral) (to the
extent a security interest in such Collateral can be perfected through the
filing of financing statements in the offices specified on Schedule 4.18(a)-1
and the filings specified on Schedule 3 to the Guarantee and Collateral
Agreement and through the delivery of the Pledged Securities required to be
delivered on the Closing Date), as security for the Obligations (as defined in
the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person (except, in the case of Collateral other than Pledged
Stock, Liens permitted by Section 7.3) to the extent required by the Guarantee
and Collateral Agreement. As of the date hereof, Schedule 4.18(a)-2 lists each
Uniform Commercial Code financing statement that (i) names any Loan Party as
debtor and (ii) will remain on file after the Closing Date. As of the date
hereof, Schedule 4.18(a)-3 lists each Uniform Commercial Code financing
statement that (i) names any Loan Party as debtor and (ii) will be terminated on
the Closing Date; and on or prior to the Closing Date, the Borrower will have
delivered to the Administrative Agent or made appropriate arrangements for the
delivery thereof, or caused to be filed, duly completed Uniform Commercial Code
termination statements, signed by the relevant secured party, in respect of each
Uniform Commercial Code financing statement listed on such Schedule.
40
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent for the benefit of the Lenders a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof; and when the Mortgages are filed in the offices specified on Schedule
4.18(b) (in the case of the Mortgages to be executed and delivered on the
Closing Date) or in the recording office designated by the Borrower (in the case
of any Mortgage to be executed and delivered pursuant to Section 6.10(b)), each
Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Mortgaged Properties
described therein and the proceeds thereof, as security for the Obligations (as
defined in the relevant Mortgage), in each case prior and superior in right to
any other Person (other than Liens permitted by Section 7.3 or other
encumbrances or rights permitted by the relevant Mortgage).
4.19 Solvency. Each Loan Party is, and after giving effect to the
Refinancing and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.20 Regulation H. No Mortgage encumbers improved real property which
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of 1968
(except any Mortgaged Properties as to which such flood insurance as required by
Regulation H has been obtained and is in full force and effect as required by
this Agreement).
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) Credit Agreement; Guarantee and Collateral Agreement. The
Administrative Agent shall have received (i) this Agreement, executed and
delivered by the Administrative Agent, Holdings, the Borrower and each
Person listed on Schedule 1.1A, (ii) the Guarantee and Collateral
Agreement, executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor and (iii) an Acknowledgement and Consent in the form
attached to the Guarantee and Collateral Agreement, executed and delivered
by each Issuer (as defined therein), if any, that is not a Loan Party.
(b) Refinancing, etc. The following transactions shall concurrently be
consummated (the events described in clauses (i) through (iv) below, the
"Refinancing"):
(i) The Borrower shall pay a dividend to Holdings in an amount
not to exceed $27,500,000 to enable Holdings to pay the Senior Holdings
Notes in full, and Holdings shall pay and/or redeem the Senior Holdings
Notes in full;
(ii) The Borrower shall pay, in an aggregate amount not to exceed
$63,000,000 (a) a dividend to Holdings so that Holdings can make a special
distribution to its equity holders and pay compensation to management and
(b) compensation to management;
(iii) (i) The Existing Credit Facility shall have been terminated
and all amounts thereunder shall have been paid in full and (ii)
satisfactory arrangements shall have been made for the termination of all
Liens granted in connection therewith; and
41
(iv) After giving effect to clauses (i) through (iii) above, the
Borrower shall have substantially no outstanding Indebtedness other than
the Indebtedness permitted under Section 7.2.
(c) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheet, (ii) audited consolidated
financial statements of Holdings for the 2000, 2001 and 2002 fiscal years
and (iii) unaudited interim consolidated financial statements of Holdings
for the last fiscal quarter ended after the date of the latest applicable
financial statements delivered pursuant to clause (ii) of this paragraph.
(d) Approvals. All material governmental and third party approvals
necessary in connection with the Refinancing, and the transactions
contemplated hereby to be entered into as of the Closing Date shall have
been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
materially adverse conditions on the Refinancing or the financing
contemplated hereby.
(e) Fees. The Agents shall have received all fees required to be paid
(including those to be passed on to the Lenders), and all reasonable
out-of-pocket expenses for which reasonably detailed invoices have been
presented (including reasonable fees, disbursements and other charges of
counsel to the Administrative Agent), on or before the Closing Date. All
such amounts will be paid with proceeds of Loans made on the Closing Date
and will be reflected in the funding instructions given by the Borrower to
the Administrative Agent on or before the Closing Date.
(f) Solvency Certificate. The Administrative Agent shall have received a
solvency certificate signed by the Chief Financial Officer on behalf of the
Borrower, substantially in the form of Exhibit H hereto.
(g) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each of the jurisdictions in which
Uniform Commercial Code financing statement or other filings or
recordations should be made to evidence or perfect security interests in
all assets of the Loan Parties, and such search shall reveal no liens on
any of the assets of the Loan Party, except for Liens permitted by Section
7.3 or liens to be discharged on or prior to the Closing Date.
(h) Closing Certificate. The Administrative Agent shall have received a
certificate of each Loan Party, dated the Closing Date, substantially in
the form of Exhibit C, with appropriate insertions and attachments.
(i) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Xxxxxx & Xxxxxxx LLP, counsel to Holdings,
the Borrower and its Subsidiaries, substantially in the form of Exhibit
F; and
(ii) the legal opinion of local counsel in each of Minnesota and
South Dakota.
(j) Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent
shall have received (i) the certificates representing the shares, if any,
of Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such
42
certificate executed in blank by a duly authorized officer of the pledgor
thereof and (ii) each promissory note (if any), excluding promissory notes
issued by directors, officers and employees of any Loan Party, pledged to
the Administrative Agent pursuant to the Guarantee and Collateral Agreement
endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank) by the pledgor thereof.
(k) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create
in favor of the Administrative Agent, for the benefit of the Lenders, a
perfected Lien on the Collateral described therein, prior and superior in
right to any other Person (other than with respect to Liens expressly
permitted by Section 7.3), shall have been delivered to the Administrative
Agent in proper form for filing, registration or recordation.
(l) Mortgages, etc. (i) The Administrative Agent shall have received a
Mortgage with respect to each Mortgaged Property, executed and delivered by
a duly authorized officer of each party thereto.
(ii) If requested by the Administrative Agent, the Administrative Agent
shall have received (A) a policy of flood insurance that (1) covers any
parcel of improved real property that is encumbered by any Mortgage and is
located in a special flood hazard area (2) is written in an amount not less
than the outstanding principal amount of the indebtedness secured by such
Mortgage that is reasonably allocable to such real property or the maximum
limit of coverage made available with respect to the particular type of
property under the National Flood Insurance Act of 1968, whichever is less,
and (3) has a term ending not earlier than the maturity of the Indebtedness
secured by such Mortgage and (B) confirmation that the Borrower has
received the notice required pursuant to Section 208(e)(3) of Regulation H
of the Board.
(m) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 5.3 of the Guarantee
and Collateral Agreement.
(n) Ratings. The Facilities shall have received a rating from each of
Xxxxx'x and S&P.
