UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
Commission file number 0-27802
ARTERIAL VASCULAR ENGINEERING, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3144218
(State of incorporation) (I.R.S. Employer
Identification No.)
3576 Unocal Place, Santa Rosa, California 95403
(Address of principal executive offices) (Zip code)
(707) 525-0111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding
Common Stock, $0.001 par value 64,342,561 as of November 1, 1998
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INDEX TO FORM 10-Q
<CAPTION>
Page
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 1998 3
and June 30, 1998
Condensed Consolidated Statements of Operations for the three 4
months ended September 30, 1998 and 1997
Condensed Statements of Stockholders' Equity for the 5
three months ended September 30, 1998 and 1997
Condensed Consolidated Statements of Cash Flows for the 6
three months ended September 30, 1998 and 1997
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 10
and Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Change in Securities and Use of Proceeds 19
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
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2
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
ARTERIAL VASCULAR ENGINEERING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<CAPTION>
September 30, June 30,
1998 1998
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 135,555 $ 48,282
Short-term investments 96,729 126,843
Accounts receivable, net 90,456 109,851
Inventories 11,544 9,524
Deferred income tax 14,687 14,687
Prepaid expenses and other current assets 9,042 5,814
--------- ---------
Total current assets 358,013 315,001
Property, plant and equipment, net 78,573 71,095
Deferred income tax 896 896
Other assets 445 477
--------- ---------
Total assets $ 437,927 $ 387,469
========= =========
LIABILITIES
Current liabilities:
Accounts payable $ 11,718 $ 13,894
Accrued employee bonus 18,133 25,585
Accrued expenses 36,281 27,530
Income taxes payable 32,813 43,482
--------- ---------
Total current liabilities 98,945 110,491
--------- ---------
STOCKHOLDERS' EQUITY
Common stock 64 64
Additional paid-in capital 125,100 117,281
Deferred compensation (224) (268)
Treasury stock (390) (390)
Comprehensive loss (767) (1,731)
Retained earnings 215,199 162,022
--------- ---------
Total stockholders' equity 338,982 276,978
--------- ---------
Total liabilities and stockholders' equity $ 437,927 $ 387,469
========= =========
<FN>
See accompanying notes
</FN>
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3
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ARTERIAL VASCULAR ENGINEERING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
September 30,
-----------------------
1998 1997
-------- --------
Net sales $161,268 $ 26,263
Cost of sales 24,574 5,489
-------- --------
Gross profit 136,694 20,774
-------- --------
Operating expenses:
Research and development 14,938 5,478
Selling, general and administrative 36,387 7,517
-------- --------
Total operating expenses 51,325 12,995
-------- --------
Operating income 85,369 7,779
Interest and other income 3,260 1,006
-------- --------
Income before provision for income taxes 88,629 8,785
Provision for income taxes 35,452 3,075
-------- --------
Net income $ 53,177 $ 5,710
======== ========
Net income per share - basic $ 0.84 $ 0.10
Net income per share - diluted $ 0.80 $ 0.09
Shares used to calculate net income per share:
Basic 63,189 59,626
Diluted 66,181 64,474
See accompanying notes
4
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ARTERIAL VASCULAR ENGINEERING, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
<CAPTION>
Common Stock Additional
---------------- Paid-in Deferred Treasury Retained Comprehensive
Shares Amount Capital Compensation Stock Earnings Loss Total
------ ------ ------- ------------ ----- -------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, June 30, 1997 62,094 $ 62 $ 92,990 $ -- $ (390) $ 46,902 $ (1,364) $ 138,200
Issuance of common stock
upon exercise of stock
options and Employee
Stock Purchase Plan 202 -- 632 -- -- -- -- 632
Income tax reduction relating
to stock plans -- -- 1,016 -- -- -- -- 1.016
------ --------- --------- --------- --------- --------- --------- ---------
Subtotal 62,296 62 94,638 -- (390) 46,902 (1,364) 139,848
------ --------- --------- --------- --------- --------- --------- ---------
Net income -- -- -- -- -- 5,710 -- 5,710
Translation adjustment -- -- -- -- -- -- (113) (113)
------ --------- --------- --------- --------- --------- --------- ---------
Comprehensive income -- -- -- -- -- 5,710 (113) 5,597
------ --------- --------- --------- --------- --------- --------- ---------
Balances, September 30, 1997 62,296 $ 62 $ 94,638 $ -- $ (390) $ 52,612 $ (1,477) $ 145,445
====== ========= ========= ========= ========= ========= ========= =========
Balances, June 30, 1998 63,974 $ 64 $ 117,281 $ (268) $ (390) $ 162,022 $ (1,731) $ 276,978
Issuance of common stock
upon exercise of stock
options and Employee
Stock Purchase Plan 412 -- 5,395 -- -- -- -- 5,395
Amortization of deferred
compensation -- -- -- 44 -- -- -- 44
Income tax reduction relating
to stock plans -- -- 2,424 -- -- -- -- 2,424
------ --------- --------- --------- --------- --------- --------- ---------
Subtotal 64,386 64 125,100 (224) (390) 162,022 (1,731) 284,841
------ --------- --------- --------- --------- --------- --------- ---------
Net income -- -- -- -- -- 53,177 -- 53,177
Translation adjustment -- -- -- -- -- -- 964 964
------ --------- --------- --------- --------- --------- --------- ---------
Comprehensive income -- -- -- -- -- 53,177 964 54,141
------ --------- --------- --------- --------- --------- --------- ---------
Balances, September 30, 1998 64,386 $ 64 $ 125,100 $ (224) $ (390) $ 215,199 $ (767) $ 338,982
====== ========= ========= ========= ========= ========= ========= =========
<FN>
See accompanying notes
</FN>
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5
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ARTERIAL VASCULAR ENGINEERING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Three Months Ended
September 30,
-------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 53,177 $ 5,710
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,445 662
Provision for doubtful accounts 1,132 246
Provision for obsolete inventory 584 104
Amortization of deferred compensation 43 --
Income tax reduction relating to stock plans 2,424 1,016
Changes in assets and liabilities:
Short-term investments 30,114 4,594
Accounts receivable 18,977 (4,119)
Inventories (2,197) (3,549)
Prepaid expenses and other current assets (3,147) (3,719)
Accounts payable (2,233) 4,815
Accrued employee bonus (7,473) (303)
Accrued expenses 8,585 866
Income taxes payable (10,624) 3,195
--------- ---------
Net cash provided by operating activities 90,807 9,518
--------- ---------
Cash flows from investing activities:
Acquisition of property, plant and equipment (8,927) (9,943)
--------- ---------
Net cash used in investing activities (8,927) (9,943)
--------- ---------
Cash flows from financing activities:
Increase in short-term borrowings -- 2,449
Proceeds from issuance of common stock 5,395 632
--------- ---------
Net cash provided by financing activities 5,395 3,081
--------- ---------
Effect of exchange rate changes on cash and cash equivalents (2) (26)
Net increase in cash and cash equivalents 87,273 2,630
Cash and cash equivalents, at beginning of period 48,282 25,036
--------- ---------
Cash and cash equivalents, at end of period $ 135,555 $ 27,666
========= =========
<FN>
See accompanying notes
</FN>
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6
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ARTERIAL VASCULAR ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, in
accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of management,
all adjustments (consisting of only normal recurring adjustments)
considered necessary to present fairly the financial position,
results of operations and cash flows have been included. These
consolidated financial statements should be read in conjunction with
the audited consolidated financial statements contained in the
Company's Form 10-K for the fiscal year ended June 30, 1998.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. The year-end balance sheet data was derived from audited
financial statements, but does not include disclosures required by
generally accepted accounting principles.
Operating results for the three-month period ended September
30, 1998 are not necessarily indicative of the results to be expected
for any other interim period or for the full fiscal year.
2. Inventories (in thousands):
September 30, June 30,
1998 1998
------------ -----------
Raw materials $3,272 $3,346
Work in process 2,786 2,554
Finished goods 5,486 3,624
------------ -----------
$11,544 $9,524
[6,297] [3,352]
============ ===========
3. Computation of Net Income Per Share
In 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share (SFAS No. 128)". SFAS No. 128 replaced the calculation of
primary and fully diluted earnings per share with basic and diluted
earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options and
warrants. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. Net income per
share -- diluted, as reported, includes the effect of dilutive stock
options (using the treasury stock method). All net income per share
amounts presented have been restated to conform to SFAS No. 128
requirements, where appropriate.
7
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ARTERIAL VASCULAR ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The table below sets forth the computation of basic and
diluted net income per share (in thousands, except per share data):
Three Months Ended
September 30,
-------------------------
1998 1997
---------- ----------
Numerator:
Net income $53,177 $5,710
---------- ----------
Denominator for net income per share - basic:
Weighted average common shares outstanding 63,189 59,626
Denominator for net income per share - diluted:
Effect of dilutive securities:
Employee stock options 1,998 2,345
Other dilutive securities 994 2,503
Weighted average common shares and dilutive
---------- ----------
securities outstanding 66,181 64,474
---------- ----------
Net income per share - basic $0.84 $0.10
Net income per share - diluted $0.80 $0.09
4. Contingencies
Legal proceedings to which the Company is a party are
discussed in Part I, Item 3 ("Legal Proceedings") in the Company's
Annual Report on Form 10-K for the year ended June 30, 1998. Material
developments in such matters are discussed in Part II, Item 1 of this
report.
5. Comprehensive Income
Effective July 1, 1998, the Company adopted Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income (SFAS No. 130),"
which states that all items that are required to be recognized under
accounting standards as components of comprehensive income (revenues,
expenses, gains and losses) be reported in a financial statement that
is displayed with the same prominence as other financial statements.
Prior year financial statements have been reclassified to conform to
the requirements of SFAS No. 130.
During the three months ended September 30, 1998 and 1997,
the Company's comprehensive income was $54,141,000 and $5,597,000,
respectively.
8
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ARTERIAL VASCULAR ENGINEERING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. Subsequent Event
On October 1, 1998 (subsequent to the close of the
quarterly period to which this report relates), the Company
consummated an agreement to acquire the coronary catheter lab
business (the "Bard Business") of C.R. Bard, Inc. ("Bard"), as well
as rights to the supply by Bard of certain materials (collectively,
the "Bard Cath Lab Acquisition"), for approximately $550 million in
cash (the "Purchase Price"). The Purchase Price is subject to
adjustment based upon a statement of assets and liabilities of the
Bard Business as of October 1, 1998. The adjustment shall be made
upward or downward by the amount by which the net book value of the
Bard Business together with a percentage of certain trade accounts
receivable of the Bard Business exceeds or is less than an agreed
sum. Bard's broad range of catheter-based technologies includes PTCA
balloon catheters (including perfusion rapid exchange catheters),
guidewires, guide catheters, coronary diagnostic catheters and
guidewires, introducers and vessel closure devices, coronary stents,
and various other components and accessories. The Bard Cath Lab
Acquisition is expected to substantially increase the Company's
personnel, facilities and product offerings and to enable the
Company to participate in new areas of interventional cardiology
through a wider product portfolio and access to new markets and
customers. However, there can be no assurance that the Company will
successfully participate in such new product areas. The Company has
entered into a bank credit agreement for $600 million in senior
secured credit facilities in order to, among other things, finance
substantially all of the Bard Cath Lab Acquisition.
9
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The statements contained in this Form 10-Q that are not
historical are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements regarding the
Company's expectations, beliefs, intentions or strategies regarding
the future. Forward-looking statements made herein include, without
limitation, statements regarding manufacturing scale-up, the
intellectual property positions of competitors, the anticipated
outcome of litigation, the extent and timing of new product
introductions, future revenues, customer demand, competition,
pricing pressure, barriers to market entry, expansion of operations,
risks of business combinations, regulatory approvals, expenditures
and margin levels, and the establishment of direct sales forces in
targeted countries. All forward-looking statements in this document
are based on information available to the Company as of the date
hereof, and the Company assumes no obligation to update any such
forward-looking statement. It is important to note that the
Company's actual results could differ materially from those in such
forward-looking statements. Additional risk factors include those
discussed in the reports filed by the Company from time to time on
Forms 10-K, 10-Q and 8-K.
The Company is engaged in the design, development,
manufacturing and marketing of stent systems and percutaneous
transluminal coronary angioplasty ("PTCA") catheters designed to be
utilized in connection with less invasive treatment of
cardiovascular disease. The Company believes that it is currently
one of the leading providers of coronary stent systems. The Company
began commercial sales of its PTCA catheters in October 1993, its
coronary stent systems in October 1994, and its peripheral stent
systems in December 1996. In June 1997, the Company's Japanese
distributor received regulatory approval for the sale in Japan of
the Company's coronary stent systems, and in January 1998 the
Company received the related reimbursement approval. In December
1997, the Company received a pre-market approval ("PMA") from the
United States Food and Drug Administration (the "FDA") in connection
with its commencement of commercial sales of its coronary stent
systems in the United States. Prior to that time, international
sales accounted for substantially all of the Company's revenues.
On October 1, 1998 (subsequent to the close of the quarterly
period to which this report relates), the Company consummated an
agreement to acquire the coronary catheter lab business (the "Bard
Business") of C.R. Bard, Inc. ("Bard"), as well as rights to the
supply by Bard of certain materials (collectively, the "Bard Cath
Lab Acquisition"), for approximately $550 million in cash (the
"Purchase Price"). The Purchase Price is subject to adjustment based
upon a statement of assets and liabilities of the Bard Business as
of October 1, 1998. The adjustment shall be made upward or downward
by the amount by which the net book value of the Bard Business
together with a percentage of certain trade accounts receivable of
the Bard Business exceeds or is less than agreed sum. Bard's broad
range of catheter-based technologies includes PTCA balloon catheters
(including perfusion rapid exchange catheters), guidewires, guide
catheters, coronary diagnostic catheters and guidewires, introducers
and vessel closure devices, coronary stents, and various other
components and accessories. The
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Bard Cath Lab Acquisition is expected to substantially increase the
Company's personnel, facilities and product offerings and to enable
the Company to participate in new areas of interventional cardiology
through a wider product portfolio and access to new markets and
customers. However, there can be no assurance that the Company will
successfully participate in such new product areas. The Company has
entered into a bank credit agreement for $600 million in senior
secured credit facilities in order to, among other things, finance
substantially all of the Bard Cath Lab Acquisition. See "--
Liquidity and Capital Resources."
In April 1998, the Company entered into an agreement to
acquire World Medical Manufacturing Corporation ("World Medical"), a
leading independent developer, manufacturer and marketer of medical
devices for the treatment of abdominal aortic aneurysms, for stock
and stock options of the Company valued at approximately $62 million
(the "World Medical Acquisition"). The World Medical Acquisition is
scheduled to be submitted to the World Medical shareholders for
approval at a meeting to be held on December 14, 1998. Consummation
of the World Medical acquisition is subject to a number of
conditions, and there can be no assurance that the World Medical
acquisition will be successfully consummated or, if consummated,
that the Company will successfully participate in such new product
areas. World Medical is conducting development programs for several
medical devices, including the Talent(TM) system, a proprietary
catheter-based stent graft system.
The Company's current analysis of the value of the Talent
development program and expectations regarding commercial
development are consistent with the discussions regarding such
program set forth in Amendment No. 4 to the Company's Registration
Statement on Form S-4 filed on November 12, 1998.
The increase in the Company's sales to date has almost
entirely been due to greater demand for the Company's coronary stent
systems. In order to support increased levels of sales in the future
and to augment its long term competitive position, the Company
anticipates that it will be required to make continuing significant
additional expenditures in manufacturing, research and development
(including clinical study and regulatory costs), sales and marketing,
and administration, both in absolute dollars and as a percentage of
net sales. The Company also expects to incur significant legal
expenses relating to ongoing litigation, including patent litigation.
At various times and to varying degrees throughout the third
and fourth quarterly periods of the fiscal year ended June 30, 1998,
as a result of the significant demands on the Company's production
capabilities related to its entry into the U.S. market, the Company
delivered some customers' orders several weeks after receiving the
orders. The Company normally attempts to deliver products to its
customers within a few days after receiving an order. The Company
does not believe that any of its customer relationships were
materially damaged by the resulting temporary inconvenience and does
not believe that the financial impact on the Company of the backlog,
if any, was material. The Company substantially reduced the backlog
during the fourth quarter of fiscal year 1998 as additional
production resources were developed, and has not, since such time,
ever been in significant backlog with respect to customer orders for
its products. There can be no assurance, however, that a backlog
will not develop in the future and that such backlog will not have a
material adverse effect on the Company's business, financial
condition and results of operations.
Since the commencement of sales of its coronary stent systems
in the United States, several of the Company's competitors have
filed claims against the Company alleging, among other things, that
such stent systems infringe on certain patents of such competitors.
Although the Company continually reviews the scope of relevant U.S.
and foreign patents and related litigation, the question of
infringement involves complex legal and factual issues and is highly
uncertain. There can be no assurance that any conclusion reached by
the Company regarding infringement will be consistent with the
11
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resolution of such issue by a court. If the Company's products are
determined to infringe such patents and it cannot obtain a license
on commercially reasonable terms or modify its current technology or
develop new products to avoid infringement, the Company would be
required to cease its sales of the affected products in the United
States, which could have a material adverse affect on the Company's
business, financial condition and results of operations. See Part
II, Item 1.
The increasing number of devices in the worldwide stent market
and the desire of companies to obtain market share has resulted in
increased price competition. Such competition has, in the past,
caused the Company to reduce prices on its stent systems. The
Company expects that, as the stent industry continues to develop,
competition and pricing pressures will increase. In particular, it
is likely that the FDA will begin to use a streamlined PMA process
once a sufficient number of similar coronary stent products have
been cleared for commercial sale in the United States, and will
permit coronary stent manufacturers to utilize a simplified clinical
trial structure in obtaining marketing approval here as sufficient
stent performance data enters the public domain. Thus, the
regulatory barriers to entry in the United States coronary stent
market that currently exist may, in the future, be lowered
significantly with respect to both new market entrants and new
products introduced by existing U.S. competitors. If the Company is
forced to effect further price reductions in connection with such
increased competition, such reductions would reduce net sales in
future periods if not offset by increased unit sales or other
factors.
The Company intends to expand its operations by promoting new
or complementary products and by expanding the breadth and depth of
its product offerings. The Bard Cath Lab Acquisition, for example,
is expected to enable the Company to participate in new areas of
interventional cardiology through a wider product portfolio and
access to new markets and customers. Expansion of the Company's
operations in this manner requires significant additional expense as
well as substantial managerial, financial and operational resources.
Furthermore, gross margins attributable to new business areas may be
lower than those associated with the Company's existing business
activities. It is expected that gross margins related to products
acquired in the Bard Cath Lab Acquisition will generally be
significantly lower than the Company's current gross margins. There
can be no assurance that the Company will be able to utilize the
Bard Cath Lab Acquisition or other transactions to expand its
operations in a cost-effective or timely manner or to successfully
participate in new product areas. Furthermore, any new product or
business launched by the Company that is not favorably received by
customers may damage the Company's reputation or the AVE brand. The
lack of market acceptance of such efforts or an inability to
generate satisfactory revenues from such expanded product offerings
to offset their costs (which, in the case of the Bard Cath Lab
Acquisition, include significant transaction-related indebtedness)
could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company may continue to choose to expand its operations or
market presence by entering into business combinations,
acquisitions, investments, joint ventures or other strategic
alliances with third parties. Any such transaction, including the
Bard Cath Lab Acquisition, is accompanied by the risks commonly
associated with such transactions, such as the difficulty of
assimilating the operations, technology and personnel of the
combined companies, the potential disruption of the Company's
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ongoing business, the inability to retain key technical and
managerial personnel, the inability of management to maximize the
financial and strategic position of the Company through the
successful integration of acquired businesses, additional expenses
associated with amortization of acquired intangible assets, the
maintenance of uniform standards, controls and policies and the
impairment of relationships with existing employees and customers.
There can be no assurance that the Company will be successful in
overcoming these risks or any other potential problems encountered
in connection with the Bard Cath Lab Acquisition or any other
business combinations, acquisitions, investments, joint ventures or
other strategic alliances, or that such transactions will not have a
material adverse effect on the Company's business, financial
condition and results of operations.
Until April 1996, substantially all of the Company's sales
were to international distributors who resell products to health
care providers. Since then, however, the Company has established
direct sales forces in Canada, France, Germany, Italy, the
Netherlands (servicing the Benelux countries), Singapore, Spain,
Switzerland, the United Kingdom and the United States (with respect
to its coronary stent systems). Additional direct sales forces in
Australia, Japan and India were obtained on October 1, 1998
(subsequent to the close of the quarterly period to which this
report relates) as a result of consummating the Bard Cath Lab
Acquisition, although in Japan the Company currently continues to
sell its coronary stent systems through Japan Lifeline Co., Ltd., an
independent distributor. The Company continually reviews its
existing distributor arrangements and expects from time to time to
establish direct sales forces in other countries. The Company
believes that the establishment and maintenance of direct sales
forces has required and will continue to require significant ongoing
expenditures and additional management resources and has resulted,
and may continue to result, in additional costs to eliminate
existing distributor relationships (including costs relating to
litigation with former distributors).
The Company believes that its computer programs utilized as of
the quarterly period to which this report relates will not be
adversely affected by the "Year 2000" problem. However, the Company
believes that some of the computer programs acquired as part of the
Bard Cath Lab Acquisition are not Year 2000 compliant. As a result,
the Company is considering installing the same computer programs
used by the Company for the management of, among other things,
inventory, customer orders and financial and other operations, at
certain of the facilities acquired through the Bard Cath Lab
Acquisition (the "Bard sites"). The software that will interface
with the hardware and systems utilized at the Bard sites has already
been developed by an independent consultant to Bard. The conversion
of the Bard sites to AVE's existing computer programs using the
developed software or the conversion to an alternative system is
expected to be completed within the next six to twelve months at a
cost to the Company of approximately $1.2 million. The Company is
also considering adapting its operational computer systems to World
Medical's systems if and when the World Medical Acquisition is
consummated. Such conversion would occur over approximately the same
time period and is expected to cost the Company approximately
$300,000. The Company is currently assessing its systems outside of
information systems and the Year 2000 readiness of its suppliers and
customers. The Company is also assessing the type of contingency
plans that may be required in the event that any of its systems or
those of its customers, suppliers or third parties are not
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ready by 2000, and expects such assessments to continue throughout
1999. The Company currently expects that the total costs of such
programs, including the cost of converting Bard's and World
Medical's systems to the Company's systems, will be approximately $2
million. Such total cost estimate does not include potential costs
relating to any customer or other claims or the cost of internal
software and hardware replaced in the normal course of business. In
the reasonable worst case scenario, the installment of the Company's
computer programs at the Bard sites and at World Medical would not
be completed by the Year 2000, or, if completed, would not be
effective in resolving all difficulties related to the Year 2000
problem. In such case, AVE's computer systems would experience
delays or other problems relating to Year 2000, and the Company's
suppliers and customers would experience delays in orders or
payments or other Year 2000 problems. Management does not currently
believe that Year 2000 matters will have a material adverse impact
on the Company's business, financial condition or results of
operations, but there can be no assurance of this and the Company
continues to investigate Year 2000 matters and to evaluate the
potential impact of the Year 2000 problem. In addition, there can be
no assurance that the failure by a supplier or customer or another
third party would not have a material adverse effect on the
Company's business, financial condition or results of operations.
The Company anticipates that its results of operations may
fluctuate for the foreseeable future due to several factors,
including variations in operating expenses, the costs and the
outcome of litigation, the potential disruption of business and
other additional costs and expenses in connection with possible
business combinations, acquisitions, joint ventures or other
strategic alliances, the Company's ability to manufacture its
products efficiently, competition (including pricing pressures), the
timing of new product introductions or transitions to new products,
the costs of establishing direct sales operations, the timing of
research and development expenses (including clinical trial related
expenditures), timing of regulatory and third party reimbursement
approvals, the level of third-party reimbursement, sales by
distributors, the mix of sales among distributors and the Company's
direct sales force, fluctuations in international currency exchange
rates, and seasonal factors impacting the number of elective
angioplasty or stent procedures. In addition, the Company's results
of operations could be affected by the timing of orders from its
distributors, changes in the Company's distributor network
(including expenses in connection with termination of former
distributors), the ability of direct sales force and independent
distributors to effectively promote the Company's products and the
ability of the Company to quickly and cost-effectively establish an
effective direct sales force in targeted countries. The Company's
limited operating history makes accurate prediction of future
operating results difficult or impossible. Although the Company has
experienced growth in recent years and substantial growth in the
most recent quarter, there can be no assurance that, in the future,
the Company will sustain revenue growth or remain profitable on a
quarterly or annual basis or that its growth will be consistent with
predictions made by securities analysts. The Company has
experienced, and may experience in one or more future quarters,
operating results that are below the expectations of public market
analysts and investors. In such event, the price of the Company's
common stock has been, and would likely be, materially and adversely
affected.
Results of Operations - Three Months Ended September 30, 1998 and
1997
14
<PAGE>
Net sales. For the three months ended September 30, 1998, net
sales were $161.3 million, an increase of 514% from $26.3 million in
the comparable period in fiscal 1998. The increase in net sales for
the three-month period was primarily due to significant increases in
net sales of the Company's GFX(R) coronary stent systems in the
United States and in Japan. The Company first began sales of its
coronary stent systems in Japan in June 1997 and in the United States
in late December 1997 (with the U.S. release of the GFX coronary
stent systems in the United States occurring in late March 1998). The
Company expects that coronary stent system sales, particularly of the
Company's GFX family of products, will constitute the substantial
majority of total net sales in the near future.
The Company experienced sales growth in all of its major
markets, including the United States, Europe, and Japan. Sales in the
United States, Europe and Asia represented approximately 76%, 11% and
11%, respectively, of the Company's total net sales during the three
months ended September 30, 1998. Japan Lifeline Co., Ltd., the
Company's Japanese distributor, accounted for approximately 10% of
the Company's total net sales for the three months ended September
30, 1998.
In certain international territories, including most countries
in Europe, the Company suffered some price reductions during the
three months ended September 30, 1998. These price reductions were
attributable both to competitive pressures and, in those countries
outside of the United States where the Company has direct sales
operations, exchange rate fluctuations. If the Company is forced to
effect further price reductions, such reductions would reduce net
sales in future periods if not offset by increased unit sales or
other factors.
Cost of Sales. Cost of sales increased to $24.6 million in the
three months ended September 30, 1998 from $5.5 million in the
comparable period in fiscal 1998, and decreased as a percentage of
net sales to 15.2% in the fiscal 1999 period from 20.9% in the
fiscal 1998 period. The increase in absolute dollars during the
period was primarily a result of the increased volume of products
sold and, to a lesser extent, the costs of additional manufacturing
capacity and personnel necessary to support increased sales volume.
The decrease as a percentage of net sales during the period was
primarily the result of increased aggregate average selling prices
(primarily due to U.S. sales), leveraging certain fixed overhead
expenses across a higher base of sales and, to a lesser extent,
decreased average unit manufacturing costs.
The Company expects cost of sales to continue to increase in
absolute dollars as the Company increases the volume of products
sold and adds additional manufacturing capacity and personnel.
Primarily as a result of the Bard Cath Lab Acquisition, the Company
expects cost of sales as a percentage of net sales to increase
significantly from the level experienced for the three months ended
September 30, 1998.
Research and Development. Research and development expenses,
which include clinical study and regulatory costs, increased to
$14.9 million in the three months ended September 30, 1998 from $5.5
million in the comparable period in fiscal 1998, and decreased as a
percentage of net sales to 9.3% in the fiscal 1999 period from 20.9%
in the fiscal 1998 period. The increase in absolute dollars during
the period was primarily due to the addition of research and
development personnel, increased levels of spending in connection
with clinical studies relating to the GFX, GFX 2.5, and GFX XL
coronary stent systems and costs incurred in connection with the
development of
15
<PAGE>
additional products. In addition, during the period the Company
incurred approximately $2.3 million in legal expenses relating to
ongoing patent litigation and a $1.8 million provision for a loan
made to CorMedica Corporation, a development stage company. The
decrease as a percentage of net sales during the period was
primarily the result of leveraging research and development expenses
across a higher base of sales.
The Company expects research and development expenses to
continue to increase in absolute dollars as the Company increases
clinical trial activities, pursues the development of new products
and incurs increased legal costs related to patent litigation. If
the Company is successful in continuing to leverage research and
development expenses across a higher base of sales, the Company
expects such expenses as a percentage of net sales to remain at a
level generally similar to that experienced for the three months
ended September 30, 1998.
Selling, General and Administrative. Selling, general and
administrative expenses increased in absolute dollars to $36.4
million in the three months ended September 30, 1998 from $7.5
million in the comparable period in fiscal 1998, and decreased as a
percentage of net sales to 22.6% in the fiscal 1999 period from
28.6% in the fiscal 1998 period. The increase during the period in
absolute dollars primarily reflected additional costs of sales,
marketing and other personnel necessary to support the Company's
higher level of operations, including the commencement of direct
sales operations in the United States in late December 1997. The
decrease in percentage of sales for the period was primarily the
result of leveraging sales, general and administrative expenses
across a higher base of sales.
The Company expects selling, general and administrative costs
(excluding the effect of the special general employee bonus) to
continue to increase in absolute dollars in the future primarily due
to increased levels of sales, product support and manufacturing
operations, as well as increases in finance, legal and
administrative costs. If the Company is successful in continuing to
leverage sales, general and administrative expenses across a higher
base of sales, the Company expects such expenses as a percentage of
net sales to remain at a level generally similar to that experienced
in the three months ended September 30, 1998.
Interest and Other Income. The Company had interest and other
income of $3.3 million in the three months ended September 30, 1998,
compared to $1.0 million in the comparable period in fiscal 1998.
The increases during the period were primarily due to higher cash
and short-term investment balances.
The Company expects to incur interest expense of approximately
$10 million for the next three quarters due to the $550 million in
indebtedness incurred by the Company in connection with the Bard
Cath Lab Acquisition.
Provision for Income Taxes. The Company's provision for income
taxes was $35.5 million in the three months ended September 30,
1998, compared to $3.1 million in the comparable period in fiscal
1998. The increase in this provision during the period was a result
of the Company's higher earnings.
Net Income. The Company had net income of $53.2 million, or
33.0% of net sales, in the three months ended September 30, 1998
compared to net income of $5.7 million, or 21.7% of net sales, for
the comparable period in fiscal 1998.
16
<PAGE>
Liquidity and Capital Resources
Net cash provided by operating activities was $90.8 million
for the three months ended September 30, 1998. Excluding the effect
of transactions in short-term investments, the Company had net cash
provided by operating activities of $60.7 million for the
three-month period, principally arising as a result of positive net
income for the period. Cash, cash equivalents and short-term
investments totaled $232.3 million at September 30, 1998 as compared
to $175.1 million at June 30, 1998. Working capital increased to
$259.1 million at September 30, 1998 as compared to $204.5 million
at June 30, 1998. Inventories increased to $11.5 million at
September 30, 1998 from $9.5 million at June 30, 1998, primarily due
to increased levels of sales activity. The Company expects accounts
receivable and inventories to increase in absolute dollar amounts to
the extent sales increase.
A significant portion of the Company's revenues are currently
derived from sales outside of the United States. As a result, the
Company's financial results will be affected by changes in foreign
currency exchange rates to the extent that such sales may be
denominated in foreign currency. The Company is currently exposed to
fluctuations in currencies in western Europe and in Singapore. During
fiscal 1997, the Company began a program of from time to time
entering into derivative financial instruments in the form of forward
exchange contracts in order to reduce the uncertainty of foreign
exchange rate movement on inter-Company sales denominated in foreign
currencies. These contracts are designed to specifically hedge
against gains or losses incurred from foreign currency transactions
and are not used for trading or speculative purposes. Forward
exchange contracts are used to hedge material foreign
currency-denominated receivables and payables. They are generally
settled between three to six months with gains or losses recorded in
"Selling, general and administrative" expenses to offset gains or
losses on foreign currency receivables and payables. As of September
30, 1998, however, the Company had no such currency hedging
instruments outstanding.
In connection with the Bard Cath Lab Acquisition, the Company
entered into a bank credit agreement for $600 million in senior
secured credit facilities, of which $200 million are five-year term
loans (the "Term A Loans"), $350 million are six-year term loans (the
"Term B Loans") and $50 million is a five-year revolving credit
facility (the "Revolving Loans"). The term loans amortize and are
prepayable at any time, subject to customary breakage provisions.
Initial interest rates are the higher of the London InterBank Offered
Rate ("LIBOR") plus 2.00% or an agreed pricing grid for the Term A
Loans and the Revolving Facilities and at the higher of LIBOR plus
2.25% or an agreed pricing grid for the Term B Loans. The Term A
Loans, the Term B Loans and the Revolving Loans outstanding will be
reduced by certain mandatory prepayments, including (i) 100% of the
net proceeds from debt issuances, subject to certain exceptions, (ii)
100% of the net proceeds from extraordinary asset sales, subject to
certain exceptions, (iii) 50% of the first $200 million of the net
cash proceeds from any issuances of equity securities of the Company
and 50% of any further net cash proceeds from issuances of equity
securities of the Company if the Company's then current leverage
ratio exceeds 2.5, and (iv) 50% of the Company's consolidated annual
excess cash flow if the Company's then current leverage ratio exceeds
2.5. The bank credit agreement contains restrictive financial
covenants relating to a maximum leverage ratio, a minimum fixed
charge coverage ratio, and a minimum net worth of the Company.
17
<PAGE>
The bank credit agreement also contains customary negative covenants,
including restrictions on (i) the incurrence of additional debt, (ii)
payment of restricted payments, (iii) liens, (iv) sales of assets,
(v) acquisitions, mergers or similar combinations, (vii) transactions
with affiliates, and (viii) capital expenditures. The senior secured
credit facilities are secured by substantially all the operating
assets of the Company and its subsidiaries and a pledge of the
capital stock of the Company's material subsidiaries, including a
newly formed subsidiary that holds a substantial portion of the
assets acquired from Bard.
The Company's high degree of leverage could have important and
materially adverse consequences to the stockholders of the Company,
including the following: (i) the Company's ability to obtain
additional financing for working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes may be
impaired in the future; (ii) a substantial portion of the Company's
current and expected cash flow from operations must be dedicated to
the payment of principal and interest on its indebtedness, thereby
reducing the funds available to the Company for other purposes; (iii)
the Company's borrowings under such senior secured credit facilities
will be at variable rates of interest, which will expose the Company
to the risk of increased interest rates; (iv) the indebtedness is
secured, which, among other things, restricts the Company's ability
to dispose of assets; (v) the Company is substantially more leveraged
than certain of its competitors, which may place the Company at a
competitive disadvantage; and (vi) the Company's substantial degree
of leverage may limit its flexibility to adjust to changing market
conditions, reduce its ability to withstand competitive pressures and
make it more vulnerable to a downturn in economic conditions or in
its businesses.
The Company expects to incur substantial additional costs,
including costs relating to capital equipment and other costs
associated with expansion of the Company's manufacturing
capabilities, increased sales and marketing activities (including the
establishment of direct sales forces internationally), and increased
research and development expenditures in connection with seeking
regulatory approvals and conducting additional clinical trials. The
Company also intends to expand its operations by promoting new or
complementary products and by expanding the breadth and depth of its
product offerings, and may do so by entering into business
combinations, acquisitions, investments, joint ventures or other
strategic alliances with third parties. The Company may require
additional equity or debt financing to address its working capital
needs, to provide funding for capital expenditures in the future or
to finance any such acquisitions or strategic alliances. Furthermore,
any additional equity financing may be dilutive to stockholders, and
debt financing, if available, may involve restrictive covenants and
may increase the Company's leverage. There can be no assurance that
events in the future will not require the Company to seek additional
capital or, if so required, that it will be available on terms
acceptable to the Company.
18
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Part I, Item 3 ("Legal Proceedings") of
the Company's previously filed Annual Report on Form 10-K for the
fiscal year ended June 30, 1998.
ESS Litigation. As previously disclosed, a number of claims
have been brought against the Company and certain of its officers,
directors and shareholders in Texas courts by Dr. Azam Anwar and Benito
Hidalgo concerning the Company's acquisition of Endothelial Support
Systems, Inc. (subsequently known as Endovascular Support Systems,
Inc.) ("ESS"). The trial date has been continued to January 25, 1999
for the several actions and related counterclaims.
From time to time, the Company is involved in other legal
proceedings arising in the ordinary course of its business. As of the
date hereof, except as previously disclosed or discussed herein, the
Company is not a party to any legal proceedings with respect to which
an adverse outcome would, in management's opinion, have a material
adverse effect on the Company's business, financial condition or
results of operations.
Item 2. Change in Securities and Use of Proceeds
The effective date of the Company's registration statement
filed on Form S-1 under the Securities Act of 1933 (No. 333-00824) was
April 2, 1996 (the "Registration Statement"). The class of securities
registered was Common Stock. The offering commenced on April 2, 1996
and all securities were sold in the offering. The managing underwriters
for the offering were Cowen & Company, Bear, Stearns & Co. Inc. and
J.P. Morgan & Co.
Pursuant to the Registration Statement, the Company sold
8,500,000 shares of Common Stock for its own account, for an aggregate
offering price of $89,250,000, and 3,000,000 shares of Common Stock for
the account of certain selling stockholders, for an aggregate offering
price of $31,500,000.
The Company incurred expenses of approximately $7,897,500 in
connection with the offering, of which $6,247,500 represented
underwriting discounts and commissions and $1,650,000 represented
estimated other expenses. All such expenses were direct or indirect
payments to others. The net offering proceeds to the Company after
total expenses was approximately $81,352,000.
The Company has used approximately $53,500,000 of the net
proceeds of the offering, of which $38,600,000 represents payments
relating to the construction of plant, building and facilities and
$14,900,000 represents payments relating to the purchase of real
estate. All such payments were direct or indirect payments to others.
All other net proceeds of the offering have been invested in various
short-term investments. The use of the proceeds of the offering does
not represent a material change in the use of proceeds described in the
prospectus that formed a part of the Registration Statement.
19
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.34 Credit Agreement, dated as of September 30, 1998, among
Arterial Vascular Engineering, Inc., as Borrower, the lenders
listed therein, as Lenders, DLJ Capital Funding, Inc., as
Syndication Agent, Paribas, as Documentation Agent, and Royal
Bank of Canada, as Administrative Agent, and exhibits thereto.
27 Financial Data Schedule.
(b) Reports on Form 8-K
On July 23, 1998, the Company filed a Form 8-K with respect to its
agreement to acquire the coronary catheter lab business of C.R. Bard,
Inc. ("Bard"), as well as rights to the supply by Bard of certain
materials, for approximately $550 million in cash, subject to
adjustment.
Report Date: July 9, 1998
Filing Date: July 23, 1998
Item 5 -- Other Events
Item 7 -- Exhibits
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARTERIAL VASCULAR ENGINEERING, INC.
Date: November 13, 1998 /s/ John D. Miller
--------------------------------------------
John D. Miller
Chief Financial Officer
(Principal Financial and Accounting Officer)
21
<PAGE>
INDEX TO EXHIBITS
Exhibit
- - -------
10.34 Credit Agreement, dated as of September 30, 1998, among Arterial
Vascular Engineering, Inc., as Borrower, the lenders listed therein, as
Lenders, DLJ Capital Funding, Inc., as Syndication Agent, Paribas, as
Documentation Agent, and Royal Bank of Canada, as Administrative Agent,
and exhibits thereto.
27 Financial Data Schedule
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 1998
AMONG
ARTERIAL VASCULAR ENGINEERING, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent,
PARIBAS,
as Documentation Agent,
and
ROYAL BANK OF CANADA,
as Administrative Agent
ARRANGED BY:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
- - --------------------------------------------------------------------------------
S-1
<PAGE>
<TABLE>
ARTERIAL VASCULAR ENGINEERING, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C> <C>
Section 1. DEFINITIONS................................................................................ 2
1.1 Certain Defined Terms...................................................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement............................................................... 40
1.3 Other Definitional Provisions and Rules of Construction.................................... 40
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS................................................. 40
2.1 Commitments; Making of Loans; the Register; Notes.......................................... 40
2.2 Interest on the Loans...................................................................... 49
2.3 Fees....................................................................................... 53
2.4 Repayments, Prepayments and Reductions in Revolving Loan
Commitments; General Provisions Regarding Payments;
Application of Proceeds of Collateral and Payments Under
Subsidiary Guaranty........................................................................ 54
2.5 Use of Proceeds............................................................................ 65
2.6 Special Provisions Governing Eurodollar Rate Loans......................................... 65
2.7 Increased Costs; Taxes; Capital Adequacy................................................... 68
2.8 Obligation of Lenders and Issuing Lenders to Mitigate...................................... 73
Section 3. LETTERS OF CREDIT.......................................................................... 73
3.1 Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein..................................................................... 73
3.2 Letter of Credit Fees...................................................................... 77
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of
Credit..................................................................................... 78
3.4 Obligations Absolute....................................................................... 81
3.5 Indemnification; Nature of Issuing Lenders' Duties......................................... 82
3.6 Increased Costs and Taxes Relating to Letters of Credit.................................... 83
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT.................................................. 85
4.1 Conditions to Term Loans................................................................... 85
4.2 Conditions to All Loans.................................................................... 90
4.3 Conditions to Letters of Credit............................................................ 91
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES.................................................. 92
(i)
<PAGE>
Page
----
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries............................................................................... 92
5.2 Authorization of Borrowing, etc............................................................ 93
5.3 Financial Condition........................................................................ 94
5.4 No Material Adverse Change; No Restricted Junior Payments.................................. 94
5.5 Title to Properties; Liens; Real Property.................................................. 94
5.6 Litigation; Adverse Facts.................................................................. 95
5.7 Payment of Taxes........................................................................... 95
5.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts......................................................................... 96
5.9 Governmental Regulation.................................................................... 96
5.10 Securities Activities...................................................................... 96
5.11 Employee Benefit Plans..................................................................... 97
5.12 Certain Fees............................................................................... 97
5.13 Environmental Protection................................................................... 98
5.14 Employee Matters........................................................................... 99
5.15 Solvency................................................................................... 99
5.16 Matters Relating to Collateral............................................................. 99
5.17 Related Agreements.........................................................................100
5.18 Disclosure.................................................................................101
Section 6. COMPANY'S AFFIRMATIVE COVENANTS...........................................................102
6.1 Financial Statements and Other Reports.....................................................102
6.2 Corporate Existence, etc...................................................................108
6.3 Payment of Taxes and Claims; Tax Consolidation.............................................108
6.4 Maintenance of Properties; Insurance; Application of Net
Insurance/ Condemnation Proceeds...........................................................109
6.5 Inspection Rights; Audits of Inventory and Accounts Receivable;
Lender Meeting.............................................................................110
6.6 Compliance with Laws, etc..................................................................111
6.7 Environmental Review and Investigation, Disclosure, Etc.;
Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws..................................111
6.8 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and Future
Subsidiaries...............................................................................114
6.9 Matters Relating to Additional Real Property Collateral....................................115
6.10 Interest Rate Protection...................................................................116
6.11 Year 2000 Compliance.......................................................................116
Section 7. COMPANY'S NEGATIVE COVENANTS...............................................................116
7.1 Indebtedness...............................................................................116
(ii)
<PAGE>
Page
----
7.2 Liens and Related Matters..................................................................118
7.3 Investments; Joint Ventures................................................................119
7.4 Contingent Obligations.....................................................................120
7.5 Restricted Junior Payments.................................................................121
7.6 Financial Covenants........................................................................121
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions...............................................................................123
7.8 Consolidated Capital Expenditures..........................................................125
7.9 Sale or Discount of Receivables............................................................126
7.10 Transactions with Shareholders and Affiliates..............................................126
7.11 Disposal of Subsidiary Stock...............................................................126
7.12 Conduct of Business........................................................................126
7.13 Amendments or Waivers of Certain Related Agreements........................................127
7.14 Fiscal Year................................................................................127
Section 8. EVENTS OF DEFAULT..........................................................................127
8.1 Failure to Make Payments When Due..........................................................127
8.2 Default in Other Agreements................................................................128
8.3 Breach of Certain Covenants................................................................128
8.4 Breach of Warranty.........................................................................128
8.5 Other Defaults Under Loan Documents........................................................128
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.......................................129
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.........................................129
8.8 Judgments and Attachments..................................................................129
8.9 Dissolution................................................................................130
8.10 Employee Benefit Plans.....................................................................130
8.11 Change in Control..........................................................................130
8.12 Invalidity of Subsidiary Guaranty; Failure of Security;
Repudiation of Obligations.................................................................130
8.13 Failure to Consummate Acquisition..........................................................131
Section 9. ADMINISTRATIVE AGENT......................................................................132
9.1 Appointment................................................................................132
9.2 Powers and Duties; General Immunity........................................................133
9.3 Representations and Warranties; No Responsibility For Appraisal
of Creditworthiness........................................................................135
9.4 Right to Indemnity.........................................................................135
9.5 Successor Agents and Swing Line Lender.....................................................136
9.6 Collateral Documents and Subsidiary Guaranty...............................................137
Section 10. MISCELLANEOUS..............................................................................138
10.1 Assignments and Participations in Loans and Letters of Credit..............................138
(iii)
<PAGE>
Page
----
10.2 Expenses...................................................................................141
10.3 Indemnity..................................................................................142
10.4 Set-Off; Security Interest in Deposit Accounts.............................................143
10.5 Ratable Sharing............................................................................144
10.6 Amendments and Waivers.....................................................................145
10.7 Independence of Covenants..................................................................146
10.8 Notices....................................................................................147
10.9 Survival of Representations, Warranties and Agreements.....................................147
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative......................................147
10.11 Marshalling; Payments Set Aside............................................................148
10.12 Severability...............................................................................148
10.13 Obligations Several; Independent Nature of Lenders' Rights.................................148
10.14 Headings...................................................................................148
10.15 Applicable Law.............................................................................149
10.16 Successors and Assigns.....................................................................149
10.17 Consent to Jurisdiction and Service of Process.............................................149
10.18 Waiver of Jury Trial.......................................................................150
10.19 Confidentiality............................................................................151
10.20 Counterparts; Effectiveness................................................................151
Signature pages ...................................................................................S-1
(iv)
</TABLE>
<PAGE>
EXHIBITS
EXHIBIT I FORM OF NOTICE OF BORROWING
EXHIBIT II FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
EXHIBIT IV FORM OF TRANCHE A TERM NOTE
EXHIBIT V FORM OF TRANCHE B TERM NOTE
EXHIBIT VI FORM OF REVOLVING NOTE
EXHIBIT VII FORM OF SWING LINE NOTE
EXHIBIT VIII FORM OF COMPLIANCE CERTIFICATE
EXHIBIT IX FORM OF OPINION OF COOLEY GODWARD LLP
EXHIBIT X FORM OF OPINION OF O'MELVENY & MYERS LLP
EXHIBIT XI FORM OF ASSIGNMENT AGREEMENT
EXHIBIT XII FORM OF MORTGAGE
EXHIBIT XIII FORM OF CERTIFICATE RE NON-BANK STATUS
EXHIBIT XIV FORM OF COLLATERAL ACCOUNT AGREEMENT
EXHIBIT XV FORM OF COMPANY PLEDGE AGREEMENT
EXHIBIT XVI FORM OF SECURITY AGREEMENT
EXHIBIT XVII FORM OF SUBSIDIARY GUARANTY
EXHIBIT XVIII FORM OF SUBSIDIARY PLEDGE AGREEMENT
EXHIBIT XIX FINANCIAL CONDITION CERTIFICATE
EXHIBIT XX FORM OF PRICING LEVEL DETERMINATION CERTIFICATE
SCHEDULES
Schedule 2.1 Lender Commitments
Schedule 4.1B Corporate/Capital Structure
Schedule 4.1G Real Property Subject to Mortgage
Schedule 5.1 State/County of Organization; Subsidiaries; Ownership Interest
Schedule 5.2B Required Shareholder Consents; Consents under Contractual
Obligations
Schedule 5.2C Required Governmental Consents
Schedule 5.5 Owned and Leased Real Property
Schedule 5.6 Litigation
Schedule 5.8 Material Contracts/Defaults
Schedule 5.11 Employee Benefits Plans
Schedule 5.12 Brokers'/Finders' Fees
Schedule 5.13 Environmental
Schedule 5.19 Patents/Trademarks/Copyrights
Schedule 7.1 Existing Indebtedness
Schedule 7.2 Existing Liens
Schedule 7.3 Existing and Proposed Investments
Schedule 7.4 Existing Contingent Obligations
Schedule 7.10 Existing Transactions with Affiliates
(v)
<PAGE>
Schedule 7.12 Description of Business
(vi)
<PAGE>
ARTERIAL VASCULAR ENGINEERING, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of September 30, 1998 and
entered into by and among ARTERIAL VASCULAR ENGINEERING, INC., a Delaware
corporation ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a "Lender" and
collectively as "Lenders"), DLJ CAPITAL FUNDING, INC., as Syndication Agent (the
"Syndication Agent"), PARIBAS, as Documentation Agent (the "Documentation
Agent") and ROYAL BANK OF CANADA ("Royal Bank of Canada"), as administrative
agent for Lenders (in such capacity, "Administrative Agent").
R E C I T A L S
WHEREAS, on the Closing Date, Company or one or more of its
Designees (as defined below) will purchase pursuant to the Acquisition Agreement
all of the outstanding shares of capital stock of the Bard Catheter Subsidiaries
(as defined below) and those assets of C.R. Bard, Inc. which, together with the
Bard Catheter Subsidiaries, comprise the Bard Catheter Lab Business;
WHEREAS, Lenders have agreed to extend certain credit
facilities to Company, the proceeds of which will be used (i) together with the
Company Cash Contribution, to fund the Acquisition Financing Requirements and
(ii) to provide financing for working capital and other general corporate
purposes of Company and its Subsidiaries;
WHEREAS, Company desires to secure all of the Obligations
hereunder and under the other Loan Documents by granting to Administrative
Agent, on behalf of Lenders, a First Priority Lien on substantially all of its
real, personal and mixed property, including a pledge of all of the capital
stock of its Domestic Subsidiaries and 65% of the stock of its Foreign
Subsidiaries; and
WHEREAS, all of the Domestic Subsidiaries of Company have
agreed to guarantee the Obligations hereunder and under the other Loan Documents
and to secure their
1
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guaranties by granting to Administrative Agent, for the benefit of Lenders, a
First Priority Lien on substantially all of their respective real, personal and
mixed property, including a pledge of all of the capital stock of each of their
respective Domestic Subsidiaries and 65% of the stock of each of their
respective Foreign Subsidiaries:
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders and
Agents agree as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the
following meanings:
"Acquisition" means the transactions provided in and/or
contemplated by the Acquisition Agreement.