(o) Projections. The Lenders shall have received projections of the
Borrower through the 2009 fiscal year.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any Loan or to issue or participate in any Letter of Credit
hereunder on any date (including, without limitation, its initial extension of
credit) is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date except to the extent that such
representations and warranties relate to an earlier date, in which case
such representations and warranties shall be true and correct in all
material respects as of such earlier date.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
43
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall and shall cause each of its
Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent for
delivery to each Lender (which may be delivered via posting on Intralinks):
(a) as soon as available, but in any event within 90 days (or 120 days,
if a Permitted Acquisition occurred during the relevant period) after the
end of each fiscal year of Holdings, a copy of the audited consolidated and
unaudited consolidating balance sheet of Holdings and its consolidated
Subsidiaries as at the end of such year and the related audited
consolidated and unaudited consolidating statements of income and of cash
flows for such year, setting forth in each case in comparative form the
figures as of the end of and for the previous year, reported on without
qualification arising out of the scope of the audit, by Ernst & Young LLP
or other independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of
Holdings, the unaudited consolidated and consolidating balance sheet of
Holdings and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated and consolidating statements of
income and of cash flows for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each case in
comparative form the figures as of the end of and for the corresponding
period in the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments and the lack of notes); and
(c) as soon as available, but in any event not later than 45 days after
the end of each month occurring during each fiscal year of Holdings (other
than the third, sixth, ninth and twelfth such month), the unaudited
consolidated and consolidating balance sheets of Holdings and its
Subsidiaries as at the end of such month and the related unaudited
consolidated and consolidating statements of income and of cash flows for
such month and the portion of the fiscal year through the end of such
month, setting forth in each case in comparative form the figures as of the
end of and for the corresponding period in the previous year, certified by
a Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments and the lack of notes);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative
Agent, with sufficient copies for distribution to each Lender, or, in the case
of clause (g), to the relevant Lender:
44
(a) concurrently with the delivery of the financial statements referred
to in Section 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making
the examination necessary therefor no knowledge was obtained of any Default
or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements pursuant
to Sections 6.1(a) and (b), (i) a certificate of a Responsible Officer on
behalf of the Borrower stating that such Responsible Officer has obtained
no knowledge of any Default or Event of Default except as specified in such
certificate and (ii) (x) a Compliance Certificate containing all
information and calculations necessary for determining compliance by
Holdings, the Borrower and its Subsidiaries with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or
fiscal year of the Borrower, as the case may be, and (y) to the extent not
previously disclosed to the Administrative Agent, a description of any new
Subsidiary and of any change in the jurisdiction of organization of any
other Loan Party and a listing of any material Intellectual Property
filings by any Loan Party since the date of the most recent list delivered
pursuant to this clause (y) (or, in the case of the first such list so
delivered, since the Closing Date), together with such documents, if any,
required to be filed or recorded in order to perfect the security interest
of the Administrative Agent therein;
(c) as soon as available, and in any event no later than 45 days after
the end of each fiscal year of Holdings, a detailed consolidated budget for
the following fiscal year (including a projected consolidated balance sheet
of Holdings and its Subsidiaries as of the end of the following fiscal
year, the related consolidated statements of projected cash flow, projected
changes in financial position and projected income) (collectively, the
"Annual Operating Budget");
(d) promptly after the same are sent, copies of all financial
statements and reports that Holdings or the Borrower sends to the holders
of any class of its debt securities or public equity securities (except for
Permitted Investors) and, promptly after the same are filed, copies of all
financial statements and reports that Holdings or the Borrower may make to,
or file with, the SEC;
(e) promptly upon delivery thereof to Holdings or the Borrower and to
the extent permitted, copies of any accountants' letters addressed to their
respective Board of Directors (or any committee thereof);
(f) promptly upon obtaining knowledge thereof: (i) any development,
event, or condition that could reasonably be expected to result in the
payment by the Borrower and its Subsidiaries of a Material Environmental
Amount; and (ii) any notice that any Governmental Authority may deny any
application for an Environmental Permit sought by, or revoke or refuse to
renew any Environmental Permit held by, the Borrower; and
(g) promptly, such additional financial and other information as the
Administrative Agent (for its own account or upon the request from any
Lender) may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material taxes, assessments and governmental charges (other than Indebtedness),
except (i) where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves required in conformity with
GAAP with respect thereto have been provided on the books of Holdings, the
Borrower or its
45
Subsidiaries, as the case may be, or (ii) to the extent that failure to comply
to pay or satisfy such obligations could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence, etc. Preserve,
renew and keep in full force and effect its corporate or other existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 7.4 and except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all Property useful
and necessary in its business in reasonably good working order and condition,
ordinary wear and tear excepted, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(b) Take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
(c) Maintain insurance with financially sound and reputable insurance
companies insurance on all its Property in at least such amounts and against at
least such risks (but including in any event public liability, product liability
and business interruption) as are usually insured against in the same general
area by companies engaged in the same or a similar business. All such insurance
shall, to the extent customary (but in any event, not including business
interruption insurance and personal injury insurance) (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof and (ii) name the Administrative
Agent as insured party or loss payee. Upon the request of the Administrative
Agent (such request not to be made more than once per year), the Borrower shall
deliver to the Administrative Agent a report of a reputable insurance broker
with respect to such insurance.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all material
dealings and transactions in relation to its business and activities, (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records upon reasonable
notice and during normal business hours (provided that such visits shall be
coordinated by the Administrative Agent, and in no event shall there be more
than one such visit per year except during the continuance of an Event of
Default), (c) permit representatives of any Lender to discuss the business,
operations, properties and financial and other condition of Holdings, the
Borrower and its Subsidiaries with officers and employees of Holdings, the
Borrower and its Subsidiaries and (d) permit representatives of the
Administrative Agent to discuss the business, operations, properties and
financial and other condition of Holdings, the Borrower and its Subsidiaries
with its independent certified public accountants; provided, that any such
discussions with the Borrower's independent certified public accountants at the
Borrower's expense shall, except while an Event of Default has occurred and is
continuing, be limited to one meeting per calendar year.
6.7 Notices. Promptly upon a Responsible Officer of any Loan Party
obtaining knowledge thereof, give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
46
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time between
Holdings, the Borrower or any of its Subsidiaries and any other Person,
that in either case, could reasonably be expected to have a Material
Adverse Effect;
(c) the following events, that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, as soon as
possible and in any event within 30 days after Holdings, the Borrower or
any Subsidiary knows or has reason to know thereof: (i) the occurrence of
any Reportable Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization
or Insolvency of, any Multiemployer Plan, (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower
or any Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the termination, Reorganization or Insolvency of,
any Plan or (iii) the occurrence of any similar events with respect to a
Commonly Controlled Plan that would reasonably be likely to result in a
direct obligation of the Borrower and its Subsidiaries to pay money;
(d) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect; and
(e) the acquisition of any Property after the Closing Date in which a
security interest is required to be created or perfected pursuant to
Section 6.10.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings, the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
6.8 Environmental Laws. (a) Except as would not have a Material Adverse
Effect, comply in all material respects with, and make commercially reasonable
efforts to ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, and make commercially
reasonable efforts to ensure that all tenants and subtenants obtain and comply
in all material respects with and maintain, any and all Environmental Permits
required by applicable Environmental Laws.
(b) Except as would not have a Material Adverse Effect, conduct and
complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and promptly comply
in all material respects with all lawful orders and directives of all
Governmental Authorities regarding Environmental Laws.
6.9 Interest Rate Protection. In the case of the Borrower, within 90 days
after the Closing Date, enter into, and thereafter maintain, Hedge Agreements to
the extent necessary to provide that at least 40% of the aggregate principal
amount of the Term Loans outstanding from time to time is subject to either a
fixed interest rate or interest rate protection for a period of not less than
two years, which Hedge Agreements shall have terms and conditions reasonably
satisfactory to the Administrative Agent.
6.10 Additional Collateral, etc. (a) With respect to any Property (other
than bank accounts, cash and Cash Equivalents) located in the United States
having a value, individually or in the aggregate of at least $1,000,000 acquired
after the Closing Date by any Loan Party (other than (x) any interests in real
property and any Property described in paragraph (c) or paragraph (d) of this
Section, (y) any Property subject to a Lien expressly permitted by Section
7.3(g) and (z) Instruments, Certificated
47
Securities and Chattel Paper, which are referred to in the last sentence of this
paragraph (a)) as to which the Administrative Agent for the benefit of the
Lenders does not have a perfected Lien, promptly (i) give notice of such
Property to the Administrative Agent and execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
or such other documents as the Administrative Agent reasonably requests to grant
to the Administrative Agent for the benefit of the Lenders a security interest
in such Property and (ii) take all actions reasonably requested by the
Administrative Agent to grant to the Administrative Agent for the benefit of the
Lenders a perfected first priority security interest in such Property (with
respect to Property (other than Vehicles) of a type owned by a Loan Party as of
the Closing Date to the extent the Administrative Agent, for the benefit of the
Lenders, has a perfected security interest in such Property as of the Closing
Date), including, without limitation, the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be requested by the Administrative
Agent. If any amount in excess of $1,000,000 payable under or in connection with
any of the Collateral shall be or become evidenced by any Instrument,
Certificated Security or Chattel Paper (or, if more than $5,000,000 in the
aggregate payable under or in connection with the Collateral shall become
evidenced by Instruments, Certificated Securities or Chattel Paper), such
Instrument, Certificated Security or Chattel Paper shall be promptly delivered
to the Administrative Agent, duly indorsed in a manner reasonably satisfactory
to the Administrative Agent, to be held as Collateral pursuant to this
Agreement; provided, however, that in no event shall the Borrower be required to
deliver to the Administrative Agent any Pledged Notes issued by directors,
officers or employees of any Loan Party.