"Acquisition Agreement" means that certain Stock and Asset
Purchase Agreement by and between Seller and Company dated as of July 9, 1998,
in the form delivered to Agents and Lenders prior to their execution of this
Agreement and as such agreement may be amended from time to time thereafter to
the extent permitted under subsection 7.13.
"Acquisition Financing Requirements" means the aggregate of all
amounts necessary (i) to finance the purchase price payable in connection with
the Acquisition (subject to the Acquisition Purchase Price Adjustment) and (ii)
to pay Transaction Costs.
"Acquisition Purchase Price Adjustment" means the adjustment to
the purchase price for the Acquisition to be paid to Seller under the
Acquisition Agreement set forth in Section 1.3 of the Acquisition Agreement.
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, the rate per annum (rounded upwards, if necessary, to the next higher
1/100%) equal to (x) the Eurodollar Rate divided by (y) a percentage equal to
1.00% minus the stated maximum rate of all reserve requirements (including any
marginal, emergency, supplemental, special or other reserves) applicable on such
Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Administrative Agent" has the meaning assigned to that term in
the introduction to this Agreement (which includes such administrative agent
also serving in its capacity as agent under the Collateral Documents) and also
means and includes any successor Administrative Agent appointed pursuant to
subsection 9.5A.
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"Affected Lender" has the meaning assigned to that term in
subsection 2.6C.
"Affected Loan" has the meaning assigned to that term in
subsection 2.6C.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agents" means, collectively, the Syndication Agent and the
Administrative Agent, and also means and includes any successor Syndication
Agent or Administrative Agent, as the case may be, appointed pursuant to
subsection 9.5A, and each is individually referred to as an "Agent".
"Agreement" means this Credit Agreement dated as of September
30, 1998, as it may be amended, supplemented or otherwise modified from time to
time.
"Applicable Commitment Fee Percentage" means, as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Pricing Level:
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Pricing Applicable Commitment
Level Fee Percentage
- - ------------------------ ---------------------------------
Level 1 0.375%
Level 2 0.45%
Level 3 0.50%
Level 4 0.50%
Level 5 0.50%
"Applicable Tranche A Base Rate Margin" means, as of any date
of determination, a percentage per annum as set forth below opposite the
applicable Pricing Level:
Pricing Applicable Tranche A
Level Base Rate Margin
- - ------------------------ ---------------------------------
Level 1 0.50%
Level 2 0.75%
Level 3 1.00%
Level 4 1.25%
Level 5 1.50%
; provided that for the first six months after the Closing Date, the Applicable
Tranche A Base Rate Margin shall be the higher of 1.00% per annum or the
Applicable Tranche A Base Rate Margin shown on the chart above; and provided
further that if the Consolidated Leverage Ratio is less than or equal to
1.50:1.00 for two consecutive Fiscal Quarters tested as of the last day of the
first Fiscal Quarter subsequent to the one year anniversary of the Closing Date
(which testing date would be December 31, 1999 for the two consecutive Fiscal
Quarters beginning July 1, 1999, assuming the Closing Date is September 30,
1998) or as of the last day of any Fiscal Quarter thereafter, the Applicable
Tranche A Base Rate Margin shall be the percentages set forth less 0.25% after
the first Business Day after the delivery of the Pricing Level Determination
Certificate for the period ending on the last day of the second such consecutive
Fiscal Quarter, and such 0.25% reduction shall remain in effect thereafter
during such period as the Consolidated Leverage Ratio shall be less than or
equal to exceed 1.50:1.00; and provided still further that if, following any
such 0.25% reduction in accordance with this definition, the Consolidated
Leverage Ratio is greater than 1.50 to 1.00 for two consecutive Fiscal Quarters,
such 0.25% reduction shall cease to be in effect after the first Business Day
after the delivery of the Pricing Level Determination Certificate for the period
ending on the last day of the second such consecutive Fiscal Quarter.
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"Applicable Tranche B Base Rate Margin" means, as of any date
of determination, a percentage per annum as set forth below opposite the
applicable Pricing Level:
Pricing Applicable Tranche B
Level Base Rate Margin
- - ------------------------ ---------------------------------
Level 1 1.00%
Level 2 1.00%
Level 3 1.25%
Level 4 1.50%
Level 5 1.75%
; provided that for the first six months after the Closing Date, the Applicable
Tranche B Base Rate Margin shall be the higher of 1.25% per annum or the
Applicable Tranche B Base Rate Margin shown on the chart above; and provided
further that if the Consolidated Leverage Ratio is less than or equal to
1.50:1.00 for two consecutive Fiscal Quarters tested as of the last day of the
first Fiscal Quarter subsequent to the one year anniversary of the Closing Date
(which testing date would be December 31, 1999 for the two consecutive Fiscal
Quarters beginning July 1, 1999, assuming the Closing Date is September 30,
1998) or as of the last day of any Fiscal Quarter thereafter, the Applicable
Tranche B Base Rate Margin shall be the percentage set forth less 0.25% after
the first Business Day after the delivery of the Pricing Level Determination
Certificate for the period ending on the last day of the second such consecutive
Fiscal Quarter, and such 0.25% reduction shall remain in effect thereafter
during such period as the Consolidated Leverage Ratio shall be less than or
equal to 1.50:1.00; and provided still further that if, following any such 0.25%
reduction in accordance with this definition, the Consolidated Leverage Ratio is
greater than 1.50 to 1.00 for two consecutive Fiscal Quarters, such 0.25%
reduction shall cease to be in effect after the first Business Day after the
delivery of the Pricing Level Determination Certificate for the period ending on
the last day of the second such consecutive Fiscal Quarter.
"Applicable Tranche A Eurodollar Margin" means, as of any date
of determination, a percentage per annum as set forth below opposite the
applicable Pricing Level:
Pricing Applicable Tranche A
Level Eurodollar Margin
- - ------------------------ ---------------------------------
Level 1 1.50%
Level 2 1.75%
Level 3 2.00%
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Level 4 2.25%
Level 5 2.50%
; provided that for the first six months after the Closing Date, the Applicable
Tranche A Eurodollar Margin shall be the higher of 2.00% per annum or the
Applicable Tranche A Eurodollar Margin shown on the chart above and provided
further that if the Consolidated Leverage Ratio is less than or equal to
1.50:1.00 for two consecutive Fiscal Quarters tested as of the last day of the
first Fiscal Quarter subsequent to the one year anniversary of the Closing Date
(which testing date would be December 31, 1999 for the two consecutive Fiscal
Quarters beginning July 1, 1999, assuming the Closing Date is September 30,
1998) or as of the last day of any fiscal Quarter thereafter, the Applicable
Tranche A Eurodollar Margin shall be the percentage set forth less 0.25% after
the first Business Day after the delivery of the Pricing Level Determination
Certificate for the period ending on the last day of the second such consecutive
Fiscal Quarter, and such 0.25% reduction shall remain in effect thereafter
during such period as the Consolidated Leverage Ratio shall be less than or
equal to exceed 1.50:1.00; and provided still further that if, following any
such 0.25% reduction in accordance with this definition, the Consolidated
Leverage Ratio is greater than 1.50 to 1.00 for two consecutive Fiscal Quarters,
such 0.25% reduction shall cease to be in effect after the first Business Day
after the delivery of the Pricing Level Determination Certificate for the period
ending on the last day of the second such consecutive Fiscal Quarter.
"Applicable Tranche B Eurodollar Margin" means, as of any date
of determination, a percentage per annum as set forth below opposite the
applicable Pricing Level:
Pricing Applicable Tranche B
Level Eurodollar Margin
- - ------------------------ ---------------------------------
Level 1 2.00%
Level 2 2.00%
Level 3 2.25%
Level 4 2.50%
Level 5 2.75%
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; provided that for the first six months after the Closing Date, the Applicable
Tranche B Eurodollar Margin shall be the higher of 2.25% per annum or the
Applicable Tranche B Eurodollar Margin shown on the chart above; and provided
further that if the Consolidated Leverage Ratio is less than or equal to
1.50:1.00 for two consecutive Fiscal Quarters tested as of the last day of the
first Fiscal Quarter subsequent to the one year anniversary of the Closing Date
(which testing date would be December 31, 1999 for the two consecutive Fiscal
Quarters beginning July 1, 1999, assuming the Closing Date is September 30,
1998) or as of the last day of any Fiscal Quarter thereafter, the Applicable
Tranche B Eurodollar Margin shall be the percentage set forth less 0.25% after
the first Business Day after the delivery of the Pricing Level Determination
Certificate for the period ending on the last day of the second such consecutive
Fiscal Quarter, and such 0.25% reduction shall remain in effect thereafter
during such period as the Consolidated Leverage Ratio shall be less than or
equal to exceed 1.50:1.00; and provided still further that if, following any
such 0.25% reduction in accordance with this definition, the Consolidated
Leverage Ratio is greater than 1.50 to 1.00 for two consecutive Fiscal Quarters,
such 0.25% reduction shall cease to be in effect after the first Business Day
after the delivery of the Pricing Level Determination Certificate for the period
ending on the last day of the second such consecutive Fiscal Quarter.
"Arranger" means Donaldson, Lufkin & Jenrette Securities
Corporation, in its capacity as arranger under this Agreement.
"Asset Sale" means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of its wholly-owned
Subsidiaries of (i) any of the stock of any of Company's Subsidiaries, (ii)
substantially all of the assets of any division or line of business of Company
or any of its Subsidiaries, or (iii) any other assets (whether tangible or
intangible) of Company or any of its Subsidiaries (other than (a) inventory or
assets sold or otherwise disposed of in the ordinary course of business, (b)
equipment, fixtures, supplies or materials that are obsolete or worn out, (c)
any such other assets to the extent that the aggregate Net Asset Sale Proceeds
of such assets sold in any single transaction or related series of transactions
is equal to $1,000,000 or less, (d) any sales and concurrent leasebacks not
prohibited by this Agreement and (e) any sales of Cash Equivalents).
"Assignment Agreement" means an Assignment Agreement in
substantially the form of Exhibit XI annexed hereto.
"Assumed Permitted Acquisition Indebtedness" means the existing
Indebtedness of an entity assumed in connection with a Permitted Acquisition;
provided that (i) such Indebtedness was not incurred by such entity or the
Person owning and/or operating such entity in connection with or for the purpose
of financing such Permitted Acquisition and (ii) such Indebtedness is unsecured
or was secured prior to the date of the Permitted Acquisition; provided further
such security extends only to the assets being acquired.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"Bard Catheter Lab Business" or "BCL" means the Bard Catheter
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Subsidiaries, a minority interest in CorMedica Corporation, a Delaware
corporation, and certain assets, in each case to be acquired pursuant to the
Acquisition Agreement.
"Bard Catheter Subsidiaries" means Bard Japan Limited, a
Japanese corporation, C.R. Bard Ireland Ltd., an Irish corporation, and Bard
Galway Ltd., an Irish corporation, and, if their respective share capital is
purchased pursuant to the Acquisition Agreement (subject to the conditions set
forth therein relating to obtaining the prior consent from former holders of
their share capital) Milu S.A., a Luxembourg corporation, and X-trode S.r.L., an
Italian corporation.
"Base Rate" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate as provided in subsection 2.2A.
"Business Day" means (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or California or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close, and (ii) with respect to all
notices, determinations, fundings and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day
described in clause (i) above and that is also a day for trading by and between
banks in Dollar deposits in the London interbank market.
"Capital Lease", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means, as at any date of determination, (i)
marketable Securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States, the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or Moody's; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations)
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<PAGE>
of not less than $100,000,000; and (v) shares of any money market mutual fund
that (a) has at least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's and (vi) such other short-term cash equivalent-type investments
made in accordance with Company's policies approved by Agents from time to time.
"Certificate re Non-Bank Status" means a certificate
substantially in the form of Exhibit XIII annexed hereto delivered by a Lender
to Administrative Agent pursuant to subsection 2.7B(iii).
"Change of Control" means (i) any sale, transfer or other
conveyance, whether direct or indirect, of a majority of the fair market value
of the assets of Company, on a consolidated basis, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction, any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than an Excluded Person or Excluded Group, is or becomes the "beneficial owner"
(as such term is used in Rule 13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of more than 30% of the equity of the transferee, (ii)
any "person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable), other than an
Excluded Person or Excluded Group, is or becomes the "beneficial owner" (as such
term is used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly
or indirectly, of more than 30% of the equity of Company then outstanding
normally entitled to vote in elections of directors or (iii) during any period
of 12 consecutive months after the date hereof, individuals who at the beginning
of any such 12-month period constituted the Board of Directors of Company
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of Company was approved by a vote of
51% or more of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute 51% or more of the
Board of Directors of Company then in office.
"Class" means, as applied to Lenders, each of the following two
classes of Lenders: (i) Lenders having Tranche A Term Loan Exposure and/or
Revolving Loan Exposure (taken together as a single class) and (ii) Lenders
having Tranche B Term Loan Exposure.
"Closing Date" means the date on or before October 30, 1998, on
which the initial Loans are made.
"Collateral" means, collectively, all of the real, personal and
mixed property (including capital stock) (other than any Excluded Collateral) in
which Liens are purported to be granted pursuant to the Collateral Documents as
security for the Obligations.
"Collateral Account" has the meaning assigned to that term in
the Collateral Account Agreement.
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"Collateral Account Agreement" means the Collateral Account
Agreement executed and delivered by Company and Administrative Agent on the
Closing Date, substantially in the form of Exhibit XIV annexed hereto, as such
Collateral Account Agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"Collateral Documents" means the Company Pledge Agreement, the
Security Agreement, the Collateral Account Agreement, the Subsidiary Pledge
Agreements, the Mortgages and all other instruments or documents delivered by
any Loan Party pursuant to this Agreement or any of the other Loan Documents in
order to grant to Administrative Agent, for the benefit of Lenders and Agents, a
Lien on any real, personal or mixed property of that Loan Party as security for
the Obligations.
"Commercial Letter of Credit" means any letter of credit or
similar instrument issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or services by
Company or any of its Subsidiaries in the ordinary course of business of Company
or such Subsidiary.
"Commitments" means the commitments of Lenders to make Loans as
set forth in subsection 2.1A.
"Company" has the meaning assigned to that term in the Preamble
to this Agreement.
"Company Cash Contribution" means the amount contributed by
Company to the purchase of BCL pursuant to the Acquisition Agreement.
"Company Pledge Agreement" means the Company Pledge Agreement
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit XV annexed hereto, as such Company Pledge Agreement may be amended,
supplemented or otherwise modified from time to time.
"Competitor" means any Person that is, or through a Joint
Venture or Affiliate is, substantially engaged in the business of designing,
developing, manufacturing or marketing medical devices or in a business
described on Schedule 7.12 annexed hereto or that derives a material portion of
its revenues from such business.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit VIII annexed hereto delivered to Administrative Agent and
Lenders by Company pursuant to subsection 6.1(iv).
"Confidential Information Memorandum" means that certain
Confidential Senior Debt Syndication Memorandum relating to Company dated July
1998.
"Consolidated Adjusted EBITDA" means, for any period, (x) the
sum of the
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amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, and (vi) other non-cash
items reducing Consolidated Net Income (including Permitted Acquisitions
Non-cash Reserves to the extent included in such period) less (y) the amounts
for such period of (a) other non-cash items increasing Consolidated Net Income
(b) reversals of non-cash accrued expenses taken in prior periods and reversals
of reserves taken in prior periods which reduced Consolidated Net Income in such
prior periods, and (c) non-cash bonus accrual charges, all of the foregoing as
determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP.
"Consolidated Capital Expenditures" means, for any period, the
sum of (i) the aggregate, without duplication, of all expenditures (whether paid
in cash or other consideration or accrued as a liability and including that
portion of Capital Leases which is capitalized on the consolidated balance sheet
of Company and its Subsidiaries) by Company and its Subsidiaries during that
period that, in conformity with GAAP, are included in "additions to property,
plant or equipment" or comparable items reflected in the consolidated statement
of cash flows of Company and its Subsidiaries plus (ii) to the extent not
covered by clause (i) of this definition, the aggregate of all expenditures by
Company and its Subsidiaries during that period (a) to purchase or develop
computer software or systems (but only to the extent such expenditures are
capitalized on the consolidated balance sheet of Company and its Subsidiaries in
conformity with GAAP) or (b) to acquire (by purchase or otherwise) the business,
property or fixed assets of any Person, or the stock or other evidence of
beneficial ownership of any Person that, as a result of such acquisition,
becomes a Subsidiary of Company (provided, however, that expenditures by Company
and its Subsidiaries in connection with Permitted Acquisitions permitted under
subsection 7.7(vi) and in connection with the World Medical Acquisition shall
not be included in Consolidated Capital Expenditures) minus the aggregate amount
of all Net Asset Sale Proceeds received by Company and its Subsidiaries during
that period in connection with sale and lease-backs of any property, all or a
portion of the purchase price of which was included in the calculation of
Consolidated Capital Expenditures for that period or any prior period. For
purposes of this definition (1) the purchase price of any equipment (including
all distribution, retailing, data processing, office and motor vehicle
equipment) owned by Company or any of its Subsidiaries that is purchased
simultaneously with the trade-in or other disposition in the ordinary course of
business of existing equipment or with insurance proceeds received by Company
and its Subsidiaries in respect of the actual or constructive total loss of any
equipment shall be included in Consolidated Capital Expenditures only to the
extent of the gross amount of such purchase price less the credit granted by the
seller of such equipment for the equipment being traded in at such time or the
amount of proceeds from such disposition or the amount of such insurance
proceeds, as the case may be and (2) the amount of any expenditure for any
equipment that replaces existing leased equipment that was purchased at the end
of the applicable lease term and then subsequently sold for a greater amount
shall be included in Consolidated Capital Expenditures only to the extent of the
gross amount of the expenditure for the new equipment less the excess of the
proceeds received by Company or any of its Subsidiaries from the sale of the
leased equipment over the gross amount of the purchase price of the leased
equipment.
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"Consolidated Current Assets" means, as at any date of
determination, the total assets of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current assets in
conformity with GAAP, excluding Cash and Cash Equivalents.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP.
"Consolidated Excess Cash Flow" means, for any period, an
amount (if positive) equal to (i) the sum, without duplication, of the amounts
for such period of (a) Consolidated Adjusted EBITDA and (b) the Consolidated
Working Capital Adjustment minus (ii) the sum, without duplication, of the
amounts for such period of (a) voluntary and scheduled repayments of
Consolidated Total Debt (excluding repayments of Revolving Loans except to the
extent the Revolving Loan Commitments are permanently reduced in connection with
such repayments), (b) Consolidated Capital Expenditures to the extent paid in
Cash during such period, (c) the amount of Consolidated Capital Expenditures
carried forward into the next succeeding Fiscal Year pursuant to the proviso set
forth in subsection 7.8, (d) Consolidated Interest Expense, (e) the provision
for current taxes based on income of Company and its Subsidiaries and payable in
cash with respect to such period and (f) cash expenditures for Permitted
Acquisitions to the extent permitted under subsection 7.7(vi).
"Consolidated Fixed Charges" means, as determined as of the end
of any Fiscal Quarter, an amount equal to the sum of (i) Consolidated Interest
Expense for the immediately preceding four consecutive Fiscal Quarters, (ii)
Consolidated Capital Expenditures for such period paid in cash and (iii)
Consolidated Scheduled Amortization for the immediately succeeding four
consecutive Fiscal Quarters.
"Consolidated Interest Expense" means, for any period, total
interest expense (net of interest income received in such period but including
that portion of interest expense attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Agreements, but excluding, however, any
amounts referred to in subsection 2.3 payable to Administrative Agent and
Lenders on or before the Closing Date.
"Consolidated Leverage Ratio" means, as at any date of
determination, the ratio of (a) Consolidated Total Debt to (b) Consolidated
Adjusted EBITDA for the consecutive four Fiscal Quarters ending on the last day
of the Fiscal Quarter immediately preceding such date (or the consecutive four
Fiscal Quarters ending on such date if such date is the last day of a Fiscal
Quarter).
"Consolidated Net Income" means, for any period, the net income
(or loss) of Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP;
provided that there shall be
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excluded (i) the income (or loss) of any Person (other than a Subsidiary of
Company) in which any other Person (other than Company or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"Consolidated Net Worth" means, as determined as of the end of
any Fiscal Quarter, the sum of the capital stock and additional paid-in capital
plus retained earnings (or minus accumulated deficits) of Company and its
Subsidiaries on a consolidated basis determined in conformity with GAAP.
"Consolidated Scheduled Amortization" means, for any period, an
amount equal to scheduled payments of principal on Indebtedness of Company and
subsidiaries (including that portion attributable to Capital Leases in
accordance with GAAP) determined on a consolidated basis in accordance with
GAAP.
"Consolidated Total Debt" means, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Working Capital" means, as at any date of
determination, the excess of Consolidated Current Assets over Consolidated
Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any period
on a consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.
"Contingent Obligation", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings or (iii) under Hedge Agreements. Contingent Obligations shall
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include, (a) the direct or indirect guaranty, endorsement (otherwise than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of non-performance by any other party or parties to an
agreement and (c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (X) to purchase, repurchase or
otherwise acquire such obligation or any security therefor or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (Y) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclauses
(X) or (Y) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Credit Parties" shall have the meaning given such term in
subsection 3.5B.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement, currency futures contract, currency option contract,
currency synthetic cap or other similar agreement or arrangement related to
currency exchange rates to which Company or any of its Subsidiaries is a party.
"Debt Securities" means any debt Securities of Company issued
or outstanding after the Closing Date.
"Deposit Account" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Designee" shall have the meaning given such term in the
Acquisition Agreement.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Domestic Subsidiary" means a Subsidiary organized under the
laws of the United States of America or any state or territory thereof or the
District of Columbia.
"Eligible Assignee" means (A) (i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial
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bank organized under the laws of any other country or a political subdivision
thereof; provided that (x) such bank is acting through a branch or agency
located in the United States or (y) such bank is organized under the laws of a
country that is a member of the Organization for Economic Cooperation and
Development or a political subdivision of such country; and (iv) any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses,
including, but not limited to, insurance companies, mutual funds and lease
financing companies; and (B) any Lender and any Affiliate or Related Fund of any
Lender; provided that no Affiliate of Company and no Competitor of Company shall
be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is or was maintained or contributed to by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates.
"Environmental Claim" means any written notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any governmental authority or any other
Person, arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law or (ii) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity.
"Environmental Laws" means any and all current or future
statutes, ordinances, orders, rules, regulations, judgments, Governmental
Authorizations or any other requirements of governmental authorities relating to
(i) environmental matters, including those relating to any Hazardous Materials
Activity, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials or (iii) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or welfare, in any
manner applicable to Company or any of its Subsidiaries or any Facility,
including the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. ss. 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
ss. 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. ss. 1251
et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. ss.136 et seq.), the Occupational Safety and Health
Act (29 U.S.C. ss. 651 et seq.), the Oil Pollution Act (33 U.S.C. ss. 2701 et
seq) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss.
11001 et seq.), each as amended or supplemented, any analogous present or future
state or local statutes or laws, and any regulations promulgated pursuant to any
of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses
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under common control within the meaning of Section 414(c) of the Internal
Revenue Code of which that Person is a member; and (iii) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the
Internal Revenue Code of which that Person, any corporation described in clause
(i) above or any trade or business described in clause (ii) above is a member.
Any former ERISA Affiliate of Company or any of its Subsidiaries shall continue
to be considered an ERISA Affiliate of Company or such Subsidiary within the
meaning of this definition with respect to the period such entity was an ERISA
Affiliate of Company or such Subsidiary and with respect to liabilities arising
after such period for which Company or such Subsidiary could be liable under the
Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning
of Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan (excluding those for which the provision for 30-day notice to
the PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on Company, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on
Company, any of its Subsidiaries or any of their respective ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071
of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to
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qualify for exemption from taxation under Section 501(a) of the Internal Revenue
Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n)
of the Internal Revenue Code or pursuant to ERISA with respect to any Pension
Plan.
"Eurodollar Rate" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum (rounded upward, if necessary, to the next higher 1/16%) equal to (x) the
offered rate for deposits in Dollars for a period equal to such Interest Period,
commencing on the first day of such Interest Period, which appears on Telerate
Page 3750 (or such other page as may replace Telerate Page 3750 on that service
or any successor service for the purpose of displaying London interbank offered
rates of major banks) as of 11:00 a.m. (London Time), on the day that is two
Business Days prior to the first day of such Interest Period. If the Eurodollar
Rate for an Interest Period cannot be determined pursuant to the preceding
sentence, then the Eurodollar Rate for such Interest Period shall be determined
on the basis of the rates at which deposits in Dollars are offered to each
Reference Lender at approximately 11:00 a.m. (London time) on the day that is
two Business Days prior to the first day of such Interest Period, and in an
amount approximately equal to the principal amount of such Reference Lender's
Eurodollar Loans to which such Interest Period is applicable. The Administrative
Agent will request the principal London office of each of the Reference Lenders
to provide a quotation of its rate. If at least two such quotations are
provided, the Eurodollar Rate for such Interest Period shall be the arithmetic
mean of those quotations. If fewer than two such quotations are provided as
requested, then Section 2.6B shall apply.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in
Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Excluded Collateral" means any of the following:
(a) any licenses or permits held by any Loan Party which by their terms
prohibit such granting of security interest or assignment by way of security;
(b) motor vehicles or other vehicles owned or leased by any Loan Party;
(c) real property owned or leased by any Loan Party not required to be
subject to a Mortgage hereunder or under the other Loan Documents; and
(d) copyrights, Trademarks, Patents and similar Intellectual Property
interests held under the laws of countries other than the United States of
America.
"Excluded Group" means a "group" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) that includes one or more Excluded
Persons; provided that
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the voting power of the capital stock of Company "beneficially owned" (as such
term is used in Rule 13d-3 promulgated under the Exchange Act) by such Excluded
Persons (without attribution to such Excluded Persons of the ownership by other
members of the "group") represents a majority of the voting power of the capital
stock "beneficially owned" (as such term is used in Rule 13d-3 promulgated under
the Exchange Act) by such group.
"Excluded Person" means any member of senior management of
Company.
"Facilities" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by Company or any of its Subsidiaries
or any of their respective predecessors or Affiliates.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate equal for each day during such period to 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 for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.
"Financial Plan" has the meaning assigned to that term in
subsection 6.1A(xii).
"First Priority" means, with respect to any Lien purported to
be created in any Collateral pursuant to any Collateral Document, that such Lien
is the only Lien (other than Permitted Encumbrances and Liens permitted pursuant
to subsection 7.2) to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its
Subsidiaries ending on June 30 of each calendar year.
"Foreign Subsidiary" means any Subsidiary which is not a
Domestic Subsidiary.
"Funding and Payment Account" means (i) the account of
Administrative Agent with The Chase Manhattan Bank, New York, ABA# 021000021,
account of Royal Bank of Canada, New York, account no.: 920-1-033363 for further
credit to account no. 293-685-4. Ref. Arterial Vascular Engineering or (ii) such
other account of Administrative Agent as may from time to time hereafter be
designated as such in a written notice delivered by Administrative Agent to
Company and each Lender.
"Funding Date" means the date of the funding of a Loan, which
shall be a
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Business Day.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, in each case as the
same are applicable to the circumstances as of the date of determination.
"Governmental Acts" shall have the meaning assigned to that
term in subsection 3.5A.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
"Guaranty Payment" shall have the meaning assigned to that term
in subsection 2.4D(ii).
"Hazardous Materials" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "acutely hazardous waste", "radioactive waste", "biohazardous waste",
"pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste",
"infectious waste", "toxic substances" or any other term or expression intended
to define, list or classify substances by reason of properties harmful to
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import) under any applicable Environmental Laws; (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos-containing materials; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"Hazardous Materials Activity" means any past, current or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
"Hedge Agreement" means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest rates or
currency values,
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respectively.
"Incurred Permitted Acquisition Indebtedness" means
Indebtedness incurred in connection with a Permitted Acquisition; provided that
such Indebtedness is unsecured.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute (X) in the case of Hedge Agreements, Contingent
Obligations, and (Y) in all other cases, Investments, and in neither case
constitute Indebtedness.
"Indemnitee" has the meaning assigned to that term in
subsection 10.3.
"Intellectual Property" means all Patents, Trademarks,
copyrights, trade secrets, customer lists, inventions (whether or not patented
or patentable), technical information, knowledge, know-how, designs, procedures,
models, drawings, materials, processes, articles of manufacture, compositions,
devices, and machines.
"Interest Payment Date" means (i) with respect to any Base Rate
Loan, each March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Closing Date, and (ii) with
respect to any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided that, in the case of each Interest Period of
longer than three months, "Interest Payment Date" shall also include each date
that would have been an Interest Payment Date had successive Interest Periods of
three-month duration been applicable.
"Interest Period" has the meaning assigned to that term in
subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement to which Company or any of its Subsidiaries is
a party.
"Interest Rate Determination Date" means, with respect to any
Interest Period, the second Business Day prior to the first day of such Interest
Period.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as
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amended to the date hereof and from time to time hereafter, and any successor
statute.
"Inventory" means, with respect to any Person as of any date of
determination, all goods, merchandise and other personal property which are then
held by such Person for sale or lease, including raw materials and work in
process.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than a Person that prior
to such purchase or acquisition was, or as a result of such purchase or
acquisition becomes, a Subsidiary of Company), (ii) any direct or indirect loan,
advance (other than advances made to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by Company or any of its
Subsidiaries to any other Person (other than a wholly-owned Subsidiary of
Company), including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business, or (iii) Interest Rate Agreements or
Currency Agreements not constituting Hedge Agreements. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.
"IP Collateral" means, collectively, the Collateral under the
Company Patent and Trademark Security Agreement and the Subsidiary Patent and
Trademark Security Agreements.
"Issuing Lender" means, with respect to any Letter of Credit,
the Lender which agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1B(ii).
"Joint Venture" means a joint venture, partnership, limited
liability company, limited liability partnership or other similar arrangement,
whether in corporate, partnership or other legal form; provided that in no event
shall any corporate Subsidiary of any Person be considered to be a Joint Venture
to which such Person is a party.
"Leasehold Property" means any leasehold interest of any Loan
Party as lessee under any lease of real property, other than any such leasehold
interest designated from time to time by Administrative Agent in its sole
discretion as not being required to be included in the Collateral.
"Lender" means each person identified as a "Lender" and listed
on the signature pages of this Agreement, together with its successors and
permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall mean
all such Lenders and shall include Swing Line Lender and each Issuing Lender
unless the context otherwise requires; provided that the term "Lenders", when
used in the context of a particular Commitment, shall mean Lenders having that
Commitment.
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"Letter of Credit" means any Commercial Letter of Credit or
Standby Letter of Credit issued or to be issued by an Issuing Lender for the
account of Company pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Letters of Credit
then outstanding and (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Lenders and not theretofore reimbursed by Company
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B).
"Lien" means any lien, mortgage, pledge, assignment (to the
extent such assignment is intended to secure an obligation of any Person),
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan" means any Tranche A Term Loan, Tranche B Term Loan,
Revolving Loan or Swing Line Loan and "Loans" means all or any combination
thereof.
"Loan Documents" means this Agreement, the Notes, the Letters
of Credit (and any applications for, or reimbursement agreements or other
documents or certificates executed by Company in favor of an Issuing Lender
relating to, the Letters of Credit), the Subsidiary Guaranty, the Collateral
Documents and the Collateral Account Agreement.
"Loan Party" means each of Company and any of Company's
Subsidiaries from time to time executing a Loan Document.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"Market Disruption Event" means (a) any suspension or
limitation of trading in securities generally on the New York Stock Exchange
(not including any suspension or limitation of trading in any particular
security as a result of computerized trading limits), or any setting of minimum
prices for trading on such exchange; (b) any banking moratorium declared by any
United States federal or State of New York or any Canadian federal or provincial
governmental authority; or (c) any outbreak or escalation of major hostilities
in which the United States or Canada is directly involved.
"Material Adverse Effect" means (i) (a) prior to the Closing
Date, a material adverse effect upon the business, operations, properties or
financial condition of Company and its Subsidiaries and the Bard Catheter Lab
Business taken as a whole or (b) from and after the Closing Date, a material
adverse effect upon the business, operations, properties or financial condition
of Company and its Subsidiaries taken as a whole or (ii) the material impairment
of the ability of Company individually or the Loan Parties taken as a whole to
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perform, or of Agents or Lenders to enforce, the Obligations.
"Material Contract" means any written contract or other written
arrangement to which Company or any of its Subsidiaries is a party (other than
the Loan Documents) for which breach, nonperformance, cancellation or failure to
renew would with reasonable likelihood have a Material Adverse Effect.
"Material Subsidiary" means each Subsidiary of Company now
existing or hereinafter acquired or formed by Company which, on a consolidated
basis for such Subsidiary and its Subsidiaries, (i) for the most recent Fiscal
Year, accounted for more than 5% of the consolidated revenues of Company and its
Subsidiaries or (ii) as at the end of such Fiscal Year, was the owner of more
than 5% of the consolidated assets of Company and its Subsidiaries.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means (i) a security instrument (whether designated
as a deed of trust or a mortgage or by any similar title) executed and delivered
by any Loan Party, substantially in the form of Exhibit XII annexed hereto or in
such other form as may be approved by Administrative Agent in its discretion, in
each case with such changes thereto as may be recommended by Administrative
Agent's local counsel based on local laws or customary local mortgage or deed of
trust practices, or (ii) at Administrative Agent's option, in the case of an
Additional Mortgaged Property (as defined in subsection 6.9), an amendment to an
existing Mortgage, in form satisfactory to Administrative Agent, adding such
Additional Mortgaged Property to the Real Property Assets encumbered by such
existing Mortgage, in either case as such security instrument or amendment may
be amended, supplemented or otherwise modified from time to time. "Mortgages"
means all such instruments, including the Closing Date Mortgages (as defined in
subsection 4.1G) and any Additional Mortgages (as defined in subsection 6.9),
collectively.
"Mortgaged Property" means a Closing Date Mortgaged Property
(as defined in subsection 4.1G) or an Additional Mortgaged Property (as defined
in subsection 6.9).
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Asset Sale Proceeds" means, with respect to any Asset
Sale, Cash payments (including any Cash received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) received from such Asset Sale, net of any bona fide direct
costs incurred in connection with such Asset Sale, including (i) reasonable
brokerage commissions, underwriting fees and discounts, legal fees, expenses and
commissions, (ii) income taxes reasonably estimated to be actually payable
within two years of the date of such Asset Sale as a result of any gain
recognized in connection with such Asset Sale and (iii) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) that is secured by a Lien on the stock or
assets in question and that is required to be repaid under the
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terms thereof as a result of such Asset Sale and (iv) the costs and expenses of
any repairs, alterations or improvements made to the property sold in connection
with such Asset Sale to the extent such repairs, alterations or improvements are
required pursuant to the terms of such Asset Sale.
"Net Debt Proceeds" means the Cash proceeds, net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses, from the
issuance of any Debt Securities of Company or any of its Subsidiaries after the
Closing Date, excluding any such proceeds from Debt Securities issued in
connection with Incurred Permitted Acquisition Indebtedness.
"Net Equity Proceeds" means the Cash proceeds, net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses, from the
issuance of any equity Securities of Company or any of its Subsidiaries after
the Closing Date.
"Net Insurance/Condemnation Proceeds" means any Cash payments
or proceeds received by Company or any of its Subsidiaries (i) under any
business interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Company or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Company or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Company or such Subsidiary in respect thereof.
"Notes" means one or more of the Tranche A Term Notes, Tranche
B Term Notes, Revolving Notes or Swing Line Note or any combination thereof.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Administrative Agent
pursuant to subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit II annexed hereto delivered by Company to
Administrative Agent pursuant to subsection 2.2D with respect to a proposed
conversion or continuation of the applicable basis for determining the interest
rate with respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice
substantially in the form of Exhibit III annexed hereto delivered by Company to
Administrative Agent pursuant to subsection 3.1B(i) with respect to the proposed
issuance of a Letter of Credit.
"Obligations" means all obligations of every nature of each
Loan Party from time to time owed to Arranger, Agents, Lenders or any of them
under the Loan Documents, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.
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"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer), its president, or any of its vice presidents its chief
financial officer, its principal accounting officer, its treasurer or its
controller; provided that every Officer's Certificate with respect to the
compliance with a condition precedent to the making of any Loans hereunder shall
include (i) a statement that the officer making or giving such Officer's
Certificate has read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signer, he or she has made or has caused to be made such
examination or investigation as is necessary to enable him or her to express an
informed opinion as to whether or not such condition has been complied with and
(iii) a statement as to whether, in the opinion of the signer, such condition
has been complied with.
"Operating Lease" means, as applied to any Person, any lease
(including leases that may be terminated by the lessee at any time) of any
property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"Patents" means all letters patent of, or rights corresponding
thereto in, the United States of America or any other country and all European
Patents and all registrations and recordings thereof and all applications for
letters patent of, or rights corresponding thereto in, the United States of
America or any other country, and all Patent Cooperation Treaty and European
Patent applications, including registrations, recordings and applications in the
PTO, and all reissues, reexaminations, continuations, divisionals,
continuations-in-part and extensions of any of the foregoing.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Permitted Acquisitions" means any acquisitions permitted
pursuant to subsection 7.7(vi) hereof.
"Permitted Acquisitions Non-cash Reserves" means for any
period, (i) non-cash charges taken by Company or any of its Subsidiaries based
on a Permitted Acquisition in accordance with subsection 7.7(vi) resulting from
the write-off of in-process research and development expenditures, and (ii)
incremental non-cash restructuring charges, write-offs or reserves of not
greater than $100,000,000 in the aggregate taken or accrued for by Company
resulting from the consolidation of any facilities related to the acquisition of
the Bard Catheter Lab Business which shall include reserves for severance costs,
lease termination fees and other plant shutdown costs, all of the foregoing as
determined in conformity with GAAP.
"Permitted Encumbrances" means the following types of Liens
(excluding
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any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by subsection
6.3;
(ii) statutory Liens of landlords, statutory Liens of banks and
rights of set-off, statutory Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed
by law, in each case incurred in the ordinary course of business (a)
for amounts not overdue for a period of more than 30 days or (b) for
amounts that are overdue and that (in the case of any such amounts
overdue for a period in excess of 30 days) are being contested in good
faith by appropriate proceedings, so long as such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have
been made for any such contested amounts;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure liability to
carriers under insurance or self-insurance arrangements, or obtaining
utility service or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money), so long as no foreclosure, sale or similar proceedings
have been commenced with respect to any portion of the Collateral on
account thereof;
(iv) any attachment or judgment Lien not constituting an Event
of Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance
with any applicable terms of the Collateral Documents and not
interfering in any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case which do
not and will not interfere in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under
any lease permitted by subsection 7.9, (b) restriction or encumbrance
that the interest or title of such lessor or sublessor may be subject
to, or (c) subordination of the interest of the lessee or sublessee
under such lease to any restriction or encumbrance referred to in the
preceding clause (b);
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(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(x) any zoning or similar law or right reserved to or vested in
any governmental office or agency to control or regulate the use of any
real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the ordinary
course of business of Company and its Subsidiaries; and
(xii) licenses of Patents, Trademarks and other Intellectual
Property rights granted by Company or any of its Subsidiaries in the
ordinary course of business and not interfering in any material respect
with the ordinary conduct of the business of Company or such
Subsidiary.
"Permitted Subordinated Debt" means Indebtedness evidenced by
subordinated obligations up to an aggregate amount of $250,000,000; provided
that, (i) the maturity of such obligations shall not be earlier than September
30, 2006, (ii) proceeds from the sale of such obligations shall be treated as
Net Debt Proceeds and applied as mandatory prepayments of the Loans in
accordance with subsection 2.4B(iii), (iii) the terms of such obligations shall
not provide for any scheduled or mandatory prepayments of principal thereof
prior to September 30, 2006 other than mandatory prepayments required as a
result of asset dispositions if the terms of such subordinated obligations allow
Company to satisfy such mandatory prepayment requirement by prepayment of Loans
under this Agreement or other senior obligations of Company or reinvestment of
the asset disposition proceeds within a specified period of time, (iv) such
Indebtedness shall be unsecured and expressly subordinated to all existing and
future senior indebtedness of Company and its Subsidiaries (including the
Obligations) with customary standstill provisions with regard to nonpayment
defaults under the Loans, (v) such obligations shall not be cross-defaulted to
(but may be cross-accelerated to) other obligations of Company or any of its
Subsidiaries, (vi) the negative covenants with respect to such subordinated
obligations shall be no more restrictive than the negative covenants in this
Agreement as in effect at the time such subordinated Indebtedness is incurred,
(vii) the affirmative covenants with respect to such subordinated obligations
shall be no more restrictive than the affirmative covenants in this Agreement as
in effect at the time such subordinated Indebtedness is incurred, (viii) the
terms of such subordinated obligations shall include customary turnover and
other subordination provisions, (ix) payments in respect of such subordinated
obligations shall be automatically and permanently blocked following a payment
default by Company under this Agreement; and (x) the documentation evidencing
such subordinated obligations shall contain such other terms and conditions as
may be approved by Agents; it being understood that Debt Securities convertible
into the common stock of the Company satisfying the conditions set forth above
shall also constitute "Permitted Subordinated Debt".
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"Person" means and includes any natural person, corporation,
limited partnership, general partnership, limited liability company, limited
liability partnership, joint stock company, Joint Venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and government (whether federal, state or local,
domestic or foreign, and including any political subdivisions thereof) and
agency or other administrative or regulatory body thereof.
"Pledged Collateral" means, collectively, the "Pledged
Collateral" as defined in the Company Pledge Agreement and the Subsidiary Pledge
Agreements.
"Potential Event of Default" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of Default.
"Pricing Level" means, as of any date, the Pricing Level,
whether (in ascending order from the lowest Pricing Level to the highest Pricing
Level) Pricing Level 1, Pricing Level 2, Pricing Level 3, Pricing Level 4 or
Pricing Level 5, that corresponds to the ratings of the Loans from Moody's or
S&P as set forth in the most recent effective Pricing Level Determination
Certificate delivered in accordance with the provisions of subsection
6.1A(xvii):
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Pricing Level Ratings of Loans
- - ------------------------ --------------------------------------------------
Level 1 BBB- or higher by S&P and Baa3 or
higher by Moody's
Level 2 BB+ by S&P or Ba1 by Moody's
Level 3 BB by S&P or Ba2 by Moody's
Level 4 BB- by S&P or Ba3 by Moody's
Level 5 B+ or lower by S&P or B1 or lower
by Moody's
In the case of a split Rating in which Moody's and S&P are one rating level
apart, the more creditworthy of such Ratings (i.e., the Rating which implies the
lower borrowing spread for Company) shall determine the Pricing Level (except
for Level 1, in which case both rating agencies must assign a Rating at least as
high as the Ratings specified above). In the case of a split Rating in which
Moody's and S&P are more than one rating level apart, the Rating which is the
midpoint between the split Ratings (i.e., an equal number of rating levels from
the higher and lower Ratings) shall determine the Pricing Level; provided that
if the midpoint falls between Rating levels (i.e., the Ratings set by Moody's
and S&P are an odd number of rating levels apart), the Rating closest to the
midpoint which is the more creditworthy (i.e. the Rating which implies the lower
borrowing spread for Company) shall be used to determine the Pricing Level
(except as provided for Level 1 in the preceding sentence). For the purposes of
determining the Pricing Level, a Pricing Level Determination Certificate shall
be deemed effective on the first Business Day following Administrative Agent's
receipt thereof, and the Pricing Level shall change on such Business Day to the
extent necessary to reflect the debt rating for the Loans as set forth in such
Pricing Level Determination Certificate.
"Pricing Level Determination Certificate" means a certificate
substantially in the form of Exhibit XX annexed hereto delivered to
Administrative Agent and Lenders by Company pursuant to subsection 6.1A(xvii).
"Prime Rate" means the rate of interest per annum determined by
Royal Bank of Canada in New York City from time to time as its Dollar prime
commercial lending rate for such day, as in effect from time to time.
"Pro Forma Financial Covenant Compliance" means, as of any date
of determination, the pro forma compliance of Company and its Subsidiaries on a
consolidated basis with each of the financial covenants set forth in subsection
7.6 for the immediately preceding Fiscal Quarter period prior to such date of
determination (the "Compliance Period"), such pro forma compliance being
calculated as follows: to the extent that during the Compliance Period for which
calculation is being made, Company or any Subsidiary of Company has made a
Permitted Acquisition permitted under subsection 7.7(vi) or has disposed of any
assets or operations in an amount for any such transaction or series of related
transactions exceeding $5,000,000, (i) such calculation shall be made as if such
Permitted Acquisition or such disposition took place on the first day of such
Compliance Period on a
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pro forma basis for the portion of such period prior to the date of such
Permitted Acquisition or after the date of such disposition and on an actual
basis for the portion of such Compliance Period after the date of such Permitted
Acquisition or before the date of such disposition, (ii) such calculations shall
be made after giving effect to the incurrence, assumption or repayment of any
Indebtedness made in connection with such acquisition or disposition, and (iii)
such calculation shall be made after giving retroactive effect to demonstrable
net cost eliminations or net cost savings arising by virtue of such Permitted
Acquisition (such as inflated compensation paid to employee owners to maximize
tax efficiencies), which cost eliminations and cost savings are demonstrated in
the Officer's Certificate required under subsection 7.7 and (A) are consistent
with standards and practices for pro forma presentation pursuant to Regulation
S-X as promulgated by the Securities and Exchange Commission and are reviewed by
Company's independent accountants, or (B) are reasonably satisfactory to
Requisite Lenders. With respect to any such Permitted Acquisition, such pro
forma calculations shall be based on the audited or reviewed financial results
delivered in compliance with clause (c)(3) of subsection 7.7(vi).
"Pro Rata Share" means, with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Tranche A Term Loan Exposure
of that Lender plus the Tranche B Term Loan Exposure of that Lender plus the
Revolving Loan Exposure of that Lender by (y) the sum of the aggregate Tranche A
Term Loan Exposure of all Lenders plus the aggregate Tranche B Term Loan
Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all
Lenders, in any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share of
each Lender is set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.
"PTO" means the United States Patent and Trademark Office or
any successor or substitute office in which filings are necessary or, in the
opinion of Administrative Agent, desirable in order to create or perfect Liens
on any IP Collateral.
"Rating" means, as at any date of determination, the
then-current rating given to the Loans by S&P or Moody's, as applicable.
"Real Property Asset" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
"Reference Lenders" means Royal Bank of Canada, Union Bank and
Fleet National Bank.
"Refunded Swing Line Loans" has the meaning assigned to that
term in subsection 2.1A(iv).
"Register" has the meaning assigned to that term in subsection
2.1D.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
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"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Related Agreements" means the Acquisition Agreement and the
Ancillary Agreements (as defined in the Acquisition Agreement).
"Related Fund" means, with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), including the
movement of any Hazardous Materials through the air, soil, surface water or
groundwater.
"Requisite Class Lenders" means, at any time of determination,
(i) for the Class of Lenders having Tranche A Term Loan Exposure and/or
Revolving Loan Exposure, Lenders having or holding more than 65% of the sum of
the aggregate Tranche A Term Loan Exposure of all Lenders plus the aggregate
Revolving Loan Exposure of all Lenders and (ii) for the Class of Lenders having
Tranche B Term Loan Exposure, Lenders having or holding more than 65% of the
aggregate Tranche B Term Loan Exposure of all Lenders.
"Requisite Lenders" means Lenders having or holding more than
50% of the sum of the aggregate Tranche A Term Loan Exposure of all Lenders plus
the aggregate Tranche B Term Loan Exposure of all Lenders plus the aggregate
Revolving Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Permitted
Subordinated Debt.
"Retained Excess Cash Flow" means, as at any date of
determination, the amount of Consolidated Excess Cash Flow not required to be
applied as a mandatory prepayment of the Loans or reductions of the Revolving
Loan Commitments pursuant to subsection 2.4(iii)(d); provided that prior to June
30, 1999, for purposes of subsection 7.3(x), the amount of Retained Excess Cash
Flow shall be deemed to be zero.
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"Revolving Loan Commitment" means the commitment of a Lender to
make Revolving Loans to Company pursuant to subsection 2.1A(iii), and "Revolving
Loan Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means September
30, 2003.
"Revolving Loan Exposure" means, with respect to any Lender as
of any date of determination, (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment, and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender, (b) in the
event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage in
respect of all Letters of Credit issued by that Lender (in each case net of any
participations purchased by other Lenders in such Letters of Credit and any such
participations in any unreimbursed drawings thereunder), (c) the aggregate
amount of all participations purchased by that Lender in any outstanding Letters
of Credit or in any unreimbursed drawings under any Letters of Credit, (d) in
the case of Swing Line Lender, the aggregate outstanding principal amount of all
Swing Line Loans (net of any participations therein purchased by other Lenders)
and (e) the aggregate amount of all participations purchased by that Lender in
any outstanding Swing Line Loans.
"Revolving Loans" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(iii).
"Revolving Note" means (i) any promissory note of Company
issued pursuant to subsection 2.1E(i)(c) on the Closing Date and (ii) any
promissory note issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Revolving Loan Commitments and
Revolving Loans of any Lenders, in each case substantially in the form of
Exhibit VI annexed hereto, as it may be amended, supplemented or otherwise
modified from time to time.
"Revolving Pro Rata Share" means, with respect to all payments,
computations and other matters relating to the Revolving Loan Commitment or the
Revolving Loans of any Lender or any Letters of Credit issued or participations
therein purchased by any Lender or any participations in any Swing Line Loans
purchased by any Lender, the percentage obtained by dividing (x) the Revolving
Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all
Lenders. The initial Revolving Pro Rata Share of each Lender is set forth
opposite the name of that Lender in Schedule 2.1 annexed hereto.
"S&P" means Standard and Poor's Ratings Services.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participations in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other similar evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any
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instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"Security Agreement" means the Security Agreement executed and
delivered by Company and by the existing Subsidiary Guarantors on the Closing
Date or executed and delivered by any additional Subsidiary Guarantor from time
to time thereafter in accordance with subsection 6.8, in each case substantially
in the form of Exhibit XVI annexed hereto, as such Security Agreement may be
amended, supplemented or otherwise modified from time to time.