(b) With respect to any fee interest in any real property having a value
(together with improvements thereof) of at least $1,000,000 acquired after the
Closing Date by any Loan Party (other than any such real property subject to a
Lien expressly permitted by Section 7.3(g)), (i) give notice of such acquisition
to the Administrative Agent and, if requested by the Administrative Agent,
execute and deliver a first priority Mortgage in favor of the Administrative
Agent, for the benefit of the Lenders, covering such real property (provided,
that no Mortgage nor survey shall be obtained if the Administrative Agent
determines in consultation with the Borrower that the costs of obtaining such
Mortgage or survey are excessive in relation to the value of the security to be
afforded thereby), (ii) if reasonably requested by the Administrative Agent, (x)
provide the Lenders with title and extended coverage insurance covering such
real property in an amount at least equal to the purchase price of such real
property (or such other amount as shall be reasonably specified by the
Administrative Agent) as well as a current ALTA survey thereof, together with a
surveyor's certificate and (y) use commercially reasonable efforts to obtain any
consents or estoppels reasonably deemed necessary by the Administrative Agent in
connection with such Mortgage, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions (of
the type delivered on the Closing Date) relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date (which, for the purposes
of this paragraph, shall include any existing Subsidiary that ceases to be an
Excluded Foreign Subsidiary), by any Loan Party, promptly (i) give notice of
such acquisition or creation to the Administrative Agent and, if requested by
the Administrative Agent, execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent reasonably deems necessary to grant to the
Administrative Agent for the benefit of the Lenders a perfected first priority
security interest in the Capital Stock of such new Subsidiary that is owned by
such Loan Party, (ii) deliver to the Administrative Agent the certificates, if
any, representing such Capital Stock, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of such Loan Party,
and (iii) at the reasonable request of the Administrative Agent, cause such new
Subsidiary (A) to
48
become a party to the Guarantee and Collateral Agreement and (B) to take such
actions necessary or advisable to grant to the Administrative Agent for the
benefit of the Lenders a perfected first priority security interest in the
Collateral described in the Guarantee and Collateral Agreement with respect to
such new Subsidiary (to the extent the Administrative Agent, for the benefit of
the Lenders, has a perfected security interest in the same type of Collateral as
of the Closing Date), including, without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by
the Guarantee and Collateral Agreement or by law or as may be reasonably
requested by the Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or acquired
after the Closing Date by any Loan Party, promptly (i) give notice of such
acquisition or creation to the Administrative Agent and, if requested by the
Administrative Agent, execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent deems necessary or reasonably advisable in order to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new Subsidiary
that is owned by such Loan Party (provided, that in no event shall more than 65%
of the total outstanding Capital Stock of any such new Excluded Foreign
Subsidiary be required to be so pledged), and (ii) deliver to the Administrative
Agent the certificates, if any, representing such Capital Stock, together with
undated stock powers, in blank, executed and delivered by a duly authorized
officer of such Loan Party, and take such other action as may be necessary or,
in the opinion of the Administrative Agent, desirable to perfect the Lien of the
Administrative Agent thereon.
6.11 Further Assurances. Maintain the security interest created by the
Guarantee and Collateral Agreement as a perfected security interest having at
least the priority described in Section 4.18 (to the extent such security
interest can be perfected through the filing of UCC-1 financing statements, the
Intellectual Property filings to be made pursuant to Schedule 3 of the Guarantee
and Collateral Agreement on the Closing Date or the delivery of Pledged
Securities required to be delivered under the Guarantee and Collateral
Agreement), subject to the rights of the Loan Parties under the Loan Documents
to dispose of the Collateral. From time to time the Loan Parties shall execute
and deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take all such actions, as the Administrative
Agent may reasonably request for the purposes of implementing or effectuating
the provisions of this Agreement and the other Loan Documents, or of more fully
perfecting or renewing the rights of the Administrative Agent and the Lenders
with respect to the Collateral as to which the Administrative Agent, for the
ratable benefit of the Lenders, has a perfected Lien as of the Closing Date
pursuant hereto or thereto, including, without limitation, filing any financing
or continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby. Upon the exercise by the Administrative Agent or any Lender of
any power, right, privilege or remedy pursuant to this Agreement or the other
Loan Documents which requires any consent, approval, recording, qualification or
authorization of any Governmental Authority, the Borrower will execute and
deliver, or will cause the execution and delivery of, all applications,
certifications, instruments and other documents and papers that the
Administrative Agent or such Lender may be required to obtain from the Borrower
or any of its Subsidiaries for such governmental consent, approval, recording,
qualification or authorization.
6.12 Use of Proceeds. The proceeds of the Term Loans shall be used to
effect the Refinancing and to pay related fees and expenses. The proceeds of the
Revolving Loans, and the Letters of Credit, shall be used to finance Permitted
Acquisitions and for other general corporate purposes of the Borrower and its
Subsidiaries.
6.13 Title Insurance.
49
(a) Within 60 days after the Closing Date, the Administrative Agent shall
have received in respect of each Mortgaged Property a mortgagee's title
insurance policy (or policies) or marked up unconditional binder for such
insurance. Each such policy shall (i) be in an amount satisfactory to the
Administrative Agent; (ii) be issued at ordinary rates; (iii) insure that the
Mortgage insured thereby creates a valid first Lien on such Mortgaged Property
free and clear of all defects and encumbrances, except as disclosed therein;
(iv) name the Administrative Agent for the benefit of the Lenders as the insured
thereunder; (v) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and
10/17/84) (or equivalent policies); (vi) contain such endorsements and
affirmative coverage as the Administrative Agent may reasonably request and
(vii) be issued by title companies satisfactory to the Administrative Agent
(including any such title companies acting as co-insurers or reinsurers, at the
option of the Administrative Agent). The Administrative Agent shall have
received evidence satisfactory to it that all premiums in respect of each such
policy, all charges for mortgage recording tax, and all related expenses, if
any, have been paid.
(b) To the extent reasonably available and within 60 days after the Closing
Date, the Administrative Agent shall have received a copy of (i) all recorded
documents referred to, or listed as exceptions to title in, the title policy or
policies referred to in clause (a) above and (ii) all other material documents
affecting the Mortgaged Properties.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so long
as the Commitments remain in effect, any Letter of Credit remains outstanding or
any Loan or other amount is owing to any Lender or the Administrative Agent
hereunder, each of Holdings and the Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Consolidated Total Leverage Ratio. Permit the Consolidated Total
Leverage Ratio of Holdings as at the last day of any period of four consecutive
fiscal quarters of Holdings ending with any fiscal quarter set forth below to
exceed the ratio set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Leverage Ratio
-------------- --------------
December 31, 2003 4.50 to 1.00
March 31, 2004 4.43 to 1.00
June 30, 2004 4.43 to 1.00
September 30, 2004 4.43 to 1.00
December 31, 2004 4.18 to 1.00
March 31, 2005 4.18 to 1.00
June 30, 2005 4.18 to 1.00
September 30, 2005 3.93 to 1.00
December 31, 2005 3.93 to 1.00
March 31, 2006 3.43 to 1.00
June 30, 2006 3.43 to 1.00
September 30, 2006 3.43 to 1.00
December 31, 2006 3.43 to 1.00
March 31, 2007 2.93 to 1.00
June 30, 2007 2.93 to 1.00
September 30, 2007 2.93 to 1.00
50
Consolidated
Fiscal Quarter Leverage Ratio
-------------- --------------
December 31, 2007 2.93 to 1.00
March 31, 2008 2.43 to 1.00
June 30, 2008 2.43 to 1.00
September 30, 2008 2.43 to 1.00
December 31, 2008 2.43 to 1.00
March 31, 2009 2.43 to 1.00
June 30, 2009 2.43 to 1.00
September 30, 2009 2.43 to 1.00
December 31, 2009 2.43 to 1.00
(b) Consolidated Net Interest Coverage Ratio. Permit the Consolidated Net
Interest Coverage Ratio of Holdings for any period of four consecutive fiscal
quarters of Holdings ending with any fiscal quarter set forth below to be less
than the ratio set forth below opposite such fiscal quarter:
Consolidated Interest
Fiscal Quarter Coverage Ratio
-------------- --------------
March 31, 2004 3.25 to 1.00
June 30, 2004 3.25 to 1.00
September 30, 2004 3.25 to 1.00
December 31, 2004 3.25 to 1.00
March 31, 2005 3.50 to 1.00
June 30, 2005 3.50 to 1.00
September 30, 2005 3.50 to 1.00
December 31, 2005 3.50 to 1.00
March 31, 2006 3.75 to 1.00
June 30, 2006 3.75 to 1.00
September 30, 2006 3.75 to 1.00
December 31, 2006 3.75 to 1.00
March 31, 2007 4.00 to 1.00
June 30, 2007 4.00 to 1.00
September 30, 2007 4.00 to 1.00
December 31, 2007 4.00 to 1.00
March 31, 2008 4.50 to 1.00
June 30, 2008 4.50 to 1.00
September 30, 2008 4.50 to 1.00
December 31, 2008 4.50 to 1.00
March 31, 2009 5.00 to 1.00
June 30, 2009 5.00 to 1.00
September 30, 2009 5.00 to 1.00
December 31, 2009 5.00 to 1.00
(c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed
Charge Coverage Ratio of Holdings for any period of four consecutive fiscal
quarters of Holdings ending with any fiscal quarter set forth below to be less
than the ratio set forth below opposite such fiscal quarter:
51
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
-------------- ---------------------
March 31, 2004 1.25 to 1.00
June 30, 2004 1.25 to 1.00
September 30, 2004 1.25 to 1.00
December 31, 2004 1.25 to 1.00
March 31, 2005 1.25 to 1.00
June 30, 2005 1.25 to 1.00
September 30, 2005 1.25 to 1.00
December 31, 2005 1.25 to 1.00
March 31, 2006 1.25 to 1.00
June 30, 2006 1.25 to 1.00
September 30, 2006 1.25 to 1.00
December 31, 2006 1.25 to 1.00
March 31, 2007 1.50 to 1.00
June 30, 2007 1.50 to 1.00
September 30, 2007 1.50 to 1.00
December 31, 2007 1.50 to 1.00
March 31, 2008 1.50 to 1.00
June 30, 2008 1.50 to 1.00
September 30, 2008 1.50 to 1.00
December 31, 2008 1.50 to 1.00
March 31, 2009 1.50 to 1.00
June 30, 2009 1.50 to 1.00
September 30, 2009 1.50 to 1.00
December 31, 2009 1.50 to 1.00
7.2 Indebtedness. Create, issue, incur, assume, or suffer to exist any
Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document or
Hedge Agreements;
(b) Indebtedness (i) of the Borrower to any Subsidiary, (ii) of any
Subsidiary Guarantor to the Borrower or any other Subsidiary and (iii) of
any Excluded Foreign Subsidiary to another Excluded Foreign Subsidiary;
(c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed 10% of consolidated total assets of Holdings
at any one time outstanding;
(d) Indebtedness outstanding on the date hereof and listed on Schedule
7.2(d) and any refinancings, refundings, renewals or extensions thereof
(without any increase in the principal amount thereof or any shortening of
the maturity of any principal amount thereof);
(e) Guarantee Obligations made in the ordinary course of business (i)
by the Borrower or any of its Subsidiaries of obligations of the Borrower
or any Subsidiary Guarantor and (ii) by Excluded Foreign Subsidiaries of
obligations of Excluded Foreign Subsidiaries;
52
(f) Indebtedness of Holdings or the Borrower pursuant to Subordinated
Debt; provided, that in the case of any such Indebtedness of Holdings, the
Net Cash Proceeds (or, in the event such Indebtedness is for the deferred
purchase price of Property or services, the Property or services acquired)
are received by or promptly contributed to the Borrower;
(g) Indebtedness of Excluded Foreign Subsidiaries in respect of local
lines of credit, letters of credit, bank guarantees, factoring
arrangements, sale/leaseback transactions and similar extensions of credit
in the ordinary course of business;
(h) Indebtedness of the Borrower or any of its Subsidiaries arising
from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently drawn by the Borrower or such
Subsidiary in the ordinary course of business against insufficient funds,
so long as such Indebtedness is repaid within five Business Days;
(i) Indebtedness of an Excluded Foreign Subsidiary to a Loan Party in
an aggregate principal amount for all Excluded Foreign Subsidiaries not to
exceed $7,500,000 at any time;
(j) Indebtedness in the form of earn-outs and other contingent
payments in respect of acquisitions (both before or after any liability
associated therewith becomes fixed); and
(k) additional Indebtedness of the Borrower or any of its Subsidiaries
in an aggregate principal amount (for the Borrower and all Subsidiaries)
not to exceed 20% of Consolidated EBITDA of the Borrower and its
Subsidiaries at any one time outstanding.
7.3 Liens. Create, incur, assume or suffer to exist any Lien upon any
of its Property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided, that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, to the extent required by GAAP;
(b) landlords', carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days or that are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, subleases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, do not materially detract from the value of the Property subject
thereto or materially interfere with the ordinary conduct of the business
of the Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(d), provided, that no such
Lien is spread to cover any additional Property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
53
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) or 7.2(k) to finance the
acquisition of fixed or capital assets, provided, that (i) such Liens shall
be created substantially simultaneously with the acquisition of such fixed
or capital assets, (ii) such Liens do not at any time encumber any Property
other than the Property financed by such Indebtedness and the proceeds
thereof and (iii) the principal amount of Indebtedness secured thereby is
not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into by
the Borrower or any other Subsidiary in the ordinary course of its business
and covering only the assets so leased, and any financing statement filed
in connection with any such lease;
(j) (i) inchoate Liens arising from judgments in circumstances not
constituting an Event of Default under Section 8(h) and (ii) Liens (other
than inchoate Liens) arising from judgments in circumstances not
constituting an Event of Default under Section 8(h) for a period not in
excess of sixty (60) days after such Lien attaches to specific assets of a
Loan Party;
(k) Liens on property or assets acquired pursuant to an acquisition
permitted under Section 7.8(h) (and the proceeds thereof) or assets of a
Subsidiary of the Borrower in existence at the time such Subsidiary is
acquired pursuant to an acquisition permitted under Section 7.8(h) and not
created in contemplation thereof;
(l) Liens on Property of Excluded Foreign Subsidiaries securing
Indebtedness permitted by this Agreement to be incurred by such Excluded
Foreign Subsidiaries; and
(m) receipt of progress payments and advances from customers in the
ordinary course of business to the extent same creates a Lien on the
related inventory and proceeds thereof.
7.4 Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
Property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided, that the Borrower shall be the continuing
or surviving corporation) or with or into any Subsidiary Guarantor
(provided, that (i) such Subsidiary Guarantor shall be the continuing or
surviving corporation or (ii) simultaneously with such transaction, the
continuing or surviving corporation shall become a Subsidiary Guarantor and
the Borrower shall comply with Section 6.9 in connection therewith);
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor;
(c) any Excluded Foreign Subsidiary may be merged or consolidated with
or into, or be liquidated into, another Excluded Foreign Subsidiary;
(d) any Excluded Foreign Subsidiary may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to any other Excluded
Foreign Subsidiary;
(e) Dispositions permitted by Section 7.5 may be consummated; and
54
(f) any Investment expressly permitted by Section 7.8 may be
structured as a merger, consolidation or amalgamation.
7.5 Disposition of Property. Dispose of any of its Property
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) (i) the sale of inventory in the ordinary course of business, (ii)
the cross-licensing or non-exclusive licensing of Intellectual Property, in
the ordinary course of business and (iii) the contemporaneous exchange, in
the ordinary course of business, of Property for Property of a like kind
(other than as set forth in clause (ii)), to the extent that the Property
received in such exchange is of a value equivalent to the value of the
Property exchanged (provided, that after giving effect to such exchange,
the value of the Property of the Loan Parties subject to perfected first
priority Liens in favor of the Administrative Agent under the Security
Documents is not materially reduced);
(c) Dispositions permitted by Section 7.4;
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Subsidiary Guarantor;
(e) the Disposition of other assets having a fair market value not to
exceed 5% of consolidated total assets of Holdings in the aggregate for any
fiscal year of the Borrower;
(f) any Recovery Event, provided, that the requirements of Section
2.10(c) are complied with in connection therewith;
(g) the leasing or sub-leasing of Property that would not materially
interfere with the required use of such Property by the Borrower or its
Subsidiaries;
(h) the transfer for fair value of Property (including Capital Stock
of Subsidiaries) to another Person in connection with a joint venture
arrangement with respect to the transferred Property; provided, that the
aggregate book value of all Property so transferred, plus, without
duplication, the aggregate amount of Investments made pursuant to Section
7.8(h), shall not exceed 5% of consolidated total assets of Holdings while
this Agreement is in effect;
(i) the Disposition by any Excluded Foreign Subsidiary of any of its
Property in an arms'-length transaction for the fair market value thereof;
and
(j) the Disposition by any Loan Party of any equity interest of any
Excluded Foreign Subsidiary held by such Loan Party in an arms'-length
transaction for the fair market value thereof.