"Seller" means C.R. Bard, Inc., a New Jersey corporation.
"Solvent" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the property
of such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person's then existing
debts as they become absolute and matured considering all financing alternatives
and potential asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Standby Letter of Credit" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and
(v) performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry; provided that Standby
Letters of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as that term is
used in Section 547 of the Bankruptcy Code).
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association, joint venture
or other business entity of
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which more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Subsidiary Guarantor" means any Subsidiary of Company that
executes and delivers the Subsidiary Guaranty on the Closing Date or from time
to time thereafter pursuant to subsection 6.8.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed
and delivered by existing Subsidiaries of Company on the Closing Date and to be
executed and delivered by additional Subsidiaries of Company from time to time
thereafter in accordance with subsection 6.8, substantially in the form of
Exhibit XVII annexed hereto, as such Subsidiary Guaranty may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means each Subsidiary Pledge
Agreement executed and delivered by an existing Subsidiary Guarantor on the
Closing Date or executed and delivered by any additional Subsidiary Guarantor
from time to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XVIII annexed hereto, as such Subsidiary
Pledge Agreement may be amended, supplemented or otherwise modified from time to
time, and "Subsidiary Pledge Agreements" means all such Subsidiary Pledge
Agreements, collectively.
"Supplemental Collateral Agent" has the meaning assigned to
that term in subsection 9.1B.
"Swing Line Lender" means Royal Bank of Canada, or any Person
serving as a successor Administrative Agent hereunder, in its capacity as Swing
Line Lender hereunder.
"Swing Line Loan Commitment" means the commitment of Swing Line
Lender to make Swing Line Loans to Company pursuant to subsection 2.1A(iv).
"Swing Line Loans" means the Loans made by Swing Line Lender to
Company pursuant to subsection 2.1A(iv).
"Swing Line Note" means (i) the promissory note of Company
issued pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any
promissory note issued by Company to any successor Swing Line Lender pursuant to
the last sentence of subsection 9.5B, in each case substantially in the form of
Exhibit VII annexed hereto, as it may be amended, supplemented or otherwise
modified from time to time.
"Syndication Agent" has the meaning assigned to that term in
the introduction to this Agreement and also means and includes any successor
Syndication Agent
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appointed pursuant to subsection 9.5A.
"Tax" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office).
"Term Loans" means, collectively, the Tranche A Term Loans and
the Tranche B Term Loans.
"Total Utilization of Revolving Loan Commitments" means, as at
any date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans (other than Revolving Loans made for the purpose of
repaying any Refunded Swing Line Loans or reimbursing the applicable Issuing
Lender for any amount drawn under any Letter of Credit but not yet so applied),
(ii) the aggregate principal amount of all outstanding Swing Line Loans and
(iii) the Letter of Credit Usage.
"Trademarks" means all trademarks, tradenames, trade styles,
service marks, logos or other source or business identifiers in the United
States of America or any other country and all registrations and recordings
thereof and all applications in connection therewith in the United States of
America or any other country, including all registrations, recordings and
applications in the PTO.
"Tranche A Pro Rata Share" means, with respect to all payments,
computations and other matters relating to the Tranche A Term Loan Commitment or
Tranche A Term Loan of any Lender, the percentage obtained by dividing (x) the
Tranche A Term Loan Exposure of that Lender by (y) the aggregate Tranche A Term
Loan Exposure of all Lenders. The initial Tranche A Pro Rata Share of each
Lender is set forth opposite the name of that Lender in Schedule 2.1 annexed
hereto.
"Tranche A Term Loan Commitment" means the commitment of a
Lender to make a Tranche A Term Loan to Company pursuant to subsection 2.1A(i)
and "Tranche A Term Loan Commitments" means such commitments of all Lenders in
the aggregate.
"Tranche A Term Loan Exposure" means, with respect to any
Lender as of any date of determination, (i) prior to the funding of the Tranche
A Term Loans, that Lender's Tranche A Term Loan Commitment, and (ii) after the
funding of the Tranche A Term Loans, the outstanding principal amount of the
Tranche A Term Loan of that Lender.
"Tranche A Term Loans" means the Loans made by Lenders to
Company
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pursuant to subsection 2.1A(i).
"Tranche A Term Note" means (i) any promissory note of Company
issued pursuant to subsection 2.1E(i)(a) on the Closing Date and (ii) any
promissory note issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Tranche A Term Loan Commitments
or Tranche A Term Loans of any Lenders, in each case substantially in the form
of Exhibit IV annexed hereto, as it may be amended, supplemented or otherwise
modified from time to time.
"Tranche B Pro Rata Share" means, with respect to all payments,
computations and other matters relating to the Tranche B Term Loan Commitment or
Tranche B Term Loan of any Lender, the percentage obtained by dividing (x) the
Tranche B Term Loan Exposure of that Lender by (y) the aggregate Tranche B Term
Loan Exposure of all Lenders. The initial Tranche B Pro Rata Share of each
Lender is set forth opposite the name of that Lender in Schedule 2.1 annexed
hereto.
"Tranche B Term Loan Commitment" means the commitment of a
Lender to make a Tranche B Term Loan to Company pursuant to subsection 2.1A(ii),
and "Tranche B Term Loan Commitments" means such commitments of all Lenders in
the aggregate.
"Tranche B Term Loan Exposure" means, with respect to any
Lender as of any date of determination, (i) prior to the funding of the Tranche
B Term Loans, that Lender's Tranche B Term Loan Commitment, and (ii) after the
funding of the Tranche B Term Loans, the outstanding principal amount of the
Tranche B Term Loan of that Lender.
"Tranche B Term Loan" means a Loan made by Lenders to Company
pursuant to subsection 2.1A(ii).
"Tranche B Term Note" means (i) any promissory note of Company
issued pursuant to subsection 2.1E(i)(b) on the Closing Date and (ii) any
promissory note issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Tranche B Term Loan Commitments
or Tranche B Term Loans of any Lenders, in each case substantially in the form
of Exhibit V annexed hereto, as it may be amended, supplemented or otherwise
modified from time to time.
"Transaction Costs" means the fees, costs and expenses payable
by Company in connection with the consummation of the transactions contemplated
by the Loan Documents and the Related Agreements.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"World Medical Acquisition" means the merger of Walleye
Acquisition Corporation, a Florida corporation and a wholly owned Subsidiary of
Company ("Merger Sub"), with and into World Medical Manufacturing Corporation, a
Florida corporation ("World Medical"), pursuant to the terms of the Agreement
and Plan of Merger and
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Reorganization dated as of April 10, 1998, as amended from time to time, by and
among Company, World Medical and Merger Sub.
"Year 2000 Compliant" means, in regard to any Person, that all
material software, hardware, firmware, equipment, goods or systems utilized by
or material to the business, operations or financial condition of such Person
will properly perform date sensitive functions (including immediately before and
during and after the year 2000).
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 Other Definitional Provisions and Rules of Construction.
A. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
B. References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided.
C. The use herein of the word "include" or "including", when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.
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Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
A. Commitments. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company set
forth herein, (1) each Lender hereby severally agrees to make the Loans
described in subsections 2.1A(i), 2.1A(ii) and 2.1A(iii) and Swing Line Lender
hereby agrees to make the Loans described in subsection 2.1A(iv).
(i) Tranche A Term Loans. Each Lender severally agrees
to lend to Company on the Closing Date an amount equal to its Tranche A
Pro Rata Share of the aggregate amount of the Tranche A Term Loan
Commitments to be used for the purposes identified in subsection 2.5A.
The amount of each Lender's Tranche A Term Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate
amount of the Tranche A Term Loan Commitments is $200,000,000; provided
that the Tranche A Term Loan Commitments of Lenders shall be adjusted
to give effect to any assignments of the Tranche A Term Loan
Commitments pursuant to subsection 10.1B. Each Lender's Tranche A Term
Loan Commitment shall expire immediately and without further action on
October 30, 1998 if the Tranche A Term Loans are not made on or before
that date. Company may make only one borrowing under the Tranche A Term
Loan Commitments. Amounts borrowed under this subsection 2.1A(i) and
subsequently repaid or prepaid may not be reborrowed.
(ii) Tranche B Term Loans. Each Lender severally
agrees to lend to Company on the Closing Date an amount equal to its
Tranche B Pro Rata Share of the aggregate amount of the Tranche B Term
Loan Commitments to be used for the purposes identified in subsection
2.5A. The amount of each Lender's Tranche B Term Loan Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto and the
aggregate amount of the Tranche B Term Loan Commitments is
$350,000,000; provided that the Tranche B Term Loan Commitments of
Lenders shall be adjusted to give effect to any assignments of the
Tranche B Term Loan Commitments pursuant to subsection 10.1B. Each
Lender's Tranche B Term Loan Commitment shall expire immediately and
without further action on October 30, 1998 if the Tranche B Term Loans
are not made on or before that date. Company may make only one
borrowing under the Tranche B Term Loan Commitments. Amounts borrowed
under this subsection 2.1A(ii) and subsequently repaid or prepaid may
not be reborrowed.
(iii) Revolving Loans. Each Lender severally agrees,
subject to the limitations set forth below with respect to the maximum
amount of Revolving Loans permitted to be outstanding from time to
time, to lend to Company from time to time during the period from three
days after the Closing Date to but excluding the Revolving Loan
Commitment Termination Date an aggregate amount not exceeding its
Revolving Pro Rata Share of the aggregate amount of the Revolving Loan
Commitments to be used for the purposes identified in subsection 2.5B.
The original
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amount of each Lender's Revolving Loan Commitment is set forth opposite
its name on Schedule 2.1 annexed hereto and the aggregate original
amount of the Revolving Loan Commitments is up to $50,000,000; provided
that the Revolving Loan Commitments of Lenders shall be adjusted to
give effect to any assignments of the Revolving Loan Commitments
pursuant to subsection 10.1B; and provided, further that the amount of
the Revolving Loan Commitments shall be reduced from time to time by
the amount of any reductions thereto made pursuant to subsections
2.4B(ii) and 2.4B(iii). Each Lender's Revolving Loan Commitment shall
expire on the Revolving Loan Commitment Termination Date and all
Revolving Loans and all other amounts owed hereunder with respect to
the Revolving Loans and the Revolving Loan Commitments shall be paid in
full no later than that date; provided that each Lender's Revolving
Loan Commitment shall expire immediately and without further action on
October 30, 1998 if the Term Loans are not made on or before that date.
Amounts borrowed under this subsection 2.1A(iii) may be repaid and
reborrowed to but excluding the Revolving Loan Commitment Termination
Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments
shall be subject to the limitation that in no event shall the Total
Utilization of Revolving Loan Commitments at any time exceed the
Revolving Loan Commitments then in effect.
(iv) Swing Line Loans. Swing Line Lender hereby agrees, subject
to the limitations set forth below with respect to the maximum amount
of Swing Line Loans permitted to be outstanding from time to time, to
make a portion of the Revolving Loan Commitments available to Company
from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date by making
Swing Line Loans to Company in an aggregate amount not exceeding the
amount of the Swing Line Loan Commitment to be used for the purposes
identified in subsection 2.5B, notwithstanding the fact that such Swing
Line Loans, when aggregated with Swing Line Lender's outstanding
Revolving Loans and Swing Line Lender's Revolving Pro Rata Share of the
Letter of Credit Usage then in effect, may exceed Swing Line Lender's
Revolving Loan Commitment. The original amount of the Swing Line Loan
Commitment is $5,000,000; provided that any reduction of the Revolving
Loan Commitments made pursuant to subsection 2.4B(ii) or 2.4B(iii)
which reduces the aggregate Revolving Loan Commitments to an amount
less than the then current amount of the Swing Line Loan Commitment
shall result in an automatic corresponding reduction of the Swing Line
Loan Commitment to the amount of the Revolving Loan Commitments, as so
reduced, without any further action on the part of Company,
Administrative Agent or Swing Line Lender. The Swing Line Loan
Commitment shall expire on the Revolving Loan Commitment Termination
Date and all Swing Line Loans and all other amounts owed hereunder with
respect to the Swing Line Loans shall be paid in full no later than
that date; provided that the Swing Line Loan Commitment shall expire
immediately and without further action on October 30, 1998 if the Term
Loans are not made on or before that date. Amounts borrowed under this
subsection 2.1A(iv) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
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Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Loan
Commitment shall be subject to the limitation that in no event shall
the Total Utilization of Revolving Loan Commitments at any time exceed
the Revolving Loan Commitments then in effect.
With respect to any Swing Line Loans which have not been
voluntarily prepaid by Company pursuant to subsection 2.4B(i), Swing
Line Lender may, at any time in its sole and absolute discretion,
deliver to Administrative Agent (with a copy to Company), no later than
1:00 P.M. (New York time) on the Business Day immediately preceding the
proposed Funding Date, a notice (which shall be deemed to be a Notice
of Borrowing given by Company) requesting Lenders with Revolving Loan
Commitments to make Revolving Loans that are Base Rate Loans on such
Funding Date in an amount equal to the amount of such Swing Line Loans
(the "Refunded Swing Line Loans") outstanding on the date such notice
is given which Swing Line Lender requests such Lenders to prepay.
Anything contained in this Agreement to the contrary notwithstanding,
(i) the proceeds of such Revolving Loans made by Lenders other than
Swing Line Lender shall be immediately delivered by Administrative
Agent to Swing Line Lender (and not to Company) and applied to repay a
corresponding portion of the Refunded Swing Line Loans and (ii) on the
day such Revolving Loans are made, Swing Line Lender's Revolving Pro
Rata Share of the Refunded Swing Line Loans shall be deemed to be paid
with the proceeds of a Revolving Loan made by Swing Line Lender, and
such portion of the Swing Line Loans deemed to be so paid shall no
longer be outstanding as Swing Line Loans and shall no longer be due
under the Swing Line Note of Swing Line Lender but shall instead
constitute part of Swing Line Lender's outstanding Revolving Loans and
shall be due under the Revolving Note of Swing Line Lender.
If for any reason (a) any Revolving Loans are not made upon the
request of Swing Line Lender as provided in the immediately preceding
paragraph at the time required and in an amount sufficient to repay any
amounts owed to Swing Line Lender in respect of any outstanding Swing
Line Loans or (b) the Revolving Loan Commitments are terminated at a
time when any Swing Line Loans are outstanding, each Lender which has
or had, as the case may be, a Revolving Loan Commitment shall be deemed
to, and hereby agrees to, have purchased a participation in such
outstanding Swing Line Loans in an amount equal to its Revolving Pro
Rata Share (calculated, in the case of the foregoing clause (b),
immediately prior to such termination of the Revolving Loan
Commitments) of the unpaid amount of such Swing Line Loans together
with accrued interest thereon. Upon one Business Day's notice from
Swing Line Lender, each such Lender shall deliver to Swing Line Lender
an amount equal to its respective participation in same day funds at
the Funding and Payment Account. In order to further evidence such
participation (and without prejudice to the effectiveness of the
participation provisions set forth above), each such Lender agrees to
enter into a separate participation agreement at the request of Swing
Line Lender in form and substance reasonably satisfactory to Swing Line
Lender. In the event any Lender fails to make available to Swing Line
Lender the
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amount of such Lender's participation as provided in this paragraph,
Swing Line Lender shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the Federal Funds
Effective Rate for three Business Days and thereafter at the Base Rate.
In the event Swing Line Lender receives a payment of any amount in
which other Lenders have purchased participations as provided in this
paragraph, Swing Line Lender shall promptly distribute to each such
other Lender its Revolving Pro Rata Share of such payment.
Anything contained herein to the contrary notwithstanding, each
Lender's obligation to make Revolving Loans for the purpose of repaying
any Refunded Swing Line Loans pursuant to the second preceding
paragraph and each Lender's obligation to purchase a participation in
any unpaid Swing Line Loans pursuant to the immediately preceding
paragraph shall be absolute and unconditional and shall not be affected
by any circumstance, including (a) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against
Swing Line Lender, Company or any other Person for any reason
whatsoever, (b) the occurrence or continuation of an Event of Default
or a Potential Event of Default, (c) any adverse change in the
business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company or any of its Subsidiaries, (d) any
breach of this Agreement or any other Loan Document by any party
thereto or (e) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided that such
obligations of each Lender are subject to the condition that (X) Swing
Line Lender believed in good faith that all conditions under Section 4
to the making of the applicable Refunded Swing Line Loans or other
unpaid Swing Line Loans, as the case may be, were satisfied at the time
such Refunded Swing Line Loans or unpaid Swing Line Loans were made or
(Y) the satisfaction of any such condition not satisfied had been
waived in accordance with subsection 10.6 prior to or at the time such
Refunded Swing Line Loans or other unpaid Swing Line Loans were made.
B. Borrowing Mechanics. Tranche A Term Loans or Tranche B Term Loans or
Revolving Loans made on any Funding Date (other than Revolving Loans made
pursuant to a request by Swing Line Lender pursuant to subsection 2.1A(iii) for
the purpose of repaying any Refunded Swing Line Loans or Revolving Loans made
pursuant to subsection 3.3B for the purpose of reimbursing any Issuing Lender
for the amount of a drawing under a Letter of Credit issued by it) shall be in
an aggregate minimum amount of (a) $5,000,000 in the case of Term Loans which
are Base Rate Loans or (b) $5,000,000 in the case of Term Loans which are
Eurodollar Rate Loans or (c) $3,000,000 in the case of Revolving Loans and, in
each case, in integral multiples of $1,000,000 in excess of that amount. Swing
Line Loans made on any Funding Date shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $1,000,000 in excess of that amount.
Whenever Company desires that Lenders make Term Loans or Revolving Loans, it
shall deliver to Administrative Agent a Notice of Borrowing no later than 1:00
P.M. (New York time) at least three Business Days in advance of the proposed
Funding Date (in the case of a Eurodollar Rate Loan) or at least one Business
Day in advance of the proposed Funding Date (in the case of a Base Rate Loan).
Whenever Company desires that Swing Line Lender make a Swing Line Loan, it shall
deliver to Administrative Agent a
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Notice of Borrowing no later than 1:00 P.M. (New York time) on the proposed
Funding Date. The Notice of Borrowing shall specify (i) the proposed Funding
Date (which shall be a Business Day), (ii) the amount and type of Loans
requested, (iii) in the case of Swing Line Loans, that such Loans shall be Base
Rate Loans, (iv) in the case of Revolving Loans, whether such Loans shall be
Base Rate Loans or Eurodollar Rate Loans and (v) in the case of any Loans
requested to be made as Eurodollar Rate Loans, the initial Interest Period
requested therefor. Term Loans and Revolving Loans may be continued as or
converted into Base Rate Loans and Eurodollar Rate Loans in the manner provided
in subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, Company may give Administrative Agent telephonic notice by the
required time of any proposed borrowing under this subsection 2.1B; provided
that such telephonic notice shall be promptly confirmed in writing by delivery
of a Notice of Borrowing to Administrative Agent no later than the next Business
Day thereafter.
Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding
of any Loans in the event that any of the matters to which Company is required
to certify in the applicable Notice of Borrowing is or may reasonably expected
to be no longer true and correct as of the applicable Funding Date, and the
acceptance by Company of the proceeds of any Loans shall constitute a
re-certification by Company, as of the applicable Funding Date, as to the
matters to which Company is required to certify in the applicable Notice of
Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable after Administrative Agent has given notice
thereof to the relevant Lenders, and Company shall be bound to make a borrowing
in accordance therewith unless Company shall pay compensation, if any, for the
non-commencement of an Interest Period on the proposed Funding Date as provided
in subsection 2.6D.
C. Disbursement of Funds. All Term Loans and Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Tranche A Pro Rata Shares, Tranche B Pro Rata Shares or Revolving Pro
Rata Shares, as the case may be, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each relevant Lender of the
proposed borrowing. Each Lender shall make the amount of its Loan available to
Administrative Agent not later than
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12:00 Noon (New York time) on the applicable Funding Date, and Swing Line Lender
shall make the amount of its Swing Line Loan available to Administrative Agent
not later than 3:00 P.M. (New York time) on the applicable Funding Date, in each
case in same day funds in Dollars, at the Funding and Payment Account. Except as
provided in subsection 2.1A(iii) or subsection 3.3B with respect to Revolving
Loans used to repay Refunded Swing Line Loans or to reimburse any Issuing Lender
for the amount of a drawing under a Letter of Credit issued by it, upon
satisfaction or waiver of the conditions precedent specified in subsection 4.1
(in the case of Loans made on the Closing Date) and 4.2 (in the case of all
Loans), Administrative Agent shall make the proceeds of such Loans available to
Company on the applicable Funding Date by causing an amount of same day funds in
Dollars equal to the proceeds of all such Loans received by Administrative Agent
from Lenders or Swing Line Lender, as the case may be, to be credited to the
account of Company at the Funding and Payment Account and shall transfer any
funds so credited in accordance with the written instructions of Company.
Unless Administrative Agent shall have been notified by any
Lender prior to the Funding Date for any Loans that such Lender does not intend
to make available to Administrative Agent the amount of such Lender's Loan
requested on such Funding Date, Administrative Agent may assume that such Lender
has made such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
amount is not in fact made available to Administrative Agent by such Lender and
Administrative Agent has made a corresponding amount available to Company,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
Federal Funds Effective Rate for three Business Days and thereafter at the Base
Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company and Company shall immediately pay to Administrative Agent such
corresponding amount not paid by such Lender together with interest thereon, for
each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Company or Administrative Agent may have against any Lender as a
result of any default by such Lender hereunder.
D. The Register.
(i) Administrative Agent shall maintain, at its address
referred to in subsection 10.8, a register for the recordation of the
names and addresses of Lenders and the Commitments and Loans of each
Lender from time to time (the "Register"). The Register shall be
available for inspection by Company or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the
Tranche A Term Loan Commitment, Tranche B Term Loan Commitment and
Revolving Loan
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Commitment and the Tranche A Term Loan, Tranche B Term Loan and
Revolving Loans from time to time of each Lender, the Swing Line Loan
Commitment and the Swing Line Loans from time to time of Swing Line
Lender, and each repayment or prepayment in respect of the principal
amount of the Tranche A Term Loan, Tranche B Term Loan or Revolving
Loans of each Lender or the Swing Line Loans of Swing Line Lender. Any
such recordation shall be conclusive and binding on Company and each
Lender, absent error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect any
Lender's Commitments or Company's Obligations in respect of any
applicable Loans.
(iii) Each Lender shall record on its internal records
(including the Notes held by such Lender) the amount of the Tranche A
Term Loan, Tranche B Term Loan and each Revolving Loan made by it and
each payment in respect thereof. Any such recordation shall be
conclusive and binding on Company, absent error; provided that failure
to make any such recordation, or any error in such recordation, shall
not affect any Lender's Commitments or Company's Obligations in respect
of any applicable Loans; and provided, further that in the event of any
inconsistency between the Register and any Lender's records, the
recordations in the Register shall govern.
(iv) Company, Administrative Agent and Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Commitments and Loans listed therein for
all purposes hereof, and no assignment or transfer of any such
Commitment or Loan shall be effective, in each case unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall
have been accepted by Administrative Agent and recorded in the Register
as provided in subsection 10.1B(ii). Prior to such recordation, all
amounts owed with respect to the applicable Commitment or Loan shall be
owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at the time of making
such request or giving such authority or consent, is listed in the
Register as a Lender shall be conclusive and binding on any subsequent
holder, assignee or transferee of the corresponding Commitments or
Loans.
(v) Company hereby designates Royal Bank of Canada to serve as
Company's agent solely for purposes of maintaining the Register as
provided in this subsection 2.1D, and Company hereby agrees that, to
the extent Royal Bank of Canada serves in such capacity, Royal Bank of
Canada and its officers, directors and employees shall constitute
Indemnitees for all purposes under subsection 10.3.
E. Notes. Company shall execute and deliver on the Closing Date (i) to
each Lender (or to Administrative Agent for that Lender), as applicable, (a) a
Tranche A Term Note substantially in the form of Exhibit IV annexed hereto to
evidence that Lender's Tranche A Term Loan, in the principal amount of that
Lender's Tranche A Term Loan and with other appropriate insertions, (b) a
Tranche B Term Note substantially in the form of Exhibit V annexed hereto to
evidence that Lender's Tranche B Term Loan, in the principal amount of that
Lender's Tranche B Term Loan and with other appropriate insertions and (c) a
Revolving Note substantially in the form of Exhibit VI annexed hereto to
evidence that Lender's Revolv-
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ing Loans, in the principal amount of that Lender's Revolving Loan Commitment
and with other appropriate insertions, and (ii) to Swing Line Lender (or to
Administrative Agent for Swing Line Lender) a Swing Line Note substantially in
the form of Exhibit VII annexed hereto to evidence Swing Line Lender's Swing
Line Loans, in the principal amount of the Swing Line Loan Commitment and with
other appropriate insertions.
Administrative Agent may deem and treat the payee of any Note
as the owner thereof for all purposes hereof unless and until an Assignment
Agreement effecting the assignment or transfer thereof shall have been accepted
by Administrative Agent as provided in subsection 10.1B(ii). Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, assignee or transferee of that Note or of
any Note or Notes issued in exchange therefor.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate, as the case may be. Subject to the provisions of
subsection 2.7, each Swing Line Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate. The applicable
basis for determining the rate of interest with respect to any Term Loan or any
Revolving Loan shall be selected by Company initially at the time a Notice of
Borrowing (or telephonic notice as provided in Section 2.1B) is given with
respect to such Loan pursuant to subsection 2.1B, and the basis for determining
the interest rate with respect to any Term Loan or any Revolving Loan may be
changed from time to time pursuant to subsection 2.2D. If on any day a Term Loan
or Revolving Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day that Loan shall bear interest determined by reference to the Base Rate.
(i) Subject to the provisions of subsections 2.2E and 2.7, the
Tranche A Term Loans and the Revolving Loans shall bear interest
through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base
Rate plus the Applicable Tranche A Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Tranche A
Eurodollar Margin.
(ii) Subject to the provisions of subsections 2.2E and 2.7, the
Tranche B Term Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base
Rate plus the
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Applicable Tranche B Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Tranche B
Eurodollar Margin.
(iii) Subject to the provisions of subsections 2.2E and 2.7,
the Swing Line Loans shall bear interest through maturity at the sum of
the Base Rate plus the Applicable Tranche A Base Rate Margin minus the
Applicable Commitment Fee Percentage.
Administrative Agent shall determine the applicable margins for
interest rates based upon the Pricing Level Determination Certificate delivered
to Administrative Agent pursuant to subsection 6.1A(xvii). Any adjustments to
such applicable margins shall become effective one Business Day following the
date on which Administrative Agent receives such Pricing Level Determination
Certificate; provided, however, that if such Pricing Level Determination
Certificate is not delivered within five Business Days after the date required
hereunder (or such later date consented to by Requisite Lenders), Pricing Level
5 shall be applicable until the next Pricing Level Determination Certificate
shall be delivered.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period or, if
deposits in the interbank Eurodollar market are generally available for such
period (as reasonably determined by each Lender making, converting to or
continuing such Eurodollar Rate Loan), a nine month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan
shall commence on the Funding Date in respect of such Loan, in the case
of a Loan initially made as a Eurodollar Rate Loan, or on the date
specified in the applicable Notice of Conversion/Continuation, in the
case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) 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, subject to clause (v) of this
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subsection 2.2B, end on the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Tranche A Term Loans shall extend beyond September 30, 2003, no
Interest Period with respect to any portion of the Tranche B Term Loans
shall extend beyond September 30, 2004 and no Interest Period with
respect to any portion of the Revolving Loans shall extend beyond the
Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the
Tranche A Term Loans or Tranche B Term Loans shall extend beyond a date
on which Company is required to make a scheduled payment of principal
of the Tranche A Term Loans or Tranche B Term Loans, as the case may
be, unless the sum of (a) the aggregate principal amount of Tranche A
Term Loans or Tranche B Term Loans, as the case may be, that are Base
Rate Loans plus (b) the aggregate principal amount of Tranche A Term
Loans or Tranche B Term Loans, as the case may be, that are Eurodollar
Rate Loans with Interest Periods expiring on or before such date equals
or exceeds the principal amount required to be paid on the Tranche A
Term Loans or Tranche B Term Loans, as the case may be, on such date;
(vii) there shall be no more than 16 Interest Periods
outstanding at any time for all of the Loans; and
(viii) in the event Company fails to specify an Interest Period
for any Eurodollar Rate Loan in the applicable Notice of Borrowing or
Notice of Conversion/Continuation, Company shall be deemed to have
selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity by acceleration or otherwise); provided that in the event any Swing
Line Loans or any Revolving Loans that are Base Rate Loans are prepaid pursuant
to subsection 2.4B(i), interest accrued on such Swing Line Loans or Revolving
Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity by acceleration or otherwise).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Tranche A Term Loans, Tranche B Term Loans or Revolving Loans
equal to $5,000,000 and integral multiples of $1,000,000 in excess of that
amount from Base Rate Loans to Eurodollar Rate Loans or (ii) upon the expiration
of any Interest Period applicable to a Eurodollar Rate Loan, (a) to continue all
or any portion of such Loan equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount as a Eurodollar Rate Loan and (b) to convert
all or any portion of such Loan to a Base Rate Loan; provided, however, that a
Eurodollar Rate Loan or portions thereof may be converted into a Base Rate Loan
on any Business Day
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other than the expiration date of an Interest Period applicable to such
Eurodollar Rate Loan if and only if breakage costs determined pursuant to
subsection 2.6 are paid by Company.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 1:00 P.M. (New York time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such telephonic notice shall be promptly
confirmed in writing by delivery of a Notice of Conversion/Continuation to
Administrative Agent no later than the next Business Day thereafter. Upon
receipt of written or telephonic notice of any proposed conversion/continuation
under this subsection 2.2D, Administrative Agent shall promptly transmit such
notice by telefacsimile or telephone to each relevant Lender.
Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of,
a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be
irrevocable after Administrative Agent has given notice thereof to the relevant
Lenders, and Company shall be bound to effect a conversion or continuation in
accordance therewith.
E. Default Rate. Any principal payments on the Loans not paid when due
and, to the extent permitted by applicable law, any interest payments thereon
not paid when due and any fees and other amounts then due and payable hereunder,
shall thereafter bear interest (including post-petition interest in any
proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable upon demand at a rate that is 2.00% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2.00%
per annum in excess of the interest rate otherwise payable under this Agreement
for Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon
the expiration of the Interest Period
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in effect at the time any such increase in interest rate is effective such
Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is 2.00% per annum
in excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans. Payment or acceptance of the increased rates of interest provided
for in this subsection 2.2E is not a permitted alternative to timely payment and
shall not constitute a waiver of any Event of Default or otherwise prejudice or
limit any rights or remedies of Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
2.3 Fees.
A. Commitment Fees. Company agrees to pay to Administrative Agent, for
distribution to each Lender having a Revolving Loan Commitment in proportion to
that Lender's Revolving Pro Rata Share, commitment fees for the period from and
including the Closing Date to and excluding the Revolving Loan Commitment
Termination Date equal to (x) the average of the daily excess of the Revolving
Loan Commitments over the aggregate principal amount of (i) outstanding
Revolving Loans (but not any outstanding Swing Line Loans) plus (ii) the Letter
of Credit Usage multiplied by (y) the Applicable Commitment Fee Percentage, such
commitment fees to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on the first such date
to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date.
B. Other Fees. Company agrees to pay to Arranger, Syndication Agent
and/or Administrative Agent all fees specified in separate letter agreements
among Arranger, Syndication Agent, Administrative Agent and/or Company and to
pay to Administrative Agent such other fees in the amounts and at the times
separately agreed upon between Company and Administrative Agent.
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2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of
Collateral and Payments Under Subsidiary Guaranty.
A. Scheduled Payments of Term Loans.
(i) Scheduled Payments of Tranche A Term Loans. Company shall
make principal payments on the Tranche A Term Loans in installments on
the dates and in the amounts set forth below:
Scheduled
Repayment
of Tranche A
Date Term Loans
------ ------------
June 30, 1999 $7,500,000
September 30, 1999 $7,500,000
December 31, 1999 $8,750,000
March 31, 2000 $8,750,000
June 30, 2000 $8,750,000
September 30, 2000 $8,750,000
December 31, 2000 $10,000,000
March 31, 2001 $10,000,000
June 30, 2001 $10,000,000
September 30, 2001 $10,000,000
December 31, 2001 $12,500,000
March 31, 2002 $12,500,000
June 30, 2002 $12,500,000
September 30, 2002 $12,500,000
December 31, 2002 $15,000,000
March 31, 2003 $15,000,000
June 30, 2003 $15,000,000
September 30, 2003 $15,000,000
Total $200,000,000
============
; provided that each scheduled installment of principal of the Tranche A
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche A Term Loans in
accordance with subsection 2.4B(iv); and provided further that the
Tranche A Term Loans and all other amounts owed hereunder with respect
to the Tranche A Term Loans shall be paid in full no later than
September 30, 2003 and the final installment payable by Company in
respect of the Tranche A Term Loans on such date shall be in an amount,
if such amount is different from that specified above, sufficient to
repay all amounts owing by Company under
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this Agreement with respect to the Tranche A Term Loans.
(ii) Scheduled Payments of Tranche B Term Loans. Company shall
make principal payments on the Tranche B Term Loans in installments on
the dates and in the amounts set forth below:
Scheduled
Repayment
of Tranche B
Date Term Loans
---- ------------
December 31, 1998 $875,000
March 31, 1999 $875,000
June 30, 1999 $875,000
September 30, 1999 $875,000
December 31, 1999 $875,000
March 31, 2000 $875,000
June 30, 2000 $875,000
September 30, 2000 $875,000
December 31, 2000 $875,000
March 31, 2001 $875,000
June 30, 2001 $875,000
September 30, 2001 $875,000
December 31, 2001 $875,000
March 31, 2002 $875,000
June 30, 2002 $875,000
September 30, 2002 $875,000
December 31, 2002 $875,000
March 31, 2003 $875,000
June 30, 2003 $875,000
September 30, 2003 $875,000
December 31, 2003 $83,125,000
March 31, 2004 $83,125,000
June 30, 2004 $83,125,000
September 30, 2004 $83,125,000
Total $350,000,000
============
; provided that each scheduled installment of principal of the Tranche B
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche B Term Loans in
accordance with subsection 2.4B(iv); and provided, further that the
Tranche B Term Loans and all other amounts owed hereunder with respect
to the Tranche B Term Loans shall be paid in full no later than
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September 30, 2004, and the final installment payable by Company in
respect of the Tranche B Term Loans on such date shall be in an amount,
if such amount is different from that specified above, sufficient to
repay all amounts owing by Company under this Agreement with respect to
the Tranche B Term Loans.
(iii) Scheduled Payment of Revolving Loans. Company shall make
a principal payment of 100% of outstanding Revolving Loans on the
Revolving Loan Commitment Termination Date.
B. Prepayments and Unscheduled Reductions in Revolving Loan
Commitments.
(i) Voluntary Prepayments. Company may, upon written or
telephonic notice to Administrative Agent on or prior to 1:00 P.M. (New
York time) on the date of prepayment, which notice, if telephonic, shall
be promptly confirmed in writing (which original written or telephonic
notice Administrative Agent will promptly transmit by telefacsimile or
telephone to Swing Line Lender, whereupon such notice shall be
irrevocable), at any time and from time to time prepay any Swing Line
Loan on any Business Day in whole or in part. Company may, upon not less
than one Business Day's prior written or telephonic notice, in the case
of Base Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 1:00 P.M. (New York time) on the date required
and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or
telephone to each relevant Lender, whereupon such notice shall be
irrevocable), at any time and from time to time prepay any Term Loans or
Revolving Loans on any Business Day in whole or in part; provided,
however, that a Eurodollar Rate Loan may be prepaid on any Business Day
other than the expiration of the Interest Period applicable thereto only
if breakage costs determined pursuant to subsection 2.6D are paid by
Company. Any such voluntary prepayment shall be applied as specified in
subsection 2.4B(iv). Voluntary prepayments of Tranche A Term Loans or
Tranche B Term Loans shall be without premium or penalty.
(ii) Voluntary Reductions of Revolving Loan Commitments.
Company may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each Lender), at any time and
from time to time terminate in whole or permanently reduce in part,
without premium or penalty, the Revolving Loan Commitments in an amount
up to the amount by which the Revolving Loan Commitments exceed the
Total Utilization of Revolving Loan Commitments at the time of such
proposed termination or reduction;
provided that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $5,000,000 and
integral multiples of $1,000,000. Company's notice to Administrative
Agent shall designate the date (which shall be a
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Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving
Loan Commitments shall be effective on the date specified in Company's
notice and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Revolving Pro Rata Share. Any such voluntary
reduction of the Revolving Loan Commitments shall be applied as
specified in subsection 2.4B(iv).
(iii) Mandatory Prepayments of Loans and Mandatory Reductions
of Revolving Loan Commitments. The Loans shall be prepaid and/or the
Revolving Loan Commitments shall be permanently reduced in the amounts
and under the circumstances set forth below, all such prepayments and/or
reductions to be applied as set forth below or as more specifically
provided in subsection 2.4B(iv):
(a) Prepayments and Reductions From Net Asset Sale
Proceeds. No later than the second Business Day following the
date of receipt by Company or any of its Subsidiaries of any
Net Asset Sale Proceeds in respect of Asset Sales if such Net
Asset Sale Proceeds exceed an aggregate cumulative amount of
$5,000,000 during any given Fiscal Year, Company shall prepay
the Loans and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to such Net
Asset Sale Proceeds; provided, however, that Net Asset Sale
Proceeds shall be excluded from the requirements of this
subsection 2.4B(iii)(a) to the extent such proceeds are
reinvested in assets used by Company and its Subsidiaries in
the conduct of its business within 180 days after receipt of
such proceeds; provided further that Company shall, within two
Business Days of the receipt by Company or any of its
Subsidiaries of Net Asset Sale Proceeds, deliver to Agents an
Officer's Certificate setting forth the amount of such Net
Asset Sale Proceeds and the amount of the mandatory prepayment
to be made, if any, pursuant to this subsection 2.4B(iii)(a)
and setting forth in reasonable detail the calculations from
which such amounts were derived, and, with respect to any Net
Asset Sale Proceeds to be reinvested as provided in this
subsection 2.4B(iii)(a), a general description of the intended
application thereof and a general estimate of the costs of the
reinvestment in accordance with this subsection 2.4B(iii)(a).
In the event that any portion of Net Asset Sale Proceeds
received by Company or any of its Subsidiaries which are
excluded from the mandatory prepayment requirement in
accordance with this subsection 2.4B(iii)(a) are not expended
for the general purposes specified in the Officer's
Certificate delivered by the Company in connection therewith
within the 180-day time period, Company shall, immediately
upon the expiration of the 180-day time period, make a
mandatory prepayment of the Loans as specified in the first
sentence of this subsection 2.4B(iii)(a) in an amount equal to
such unexpended portion.
(b) Prepayments and Reductions Due to Issuance of
Equity Securities. No later than the second Business Day
following the date of receipt by Company or any of its
Subsidiaries of Net Equity Proceeds, Company shall prepay the
Loans and/or the Revolving Loan Commitments shall be
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permanently reduced in an aggregate amount equal to (i) 50% of
such Net Equity Proceeds if such Net Equity Proceeds are less
than or equal to $200,000,000 (as determined on a cumulative
basis for the period after the Closing Date); and (ii) either
(x) 50% of any such Net Equity Proceeds in excess of
$200,000,000 (as determined on a cumulative basis for the
period after the Closing Date) received by Company at any time
during such period when the Consolidated Leverage Ratio as of
the end of the immediately preceding four Fiscal Quarter
period (for which Administrative Agent has received an
Officer's Certificate showing the Consolidated Leverage Ratio
for such period) is greater than or equal to 2.5:1.0 or (y) 0%
of any such Net Equity Proceeds in excess of $200,000,000 (as
determined on a cumulative basis for the period after the
Closing Date) at any time during such period when the
Consolidated Leverage Ratio as of the end of the immediately
preceding four Fiscal Quarter period (for which Administrative
Agent has received an Officer's Certificate showing the
Consolidated Leverage Ratio for such period) is less than
2.5:1.0, as may be applicable.
(c) Prepayments and Reductions Due to Issuance of Debt
Securities. No later than the second Business Day following
the date of receipt by Company or any of its Subsidiaries of
Net Debt Proceeds (excluding any Net Debt Proceeds of
Indebtedness permitted under subsection 7.1(i), (iv), (vii),
(viii) and (ix)), Company shall prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to such Net Debt Proceeds. Any such
mandatory prepayments shall be applied as specified in
subsection 2.4B(iv).
(d) Prepayments and Reductions from Consolidated
Excess Cash Flow. In the event that there shall be
Consolidated Excess Cash Flow for any Fiscal Year (commencing
with the Fiscal Year ending June 30, 1999), Company shall
prepay no later than 90 days after the end of such Fiscal Year
the Loans and/or the Revolving Loan Commitments shall be
permanently reduced (a) in an aggregate amount equal to 0% of
such Consolidated Excess Cash Flow for each Fiscal Year in
which the Consolidated Leverage Ratio, as determined as at the
last day of such Fiscal Year is less than 2.5:1.0, and (b) an
aggregate amount equal to 50% of such Consolidated Excess Cash
Flow for each Fiscal Year in which the Consolidated Leverage
Ratio, as determined as at the last day of such Fiscal Year,
is greater than or equal to 2.5 to 1.0.
(e) Prepayments and Reductions from Net
Insurance/Condemnation Proceeds. No later than the second
Business Day following the date of receipt by Administrative
Agent or by Company or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds that are required to be
applied to prepay the Loans and/or reduce the Revolving Loan
Commitments pursuant to subsection 6.4C, Company shall prepay
the Loans and/or the Revolving Loan Commitments will be
permanently reduced in an aggregate amount equal to the amount
of such Net Insurance/Condemnation Proceeds.
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(f) Calculations of Net Proceeds Amounts; Additional
Prepayments and Reductions Based on Subsequent Calculations.
Concurrently with any prepayment of the Loans and/or reduction
of the Revolving Loan Commitments pursuant to subsections
2.4B(iii)(a)-(e), Company shall deliver to Administrative
Agent an Officer's Certificate demonstrating the calculation
of the amount (the "Net Proceeds Amount") of the applicable
Net Asset Sale Proceeds or Net Equity Proceeds or Net Debt
Proceeds or Net Insurance/Condemnation Proceeds, or the
applicable Consolidated Excess Cash Flow, as the case may be,
that gave rise to such prepayment and/or reduction.
In the event that Company shall subsequently determine
that the actual Net Proceeds Amount was greater than the amount set forth in
such Officer's Certificate, Company shall promptly make an additional prepayment
of the Loans (and/or, if applicable, the Revolving Loan Commitments shall be
permanently reduced) in an amount equal to the amount of such excess, and
Company shall concurrently therewith deliver to Administrative Agent an
Officer's Certificate demonstrating the derivation of the additional Net
Proceeds Amount resulting in such excess.
(g) Prepayments Due to Reductions or Restrictions of
Revolving Loan Commitments. Company shall from time to time
prepay first the Swing Line Loans and second the Revolving
Loans to the extent necessary (1) so that the Total
Utilization of Revolving Loan Commitments shall not at any
time exceed the Revolving Loan Commitments then in effect and
(2) to give effect to the limitations set forth in the second
paragraph of subsection 2.1A(iii) and in the second paragraph
of subsection 2.1A(iv).
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(iv) Application of Prepayments and Unscheduled Reductions of
Revolving Loan Commitments.
(a) Application of Voluntary Prepayments by Type of
Loans and Order of Maturity. Subject to subsection
2.4B(iv)(c), any voluntary prepayments pursuant to subsection
2.4B(i) shall be applied as specified by Company in the
applicable notice of prepayment; provided that in the event
Company fails to specify the Loans to which any such
prepayment shall be applied, such prepayment shall be applied
first to repay outstanding Swing Line Loans to the full extent
thereof, second to repay outstanding Term Loans to the full
extent thereof, and third to repay outstanding Revolving Loans
to the full extent thereof. Subject to subsection 2.4B(iv)(c),
any voluntary prepayments of the Term Loans pursuant to
subsection 2.4B(i) shall be applied to prepay the Tranche A
Term Loans and the Tranche B Term Loans on a pro rata basis
(in accordance with the respective outstanding principal
amounts thereof) first to scheduled installments of principal
of the Tranche A Term Loans and the Tranche B Term Loans
scheduled within one year of the prepayment in forward order
of maturity on a pro rata basis and second to prepay the
remaining scheduled installments of principal of the Tranche A
Term Loans and the Tranche B Term Loans set forth in
subsections 2.4A(i) and 2.4A(ii), respectively, on a pro rata
basis.
(b) Application of Mandatory Prepayments by Type of
Loans. Any amount (the "Applied Amount") required to be
applied as a mandatory prepayment of the Loans and/or a
reduction of the Revolving Loan Commitments pursuant to
subsections 2.4B(iii)(a)-(e) shall be applied first to prepay
the Term Loans to the full extent thereof, second, to the
extent of any remaining portion of the Applied Amount, to
prepay the Swing Line Loans to the full extent thereof and
thereby to permanently reduce the Revolving Loan Commitments
by the amount of such prepayment, third, to the extent of any
remaining portion of the Applied Amount, to prepay the
Revolving Loans to the full extent thereof and thereby to
further permanently reduce the Revolving Loan Commitments by
the amount of such prepayment, and fourth, to the extent of
any remaining portion of the Applied Amount, to further
permanently reduce the Revolving Loan Commitments to the full
extent thereof.
(c) Application of Mandatory Prepayments of Term Loans
to Tranche A Term Loans and Tranche B Term Loans and the
Scheduled Installments of Principal Thereof.
(1) Any mandatory prepayments of the Term
Loans pursuant to subsection 2.4B(iii)(a)-(e) shall be
applied to prepay the Tranche A Term Loans and the
Tranche B Term Loans on a pro rata basis in accordance
with the respective outstanding principal amounts
thereof; provided that, in the case of any such
mandatory prepayment of the
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Tranche B Term Loans with respect to which Company has
given Administrative Agent written notification, prior
to Administrative Agent's receipt of such mandatory
prepayment, that Company has elected to give each
Lender of Tranche B Term Loans the option to waive
their rights to receive such prepayment (a "Waivable
Mandatory Prepayment"), Administrative Agent shall,
upon receipt of such Waivable Mandatory Prepayment,
notify each Lender of Tranche B Term Loans of such
receipt and of the amount of such Waivable Mandatory
Prepayment to be applied to such Lender's Tranche B
Term Loan and of the designation of such Waivable
Mandatory Prepayment as such by Company; provided
further that Company shall use its reasonable efforts
to notify Tranche B Term Lenders of such Waivable
Mandatory Prepayment three Business Days prior to the
payment to Administrative Agent of such Waivable
Mandatory Prepayment (it being understood that Company
shall have no liability for failing to so notify
Tranche B Term Lenders). In the event any Tranche B
Term Lender desires to waive such Lender's right to
receive such Waivable Mandatory Prepayment, (A) such
Lender shall so advise Administrative Agent in writing
(or by telephone with written confirmation) no later
than the close of business on the date it receives
such notice from Administrative Agent and (B) upon
application of such proceeds from such Lender, (I)
Administrative Agent shall apply 50% of the amount so
waived by such Lender to prepay the Tranche A Term
Loans and to reduce the unpaid scheduled installments
of principal of the Tranche A Term Loans set forth in
subsection 2.4A(i) on a pro rata basis and (II) in the
case of amounts so waived prior to payment to
Administrative Agent, Company shall retain the
remainder of the amount so waived and in the case of
amounts so waived after payment to Administrative
Agent, Administrative Agent shall return the remainder
of the amount so waived by such Lender to Company. Any
amounts so waived by any Tranche B Term Lender
thereupon shall be scheduled to be paid to such Lender
on September 30, 2004, and, if not paid prior to such
date, shall be paid on such date as required by the
second proviso of subsection 2.4A(ii).
(2) Any mandatory prepayments applied to the
Tranche A Term Loans or the Tranche B Term Loans
pursuant to subsection 2.4B(iv)(c)(1) shall be applied
on a pro rata basis (in accordance with the respective
outstanding principal amounts thereof) to reduce each
scheduled installment of principal of the Tranche A
Term Loans or the Tranche B Term Loans, as the case
may be, set forth in subsection 2.4A(i) or 2.4A(ii)
that is unpaid at the time of such prepayment.
(d) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Considering Tranche A Term Loans,
Tranche B Term Loans and Revolving Loans being prepaid
separately, any prepayment thereof shall be
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applied first to Base Rate Loans to the full extent thereof
before application to Eurodollar Rate Loans, in each case in a
manner which minimizes the amount of any payments required to
be made by Company pursuant to subsection 2.6D.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. Without prejudice to Section
10.4, all payments by Company of principal, interest, fees and other
Obligations hereunder and under the Notes shall be made in Dollars in
same day funds, without defense, setoff or counterclaim, free of any
restriction or condition, and delivered to Administrative Agent not
later than 1:00 P.M. (New York time) on the date due to the Funding and
Payment Account for the account of Lenders. Funds received by
Administrative Agent after such time on such due date shall be deemed to
have been paid by Company on the next succeeding Business Day.
(ii) Application of Payments to Principal and Interest. All
payments in respect of any Loan shall be applied to the payment of
interest then due and payable in accordance with Section 2.2 before
application to principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments in respect of Term Loans and Revolving Loans shall be
apportioned among all outstanding Loans to which such payments relate,
in each case proportionately to Lenders' respective Tranche A Pro Rata
Shares, Tranche B Pro Rata Shares or Revolving Pro Rata Shares, as the
case may be. Administrative Agent shall promptly distribute to each
Lender, at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such
Lender may request, its Tranche A Pro Rata Share, Tranche B Pro Rata
Share or Revolving Pro Rata Share, as the case may be, of all such
payments received by Administrative Agent and the commitment fees of
such Lender when received by Administrative Agent pursuant to subsection
2.3. Notwithstanding the foregoing provisions of this subsection
2.4C(iii), if, pursuant to the provisions of subsection 2.6C, any Notice
of Conversion/Continuation is withdrawn as to any Affected Lender or if
any Affected Lender makes Base Rate Loans in lieu of its Tranche A Pro
Rata Share, Tranche B Pro Rata Share or Revolving Pro Rata Share, as the
case may be, of any Eurodollar Rate Loans, Administrative Agent shall
give effect thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Subject to subsection 2.2B,
whenever any payment to be made hereunder shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
the computation of the payment of interest hereunder or of the
commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that
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Lender will make a notation thereon of all Loans evidenced by that Note
and all principal payments previously made thereon and of the date to
which interest thereon has been paid; provided that the failure to make
(or any error in the making of) a notation of any Loan made under such
Note shall not limit or otherwise affect the Obligations of Company
hereunder or under such Note with respect to any Loan or any payments of
principal or interest on such Note.