7.6 Restricted Payments. Declare or pay any dividend on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any Capital Stock of Holdings, the Borrower or any Subsidiary, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of
Holdings, the Borrower or any Subsidiary, or enter into any derivatives or other
transaction with any financial institution, commodities
55
or stock exchange or clearinghouse (a "Derivatives Counterparty") obligating
Holdings, the Borrower or any Subsidiary to make payments to such Derivatives
Counterparty as a result of any change in market value of any such Capital Stock
(collectively, "Restricted Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the Borrower or any
Subsidiary Guarantor;
(b) Holdings may make Restricted Payments (i) in the form of common
stock of Holdings or (ii) with the proceeds of any Capital Stock issued by
Holdings to Permitted Investors;
(c) (i) the Borrower may pay dividends to Holdings to permit Holdings
to purchase Holdings' common stock or common stock options from present or
former officers or employees of Holdings, the Borrower or any Subsidiary
upon the death, disability or termination of employment of such officer or
employee, provided, that the aggregate amount of payments under this clause
(i) subsequent to the date hereof (net of any proceeds received by Holdings
and contributed to the Borrower subsequent to the date hereof in connection
with resales of any common stock or common stock options so purchased)
shall not exceed $6,000,000 and (ii) the Borrower may pay dividends to
Holdings to permit Holdings to pay management fees to the Sponsor and GE
Equity pursuant to the terms of the Management Agreement;
(d) the Borrower may pay dividends to Holdings to permit Holdings to
(A) pay general and administrative expenses incurred in the ordinary course
of business not to exceed $1,750,000 in any fiscal year and (B) pay any
taxes which are due and payable by Holdings and the Borrower as part of a
consolidated group; and
(e) the Borrower may make Restricted Payments to Holdings to effect
the Refinancing.
7.7 Capital Expenditures. Make any Capital Expenditure, except Capital
Expenditures of the Borrower and its Subsidiaries in the ordinary course of
business not to exceed in any fiscal year 1.75% of the annual gross revenue of
the Borrower and its Subsidiaries for the immediately preceding fiscal year;
provided, that (A) up to $500,000 of any such amount referred to above, if not
so expended in the fiscal year for which it is permitted, may be carried over
for expenditure in the next succeeding fiscal year and (B) Capital Expenditures
made during any fiscal year shall be deemed made, first, in respect of amounts
permitted for such fiscal year as provided above and second, in respect of
amounts carried over from the prior fiscal year as provided above.
7.8 Investments. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or all or
substantially all of the assets constituting an ongoing business from, or make
any other investment in, any other Person (all of the foregoing, "Investments"),
except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Investments arising in connection with the incurrence of
Indebtedness permitted by Sections 7.2(b) and (e);
(d) loans and advances to employees of Holdings, the Borrower or any
of its Subsidiaries in the ordinary course of business (including, without
limitation, for travel,
56
entertainment and relocation expenses) in an aggregate amount (for
Holdings, the Borrower and all Subsidiaries) not to exceed $250,000 at any
one time outstanding;
(e) Investments (other than those relating to the incurrence of
Indebtedness permitted by Section 7.8(c)) by Holdings, the Borrower or any
of its Subsidiaries in the Borrower or any Person that, prior to such
Investment, is a Subsidiary Guarantor;
(f) Permitted Acquisitions in an aggregate purchase price (other than
purchase price paid through the issuance of equity) amount not to exceed
$40,000,000 for any single Permitted Acquisition and (ii) 80,000,000 during
any fiscal year of the Borrower;
(g) loans by Holdings or the Borrower to the officers and directors of
Holdings or the Borrower or any of their Subsidiaries in connection with
management incentive plans in an aggregate amount not to exceed $4,000,000
at any one time outstanding, provided that such officers and directors
invest such loans in the Capital Stock of Holdings;
(h) Investments by the Borrower and its Subsidiaries in joint ventures
or similar arrangements; provided, that the aggregate amount of such
Investments, plus, without duplication, the aggregate book value of
Property transferred by the Borrower and its Subsidiaries to joint ventures
or similar arrangements pursuant to Section 7.5(h), shall not exceed 5% of
consolidated total assets of Holdings while this Agreement is in effect;
(i) Investments (including debt obligations) received in the ordinary
course of business by the Borrower or any Subsidiary in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with, customers and
suppliers arising out of the ordinary course of business;
(j) Investment by any Excluded Foreign Subsidiary in other Excluded
Foreign Subsidiaries;
(k) Investments in existence on the Closing Date and listed on
Schedule 7.8;
(l) Investments of the Borrower or any Subsidiary under Hedge
Agreements permitted hereunder;
(m) Investments of any Person in existence at the time such Person
becomes a Subsidiary of the Borrower; provided such Investment was not made
in connection with or anticipation of such Person becoming a Subsidiary of
the Borrower;
(n) Investments by the Borrower and the Subsidiary Guarantors in the
form of loans and advances to Excluded Foreign Subsidiaries permitted to be
incurred by the Excluded Foreign Subsidiaries under Section 7.2(c); and
(o) Investments so long as the aggregate amount thereof (determined as
the amount originally advanced, loaned or otherwise invested, less any
returns on the respective Investment not to exceed the original amount
invested) at no time exceeds 3.0% of consolidated total assets of Holdings
at the time made.
7.9 Optional Payments and Modifications of Certain Debt Instruments.
(a) Make or offer to make any optional or voluntary payment, prepayment,
repurchase or redemption of, or otherwise voluntarily or optionally defease, any
Subordinated Debt, or segregate funds for any such payment,
57
prepayment, repurchase, redemption or defeasance, or enter into any derivative
or other transaction with any Derivatives Counterparty obligating Holdings, the
Borrower or any Subsidiary to make payments to such Derivatives Counterparty as
a result of any change in market value of any Subordinated Debt, (b) amend,
modify or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of any Subordinated Debt, if such
modification would (i) increase the principal amount thereof (other than any
such increase in principal amount arising from interest payments paid in kind),
(ii) increase the interest rate payable in cash, (iii) reduce the ability of
Holdings to pay interest in kind, (iv) shorten the maturity thereof, (v) make
the subordination terms thereof less favorable to the Lenders, (vi) require
Holdings to maintain compliance with any financial covenants, whether compliance
with such covenants is required at all times or is tested only at the end of any
fiscal period, (vii) provide for any default under such Subordinated Debt in the
case of a Default or Event of Default under this Agreement or (viii) prohibit,
restrict or limit the ability of Holdings to act, or refrain from acting, in a
manner permitted by this Agreement or (c) amend its certificate of incorporation
in any manner reasonably determined by the Borrower to be adverse to the
Lenders.
7.10 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
Property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than Holdings, the Borrower,
any Subsidiary Guarantor or any Excluded Foreign Subsidiary) unless such
transaction is (a) otherwise not prohibited under this Agreement and (b) upon
fair and reasonable terms no less favorable to Holdings, the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person that is not an Affiliate. Notwithstanding the
foregoing, Holdings and its Subsidiaries may (i) pay to the Sponsor and its
Affiliates fees and expenses pursuant to the Management Agreement and (ii) enter
into any transaction with an Affiliate that is expressly permitted by the terms
of this Agreement to be entered into by Holdings or such Subsidiary with an
Affiliate. For the avoidance of doubt, this Section 7.10 shall not apply to
employment arrangements with, and payments of compensation or benefits to or for
the benefit of, management.
7.11 Sales and Leasebacks. Enter into any arrangement with any Person
providing for the leasing by Holdings, the Borrower or any Subsidiary of real or
personal property which is to be sold or transferred by Holdings, the Borrower
or such Subsidiary (i) to such Person or (ii) to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of Holdings, the Borrower or such Subsidiary, except for
sales or transfers that, together with Dispositions consummated pursuant to
Section 7.5(h), do not exceed 5% of consolidated total assets of Holdings in the
aggregate.