D. Application of Proceeds of Collateral and Payments Under Subsidiary
Guaranty.
(i) Application of Proceeds of Collateral. Except as provided
in subsection 2.4B(iii)(a) with respect to prepayments from Net Asset
Sale Proceeds, all proceeds received by Administrative Agent in respect
of any sale of, collection from, or other realization upon all or any
part of the Collateral under any Collateral Document shall be applied in
full or in part by Administrative Agent against the applicable Secured
Obligations (as defined in such Collateral Document) in the following
order of priority:
(a) To the payment of all costs and expenses of such
sale, collection or other realization, including reasonable
compensation to Administrative Agent and its agents and
counsel, and all other expenses, liabilities and advances made
or incurred by Administrative Agent in connection herewith and
therewith, and all amounts for which Administrative Agent is
entitled to indemnification hereunder and under such
Collateral Document and all advances made by Administrative
Agent hereunder and thereunder for the account of the
applicable Loan Party, and to the payment of all costs and
expenses paid or incurred by Administrative Agent in
connection with the exercise of any right or remedy hereunder
and under such Collateral Document, all in accordance with the
terms of this Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such
proceeds, to the payment of all other such Secured Obligations
for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such
proceeds, to the payment to or upon the order of such Loan
Party or to whosoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
(ii) Application of Payments Under Subsidiary Guaranty. All
payments received by Administrative Agent under the Subsidiary Guaranty
("Guaranty Payments") shall be applied promptly from time to time by
Administrative Agent in the following order of priority:
(a) To the payment of the costs and expenses of any
collection or
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other realization under the Subsidiary Guaranty, including
reasonable compensation to Administrative Agent and its agents
and counsel, and all expenses, liabilities and advances made
or incurred by Administrative Agent in connection herewith and
therewith, all in accordance with the terms of this Agreement
and such Subsidiary Guaranty;
(b) thereafter, to the extent of any excess such
Guaranty Payments, to the payment of all other Guaranteed
Obligations (as defined in such Guaranty) for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such
Guaranty Payments, to the payment to the applicable Subsidiary
Guarantor or to whosoever may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
2.5 Use of Proceeds.
A. Term Loans. The proceeds of the Term Loans, together with the
Company Cash Contribution, shall be applied by Company to fund a portion of the
purchase price of the acquisition of BCL.
B. Revolving Loans; Swing Line Loans. The proceeds of any Revolving
Loans and any Swing Line Loans shall be applied by Company for working capital
and general corporate purposes (including the funding of the Acquisition
Purchase Price Adjustment and replacing the existing receivables financing of
BCL of approximately $70,000,000), and Commercial Letters of Credit and Standby
Letters of Credit shall be issued for the purposes set forth in the definition
of such terms.
C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable on
each Interest Rate Determination Date, Administrative Agent shall determine
(which determination shall, absent manifest error in calculation, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof (in
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writing or by telephone confirmed in writing) to Company and each relevant
Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto) that the making,
maintaining or continuation of Loans bearing interest determined by reference to
the Adjusted Eurodollar Rate (i) has become unlawful as a result of compliance
by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "Affected
Lender" and it shall on that day give notice (by telefacsimile or by telephonic
notice confirmed in writing) to Company and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to each
other Lender). Thereafter, (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until
such notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected
Loans") shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Administrative
Agent of such rescission on the date on which the
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Affected Lender gives notice of its determination as described above (which
notice of rescission Administrative Agent shall promptly transmit to each other
Lender). Except as provided in the immediately preceding sentence, nothing in
this subsection 2.6C shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar
Rate Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the manner and method of computing such compensation),
for all reasonable losses, expenses and liabilities, if any, (including any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability incurred by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may incur: (i) if for any reason (other than a default by that
Lender or due to any failure of any Lender to fund Eurodollar Loans due to
illegality or impracticability under subsection 2.6C) a borrowing of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any prepayment
pursuant to subsection 2.4B(i)) or other principal payment or any conversion of
any of its Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to that Loan or (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by Company.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of an Event of Default, (i) Company may not elect to
have a Loan be made or continued as, or converted to, a Eurodollar Rate Loan
after the expiration of any Interest Period then in effect for that Loan and
(ii) subject to the provisions of subsection 2.6D, any Notice of Borrowing or
Notice of Conversion/Continuation given by Company with respect to a requested
borrowing or conversion/continuation that has not yet occurred shall be
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deemed to be rescinded by Company and be deemed a request to convert or continue
Loans referred to therein as Base Rate Loans.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall reasonably determine in
good faith (which determination shall be rebuttably presumed to be correct) that
any law, treaty or governmental rule, regulation or order enacted, entered into
or promulgated after the date hereof or any change after the date hereof therein
or in the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) subjects such Lender (or its applicable lending office) to
any additional Tax (other than any Tax on the overall net income of such
Lender or any franchise Tax) with respect to this Agreement or any of
its obligations hereunder or any payments to such Lender (or its
applicable lending office) of principal, interest, fees or any other
amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of such Lender
(other than any such reserve or other requirements with respect to
Eurodollar Rate Loans that are reflected in the definition of Adjusted
Eurodollar Rate); or
(iii) imposes on such Lender (or its applicable lending
office) any other condition (other than with respect to a Tax matter) on
or affecting such Lender (or its applicable lending office) or its
obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto, then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder; provided that a Lender shall not be entitled to avail itself of the
benefit of this subsection 2.7A to the extent it had an ability (subject to
subsection 2.8A), without incurring, as determined in its sole discretion, any
material cost prior to incurrence of such increased costs or taxes to reduce or
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avoid the same through the relocation of its lending office or otherwise (and
failed to do so) and to the extent that any such increased cost or reduction in
amounts was incurred more than six months prior to the time it gives notice to
Company (as provided in the next sentence) of the relevant circumstance, unless
such circumstance arose or became applicable retroactively, in which case such
Lender shall not be limited to such six month period so long as such Lender has
given such notice to Company no later than one year from the time such
circumstance became known to Lender to be applicable to such Lender. Such Lender
shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis for calculating
additional amounts to such Lender under this subsection 2.7A, which statement
shall be rebuttably presumed to be correct.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other Loan Documents shall (except to the
extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender or any franchise Tax) imposed, levied,
collected, withheld or assessed by or within the United States of
America or any political subdivision in or of the United States of
America or any other jurisdiction from or to which a payment is made by
or on behalf of Company or by any federation or organization of which
the United States of America or any such jurisdiction is a member at the
time of payment.
(ii) Grossing-up of Payments. If Company or Administrative
Agent is required by law to make any deduction or withholding on account
of any such Tax from any sum paid or payable by Company to
Administrative Agent or any Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any
such requirement or any change in any such requirement as soon
as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if
the liability to pay is imposed on Company) for its own
account or (if that liability is imposed on Administrative
Agent or such Lender, as the case may be) on behalf of and in
the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall
be increased to the extent necessary to ensure that, after the
making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been
required or made;
(d) within 30 days after paying any sum from which it
is required
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by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is
required by clause (b) above to pay, Company shall deliver to
Administrative Agent evidence satisfactory to the other
affected parties of such deduction, withholding or payment and
of the remittance thereof to the relevant taxing or other
authority;
provided that no such additional amount shall be required to
be paid to any Lender under clause (c) above except to the
extent that any change after the date hereof (in the case of
each Lender listed on the signature pages hereof) or after the
date of the Assignment Agreement pursuant to which such Lender
became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of
such deduction, withholding or payment from that in effect at
the date of this Agreement or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such
Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of
any jurisdiction other than the United States or any state or
other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "Non-US Lender") shall deliver to
Administrative Agent for transmission to Company, on or prior
to the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on or prior to the effective date
of the Assignment Agreement pursuant to which it becomes a
Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue
Service Form 1001 or 4224 (or any successor forms), properly
completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect
to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Loan Documents or (2)
if such Lender is not a "bank" or other Person described in
Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue Service
Form W-8 (or any successor form), properly completed and duly
executed by such Lender, together with any other certificate
or statement of exemption required under the Internal Revenue
Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of
United States federal income tax with respect to any payments
to such Lender of interest payable under any of the Loan
Documents.
(b) Each Lender required to deliver any forms,
certificates or other
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evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby
agrees, from time to time after the initial delivery by such
Lender of such forms, certificates or other evidence, whenever
a lapse in time or change in circumstances renders such forms,
certificates or other evidence obsolete or inaccurate in any
material respect, that such Lender shall promptly (1) deliver
to Administrative Agent for transmission to Company two new
original copies of Internal Revenue Service Form 1001 or 4224,
or a Certificate re Non-Bank Status and two original copies of
Internal Revenue Service Form W-8, as the case may be,
properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required
in order to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal
income tax with respect to payments to such Lender under the
Loan Documents or (2) notify Administrative Agent and Company
of its inability to deliver any such forms, certificates or
other evidence.
(c) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to
satisfy the requirements of clause (a) or (b)(1) of this
subsection 2.7B(iii); provided that if such Lender shall have
satisfied the requirements of subsection 2.7B(iii)(a) on the
Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment
Agreement pursuant to which it became a Lender (in the case of
each other Lender), nothing in this subsection 2.7B(iii)(c)
shall relieve Company of its obligation to pay any additional
amounts pursuant to clause (c) of subsection 2.7B(ii) in the
event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any
change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to
withholding as described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change after the date hereof therein or in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its applicable lending office) with any guideline,
request or directive published, rendered or given after the date hereof
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any such
Lender's holding company, if any, as a consequence of, or with reference to,
such Lender's Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such Lender's holding
company, if any, could have achieved but for such adoption, effectiveness,
phase-in, applicability, change or
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compliance (taking into consideration the policies of such Lender or such
holding company with regard to capital adequacy) then from time to time, within
five Business Days after receipt by Company from such Lender of the statement
referred to in the next sentence, Company shall pay to such Lender upon receipt
of such statement such additional amount or amounts as will compensate such
Lender or such controlling corporation on an after-tax basis for such reduction;
provided that a Lender shall not be entitled to avail itself of the benefit of
this subsection 2.7C to the extent that any such reduction of return was
incurred more than six months prior to the time such Lender gives notice to
Company, unless such reduction arose retroactively, in which case such Lender
shall give such notice within six months from the time such reductions become
applicable to such Lender. Such Lender shall deliver to Company (with a copy to
Administrative Agent) a written statement, setting forth in reasonable detail
the basis of the calculation of the additional amounts, which statement shall be
conclusive and binding upon all parties hereto absent error.
D. Substitute Lenders. In the event Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender or in the event any Lender defaults on its obligation to lend to Company
in accordance with this Agreement, Company may, so long as no Event of Default
or Potential Event of Default shall have occurred and be continuing, elect to
terminate such Lender as a party to this Agreement; provided that, concurrently
with such termination, (i) Company shall pay that Lender all principal, interest
and fees and other amounts (including without limitation, amounts, if any, owed
under this subsection 2.7) owed to such Lender through such date of termination,
(ii) another financial institution or other entity satisfactory to Company and
Agents (or if an Agent is also the Lender to be terminated, the successor such
Agent) shall agree, as of such date, to become a Lender for all purposes under
this Agreement (whether by assignment or amendment) and to assume all
obligations of the Lender to be terminated as of such date, and (iii) all
documents and supporting materials necessary, in the judgment of Agents (or if
an Agent is also the Lender to be terminated, the successor to such Agent), to
evidence the substitution of such Lender shall have been received and approved
by Administrative Agent as of such date.
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2.8 Obligation of Lenders and Issuing Lenders to Mitigate.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after such Lender or Issuing Lender becomes aware of the occurrence of an event
or the existence of a condition that would cause such Lender to become an
Affected Lender or that would entitle such Lender or Issuing Lender to receive
payments under subsection 2.7 or subsection 3.6, it will, to the extent not
inconsistent with the internal policies of such Lender or Issuing Lender and any
applicable legal or regulatory restrictions, and so long as it does not, as
determined in its sole discretion, incur material costs or suffer material
adverse effect, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office unless Company agrees to pay all reasonable incremental
expenses incurred by such Lender or Issuing Lender as a result of utilizing such
other lending or credit office described in clause (i) above. A certificate as
to the amount of any such expenses payable by Company pursuant to this
subsection 2.8 (setting forth in reasonable detail the basis for requesting such
amount) submitted by such Lender or Issuing Lender to Company (with a copy to
Administrative Agent) shall be conclusive absent manifest error.
Section 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.
A. Letters of Credit. In addition to Company requesting that Lenders
make Revolving Loans pursuant to subsection 2.1A(iii) and that Swing Line Lender
make Swing Line Loans pursuant to subsection 2.1A(iv), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date, that one or more Lenders having a Revolving Loan Commitment
issue Letters of Credit for the account of Company for the purposes specified in
the definitions of Commercial Letters of Credit and Standby Letters of Credit.
Subject to the terms and conditions of this Agreement and in reliance upon the
representations and warranties of Company herein set forth, any one or more
Lenders having a Revolving Loan Commitment may, but (except as provided in
subsection 3.1B(ii)) shall not be obligated to, issue such Letters of Credit in
accordance with
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the provisions of this subsection 3.1; provided that Company shall not request
that any Lender issue (and no Lender shall issue):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $10,000,000 at any
time in the aggregate;
(iii) any Standby Letter of Credit having an expiration date
later than the earlier of (a) seven Business Days before the Revolving
Loan Commitment Termination Date and (b) the date which is one year from
the date of issuance of such Standby Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent any Issuing Lender
from agreeing that a Standby Letter of Credit will automatically be
extended for one or more successive periods not to exceed one year each
unless such Issuing Lender elects not to extend for any such additional
period; and provided, further that such Issuing Lender shall elect not
to extend such Standby Letter of Credit if it has knowledge that an
Event of Default has occurred and is continuing (and has not been waived
in accordance with subsection 10.6) at the time such Issuing Lender must
elect whether or not to allow such extension; or
(iv) any Commercial Letter of Credit (a) having an expiration
date later than the earlier of (X) the date which is 30 days prior to
the Revolving Loan Commitment Termination Date and (Y) the date which is
180 days from the date of issuance of such Commercial Letter of Credit
or (b) that is otherwise unacceptable to the applicable Issuing Lender
in its reasonable discretion.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance
of a Letter of Credit in accordance with subsection 3.1A above, it shall
deliver to Administrative Agent a Notice of Issuance of Letter of Credit
substantially in the form of Exhibit III annexed hereto no later than
1:00 P.M. (New York time) at least three Business Days (in the case of
Standby Letters of Credit) or five Business Days (in the case of
Commercial Letters of Credit), or in each case (once the Issuing Lender
has been selected and with the Administrative Agent's approval) such
shorter period as may be agreed to by the Issuing Lender in any
particular instance, in advance of the proposed date of issuance. The
Notice of Issuance of Letter of Credit shall specify (a) the proposed
date of issuance (which shall be a Business Day), (b) whether the Letter
of Credit is to be a Standby Letter of Credit or a Commercial Letter of
Credit, (c) the face amount of the Letter of Credit, (d) the expiration
date of the Letter of Credit (subject to subsection 3.1A hereof), (e)
the name and address of the beneficiary, and (f) either the verbatim
text of the proposed Letter of Credit or the proposed terms and
conditions thereof, including a precise description and list of any
documents (including the content thereof) to be presented by the
beneficiary which, if presented by the
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beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Lender to make payment under the Letter of Credit;
provided that the Issuing Lender, in its reasonable discretion, may
require changes in the text of the proposed Letter of Credit or any such
documents; and provided, further that no Letter of Credit shall require
payment against a conforming draft to be made thereunder on the same
business day (under the laws of the jurisdiction in which the office of
the Issuing Lender to which such draft is required to be presented is
located) that such draft is presented if such presentation is made after
10:00 A.M. (in the time zone of such office of the Issuing Lender) on
such business day. Upon the Administrative Agent's receipt of such
Notice of Issuance, the Issuing Lender shall be determined in accordance
with subsection 3.1B(ii) hereof.
Company shall notify the applicable Issuing Lender
(and Administrative Agent, if Administrative Agent is not such Issuing
Lender) prior to the issuance of any Letter of Credit in the event that
any of the matters to which Company is required to certify in the
applicable Notice of Issuance of Letter of Credit is no longer true and
correct as of the proposed date of issuance of such Letter of Credit,
and upon the issuance of any Letter of Credit Company shall be deemed to
have re-certified, as of the date of such issuance, as to the matters to
which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by
Administrative Agent of a Notice of Issuance of Letter of Credit
pursuant to subsection 3.1B(i) requesting the issuance of a Letter of
Credit, in the event the Lender that is Administrative Agent elects, in
its sole discretion, to issue such Letter of Credit, Administrative
Agent shall promptly so notify Company, and such Lender shall be the
Issuing Lender with respect thereto. In the event that such Lender, in
its sole discretion, elects not to issue such Letter of Credit,
Administrative Agent shall promptly so notify Company, whereupon Company
may request any other Lender having a Revolving Loan Commitment to issue
such Letter of Credit by delivering to such Lender a copy of the
applicable Notice of Issuance of Letter of Credit and advising the
Administrative Agent of such request in writing or by telephonic notice
(promptly confirmed in writing). Any Lender so requested to issue such
Letter of Credit shall promptly notify Company and Administrative Agent,
in writing or by telephonic notice (promptly confirmed in writing),
whether or not, in its sole discretion, it has elected to issue such
Letter of Credit, and any such Lender which so elects to issue such
Letter of Credit shall be the Issuing Lender with respect thereto. In
the event that all other Lenders shall have declined to issue such
Letter of Credit, notwithstanding the prior election of the Lender that
is Administrative Agent not to issue such Letter of Credit, such Lender
shall be obligated to issue such Letter of Credit and shall be the
Issuing Lender with respect thereto, notwithstanding the fact that the
Letter of Credit Usage with respect to such Letter of Credit and with
respect to all other Letters of Credit issued by such Lender, when
aggregated with such Lender's outstanding Revolving Loans and Swing Line
Loans, may exceed such Lender's Revolving Loan Commitment then in
effect.
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(iii) Issuance of Letter of Credit. Upon satisfaction or
waiver (in accordance with subsection 10.6) of the conditions set forth
in subsection 4.3, the Issuing Lender shall issue the requested Letter
of Credit in accordance with the Issuing Lender's standard operating
procedures.
(iv) Notification to Lenders. Upon the issuance of any Letter
of Credit, the Issuing Lender thereof shall promptly notify
Administrative Agent and each other Lender having a Revolving Loan
Commitment of such issuance, which notice shall be accompanied by a copy
of such Letter of Credit. Promptly after receipt of such notice (or, if
the Lender that is Administrative Agent is the Issuing Lender, together
with such notice), Administrative Agent shall notify each Lender of the
amount of such Lender's respective participation in such Letter of
Credit, determined in accordance with subsection 3.1C.
(v) Reports to Lenders. Within 15 days after the end of each
calendar quarter ending after the Closing Date, so long as any Letter of
Credit shall have been outstanding during such calendar quarter, each
Issuing Lender shall deliver to Administrative Agent, which shall
deliver to each other Lender having a Revolving Loan Commitment a report
setting forth for such calendar quarter the daily aggregate amount
available to be drawn under the Letters of Credit issued by such Issuing
Lender that were outstanding during such calendar quarter.
C. Lenders' Purchase of Participations in Letters of Credit. Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby agrees to, have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and any drawings honored thereunder in an
amount equal to such Lender's Revolving Pro Rata Share of the Revolving Loan
Commitments multiplied by the maximum amount which is or at any time may become
available to be drawn thereunder.
3.2 Letter of Credit Fees.
Company agrees to pay the following amounts with respect to
Letters of Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a
fronting fee, payable directly to the Issuing Lender thereof for its own
account, equal to the greater of (X) $500 and (Y) 0.25% per annum of the
daily amount available to be drawn under such Standby Letter of Credit
and (b) a letter of credit fee, payable to Administrative Agent for the
account of Lenders having a Revolving Loan Commitment, equal to (i) the
Applicable Tranche A Eurodollar Margin (with respect to a Standby Letter
of Credit) multiplied by (ii) the average daily amount available to be
drawn under such Standby Letter of Credit, each such fronting fee or
letter of credit fee to be payable in arrears on and to (but excluding)
each March 31, June 30, September 30 and December 31 of each year and
computed on the basis of a 360-day year for the actual number of days
elapsed;
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(ii) with respect to each Commercial Letter of Credit, (a) a
fronting fee, payable directly to the Issuing Lender thereof for its own
account, equal to the greater of (X) $500 and (Y) 0.25% per annum of the
daily amount available to be drawn under such Commercial Letter of
Credit and (b) a letter of credit fee, payable to Administrative Agent
for the account of Lenders having a Revolving Loan Commitment, in such
amount as may be agreed by Company and Issuing Lender, each such
fronting fee or letter of credit fee to be payable at issuance of such
Commercial Letter of Credit; and
(iii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clauses (i) or (ii)
above), documentary and processing charges payable directly to the
Issuing Lender thereof for its own account in accordance with such
Issuing Lender's standard schedule for such charges in effect at the
time of such issuance, amendment, transfer or payment, as the case may
be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by Administrative Agent of any amount
described in clause (i)(b) of this subsection 3.2, Administrative Agent shall
distribute to each Lender having a Revolving Loan Commitment its Revolving Pro
Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit.
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine
with reasonable care the documents delivered by such beneficiary under such
Letter of Credit so as to ascertain whether such documents appear on their face
to be in accordance with the terms and conditions of such Letter of Credit.
B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
(for any Issuing Lender other than the Lender that is Administrative Agent)
Administrative Agent (which notice shall be in writing or telephonic notice
(promptly confirmed in writing)), and Company shall reimburse Administrative
Agent for the account of such Issuing Lender on or before the Business Day
immediately following the date on which notification that such Issuing Lender
has determined to honor such drawing has been delivered to Company (the
"Reimbursement Date") in an amount in Dollars and in same day funds equal to the
amount of such honored drawing; provided that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent and such Issuing Lender prior to 11:00 A.M. (New
York time) on the Reimbursement Date that Company intends on such day to
reimburse Administrative Agent for the account of such Issuing Lender for the
amount of such honored drawing with funds other than the proceeds of Revolving
Loans, Company shall
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be deemed to have given a timely Notice of Borrowing to Administrative Agent
requesting Lenders to make Revolving Loans that are Base Rate Loans on the
Reimbursement Date in an amount in Dollars equal to the amount of such honored
drawing and Administrative Agent shall promptly notify each relevant Lender of
its Revolving Pro Rata Share of such Revolving Loans and (ii) subject to
satisfaction or waiver of the conditions specified in subsection 4.2B, Lenders
shall, not later than 3:00 P.M. (New York time) on the Reimbursement Date, make
Revolving Loans that are Base Rate Loans in the amount of such honored drawing,
the proceeds of which shall be applied directly by Administrative Agent to
reimburse such Issuing Lender for the amount of such honored drawing; provided
further that, in the event that the conditions specified in subsection 4.2B have
not been satisfied or waived, Administrative Agent may, upon the request of
Requisite Lenders, notify Company that Lenders elect not to make such Revolving
Loans; and provided still further that if for any reason proceeds of Revolving
Loans are not received by Administrative Agent for the account of such Issuing
Lender on the Reimbursement Date in an amount equal to the amount of such
honored drawing, Company shall reimburse Administrative Agent for the account of
such Issuing Lender, on demand, in an amount in same day funds equal to the
excess of the amount of such honored drawing over the aggregate amount of such
Revolving Loans, if any, which are so received. Nothing in this subsection 3.3B
shall be deemed to relieve any Lender from its obligation to make Revolving
Loans on the terms and conditions set forth in this Agreement, and Company shall
retain any and all rights it may have against any Lender resulting from the
failure of such Lender to make such Revolving Loans under this subsection 3.3B.
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C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of
Credit.
(i) Payment by Lenders. In the event that Company shall fail
for any reason to reimburse Administrative Agent for the account of any
Issuing Lender as provided in subsection 3.3B in an amount equal to the
amount of any drawing honored by such Issuing Lender under a Letter of
Credit issued by it (such failure being deemed in accordance with
subsection 3.3B a timely request that Lenders make Revolving Loans in
the amount of such unreimbursed honored drawing) by 1:00 P.M. (New York
time) on the Reimbursement Date, Administrative Agent shall promptly
notify such Issuing Lender and each other Lender having a Revolving Loan
Commitment of the unreimbursed amount of such honored drawing and of
such other Lender's respective participation therein based on such
Lender's Revolving Pro Rata Share. If for any reason Revolving Loans may
not be funded at the time required and in an amount sufficient to
reimburse Administrative Agent for the account of such Issuing Lender as
provided in subsection 3.3B in an amount equal to the amount of such
drawing, each Lender having a Revolving Loan Commitment agrees to fund
its participation in such unreimbursed honored drawing of the Letter of
Credit purchased pursuant to subsection 3.1C in an amount equal to its
Revolving Pro Rata Share thereof. Each Lender having a Revolving Loan
Commitment shall make available to Administrative Agent for the account
of such Issuing Lender an amount equal to its respective participation
(whether as a Revolving Loan or as a participation in the Letter of
Credit), in Dollars and in same day funds, to the Funding and Payment
Account, not later than 12:00 Noon (New York time) on the first business
day (under New York law) after the date notified by Administrative
Agent. In the event that any Lender fails to make available
Administrative Agent for the account of such Issuing Lender on such
business day the amount of such Lender's participation in such Letter of
Credit as provided in this subsection 3.3C, such Issuing Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the rate customarily used by such Issuing Lender for
the correction of errors among banks for three Business Days and
thereafter at the Base Rate. Nothing in this subsection 3.3C shall be
deemed to prejudice the right of any Lender to recover from any Issuing
Lender any amounts made available by such Lender to such Issuing Lender
pursuant to this subsection 3.3C in the event and to the extent that it
is determined by the final judgment of a court of competent jurisdiction
that the payment with respect to a Letter of Credit by such Issuing
Lender in respect of which payment was made by such other Lender
constituted gross negligence or willful misconduct on the part of such
Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of
any drawing honored by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall distribute to Administrative
Agent for the account of each other Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such honored
drawing such other
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Lender's Revolving Pro Rata Share of all payments subsequently received
by such Issuing Lender from Company in reimbursement of such honored
drawing when such payments are received. Any such amount shall be
promptly distributed by Administrative Agent to a Lender at its primary
address set forth below its name on the appropriate signature page
hereof or at such other address as such Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to
each Issuing Lender, with respect to drawings honored under any Letters
of Credit issued by it, interest on the amount paid by such Issuing
Lender in respect of each such honored drawing from the date such
drawing is honored to but excluding the date such amount is reimbursed
by Company (including any such reimbursement out of the proceeds of
Revolving Loans) at a rate equal to (a) for the period from the date
such drawing is honored to but excluding the Reimbursement Date, the
rate then in effect under this Agreement with respect to Revolving Loans
that are Base Rate Loans and (b) thereafter, a rate which is 2% per
annum in excess of the rate of interest otherwise payable under this
Agreement with respect to Revolving Loans that are Base Rate Loans.
Interest payable pursuant to this subsection 3.3D(i) shall be computed
on the basis of a 360-day year for the actual number of days elapsed in
the period during which it accrues and shall be payable on demand or, if
no demand is made, on the date on which the related drawing under a
Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing honored under a
Letter of Credit issued by it, (a) such Issuing Lender shall distribute
to Administrative Agent for the account of each other Lender having a
Revolving Loan Commitment, out of the interest received by such Issuing
Lender in respect of the period from the date such drawing is honored to
but excluding the date on which such Issuing Lender is reimbursed for
the amount of such drawing (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B), the amount
that such other Lender would have been entitled to receive in respect of
the letter of credit fee that would have been payable in respect of such
Letter of Credit for such period pursuant to subsection 3.2 if no
drawing had been honored under such Letter of Credit, and (b) in the
event such Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of such honored
drawing, such Issuing Lender shall distribute to each other Lender which
has paid all amounts payable by it under subsection 3.3C(i) with respect
to such honored drawing such other Lender's Revolving Pro Rata Share of
any interest received by such Issuing Lender in respect of that portion
of such honored drawing in which such Lender participates for the period
from the date on which such participation was funded to but excluding
the date on which such portion of such honored drawing is reimbursed by
Company. Any such distribution shall be made to a Lender at its primary
address set forth below its name on the appropriate signature page
hereof or at such other address as such Lender may request.
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3.4 Obligations Absolute.
The obligation of Company to reimburse each Issuing Lender for
drawings honored under the Letters of Credit issued by it and to repay any
Revolving Loans made by Lenders pursuant to subsection 3.3B or 3.3C and the
obligations of Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), any Issuing Lender or other
Lender or any other Person or, in the case of a Lender, against Company,
whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying
transaction between Company or one of its Subsidiaries and the
beneficiary for which any Letter of Credit was procured);
(iii) any draft or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by the applicable Issuing Lender under any Letter
of Credit against presentation of a draft or other document which does
not substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document
by any party thereto;
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event
of Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question.
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3.5 Indemnification; Nature of Issuing Lenders' Duties.
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender or (b) the wrongful dishonor by such Issuing Lender of a
proper demand for payment made under any Letter of Credit issued by it (except
for any such dishonor as a result of Governmental Acts as described in (ii)
below) or (ii) the failure of such Issuing Lender to honor a drawing under any
such Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "Governmental
Acts").
B. Nature of Issuing Lenders' Duties. As between Company and any Issuing
Lender or its correspondents, Administrative Agent or Lenders (all of the
foregoing being collectively, "Credit Parties"), Company assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit issued by such
Issuing Lender by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, such Issuing Lender shall
not be responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with a drawing under any such Letter of Credit, even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any such Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) failure of the
beneficiary of any such Letter of Credit to comply fully with any conditions
required in order to draw upon such Letter of Credit; (iv) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (v)
errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of such Issuing Lender, including any
Governmental Acts, and none of the above shall affect or impair, or prevent the
vesting of, any of such Credit Parties' rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions set forth in the first paragraph of this subsection 3.5B,
any action taken or omitted by any Issuing Lender under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put such Issuing Lender
or any of the other Credit Parties under any resulting liability to Company or
the other Credit Parties hereunder.
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Notwithstanding anything to the contrary contained in this
subsection 3.5 (including in the immediately preceding paragraph), Company shall
retain any and all rights it may have against any Issuing Lender for any
liability to the extent arising primarily out of the gross negligence or willful
misconduct of such Issuing Lender.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Lender shall determine (which determination shall be
rebuttably presumed to be correct) that any law, treaty or governmental rule,
regulation, order or directive, in each case which is enacted, entered into,
promulgated or rendered after the date hereof or any change after the date
hereof in any law, treaty or governmental rule, regulation, order or directive
or in the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation, order or
directive), or any determination of a court or governmental authority, in each
case that becomes effective after the date hereof, or compliance by any Issuing
Lender or Lender with any guideline, request or directive issued or made after
the date hereof by any central bank or other governmental or quasi-governmental
authority (whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than
any Tax on the overall net income of such Issuing Lender or Lender or
any franchise Tax) with respect to the issuing or maintaining of any
Letters of Credit or the purchasing or maintaining of any participations
therein or any other obligations under this Section 3, whether directly
or by such being imposed on or suffered by any particular Issuing
Lender;
(ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing
Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Issuing Lender or Lender (or its
applicable lending or letter of credit office) regarding this Section 3
or any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder;
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provided that such Issuing Lender or Lender shall not be entitled to avail
itself of the benefit of this subsection 3.6 to the extent it had an ability,
without incurring, as determined in its sole discretion, any material cost or
suffering material adverse effect and to the extent not inconsistent with the
internal policies of such Issuing Lender or Lender and any applicable legal or
regulatory restrictions, prior to incurrence of such increased costs or taxes to
reduce or avoid the same through the relocation of its lending office or letter
of credit office or otherwise (and failed to do so) and to the extent that any
such increased cost or reduction in amounts was incurred more than six months
prior to the time it gives notice to Company (as provided in the next sentence)
of the relevant circumstance, unless such circumstance arose or became
applicable retroactively, in which case such Issuing Lender or Lender shall not
be limited to such six-month period so long as such Issuing Lender or Lender has
given such notice to Company no later than one year from the time such
circumstance became applicable to such Issuing Lender or Lender. Such Issuing
Lender or Lender shall deliver to Company a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts owed to such
Issuing Lender or Lender under this subsection 3.6, which statement shall be
rebuttably presumed to be correct.
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and to issue or
participate in Letters of Credit hereunder are subject to the satisfaction of
the following conditions.
4.1 Conditions to Term Loans.
The obligations of Lenders to make the Term Loans are, in
addition to the conditions precedent specified in subsection 4.2, subject to
prior or concurrent satisfaction of the following conditions:
A. Loan Party Documents. On or before the Closing Date, Company shall,
and shall cause each other Loan Party to, deliver to Administrative Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender the following with respect to Company or such Loan Party, as the case may
be, each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of the Certificate or Articles of
Incorporation of such Person, together with a good standing certificate
from the Secretary of State of its jurisdiction of incorporation and
each other state in which such Person is qualified as a foreign
corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing
authority of each of such jurisdictions, each dated a recent date prior
to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary;
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(iii) Resolutions of the Board of Directors of such Person
approving and authorizing the execution, delivery and performance of the
Loan Documents and Related Agreements to which it is a party, certified
as of the Closing Date by the corporate secretary or an assistant
secretary of such Person as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of the officers of
such Person executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such
Person is a party; and
(vi) Such other documents as Administrative Agent may
reasonably request.
B. Corporate and Capital Structure and Ownership
(i) Corporate Structure. The corporate organizational
structure of Company and its Subsidiaries after giving effect to the
Acquisition, shall be as set forth on Schedule 4.1B annexed hereto.
(ii) Capital Structure and Ownership. The capital structure
and ownership of Company after giving effect to the Acquisition shall be
as set forth on Schedule 4.1B annexed hereto.
C. Related Agreements.
Agents shall have received (a) a fully executed or conformed copy of
each Related Agreement and any documents executed in connection
therewith, and each Related Agreement shall be in full force and effect
and no provision thereof shall have been modified or waived in any
respect determined by Administrative Agent to be material, in each case
without the consent of Agents and Requisite Lenders and (b) an Officer's
Certificate from Company, in form and substance satisfactory to each
Agent and Lenders, certifying that each such Related Agreement and
document (which shall be attached thereto) is correct and complete and
is in full force and effect and certifying as to such matters with
respect to each of the Related Agreements.
D. Intentionally Omitted.
E. Necessary Governmental Authorizations and Consents; Expiration
of Waiting Periods, Etc.
Company shall have obtained all Governmental Authorizations and all
consents of other Persons, in each case that are necessary in connection
with the Acquisition, the other transactions contemplated by the Loan
Documents and the Related Agreements and the continued operation of the
business conducted by Company and its Subsidiaries, giving effect to the
consummation of the Acquisition, and each of the
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foregoing shall be in full force and effect, in each case other than
those the failure to obtain or maintain which would not reasonably be
expected to have a Material Adverse Effect. All applicable Hart-
Scott-Rodino and other similar antitrust or anti-merger waiting periods
shall have expired without any action being taken or threatened by any
competent governmental authority which would restrain, prevent or
otherwise impose adverse conditions on the Acquisition or the financing
thereof. No action, request for stay, petition for review or rehearing,
reconsideration, or appeal with respect to any of the foregoing shall be
pending, and the time for any applicable agency to take action to set
aside its consent on its own motion shall have expired.
F. Consummation of Acquisition.
(i) All conditions to the Acquisition to be satisfied by
Company, as Buyer, which conditions are all set forth in Article V of
the Acquisition Agreement shall have been satisfied or the fulfillment
of any such conditions shall have been waived by Seller with the consent
of Agents (acting on the concurrence of Requisite Lenders);
(ii) the Acquisition shall have been consummated in accordance
with the terms of the Acquisition Agreement by no later than October 30,
1998 for an aggregate purchase price not in excess of $550,000,000 plus
the Acquisition Purchase Price Adjustment (exclusive of Transaction
Costs);
(iii) Transaction Costs shall not exceed $25,000,000, and
Administrative Agent shall have received evidence to its satisfaction to
such effect; and
(iv) Arranger, each Agent and each Lender shall have received
an Officer's Certificate of Company to the effect set forth in clauses
(i)-(iii) above.
G. Closing Date Mortgages. Administrative Agent shall have received from
Company and each applicable Subsidiary Guarantor fully executed and notarized
Mortgages (each a "Closing Date Mortgage" and, collectively, the "Closing Date
Mortgages"), in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each Real Property Asset listed in
Schedule 4.1G annexed hereto (each a "Closing Date Mortgaged Property" and,
collectively, the "Closing Date Mortgaged Properties").
H. Security Interests in Personal and Mixed Property. To the extent not
otherwise satisfied pursuant to subsection 4.1G, each Agent shall have received
evidence satisfactory to it that Company and Subsidiary Guarantors shall have
taken or caused to be taken all such actions, executed and delivered or caused
to be executed and delivered all such agreements, documents and instruments, and
made or caused to be made all such filings and recordings (other than the filing
or recording of items described in clauses (iii), (iv) and (v) below) that may
be necessary or, in the opinion of Agents, reasonably desirable in order to
create in favor of Administrative Agent, for the benefit of Lenders, a valid and
(upon such filing and recording) perfected First Priority security interest in
the personal and mixed property Collateral. Such actions shall include the
following:
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(i) Schedules to Collateral Documents. Delivery to Agents of
accurate and complete schedules to all of the applicable Collateral
Documents.
(ii) Stock Certificates and Instruments. Delivery to
Administrative Agent in New York, New York of (a) certificates (which
certificates shall be accompanied by irrevocable undated stock powers,
duly endorsed in blank and otherwise satisfactory in form and substance
to Agents) representing all certificated capital stock pledged pursuant
to the Company Pledge Agreement and the Subsidiary Pledge Agreements
which is directly held by the Company or the applicable Subsidiary as
owner thereof, registered in the name of such Person on the books of the
issuer thereof and not held through any securities intermediary (as
defined in Section 8-102 of the Uniform Commercial Code as currently in
effect in the State of New York) and (b) all promissory notes or other
instruments (duly endorsed, where appropriate, in a manner satisfactory
to Agents) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery
to Administrative Agent of (a) the results of a recent search, by a
Person satisfactory to Agents, of all effective UCC financing statements
and fixture filings and all judgment and tax lien filings which may have
been made with respect to any personal or mixed property of any Loan
Party, together with copies of all such filings disclosed by such
search, and (b) UCC termination statements duly executed by all
applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or fixture
filings disclosed in such search (other than any such financing
statements or fixture filings in respect of Liens permitted to remain
outstanding pursuant to the terms of this Agreement).
(iv) UCC Financing Statements and Fixture Filings. Delivery to
Administrative Agent of UCC financing statements and, where appropriate,
fixture filings, duly executed by each applicable Loan Party with
respect to all personal and mixed property Collateral of such Loan
Party, for filing in all jurisdictions as may be necessary or, in the
opinion of Agents, reasonably desirable to perfect the security
interests created in such Collateral pursuant to the Collateral
Documents;
(v) PTO Cover Sheets, Etc. Delivery to Agents of all cover
sheets or other documents or instruments required to be filed with the
PTO in order to create or perfect Liens in respect of any IP Collateral;
(vi) Opinions of Local Counsel. At the reasonable request of
any Agent, delivery to all Agents of an opinion of counsel (which
counsel shall be reasonably satisfactory to each Agent) under the laws
of each jurisdiction in which any Loan Party or any material personal or
mixed property Collateral is located with respect to the creation and
perfection of the security interests in favor of Administrative Agent in
such Collateral and such other matters governed by the laws of such
jurisdiction regarding such security interests as any Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to each Agent.
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I. Financial Statements; Pro Forma Balance Sheet. On or before the
Closing Date, Lenders shall have received from Company (i) unaudited financial
statements of Company and its Subsidiaries for each fiscal quarter ending after
June 30, 1998, and for each month thereafter for which financial statements were
prepared in the ordinary course consisting of a balance sheet and the related
consolidated statements of income, and (with respect to quarterly statements
only), statements of cash flows for the periods then ending, all in reasonable
detail and certified by the chief financial officer of Company that they fairly
present the financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes resulting from audit and normal year-end
adjustments and (ii) pro forma consolidated balance sheets of Company and its
Subsidiaries as at June 30, 1998, prepared in accordance with GAAP (subject to
such changes as reflected in the report on Form 8- K filed with the Securities
and Exchange Commission in connection with the acquisition of BCL and except for
the absence of footnotes) and reflecting the consummation of the Acquisition,
the related financings and the other transactions contemplated by the Loan
Documents and the Related Agreements, all of the foregoing to be in form and
substance satisfactory to each Agent.
J. Solvency Assurances. On the Closing Date, each Agent shall have
received a Financial Condition Certificate dated the Closing Date, substantially
in the form of Exhibit XIX annexed hereto and with appropriate attachments, in
each case demonstrating that, after giving effect to the consummation of the
Acquisition the related financings and the other transactions contemplated by
the Loan Documents and the Related Agreements, Company will be Solvent.
K. Opinions of Counsel to Loan Parties. Arranger, each Agent and each
Lender shall have received originally executed copies of one or more favorable
written opinions of Cooley Godward LLP, counsel for Loan Parties, in form and
substance reasonably satisfactory to Administrative Agent and its counsel, dated
as of the Closing Date and setting forth substantially the matters in the
opinions set forth in Exhibit IX annexed hereto and as to such other matters as
Agents acting on behalf of Lenders may reasonably request.
L. Opinion of Agents' Counsel. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & Myers
LLP, counsel to Agents, substantially in the form of Exhibit X annexed hereto,
and as to such other matters as Agents acting on behalf of Lenders may
reasonably request.
M. Fees. Company shall have paid to Administrative Agent or at the
direction of Syndication Agent, for distribution (as appropriate) to Arranger,
Agents and Lenders, the fees payable on the Closing Date referred to in
subsection 2.3.
N. Representations and Warranties; Performance of Agreements. Company
shall have delivered to each Agent Officer's Certificates, in form and substance
satisfactory to each Agent, to the effect that the representations and
warranties in Section 5 hereof are true and correct in all material respects and
omit no material facts which would cause such representation and warranty to be
materially misleading in the context in which it was made on and as of the
Closing Date to the same extent as though made on and as of that date (or, to
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the extent such representations and warranties specifically relate to an earlier
date, that such representations and warranties were true and correct in all
material respects and omitted no material facts which would cause such
representation and warranty to have been materially misleading in the context in
which it was made on and as of such earlier date) and that Company shall have
performed in all material respects all agreements and satisfied all conditions
which this Agreement provides shall be performed or satisfied by Company on or
before the Closing Date, except as otherwise disclosed to and agreed to in
writing by Agents and Requisite Lenders.
O. No Disruption of Financial and Capital Markets. Since the date of
this Agreement there shall have been no Market Disruption Event which would be
expected to materially adversely affect the syndication of the Loans, as
determined by Arranger in its reasonable discretion.
P. Ratings. Lenders shall have received ratings for the Loans from each
of S&P and Moody's and a private placement number for the Loans from S&P.
4.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date
are subject to the following further conditions precedent:
A. Administrative Agent shall have received before that
Funding Date, in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, in each case signed by the chief
executive officer, the chief financial officer, the principal accounting
officer, the treasurer or the controller of Company or by any executive officer
of Company designated by any of the above-described officers on behalf of
Company in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Loan Documents shall be true and correct in all material
respects and shall omit no material facts which would cause such
representation or warranty to be materially misleading in the context in
which it was made on and as of that Funding Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true
and correct in all material respects and shall have omitted no material
facts which would cause such representation or warranty to have been
materially misleading in the context in which it was made on and as of
such earlier date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
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(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it (except as
otherwise disclosed to and agreed to by Requisite Lenders) on or before
that Funding Date; and
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Loans to be made by it on that Funding Date.
4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder (whether or not
the applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Term Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer, the principal accounting officer, the treasurer or the controller of
Company or by any executive officer of Company designated by any of the
above-described officers on behalf of Company in a writing delivered to
Administrative Agent, together with all other information specified in
subsection 3.1B(i) and such other documents or information as the applicable
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Agents and Lenders to enter into and
perform their obligations under this Agreement and to make the Loans, to induce
Issuing Lenders to issue Letters of Credit and to induce other Lenders to
purchase participations therein, Company represents and warrants to each Agent
and each Lender, on the date of this Agreement, on each Funding Date and on the
date of issuance of each Letter of Credit, that the following statements are
true and correct and omit no material facts which would cause such
representation or warranty to be materially misleading in the context in which
it was made:
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5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto. Each
Loan Party has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and Related Agreements to which it
is a party and to carry out the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and is in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, except
in jurisdictions where the failure to be so qualified or in good standing has
not had and would not reasonably be expected to have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.12.
D. Subsidiaries. All of the Subsidiaries of Company as of the Closing
Date are identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection 6.1(xv).
The capital stock of each of the Subsidiaries of Company identified in Schedule
5.1 annexed hereto (as so supplemented) is duly authorized, validly issued,
fully paid and nonassessable and none of such capital stock constitutes Margin
Stock. Each of the Subsidiaries of Company identified in Schedule 5.1 annexed
hereto (as so supplemented) is duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, in each case except where failure to be so
qualified or in good standing or a lack of such power and authority has not had
and would not reasonably be expected to have a Material Adverse Effect. Schedule
5.1 annexed hereto (as so supplemented) correctly sets forth, as of the Closing
Date, the ownership interest of Company and each of its Subsidiaries in each of
the Subsidiaries of Company identified therein.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance
of the Loan Documents and the Related Agreements have been duly authorized by
all necessary action on the part of each Loan Party that is a party thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties
of the Loan Documents and the Related Agreements to which they are parties and
the consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not (i) violate any provision of any law or any
governmental rule or regulation
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applicable to such Loan Party, the Certificate or Articles of Incorporation or
Bylaws or other applicable organizational documents of such Loan Party or any
order, judgment or decree of any court or other agency of government binding on
such Loan Party, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual Obligation
of Company or any of its Subsidiaries, (iii) result in or require the creation
or imposition of any Lien upon any of the properties or assets of Company or any
of its Subsidiaries (other than any Liens created under any of the Loan
Documents in favor of Administrative Agent on behalf of Lenders) or (iv) require
any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date and
those disclosed on Schedule 5.2B hereto.
C. Governmental Consents. The execution, delivery and performance by
Loan Parties of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body, except for (i) filings and recordings required in connection with the
perfection of security interests granted pursuant to the Loan Documents, (ii)
registrations, consents, approvals, notices or other actions set forth on
Schedule 5.2C annexed hereto and (iii) registrations, consents, approvals,
notices or other actions the absence of which would not reasonably be expected
to have a Material Adverse Effect.
D. Binding Obligation. Each of the Loan Documents and Related Agreements
has been duly executed and delivered by each Loan Party that is a party thereto
and is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
5.3 Financial Condition.
Company has heretofore delivered to Syndication Agent on
behalf of Lenders, at Lenders' request, the following financial statements and
information: (i) the audited consolidated balance sheets of Company and its
Subsidiaries for the Fiscal Years ended June 30, 1995, 1996, 1997 and 1998 and
the related consolidated statements of income, stockholders' equity and cash
flows of Company and its Subsidiaries for the Fiscal Years then ended, (ii)
audited consolidated balance sheets of BCL for the fiscal years ended December
31, 1996 and 1997 and the related consolidated statements of income of BCL for
the fiscal years then ended and (iii) the unaudited consolidated balance sheets
of BCL as at June 30, 1998 and the related unaudited consolidated statements of
income of BCL for the six months then ended. All such statements were prepared
in conformity with GAAP (subject to such changes as reflected in the report on
Form 8-K filed with the Securities and Exchange Commission in connection with
the acquisition of BCL and except, in the case of clauses (ii) and (iii), for
the absence of footnotes) and fairly present, in all material respects, the
financial position (on a consolidated basis) of the entities described in such
financial statements as at
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the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments.
5.4 No Material Adverse Change; No Restricted Junior Payments.
Since June 30, 1998, no event or change (including pending or
overtly threatened litigation, proceedings or investigations) has occurred that
has caused or would reasonably be expected to have a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 7.5.
5.5 Title to Properties; Liens; Real Property.
A. Title to Properties; Liens. Each Loan Party and its
Subsidiaries have (i) good, sufficient and legal title to (in the case of fee
interests in real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property) or (iii) good title to (in the
case of all other personal property), their respective properties and assets
constituting Collateral and reflected in the financial statements referred to in
subsection 5.3 or in the most recent financial statements delivered pursuant to
subsection 6.1, in each case except for assets disposed of since the date of
such financial statements in the ordinary course of business or as otherwise
permitted under subsection 7.7. Except as permitted by this Agreement, all such
properties and assets are free and clear of Liens in excess of $100,000
individually and $500,000 in the aggregate.
B. Real Property. As of the Closing Date, Schedule 5.5 annexed
hereto contains a true, accurate and complete list of (i) all fee properties and
(ii) all leases, subleases or assignments of leases (together with all
amendments, modifications, supplements, renewals or extensions of any thereof)
affecting each Real Property Asset of any Loan Party, regardless of whether such
Loan Party is the landlord or tenant (whether directly or as an assignee or
successor in interest) under such lease, sublease or assignment.
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5.6 Litigation; Adverse Facts.
Except as set forth in Schedule 5.6 annexed hereto, there are
no actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of any Loan Party or any of its
Subsidiaries) at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign (including any Environmental Claims) that
are pending or, to the knowledge of Company, overtly threatened against or
affecting any Loan Party or any of its Subsidiaries or any property of any Loan
Party or any of its Subsidiaries and that, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Effect. No Loan
Party nor any of its Subsidiaries (i) is in violation of any applicable laws
(including Environmental Laws) that would reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that would
reasonably be expected to result in a Material Adverse Effect.