7.12 Changes in Fiscal Periods. Permit the fiscal year of the Borrower
to end on a day other than December 31 or change the Borrower's method of
determining fiscal quarters.
7.13 Negative Pledge Clauses. Enter into any agreement that prohibits
or limits the ability of Holdings, the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its Property or
revenues, whether now owned or hereafter acquired, to secure the Obligations or,
in the case of any guarantor, its obligations under the Guarantee and Collateral
Agreement, other than (a) this Agreement and the other Loan Documents, (b) any
agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby and the proceeds thereof),
(c) software and other Intellectual Property licenses pursuant to which the
Borrower is the licensee of the relevant software or Intellectual Property, as
the case may be, (in which case, any prohibition or limitation shall relate only
to the assets subject of the applicable license), (d) Contractual Obligations
incurred in the ordinary course of business and on customary terms which limit
Liens on the assets subject of the applicable Contractual Obligation and (e) the
lease for the Borrower's corporate
58
headquarters located at 000 Xxxxxxxx Xxxx in St. Xxxx, Minnesota, which
prohibits Liens on such leasehold.
7.14 Clauses Restricting Subsidiary Distributions. Enter into any
consensual encumbrance or restriction on the ability of any Subsidiary to (a)
make Restricted Payments in respect of any Capital Stock of such Subsidiary held
by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary or (b)
make Investments in the Borrower or any other Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) any restrictions
existing under the Loan Documents and (ii) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement that has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock
or assets of such Subsidiary.
7.15 Lines of Business. Enter into any business, either directly or
through any Subsidiary, except for the Business.
7.16 Limitations on Activities of Holdings. Permit Holdings to (a)
conduct, transact or otherwise engage in any business or operations other than
those incidental to its ownership of the Capital Stock of the Borrower and its
other property referred to herein, except to (i) make Dispositions of Property
in accordance with Section 7.5(a), (b), (c), (f), (h) and (j), (ii) make
Restricted Payments in accordance with Section 7.6, (iii) make Investments in
accordance with Section 7.8(e) and (g), (iv) enter into transactions otherwise
permitted for Holdings under this Section 7.16 with Affiliates permitted by
Section 7.10, (v) enter into sales and leaseback transactions pursuant to
Section 7.11, (vi) enter into agreements that prohibit or limit its ability to
create, incur, assume or suffer to exist any Lien upon any of its Property or
revenues permitted under Section 7.13 and (vii) issue its Capital Stock in a
public offering, (b) incur, create, assume or suffer to exist any Indebtedness,
except (i) nonconsensual obligations imposed by operation of law, (ii) pursuant
to the Loan Documents to which it is a party, (iii) Indebtedness incurred in
accordance with Section 7.2(f), (iv) obligations with respect to its Capital
Stock and (v) to enter into and perform its obligations pursuant to the
Management Agreement, or (c) own, lease, manage or otherwise operate any
properties or assets other than (i) the ownership of shares of Capital Stock of
the Borrower and its other property referred to herein, (ii) cash and Cash
Equivalents and deposit and securities accounts comprised of cash and Cash
Equivalents and (iii) other assets not material in amount incidental to the
operations of Holdings. Notwithstanding anything contained in this Section to
the contrary, nothing in this Section shall limit Holdings ability to (i) hold,
maintain and exercise Holdings' rights in connection with its United States
Medicare and other third-party payors' billing number (the "Billing Number"),
including, without limitation, the right to accept payments from Medicare and
such other third-party payors pursuant to contracts relating thereto, (ii) take
all action necessary to satisfy its obligations with respect to the Billing
Number including, without limitation, the payment of any money, (iii) receive
payments for use of the Billing Number, (iv) distribute revenues received in
connection with the Billing Number and (v) hire, retain, pay, insure and
otherwise manage no more than 5 employees.
7.17 Limitation on Hedge Agreements. Enter into any Hedge Agreement
other than Hedge Agreements entered into in the ordinary course of business, and
not for speculative purposes, to protect against changes in interest rates or
foreign exchange rates.
7.18 Changes in Jurisdictions of Organization; Name. Except upon
prompt written notice (but in any event no later than five (5) days after
consummating an activity referred to in clause (i) or (ii) below) to the
Administrative Agent and delivery to the Administrative Agent of all additional
executed financing statements and other documents reasonably requested by the
Administrative Agent to maintain the validity, perfection and priority of the
security interests provided for in the Security Documents:
59
(i) change its jurisdiction of organization; or
(ii) change its name.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms hereof; or the Borrower shall fail to pay any
Reimbursement Obligation or interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within three Business Days after any such interest or other
amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made or furnished; or
(c) Any Loan Party shall default in the observance or performance of
any agreement contained in Section 6.7(a) or Section 7; or
(d) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after such
Loan Party receives from the Administrative Agent or any Lender notice or
any Lender of the existence of such default; or
(e) Holdings, the Borrower or any of its Subsidiaries shall (i)
default in making any payment of any principal of any Indebtedness
(excluding the Loans and Reimbursement Obligations) on the scheduled or
original due date with respect thereto; or (ii) default in making any
payment of any interest on any such Indebtedness beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event of default shall occur, the effect of which
payment or other default or other event of default is to cause, or to
permit the holder or beneficiary of such Indebtedness (or a trustee or
agent on behalf of such holder or beneficiary) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity or to become subject to a mandatory offer to purchase by the
obligor thereunder or to become payable; provided, that (x) a default,
event or condition described in this paragraph shall not at any time
constitute an Event of Default unless, at such time, one or more defaults
or events of default of the type described in this paragraph shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $5,000,000 and (y) this
paragraph (e) shall not apply to (i) secured Indebtedness that becomes due
as a result of the sale, transfer, destruction or other disposition of the
Property or assets securing such Indebtedness if such sale, transfer,
destruction or other disposition is not prohibited hereunder and under the
documents providing for such Indebtedness or (ii) any Guarantee Obligations
except to the extent such Guarantee Obligations shall become due and
payable by Holdings, the Borrower or any of its Subsidiaries
60
and remain unpaid after any applicable grace period or period permitted
following demand for the payment thereof; or
(f) (i) Holdings, the Borrower or any of its Material Subsidiaries
shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or Holdings, the
Borrower or any of its Subsidiaries (other than any Immaterial Subsidiary)
shall make a general assignment for the benefit of its creditors; or(ii)
there shall be commenced against Holdings, the Borrower or any of its
Subsidiaries (other than any Immaterial Subsidiary) any case, proceeding or
other action of a nature referred to in clause (i) above that (A) results
in the entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against Holdings, the Borrower or
any of its Subsidiaries (other than any Immaterial Subsidiary) any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against substantially all of its
assets that results in the entry of an order for any such relief that shall
not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) Holdings, the Borrower or
any of its Subsidiaries (other than any Immaterial Subsidiary) shall
consent to or approve of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) Holdings, the Borrower or any of
its Subsidiaries (other than any Immaterial Subsidiary) shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay
its debts as they become due; or
(g) (i) The Borrower or any of its Subsidiaries shall incur any
liability in connection with any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii)
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in
favor of the PBGC or a Plan shall arise on the assets of the Borrower or
any Subsidiary, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Subsidiary shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability as a
result of a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition (other than one
which could not reasonably be expected to result in a violation of any
applicable law or of the qualification requirements of the Code) shall
occur or exist with respect to a Plan or a Commonly Controlled Plan; and in
each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could reasonably
be expected to result in a direct obligation of the Borrower and its
Subsidiaries to pay money that could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
Holdings, the Borrower or any of its Material Subsidiaries involving for
Holdings, the Borrower and its Material Subsidiaries taken as a whole a
liability (not paid or fully covered by insurance or effective indemnity)
of $5,000,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
61
(i) Any of the Security Documents shall cease, for any reason (other
than by reason of the express release thereof pursuant to Section 10.15),
to be in full force and effect in any material respect, or any Loan Party
shall so assert, or any Lien created by any of the Security Documents shall
cease in any material respect to be enforceable and of the same effect and
priority purported to be created thereby; provided, that there shall be no
Event of Default under this clause (i) to the extent such Event of Default
arises from (a) the resignation of the Administrative Agent or (b) the
negligence or willful misconduct of the Administrative Agent following a
reasonable request from the Borrower to execute any document or take any
other action relating to such Security Document or the Liens granted
thereunder; or
(j) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason (other than by reason of
the express release thereof pursuant to Section 10.15), to be in full force
and effect in any material respect or any Loan Party shall so assert; or
(k) (i) Holdings shall cease to own 100% of the Capital Stock of the
Borrower; or (ii) if Holdings' Capital Stock is not traded on a
nationally-recognized stock exchange, the Permitted Investors shall cease
to own, free and clear of all Liens, at least 50.1% of the Capital Stock of
Holdings; or (iii) if Holdings' Capital Stock is traded on a
nationally-recognized stock exchange, the Permitted Investors shall cease
to own, free and clear of all Liens, at least 30% of the Capital Stock of
Holdings and no other shareholder owns a greater amount, or (iv) at any
time for any reason, the Sponsor shall not have the right to elect a
majority of the Board of Directors of Holdings, or (v) at any time and for
any reason whatsoever, a majority of the Board of Directors of Holdings
shall not be Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Revolving Facility Lenders, the
Administrative Agent may, or upon the request of the Majority Revolving Facility
Lenders, the Administrative Agent shall, by notice to the Borrower declare the
Revolving Commitments to be terminated forthwith, whereupon the Revolving
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. In the case of all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower then due and owing hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower (or such other Person as may be
62
lawfully entitled thereto). Except as expressly provided above in this Section
or otherwise in any Loan Document, presentment, demand and protest of any kind
are hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to Holdings or the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The
63
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
unless the Administrative Agent has received notice from a Lender, Holdings or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by Holdings or the Borrower and
without limiting the obligation of Holdings or the Borrower to do so), ratably
according to their respective Aggregate Exposure Percentages in effect on the
date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby or any action taken or
omitted by such Agent under or in connection with any of the foregoing;
64
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross negligence or willful misconduct. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders and the
Borrower effective upon appointment of a successor Agent. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an Event of
Default under Section 8(a) or Section 8(f) with respect to the Borrower shall
have occurred and be continuing) be subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor Administrative Agent shall have been so
appointed by the Required Lenders with such consent of the Borrower and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent's giving of notice of resignation of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Lenders and with
the consent of the Borrower (such consent not to be unreasonably withheld or
delayed), appoint a successor Administrative Agent, that shall be a bank that
has an office in New York, New York with a combined capital and surplus of at
least $500,000,000. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens and Guarantees. The Administrative
Agent is hereby irrevocably authorized by each of the Lenders to effect any
release of Liens or Guarantee Obligations contemplated by Section 10.15.