5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, all tax
returns and reports of each Loan Party and its Subsidiaries required to be filed
by any of them have been timely filed, and all taxes shown on such tax returns
to be due and payable and all assessments, fees and other governmental charges
upon such Loan Party and its Subsidiaries and upon their respective properties,
assets, income, businesses and franchises which are due and payable have been
paid when due and payable. No Loan Party knows of any material proposed tax
assessment against it or any of its Subsidiaries which is due and not being
actively contested by it or such Subsidiary in good faith and by appropriate
proceedings; provided that such reserves or other appropriate provisions, if
any, as shall be required in conformity with GAAP shall have been made or
provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts.
A. No Loan Party nor any of its Subsidiaries is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not with reasonable likelihood have a
Material Adverse Effect.
B. No Loan Party nor any of its Subsidiaries is a party to or
is otherwise subject to any agreements or instruments or any charter or other
internal restrictions which would reasonably be expected to result in a Material
Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of
all the Material
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Contracts in effect on the Closing Date. Except as described on Schedule 5.8,
all such Material Contracts are in full force and effect and no material
defaults on the part of Company or its Subsidiaries currently exist thereunder
and to Company's knowledge, no material defaults on the part of other parties
thereto currently exist thereunder.
5.9 Governmental Regulation.
No Loan Party nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
5.10 Securities Activities.
A. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not
more than 25% of the value of the assets (either of Company only or of Company
and its Subsidiaries on a consolidated basis) subject to the provisions of
subsection 7.2 or 7.7 or subject to any restriction contained in any agreement
or instrument between Company and any Lender or any Affiliate of any Lender
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 Employee Benefit Plans.
A. Each Loan Party and each of its Subsidiaries and each of
their respective ERISA Affiliates is in material compliance with all applicable
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and has
materially performed all its obligations under each Employee Benefit Plan. Each
Employee Benefit Plan which is intended to qualify under Section 401(a) of the
Internal Revenue Code has not been disqualified by the Internal Revenue Service
and is not currently under any audit, investigation or other inspection by the
Internal Revenue Service which could lead to the disqualification of such
Employee Benefit Plan.
B. No ERISA Event has occurred or is reasonably expected to
occur.
C. Except to the extent required under Section 4980B of the
Internal Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no
Employee Benefit Plan provides health or welfare benefits (through the purchase
of insurance or otherwise) for any retired or former employee of Company, any of
its Subsidiaries or any of their respective ERISA Affiliates.
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D. As of the most recent valuation date for any Pension Plan,
the amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $5,000,000.
E. As of the most recent valuation date for each Multiemployer
Plan for which the actuarial report is available, the potential liability of
Company, its Subsidiaries and their respective ERISA Affiliates for a complete
withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of
ERISA), when aggregated with such potential liability for a complete withdrawal
from all Multiemployer Plans, based on information available pursuant to Section
4221(e) of ERISA, does not exceed $3,000,000.
5.12 Certain Fees.
Except as set forth on Schedule 5.12 annexed hereto, no
broker's or finder's fee or commission will be payable with respect to this
Agreement or any of the transactions contemplated hereby, and Company hereby
indemnifies Agents and Lenders against, and agrees that it will hold such
Persons harmless from, any claim, demand or liability for any such broker's or
finder's fees alleged to have been incurred in connection herewith or therewith
and any expenses (including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or liability.
5.13 Environmental Protection.
Except as set forth on Schedule 5.13 annexed hereto:
(i) no Loan Party nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding
written order, consent decree or settlement agreement with any Person
relating to (a) any Environmental Law, (b) any Environmental Claim, or
(c) any Hazardous Materials Activity that would reasonably be expected
to have a Material Adverse Effect;
(ii) no Loan Party nor any of its Subsidiaries has received
any letter or other written request for information under Section 104 of
the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. ss. 9604) or any comparable state law;
(iii) there are and to Company's knowledge, have been no
conditions, occurrences, or Hazardous Materials Activities which could
reasonably be expected to form the basis of an Environmental Claim
against any Loan Party or any of its Subsidiaries that could reasonably
be expected to have a Material Adverse Effect;
(iv) no Loan Party nor any of its Subsidiaries nor, to
Company's knowledge, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Law indicating
past or present treatment of Hazardous Materials at any
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Facility;
(v) Commencing at least one year prior to the Closing Date,
Company has maintained an environmental management system for its and
each of its manufacturing Subsidiaries' operations that demonstrates a
commitment to environmental compliance and includes procedures for (a)
preparing and updating written compliance manuals covering pertinent
regulatory areas, (b) tracking changes in applicable Environmental Laws
and modifying operations to comply with new requirements thereunder, (c)
training employees to comply with applicable environmental requirements
and updating such training as necessary, (d) performing regular internal
compliance audits of each Facility and ensuring correction of any
incidents of non-compliance detected by means of such audits and (e)
reviewing the compliance status of off-site waste disposal facilities;
and
(vi) compliance with all applicable current or reasonably
foreseeable future requirements pursuant to or under Environmental Laws
will not, with reasonable likelihood, give rise to a Material Adverse
Effect.
Notwithstanding anything in this subsection 5.13 to the
contrary, no event or condition has occurred or is occurring with respect to
Company or any of its Subsidiaries relating to any Environmental Law, any
Release of Hazardous Materials, or any Hazardous Materials Activity, including
any matter disclosed on Schedule 5.13 annexed hereto, which has had or would
reasonably be expected to have a Material Adverse Effect.
5.14 Employee Matters.
There is no strike or work stoppage in existence or threatened
involving any Loan Party or any of its Subsidiaries that would reasonably be
expected to have a Material Adverse Effect.
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5.15 Solvency.
Each Loan Party is and, upon the incurrence of any Obligations
by such Loan Party on any date on which this representation is made, will be,
Solvent.
5.16 Matters Relating to Collateral.
A. Creation, Perfection and Priority of Liens. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1G, 4.1H,
6.8 and 6.9 and (ii) the delivery to Administrative Agent of any Pledged
Collateral not delivered to Administrative Agent at the time of execution and
delivery of the applicable Collateral Document (all of which Pledged Collateral
has been so delivered) are effective to create in favor of Administrative Agent
for the benefit of Lenders, as security for the respective Secured Obligations
(as defined in the applicable Collateral Document in respect of any Collateral),
a valid and perfected First Priority Lien on substantially all (based on the
fair market value thereof) of the Collateral, and all filings and other actions
necessary or reasonably desirable to perfect and maintain the perfection and
First Priority status of such Liens have been duly made or taken and remain in
full force and effect, other than the filing of any UCC financing statements
delivered to Administrative Agent for filing (but not yet filed) and the
periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent. For the avoidance of
doubt, Loan Parties shall not be obligated to grant security interests to
Administrative Agent for the benefit of Lenders and Agents in any Excluded
Collateral or in the proceeds thereof (except to the extent such proceeds are
Cash).
B. Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 5.16A and except as may be required, in connection with the
exercise of remedies in connection with interests in real property or the
disposition of any Pledged Collateral, by laws generally affecting the offering
and sale of securities, including laws of jurisdictions other than the United
States of America affecting foreclosure of security interests in securities.
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of Administrative Agent as contemplated by subsection 5.16A and such as
may have been filed in connection with Liens permitted under subsection 7.2, (i)
no effective UCC financing statement, fixture filing or other instrument similar
in effect covering all or any part of the Collateral authorized by Company or
any other Loan Party is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the IP Collateral is on file in the
PTO.
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D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
E. Information Regarding Collateral. All written information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate in all material respects and does not omit any material
facts necessary in order to make the statements contained therein not misleading
in light of the circumstances in which the same were made.
5.17 Related Agreements.
A. Delivery of Related Agreements. Company has delivered to
each Agent complete and correct copies of each Related Agreement and of all
exhibits and schedules thereto.
B. Seller's Warranties. To the knowledge of Company and except
to the extent otherwise set forth herein or in the schedules hereto, each of the
representations and warranties given by Seller to Company in the Acquisition
Agreement is true and correct in all material respects as of the date hereof (or
as of any earlier date to which such representation and warranty specifically
relates) and will be true and correct in all material respects as of the Closing
Date (or as of such earlier date, as the case may be), in each case subject to
the qualifications set forth in the schedules to the Acquisition Agreement;
provided that Lenders shall not be entitled to make any claim against Company
(or utilize the breach of this subsection 5.17B as a basis of an Event of
Default under subsection 8.4) based on the failure of a representation or
warranty of Seller incorporated by this subsection 5.17B to be true and correct
in all material respects except to the extent (a) such claims in the aggregate
exceed the indemnification threshold amount of $7,500,000 set out in Section 8.3
of the Acquisition Agreement and (b) Company is proceeding in good faith to
obtain indemnification or other compensation therefor from Seller under the
Acquisition Agreement.
C. Warranties of Company. Subject to the qualifications set
forth therein, each of the representations and warranties given by Company to
Seller in the Acquisition Agreement is true and correct in all material respects
as of the date hereof and will be true and correct in all material respects as
of the Closing Date.
D. Survival. Notwithstanding anything in the Acquisition
Agreement to the contrary, the representations and warranties of Company set
forth in subsections 5.17B and 5.17C shall, solely for purposes of this
Agreement, survive the Closing Date for the benefit of Agents and Lenders.
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5.18 Disclosure.
No representation or warranty of any Loan Party or any of its
Subsidiaries contained in the Confidential Information Memorandum or in any Loan
Document or Related Agreement or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact in light of the
circumstances. Any projections and pro forma financial information contained in
such materials are based upon good faith estimates and assumptions believed by
Company to be reasonable at the time made, it being recognized by Lenders that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results.
5.19 Intellectual Property Rights.
Company and its Subsidiaries own, license or otherwise have the right to
use all Intellectual Property that is material and reasonably necessary for the
operation of the business of Company and its Subsidiaries as currently
conducted, taken as a whole. Each Patent, Trademark and registered copyright
owned by Company or any such Subsidiary as of the Closing Date is listed,
together with applicable federal, state or foreign application and registration
numbers, on Schedule 5.19. No third party has notified Company or any of its
Subsidiaries that Company or any such Subsidiary is infringing,
misappropriating, breaching or otherwise violating any unexpired Intellectual
Property rights owned by such third party in the current conduct of Company's or
such Subsidiary's business, nor is any claim now pending or overtly threatened
to such effect, the effect of which infringement, misappropriation, breach or
other violation, or claim thereof would with reasonable likelihood result in a
Material Adverse Effect. Except as set forth on Schedule 5.19, to Company's
knowledge, there is no infringement, misappropriation, breach or other
violation, or claim thereof by others of any Intellectual Property that is
owned, licensed or that Company or any Subsidiary otherwise has the right to use
and that is material and reasonably necessary for the operation of the business
of Company and its Subsidiaries as currently conducted, taken as a whole.
Section 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall have otherwise given prior
written consent in accordance with subsection 10.6 to amendment or waiver
thereof, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 6.
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6.1 Financial Statements and Other Reports.
A. Company will maintain, and cause each of its Subsidiaries
to maintain, a system of accounting established and administered in accordance
with sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to each Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event
within 20 days after the end of each month ending after the Closing Date
until September 30, 1999, the consolidated statements of income of
Company and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month to
the extent prepared on a monthly basis, all in reasonable detail and in
form consistent with previously delivered monthly statements and
certified by the chief financial officer, principal accounting officer,
treasurer or controller of Company that they fairly present, in all
material respects, the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their
operations for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments;
(ii) Quarterly Financials: as soon as available and in any
event within 45 days after the end of the first three Fiscal Quarters of
each Fiscal Year, (a) the consolidated balance sheets of Company and its
Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated statements of income of Company and its Subsidiaries for
such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding
figures from the Financial Plan for the current Fiscal Year, all in
reasonable detail and in form consistent with previously delivered
quarterly statements and certified by the chief financial officer,
principal accounting officer, treasurer or controller of Company that
they fairly present, in all material respects, the financial condition
of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of
Company and its Subsidiaries in the form prepared for presentation to
senior management for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter; provided that, so long as Company files quarterly reports on
Form 10-Q with the Securities and Exchange Commission, the delivery of
such Form Q for a Fiscal Quarter shall satisfy the requirements of (a)
and (b) above for such Fiscal Quarter.
(iii) Year-End Financials: as soon as available and in any
event within 90 days after the end of each Fiscal Year, (a) the
consolidated balance sheets of Company and its Subsidiaries as at the
end of such Fiscal Year and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its
Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the
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corresponding figures for the previous Fiscal Year and the corresponding
figures from the Financial Plan for the Fiscal Year covered by such
financial statements, all in reasonable detail and in form consistent
with previously delivered year-end statements and certified by the chief
financial officer, principal accounting officer, treasurer or controller
of Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, (b) a narrative report describing the operations
of Company and its Subsidiaries in the form prepared for presentation to
senior management for such Fiscal Year and (c) in the case of such
consolidated financial statements, a report thereon of Ernst & Young LLP
or other independent certified public accountants of recognized national
standing selected by Company and reasonably satisfactory to
Administrative Agent, which report shall be unqualified, shall contain
no exceptions regarding the ability of Company and its Subsidiaries to
continue as a going concern and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards; provided that, so
long as Company files annual reports on Form 10-K with the Securities
and Exchange Commission, the delivery of such Form 10-K for a Fiscal
Year (with all documents incorporated by reference, including the
auditors' report for Company and its Subsidiaries) shall satisfy the
requirements of subsections (a), (b) and (c) above;
(iv) Officer's and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (i), (ii) and (iii) above, (a) an Officer's
Certificate of Company stating that the signer has reviewed the terms of
this Agreement and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period,
and that the signer does not have knowledge of the existence as at the
date of such Officer's Certificate, of any condition or event that
constitutes an Event of Default or Potential Event of Default, or, if
any such condition or event existed or exists, specifying the nature and
period of existence thereof and what action Company has taken, is taking
and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail compliance during and at
the end of the applicable accounting periods with the restrictions
contained in Section 7, in each case to the extent compliance with such
restrictions is required to be tested at the end of the applicable
accounting period;
(v) Reconciliation Statements: if, as a result of any change
in accounting principles and policies from those used in the preparation
of the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of
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Company and its Subsidiaries delivered pursuant to subdivisions (i),
(ii), (iii) or (xii) of this subsection 6.1 will differ in any material
respect from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (i), (ii),
(iii) or (xii) of this subsection 6.1 following such change,
consolidated financial statements of Company and its Subsidiaries for
(y) the current Fiscal Year to the effective date of such change and (z)
the full Fiscal Year immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with
each delivery of financial statements pursuant to subdivision (i), (ii),
(iii) or (xii) of this subsection 6.1 following such change, a written
statement of the chief financial officer, principal accounting officer,
treasurer or controller of Company setting forth the differences
(including any differences that would affect any calculations relating
to the financial covenants set forth in subsection 7.6) which would have
resulted if such financial statements had been prepared without giving
effect to such change;
(vi) Auditors' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries
pursuant to subdivision (iii) above, a written statement by the
independent auditors giving the report thereon (a) stating that they
have audited the financial statements in accordance with generally
accepted auditing standards and issued their report thereon, (b) stating
whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default has come to their attention
and, if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that
such auditors shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default that would not be disclosed in
the course of their audit examination and (c) stating that based on
their audit examination nothing has come to their attention that causes
them to believe that Company failed to comply in all material respects
with the terms, covenants, provisions or conditions of this Agreement
insofar as they relate to component amounts included in the accounts of
Company and its Subsidiaries reflected in such audited financial
statements;
(vii) Auditors' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent auditors in connection with each
annual, interim or special audit of the financial statements of Company
and its Subsidiaries made by such auditors, including any comment letter
submitted by such auditors to management in connection with their annual
audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by Company
to its security holders or by any Subsidiary of Company to its security
holders other than Company or another Subsidiary of Company, (b) all
regular and periodic reports and all registration statements (other than
on Form S-8 or a similar form) and final prospectuses, if any, filed by
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Company or any of its Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or any governmental or private
regulatory authority and (c) all press releases and other statements
made available generally by Company or any of its Subsidiaries to the
public concerning material developments in the business of Company or
any of its Subsidiaries;
(ix) Litigation or Other Proceedings: promptly upon any
officer of Company obtaining knowledge of (X) the institution of, or
non-frivolous overt threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"Proceedings") not previously disclosed in writing by Company to Lenders
or (Y) any material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect (after
giving effect to coverage and policy limits of insurance
policies maintained by Company and its Subsidiaries, to the
extent such insurer is not disputing or has not rejected
tender thereof); or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company (taking into account, among other
things, Company's interest in maintaining its and its Subsidiaries'
attorney-client privilege protections) to enable Lenders and their
counsel to evaluate such matters;
(x) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Company, any of its
Subsidiaries or any of their respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xi) ERISA Notices: with reasonable promptness, copies of (a)
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates with the Internal Revenue Service with
respect to each Pension Plan; (b) all notices received by Company, any
of its Subsidiaries or any of their respective ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event; and (c) copies of
such other documents or governmental reports or filings relating to any
Employee Benefit Plan as Administrative Agent shall reasonably request;
(xii) Financial Plans: as soon as practicable and in any event
no later than 20 days after to the beginning of each Fiscal Year, a
consolidated plan and financial
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forecast for such Fiscal Year and the next succeeding Fiscal Year on a
quarterly basis (the "Financial Plan" for such Fiscal Years), including
forecasted consolidated balance sheets and forecasted consolidated
statements of income and cash flows of Company and its Subsidiaries for
each such Fiscal Year, together with an explanation of the assumptions
on which such forecasts are based, together with an explanation of the
assumptions on which such forecasts are based and such other information
and projections as any Lender may reasonably request;
(xiii) Insurance: as soon as practicable and in any event by
the last day of each Fiscal Year, a report in form and substance
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately succeeding
Fiscal Year;
(xiv) Board of Directors: with reasonable promptness, written
notice of any change in the Board of Directors of Company;
(xv) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule 5.1
annexed hereto with respect to all Subsidiaries of Company (it being
understood that such written notice shall be deemed to supplement
Schedule 5.1 annexed hereto for all purposes of this Agreement;
(xvi) Material Contracts: promptly, and in any event within
thirty Business Days after any Material Contract of Company or any of
its Subsidiaries is terminated or amended in a manner that is materially
adverse to Company or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement describing such
event with copies of such material amendments or new contracts, and an
explanation of any material actions being taken with respect thereto;
(xvii) Pricing Level Determination Certificates: (a) together
with each delivery of financial statements of Company and its
Subsidiaries pursuant to subdivisions (ii) and (iii) above, (b) within
one Business Day after any public release by S&P or Moody's lowering its
credit rating on the Loans and (c) at such additional times as Company
may elect, a Pricing Level Determination Certificate; and
(xviii) Other Information: with reasonable promptness, such
other information and data with respect to Company or any of its
Subsidiaries as from time to time may be reasonably requested by any
Agent or Lender.
B. Company shall deliver to each Agent promptly upon any officer of
Company obtaining knowledge (a) of any condition or event that constitutes an
Event of Default or Potential Event of Default, or becoming aware that any
Lender has given any notice (other than to Administrative Agent) or taken any
other action with respect to a claimed Event of Default or Potential Event of
Default, (b) that any Person has given any notice to Company or
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any of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2, (c) of
any condition or event that would be required to be disclosed in a current
report filed by Company with the Securities and Exchange Commission on Form 8-K
(Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof) if Company
were required to file such reports under the Exchange Act or (d) of the
occurrence of any event or change that has caused or evidences a Material
Adverse Effect, an Officer's Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice given or
action taken by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action Company
has taken, is taking and proposes to take with respect thereto.
6.2 Corporate Existence, etc.
Except as permitted under subsection 7.7, Company will, and
will cause each of its Subsidiaries to, at all times preserve and keep in full
force and effect its corporate existence and all rights and franchises material
to its business; provided, however that neither Company nor any of its
Subsidiaries shall be required to preserve any such right or franchise if the
Board of Directors of Company or such Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
Company or such Subsidiary, as the case may be, and that the loss thereof is not
disadvantageous in any material respect to Company, such Subsidiary or Lenders.
6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Company will, and will cause each of its Subsidiaries to,
pay all taxes, assessments and other governmental charges imposed upon it or any
of its properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if it is
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person (other than Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds.
A. Maintenance of Properties. Company will, and will cause
each of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all properties
(including Intellectual Property) material to and useful in the business of
Company and its Subsidiaries as it is contemplated at
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such time to be conducted and from time to time will make or cause to be made
all appropriate repairs, renewals and replacements thereof.
B. Insurance. Company will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, business interruption insurance and
casualty insurance with respect to liabilities, losses or damage in respect of
the assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Each such policy of insurance
shall (a) name Administrative Agent for the benefit of Lenders as an additional
insured thereunder as its interests may appear and (b) in the case of each
business interruption and casualty insurance policy, contain a loss payable
clause or endorsement, satisfactory in form and substance to Administrative
Agent, that names Administrative Agent for the benefit of Lenders as the loss
payee thereunder for any covered loss in excess of $5,000,000 and provides for
at least 30 days prior written notice to Administrative Agent of any material
modification or any cancellation of such policy.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Company
or any of its Subsidiaries of any business interruption insurance
proceeds constituting Net Insurance/Condemnation Proceeds, (a) so long
as no Event of Default shall have occurred and be continuing, Company or
such Subsidiary may retain and apply such Net Insurance/Condemnation
Proceeds for working capital purposes, and (b) if an Event of Default
shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay the Loans
(and/or the Revolving Loan Commitments shall be reduced) as provided in
subsection 2.4B(iii)(e);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
Company or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance (a) so long as
no Event of Default shall have occurred and be continuing, Company
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such Net Insurance/Condemnation Proceeds to pay or
reimburse the costs of repairing, restoring or replacing the assets in
respect of which such Net Insurance/Condemnation Proceeds were received
within one year of receipt of such Net Insurance/Condemnation Proceeds
or, to the extent not so applied by the end of such one year period and
to the extent the amount of such Net Insurance/Condemnation Proceeds
exceed $1,000,000, to prepay the Loans (and/or the Revolving Loan
Commitments shall be reduced) as provided in subsection 2.4B(iii)(e),
and (b) if an Event of Default shall have occurred and be continuing,
Company shall apply an amount equal to such Net Insurance/Condemnation
Proceeds to prepay the Loans (and/or the Revolving Loan Commitments
shall be reduced) as provided in subsection 2.4B(iii)(e).
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(iii) Net Insurance/Condemnation Proceeds Received by
Administrative Agent. Upon receipt by Administrative Agent for itself or
on behalf of Lenders of any Net Insurance/Condemnation Proceeds as
additional insured or as loss payee, if and to the extent Company would
have been required to apply such Net Insurance/Condemnation Proceeds (if
it had received them directly) to prepay the Loans and/or reduce the
Revolving Loan Commitments, Administrative Agent shall, and Company
hereby authorizes Administrative Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) as provided in subsection
6.4(c)(i) or (ii) as applicable. All other Net Insurance/Condemnation
Proceeds shall be paid over to Company or the applicable Subsidiary on
whose behalf such Net Insurance/Condemnation Proceeds were originally
paid.
6.5 Inspection Rights; Audits of Inventory and Accounts Receivable; Lender
Meeting.
A. Inspection Rights. Company shall, and shall cause each of
its Subsidiaries to, permit any authorized representatives designated by any
Agent or Lender to visit and inspect the chief executive offices of Company or
of any of its Subsidiaries, to inspect, copy and take extracts from its and
their financial and accounting records, and to discuss its and their affairs,
finances and accounts with its and their officers, all upon reasonable notice
and at such reasonable times during normal business hours and as often as may
reasonably be requested.
B. Audits of Inventory and Accounts Receivable. Company shall,
and shall cause each of its Subsidiaries to, permit any authorized
representatives designated by Administrative Agent to conduct one audit of all
Inventory and accounts receivable of Loan Parties during each twelve-month
period after the Closing Date, all upon reasonable notice and at such reasonable
times during normal business hours as may reasonably be requested.
C. Lender Meeting. Company will, upon the request of
Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or at such other location as may be agreed to by
Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
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6.6 Compliance with Laws, etc.
Company shall comply, and shall cause each of its Subsidiaries
to comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including all Environmental Laws),
noncompliance with which would reasonably be expected to cause a Material
Adverse Effect, in each case except to the extent that Company's or Subsidiary's
requirement to comply with any such laws, rules, regulations or orders relating
to Taxes is being contested in good faith by Company or such Subsidiary, as the
case may be, and such reserve or other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor.
6.7 Environmental Review and Investigation, Disclosure, Etc.; Company's
Actions Regarding Hazardous Materials Activities, Environmental Claims
and Violations of Environmental Laws.
A. Environmental Review and Investigation. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain an independent professional consultant to review any environmental
audits, investigations, analyses and reports relating to Hazardous Materials
prepared by or for Company and (ii) in the event Administrative Agent reasonably
believes that Company has materially breached any representation, warranty or
covenant contained in subsections 5.6, 5.13, 6.6 or 6.7 or that there has been a
material violation of Environmental Laws at any Facility or by Company or any of
its Subsidiaries at any other location, conduct its own investigation of any
Facility (such review (under subsection 6.7A(i)) or investigation (under
subsection 6.7A(ii)) to be at Company's expense if such review or investigation
results in the discovery of a material liability not previously disclosed to
Administrative Agent); provided that, in the case of any Facility no longer
owned, leased, operated or used by Company or any of its Subsidiaries, Company
shall only be obligated to use commercially reasonable efforts to obtain
permission for Administrative Agent's professional consultant to conduct an
investigation of such Facility. For purposes of conducting such a review and/or
investigation, Company hereby grants to Administrative Agent and its agents,
employees, consultants and contractors the right to enter into or onto any
Facilities currently owned, leased, operated or used by Company or any of its
Subsidiaries and to perform such tests on such property (including taking
samples of soil, groundwater and suspected asbestos-containing materials) as are
reasonably necessary in connection therewith. Any such investigation of any
Facility shall be conducted, unless otherwise agreed to by Company and
Administrative Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at such Facility or to cause any damage or loss to any property at
such Facility. Company and Administrative Agent hereby acknowledge and agree
that any report of any investigation conducted at the request of Administrative
Agent pursuant to this subsection 6.7A will be obtained and shall be used by
Administrative Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents. Administrative Agent agrees to
deliver a copy of any such report to Company with the understanding that Company
acknowledges and agrees that (x) it will indemnify and hold
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harmless Administrative Agent and each Lender from any costs, losses or
liabilities relating to Company's use of or reliance on such report, (y) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report and (z) by delivering such report to Company, neither
Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
B. Environmental Disclosure. Company will deliver to
Administrative Agent:
(i) Environmental Audits and Reports. As soon as practicable
following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons,
with respect to significant environmental matters at any Facility which
would reasonably be expected to result in a Material Adverse Effect or
with respect to any Environmental Claims which would reasonably be
expected to result in a Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial Actions, Etc.
Promptly following the occurrence thereof, written notice describing in
reasonable detail (a) any Release required to be reported to any
federal, state or local governmental or regulatory agency under any
applicable Environmental Laws (the existence of which has a reasonable
possibility of resulting in a Material Adverse Effect), (b) any remedial
action taken by Company or any other Person in response to (1) any
Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having a
Material Adverse Effect or (2) any Environmental Claims that have a
reasonable possibility of resulting in a Material Adverse Effect and (c)
Company's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of any Facility that could cause such
Facility or any part thereof to be subject to any material restrictions
on the ownership, occupancy, transferability or use thereof under any
Environmental Laws.
(iii) Written Communications Regarding Environmental Claims,
Releases, Etc. As soon as practicable following the sending or receipt
thereof by Company or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims that
have a reasonable possibility of giving rise to a Material Adverse
Effect, (b) any Release required to be reported to any federal, state or
local governmental or regulatory agency and (c) any request for
information from any governmental agency that states that such agency is
investigating whether Company or any of its Subsidiaries may be
potentially responsible for any Hazardous Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental
Impact. Prompt written notice describing in reasonable detail (a) any
proposed acquisition of stock, assets or property by Company or any of
its Subsidiaries that could reasonably
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be expected to (1) expose Company or any of its Subsidiaries to, or
result in, Environmental Claims that could reasonably be expected to
have a Material Adverse Effect or (2) affect the ability of Company or
any of its Subsidiaries to maintain in full force and effect all
material Governmental Authorizations required under any Environmental
Laws for their respective operations and (b) any proposed action to be
taken by Company or any of its Subsidiaries to modify current operations
in a manner that would reasonably be expected to subject Company or any
of its Subsidiaries to any additional obligations or requirements under
any Environmental Laws that would reasonably be expected to have a
Material Adverse Effect.
(v) Other Information. With reasonable promptness, such other
documents and information as from time to time may be reasonably
requested by any Agent or Lender in relation to any matters disclosed
pursuant to this subsection 6.7.
C. Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws.
(i) Remedial Actions Relating to Hazardous Materials
Activities. Company shall promptly undertake, and shall cause each of
its Subsidiaries promptly to undertake, any and all investigations,
studies, sampling, testing, abatement, cleanup, removal, remediation or
other response actions necessary to remove, remediate, clean up or abate
any Hazardous Materials Activity on, under or about any Facility that
would reasonably be expected to have a Material Adverse Effect. In the
event Company or any of its Subsidiaries undertakes any such action with
respect to any Hazardous Materials, Company or such Subsidiary shall
conduct and complete such action in compliance with all applicable
Environmental Laws and in accordance with the policies, orders and
directives of all federal, state and local governmental authorities
except when, and only to the extent that, Company's or such Subsidiary's
liability with respect to such Hazardous Materials Activity is being
contested in good faith by Company or such Subsidiary.
(ii) Actions with Respect to Environmental Claims and
Violations of Environmental Laws. Company shall promptly take, and shall
cause each of its Subsidiaries promptly to take, any and all actions
necessary to (i) cure any violation of applicable Environmental Laws by
Company or its Subsidiaries that would reasonably be expected to have a
Material Adverse Effect and (ii) make an appropriate response to any
Environmental Claim against Company or any of its Subsidiaries and
discharge any obligations it may have to any Person thereunder where
failure to do so would reasonably be expected to have a Material Adverse
Effect.
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6.8 Execution of Subsidiary Guaranty and Personal Property Collateral
Documents by Certain Subsidiaries and Future Subsidiaries.
A. Execution of Subsidiary Guaranty and Personal Property
Collateral Documents. In the event that any Person becomes a Subsidiary of
Company after the date hereof, Company will promptly (and in any case no later
than 45 days thereafter) notify Administrative Agent of that fact and cause such
Subsidiary to execute and deliver to Administrative Agent a Subsidiary Pledge
Agreement, and, with respect to Domestic Subsidiaries only, a Subsidiary
Security Agreement, a Subsidiary Patent and Trademark Security Agreement and a
counterpart of the Subsidiary Guaranty and in each case to take all such further
actions and execute all such further documents and instruments (including
actions, documents and instruments comparable to those described in subsection
4.1H) as may be necessary or, in the reasonable opinion of Administrative Agent,
desirable to create in favor of Administrative Agent, for the benefit of Lenders
and Agents, a valid and perfected First Priority Lien on the personal and mixed
property assets of such Subsidiary described in the applicable forms of
Collateral Documents.
B. Subsidiary Charter Documents, Legal Opinions, Etc. Company
shall deliver to Administrative Agent, together with such Loan Documents in
accordance with subsection 6.8A above, (i) certified copies of such Subsidiary's
Certificate or Articles of Incorporation or other applicable organizational
documents filed or registered with the state or other jurisdiction in which such
Subsidiary is organized, together with, to the extent applicable, a good
standing certificate from the Secretary of State of the jurisdiction of its
incorporation and each other state in which such Subsidiary is qualified as a
foreign corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to
Administrative Agent, (ii) a copy of such Subsidiary's Bylaws, Operating
Agreement, Partnership Agreement or other similar organizational document,
certified by its secretary or an assistant secretary as of a recent date prior
to their delivery to Administrative Agent, (iii) a certificate executed by the
secretary or an assistant secretary of such Subsidiary as to (a) the fact that
the attached resolutions of the Board of Directors (or other similar body) of
such Subsidiary approving and authorizing the execution, delivery and
performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents and (iv) if reasonably required
by Administrative Agent, a favorable opinion of counsel to such Subsidiary, in
form and substance satisfactory to Administrative Agent and its counsel, as to
(a) the due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of such Loan Documents,
(c) the enforceability of such Loan Documents against such Subsidiary, (d) such
other matters (including matters relating to the creation and perfection of
Liens in any Collateral pursuant to such Loan Documents) as Administrative Agent
may reasonably request, all of the foregoing to be satisfactory in form and
substance to Administrative Agent and its counsel.
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6.9 Matters Relating to Additional Real Property Collateral.
From and after the Closing Date, in the event that (i) Company
or any Subsidiary Guarantor acquires any fee interest in real property or any
Leasehold Property or (ii) at the time any Person becomes a Subsidiary
Guarantor, such Person owns or holds any fee interest in real property or any
Leasehold Property, in either case excluding any such Real Property Assets the
aggregate value of which fee interests or leasehold interests is less than
$10,000,000 or the encumbrancing of which requires the consent of any applicable
lessor or (in the case of clause (ii) above) then-existing senior lienholder,
where Company and its Subsidiaries are unable to obtain such lessor's or senior
lienholder's consent (any such non-excluded Real Property Asset described in the
foregoing clause (i) or (ii) being an "Additional Mortgaged Property"), Company
or such Subsidiary Guarantor shall deliver to Administrative Agent, as soon as
practicable after such Person acquires such Additional Mortgaged Property or
becomes a Subsidiary Guarantor, as the case may be, the following:
A. Additional Mortgage. A fully executed and notarized
Mortgage (an "Additional Mortgage"), duly recorded in all appropriate
places in all applicable jurisdictions, encumbering the interest of such
Loan Party in such Additional Mortgaged Property;
B. Landlord Consent and Estoppel; Recorded Leasehold Interest.
In the case of an Additional Mortgaged Property consisting of a
Leasehold Property, if reasonably required by Administrative Agent, (a)
a consent and estoppel signed by the landlord thereof consenting to the
encumbrance of such Leasehold Property with a Mortgage and including
standard notice and cure rights for Administrative Agent on behalf of
Lenders and (b) evidence that the lease or memorandum for such Leasehold
Property has been recorded in all places necessary or desirable; and
C. Environmental Audit. If reasonably required by
Administrative Agent, reports and other information, in form, scope and
substance reasonably satisfactory to Agents and prepared by
environmental consultants satisfactory to Agents, concerning any
environmental hazards or liabilities to which Company or any of its
Subsidiaries may be subject with respect to such Additional Mortgaged
Property.
6.10 Interest Rate Protection.
At all times after the date which is 90 days after the Closing
Date, Company shall maintain in effect one or more Interest Rate Agreements with
respect to the Loans, in an aggregate notional principal amount of not less than
50% of the Term Loans borrowed on the Closing Date as projected to be reduced by
scheduled amortization, each such Interest Rate Agreement to be in form and
substance satisfactory to Administrative Agent and with a term of not less than
two years after the Closing Date.
6.11 Year 2000 Compliance.
Company shall perform all acts reasonably necessary to ensure
that Company
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and its Subsidiaries become Year 2000 Compliant in a timely manner. Such acts
shall include performing a comprehensive review and assessment of all of Company
and its Subsidiaries' systems and adopting a detailed plan, with itemized
budget, for the remediation, monitoring and testing of such systems. Company
shall, immediately upon request, provide to Administrative Agent (which shall
furnish copies thereof to Lenders) such certifications or other evidence of
Company and its Subsidiaries' compliance with the terms of this subsection 6.11
as any Agent or Lender (through the Administrative Agent) may from time to time
reasonably request.
Section 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall have otherwise given prior
written consent in accordance with subsection 10.6 to amendment or waiver
thereof, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 7.
7.1 Indebtedness.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guarantee, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Company and Loan Parties may become and remain liable
with respect to the Obligations;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by subsection 7.4 and,
upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases not to
exceed $15,000,000 in the aggregate at any time outstanding;
(iv) Company may become and remain liable with respect to
Indebtedness to any of its direct or indirect wholly-owned Subsidiaries,
and any direct or indirect wholly-owned Subsidiary of Company may become
and remain liable with respect to Indebtedness to Company or any other
direct or indirect wholly-owned Subsidiary of Company; provided that (a)
all such intercompany Indebtedness shall be evidenced by promissory
notes, (b) all such intercompany Indebtedness owed by Company to any of
its Subsidiaries shall be subordinated in right of payment to the
payment in full of the Obligations pursuant to the terms of the
applicable promissory notes or an intercompany subordination agreement
and (c) any payment by any Subsidiary of
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Company under any guaranty of the Obligations shall result in a pro
tanto reduction of the amount of any intercompany Indebtedness owed by
such Subsidiary to Company or to any of its Subsidiaries for whose
benefit such payment is made;
(v) Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in Schedule 7.1 annexed
hereto;
(vi) Company may become and remain liable with respect to
Permitted Subordinated Debt;
(vii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness constituting purchase money
financing for personal property or mortgage financing of Real Property
Assets in an aggregate principal amount not exceeding $10,000,000 at any
time outstanding;
(viii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness constituting Assumed Permitted
Acquisition Indebtedness and Incurred Permitted Acquisition Indebtedness
in an aggregate principal amount not exceeding $100,000,000 at any time
outstanding; provided that in the event that the Loans (after giving
effect to the proposed acquisition) obtain a Rating of not less than BB+
from S&P and Ba1 from Moody's, Company and its Subsidiaries may become
liable with respect to such Indebtedness in an aggregate principal
amount not exceeding $150,000,000 at any time outstanding; and
(ix) Company and its Subsidiaries may become and remain liable
with respect to other Indebtedness in an aggregate principal amount not
to exceed $10,000,000 at any time outstanding.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any state or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
(iv) Liens associated with Assumed Permitted Acquisition
Indebtedness;
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and
(v) Liens securing Indebtedness permitted under subsection
7.1(vii) hereof.
B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Company nor any
of its Subsidiaries shall enter into any agreement (other than any agreement
prohibiting only the creation of Liens securing Permitted Subordinated Debt)
generally prohibiting the creation or assumption of any Lien upon its properties
and assets, whether now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein, Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
7.3 Investments; Joint Ventures.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments
in Cash and Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries of
Company;
(iii) Company and its Subsidiaries may make intercompany loans
to the extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may make Consolidated
Capital
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Expenditures permitted by subsection 7.8;
(v) Company and its Subsidiaries may make Investments as
required to consummate Permitted Acquisitions permitted under subsection
7.7(vi) and the World Medical Acquisition;
(vi) Company and its Subsidiaries may continue to own the
Investments and proposed Investments owned by them and described in
Schedule 7.3 annexed hereto;
(vii) Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed $10,000,000 at any time
outstanding;
(viii) Company and its Subsidiaries may make and own
Investments in an aggregate amount not to exceed $20,000,000 at any time
outstanding consisting of any deferred portion of the sales price
received by Company or its Subsidiaries in connection with any Asset
Sale permitted under subsection 7.7(v);
(ix) Company or any of its Subsidiaries may make and own
Investments in respect of Securities of another Person received by
Company or such Subsidiary in connection with a plan of reorganization
of such Person or a readjustment of its debt;
(x) Company and its Subsidiaries may make and own Investments
in Joint Ventures in an aggregate amount not exceeding the lesser of (a)
Retained Excess Cash Flow at the time of such Investment and (b)
$50,000,000, each as determined on a cumulative basis from the Closing
Date; and
(xi) Company may make loans to employees in connection with
the purchase of the stock of Company by such employees pursuant to the
terms of employment agreements of such employees in an aggregate amount
not to exceed $2,000,000 in any Fiscal Year.
7.4 Contingent Obligations.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary Guaranty;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of Letters of Credit
and Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of letters of credit other
than the Letters of Credit in an aggregate amount not to exceed
$15,000,000 at any time outstanding;
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(iii) Company may become and remain liable with respect to
Contingent Obligations under Hedge Agreements;
(iv) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets;
(v) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations under guarantees in the ordinary
course of business of the obligations of suppliers, customers,
franchisees and licensees of Company and its Subsidiaries in an
aggregate amount not to exceed $10,000,000 at any time outstanding;
(vi) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness of
Company or any of its Subsidiaries permitted by subsection 7.1;
(vii) Company and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in Schedule 7.4
annexed hereto; and
(viii) Company and its Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided that the
maximum aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no
time exceed $10,000,000.
7.5 Restricted Junior Payments.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that (i) Company may make
regularly scheduled payments of interest in respect of any Permitted
Subordinated Debt in accordance with the terms of, and only to the extent
required by, and subject to the subordination provisions contained in, the
indenture or other agreement pursuant to which such Permitted Subordinated Debt
was issued, as such indenture or other agreement may be amended from time to
time to the extent permitted under subsection 7.13B and (ii) Company may redeem
or repurchase the stock of Company (or options or warrants to acquire such
stock) from employees thereof pursuant to the terms of employment agreements
with such employees in an aggregate amount not to exceed $2,000,000 in any
Fiscal Year.
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7.6 Financial Covenants.
For purposes of this subsection 7.6, the components of the
following financial covenants shall include the financial results of the Bard
Catheter Lab Business as if such business had been acquired at the beginning of
such tested period for purposes of calculating Consolidated Adjusted EBITDA.
A. Minimum Fixed Charge Coverage Ratio. As measured quarterly as at the
end of each Fiscal Quarter, Company shall not permit the ratio of (i)
Consolidated Adjusted EBITDA for any four consecutive Fiscal Quarter period
ending on any date set forth below to (ii) Consolidated Fixed Charges for any
four consecutive Fiscal Quarter period ending on such date (or, in the case of
Consolidated Scheduled Amortization for the immediately succeeding four
consecutive Fiscal Quarter period) to be less than the correlative ratio
indicated:
Minimum
Date Fixed Charge Coverage Ratio
-------------------------- ---------------------------
December 31, 1998 2.2:1.0
March 31, 1999 2.2:1.0
June 30, 1999 2.2:1.0
September 30, 1999 2.2:1.0
December 31, 1999 2.5:1.0
March 31, 2000 2.7:1.0
June 30, 2000 2.9:1.0
September 30, 2000 3.0:1.0
December 31, 2000 3.1:1.0
March 31, 2001 3.2:1.0
June 30, 2001 3.3:1.0
September 30, 2001
and each Fiscal Quarter end thereafter 1.0:1.0
; provided that (a) with respect to the foregoing ratio for the period ending
December 31, 1998, Consolidated Interest Expense and Consolidated Capital
Expenditures (as utilized in Consolidated Fixed Charges) shall be calculated as
the product of Consolidated Interest Expense and Consolidated Capital
Expenditures for the Fiscal Quarter ending December 31, 1998 multiplied by four;
(b) for the period ending March 31, 1999, Consolidated Interest Expense and
Consolidated Capital Expenditures shall be calculated as the product of
Consolidated Interest Expense and Consolidated Capital Expenditures for the two
Fiscal Quarters ending March 31, 1999 multiplied by two; and (c) for the period
ending June 30, 1999, Consolidated Interest Expense and Consolidated Capital
Expenditures shall be calculated as the product of Consolidated Interest Expense
and Consolidated Capital Expenditures for the three Fiscal Quarters ending June
30, 1999 multiplied by one and one-
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third.
<TABLE>
B. Maximum Leverage Ratio. Company shall not permit the Consolidated
Leverage Ratio at any time to exceed the ratios indicated below during any of
the periods set forth below:
<CAPTION>
Period Maximum Leverage Ratio
----------------------------------- ------------------------
<S> <C> <C>
September 30, 1998 through and including December 31, 1998 2.1:1.0
January 1, 1999 through and including March 31, 1999 2.1:1.0
April 1, 1999 through and including June 30, 1999 2.0:1.0
July 1, 1999 through and including September 30, 1999 1.9:1.0
October 1, 1999 through and including December 31, 1999 1.7:1.0
January 1, 2000 through and including March 31, 2000 1.6:1.0
April 1, 2000 through and including June 30, 2000 1.5:1.0
July 1, 2000 through and including September 30, 2000 1.2:1.0
October 1, 2000 through and including December 31, 2000 1.1:1.0
January 1, 2001
and thereafter 1.0:1.0
</TABLE>
C. Minimum Consolidated Net Worth. As determined quarterly as at the
end of each Fiscal Quarter, Company shall not permit Consolidated Net Worth as
at any such date as set forth below to be less than the sum of $100,000,000 plus
the amount equal to 75% of Consolidated Net Income at such time, as Consolidated
Net Income is determined on a cumulative basis from the Closing Date, without
deductions for any losses (other than any amounts accrued as Permitted
Acquisitions Non-cash Reserves after the Closing Date).
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
Company shall not, and shall not permit any of its Subsidiaries
to, enter into any transaction of merger or consolidation, or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of,
in one transaction or a series of transactions, all or any part of its business,
property or assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person or
any division or line of business of any Person, except:
(i) any Subsidiary of Company may be merged with or into
Company or any direct or indirect wholly-owned Subsidiary Guarantor, or
be liquidated, wound up or dissolved, or all or any part of its
business, property or assets may be conveyed,
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sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to Company or any direct or indirect
wholly-owned Subsidiary Guarantor; provided that, in the case of such a
merger, Company or such direct or indirect wholly-owned Subsidiary
Guarantor shall be the continuing or surviving corporation;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may dispose of obsolete or
worn out property in the ordinary course of business;
(iv) Company and its Subsidiaries may sell or otherwise dispose
of assets in transactions that do not constitute Asset Sales;
(v) subject to subsection 7.11, Company and its Subsidiaries
may make annual Asset Sales of assets having a fair market value not in
excess of 5% of the consolidated revenues of Company and its
Subsidiaries for the immediately preceding Fiscal Year as shown on the
consolidated financial statements of Company and its Subsidiaries for
such immediately preceding Fiscal Year; provided that (x) the
consideration received for such assets shall be in an amount at least
equal to the fair market value thereof; (y) at least 85% of the
consideration received shall be cash; and (z) the proceeds of such
Asset Sales shall be applied as required by subsection 2.4B(iii)(a);
(vi) Company and its Subsidiaries may acquire, whether by
purchase, issuance of stock or other equity or debt securities, merger,
reorganization or any other method, not less than eighty percent (80%)
of the ownership interest of any Person substantially engaged in a
medical device business or a business described on Schedule 7.12
annexed hereto, substantially all of the assets of such Person, or any
division or line of business through which any Person substantially
engages in the medical device business or a business described on
Schedule 7.12 annexed hereto in an aggregate amount up to $200,000,000,
which amount may consist of an aggregate amount of up to $100,000,000
of Cash, Incurred Permitted Acquisition Indebtedness and Assumed
Permitted Acquisition Indebtedness, in each case as determined on a
cumulative basis from the Closing Date and excluding any amounts in
connection with the World Medical Acquisition; provided that in the
event that the Loans (after giving effect to such proposed
acquisitions) obtain Ratings of not less than BB+ from S&P and Ba1 from
Moody's, such acquisitions in the aggregate shall be permitted up to an
unlimited amount, which amount may consist of an aggregate amount of up
to $150,000,000 of Cash, Incurred Permitted Acquisition Indebtedness
and Assumed Permitted Acquisition Indebtedness, as determined on a
cumulative basis from the Closing Date and excluding any amounts in
connection with the World Medical Acquisition; provided further that:
(a) such Person becomes a Subsidiary of Company, or such business,
property or other assets are acquired by Company or a direct or
indirect wholly-owned Subsidiary of Company; (b) concurrently with the
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consummation of such Permitted Acquisition, Company shall, and shall
cause its Subsidiaries to, comply with the requirements of subsections
6.8 and 6.9 with respect to such Permitted Acquisitions; and (c) prior
to the consummation of any such Permitted Acquisition having a purchase
price in excess of $5,000,000, Company shall deliver to Administrative
Agent an Officer's Certificate (1) certifying that no Potential Event
of Default or Event of Default under this Agreement shall then exist or
shall occur as a result of such Permitted Acquisition, (2)
demonstrating that after giving effect to such Permitted Acquisition
and to all Indebtedness to be incurred or assumed or repaid in
connection with or as consideration for such Permitted Acquisition,
that Company is in Pro Forma Financial Covenant Compliance for the four
consecutive Fiscal Quarter period ending immediately prior to the date
of the proposed Permitted Acquisition, (3) delivering a copy, prepared
in conformity with GAAP (subject to year-end adjustments and the
absence of footnotes), of (i) financial statements of the Person or
business so acquired for the immediately preceding four consecutive
Fiscal Quarter period corresponding to the calculation period for the
financial covenants in the immediately preceding clause and (ii)
audited or reviewed financial statements of the Person or business so
acquired for the fiscal year ended within such period of such Person
and (4) revised financial projections (in a form substantially
consistent with previously provided projections) for the Company pro
forma for any proposed Permitted Acquisition in excess of $50,000,000
for the succeeding four Fiscal Quarters; and
(vii) Company may consummate the World Medical Acquisition.
7.8 Consolidated Capital Expenditures.
Company shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures in any Fiscal Year in an
aggregate amount in excess of (a) for Fiscal Year 1999, $75,000,000, and (b) for
Fiscal Year 2000 and each Fiscal Year thereafter, an amount equal to 5% of the
consolidated revenues of Company and its Subsidiaries for such Fiscal Year as
shown on the audited consolidated financial statements of Company and its
Subsidiaries for such Fiscal Year (in each case, the "Maximum Consolidated
Capital Expenditures Amount"); provided that the Maximum Consolidated Capital
Expenditures Amount for any Fiscal Year shall be increased by an amount equal to
the excess, if any (but in no event more than 50% of the Maximum Consolidated
Capital Expenditures Amount for the previous Fiscal Year (as adjusted in
accordance with this proviso)) of the Maximum Consolidated Capital Expenditures
Amount for the immediately preceding Fiscal Year over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year.
7.9 Sale or Discount of Receivables.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, sell with recourse, or discount or otherwise sell
for less than the face value thereof, any of its notes or accounts receivable
sold for purposes of collection and for which reserves had been established in
accordance with GAAP.
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7.10 Transactions with Shareholders and Affiliates.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 10% or more of any class of equity
Securities of Company or with any Affiliate of Company or of any such holder, on
terms that are less favorable to Company or that Subsidiary, as the case may be,
than those that might be obtained at the time from Persons who are not such a
holder or Affiliate; provided that the foregoing restriction shall not apply to
(i) any transaction between Company and any of its direct or indirect
wholly-owned Subsidiaries or between any of its direct or indirect wholly-owned
Subsidiaries or (ii) reasonable and customary fees paid to members of the Boards
of Directors of Company and its Subsidiaries or (iii) as set forth on Schedule
7.10 annexed hereto.