9.11 Documentation Agent and Syndication Agent. Neither the
Documentation Agent nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and
65
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Term Loan, reduce the stated rate of any
interest or fee payable hereunder (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates (which waiver shall
be effective with the consent of the Majority Facility Lenders of each adversely
affected Facility) and (y) that any amendment or modification of defined terms
used in the financial covenants in this Agreement shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (i)) or
extend the scheduled date of any payment thereof, or increase the amount or
extend the expiration date of any Lender's Revolving Commitment, in each case
without the written consent of each Lender directly and adversely affected
thereby; (ii) eliminate or reduce the voting rights of any Lender under this
Section 10.1 without the written consent of such Lender; (iii) reduce any
percentage specified in the definition of Required Lenders, consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, release all or substantially
all of the Collateral or release all or substantially all of the Subsidiary
Guarantors from their obligations under the Guarantee and Collateral Agreement,
in each case without the written consent of all Lenders; (iv) amend, modify or
waive any provision of Section 2.16 without the written consent of the Majority
Facility Lenders in respect of each Facility adversely affected thereby; (v)
reduce the percentage specified in the definition of Majority Facility Lenders
with respect to any Facility without the written consent of all Lenders under
such Facility; (vi) amend, modify or waive any provision of Section 9 without
the written consent of the Administrative Agent; or (vii) amend, modify or waive
any provision of Section 3 without the written consent of the Issuing Lender.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Loan Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing unless limited by the terms of such waiver; but
no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
Notwithstanding the foregoing, this Agreement may be amended (or
amended and restated) with the written consent of the Required Lenders, the
Administrative Agent and the Borrower (a) to add one or more additional credit
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
to share ratably in the benefits of this Agreement and the other Loan Documents
with the Term Loans and Revolving Extensions of Credit and the accrued interest
and fees in respect thereof and (b) to include appropriately the Lenders holding
such credit facilities in any determination of the Required Lenders and Majority
Facility Lenders.
In addition, notwithstanding the foregoing, this Agreement may be
amended with the written consent of the Administrative Agent, the Borrower and
the Lenders providing the relevant Replacement Term Loans (as defined below) to
permit the refinancing of all outstanding Term Loans ("Refinanced Term Loans")
with a replacement term loan tranche hereunder ("Replacement Term Loans"),
provided that (a) the aggregate principal amount of such Replacement Term Loans
shall not exceed the aggregate principal amount of such Refinanced Term Loans,
(b) the Applicable Margin for such Replacement Term Loans shall not be higher
than the Applicable Margin for such Refinanced Term Loans, (c) the weighted
average life to maturity of such Replacement Term Loans shall not be shorter
than the weighted average life to maturity of such Refinanced Term Loans at the
time of such refinancing and (d) all other terms applicable to such Replacement
Term Loans shall be substantially identical to, or less favorable to the Lenders
providing such Replacement Term Loans than, those applicable to such
66
Refinanced Term Loans, except to the extent necessary to provide for covenants
and other terms applicable to any period after the latest final maturity of the
Term Loans in effect immediately prior to such refinancing.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Holdings, the Borrower and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:
Holdings: Empi, Inc.
000 Xxxxxxxx Xxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
The Carlyle Group
000 Xxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Borrower: Empi Corp.
000 Xxxxxxxx Xxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
The Carlyle Group
000 Xxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Administrative Agent: JPMorgan Chase Bank
1111 Xxxxxx, 10/th/ Floor
Loan and Agency Services Group
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
67
With a copy to: JPMorgan Chase Bank
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxx Xxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
provided that any notice, request or demand to or upon the Administrative Agent,
the Lenders, Holdings or the Borrower shall not be effective until received.
Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Section 2 unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
10.5 Payment of Expenses; Indemnification. The Borrower agrees (a) to
pay or reimburse the Administrative Agent and the Joint Lead Arrangers for all
their respective reasonable out-of-pocket costs and expenses actually incurred
in connection with the syndication of the Facilities (other than fees payable to
syndicate members) and the development, preparation, execution and delivery of
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith and any amendment, supplement or modification
thereto, and, as to the Administrative Agent only, the administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements and other charges of counsel to the
Administrative Agent in connection with all of the foregoing, (b) to pay or
reimburse each Lender and the Administrative Agent for all their costs and
expenses actually incurred in connection with the enforcement or preservation of
any rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the reasonably documented fees and
disbursements of counsel to each Lender and of counsel to the Administrative
Agent, (c) to pay, indemnify, or reimburse each Lender and the Administrative
Agent for, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and similar other taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents
68
and (d) to pay, indemnify or reimburse each Lender, each Agent, their respective
affiliates, and their respective officers, directors, trustees, employees,
advisors, agents and controlling Persons (each, an "Indemnitee") for, and hold
each Indemnitee harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, costs, expenses or disbursements
arising out of any actions, judgments or suits of any kind or nature whatsoever,
arising out of or in connection with any claim, action or proceeding relating to
or otherwise with respect to the execution, delivery, enforcement, performance
and administration of this Agreement, the other Loan Documents and any such
other documents, including, without limitation, any of the foregoing relating to
the use of proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of the
Borrower any of its Subsidiaries or any of the Properties and the fees and
disbursements and other charges of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against the Borrower hereunder (all the
foregoing in this clause (d), collectively, the "Indemnified Liabilities"),
provided, that the Borrower shall have no obligation hereunder to any Indemnitee
with respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found to have resulted from the gross negligence or willful
misconduct of such Indemnitee or its affiliates, officers, directors, employees,
advisors or agents. Without limiting the foregoing, and to the extent permitted
by applicable law, the Borrower agrees not to assert and to cause its
Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries so to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this Section shall be
payable promptly after receipt of a reasonably detailed invoice therefor.
Statements payable by the Borrower pursuant to this Section shall be submitted
to Xxxxxxx X. Xxxxxxxx (Telephone No. (000) 000-0000) (Fax No. (000) 000-0000),
at the address of the Borrower set forth in Section 10.2, or to such other
Person or address as may be hereafter designated by the Borrower in a written
notice to the Administrative Agent. The agreements in this Section shall survive
repayment of the Obligations.