7.11 Disposal of Subsidiary Stock.
Except for any sale of 100% of the capital stock or other
equity Securities of any of its Subsidiaries in compliance with the provisions
of subsection 7.7(v), Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of their respective
Subsidiaries (including such Subsidiary), except to Company, another
Subsidiary of Company or to qualify directors if required by applicable
law.
7.12 Conduct of Business.
From and after the Closing Date, Company shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Company and its Subsidiaries on the Closing Date and
similar or related businesses (as described on Schedule 7.12 annexed hereto) and
(ii) such other lines of business as may be consented to by Requisite Lenders.
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7.13 Amendments or Waivers of Certain Related Agreements
A. Amendments or Waivers of Certain Related Agreements. Neither Company
nor any of its Subsidiaries shall agree to any material amendment to, or waive
any of its material rights under, any Related Agreement (other than any Related
Agreement evidencing or governing any Permitted Subordinated Debt) after the
Closing Date without in each case obtaining the prior written consent of
Requisite Lenders to such amendment or waiver.
B. Amendments of Documents Relating to Permitted Subordinated Debt.
Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Permitted Subordinated Debt, or make any
payment consistent with an amendment thereof or change thereto, if the effect of
such amendment or change is to increase the interest rate on such Permitted
Subordinated Debt, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period with respect thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Permitted Subordinated Debt (or a
trustee or other representative on their behalf) which would be adverse to
Company or Lenders.
7.14 Fiscal Year
Company shall not change its Fiscal Year-end from June 30.
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of
Default") shall occur:
8.1 Failure to Make Payments When Due.
Failure by Company to pay any installment of principal of any
Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; failure by Company
to pay when due any amount payable to an Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or failure by Company to pay any interest on
any Loan or any fee or any other amount due under this Agreement within five
days after the date due; or
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8.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to pay when
due any principal of or interest on or any other amount payable in respect of
one or more items of Indebtedness (other than Indebtedness referred to in
subsection 8.1) or Contingent Obligations, in each case in an individual or an
aggregate outstanding principal amount of $10,000,000 or more, in each case
beyond the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its Subsidiaries
with respect to any other material term of (a) one or more items of Indebtedness
or Contingent Obligations in the individual or aggregate principal amounts
referred to in clause (i) above or (b) any loan agreement, mortgage, indenture
or other agreement relating to such item(s) of Indebtedness or Contingent
Obligation(s), if the effect of such breach or default is to cause, or to permit
the holder or holders of that Indebtedness or Contingent Obligation(s) (or a
trustee on behalf of such holder or holders) to cause, that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable prior to its
stated maturity or the stated maturity of any underlying obligation, as the case
may be (upon the giving or receiving of notice, lapse of time, both, or
otherwise); or
8.3 Breach of Certain Covenants.
Failure of Company to perform or comply with any term or
condition contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 Breach of Warranty.
Any representation, warranty, certification or other statement
made by Company or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Company or any of its Subsidiaries
in writing pursuant hereto or thereto or in connection herewith or therewith
shall be false in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
Any Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the earlier of (i) an officer of Company or such Loan Party becoming
aware of such default or (ii) receipt by Company and such Loan Party of notice
from any Agent or any Lender of such default; or
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8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Company or any of its Material
Subsidiaries in an involuntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or (ii) an involuntary case
shall be commenced against Company or any of its Material Subsidiaries under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Company or any of its Material Subsidiaries, or over all or a substantial part
of its property, shall have been entered; or there shall have occurred the
involuntary appointment of an interim receiver, trustee or other custodian of
Company or any of its Material Subsidiaries for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of Company or any of
its Material Subsidiaries, and any such event described in this clause (ii)
shall continue for 60 days unless dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Company or any of its Material Subsidiaries shall have an
order for relief entered with respect to it or commence a voluntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Company or any of its Material
Subsidiaries shall make any assignment for the benefit of creditors; or (ii)
Company or any of its Material Subsidiaries shall be unable, or shall fail
generally, or shall admit in writing its inability, to pay its debts as such
debts become due; or the Board of Directors of Company or any of its Material
Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to in clause (i)
above or this clause (ii); or
8.8 Judgments and Attachments.
Any money judgment, writ or warrant of attachment or similar
process involving (i) in any individual case an amount in excess of $5,000,000
or (ii) in the aggregate an amount in excess of $10,000,000 at any time (in
either case not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against Company or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of any
proposed sale thereunder); or
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8.9 Dissolution.
Any order, judgment or decree shall be entered against Company
or any of its Material Subsidiaries decreeing the dissolution or split up of
Company or that Material Subsidiary and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
8.10 Employee Benefit Plans.
There shall occur one or more ERISA Events which individually
or in the aggregate results in liability of Company, any of its Subsidiaries or
any of their respective ERISA Affiliates in excess of $5,000,000 during the term
of this Agreement; or there shall exist an amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA), individually for any
Pension Plans (excluding for purposes of such computation any Pension Plans with
respect to which assets exceed benefit liabilities), which exceeds $5,000,000 or
$10,000,000 in the aggregate for all Pension Plans; or
8.11 Change in Control.
A Change of Control shall have occurred; or
8.12 Invalidity of Subsidiary Guaranty; Failure of Security; Repudiation of
Obligations.
At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Administrative Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any Collateral
purported to be covered thereby having a fair market value individually or in
the aggregate exceeding $5,000,000, in each case for any reason other than the
failure of Administrative Agent or any Lender to take any action within its
control, or (iii) any Loan Party shall contest the validity or enforceability of
any Loan Document in writing or deny in writing that it has any further
liability, including with respect to future Loans by Lenders, under any Loan
Document to which it is a party; or
8.13 Failure to Consummate Acquisition.
The Acquisition shall not be consummated in accordance with
this Agreement and the applicable Related Agreements concurrently with the
making of the initial Loans, or the Acquisition shall be unwound, reversed or
otherwise rescinded in whole or in part for any
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reason:
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of the Lender that is Administrative Agent to issue any Letter of
Credit and the right of any Lender to issue any Letter of Credit hereunder shall
thereupon terminate, and (ii) upon the occurrence and during the continuation of
any other Event of Default, Administrative Agent shall, upon the written request
or with the written consent of Requisite Lenders, by written notice to Company,
declare all or any portion of the amounts described in clauses (a) through (c)
above to be, and the same shall forthwith become, immediately due and payable,
and the obligation of each Lender to make any Loan, the obligation of
Administrative Agent to issue any Letter of Credit and the right of any Lender
to issue any Letter of Credit hereunder shall thereupon terminate; provided that
the foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i) or the obligations of Lenders to purchase participations in
any unpaid Swing Line Loans as provided in subsection 2.1A(iv).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Collateral Account Agreement and shall be applied as therein
provided.
Notwithstanding anything contained in the second preceding
paragraph, if at any time within 30 days after an acceleration of the Loans
pursuant to clause (ii) of such paragraph Company shall pay all arrears of
interest and all payments on account of principal which shall have become due
otherwise than as a result of such acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of the principal of and accrued interest on the Loans, in each
case which is due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to subsection 10.6, then Requisite Lenders, by
written notice to Company, may at their option rescind and annul such
acceleration and its consequences; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right
consequent thereon. The provisions of this paragraph are intended merely to bind
Lenders to a decision which may be made at the election of Requisite Lenders and
are not intended, directly or indirectly, to benefit Company, and such
provisions shall not at any time be construed so as to grant Company the right
to require Lenders to rescind or annul any acceleration hereunder or to preclude
Administrative Agent or Lenders from exercising any of the rights or remedies
available to them under any of the Loan Documents, even if the conditions set
forth in this paragraph are met.
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Section 9. ADMINISTRATIVE AGENT
9.1 Appointment.
A. Appointment of Agents. Royal Bank of Canada is hereby appointed as
Administrative Agent and DLJ Capital Funding, Inc. is hereby appointed as
Syndication Agent, each so appointed hereunder and under the other Loan
Documents, and each Lender hereby authorizes each Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents.
Administrative Agent agrees to act upon the express conditions contained in this
Agreement and the other Loan Documents, as applicable. The provisions of this
Section 9 are solely for the benefit of each Agent and Lenders, and Company
shall have no rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, each Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Company or any of its Subsidiaries.
B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent in such jurisdiction.
It is recognized that in case of litigation under this Agreement or any of the
other Loan Documents, and in particular in case of the enforcement of any of the
Loan Documents, or in case Administrative Agent deems that by reason of any
present or future law of any jurisdiction it may not exercise any of the rights,
powers or remedies granted herein or in any of the other Loan Documents or take
any other action which may be desirable or necessary in connection therewith, it
may be necessary that Administrative Agent appoint an additional individual or
institution as a separate agent, collateral agent or collateral co-agent (any
such additional individual or institution being referred to herein individually
as a "Supplemental Collateral Agent" and collectively as "Supplemental
Collateral Agents").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative
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Agent and/or such Supplemental Collateral Agent, as the context may require.
Should any instrument in writing from Company or any other Loan
Party be required by any Supplemental Collateral Agent so appointed by
Administrative Agent for more fully and certainly vesting in and confirming to
it such rights, powers, privileges and duties, Company shall, or shall cause
such other Loan Party to, execute, acknowledge and deliver any and all such
instruments promptly upon request by Administrative Agent. In case any
Supplemental Collateral Agent, or a successor thereto, shall cease to exist,
become bankrupt or insolvent, become incapable of acting, resign or be removed,
all the rights, powers, privileges and duties of such Supplemental Collateral
Agent, to the extent permitted by law, shall vest in and be exercised by
Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 Powers and Duties; General Immunity.
A. Powers; Duties Specified. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. Each Agent
may exercise such powers, rights and remedies and perform such duties by or
through its officers, directors, agents, employees, trustees or
attorneys-in-fact. No Agent shall have, by reason of this Agreement or any of
the other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon any Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
B. No Responsibility for Certain Matters. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by such Agent to Lenders or by or on behalf of
Company to such Agent or any Lender in connection with the Loan Documents and
the transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall such Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary notwithstanding, no Agent
shall have any liability arising from confirmations of the amount of outstanding
Loans or the Letter of Credit Usage or the component amounts thereof.
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C. Exculpatory Provisions. No Agent nor any of its respective officers,
directors, employees, trustees, agents or attorneys-in-fact shall be liable to
Lenders for any action taken or omitted by such Agent under or in connection
with any of the Loan Documents except to the extent caused by such Agent's gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection with this Agreement or any of the other Loan Documents or from the
exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until such Agent shall have received instructions in
respect thereof from Requisite Lenders (or such other Lenders as may be required
to give such instructions under subsection 10.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may be),
such Agent shall be entitled to act or (where so instructed) refrain from
acting, or to exercise such power, discretion or authority, in accordance with
such instructions. Without prejudice to the generality of the foregoing, (i)
each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
D. Agents Entitled to Act as Lender. The agencies hereby created shall
in no way impair or affect any of the rights and powers of, or impose any duties
or obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the agency duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless the context clearly otherwise indicates, include such
Agent in its individual capacity as Lender. Each Agent and its Affiliates and
Related Funds may accept deposits from, lend money to and generally engage in
any kind of banking, trust, financial advisory or other business with Company or
any of its Affiliates as if it were not performing the duties specified herein
and may accept fees and other consideration from Company for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
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9.3 Representations and Warranties; No Responsibility For Appraisal of
Credit-worthiness.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify each Agent, to the extent that such Agent shall not have
been reimbursed by Company, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including reasonable counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against such Agent in exercising its powers, rights and remedies or
performing its duties hereunder or under the other Loan Documents or otherwise
in its capacity as Administrative Agent or Syndication Agent, as the case may
be, in any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements with respect to an Agent to the extent
resulting from such Agent's gross negligence or willful misconduct. If any
indemnity furnished to any Agent for any purpose shall, in the opinion of such
Agent, be insufficient or become impaired, such Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
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9.5 Successor Agents and Swing Line Lender.
A. Successor Agents. Administrative Agent may resign by giving
30 days' prior written notice thereof to Syndication Agent, Lenders and Company,
and such resignation shall only be effective upon the appointment of, and
acceptance of such appointment by, a successor Administrative Agent pursuant to
this subsection 9.5, which successor must be a financial institution reasonably
satisfactory to Company; provided that Administrative Agent may resign at any
time if Company shall be in default in the payment of any amount owed by Company
to Administrative Agent in such capacity. Administrative Agent may be removed at
any time with or without cause by an instrument or concurrent instruments in
writing delivered to Company and Administrative Agent and signed by Requisite
Lenders. Syndication Agent may resign at any time upon one Business Day's prior
notice thereof to Company and Administrative Agent. Upon any such notice of
resignation of Administrative Agent or Syndication Agent or any such removal of
Administrative Agent, Requisite Lenders shall have the right, upon five Business
Days' notice to Company, to appoint a successor Administrative Agent or
Syndication Agent, as the case may be, which replacement must be a financial
institution reasonably satisfactory to Company. Upon the acceptance of any
appointment as Administrative Agent or Syndication Agent, as the case may be,
hereunder by a successor Administrative Agent or Syndication Agent, as the case
may be, that successor Administrative Agent or Syndication Agent, as the case
may be, shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring or removed Administrative Agent or
Syndication Agent, as the case may be, and the retiring or removed
Administrative Agent or Syndication Agent, as the case may be, shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Administrative Agent's or Syndication Agent's, as the case
may be, resignation or removal hereunder as Administrative Agent or Syndication
Agent, as the case may be, 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 or Syndication Agent, as the case may be, under this
Agreement.
B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of Royal Bank of Canada or its successor as Swing Line
Lender (notwithstanding whether such Person may continue to be a Lender
hereunder), and any successor Administrative Agent appointed pursuant to
subsection 9.5A shall, upon its acceptance of such appointment, become the
successor Swing Line Lender for all purposes hereunder. In such event, (i)
Company shall prepay any outstanding Swing Line Loans made by the retiring or
removed Swing Line Lender, (ii) upon such prepayment, the retiring or removed
Swing Line Lender shall surrender the Swing Line Note held by it to Company for
cancellation and (iii) Company shall issue a new Swing Line Note to the
successor Swing Line Lender substantially in the form of Exhibit VII annexed
hereto, in the principal amount of the Swing Line Loan Commitment then in effect
and with other appropriate insertions.
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9.6 Collateral Documents and Subsidiary Guaranty.
Each Lender and Syndication Agent hereby further authorizes
Administrative Agent, on behalf of and for the benefit of Lenders and Agents, to
enter into each Collateral Document as secured party and to be the agent for and
representative of Lenders and Agents under the Subsidiary Guaranty, and each
Lender and each Agent agrees to be bound by the terms of each Collateral
Document and Guaranty; provided that Administrative Agent shall not (i) enter
into or consent to any material amendment, modification, termination or waiver
of any provision contained in any Collateral Document or the Subsidiary Guaranty
or (ii) release any Collateral (except as otherwise expressly permitted or
required pursuant to the terms of this Agreement or the applicable Collateral
Document), in each case without the prior consent of Requisite Lenders (or, if
required pursuant to subsection 10.6, all Lenders); provided further, however,
that, without further written consent or authorization from Lenders,
Administrative Agent may execute any documents or instruments necessary to (a)
release any Lien encumbering any item of Collateral that is the subject of a
sale or other disposition of assets permitted by this Agreement or the
applicable Collateral Document or to which Requisite Lenders have otherwise
consented or (b) release any Subsidiary Guarantor from the Subsidiary Guaranty
if all of the capital stock of such Subsidiary Guarantor is, or all or
substantially all of the assets are, sold to any Person (other than an Affiliate
of Company) pursuant to a sale or other disposition permitted hereunder or to
which Requisite Lenders (or such other Lenders as may be required to consent
under subsection 10.6) have otherwise consented. Anything contained in any of
the Loan Documents to the contrary notwithstanding, Company, Administrative
Agent and each Lender hereby agree that (X) no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
or to enforce the Subsidiary Guaranty, it being understood and agreed that all
powers, rights and remedies under the Collateral Documents and the Subsidiary
Guaranty may be exercised solely by Administrative Agent for the benefit of
Lenders in accordance with the terms thereof, and (Y) in the event of a
foreclosure by Administrative Agent on any of the Collateral pursuant to a
public or private sale, Administrative Agent or any Lender may be the purchaser
of any or all of such Collateral at any such sale and Administrative Agent, as
agent for and representative of Lenders (but not any Lender or Lenders in its or
their respective individual capacities unless Requisite Lenders shall otherwise
agree in writing) shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any Collateral payable by
Administrative Agent at such sale.
Section 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit.
A. General. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee or
(ii) sell participations to any Person, in all or any part of its Commitments or
any Loan or Loans made by it or its Letters
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of Credit or participations therein or any other interest herein or in any other
Obligations owed to it; provided that no such sale, assignment, transfer or
participation shall, without the consent of Company, require Company to file a
registration statement with the Securities and Exchange Commission or apply to
qualify such sale, assignment, transfer or participation under the securities
laws of any state; provided, further that no such sale, assignment or transfer
described in clause (i) above shall be effective unless and until an Assignment
Agreement effecting such sale, assignment or transfer shall have been accepted
by Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii); provided, further that no such sale, assignment, transfer or
participation of any Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation of a corresponding
interest in the Revolving Loan Commitment and the Revolving Loans of the Lender
effecting such sale, assignment, transfer or participation; and provided,
further that, anything contained herein to the contrary notwithstanding, the
Swing Line Loan Commitment and the Swing Line Loans of Swing Line Lender may not
be sold, assigned or transferred as described in clause (i) above to any Person
other than a successor Administrative Agent and Swing Line Lender to the extent
contemplated by subsection 9.5. Except as otherwise provided in this subsection
10.1, no Lender shall, as between Company and such Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment or transfer of, or
any granting of participations in, all or any part of its Commitments or the
Loans, the Letters of Credit or participations therein, or the other Obligations
owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan,
Letter of Credit or participation therein, or other Obligation may be
(a) assigned in any amount to another Lender, to an Affiliate of the
assigning Lender or another Lender, or to a Related Fund of the
assigning Lender or another Lender, with the giving of notice to
Company and Administrative Agent, or (b) assigned in an aggregate
amount of not less than $5,000,000 (or such lesser amount as shall
constitute the aggregate amount of the Commitments, Loans, Letters of
Credit and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of
(x) Company (which consent shall only be required so long as no Event
of Default has occurred and is continuing) and (y) the Agents (in each
case which consent shall not be unreasonably withheld or delayed). To
the extent of any such assignment in accordance with either clause (a)
or (b) above, the assigning Lender shall be relieved of its obligations
with respect to its Commitments, Loans, Letters of Credit or
participations therein, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver
to Administrative Agent, for its acceptance and recording in the
Register, an Assignment Agreement, together with a processing and
recordation fee of $3,500 and such forms, certificates or other
evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment Agreement may
be required to deliver to Administrative Agent pursuant to subsection
2.7B(iii)(a). Notwithstanding anything to the contrary in the
foregoing, no processing and recordation fee shall be payable in
respect of assignments by Syndication Agent to Lenders with Tranche B
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Term Loan Commitments made within 10 Business Days of the Closing Date.
Upon such execution, delivery, acceptance and recordation, from and
after the effective date specified in such Assignment Agreement, (y)
the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to
such Assignment Agreement, shall have (in addition to any such rights
and obligations theretofore held by it) the rights and obligations of a
Lender hereunder and (z) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, relinquish its rights (other
than any rights which survive the termination of this Agreement under
subsection 10.9B) and be released from its obligations under this
Agreement (and, in the case of an Assignment Agreement covering all or
the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto
(without prejudice to the survival of representations, warranties and
agreements pursuant to subsection 10.9); provided that, anything
contained in any of the Loan Documents to the contrary notwithstanding,
if such Lender is the Issuing Lender with respect to any outstanding
Letters of Credit such Lender shall continue to have all rights and
obligations of an Issuing Lender with respect to such Letters of Credit
until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder). The Commitments
hereunder shall be modified to reflect the Commitments of such assignee
and any remaining Commitment(s) of such assigning Lender and, if any
such assignment occurs after the issuance of the Notes hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes to
Administrative Agent for cancellation, and thereupon new Notes shall be
issued to the assignee and to the assigning Lender, substantially in
the form of Exhibit IV or Exhibit V annexed hereto, as the case may be,
with appropriate insertions, to reflect the new Commitments and/or
outstanding Tranche A Term Loans and/or Tranche B Term Loans, as the
case may be, of the assignee and the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in
Register. Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the processing and recordation fee referred to
in subsection 10.1B(i) and any forms, certificates or other evidence
with respect to United States federal income tax withholding matters
that such assignee may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
Agents and Company (if required) have consented to the assignment
evidenced thereby, in each case to the extent such consent is required
pursuant to subsection 10.1B(i)), (a) accept such Assignment Agreement
by executing a counterpart thereof as provided therein (which
acceptance shall evidence Administrative Agent's receipt of any
required consent of such Agent and Company to such assignment), (b)
record the information contained therein in the Register and (c) give
prompt notice thereof to Company. Administrative Agent shall maintain a
copy of each Assignment Agreement delivered to and accepted by it as
provided in this subsection 10.1B(ii).
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C. Participations. The holder of any participation, other than an
Affiliate or Related Fund of the Lender granting such participation, shall not
be entitled to require such Lender to take or omit to take any action hereunder
except action directly affecting (i) the extension of the scheduled final
maturity date of any Loan allocated to such participation or (ii) a reduction of
the principal amount of or the rate of interest payable on any Loan allocated to
such participation, (iii) the release of any Lien granted in favor of
Administrative Agent with respect to 25% or more in aggregate fair market value
of the Collateral, or (iv) any release of any Subsidiary Guarantor or Subsidiary
Guarantors during the term of this Agreement whose aggregate revenue is greater
than or equal to 25% or more of the aggregate revenue of the Company and its
Subsidiaries from its obligations under the Subsidiary Guaranty other than in
accordance with the terms of the Loan Documents, and all amounts payable by
Company hereunder (including amounts payable to such Lender pursuant to
subsections 2.6D, 2.7 and 3.6 to the extent not resulting in greater obligations
of Company to such participant than to Lender selling such participation) shall
be determined as if such Lender had not sold such participation.
D. Assignments to Federal Reserve Banks. For the avoidance of doubt,
the parties to this Agreement acknowledge that the provisions of this subsection
concerning assignments of Loans and Notes relate only to absolute assignments
and that such provisions do not prohibit assignments creating security
interests, including without limitation, any pledge or assignment by a Lender of
any Loan or Note to any Federal Reserve Bank in accordance with applicable law;
provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge, (ii) in no event shall such Federal Reserve Bank be considered to be
a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder and (iii) any Lender that invests in bank loans may,
without the consent of the Administrative Agent or Company, pledge all or any
portion of its rights and obligations hereunder to any trustee for, or any other
representative of, holders of obligations owed, or securities issued, by such
fund, as security for such obligations or securities, provided further that any
foreclosure or similar action by such trustee shall be subject to the provisions
of this section concerning assignments (including any required consents).
E. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. Representations of Lenders. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making or purchasing of loans such as the Loans; and (iii)
that it will make or purchase its Loans for its own account in the ordinary
course of its business and without a view to distribution of such Loans within
the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of this
subsection 10.1, the disposition of such Loans or any interests therein shall at
all times remain within its exclusive control). Each Lender that becomes a party
hereto pursuant to an Assignment Agreement shall be deemed to agree that the
representations and warranties of such Lender contained in
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Section 2(c) of such Assignment Agreement are incorporated herein by this
reference.
10.2 Expenses.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents incurred by Arranger and
Syndication Agent and any consents, amendments, waivers or other modifications
thereto; (ii) all the costs of furnishing all opinions by counsel for Company
(including any opinions requested by Lenders as to any legal matters arising
hereunder) and of Company's performance of and compliance with all agreements
and conditions on its part to be performed or complied with under this Agreement
and the other Loan Documents, including with respect to confirming compliance
with environmental, insurance and solvency requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to Arranger and Agents (including
allocated costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Company; (iv) all the actual costs and
reasonable expenses incurred by Syndication Agent and Administrative Agent of
creating and perfecting Liens in favor of Administrative Agent for the benefit
of Lenders and Agents pursuant to any Collateral Document, including filing and
recording fees, expenses and taxes, stamp or documentary taxes, search fees,
title insurance premiums and reasonable fees, expenses and disbursements of
counsel to Agents and of counsel providing any opinions that any Agent may
reasonably request in respect of the Collateral Documents or the Liens created
pursuant thereto; (v) all the actual costs and reasonable expenses (including
the reasonable fees, expenses and disbursements of any auditors, accountants and
any environmental or other consultants, advisors and agents employed or retained
by Syndication Agent and Administrative Agent or their counsel) of obtaining and
reviewing any environmental audits or reports provided for under subsection 6.7A
or 6.9C and any audits or reports provided for under subsection 6.5B with
respect to Inventory and accounts receivable of Company and its Subsidiaries;
(vi) the custody or preservation of any of the Collateral; (vii) all other
actual and reasonable costs and expenses incurred by Arranger in connection with
the syndication of the Commitments; and (viii) after the occurrence of an Event
of Default, all costs and expenses, including reasonable attorneys' fees
(including allocated costs of internal counsel) and costs of settlement,
incurred by Agents (jointly represented by one lead firm of attorneys and local
counsel (as reasonably necessary)) and Lenders (jointly represented by one lead
firm of attorneys and local counsel (as reasonably necessary)) in enforcing any
Obligations of or in collecting any payments due from any Loan Party hereunder
or under the other Loan Documents by reason of such Event of Default (including
in connection with the sale of, collection from, or other realization upon any
of the Collateral or the enforcement of the Subsidiary Guaranty or in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings (including reasonable fees of financial advisors)).
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10.3 Indemnity.
In addition to the payment of expenses pursuant to subsection
10.2, whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel
reasonably acceptable to Company), indemnify, pay and hold harmless Arranger,
Agents and Lenders, and the officers, directors, employees, trustees, agents,
attorneys-in-fact and affiliates of Arranger, Agents and Lenders (collectively
called the "Indemnitees"), from and against any and all Indemnified Liabilities
(as hereinafter defined); provided that Company shall not have any obligation to
any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise from the gross negligence or willful
misconduct of that Indemnitee.
As used herein, "Indemnified Liabilities" means, collectively,
any and all liabilities, obligations, losses, damages (including natural
resource damages), penalties, actions, judgments, suits, claims (including
Environmental Claims), costs (including the costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the Related
Agreements or the transactions contemplated hereby or thereby (including
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds thereof or the issuance of Letters of Credit hereunder or the use or
intended use of any thereof, or any enforcement of any of the Loan Documents
(including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Subsidiary Guaranty), (ii) the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto or (iii) any Environmental Claim or any Hazardous Materials
Activity relating to or arising from, directly or indirectly, any past or
present activity, operation, land ownership, or practice of Company or any of
its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay
and hold harmless set forth in this subsection 10.3 may be unenforceable in
whole or in part because they are violative of any law or public policy, Company
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Indemnitees or any of them.
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10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default each Lender is hereby authorized by Company
at any time or from time to time, without notice to Company or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender to or for the credit or
the account of Company against and on account of the obligations and liabilities
of Company to that Lender under this Agreement, the Letters of Credit and
participations therein and the other Loan Documents, including, but not limited
to, all claims of any nature or description arising out of or connected with
this Agreement, the Letters of Credit and participations therein or any other
Loan Document, irrespective of whether or not (i) that Lender shall have made
any demand hereunder or (ii) the principal of or the interest on the Loans or
any amounts in respect of the Letters of Credit or any other amounts due
hereunder shall have become due and payable pursuant to Section 8 and although
said obligations and liabilities, or any of them, may be contingent or
unmatured. Company hereby further grants to each Agent and each Lender a
security interest as security for the Obligations in all right, title and
interest of Company to all deposits and accounts maintained with such Agent or
such Lender.
Each Lender specifically acknowledges the provisions of this subsection
10.4. Each Lender further acknowledges that one of the consequences of such
provisions is that amounts received by Administrative Agent for the account of
Lenders may not be distributed on a pro rata basis. Administrative Agent shall
be conclusively entitled to rely on any notice furnished pursuant to this
subsection 10.4 and neither Administrative Agent nor any of its directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by them as contemplated or required by this subsection 10.4 or in
reliance upon any such notice except to the extent of its gross negligence or
wilful misconduct in determining whether any notice under this subsection 10.4
on its face meets the requirements thereof.
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10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment (other than a voluntary prepayment of Loans
made and applied in accordance with the terms of this Agreement), by realization
upon security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due of the same Class to
such other Lender, then the Lender receiving such proportionately greater
payment shall (i) notify Administrative Agent and each other Lender of the
receipt of such payment and (ii) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each seller of a
participation simultaneously upon the receipt by such seller of its portion of
such payment) in the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion
to the Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
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10.6 Amendments and Waivers.
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No amendment, modification, termination or waiver of any
provision of this Agreement, the Notes or any other Loan Document and no consent
to any departure by Company therefrom, shall in any event be effective without
the written concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: (a) increases the amount of
any of the Commitments or reduces the principal amount of any of the Loans; (b)
increases the maximum amount of Letters of Credit or of Commercial Letters of
Credit or Standby Letters of Credit; (c) changes in any manner any of the
following definitions: "Class," "Pro Rata Share," "Tranche A Pro Rata Share,"
"Tranche B Pro Rata Share," "Revolving Pro Rata Share," "Requisite Class
Lenders" or "Requisite Lenders"; (d) changes in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or concurrence of
all Lenders; (e) postpones the scheduled final maturity date (but not the date
of any scheduled installment of principal) of any of the Loans; (f) postpones
the date or reduces the amount of any scheduled payment (but not prepayment) of
principal of any of the Loans; (g) postpones the date or reduces the amount of
any scheduled reduction of the Revolving Loan Commitments; (h) postpones the
date on which any interest or any fees are payable; (i) decreases the interest
rate borne by any of the Loans (other than any waiver of any increase in the
interest rate applicable to any of the Loans pursuant to subsection 2.2E) or the
amount of any fees payable hereunder; (j) increases the maximum duration of
Interest Periods permitted hereunder; (k) reduces the amount or postpones the
due date of any amount payable in respect of, or extends the required expiration
date of, any Letter of Credit; (l) changes in any manner the obligations of
Lenders relating to the purchase of participations in Letters of Credit or Swing
Line Loans; (m) releases any Lien granted in favor of Administrative Agent with
respect to 25% or more in aggregate fair market value of the Collateral; (n)
releases any Subsidiary Guarantor or Subsidiary Guarantors during the term of
this Agreement whose aggregate revenue is greater than or equal to 25% or more
of the aggregate revenue of the Company and its Subsidiaries from its
obligations under the Subsidiary Guaranty, in each case other than in accordance
with the terms of the Loan Documents; (o) or changes in any manner the
provisions contained in subsection 8.1 or this subsection 10.6 shall be
effective only if evidenced by a writing signed by or on behalf of all Lenders;
provided, further, that if any matter described in the foregoing proviso relates
only to Tranche A Term Loans or Revolving Loans, the approval of all Lenders who
hold Tranche A Term Loans or Revolving Loan Commitments shall be sufficient and,
if any matter described in the foregoing proviso relates only to Tranche B Term
Loans, the approval of all Lenders who hold Tranche B Term Loans shall be
sufficient. In addition, (i) any amendment, modification, termination or waiver
of any of the provisions contained in Section 4 shall be effective only if
evidenced by a writing signed by or on behalf of Agents and Requisite Lenders,
(ii) no amendment, modification, termination or waiver of any provision of any
Note shall be effective without the written concurrence of the Lender which is
the holder of that Note, (iii) no amendment, modification, termination or waiver
of any provision of subsection 2.1A(iv) or of any other provision of this
Agreement relating to the Swing Line Loan Commitment or the Swing Line Loans
shall be effective without the written concurrence of Swing Line Lender, (iv) no
amendment, modification, termination or waiver of any provision of Section 9 or
of any other provision of this Agreement which, by its terms, expressly requires
the approval or concurrence of Agents or of any Agent shall be effective without
the written concurrence of Agents or such Agent, as the case may be, (v) no
amendment, modification, termination or waiver of any provision of subsection
2.4 which has
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the effect of changing any voluntary or mandatory prepayments or Commitment
reductions applicable to any Class (the "Affected Class") in a manner that
disproportionately disadvantages such Class relative to the other Classes shall
be effective without the written concurrence of Requisite Class Lenders of the
Affected Class (it being understood and agreed that any amendment, modification,
termination or waiver of any such provision which only postpones or reduces
voluntary or mandatory prepayment or Commitment reduction from those set forth
in subsection 2.4 with respect to one Class but not the other Class shall be
deemed to disproportionately disadvantage such one Class but not to
disproportionately disadvantage such other Class for purposes of this clause
(v)), and (vi) no amendment, modification, termination or waiver of any
Collateral Document having the effect of securing additional Indebtedness (other
than Indebtedness comprising Obligations and Hedge Agreements) by the Collateral
shall be effective without the written concurrence of Lenders having or holding
more than 66 2/3% of the sum of the aggregate Tranche A Term Loan Exposure of
all Lenders plus the aggregate Tranche B Term Loan Exposure of all Lenders plus
the aggregate Revolving Loan Exposure of all Lenders. Administrative Agent may,
but shall have no obligation to, with the written consent of any Lender, execute
amendments, modifications, waivers or consents on behalf of that Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on Company in
any case shall entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 10.6 shall be binding
upon each Lender at the time outstanding, each future Lender and, if signed by
Company, on Company.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
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10.8 Notices.
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of electronic confirmation of telefacsimile
or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided that notices to Agents shall
not be effective until received. For the purposes hereof, the address of each
party hereto shall be as set forth under such party's name on the signature
pages hereof or (i) as to Company and Agents, such other address as shall be
designated by such Person in a written notice delivered to the other parties
hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Administrative Agent
and Company. Unless otherwise specifically provided herein, notices shall be
deemed irrevocable and conclusive when given and telephonic notices (to the
extent provided for herein) which are to be confirmed in writing shall be
confirmed in writing on the same day.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein
shall survive the execution and delivery of this Agreement and the making of the
Loans and the issuance of and drawing under the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law
to the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
subsections 9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
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10.11 Marshalling; Payments Set Aside.
None of Agents nor any Lender shall be under any obligation to
marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or any of Agents or Lenders enforce any
security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
10.12 Severability.
In case any provision in or obligation under this Agreement or
the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender
shall be responsible for the obligations or Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no action
taken by Lenders pursuant hereto or thereto, shall be deemed to constitute
Lenders as a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and, subject to subsection 9.6, each Lender shall
be entitled to protect and enforce its rights arising out of this Agreement and
it shall not be necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.
10.14 Headings.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
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10.15 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
10.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lenders (it being understood
that Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders. Any attempted or purported assignment in contravention of the preceding
sentence shall be null and void.
10.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY OF THE PARTIES TO
THIS AGREEMENT ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE AND COUNTY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF THE PARTIES TO THIS AGREEMENT,
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING
IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
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(V) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR
THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this waiver
is a material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO CREDIT EXTENDED HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
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10.19 Confidentiality.
Each Lender shall hold all non-public information obtained
pursuant to the requirements of this Agreement which has been identified as
confidential by Company in accordance with such Lender's customary procedures
for handling confidential information of this nature and in accordance with safe
and sound commercial lending practices, it being understood and agreed by
Company that in any event a Lender may make disclosures to Affiliates of such
Lender or disclosures reasonably required by any bona fide prospective assignee,
transferee or participant in connection with the contemplated assignment or
transfer by such Lender of any Loans or other Obligations or any participations
therein or disclosures required or requested by any governmental agency
(including, without limitation, the National Association of Insurance
Commissioners) or representative thereof or pursuant to legal process; provided
that each such Affiliate and each such bonafide prospective assignee, transferee
or participant shall agree to maintain the confidentiality of such information
in accordance with this subsection 10.19 and provided further that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information; and
provided, further that in no event shall any Lender be obligated or required to
return any materials furnished by Company or any of its Subsidiaries.
10.20 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Agents of such counterparts or, in the case of any Lender, of written
notification of such execution of signature pages and written authorization of
delivery thereof (in each case which may be provided by facsimile transmission).
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY: ARTERIAL VASCULAR ENGINEERING, INC.,
a Delaware corporation
By:
-------------------------------
Title:
-------------------------------
Notice Address:
3576 Unocal Place
Santa Rosa, California 95403
Attention: John Miller
Telephone: (707) 541-3201
Telecopy: (707) 522-2248
LENDERS: DLJ CAPITAL FUNDING, INC.,
individually and as Syndication Agent
By:
-------------------------------
Title:
-------------------------------
Notice Address:
277 Park Avenue, 9th Floor
New York, NY 10172
Attention: Tom Newberry
Telephone: 212/892-2409
Telecopy: 212/892-5286
NOTE: Signature pages in a separate document
S-1
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EXHIBIT I
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of
September 30, 1998 (said Credit Agreement, as amended, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Arterial Vascular Engineering, Inc. ("Company"), the financial institutions
listed therein as Lenders ("Lenders"), DLJ Capital Funding, Inc., as Syndication
Agent, Paribas, as Documentation Agent, and Royal Bank of Canada, as
Administrative Agent (the "Administrative Agent"), this represents Company's
request to borrow as follows:
1. Date of borrowing: ___________________, _________
2. Amount of borrowing: $___________________
3. Lender(s): a. Lenders, in accordance with their applicable Pro
Rata Shares
b. Swing Line Lender
4. Type of Loans: a. Tranche A Term Loans
b. Tranche B Term Loans
c. Revolving Loans
c. Swing Line Loan
5. Interest rate option: a. Base Rate Loan(s) (must select for Swing Line
Loans)
b. Eurodollar Rate Loans with an initial Interest
Period of ____________ month(s)
The proceeds of such Loans are to be deposited in Company's account at
Administrative Agent.
The undersigned officer, to the best of his or her knowledge,
and Company certify that:
(i) The representations and warranties contained in the
Credit Agreement and the other Loan Documents are true,
correct and complete in all material respects on and as of the
date hereof to the same extent as though made on and as of the
date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, in which
case such representations and warranties were true, correct
and complete in all material respects on and as of such
earlier date;
I-1
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(ii) No event has occurred and is continuing or would
result from the consummation of the borrowing contemplated
hereby that would constitute an Event of Default or a
Potential Event of Default; and
(iii) Company has performed in all material respects
all agreements and satisfied all conditions which the Credit
Agreement provides shall be performed or satisfied by it on or
before the date hereof.
DATED:_______________________ ARTERIAL VASCULAR ENGINEERING, INC.
By:________________________________
Title:_____________________________
I-2
<PAGE>
EXHIBIT II
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of
September 30, 1998 (said Credit Agreement, as amended, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Arterial Vascular Engineering, Inc. ("Company"), the financial institutions
listed therein as Lenders ("Lenders"), DLJ Capital Funding, Inc., as Syndication
Agent, Paribas, as Documentation Agent, and Royal Bank of Canada, as
Administrative Agent (the "Administrative Agent"), this represents Company's
request to convert or continue Loans as follows:
1. Date of conversion/continuation: __________________, _______
2. Amount of Loans being converted/continued: $_________________
3. Type of Loans being a. Tranche A Term Loan
converted/continued: b. Tranche B Term Loan
c. Revolving Loans
4. Nature of conversion/continuation:
a. Conversion of Base Rate Loans to Eurodollar Rate Loans
b. Conversion of Eurodollar Rate Loans to Base Rate Loans
c. Continuation of Eurodollar Rate Loans as such
5. If Loans are being converted to or continued as Eurodollar Rate Loans,
the duration of the new Interest Period that commences on the conversion/
continuation date: _______________ month(s)
In the case of a conversion to or continuation of Eurodollar Rate Loans,
the undersigned officer, to the best of his or her knowledge, and Company
certify that no Event of Default or Potential Event of Default has occurred and
is continuing under the Credit Agreement.
DATED:_______________________ ARTERIAL VASCULAR ENGINEERING, INC.
By:________________________________
Title:_____________________________
II-1
<PAGE>
EXHIBIT III
[FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT]
NOTICE OF ISSUANCE OF LETTER OF CREDIT
Pursuant to that certain Credit Agreement dated as of
September 30, 1998 (said Credit Agreement, as amended, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Arterial Vascular Engineering, Inc. ("Company"), the financial institutions
listed therein as Lenders ("Lenders"), DLJ Capital Funding, Inc., as Syndication
Agent, Paribas, as Documentation Agent, and Royal Bank of Canada, as
Administrative Agent (the "Administrative Agent"), this represents Company's
request for the issuance of a Letter of Credit as follows:
1. Date of issuance of Letter of Credit: ________________, ________
2. Type of Letter of Credit: a. Commercial Letter of Credit
b. Standby Letter of Credit
3. Face amount of Letter of Credit: $________________________
4. Expiration date of Letter of Credit: ________________, ________
5. Name and address of beneficiary:
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
6. Attached hereto is:
a. the verbatim text of such proposed Letter of Credit
b. a description of the proposed terms and conditions of such
Letter of Credit, including a precise description of any documents
(including the content thereof) to be presented by the beneficiary
which, if presented by the beneficiary prior to the expiration
date of such Letter of Credit, would require the Issuing Lender to
make payment under such Letter of Credit.
The undersigned officer, to the best of his or her knowledge, and
Company certify that:
(i) The representations and warranties contained in the
Credit Agreement and the other Loan Documents are true,
correct and complete in all material respects on and as of the
date hereof to the same extent as though made on and as of the
date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, in which
case such representations and warranties were true, correct
and complete in all material respects on and as of such
earlier date;
(ii) No event has occurred and is continuing or would
result from the issuance of the Letter of Credit contemplated
hereby that would constitute an Event of Default or a
Potential Event of Default; and
(iii) Company has performed in all material respects
all agreements and satisfied all conditions which the Credit
Agreement provides shall be performed or satisfied by it on or
before the date hereof.
7. All Letters of Credit hereunder pursuant to the Credit Agreement
shall be issued subject to and in accordance with the Uniform Customs and
Practice for Documentary Credits, 1993 Revision, ICC Publication No. 500.
DATED:_______________________ ARTERIAL VASCULAR ENGINEERING, INC.
By:________________________________
Title:_____________________________
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<PAGE>
EXHIBIT IV
[FORM OF TRANCHE A TERM NOTE]
ARTERIAL VASCULAR ENGINEERING, INC.
PROMISSORY NOTE DUE SEPTEMBER 30, 2003
$[1] [2]
[3]
FOR VALUE RECEIVED, ARTERIAL VASCULAR ENGINEERING, INC., a
Delaware corporation ("Company"), promises to pay to the order of [4] ("Payee")
or its registered assigns the principal amount of [5] ($[1]) in the installments
referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of September 30, 1998, by and among Company,
the financial institutions listed therein as Lenders, DLJ Capital Funding, Inc.,
as Syndication Agent, Paribas, as Documentation Agent, and Royal Bank of Canada,
as Administrative Agent (the "Administrative Agent") (said Credit Agreement, as
it may be amended, supplemented or otherwise modified from time to time, being
the "Credit Agreement", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
Company shall make principal payments on this Note in
consecutive quarterly installments, commencing on June 30, 1999 and ending on
September 30, 2003. Each such installment shall be due on the date specified in
the Credit Agreement and in an amount determined in accordance with the
provisions thereof; provided that the last such installment shall be in an
amount sufficient to repay the entire unpaid principal balance of this Note,
together with all accrued and unpaid interest thereon.
This Note is one of Company's "Tranche A Term Notes" in the
aggregate principal amount of $200,000,000 and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Tranche A Term Loan evidenced hereby was made and is to be repaid.
- - ----------------------------------------------
1 Insert amount of Lender's Tranche A Term Loan in numbers.
2 Insert place of delivery of Note.
3 Insert Closing Date.
4 Insert Lender's name in capital letters.
5 Insert amount of Lender's Tranche A Term Loan in words.
IV-1
<PAGE>
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement. Unless and until an Assignment Agreement effecting the assignment or
transfer of this Note shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii) of the Credit
Agreement, Company and Administrative Agent shall be entitled to deem and treat
Payee as the owner and holder of this Note and the Loan evidenced hereby. Payee
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment made
on this Note shall not limit or otherwise affect the obligations of Company
hereunder with respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement. This Note is secured by and entitled to the benefits of the
Collateral Documents.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
IV-2
<PAGE>
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company and
any endorsers of this Note hereby consent to renewals and extensions of time at
or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
ARTERIAL VASCULAR
ENGINEERING INC.
By: __________________________
Title: ________________________
IV-3
<PAGE>
EXHIBIT V
[FORM OF TRANCHE B TERM NOTE]
ARTERIAL VASCULAR ENGINEERING, INC.
PROMISSORY NOTE DUE SEPTEMBER 30, 2004
$[1] [2]
[3]
FOR VALUE RECEIVED, Arterial Vascular Engineering, Inc., a
Delaware corporation ("Company"), promises to pay to the order of [4] ("Payee")
or its registered assigns the principal amount of [5] ($[1]) in the installments
referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of September 30, 1998 by and among by and
among Company, the financial institutions listed therein as Lenders, DLJ Capital
Funding, Inc., as Syndication Agent, Paribas, as Documentation Agent, and Royal
Bank of Canada, as Administrative Agent (the "Administrative Agent") (said
Credit Agreement, as it may be amended, supplemented or otherwise modified from
time to time, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined).
Company shall make principal payments on this Note in
consecutive quarterly installments, commencing on December 31, 1998 and ending
on September 30, 2004. Each such installment shall be due on the date specified
in the Credit Agreement and in an amount determined in accordance with the
provisions thereof; provided that the last such installment shall be in an
amount sufficient to repay the entire unpaid principal balance of this Note,
together with all accrued and unpaid interest thereon.
This Note is one of Company's "Tranche B Term Notes" in the
aggregate principal amount of $350,000,000 and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Tranche B Term Loan evidenced hereby was made and is to be repaid.
- - -----------------------------------------------
1 Insert amount of Lender's Tranche B Term Loan in numbers.
2 Insert place of delivery of Note.
3 Insert Closing Date.
4 Insert Lender's name in capital letters.
5 Insert amount of Lender's Tranche B Term Loan in words.
V-1
<PAGE>
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement. Unless and until an Assignment Agreement effecting the assignment or
transfer of this Note shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii) of the Credit
Agreement, Company and Administrative Agent shall be entitled to deem and treat
Payee as the owner and holder of this Note and the Loan evidenced hereby. Payee
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment made
on this Note shall not limit or otherwise affect the obligations of Company
hereunder with respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement. This Note is secured by and entitled to the benefits of the
Collateral Documents.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
V-2
<PAGE>
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company and
any endorsers of this Note hereby consent to renewals and extensions of time at
or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
ARTERIAL VASCULAR
ENGINEERING, INC.
By: __________________________
Title: ________________________
V-3
<PAGE>
EXHIBIT VI
[FORM OF REVOLVING NOTE]
ARTERIAL VASCULAR ENGINEERING, INC.
PROMISSORY NOTE DUE SEPTEMBER 30, 2003
$[1] [2]
[3]
FOR VALUE RECEIVED, Arterial Vascular Engineering, Inc., a
Delaware corporation ("Company"), promises to pay to the order of [4] ("Payee")
or its registered assigns, on or before September 30, 2003, the lesser of (x)
[5] ($[1]) and (y) the unpaid principal amount of all advances made by Payee to
Company as Revolving Loans under the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of September 30, 1998 by and among Company,
the financial institutions listed therein as Lenders, DLJ Capital Funding, Inc.,
as Syndication Agent, Paribas, as Documentation Agent, and Royal Bank of Canada,
as Administrative Agent (the "Administrative Agent") (said Credit Agreement, as
it may be amended, supplemented or otherwise modified from time to time, being
the "Credit Agreement", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is one of Company's "Revolving Notes" in the
aggregate principal amount of $50,000,000 and is issued pursuant to and entitled
to the benefits of the Credit Agreement, to which reference is hereby made for a
more complete statement of the terms and conditions under which the Revolving
Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement. Unless and until an Assignment Agreement effecting the assignment or
transfer of this Note shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii) of the Credit
Agreement, Company and Administrative Agent shall be entitled to deem and treat
Payee as the owner and holder of this Note and the Loans evidenced hereby.
- - -------------------------------------
1 Insert amount of Lender's Revolving Loan Commitment in numbers.
2 Insert place of delivery of Note.
3 Insert Closing Date.
4 Insert Lender's name in capital letters.
5 Insert amount of Lender's Revolving Loan Commitment in words.
VI-1
<PAGE>
Payee hereby agrees, by its acceptance hereof, that before
disposing of this Note or any part hereof it will make a notation hereon of all
principal payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a notation of
any payment made on this Note shall not limit or otherwise affect the
obligations of Company hereunder with respect to payments of principal of or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement. This Note is secured by and entitled to the benefits of the
Collateral Documents.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company and
any endorsers of this Note hereby consent to renewals and extensions of time at
or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
VI-2
<PAGE>
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
ARTERIAL VASCULAR
ENGINEERING, INC.
By: __________________________
Title: ________________________
VI-3
<PAGE>
<TABLE>
TRANSACTIONS
ON
REVOLVING NOTE
<CAPTION>
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- ----------- ------------- --------------- --------------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
VI-4
<PAGE>
EXHIBIT VII
[FORM OF SWING LINE NOTE]
ARTERIAL VASCULAR ENGINEERING, INC.
PROMISSORY NOTE DUE SEPTEMBER 30, 2003
$[1] [2]
[3]
FOR VALUE RECEIVED, Arterial Vascular Engineering, Inc. a
Delaware corporation ("Company"), promises to pay to the order of [4] ("Payee"),
on or before September 30, 2003, the lesser of (x) [5] and no/100 Dollars ($[1])
and (y) the unpaid principal amount of all advances made by Payee to Company as
Swing Line Loans under the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of September 30, 1998 by and among Company,
the financial institutions listed therein as Lenders, DLJ Capital Funding, Inc.,
as Syndication Agent, Paribas, as Documentation Agent, and Royal Bank of Canada,
as Administrative Agent (the "Administrative Agent") (said Credit Agreement, as
it may be amended, supplemented or otherwise modified from time to time, being
the "Credit Agreement", the terms defined therein and not otherwise defined
herein being used herein as therein defined).