10.6 Successors and Assigns; Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any affiliate of the Issuing Lender that issues any Letter of
Credit), except that (i) the Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.
(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below,
any Lender may assign to one or more assignees (each, an "Assignee") all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower shall be
required for an assignment to a Lender, an affiliate of a Lender, an
Approved Fund (as defined below) or, if an Event of Default under Section
8(a) or (f) has occurred and is continuing, any other Person; and
(B) the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment of (x) any
Revolving Commitment or Revolving Loans to an assignee that is a Lender
with a Revolving Commitment immediately prior to giving effect to such
assignment or (y) all or any portion of a Term Loan to a Lender, an
Affiliate of a Lender or an Approved Fund.
(ii) Assignments shall be subject to the following additional
conditions:
69
(A) except in the case of an assignment to a Lender, an affiliate
of a Lender or an Approved Fund or an assignment of the entire
remaining amount of the assigning Lender's Commitments or Loans under
any Facility, the amount of the Commitments or Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5,000,000 (or, in
the case of the Term Facility, $1,000,000) unless each of the Borrower
and the Administrative Agent otherwise consent, provided that (1) no
such consent of the Borrower shall be required if an Event of Default
under Section 8(a) or (f) has occurred and is continuing and (2) such
amounts shall be aggregated in respect of each Lender and its
affiliates or Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; and
(C) the Assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an administrative questionnaire.
For the purposes of this Section 10.6, "Approved Fund" means any
Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) below, from and after the effective date specified in each
Assignment and Assumption the Assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.17, 2.18, 2.19 and 10.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 10.6
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amount of the Loans and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent, the Issuing
Lender and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Lender and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an Assignee, the Assignee's
completed administrative questionnaire (unless the Assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the
70
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(c)(i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); provided that (A) such Lender's obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver that (1) requires the consent of each Lender directly and adversely
affected thereby pursuant to the proviso to the second sentence of Section 10.1
and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.17, 2.18 and 2.19 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.17 or 2.18 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent to such greater amounts. Any Participant that
is a Non-U.S. Lender shall not be entitled to the benefits of Section 2.18
unless such Participant complies with Section 2.18(d).
(d) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided, that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or Assignee for such Lender
as a party hereto.
(e) The Borrower, upon receipt of written notice from the
relevant Lender, agrees to issue Notes to any Lender requiring Notes to
facilitate transactions of the type described in paragraph (d) above.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender or to the
Lenders under a particular Facility, if any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise) in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender's Obligations, such Benefitted Lender shall purchase for cash
from the other Lenders a participating interest in such portion of each such
other Lender's Obligations, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
71
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to
Holdings or the Borrower, any such notice being expressly waived by Holdings and
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by Holdings or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) after the expiration of any cure or
grace periods, to set off and appropriate and apply against such amount any and
all deposits (general or special, time or demand, provisional or final but
excluding trust accounts), in any currency, and any other credits, indebtedness
or claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of Holdings or
the Borrower, as the case may be. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, provided, that the failure to give such notice shall not affect
the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of Holdings, the Borrower, the Administrative
Agent and the Lenders with respect to the subject matter hereof and thereof.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of Holdings and
the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States for
the Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail),
72
postage prepaid, to Holdings or the Borrower, as the case may be at its
address set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.
10.13 Acknowledgments. Each of Holdings and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to Holdings or the Borrower arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between Administrative Agent and
Lenders, on one hand, and Holdings and the Borrower, on the other hand,
in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among Holdings, the Borrower
and the Lenders.
10.14 Confidentiality. The Agents and the Lenders agree to treat
any and all information, regardless of the medium or form of communication, that
is disclosed, provided or furnished, directly or indirectly, by or on behalf of
the Borrower or any of its affiliates, whether in writing, orally, by
observation or otherwise and whether furnished before or after the Closing Date
("Confidential Information"), strictly confidential and not to use Confidential
Information for any purpose other than evaluating the Refinancing and
negotiating, making available, syndicating and administering the Credit
Agreement (the "Agreed Purposes"). Without limiting the foregoing, each Agent
and each Lender agrees to treat any and all Confidential Information with no
less than adequate means to preserve its confidentiality, and each Agent and
each Lender agrees not to disclose Confidential Information, at any time, in any
manner whatsoever, directly or indirectly, to any other Person whomsoever,
except (1) to its directors, officers, employees, counsel and other
representatives (collectively, the "Representatives"), to the extent necessary
to permit such Representatives to assist in connection with the Agreed Purposes,
(2) to prospective Lenders and participants in connection with the syndication
(including secondary trading) of the Facilities and Commitments and Loans
hereunder, in each case who are informed of the confidential nature of the
information and agree to observe and be bound by standard confidentiality terms,
(3) upon the request or demand of any Governmental Authority having jurisdiction
over it, (4) in response to any order of any Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (5) to the extent
reasonably required or necessary, in connection with any litigation or similar
proceeding relating to the Facilities, (6) that has been publicly disclosed
other than in breach of this Section 10.14, (7) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender or (8)
to the extent reasonably required or necessary, in connection with the exercise
of any remedy under the Loan Documents. Each Agent and each Lender acknowledges
that (i) Confidential Information includes
73
information that is not otherwise publicly available and that such non-public
information may constitute confidential business information which is
proprietary to the Borrower and (ii) the Borrower has advised the Agents and the
Lenders that it is relying on the Confidential Information for its success and
would not disclose the Confidential Information to the Agents and the Lenders
without the confidentiality provisions of this Agreement. Notwithstanding
anything herein to the contrary, any party to this Agreement (and any employee,
representative, or other agent of any party to this Agreement) may disclose to
any and all persons, without limitation of any kind, the tax treatment and any
facts that may be relevant to the tax structure of the transactions contemplated
by this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure. However, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities laws.
10.15 Release of Collateral and Guarantee Obligations. (a)
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, upon request of the Borrower in connection with any Disposition of
Property permitted by the Loan Documents, the Administrative Agent shall
(without notice to, or vote or consent of, any Lender, or any affiliate of any
Lender that is a party to any Specified Hedge Agreement) take such actions as
shall be required to release its security interest in any Collateral being
Disposed of in such Disposition, and to release any Guarantee Obligations under
any Loan Document of any Person being Disposed of in such Disposition, to the
extent necessary to permit consummation of such Disposition in accordance with
the Loan Documents.
(b) Notwithstanding anything to the contrary contained herein
or any other Loan Document, when all Obligations (other than obligations in
respect of any Specified Hedge Agreement or any Specified Cash Management
Arrangement) have been paid in full, all Commitments have terminated or expired
and no Letter of Credit shall be outstanding, upon request of the Borrower, the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender, or any affiliate of any Lender that is a party to any Specified Hedge
Agreement) take such actions as shall be required to release its security
interest in all Collateral, and to release all Guarantee Obligations under any
Loan Document, whether or not on the date of such release there may be
outstanding Obligations in respect of Specified Hedge Agreements. Any such
release of Guarantee Obligations shall be deemed subject to the provision that
such Guarantee Obligations shall be reinstated if after such release any portion
of any payment in respect of the Obligations guaranteed thereby shall be
rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payment had not been made.
10.16 Accounting Changes. In the event that any Accounting Change
(as defined below) shall occur and such change results in a change in the method
of calculation of financial covenants, standards or terms in this Agreement,
then the Borrower and the Administrative Agent agree to enter into negotiations
in order to amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for evaluating
the Borrower's financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made. Until such time as such
an amendment shall have been executed and delivered by the Borrower, the
Administrative Agent and the Required Lenders, all financial covenants,
standards and terms in this Agreement shall continue to be calculated or
construed as if such Accounting Changes had not occurred. "Accounting Changes"
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
74
10.17 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
75
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
EMPI, INC.
By:__________________________________________
Name:
Title:
EMPI CORP.
By:__________________________________________
Name:
Title:
JPMORGAN CHASE BANK, as Administrative Agent,
Syndication Agent and as a Lender
By:__________________________________________
Name:
Title:
WACHOVIA BANK, NATIONAL ASSOCIATION, as
Documentation Agent and as a Lender
By:__________________________________________
Name:
Title:
______________________________________
(Name of Lender)
By:___________________________________
Name:
Title:
_______________________________________
(Name of Lender)
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