This Note is Company's "Swing Line Note" and is issued
pursuant to and entitled to the benefits of the Credit Agreement, to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Swing Line Loans evidenced hereby were made and are
to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
- - -----------------------------------------------
1 Insert amount of Lender's Swing Line Commitment in numbers.
2 Insert place of delivery of Note.
3 Insert Closing Date.
4 Insert Lender's name in capital letters.
5 Insert amount of Lender's Swing Line Commitment in numbers.
VII-1
<PAGE>
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement. This Note is secured by and entitled to the benefits of the
Collateral Documents.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company and
any endorsers of this Note hereby consent to renewals and extensions of time at
or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
ARTERIAL VASCULAR
ENGINEERING, INC.
By: __________________________
Title: ________________________
VII-2
<PAGE>
<TABLE>
TRANSACTIONS
ON
SWING LINE NOTE
<CAPTION>
Outstanding
Amount of Amount of Principal
Loan Made Principal Paid Balance Notation
Date This Date This Date This Date Made By
---- --------- -------------- ------------ --------
<S> <C> <C> <C> <C>
</TABLE>
VII-3
<PAGE>
EXHIBIT VIII
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) I am the duly elected [Chief Financial Officer, principal
accounting officer, controller or treasurer] of Arterial Vascular
Engineering, Inc., a Delaware corporation ("Company");
(2) I have reviewed the terms of that certain Credit Agreement dated as
of September 30, 1998 (said Credit Agreement, as amended, supplemented or
otherwise modified, being the "Credit Agreement", the terms defined therein
and not otherwise defined in this Certificate (including Attachment No. 1
annexed hereto and made a part hereof) being used in this Certificate as
therein defined), by and among Company, the financial institutions listed
therein as Lenders, DLJ Capital Funding, Inc., as Syndication Agent,
Paribas, as Documentation Agent, and Royal Bank of Canada, as
Administrative Agent, and the terms of the other Loan Documents, and I have
made, or have caused to be made under my supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by the attached financial
statements; and
(3) The examination described in paragraph (2) above did not disclose,
and I have no knowledge of, the existence of any condition or event which
constitutes an Event of Default or Potential Event of Default during or at
the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate[, except as set forth
below].
[Set forth [below] [in a separate attachment to this Certificate] are
all exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Company has taken, is taking, or proposes to take with respect to each such
condition or event:
_______________________________________________________________________________]
VIII-1
<PAGE>
The foregoing certifications, together with the computations
set forth in Attachment No. 1 annexed hereto and made a part hereof and the
financial statements delivered with this Certificate in support hereof, are made
and delivered this __________ day of _____________, ____ pursuant to subsection
6.1(iv) of the Credit Agreement.
ARTERIAL VASCULAR
ENGINEERING, INC.
By: __________________________
Title: ________________________
VIII-2
<PAGE>
<TABLE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a
Compliance Certificate dated as of ____________, and pertains to the period from
____________, to ____________, . Subsection references herein relate to
subsections of the Credit Agreement.
<CAPTION>
A. Indebtedness
<S> <C> <C>
1. Indebtedness permitted under subsection 7.1 (iii): $
-------------
2. Maximum permitted under subsection 7.1 (iii): $ 15,000,000
-------------
3. Indebtedness permitted under subsection 7.1(vi): $
-------------
4. Maximum permitted under definition of Permitted
Subordinated Debt: $ 250,000,000
-------------
5. Indebtedness permitted under subsection 7.1(vii): $
-------------
6. Maximum permitted under subsection 7.1(vii): $ 10,000,000
-------------
7. Indebtedness permitted under subsection 7.1 (viii): $
-------------
8. Maximum permitted under subsection 7.1 (viii): $[100,000,000/150,000,000]*
-------------------------
9. Indebtedness permitted under subsection 7.1 (ix): $
-------------
10. Maximum permitted under subsection 7.1(ix): $ 10,000,000
-------------
B. Investments
1. Investments permitted under subsection 7.3 (vii): $
-------------
2. Maximum permitted under subsection 7.3 (vii): $ 10,000,000
-------------
3. Investments permitted under subsection 7.3 (viii): $
-------------
4. Maximum permitted under subsection 7.3 (viii): $ 20,000,000
-------------
5. Investments permitted under subsection 7.3 (x) $
-------------
6. Maximum permitted under subsection 7.3 (x) $ 50,000,000
-------------
<FN>
- - -------------------
*$100,000,000 unless Loans obtain a rating of not less than BB+ from S&P and Ba1
from Moody's, in which case the maximum permitted increases to $150,000,000.
</FN>
VIII-3
<PAGE>
7. Investments permitted under subsection 7.3(xi) $
-------------
8. Maximum permitted under subsection 7.3(xi) $ 2,000,000
-------------
C. Contingent Obligations
1. Contingent Obligations in respect of
letters of credit (other than Letters of Credit)
permitted under subsection 7.4(ii): $
-------------
2. Maximum permitted under subsection 7.4(ii): $ 15,000,000
-------------
3. Contingent Obligations under guarantees of obligations of
suppliers, customers, franchisees
and licensees permitted under subsection 7.4(v): $
-------------
4. Maximum permitted under subsection 7.4(v): $ 10,000,000
-------------
5. Contingent Obligations permitted under subsection
7.4(viii): $
-------------
6. Maximum permitted under subsection 7.4(viii): $ 10,000,000
-------------
D. Restricted Junior Payments
1. Restricted Junior Payments permitted under subsection 7.5(ii): $
-------------
2. Maximum permitted under subsection 7.5(ii): $ 2,000,000
-------------
E. Minimum Fixed Charge Coverage Ratio (for the four-Fiscal Quarter period
ending _____________,____________)
1. Consolidated Net Income
(for the four Fiscal Quarter Period ending __, ____): $
-------------
2. Consolidated Interest Expense
(for the four Fiscal Quarter period ending __, ____): $
-------------
3. Provisions for taxes based on income
(for the four Fiscal Quarter period ending __, ____): $
-------------
4. Total depreciation expense
(for the four Fiscal Quarter period ending __, ____): $
-------------
5. Total amortization expense
(for the four Fiscal Quarter period ending __, ____): $
-------------
6. Other non-cash items reducing Consolidated Net Income
(including Permitted Acquisitions Non-cash Reserves to the
VIII-4
<PAGE>
extent included in such period)
(for the four Fiscal Quarter period ending __, ____) $
-------------
7. Other non-cash items increasing Consolidated Net Income
(for the four Fiscal Quarter ending ___, ____): $
-------------
8. Reversals of non-cash accrued expenses taken in prior periods
and reversals of reserves taken in prior periods which reduced
Consolidated Net Income in such prior perids
(for the four Fiscal Quarter period ending ___, ____): $
-------------
9. Non-cash bonus accrual charges: $
-------------
10. Consolidated Adjusted EBITDA (1+2+3+4+5+6-7-8-9): $
-------------
11. Consolidated Capital Expenditures: $
-------------
12. Consolidated Scheduled Amortization: $
-------------
13. Consolidated Fixed Charges (2+11+12): $
-------------
14. Fixed Charge Coverage Ratio (10):(13): ____:1.00
15. Minimum ratio required under subsection 7.6A: ____:1.00
F. Maximum Leverage Ratio (as of _____________, )
1. Consolidated Total Debt: $
-------------
2. Consolidated Adjusted EBITDA [(E.10 above)]: $
-------------
3. Leverage Ratio (1):(2): ____:1.00
4. Maximum ratio permitted under subsection
7.6B: ____:1.00
G. Minimum Consolidated Net Worth (as of ____________, )
1. Consolidated Net Worth: $
-------------
2. Minimum required under subsection 7.6C: $
-------------
H. Fundamental Changes
1. Aggregate fair market value of assets sold in any
one or more Asset Sales in one or more
transactions permitted under subsection 7.7(v): $
-------------
2. Maximum permitted under subsection 7.7(v): $
-------------
VIII-5
<PAGE>
3. Aggregate amount of assets acquired in a transaction
permitted under subsection 7.7(vi): $
-------------
4. Maximum permitted under subsection 7.7(vi): $[200,000,000/unlimited]*
-----------------------
5. Amount of Cash, Incurred Permitted Acquisition
Indebtedness and Assumed Permitted Acquisition
Indebtedness for assets acquired in a transaction
permitted under subsection 7.7 (vi): $
-------------
6. Maximum permitted under subsection 7.7 (vi): $[100,000,000/150,000,000]**
-------------------------
I. Consolidated Capital Expenditures
1. Consolidated Capital Expenditures for Fiscal
Year-to-date: $
-------------
2. Maximum amount of Consolidated Capital Expenditures permitted
under subsection 7.8 for
Fiscal Year: $
-------------
</TABLE>
- - -----------------------------
* $200,000,000 unless the Loans obtain a rating of not less than BB+ from S&P
and Ba1 from Moody's, in which case there is no limit.
** $100,000,000 unless the Loans obtain a rating of not less than BB+ from S&P
and Ba1 from Moody's, in which case the maximum permitted increase is to
$150,000,000.
VIII-6
<PAGE>
EXHIBIT IX
[FORM OF OPINION OF COOLEY GODWARD LLP]
[letterhead of Cooley Godward LLP]
(See separate document from Cooley Godward)
1
<PAGE>
EXHIBIT X
FORM OF OPINION OF
O'MELVENY & MYERS
October 1, 1998 OUR FILE NUMBER
218,107-016
DLJ Capital Funding, Inc.,
as Syndication Agent
277 Park Avenue, 10th Floor
New York, New York 10172
Royal Bank of Canada,
as Administrative Agent
One Liberty Plaza
New York, New York 10006
and
The Lenders Party to the Credit
Agreement Referenced Below
Re: Loans to Arterial Vascular Engineering, Inc.
Ladies and Gentlemen:
We have acted as counsel to DLJ Capital Funding, Inc., as Syndication
Agent (in such capacity, "Syndication Agent"), and Royal Bank of Canada, as
Administrative Agent (in such capacity, "Administrative Agent" and together with
Syndication Agent, "Agents"), in connection with the preparation and delivery of
a Credit Agreement dated as of September 30, 1998 (the "Credit Agreement") by
and among Arterial Vascular Engineering, Inc. ("Company"), the financial
institutions listed therein as Lenders ("Lenders"), Syndication Agent, Paribas
as Documentation Agent, and Administrative Agent, and in connection with the
preparation and delivery of certain related documents.
In our capacity as such counsel, we have examined copies of the Credit
Agreement and we have also participated in the meeting held on the date hereof
incident to the funding of the initial loans made under the Credit Agreement. On
the basis of such examination, our reliance upon the assumptions in this opinion
and our consideration of those questions of law we considered relevant, and
subject to the limitations and qualifications in this opinion, we are of the
opinion that (i) the Credit Agreement constitutes the legally valid and binding
obligation of
X-1
<PAGE>
The Lenders, October 1, 1998 - Page 2
Company, enforceable against Company in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance laws) and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding in equity
or at law; and (ii) the forms of the Collateral Account Agreement, the Security
Agreement, the Company Pledge Agreement, and the Subsidiary Pledge Agreement are
sufficient as a matter of legal form to create in favor of the Administrative
Agent a security interest in such of the Collateral (as defined in the relevant
agreement) of the Company or the relevant Guarantor, as the case may be, that is
of a type in which a security interest can be created under Articles 8 and 9 of
the Uniform Commercial Code in effect in the State of New York ("NYUCC").
We express no opinion as to (a) any provision of the Credit Agreement
requiring amendments or waivers to be in writing in so far as they suggest that
oral or other modifications, amendments or waivers could not be effectively
agreed upon by the parties or that the doctrine of promissory estoppel may not
apply; (b) any provisions of the Credit Agreement purporting to constitute a
waiver of any rights, claims, or defenses that Company may have to the extent
such waivers are against public policy or prohibited by law; (c) the provisions
of subsection 10.4 of the Credit Agreement purporting to grant a security
interest in certain deposits and accounts; or (d) the effect of non-compliance
by any Agent or any Lender with any state or federal laws or regulations
applicable to the transactions contemplated by the Credit Agreement because of
the nature of their respective businesses. In addition, we advise you that (a)
public policy considerations, statutes, or court decisions may limit the rights
of a party to obtain indemnification against its own negligence, willful
misconduct or unlawful conduct; and (b) the provisions of subsection 10.17 which
provide for the non-exclusive jurisdiction of the federal courts sitting in the
State of New York may not be binding on the federal courts sitting in the State
of New York.
Our opinion in clause (ii) above is limited to Articles 8 and 9 of the
NYUCC and therefore that opinion does not address (i) laws of jurisdictions
other than New York, (ii) collateral of the type not subject to Articles 8 or 9
of the NYUCC or (iii) under 9103 of the NYUCC or otherwise what law governs the
perfection of the security interests granted in the collateral covered by that
opinion clause.
In rendering this opinion, we have assumed without independent
verification that (a) each of the parties to the Credit Agreement is duly
organized, validly existing and in good standing in the jurisdiction of its
organization and has the corporate power and authority to execute, deliver and
perform its obligations under the Credit Agreement, (b) the Credit Agreement has
been duly authorized, executed and delivered by each of the parties thereto, (c)
the Credit Agreement is the legal, valid and binding obligation of the Agents
and Lenders, enforceable against the Agents and Lenders in accordance with its
terms, (d) all consents and approvals required to be obtained in connection with
the Credit Agreement have been obtained, (e) the parties have complied with all
statutes, rules and regulations of any governmental authority required to be
complied with in
X-2
<PAGE>
The Lenders, October 1, 1998 - Page 3
order to consummate the transactions contemplated by the Credit Agreement and
(f) the Credit Agreement has not been further amended, modified or supplemented
in any way by the parties thereto nor has there been any waiver of any material
provisions thereof. In addition, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals or
copies and the due authority of all persons executing the same, and we have
relied as to factual matters on the documents that we have reviewed.
The law covered by this opinion is limited to the present law of the
State of New York. We express no opinion as to the laws of any other
jurisdiction and no opinion regarding the statutes, administrative decisions,
rules, regulations or requirements of any county, municipality, subdivision or
local authority of any jurisdiction.
This opinion is limited to the matters expressly stated herein and no
opinion is to be implied or may be inferred beyond the matters expressly so
stated.
This opinion is given as of the date hereof and we assume no obligation
to update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in law which may hereafter
occur.
This opinion is furnished by us as counsel to Agents and may be relied
upon by you only in connection with the transactions contemplated by the Credit
Agreement. It may not be used or relied upon by you for any other purpose or by
any other person, nor may copies be delivered to any other person without in
each instance our prior written consent. You may, however, deliver a copy of
this opinion to your accountants, attorneys, and other professional advisors, to
governmental regulatory agencies having jurisdiction over you and to Eligible
Assignees in connection with permitted assignments under the Credit Agreement,
and such Eligible Assignees may rely on this opinion as if it were addressed and
had been delivered to them on the date of this opinion.
Respectfully submitted,
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<PAGE>
EXHIBIT XI
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "Agreement") is entered into
by and between the parties respectively designated as Assignor ("Assignor") and
Assignee ("Assignee") above the signatures of such parties on the Schedule of
Terms attached hereto and hereby made an integral part hereof (the "Schedule of
Terms") and relates to that certain Credit Agreement described in the Schedule
of Terms (said Credit Agreement, as amended, supplemented or otherwise modified
to the date hereof and as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
IN CONSIDERATION of the agreements, provisions and covenants
herein contained, the parties hereto hereby agree as follows:
SECTION 1. Assignment and Assumption.
(a) Effective upon the Settlement Date specified in Item 4 of
the Schedule of Terms (the "Settlement Date"), Assignor hereby sells and assigns
to Assignee, without recourse, representation or warranty (except as expressly
set forth herein), and Assignee hereby purchases and assumes from Assignor, that
percentage interest in all of Assignor's rights and obligations as a Lender
arising under the Credit Agreement and the other Loan Documents with respect to
all or such portion of Assignor's Commitments and outstanding Loans, if any, as
specified in such Schedule of Terms which represents, as of the Settlement Date,
the percentage interest specified in Item 3 of the Schedule of Terms of all
rights and obligations of Lenders arising under the Credit Agreement and the
other Loan Documents with respect to those Commitments and any outstanding Loans
of the same Class as such assigned rights and obligations (the "Assigned
Share"). Without limiting the generality of the foregoing, the parties hereto
hereby expressly acknowledge and agree that any assignment of all or any portion
of Assignor's rights and obligations relating to Assignor's Revolving Loan
Commitment shall include (i) in the event Assignor is an Issuing Lender with
respect to any outstanding Letters of Credit (any such Letters of Credit being
"Assignor Letters of Credit"), the sale to Assignee of a participation in the
Assignor Letters of Credit and any drawings thereunder as contemplated by
subsection 3.1C of the Credit Agreement and (ii) the sale to Assignee of a
ratable portion of any participations previously purchased by Assignor pursuant
to said subsection 3.1C with respect to any Letters of Credit other than the
Assignor Letters of Credit.
(b) In consideration of the assignment described above,
Assignee hereby agrees to pay to Assignor, on the Settlement Date, the principal
amount of any outstanding Loans included within the Assigned Share, such payment
to be made by wire transfer of immediately available funds in accordance with
the applicable payment instructions set forth in Item 5 of the Schedule of
Terms.
(c) Assignor hereby represents and warrants that Item 3 of the
Schedule of Terms correctly sets forth the amount of the Commitments, the
outstanding Term Loan and the Pro Rata Share corresponding to the Assigned
Share.
(d) Assignor and Assignee hereby agree that, upon giving
effect to the assignment and assumption described above, (i) Assignee shall be a
Lender party to the Credit Agreement and shall have all of the rights and
obligations under the Loan Documents, and shall be deemed to have made all
XI-1
<PAGE>
of the covenants and agreements contained in the Loan Documents, arising out of
or otherwise related to the Assigned Share, and (ii) Assignor shall be
absolutely released from any of such obligations, covenants and agreements
assumed or made by Assignee in respect of the Assigned Share. Assignee hereby
acknowledges and agrees that the agreement set forth in this Section 1(d) is
expressly made for the benefit of Company, Agent, Assignor and the other Lenders
and their respective successors and permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect the assignment by
Assignor and the assumption by Assignee of Assignor's rights and obligations
with respect to the Assigned Share, (ii) any other assignments by Assignor of a
portion of its rights and obligations with respect to the Commitments and any
outstanding Loans shall have no effect on the Commitments, the outstanding Term
Loans and the Pro Rata Share corresponding to the Assigned Share as set forth in
Item 3 of the Schedule of Terms or on the interest of Assignee in any
outstanding Revolving Loans corresponding thereto, and (iii) from and after the
Settlement Date, Administrative Agent shall make all payments under the Credit
Agreement in respect of the Assigned Share (including, without limitation, all
payments of principal and accrued but unpaid interest, commitment fees and
letter of credit fees with respect thereto) (A) in the case of any such interest
and fees that shall have accrued prior to the Settlement Date, to Assignor, and
(B) in all other cases, to Assignee; provided that Assignor and Assignee shall
make payments directly to each other to the extent necessary to effect any
appropriate adjustments in any amounts distributed to Assignor and/or Assignee
by Administrative Agent under the Loan Documents in respect of the Assigned
Share in the event that, for any reason whatsoever, the payment of consideration
contemplated by Section 1(b) occurs on a date other than the Settlement Date.
SECTION 2. Certain Representations, Warranties and Agreements.
(a) Assignor represents and warrants that it is the legal and
beneficial owner of the Assigned Share, free and clear of any adverse claim.
(b) Assignor shall not be responsible to Assignee for the
execution, effectiveness, genuineness, validity, enforceability, collectibility
or sufficiency of any of the Loan Documents or for any representations,
warranties, recitals or statements made therein or made in any written or oral
statements or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by Assignor to Assignee or
by or on behalf of Company or any of its Subsidiaries to Assignor or Assignee in
connection with the Loan Documents and the transactions contemplated thereby or
for the financial condition or business affairs of Company or any other Person
liable for the payment of any Obligations, nor shall Assignor be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the use of the
Letters of Credit or as to the existence or possible existence of any Event of
Default or Potential Event of Default.
(c) Assignee represents and warrants that it is an Eligible
Assignee; that it has experience and expertise in the making of loans such as
the Loans; that it has acquired the Assigned Share for its own account in the
ordinary course of its business and without a view to distribution of the Loans
within the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of
subsection 10.1 of the Credit Agreement, the disposition of the Assigned Share
or any interests therein shall at all times remain within its exclusive
control); and that it has received, reviewed and approved a copy of the Credit
Agreement (including all Exhibits and Schedules thereto).
XI-2
<PAGE>
(d) Assignee represents and warrants that it has received from
Assignor such financial information regarding Company and its Subsidiaries as is
available to Assignor and as Assignee has requested, that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the assignment evidenced by this Agreement,
and that it has made and shall continue to make its own appraisal of the
creditworthiness of Company and its Subsidiaries. Assignor shall have no duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Assignee or to provide Assignee
with any other credit or other information with respect thereto, whether coming
into its possession before the making of the initial Loans or at any time or
times thereafter, and Assignor shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Assignee.
(e) Each party to this Agreement represents and warrants to
the other party hereto that it has full power and authority to enter into this
Agreement and to perform its obligations hereunder in accordance with the
provisions hereof, that this Agreement has been duly authorized, executed and
delivered by such party and that this Agreement constitutes a legal, valid and
binding obligation of such party, enforceable against such party in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity.
(f) The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim.
SECTION 3. Miscellaneous.
(a) Each of Assignor and Assignee hereby agrees upon request
of the other such party hereto, from time to time, to take such additional
actions and to execute and deliver such additional documents and instruments as
such other party may reasonably request to effect the transactions contemplated
by, and to carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated, except by an instrument in writing signed by
the party (including, if applicable, any party required to evidence its consent
to or acceptance of this Agreement) against whom enforcement of such change,
waiver, discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and may be personally served, telexed or sent by telefacsimile or United
States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed. For the purposes hereof, the notice
address of each of Assignor and Assignee shall be as set forth on the Schedule
of Terms or, as to either such party, such other address as shall be designated
by such party in a written notice delivered to the other such party. In
addition, the notice address of Assignee set forth on the Schedule of Terms
shall serve as the initial notice address of Assignee for purposes of subsection
10.8 of the Credit Agreement.
(d) In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
XI-3
<PAGE>
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and assigns.
(g) This Agreement may be executed in one or more counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
(h) This Agreement shall become effective upon the date (the
"Effective Date") upon which all of the following conditions are satisfied: (i)
the execution of a counterpart hereof by each of Assignor and Assignee, (ii) the
receipt by Administrative Agent of the processing and recordation fee referred
to in subsection 10.1B(i) of the Credit Agreement, (iii) in the event Assignee
is a Non-US Lender (as defined in subsection 2.7B(iii)(a) of the Credit
Agreement), the delivery by Assignee to Administrative Agent of such forms,
certificates or other evidence with respect to United States federal income tax
withholding matters as Assignee may be required to deliver to Administrative
Agent pursuant to said subsection 2.7B(iii)(a), (iv) the execution of a
counterpart hereof by Administrative Agent as evidence of its acceptance hereof
in accordance with subsection 10.1B(ii) of the Credit Agreement, (v) the receipt
by Administrative Agent of originals or telefacsimiles of the counterparts
described above and authorization of delivery thereof, and (v) the recordation
by Administrative Agent in the Register of the pertinent information regarding
the assignment effected hereby in accordance with subsection 10.1B(ii) of the
Credit Agreement.
[Remainder of page intentionally left blank]
XI-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, such execution being made as of the Effective Date in
the applicable spaces provided on the Schedule of Terms.
XI-5
<PAGE>
<TABLE>
SCHEDULE OF TERMS
1. Borrower: Arterial Vascular Engineering, Inc.
2. Name and Date of Credit Agreement: Credit Agreement dated as of
September 30, 1998 by and among Borrower, the financial institutions
listed therein as Lenders, DLJ Capital Funding, Inc., as Syndication
Agent, Paribas as Documentation Agent and Royal Bank of Canada, as
Administrative Agent.
<CAPTION>
3. Amounts: Re: Revolving Re: Tranche Re: Tranche
Loans A Loans B Loans
------------- ----------- -----------
<S> <C> <C> <C>
(a) Aggregate Commitments of all Lenders: $___________ $__________ $__________
(b) Assigned Share/Pro Rata Share: _______% _______% _______%
(c) Amount of Assigned Share of Commitments: $___________ $__________ $__________
(d) Amount of Assigned Share of Term Loans: $__________ $__________
4. Settlement Date: ____________, _____
5. Payment Instructions:
ASSIGNOR: ASSIGNEE:
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
Attention: ________________ Attention: ________________
Reference: ________________ Reference: ________________
6. Notice Addresses:
ASSIGNOR: ASSIGNEE:
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
7. Signatures:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By: _____________________ By: ______________________
Title: __________________ Title:____________________
Accepted in accordance with subsection
10.1B(ii) of the Credit Agreement
CONSENTED:
[NAME OF ADMINISTRATIVE AGENT], [ARTERIAL VASCULAR ENGINEERING,
INC.
as Administrative Agent
By: _____________________ By: __________________________
Title: __________________ Title:________________________]
[include only if required under section 10.1B of the Credit Agreement]
</TABLE>
XI-6
<PAGE>
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent
By:________________________
Title:_____________________
XI-7
<PAGE>
EXHIBIT XII
[FORM OF MORTGAGE]
PREPARED BY,
RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
O'Melveny & Myers LLP
400 South Hope Street,
Eleventh Floor
Los Angeles, California 90071-2899
Attention: Marc Philip Wane, Esq.
File #218,107-016
======================================= =======================================
SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE
DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND LEASES AND FIXTURE FILING (CALIFORNIA)
by and from
ARTERIAL VASCULAR ENGINEERING, INC., "Grantor"
to
Commonwealth Land Title Company, "Trustee"
for the benefit of
Royal Bank of Canada, as agent for certain Agents and Lenders, "Beneficiary"
Dated as of September 30, 1998
Location: ________________
Municipality: ________________
County: Sonoma
State: California
THIS DEED OF TRUST SECURES ONE OR MORE VARIABLE RATE PROMISSORY NOTES
WHICH VARY ACCORDING TO CHANGES IN THE INTEREST RATE DETERMINED
IN ACCORDANCE WITH THE CREDIT AGREEMENT (AS DEFINED HEREIN).
THE SECURED OBLIGATIONS SECURED BY THIS DEED OF TRUST INCLUDE
REVOLVING CREDIT OBLIGATIONS THAT PERMIT BORROWING, REPAYMENT AND
REBORROWING.
ATTENTION: COUNTY RECORDER: This Deed of Trust covers goods which are or are to
become affixed to or fixtures on the land described in Exhibit A hereto and is
to be filed for record in the records where deeds of trust on real estate are
recorded. Additionally, this instrument should be appropriately indexed, not
only as a deed of trust, but also as a financing statement covering goods that
are or are to become fixtures on the real property described herein. The mailing
addresses of the Grantor (Debtor) and Beneficiary (Secured Party) are set forth
in the Preamble of this Deed of Trust.
XII-1
<PAGE>
DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND
FIXTURE FILING (CALIFORNIA)
THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND LEASES AND FIXTURE FILING (CALIFORNIA) (this "Deed of Trust") is dated as of
September 30, 1998, by and from ARTERIAL VASCULAR ENGINEERING, Inc., a Delaware
corporation ("Grantor"), whose address is ______________________________, to
COMMONWEALTH LAND Title Company, a California corporation ("Trustee"), with an
address at ________________, for the benefit of Royal Bank of Canada, a Canadian
chartered bank under and governed by the provisions of the Bank Act, being S.C.
1991, c.46, as Administrative Agent, for the benefit of the Agents, Lenders,
Issuing Lenders and Swing Line Lender party to the Credit Agreement (defined
below)(such lenders, together with their respective successors and assigns,
collectively, the "Lenders"), and any Interest Rate Exchangers (defined
below)(in such capacity, "Agent"), having an address at One Liberty Plaza, 4th
Floor, New York, New York 10006-1404. (Agent, together with its successors and
assigns, "Beneficiary"). The term "Grantor" shall be synonymous with the term
"Trustor" for purposes of California Law.
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. All capitalized terms used herein without definition
shall have the respective meanings ascribed to them in that certain
Credit Agreement dated as of September 30, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement") among Grantor, Beneficiary, the Lenders, DLJ Capital
Funding, Inc. as syndication agent, and Paribas as documentation agent.
As used herein, the following terms shall have the following meanings:
(a) "Mortgaged Property": All of Grantor's interest in (1) the
fee interest in the real property described in Exhibit A attached
hereto and incorporated herein by this reference, together with any
greater estate therein as hereafter may be acquired by Grantor (the
"Land"), (2) all improvements now owned or hereafter acquired by
Grantor, now or at any time situated, placed or constructed upon the
Land (the "Improvements"; the Land and Improvements are collectively
referred to as the "Premises"), (3) all materials, supplies, equipment,
apparatus and other items of personal property now owned or hereafter
acquired by Grantor and now or hereafter attached to, installed in or
used in connection with any of the Improvements or the Land, and water,
gas, electrical, telephone, storm and sanitary sewer facilities and all
other utilities whether or not situated in easements (the "Fixtures"),
(4) all leases, licenses, concessions, occupancy agreements or other
agreements (written or oral, now or at any time in effect) which grant
to any Person, other than Grantor, a possessory interest in, or the
right to use, all or any part of the Mortgaged Property, together with
all related security and other deposits (the "Leases"), (5) all of the
rents, revenues, royalties, income, proceeds, profits, security and
other types of deposits, and other benefits paid or payable by parties
to the Leases for using, leasing, licensing, possessing, operating
from, residing in, selling or otherwise enjoying
XII-2
<PAGE>
the Mortgaged Property (the "Rents"), (6) all other agreements, such as
construction contracts, architects' agreements, engineers' contracts,
utility contracts, maintenance agreements, management agreements,
service contracts, listing agreements, guaranties, warranties, permits,
licenses, certificates and entitlements in any way relating to the
construction, use, occupancy, operation, maintenance, enjoyment or
ownership of the Mortgaged Property (the "Property Agreements"), (7)
all rights, privileges, tenements, hereditaments, rights-of-way,
easements, appendages and appurtenances appertaining to the foregoing,
(8) all property tax refunds (the "Tax Refunds"), (9) all accessions,
replacements and substitutions for any of the foregoing and all
proceeds thereof (the "Proceeds"), (10) all insurance policies,
unearned premiums therefor and proceeds from such policies covering any
of the above property now or hereafter acquired by Grantor (the
"Insurance"), and (11) all of Grantor's right, title and interest in
and to any awards, damages, remunerations, reimbursements, settlements
or compensation heretofore made or hereafter to be made by any
governmental authority pertaining to the Land, Improvements, Fixtures
or Personalty (the "Condemnation Awards"). As used in this Deed of
Trust, the term "Mortgaged Property" shall mean all or, where the
context permit or requires, any portion of the above or any interest
therein.
(b) "Secured Obligations": means all obligations and
liabilities of every nature of Grantor to Beneficiary, Agents, Lenders
and those Lenders (in such capacity the "Interest Rate Exchangers")
that are party to Interest Rate Agreements (collectively the "Lender
Interest Rate Agreements") in accordance with the terms of the Credit
Agreement now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents,
including without limitation any Tranche A Term Notes, Tranche B Term
Notes, Revolving Notes, Swing Line Note or Letters of Credit, and all
extensions or renewals thereof, whether for principal, interest
(including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Grantor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or
not from time to time decreased or extinguished and later increased,
created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such
payment is avoided or recovered directly or indirectly from Beneficiary
or any Lender or Interest Rate Exchanger as a preference, fraudulent
transfer or otherwise, and all obligations of every nature of Grantor
now or hereafter existing under this Deed of Trust. The Credit
Agreement contains a revolving credit facility which permits the
Grantor to borrow certain principal amounts, repay all or a portion of
such principal amounts, and then reborrow, all upon satisfaction of
certain conditions stated in the Credit Agreement. Subject to the
provisions hereof, this Deed of Trust secures all advances and
re-advances under the revolving credit feature of the Credit Agreement,
including, without limitation, funding of participations in Letters of
Credit pursuant thereto.
XII-3
<PAGE>
(c) "UCC": The Uniform Commercial Code of California or, if the
creation, perfection and enforcement of any security interest herein
granted is governed by the laws of a state other than California, then,
as to the matter in question, the Uniform Commercial Code in effect in
that state.
ARTICLE 2
GRANT
Section 2.1. Grant. To secure the full and timely payment and
performance of the Secured Obligations, Grantor GRANTS, BARGAINS, ASSIGNS, SELLS
and CONVEYS, to Trustee the Mortgaged Property, subject, however, to the
Permitted Encumbrances, TO HAVE AND TO HOLD the Mortgaged Property to Trustee,
IN TRUST, WITH POWER OF SALE, and Grantor does hereby bind itself, its
successors and assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged
Property unto Trustee.
ARTICLE 3
WARRANTIES, REPRESENTATIONS AND COVENANTS
Grantor warrants, represents and covenants to Beneficiary as follows:
Section 3.1. Title to Mortgaged Property and Lien of this Instrument.
Grantor owns the Mortgaged Property free and clear of any liens, claims or
interests, except the Permitted Encumbrances. This Deed of Trust creates valid,
enforceable first priority liens and security interests against the Mortgaged
Property.
Section 3.2. First Lien Status. Grantor shall preserve and protect the
first lien and security interest status of this Deed of Trust and the other Loan
Documents. If any lien or security interest other than the Permitted
Encumbrances is asserted against the Mortgaged Property, Grantor shall promptly,
and at its expense, (a) give Beneficiary a detailed written notice of such lien
or security interest (including origin, amount and other terms), and (b) pay the
underlying claim in full or take such other action so as to cause it to be
released or contest the same in compliance with the requirements of the Credit
Agreement (including the requirement of providing a bond or other security
satisfactory to Beneficiary).
Section 3.3. Payment and Performance. Grantor shall pay when due and
shall perform in full when required to be perform, each and all of the Secured
Obligations.
Section 3.4. Replacement of Fixtures. Grantor shall not, without the
prior written consent of Beneficiary, permit any of the Fixtures to be removed
at any time from the Land or Improvements, unless the removed item is removed
temporarily for maintenance and repair or, if removed permanently, is obsolete
and is replaced by an article of equal or better suitability and value, owned by
Grantor subject to the liens and security interests of this Deed of Trust and
the other Loan Documents, and free and clear of any other lien or security
interest except such as may be permitted under the Credit Agreement or first
approved in writing by Beneficiary.
XII-4
<PAGE>
Section 3.5. Inspection. Grantor shall permit Beneficiary and the
Lenders and their respective agents, representatives and employees, upon
reasonable prior notice to Grantor, and in compliance with the Subject Lease, to
inspect the Mortgaged Property and all books and records of Grantor located
thereon, and to conduct such environmental and engineering studies as
Beneficiary or the Lenders may require, provided that such inspections and
studies shall not materially interfere with the use and operation of the
Mortgaged Property.
Section 3.6. Other Covenants. All of the covenants in the Credit
Agreement are incorporated herein by reference and, together with covenants in
this Article 3, shall be covenants running with the land.
Section 3.7. Condemnation Awards and Insurance Proceeds.
(a) Condemnation Awards. Grantor assigns all awards and
compensation to which it is entitled for any condemnation or other
taking, or any purchase in lieu thereof, to Beneficiary and authorizes
Beneficiary to collect and receive such awards and compensation and to
give proper receipts and acquittances therefor, subject to the terms of
Section 6.4C of the Credit Agreement.
(b) Insurance Proceeds. Grantor assigns to Beneficiary all
proceeds of any insurance policies insuring against loss or damage to
the Mortgaged Property. Notwithstanding such assignment, Grantor shall
be entitled to collect, receive and apply such proceeds subject to the
limitations, conditions and terms specified in Section 6.4C of the
Credit Agreement.
ARTICLE 4
[Intentionally Omitted]
ARTICLE 5
DEFAULT AND FORECLOSURE
Section 5.1. Remedies. If an Event of Default (as defined in the Credit
Agreement) or the occurrence of an Early Termination Date (as defined in a
Master Agreement or an Interest Rate Swap Agreement or Interest Rate and
Currency Exchange Agreement, each of such agreements in the form prepared by the
International Swap and Derivatives Association Inc. or a similar event under any
similar swap agreement) under any Lender Interest Rate Agreement (either such
occurrence being an "Event of Default" for purposes of this Deed of Trust)
exists, Beneficiary may, at Beneficiary's election and by or through Trustee or
otherwise, exercise any or all of the following rights, remedies and recourses:
(a) Acceleration. Declare the Secured Obligations to be
immediately due and payable, without further notice, presentment,
protest, notice of intent to accelerate, notice of acceleration, demand
or action of any nature whatsoever
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(each of which hereby is expressly waived by Grantor), whereupon the
same shall become immediately due and payable.
(b) Entry on Mortgaged Property. Enter the Mortgaged Property
and take exclusive possession thereof and of all books, records and
accounts relating thereto or located thereon. If Grantor remains in
possession of the Mortgaged Property after an Event of Default and
without Beneficiary's prior written consent, Beneficiary may invoke any
legal remedies to dispossess Grantor.
(c) Operation of Mortgaged Property. Hold, lease, develop,
manage, operate or otherwise use the Mortgaged Property upon such terms
and conditions as Beneficiary may deem reasonable under the
circumstances (making such repairs, alterations, additions and
improvements and taking other actions, from time to time, as
Beneficiary deems necessary or desirable), and apply all Rents and
other amounts collected by Trustee in connection therewith in
accordance with the provisions of Section 5.7.
(d) Foreclosure and Sale. Institute proceedings for the
complete foreclosure of this Deed of Trust, either by judicial action
or by power of sale, in which case the Mortgaged Property may be sold
for cash or credit in one or more parcels as Beneficiary may determine.
With respect to any notices required or permitted under the UCC,
Grantor agrees that fifteen (15) days' prior written notice shall be
deemed commercially reasonable. At any such sale by virtue of any
judicial proceedings, power of sale, or any other legal right, remedy
or recourse, the title to and right of possession of any such property
shall pass to the purchaser thereof, and to the fullest extent
permitted by law, Grantor shall be completely and irrevocably divested
of all of its right, title, interest, claim, equity, equity of
redemption, and demand whatsoever, either at law or in equity, in and
to the property sold and such sale shall be a perpetual bar both at law
and in equity against Grantor, and against all other Persons claiming
or to claim the property sold or any part thereof, by, through or under
Grantor. Beneficiary or any of the Lenders may be a purchaser at such
sale. If Beneficiary is the highest bidder, Beneficiary may credit the
portion of the purchase price that would be distributed to Beneficiary
against the Secured Obligations in lieu of paying cash. In the event
this Deed of Trust is foreclosed by judicial action, appraisement of
the Mortgaged Property is waived.
(e) Receiver. Make application to a court of competent
jurisdiction for, and obtain from such court as a matter of strict
right and without notice to Grantor or regard to the adequacy of the
Mortgaged Property for the repayment of the Secured Obligations, the
appointment of a receiver of the Mortgaged Property, and Grantor
irrevocably consents to such appointment. Any such receiver shall have
all the usual powers and duties of receivers in similar cases,
including the full power to rent, maintain and otherwise operate the
Mortgaged Property upon such terms as may be approved by the court, and
shall apply such Rents in accordance with the provisions of Section
5.7.
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<PAGE>
(f) Other. Exercise all other rights, remedies and recourses
granted under the Loan Documents or otherwise available at law or in
equity.
Section 5.2. Separate Sales. The Mortgaged Property may be sold in one
or more parcels and in such manner and order as Trustee in its sole discretion
may elect; the right of sale arising out of any Event of Default shall not be
exhausted by any one or more sales.
Section 5.3. Remedies Cumulative, Concurrent and Nonexclusive.
Beneficiary, the Lenders and Trustee shall have all rights, remedies and
recourses granted in the Loan Documents and available at law or equity
(including the UCC), which rights (a) shall be cumulated and concurrent, (b) may
be pursued separately, successively or concurrently against Grantor or others
obligated under the Loan Documents, or against the Mortgaged Property, or
against any one or more of them, at the sole discretion of Beneficiary, the
Lenders or Trustee, as the case may be, (c) may be exercised as often as
occasion therefor shall arise, and the exercise or failure to exercise any of
them shall not be construed as a waiver or release thereof or of any other
right, remedy or recourse, and (d) are intended to be, and shall be,
nonexclusive. No action by Beneficiary, the Lenders or Trustee in the
enforcement of any rights, remedies or recourses under the Loan Documents or
otherwise at law or equity shall be deemed to cure any Event of Default.
Section 5.4. Release of and Resort to Collateral. Beneficiary may
release, regardless of consideration and without the necessity for any notice to
or consent by the holder of any subordinate lien on the Mortgaged Property, any
part of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security interest
created in or evidenced by the Loan Documents or their status as a first and
prior lien and security interest in and to the Mortgaged Property. For payment
of the Secured Obligations, Beneficiary may resort to any other security in such
order and manner as Beneficiary may elect.
Section 5.5. Waiver of Redemption, Notice and Marshalling of Assets. To
the fullest extent permitted by law, Grantor hereby irrevocably and
unconditionally waives and releases (a) all benefit that might accrue to Grantor
by virtue of any present or future statute of limitations or law or judicial
decision exempting the Mortgaged Property from attachment, levy or sale on
execution or providing for any stay of execution, exemption from civil process,
redemption or extension of time for payment, (b) all notices of any Event of
Default or of any election by Trustee or Beneficiary to exercise or the actual
exercise of any right, remedy or recourse provided for under the Loan Documents,
and (c) any right to a marshalling of assets or a sale in inverse order of
alienation.
Section 5.6. Discontinuance of Proceedings. If Beneficiary, the Lenders
or Trustee shall have proceeded to invoke any right, remedy or recourse
permitted under the Loan Documents and shall thereafter elect to discontinue or
abandon it for any reason, Beneficiary, the Lenders or Trustee, as the case may
be, shall have the unqualified right to do so and, in such an event, Grantor,
Beneficiary, the Lenders and Trustee shall be restored to their former positions
with respect to the Secured Obligations, the Loan Documents, the Mortgaged
Property and otherwise, and the rights, remedies, recourses
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and powers of Beneficiary, the Lenders and Trustee shall continue as if the
right, remedy or recourse had never been invoked, but no such discontinuance or
abandonment shall waive any Event of Default which may then exist or the right
of Beneficiary, the Lenders or Trustee thereafter to exercise any right, remedy
or recourse under the Loan Documents for such Event of Default.
Section 5.7. Application of Proceeds. The proceeds of any sale of, and
the Rents and other amounts generated by the holding, leasing, management,
operation or other use of the Mortgaged Property, shall be applied by
Beneficiary or Trustee (or the receiver, if one is appointed) in accordance with
Section 2.4D of the Credit Agreement.
Section 5.8. Occupancy After Foreclosure. Any sale of the Mortgaged
Property or any part thereof in accordance with Section 5.1(d) will divest all
right, title and interest of Grantor in and to the property sold. Subject to
applicable law, any purchaser at a foreclosure sale will receive immediate
possession of the property purchased. If Grantor retains possession of such
property or any part thereof subsequent to such sale, Grantor will be considered
a tenant at sufferance of the purchaser, and will, if Grantor remains in
possession after demand to remove, be subject to eviction and removal, forcible
or otherwise, with or without process of law.
Section 5.9. Additional Advances and Disbursements; Costs of
Enforcement.
(a) If any Event of Default exists, Beneficiary and each of the
Lenders shall have the right, but not the obligation, to cure such
Event of Default in the name and on behalf of Grantor. All sums
advanced and expenses incurred at any time by Beneficiary or any of the
Lenders under this Section 5.9, or otherwise under this Deed of Trust
or any of the other Loan Documents or applicable law, shall bear
interest from the date that such sum is advanced or expense incurred,
to and including the date of reimbursement, computed at the rate or
rates at which interest is then computed on the Secured Obligations,
and all such sums, together with interest thereon, shall be secured by
this Deed of Trust.
(b) Grantor shall pay all expenses (including reasonable
attorneys' fees and expenses) of or incidental to the perfection and
enforcement of this Deed of Trust and the other Loan Documents, or the
enforcement, compromise or settlement of the Secured Obligations or any
claim under this Deed of Trust and the other Loan Documents, and for
the curing thereof, or for defending or asserting the rights and claims
of Beneficiary in respect thereof, by litigation or otherwise.
Section 5.10. No Mortgagee in Possession. Neither the enforcement of
any of the remedies under this Article 5, the assignment of the Rents and Leases
under Article 6, the security interests under Article 7, nor any other remedies
afforded to Beneficiary under the Loan Documents, at law or in equity shall
cause Beneficiary, any of the Lenders or Trustee to be deemed or construed to be
a mortgagee in possession of the Mortgaged Property, to obligate Beneficiary,
any of the Lenders or Trustee to lease the Mortgaged Property or attempt to do
so, or to take any action, incur any expense, or
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perform or discharge any obligation, duty or liability whatsoever under any of
the Leases or otherwise.
ARTICLE 6
ASSIGNMENT OF RENTS AND LEASES
Section 6.1. Assignment. In furtherance of and in addition to the
assignment made by Grantor in Section 2.1 of this Deed of Trust, Grantor hereby
absolutely and unconditionally assigns, sells, transfers and conveys to Trustee
(for the benefit of Beneficiary) and to Beneficiary all of its right, title and
interest in and to all Leases, whether now existing or hereafter entered into,
and all of its right, title and interest in and to all Rents. This assignment is
an absolute assignment and not an assignment for additional security only. So
long as no Event of Default shall have occurred and be continuing, Grantor shall
have a revocable license from Trustee and Beneficiary to exercise all rights
extended to the landlord under the Leases, including the right to receive and
collect all Rents and to hold the Rents in trust for use in the payment and
performance of the Secured Obligations and to otherwise use the same. The
foregoing license is granted subject to the conditional limitation that no Event
of Default shall have occurred and be continuing. Upon the occurrence and during
the continuance of an Event of Default, whether or not legal proceedings have
commenced, and without regard to waste, adequacy of security for the Secured
Obligations or solvency of Grantor, the license herein granted shall
automatically expire and terminate, without notice by Trustee or Beneficiary
(any such notice being hereby expressly waived by Grantor).
Section 6.2. Perfection Upon Recordation. Grantor acknowledges that
Beneficiary and Trustee have taken all actions necessary to obtain, and that
upon recordation of this Deed of Trust Beneficiary and Trustee shall have, to
the extent permitted under applicable law, a valid and fully perfected, first
priority, present assignment of the Rents arising out of the Leases and all
security for such Leases. Grantor acknowledges and agrees that upon recordation
of this Deed of Trust Trustee's and Beneficiary's interest in the Rents shall be
deemed to be fully perfected, "choate" and enforced as to Grantor and all third
parties, including, without limitation, any subsequently appointed trustee in
any case under Title 11 of the United States Code (the "Bankruptcy Code"),
without the necessity of commencing a foreclosure action with respect to this
Deed of Trust, making formal demand for the Rents, obtaining the appointment of
a receiver or taking any other affirmative action.
Section 6.3. Bankruptcy Provisions. Without limitation of the absolute
nature of the assignment of the Rents hereunder, Grantor, Trustee and
Beneficiary agree that (a) this Deed of Trust shall constitute a "security
agreement" for purposes of Section 552(b) of the Bankruptcy Code, (b) the
security interest created by this Deed of Trust extends to property of Grantor
acquired before the commencement of a case in bankruptcy and to all amounts paid
as Rents and (c) such security interest shall extend to all Rents acquired by
the estate after the commencement of any case in bankruptcy.
Section 6.4. No Merger of Estates. So long as part of the Secured
Obligations secured hereby remain unpaid and undischarged, the fee and leasehold
estates to the
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Mortgaged Property shall not merge, but shall remain separate and distinct,
notwithstanding the union of such estates either in Grantor, Beneficiary, any
tenant or any third party by purchase or otherwise.
ARTICLE 7
SECURITY AGREEMENT
Section 7.1. Security Interest. This Deed of Trust constitutes a
"security agreement" within the meaning of the UCC and other applicable law and
with respect to the Fixtures. To this end, Grantor grants to Beneficiary a first
and prior security interest in the Fixtures to secure the payment and
performance of the Secured Obligations, and agrees that Beneficiary shall have
all the rights and remedies of a secured party under the UCC with respect to
such property. Any notice of sale, disposition or other intended action by
Beneficiary with respect to the Fixtures sent to Grantor at least fifteen (15)
days prior to any action under the UCC shall constitute reasonable notice to
Grantor.
Section 7.2. Fixture Filing. This Deed of Trust constitutes a "fixture
filing" for the purposes of the UCC against all of the Mortgaged Property which
is or is to become fixtures. Information concerning the security interest herein
granted may be obtained at the addresses of Debtor (Grantor) and Secured Party
(Beneficiary) as set forth in the first paragraph of this Deed of Trust.
ARTICLE 8
CONCERNING THE TRUSTEE
Section 8.1. Certain Rights. At any time, or from time to time, without
liability therefor and without notice, upon written request of Beneficiary and
presentation of this Deed of Trust and without affecting any personal liability
of any person for payment or performance of the Secured Obligations or the
effect of this Deed of Trust upon the remainder of the Mortgaged Party, Trustee
may (i) reconvey any part of the Mortgaged Property, (ii) consent in writing to
the making of any map or plat thereof, (iii) join in granting any easement
thereon, or (iv) join in any extension agreement or any agreement subordinating
the lien or charge hereof. With the approval of Beneficiary, Trustee shall have
the right to select, employ and consult with counsel. Trustee shall have the
right to rely on any instrument, document or signature authorizing or supporting
any action taken or proposed to be taken by it hereunder, believed by it in good
faith to be genuine. Trustee shall be entitled to reimbursement for actual,
reasonable expenses incurred by it in the performance of its duties. Grantor
shall, from time to time, pay the compensation due to Trustee hereunder and
reimburse Trustee for, and indemnify, defend and save Trustee harmless against,
all liability and reasonable expenses which may be incurred by it in the
performance of its duties, including those arising from joint, concurrent, or
comparative negligence of Trustee; however, Grantor shall not be liable under
such indemnification to the extent such liability or expenses result solely from
Trustee's gross negligence or willful misconduct. Grantor's obligations under
this Section 8.1 shall not be reduced or impaired by principles of comparative
or contributory negligence.
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Section 8.2. Retention of Money. All moneys received by Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law), and Trustee shall be under
no liability for interest on any moneys received by Trustee hereunder.
Section 8.3. Successor Trustees. If Trustee or any successor Trustee
shall die, resign or become disqualified from acting in the execution of this
trust, or Beneficiary shall desire to appoint a substitute Trustee, Beneficiary
shall have full power to appoint one or more substitute Trustees and, if
preferred, several substitute Trustees in succession who shall succeed to all
the estates, rights, powers and duties of Trustee. Such appointment may be
executed by any authorized agent of Beneficiary and as so executed, such
appointment shall be conclusively presumed to be executed with authority, valid
and sufficient, without further proof of any action. Without limitation of the
foregoing, Beneficiary may, from time to time, by a written instrument executed
and acknowledged by Beneficiary, recorded in the county in which the Mortgaged
Property is located or by otherwise complying with the provisions of applicable
law, substitute a successor or successors to any Trustee named herein or acting
hereunder; and such successor(s) shall, without conveyance from the predecessor
Trustee, succeed to all title, estate, rights, powers and duties of such
predecessor.
Section 8.4. Perfection of Appointment. Should any deed, conveyance or
instrument of any nature be required from Grantor by any successor Trustee to
more fully and certainly vest in and confirm to such successor Trustee such
estates, rights, powers and duties, then, upon request by such Trustee, all such
deeds, conveyances and instruments shall be made, executed, acknowledged and
delivered and shall be caused to be recorded and/or filed by Grantor.
Section 8.5. Trustee Liability. In no event or circumstance shall
Trustee or any substitute Trustee hereunder be personally liable under or as a
result of this Deed of Trust, either as a result of any action by Trustee (or
any substitute Trustee) in the exercise of the powers hereby granted or
otherwise.
ARTICLE 9
MISCELLANEOUS
Section 9.1. Notices. Any notice required or permitted to be given
under this Deed of Trust shall be given in accordance with Section 10.8 of the
Credit Agreement.
Section 9.2. Covenants Running with the Land. All obligations contained
in this Deed of Trust are intended by Grantor, Beneficiary and Trustee to be,
and shall be construed as, covenants running with the Mortgaged Property. As
used herein, "Grantor" shall refer to the party named in the first paragraph of
this Deed of Trust and to any subsequent owner of all or any portion of the
Mortgaged Property. All Persons who may have or acquire an interest in the
Mortgaged Property shall be deemed to have notice of, and be bound by, the terms
of the Credit Agreement and the other Loan Documents;
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however, no such party shall be entitled to any rights thereunder without the
prior written consent of Beneficiary.
Section 9.3. Attorney-in-Fact. Grantor hereby irrevocably appoints
Beneficiary and its successors and assigns, as its attorney-in-fact, which
agency is coupled with an interest and with full power of substitution, (a) to
execute and/or record any notices of completion, cessation of labor or any other
notices that Beneficiary deems appropriate to protect Beneficiary's interest, if
Grantor shall fail to do so within ten (10) days after written request by
Beneficiary, (b) upon the issuance of a deed pursuant to the foreclosure of this
Deed of Trust or the delivery of a deed in lieu of foreclosure, to execute all
instruments of assignment, conveyance or further assurance with respect to the
Leases, Rents, Deposit Accounts, Property Agreements, Tax Refunds, Proceeds,
Insurance and Condemnation Awards in favor of the grantee of any such deed and
as may be necessary or desirable for such purpose, (c) to prepare, execute and
file or record financing statements, continuation statements, applications for
registration and like papers necessary to create, perfect or preserve
Beneficiary's security interests and rights in or to any of the Mortgaged
Property, and (d) while any Event of Default exists, to perform any obligation
of Grantor hereunder, however: (1) Beneficiary shall not under any circumstances
be obligated to perform any obligation of Grantor; (2) any sums advanced by
Beneficiary in such performance shall be added to and included in the Secured
Obligations and shall bear interest at the rate or rates at which interest is
then computed on the Secured Obligations; (3) Beneficiary as such
attorney-in-fact shall only be accountable for such funds as are actually
received by Beneficiary; and (4) Beneficiary shall not be liable to Grantor or
any other person or entity for any failure to take any action which it is
empowered to take under this Section 9.3.
Section 9.4. Successors and Assigns. This Deed of Trust shall be
binding upon and inure to the benefit of Beneficiary, the Lenders, Trustee and
Grantor and their respective successors and assigns. Grantor shall not, without
the prior written consent of Beneficiary, assign any rights, duties or
obligations hereunder.
Section 9.5. No Waiver. Any failure by Beneficiary, the Lenders or
Trustee to insist upon strict performance of any of the terms, provisions or
conditions of the Loan Documents shall not be deemed to be a waiver of same, and
Beneficiary, the Lenders or Trustee shall have the right at any time to insist
upon strict performance of all of such terms, provisions and conditions.
Section 9.6. Credit Agreement. If any conflict or inconsistency exists
between this Deed of Trust and the Credit Agreement, the Credit Agreement shall
govern.
Section 9.7. Release or Reconveyance. Upon payment and performance in
full of the Secured Obligations, Beneficiary, at Grantor's expense, shall
release the liens and security interests created by this Deed of Trust or
reconvey the Mortgaged Property to Grantor.
Section 9.8. Waiver of Stay, Moratorium and Similar Rights. Grantor
agrees, to the full extent that it may lawfully do so, that it will not at any
time insist upon or
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plead or in any way take advantage of any stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent or hinder the enforcement of the provisions of this Deed of Trust
or the Secured Obligations secured hereby, or any agreement between Grantor and
Beneficiary or any rights or remedies of Beneficiary, the Lenders or Trustee.
Section 9.9. Applicable Law. The provisions of this Deed of Trust
regarding the creation, perfection and enforcement of the liens and security
interests herein granted shall be governed by and construed under the laws of
the state in which the Mortgaged Property is located. All other provisions of
this Deed of Trust shall be governed by the laws of the State of New York
(including, without limitation, Section 5-1401 of the General Obligations Law of
the State of New York), without regard to conflicts of laws principles.
Section 9.10. Headings. The Article, Section and Subsection titles
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.
Section 9.11. Entire Agreement. This Deed of Trust and the other Loan
Documents embody the entire agreement and understanding between Grantor and
Beneficiary and supersede all prior agreements and understandings between such
parties relating to the subject matter hereof and thereof. Accordingly, the Loan
Documents may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
Section 9.12. Beneficiary as Agent: Successor Agents
(a) Beneficiary has been appointed to act as Beneficiary
hereunder by the Lenders. Beneficiary shall have the right to make
demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of the Mortgaged
property) in accordance with the terms of the Credit Agreement, any
related agency agreement among Agent and the Lenders (collectively, as
amended, supplemented or otherwise modified or replaced from time to
time, the "Agency Documents") and this Deed of Trust. Grantor and all
other persons shall be entitled to rely on releases, waivers, consents,
approvals, notifications and other acts of Beneficiary, without inquiry
into the existence of required consents or approvals of the Lenders
therefor.
(b) Written notice of resignation by Agent pursuant to the
Agency Documents shall also constitute notice of resignation as
Beneficiary under this Deed of Trust. Removal of Agent pursuant to any
provision of the Agency Documents shall also constitute removal as
Beneficiary under this Deed of Trust. Appointment of a successor Agent
pursuant to the Agency Documents shall also constitute appointment of a
successor Beneficiary under this Deed of Trust. Upon the acceptance of
any appointment as Agent by a successor Agent under the Agency
Documents, that successor Agent shall thereupon succeed to and become
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vested with all the rights, powers, privileges and duties of the
resting or removed Agent as the Beneficiary under this Deed of Trust,
and the retiring or removed Beneficiary shall promptly (i) assign and
transfer to such successor Beneficiary all of its right, title and
interest in and to this Deed of Trust and the Mortgaged Property, and
(ii) execute and deliver to such successor Beneficiary such assignments
and amendments and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor
Beneficiary of the liens and security interests created hereunder,
whereupon such resting or removed Beneficiary's resignation or removal
hereunder as Agent, the provisions of this Deed of Trust and the Agency
Documents shall inure to its benefit as to any actions take or omitted
to be taken by it under this Deed of Trust while it was the Beneficiary
hereunder.
ARTICLE 10
LOCAL LAW PROVISIONS
Section 10.1. Inconsistencies. In the event of any inconsistencies
between the terms and conditions of this Article 10 and the other provisions of
this Deed of Trust, the terms and conditions of this Article 10 shall control
and be binding.
Section 10.2. Choice of Law. Supplementing Section 9.9, Grantor agrees
that (1) whether or not deficiency judgments are available under the laws of the
State of California after a foreclosure (judicial or nonjudicial) of the
Mortgaged Property, or any portion thereof, or any other realization thereon by
Beneficiary or Trustee, Beneficiary and Trustee shall have the right to seek
such a deficiency judgment against Grantor in other states or foreign
jurisdictions; (ii) to the extent Beneficiary or Trustee obtain deficiency
judgment in any other state or foreign jurisdiction then such party shall have
the right to enforce such judgment in the State of California, as well as in
other states or foreign jurisdictions; (iii) Grantor and Beneficiary will submit
to non-exclusive jurisdiction and the laying of venue for any suit on this Deed
of Trust in such state; (iv) without limiting the generality of the foregoing,
Grantor hereby waives, to the maximum extent permitted by law, any rights it may
have under the California Code of Civil procedure Sections 580b, 580d and 726
with respect to the Mortgaged Property and enforcement or realization by
Beneficiary or Trustee of their respective rights and remedies under this Deed
of Trust or with respect to the Mortgaged Property; and (v) no action,
proceeding or judgment initiated, pursued or obtained by Beneficiary or Trustee
in the State of California with respect to the Mortgaged Property or this Deed
of Trust shall be considered a "judgment" for the purposes of such Section 580d
or an "action" for the purposes of such Section 726.
Section 10.3. Waiver of Rights. Supplementing Section 9.8, Grantor
waives, to the full extent permitted by law, (1) the benefit of all laws now
existing or that may hereafter be enacted providing for any appraisement before
sale of any portion of the Mortgaged Property; (2) all rights of redemption,
valuation, appraisement, stay of execution, notice of election to mature or
declare due the Secured Obligations and the right to require marshaling in the
event of foreclosure of the liens hereby created; and (3) all rights and
remedies that Grantor may have or be able to assert by reason of the laws of
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the State of California pertaining to the rights and remedies of sureties,
including, without limitation, Sections 2809, 2810, 2819, 2839, 2845, 2849,
2850, 2899 and 3433 of the California Civil Code.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, Grantor has on the date set forth in the acknowledgement
hereto, effective as of the date first above written, caused this instrument to
be duly EXECUTED AND DELIVERED by authority duly given.
GRANTOR: ARTERIAL VASCULAR ENGINEERING, INC.,
a Delaware corporation
By: ___________________________________________
Printed Name:__________________________________
Title:_________________________________________
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State of California )
) ss.
County of ______________________ )
On ____________________, before me, personally appeared ____________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL]
_____________________________
My Commission expires: Notary Public
________________________
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EXHIBIT A
Legal Description of Premises located
at __________, ____________, _______________
[See Attached Pages]
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<PAGE>
EXHIBIT XIII
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Credit Agreement
dated as of September 30, 1998 (said Credit Agreement, as amended, supplemented
or otherwise modified to the date hereof, being the "Credit Agreement") by and
among Arterial Vascular Engineering, Inc., the financial institutions listed
therein as Lenders, DLJ Capital Funding, Inc., as Syndication Agent, Paribas, as
Documentation Agent, and Royal Bank of Canada, as Administrative Agent. Pursuant
to subsection 2.7B(iii) of the Credit Agreement, the undersigned hereby
certifies that it is not a "bank" or other Person described in Section 881(c)(3)
of the Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By: ________________________________
Title: _____________________________
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EXHIBIT XIV
[FORM OF COLLATERAL ACCOUNT AGREEMENT]
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated
as of September 30, 1998 and entered into by and between ARTERIAL VASCULAR
ENGINEERING, INC., a Delaware corporation ("Pledgor"), and ROYAL BANK OF CANADA,
as Administrative Agent, for the benefit of the Agents, Issuing Lenders, Swing
Line Lender and Lenders party to the Credit Agreement referred to below and any
Interest Rate Exchangers (as hereinafter defined)(in such agent capacity for all
such parties, the "Secured Party" herein).
PRELIMINARY STATEMENTS
A. Secured Party, Agents and Lenders have entered into a
Credit Agreement dated as of September 30, 1998 (said Credit Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Pledgor pursuant to
which Agents have undertaken certain obligations and Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Pledgor.
B. Pledgor may from time to time enter, or may from time to
time have entered, into one or more Interest Rate Agreements with one or more
Lenders (collectively, the "Lender Interest Rate Agreements") (such Lenders in
such capacity, collectively, "Interest Rate Exchangers").
C. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement (including, without limitation, the issuance of Letters of Credit or
the purchase of participations therein) and to induce the Agents to undertake
their obligations and to induce the Interest Rate Exchangers to enter into the
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees
with Secured Party as follows:
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SECTION 1. Certain Definitions. The following terms used in
this Agreement shall have the following meanings:
"Collateral" means (i) the Collateral Account, (ii) all
amounts on deposit from time to time in the Collateral Account, (iii) all
interest, cash, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing, and (iv) to the extent not covered by clauses (i)
through (iii) above, all proceeds of any or all of the foregoing.
"Beneficiaries" means the Agents, Lenders, Issuing Lenders and
Swing Line Lender under the Credit Agreement and the Interest Rate Exchangers,
collectively ("Beneficiary" meaning any one of such Beneficiaries).
"Collateral Account" means the restricted deposit account
established and maintained by Secured Party pursuant to Section 2(a).
"Secured Obligations" means all obligations and liabilities of
every nature of Pledgor to any Beneficiary now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents and the Lender Interest Rate Agreements and all extensions or renewals
thereof, whether for principal, interest (including, without limitation,
interest that, but for the filing of a petition in bankruptcy with respect to
Pledgor, would accrue on such obligations), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Beneficiary as a preference, fraudulent
transfer or otherwise, and all obligations of every nature of Pledgor now or
hereafter existing under this Agreement.
SECTION 2. Establishment and Operation of Collateral Account.
(a) Secured Party is hereby authorized to establish and
maintain at its office at One Liberty Plaza, 4th Floor, New York, New York
10006-1404, as a blocked account in the name of Secured Party and under the sole
dominion and control of Secured Party, a restricted deposit account designated
as "Arterial Vascular Engineering, Inc. Collateral Account".
(b) The Collateral Account shall be operated in accordance
with the terms of this Agreement.
(c) All amounts at any time held in the Collateral Account
shall be beneficially owned by Pledgor but shall be held in the name of Secured
Party hereunder, for the benefit of Beneficiaries, as collateral security for
the Secured Obligations upon the terms and conditions set forth herein. Pledgor
shall have no right to withdraw, transfer or, except as expressly set forth
herein, otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding,
the Collateral Account shall be subject to such applicable laws, and such
applicable regulations of the Board of
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Governors of the Federal Reserve System and of any other appropriate banking or
governmental authority, as may now or hereafter be in effect.
SECTION 3. Deposits of Cash Collateral.
(a) All deposits of funds in the Collateral Account shall be
made in U.S. dollars by wire transfer (or, if applicable, by intra-bank transfer
from another account of Pledgor) of immediately available funds, in each case
addressed as follows:
Account No.:
ABA No.:
Reference:
Attention:
Pledgor shall, promptly after initiating a transfer of Funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and,
in accordance with Section 8 of the Credit Agreement, upon receipt of notice
from Secured Party, Pledgor is required to pay to Secured Party an amount (the
"Aggregate Available Amount") equal to the maximum amount that may at any time
be drawn under all Letters of Credit then outstanding under the Credit
Agreement, Pledgor shall deliver funds in such an amount for deposit in the
Collateral Account in accordance with Section 3(a).
If for any reason the aggregate amount delivered by Pledgor
for deposit in the Collateral Account as aforesaid is less than the Aggregate
Available Amount, the aggregate amount so delivered by Pledgor shall be
apportioned among all outstanding Letters of Credit for purposes of this Section
3(b) in accordance with the ratio of the maximum amount available for drawing
under each such Letter of Credit (as to such Letter of Credit, the "Maximum
Available Amount") to the Aggregate Available Amount. Upon any drawing under any
outstanding Letter of Credit in respect of which Pledgor has deposited in the
Collateral Account any amounts described above, Secured Party shall apply such
amounts to reimburse the Issuing Lender for the amount of such drawing. In the
event of cancellation or expiration of any Letter of Credit in respect of which
Pledgor has deposited in the Collateral Account any amounts described above, or
in the event of any reduction in the Maximum Available Amount under such Letter
of Credit, Secured Party shall apply the amount then on deposit in the
Collateral Account in respect of such Letter of Credit (less, in the case of
such a reduction, the Maximum Available Amount under such Letter of Credit
immediately after such reduction) first, to the payment of any amounts payable
to Secured Party pursuant to Section 13, second, to the extent of any excess, to
the cash collateralization pursuant to the terms of this Agreement of any
outstanding Letters of Credit in respect of which Pledgor has failed to pay all
or a portion of the amounts described above (such cash collateralization to be
apportioned among all such Letters of Credit in the manner described above),
third, to the extent of any further excess, to the payment of any other
outstanding Secured Obligations in such order as Secured Party shall elect, and
fourth, to the extent of any further excess, to the payment to whomsoever shall
be lawfully entitled to receive such funds.
SECTION 4. Pledge of Security for Secured Obligations. Pledgor
hereby pledges and assigns to Secured Party, and hereby grants to Secured Party
a security interest in, all
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of Pledgor's right, title and interest in and to the Collateral as collateral
security for the prompt payment or performance in full when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss.362(a)), of all Secured Obligations.
SECTION 5. No Investment of Amounts in the Collateral Account;
Interest on Amounts in the Collateral Account.
(a) Cash held by Secured Party in the Collateral Account shall
not be invested by Secured Party but instead shall be maintained as a cash
deposit in the Collateral Account pending application thereof as elsewhere
provided in this Agreement.
(b) To the extent permitted under Regulation Q of the Board of
Governors of the Federal Reserve System, any cash held in the Collateral Account
shall bear interest at the standard rate paid by Secured Party to its customers
for deposits of like amounts and terms.
(c) Subject to Secured Party's rights under Section 12, any
interest earned on deposits of cash in the Collateral Account in accordance with
Section 5(b) shall be deposited directly in, and held in the Collateral Account
and shall constitute Collateral hereunder.
SECTION 6. Representations and Warranties. Pledgor represents
and warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of
transfer thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free and
clear of any Lien except for the security interest created by this Agreement.
(b) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except as may have been taken by or
at the direction of Pledgor).
(c) Perfection. The pledge and assignment of the Collateral
pursuant to this Agreement creates a valid and perfected first priority security
interest in the Collateral in favor of the Secured Party, securing the payment
of the Secured Obligations.
(d) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Pledgor with respect to
the Collateral is accurate and complete in all respects.
SECTION 7. Further Assurances. Pledgor agrees that from time
to time, at the expense of Pledgor, Pledgor will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or desirable, or that Secured Party may request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
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<PAGE>
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, Pledgor will: (a) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Secured Party may request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
and (b) at Secured Party's request, appear in and defend any action or
proceeding that may affect Pledgor's beneficial title to or Secured Party's
security interest in all or any part of the Collateral.
SECTION 8. Transfers and other Liens. Pledgor agrees that it
will not (a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral or (b) create or suffer to exist any Lien upon
or with respect to any of the Collateral, except for the security interest under
this Agreement.
SECTION 9. Secured Party Appointed Attorney-in-Fact. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Collateral without the
signature of Pledgor.
SECTION 10. Secured Party May Perform. If Pledgor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall constitute Secured Obligations hereunder, payable
by Pledgor under Section 13.
SECTION 11. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral, it being understood that Secured Party shall
have no responsibility for (a) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Collateral) to preserve rights against any parties with
respect to any Collateral or (b) taking any necessary steps to collect or
realize upon the Secured Obligations or any guaranty therefor, or any part
thereof, or any of the Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property of like kind.
SECTION 12. Remedies. Subject to the provisions of Section
3(b), Secured Party may exercise in respect of the Collateral, in addition to
all other rights and remedies otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial Code as in
effect in any relevant jurisdiction (the "Code") (whether or not the Code
applies to the affected Collateral).
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SECTION 13. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Secured Party and each
Beneficiary, from and against any and all claims, losses and liabilities in any
way relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except, with respect to such Secured Party or such Beneficiary
to the extent such claims, losses or liabilities result from such Secured
Party's or such Beneficiary's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount
of any and all costs and expenses, including the reasonable fees and expenses of
its counsel (including the allocated costs of in-house counsel) and of any
experts and agents, that Secured Party may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure by Pledgor to perform or observe
any of the provisions hereof.
SECTION 14. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the latest of payment in full of
the Secured Obligations, the cancellation or termination of the Commitments, and
the cancellation or expiration of all outstanding Letters of Credit and the
reimbursement of all drawings thereunder and the payment of agreed fees, (b) be
binding upon Pledgor, its successors and assigns, and (c) inure, together with
the rights and remedies of Secured Party hereunder, to the benefit of Secured
Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit and the
reimbursement of all drawings thereunder, the security interest granted hereby
shall terminate automatically and all rights to the Collateral shall revert to
Pledgor. Upon any such termination Secured Party shall, at Pledgor's expense,
promptly execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence or effect such termination and Pledgor shall be
entitled to the prompt return, upon its request and at its expense, against
receipt and without recourse to Secured Party, of such of the Collateral as
shall not have been otherwise applied pursuant to the terms hereof.
SECTION 15. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Agents and Lenders and, by their acceptance of the benefits hereof,
Interest Rate Exchangers. Secured Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement.
XIV-6
<PAGE>
(b) Written notice of resignation by Administrative Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Secured Party under this Agreement; removal of Administrative
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute appointment of a successor Secured Party under this Agreement.
Upon the acceptance of any appointment as Administrative Agent under subsection
9.5 of the Credit Agreement by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Secured Party
under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums
held by Secured Party hereunder (which shall be deposited in a new Collateral
Account established and maintained by such successor Secured Party), together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Secured Party, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Secured Party hereunder.
SECTION 16. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 17. Notices. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex, or three Business Days after depositing it in the United
States mail with postage prepaid and properly addressed. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or, as to either party, such other
address as shall be designated by such party in a written notice delivered to
the other party hereto.
SECTION 18. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
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SECTION 19. Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 20. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. Governing Law; Terms. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.
SECTION 22. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COUNTY OF NEW YORK AND THE STATE OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT. Pledgor hereby agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to Pledgor at its address provided in
Section 17, such service being hereby acknowledged by Pledgor to be sufficient
for personal jurisdiction in any action against Pledgor in any such court and to
be otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of Secured Party to bring proceedings against Pledgor in
the courts of any other jurisdiction.
SECTION 23. Waiver of Jury Trial. PLEDGOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Pledgor and
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Secured Party each acknowledge that this waiver is a material inducement for
Pledgor and Secured Party to enter into a business relationship, that Pledgor
and Secured Party have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver in their related
future dealings. Pledgor and Secured Party further warrant and represent that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 23 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court.
SECTION 24. Counterparts. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
ARTERIAL VASCULAR ENGINEERING, INC.
By: __________________________________________
Title:
Notice Address: ____________________________
____________________________
____________________________
ROYAL BANK OF CANADA, as Administrative
Agent, as Secured Party
By: __________________________________________
Title:
Notice Address: ____________________________
____________________________
____________________________
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EXHIBIT XV
[FORM OF COMPANY PLEDGE AGREEMENT]
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "Agreement") is dated as
of September 30, 1998 and entered into by and between ARTERIAL VASCULAR
ENGINEERING, INC., a Delaware corporation ("Pledgor"), and ROYAL BANK OF CANADA,
as Administrative Agent, for the benefit of the Agents, Issuing Lenders, Swing
Line Lender and Lenders party to the Credit Agreement referred to below and any
Interest Rate Exchangers (as hereinafter defined)(in such agent capacity for all
such parties, the "Secured Party" herein).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of (i) the shares
of stock (the "Pledged Shares") described in Part A of Schedule I annexed hereto
and issued by the corporations named therein and (ii) the indebtedness (the
"Pledged Debt") described in Part B of said Schedule I and issued by the
obligors named therein.
B. Secured Party, Agents and Lenders have entered into a
Credit Agreement dated as of September 30, 1998 (said Credit Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Pledgor pursuant to
which Agents have undertaken certain obligations and Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Pledgor.
C. Pledgor may from time to time enter into one or more
Interest Rate Agreements with one or more Lenders (collectively, the "Lender
Interest Rate Agreements") (such Lenders in such capacity, collectively,
"Interest Rate Exchangers") in accordance with the terms of the Credit
Agreement, and it is desired that the obligations of Pledgor under the Lender
Interest Rate Agreements, including, without limitation, the obligation of
Pledgor to make payments thereunder in the event of early termination thereof,
together with all obligations of Pledgor under the Credit Agreement and the
other Loan Documents, be secured hereunder.
D. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement (including, without limitation, the issuance of Letters of Credit or
the purchase of participations therein) and to induce the Agents to undertake
their obligations and to induce the Interest Rate Exchangers to enter into the
Lender Interest Rate Agreements, and for other good and valuable consideration,
the
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<PAGE>
receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees
with Secured Party as follows:
SECTION 1. Pledge of Security. Pledgor hereby pledges and
assigns to Secured Party, and hereby grants to Secured Party a security interest
in, all of Pledgor's right, title and interest in and to the following (the
"Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares. any securities accounts in which the Pledged Shares may be held
and any securities entitlements represented thereby, and any interest of Pledgor
in the entries on the books of any securities intermediary pertaining to the
Pledged Shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing the
Pledged Debt, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities convertible
into and warrants, options and other rights to purchase or otherwise acquire,
stock of any issuer of the Pledged Shares from time to time acquired by Pledgor
in any manner (which shares shall be deemed to be part of the Pledged Shares),
the certificates or other instruments representing such additional shares,
securities, warrants, options or other rights, any securities accounts in which
the Pledged Shares may be held and any securities entitlements represented
thereby, and any interest of Pledgor in the entries on the books of any
securities intermediary pertaining to such additional shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional shares, securities, warrants, options or other
rights;
(d) all additional indebtedness from time to time owed to
Pledgor by any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of Pledgor (which shares shall be deemed to be
part of the Pledged Shares), the certificates or other instruments representing
such shares, securities, warrants, options or other rights and any interest of
Pledgor in the entries on the books of any securities intermediary pertaining to
such shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares,
securities, warrants, options or other rights;
(f) all indebtedness from time to time owed to Pledgor by any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct or indirect Subsidiary of Pledgor, and all interest, cash,
instruments and other property or proceeds from time
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to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f)
above, all proceeds of any or all of the foregoing Pledged Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Pledged Collateral or proceeds are sold, exchanged, collected
or otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, proceeds of any indemnity or guaranty payable
to Pledgor or Secured Party from time to time with respect to any of the Pledged
Collateral.
SECTION 2. Security for Obligations. This Agreement and the
pledges hereunder secure, and the Pledged Collateral is collateral security for,
the prompt payment or performance in full when due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
ss.362(a)), of all obligations and liabilities of every nature of Pledgor to the
Agents, Lenders and Interest Rate Exchangers now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents and the Lender Interest Rate Agreements and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to Pledgor,
would accrue on such obligations), reimbursement of amounts drawn under Letters
of Credit, payments for early termination of Lender Interest Rate Agreements,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from Secured
Party or any Agent, Lender or Interest Rate Exchanger as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of Pledgor
now or hereafter existing under this Agreement (all such obligations of Pledgor
being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party. Upon the occurrence and during the continuance of an Event of
Default (as defined in the Credit Agreement) or the occurrence of an Early
Termination Date (as defined in a Master Agreement or an Interest Rate Swap
Agreement or Interest Rate and Currency Exchange Agreement, each of such
agreements in the form prepared by the International Swap and Derivatives
Association Inc. or a similar event under any similar swap agreement) under any
Lender Interest Rate Agreement (either such occurrence being an "Event of
Default" for purposes of this Agreement), Secured Party shall have the right,
without notice to Pledgor, to transfer to or to register in the name of Secured
Party or any of its nominees any or all of the Pledged Collateral, subject only
to the revocable rights specified in Section 7(a). In addition, Secured Party
shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments of
smaller or larger denominations.
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SECTION 4. Representations and Warranties. Pledgor represents
and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares have been duly authorized and validly issued and are fully paid
and non-assessable. All of the Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged Shares
constitute all of the issued and outstanding shares of stock of each issuer
thereof which is a Domestic Subsidiary and 65% of the issued and outstanding
shares of stock of each issuer thereof which is a Foreign Subsidiary, and there
are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged Shares.
The Pledged Debt constitutes all of the issued and outstanding intercompany
indebtedness evidenced by a promissory note of the respective issuers thereof
owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the legal,
record and beneficial owner of the Pledged Collateral free and clear of any Lien
except for the security interest created by this Agreement.
SECTION 5. Transfers and Other Liens; Additional Pledged
Collateral; etc. Pledgor shall:
(a) not, except as expressly permitted by the Credit
Agreement, (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
(ii) create or suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement, or
(iii) permit any issuer of Pledged Shares to merge or consolidate unless all the
outstanding capital stock of the surviving or resulting corporation is, upon
such merger or consolidation, pledged hereunder and no cash, securities or other
property is distributed in respect of the outstanding shares of any other
constituent corporation; provided that in the event Pledgor makes an Asset Sale
permitted by the Credit Agreement and the assets subject to such Asset Sale are
Pledged Shares, upon appropriate notice, Secured Party shall release the Pledged
Shares that are the subject of such Asset Sale to Pledgor free and clear of the
lien and security interest under this Agreement concurrently with the
consummation of such Asset Sale; provided, further that, as a condition
precedent to such release, Secured Party shall have received evidence
satisfactory to it that arrangements satisfactory to it have been made for
delivery to Secured Party of the Net Asset Sale Proceeds of such Asset Sale to
the extent required under subsection 2.4B(iii) of the Credit Agreement;
(b) (i) cause each issuer of Pledged Shares not to issue any
stock or other securities in addition to or in substitution for the Pledged
Shares issued by such issuer, except to Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer of Pledged Shares
such that all of the shares of stock or other securities of each issuer which is
a Domestic Subsidiary and 65% of the shares of stock or other securities of each
issuer which is a Foreign Subsidiary shall be pledged to Secured Party hereunder
after giving effect to such acquisition, and (iii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all shares of
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stock of any Person that, after the date of this Agreement, becomes, as a result
of any occurrence, a direct Domestic Subsidiary of Pledgor and 65% of the shares
of stock of any Person that, after the date of this Agreement, becomes, as a
result of any occurrence, a direct Foreign Subsidiary of Pledgor;
(c) (i) pledge hereunder, immediately upon their issuance, any
and all instruments or other evidences of additional indebtedness from time to
time owed to Pledgor by any obligor on the Pledged Debt, and (ii) pledge
hereunder, immediately upon their issuance, any and all instruments or other
evidences of indebtedness from time to time owed to Pledgor by any Person that
after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of Pledgor;
(d) promptly notify Secured Party of any event of which
Pledgor becomes aware causing a loss or depreciation in the value of the Pledged
Collateral that would reasonably be expected to have a Material Adverse Effect;
(e) promptly deliver to Secured Party all written notices
received by it with respect to the Pledged Collateral; and
(f) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the Pledged
Collateral, except to the extent the validity thereof is being contested in good
faith; provided that Pledgor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against Pledgor or any of the Pledged Collateral as a result of the
failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the expense of
Pledgor, Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral. Without limiting the generality of the foregoing,
Pledgor will: (i) take all such further action and execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to be granted hereby (including, without limitation, giving Secured
Party control (as defined in section 8-106 of the Uniform Commercial Code as
currently in effect in the State of New York (the "UCC")) over any Pledged
Collateral that is investment property or uncertificated securities (each as
defined in the UCC) in order to perfect Secured Party's interest in such Pledged
Collateral in accordance with the UCC) and (ii) at Secured Party's reasonable
request, appear in and defend any action or proceeding that may materially
impair Pledgor's title to or Secured Party's security interest in all or any
part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder
as provided in Section 5(b) or (c), promptly (and in any event within five
Business Days) deliver to Secured Party a Pledge
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Amendment, duly executed by Pledgor, in substantially the form of Schedule II
annexed hereto (a "Pledge Amendment"), in respect of the additional Pledged
Shares or Pledged Debt to be pledged pursuant to this Agreement. Pledgor hereby
authorizes Secured Party to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Shares or Pledged Debt listed on any Pledge Amendment
delivered to Secured Party shall for all purposes hereunder be considered
Pledged Collateral; provided that the failure of Pledgor to execute a Pledge
Amendment with respect to any additional Pledged Shares or Pledged Debt pledged
pursuant to this Agreement shall not impair the security interest of Secured
Party therein or otherwise adversely affect the rights and remedies of Secured
Party hereunder with respect thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Credit
Agreement or any other Loan Document; provided, however, that
Pledgor shall not exercise or refrain from exercising any such
right if Secured Party shall have notified Pledgor that, in
Secured Party's judgment, such action would have a material
adverse effect on the value of the Pledged Collateral or any
part thereof; and provided, further, that Pledgor shall give
Secured Party at least five Business Days' prior written
notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right. It is
understood, however, that neither (A) the voting by Pledgor of
any Pledged Shares for or Pledgor's consent to the election of
directors at a regularly scheduled annual or other meeting of
stockholders or with respect to incidental matters at any such
meeting nor (B) Pledgor's consent to or approval of any action
otherwise permitted under this Agreement and the Credit
Agreement or any other Loan Document shall be deemed
inconsistent with the terms of this Agreement or the Credit
Agreement within the meaning of this Section 7(a)(i), and no
notice of any such voting or consent need be given to Secured
Party;
(ii) Pledgor shall be entitled to receive and retain,
and to utilize free and clear of the security interest granted
under this Agreement, any and all dividends and interest paid
in respect of the Pledged Collateral; provided, however, that
any and all
(A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or
in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable
in cash in respect of any Pledged Collateral in connection with
a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or
paid-in-surplus, and
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<PAGE>
(C) cash paid, payable or otherwise distributed in
respect of principal or in redemption of or in exchange for any
Pledged Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in
trust for the benefit of Secured Party, be segregated from the other
property or funds of Pledgor and be forthwith delivered to Secured
Party as Pledged Collateral in the same form as so received (with all
necessary indorsements); and
(iii) Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to Pledgor all
such proxies, dividend payment orders and other instruments as
Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other
consensual rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal or
interest payments which it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an
Event of Default:
(i) upon written notice from Secured Party to
Pledgor, all rights of Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled
to exercise pursuant to Section 7(a)(i) shall cease, and all
such rights shall thereupon become vested in Secured Party
which shall thereupon have the sole right to exercise such
voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends
and interest payments which it would otherwise be authorized
to receive and retain pursuant to Section 7(a)(ii) shall
cease, and all such rights shall thereupon become vested in
Secured Party who shall thereupon have the sole right to
receive and hold as Pledged Collateral such dividends and
interest payments; and
(iii) all dividends, principal and interest payments
which are received by Pledgor contrary to the provisions of
paragraph (ii) of this Section 7(b) shall be received in trust
for the benefit of Secured Party, shall be segregated from
other funds of Pledgor and shall forthwith be paid over to
Secured Party as Pledged Collateral in the same form as so
received (with any necessary indorsements).
(c) In order to permit Secured Party to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant to
Section 7(b)(i) and to receive all dividends and other distributions which it
may be entitled to receive under Section 7(a)(ii) or Section 7(b)(ii) or (iii),
(i) Pledgor shall promptly execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies, dividend payment orders and other
instruments as Secured Party may from time to time reasonably request and (ii)
without limiting the effect of the immediately preceding clause (i), Pledgor
hereby grants to Secured Party an irrevocable proxy to vote the Pledged Shares
and to exercise all other rights, powers, privileges and remedies to which a
holder of the Pledged Shares would be entitled (including, without limitation,
giving or withholding written consents of shareholders, calling special meetings
of shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any
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action (including any transfer of any Pledged Shares on the record books of the
issuer thereof) by any other Person (including the issuer of the Pledged Shares
or any officer or agent thereof) or any consent of Pledgor, upon the occurrence
of an Event of Default and which proxy shall only terminate upon the waiver or
cure of such Event of Default under the Credit Agreement or the payment in full
of the Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to file one or more financing or continuation statements,
or amendments thereto, relative to all or any part of the Pledged Collateral
without the signature of Pledgor;
(b) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made
payable to Pledgor representing any dividend, principal or interest payment or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same; and
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Pledged Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Pledged Collateral.
Notwithstanding anything to the contrary in this Section 8,
Secured Party's authority as Pledgor's attorney-in-fact under subsections (b),
(c) and (d) shall be exercisable only after the occurrence and during the
continuance of an Event of Default.
SECTION 9. Secured Party May Perform. If Pledgor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall be payable by Pledgor in accordance with Section
10.2 of the Credit Agreement.
SECTION 10. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Pledged Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Pledged Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Pledged Collateral, it being
understood that Secured Party shall have no responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Collateral, whether or not
Secured Party has or is deemed to have knowledge of such matters, (b) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Pledged Collateral) to preserve
rights against any parties with respect to any Pledged Collateral, (c) taking
any necessary steps to collect or realize upon the
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Secured Obligations or any guaranty therefor, or any part thereof, or any of the
Pledged Collateral, or (d) initiating any action to protect the Pledged
Collateral against the possibility of a decline in market value. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of Pledged Collateral in its possession if such Pledged Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property consisting of negotiable securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Pledged Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"Code") (whether or not the Code applies to the affected Pledged Collateral),
and Secured Party may also in its sole discretion, without notice except as
specified below, sell the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange or broker's board or at any
of Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral. Secured
Party or any Lender or Interest Rate Exchanger may be the purchaser of any or
all of the Pledged Collateral at any such sale and Secured Party, as agent for
and representative of Agents, Lenders, Issuing Lenders, Swing Line Lender and
Interest Rate Exchangers (but not any Agent or Agents, Lender or Lenders,
Issuing Lender or Issuing Lenders, Swing Line Lender or Interest Rate Exchanger
or Interest Rate Exchangers in its or their respective individual capacities
unless Requisite Obligees (as defined in Section 14(a)) shall otherwise agree in
writing), shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Pledged Collateral
sold at any such public sale, to use and apply any of the Secured Obligations as
a credit on account of the purchase price for any Pledged Collateral payable by
Secured Party at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor hereby waives (to the extent permitted by applicable law) all rights
of redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned, provided, however, that if a
sale is postponed for more than 60 days, Secured Party shall re-notice Pledgor
of any subsequent sale of the affected Pledged Collateral in accordance with the
second-preceding sentence hereof. Pledgor hereby waives any claims against
Secured Party to the extent arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree, provided, however, that the price at which
any Pledged Collateral shall be sold at any public or private sale shall be
commercially reasonable. If the proceeds of any sale or other disposition of the
Pledged Collateral are insufficient to pay all the Secured Obligations, Pledgor
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shall be liable for the deficiency and the fees of any attorneys employed by
Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of such
Pledged Collateral under the Securities Act and/or such state securities laws,
to limit purchasers to those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable than those obtainable through
a public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances, Pledgor agrees that Secured Party shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Pledged Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it, and any assessment of
commercial reasonableness in connection with a private sale shall take into
account Pledgor's agreement that private sales are an acceptable means to
Secured Party's realization of the value of the Pledged Collateral.
(c) If Secured Party determines to exercise its right to sell
any or all of the Pledged Collateral, upon written request, Pledgor shall and
shall cause each issuer of any Pledged Shares to be sold hereunder from time to
time to furnish to Secured Party all such information as Secured Party may
request in order to determine the number of shares and other instruments
included in the Pledged Collateral which may be sold by Secured Party in exempt
transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.
SECTION 12. Application of Proceeds. All proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Pledged Collateral shall be applied as provided in
subsection 2.4D of the Credit Agreement.
SECTION 13. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the payment in
full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the benefit
of Secured Party and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall automatically terminate and all rights to the
Pledged Collateral shall revert to Pledgor. Upon any such termination Secured
Party will, at Pledgor's expense, execute and deliver to Pledgor such documents
as Pledgor shall reasonably
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request to evidence or effect such termination, and Pledgor shall be entitled to
the prompt return, upon its request and at its expense, against receipt and
without recourse to Secured Party, of such of the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 14. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party
by Agents, Lenders and, by their acceptance of the benefits hereof, Interest
Rate Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Pledged Collateral), solely
in accordance with this Agreement and the Credit Agreement; provided that
Secured Party shall exercise, or refrain from exercising, any remedies provided
for in Section 11 in accordance with the instructions of (i) Requisite Lenders
or (ii) after payment in full of all Obligations under the Credit Agreement and
the other Loan Documents and subject to payment of agreed fees, the holders of a
majority of the aggregate notional amount (or, with respect to any Lender
Interest Rate Agreement that has been terminated in accordance with its terms,
the amount then due and payable (exclusive of expenses and similar payments but
including any early termination payments then due) under such Lender Interest
Rate Agreement) under all Lender Interest Rate Agreements (Requisite Lenders or,
if applicable, such holders being referred to herein as "Requisite Obligees").
In furtherance of the foregoing provisions of this Section 14(a), each Interest
Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall
have no right individually to realize upon any of the Pledged Collateral
hereunder, it being understood and agreed by such Interest Rate Exchanger that
all rights and remedies hereunder may be exercised solely by Secured Party for
the benefit of Agents, Lenders and Interest Rate Exchangers in accordance with
the terms of this Section 14(a).
(b) Written notice of resignation by Administrative Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Secured Party under this Agreement; removal of Administrative
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute appointment of a successor Secured Party under this Agreement.
Upon the acceptance of any appointment as Administrative Agent under subsection
9.5 of the Credit Agreement by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Secured Party
under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Secured Party, the provisions of this
XV-11
<PAGE>
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Secured Party hereunder.
SECTION 15. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 16. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or three Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement.
SECTION 17. Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 18. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 19. Governing Law; Terms. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.
SECTION 20. Counterparts. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
ARTERIAL VASCULAR ENGINEERING, INC.
By: ___________________________________
Title:
ROYAL BANK OF CANADA, as Administrative
Agent, as Secured Party
By: ___________________________________
Title:
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<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated
as of September 30, 1998 between Arterial Vascular Engineering, Inc. as Pledgor,
and Royal Bank of Canada, as Administrative Agent, as Secured Party.
Part A
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- - ------------ ----- ----------- ----- ------
Part B
Debt Issuer Amount of Indebtedness
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<PAGE>
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, ____, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of September 30, 1998, between the undersigned and
Royal Bank of Canada, as Administrative Agent, as Secured Party (the "Pledge
Agreement," capitalized terms defined therein being used herein as therein
defined), and that the [Pledged Shares] [Pledged Debt] listed on this Pledge
Amendment shall be deemed to be part of the [Pledged Shares] [Pledged Debt] and
shall become part of the Pledged Collateral and shall secure all Secured
Obligations.
ARTERIAL VASCULAR ENGINEERING, INC.
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- - ------------ ----- ----------- ----- ------
Debt Issuer Amount of Indebtedness
XV-15
<PAGE>
EXHIBIT XVI
[FORM OF SECURITY AGREEMENT]
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of
September 30, 1998 and entered into by and between ARTERIAL VASCULAR
ENGINEERING, INC. , a Delaware corporation ("Company"), each of THE UNDERSIGNED
DIRECT AND INDIRECT SUBSIDIARIES of Company (each of such undersigned
Subsidiaries being a "Subsidiary Grantor" and collectively "Subsidiary
Grantors", and each of Company and Subsidiary Grantors being a "Grantor" and
collectively "Grantors"; provided that after the Closing Date, "Grantors" shall
include any Additional Grantors (as hereinafter defined)) and ROYAL BANK OF
CANADA, as Administrative Agent, for the benefit of Agents, Issuing Lenders,
Swing Line Lender and Lenders party to the Credit Agreement referred to below
and any Interest Rate Exchangers (as hereinafter defined)(in such agent capacity
for all such parties, the "Secured Party" herein).
PRELIMINARY STATEMENTS
A. Secured Party, Agents and Lenders have entered into a
Credit Agreement dated as of September 30, 1998 (said Credit Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Company pursuant to
which Agents have undertaken certain obligations and Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
B. Company may from time to time enter, or may from time to
time have entered, into one or more Interest Rate Agreements with one or more
Lenders (collectively, the "Lender Interest Rate Agreements") (such Lenders in
such capacity, collectively, "Interest Rate Exchangers") in accordance with the
terms of the Credit Agreement, and it is desired that the obligations of Company
under the Lender Interest Rate Agreements, including, without limitation, the
obligation of Company to make payments thereunder in the event of early
termination thereof (all such obligations being the "Interest Rate
Obligations"), together with all obligations of Company under the Credit
Agreement and the other Loan Documents, be secured hereunder.
C. Subsidiary Grantors have executed and delivered that
certain Subsidiary Guaranty dated as of September 30, 1998 (said Subsidiary
Guaranty, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the "Subsidiary Guaranty") in favor of Secured
Party for the benefit of Lenders, Issuing Lenders, Swing Line Lender and
Interest Rate Exchangers, pursuant to which each Subsidiary Grantor has
guaranteed the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and all obligations of Company under the
Lender Interest Rate Agreements, including, without limitation, the obligation
of Company to make payments thereunder in the event of early termination
thereof.
XVI-1
<PAGE>
D. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Grantors shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement (including, without limitation, the issuance of Letters of Credit or
the purchase of participations therein) and to induce the Agents to undertake
their obligations and Interest Rate Exchangers to enter into the Lender Interest
Rate Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby agrees with
Secured Party as follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
such Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which such Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
(a) all equipment in all of its forms, all parts thereof and
all accessions thereto (any and all such equipment, parts and accessions being
the "Equipment");
(b) all inventory in all of its forms (including, but not
limited to, (i) all goods held by such Grantor for sale or lease or to be
furnished under contracts of service or so leased or furnished, (ii) all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in such Grantor's
business, (iii) all goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind and (iv) all goods which are
returned to or repossessed by such Grantor, and all accessions thereto and
products thereof (all such inventory, accessions and products being the
"Inventory") and all negotiable documents of title (including, without
limitation, warehouse receipts, dock receipts and bills of lading) issued by any
Person covering any Inventory (any such negotiable document of title being a
"Negotiable Document of Title");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any kind
owned by or owing to such Grantor and all rights in, to and under all security
agreements, leases and other contracts securing or otherwise relating to any
such accounts, contract rights, chattel paper, documents, instruments, general
intangibles or other obligations (any and all such accounts, contract rights,
chattel paper, documents, instruments, general intangibles and other obligations
being the "Accounts", and any and all such security agreements, leases and other
contracts being the "Related Contracts");
(d) the agreements to which any Grantor is party, as each such
agreement may be amended, restated, supplemented or otherwise modified from time
to time (said agreements, as so amended, restated, supplemented or otherwise
modified, being referred to herein individually as an "Assigned Agreement" and
collectively as the "Assigned Agreements"), including, without limitation, (i)
all rights of such Grantor to receive moneys due or to become due under or
pursuant to the Assigned Agreements, (ii) all rights of such Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (iii) all
XVI-2
<PAGE>
claims of such Grantor for damages arising out of any breach of or default under
the Assigned Agreements, and (iv) all rights of such Grantor to terminate,
amend, supplement, modify or exercise rights or options under the Assigned
Agreements, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder;
(e) all deposit accounts, including, without limitation, the
deposit accounts listed on Schedule 1(e) annexed hereto and all other deposit
accounts maintained with Secured Party;
(f) the "Intellectual Property Collateral", which term means:
(i) all right, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent
permitted by agreements governing such license or other use)
in and to all trademarks, service marks, designs, logos,
indicia, tradenames, trade dress, corporate names, company
names, business names, fictitious business names, trade styles
and/or other source and/or business identifiers and
applications pertaining thereto, owned by such Grantor, or
hereafter adopted and used, in its business (including,
without limitation, the trademarks specifically identified in
Schedule 1(f)(i), as the same may be amended pursuant hereto
from time to time) (collectively, the "Trademarks"), all
registrations that have been or may hereafter be issued or
applied for thereon in the United States and any state thereof
(including, without limitation, the registrations and
applications specifically identified in Schedule 1(f)(i), as
the same may be amended pursuant hereto from time to time)
(the "Trademark Registrations"), all common law and other
rights (but in no event any of the obligations) in and to the
Trademarks in the United States and any state thereof (the
"Trademark Rights"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith
(the "Associated Goodwill"):
(ii) all right, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent
permitted by agreements governing such license or other use)
in and to all patents and patent applications and rights and
interests in patents and patent applications under any
domestic or foreign law that are presently, or in the future
may be, owned or held by such Grantor and all patents and
patent applications and right, title and interests in patents
and patent applications under any domestic law that are
presently, or in the future may be, owned by such Grantor in
whole or in part (including, without limitation, the patents
and patent applications listed in Schedule 1(f)(ii), as the
same may be amended pursuant hereto from time to time), all
rights (but not obligations) corresponding thereto (including,
without limitation, the right (but not the obligation),
exercisable only upon the occurrence and during the
continuation of an Event of Default, to sue for past, present
and future infringements in the name of such Grantor or in the
name of Secured Party or Lenders), and all re-issues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being
collectively referred to as the "Patents"); it being
understood that the rights and interests included in the
Intellectual Property Collateral hereby shall include, without
limitation, all rights and interests pursuant to licensing or
other contracts in favor of such Grantor pertaining to patent
XVI-3
<PAGE>
applications and patents presently or in the future owned or
used by third parties but, in the case of third parties which
are not Affiliates of such Grantor, only to the extent
permitted by such licensing or other contracts and, if not so
permitted, only with the consent of such third parties; and
(iii) all right, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent
permitted by agreements governing such license or other use)
under copyright in various published and unpublished works of
authorship including, without limitation, computer programs,
computer data bases, other computer software, layouts, trade
dress, drawings, designs, writings, and formulas owned by
Grantor (including, without limitation, the works listed on
Schedule 1(f)(iii), as the same may be amended pursuant hereto
from time to time) (collectively, the "Copyrights"), all
copyright registrations issued to such Grantor and
applications for copyright registration that have been or may
hereafter be issued or applied for thereon by Grantor in the
United States and any state thereof (including, without
limitation, the registrations listed on Schedule 1(f)(iii), as
the same may be amended pursuant hereto from time to time)
(collectively, the "Copyright Registrations"), all common law
and other rights in and to the Copyrights in the United States
and any state thereof, including all copyright licenses (but
with respect to such copyright licenses, only to the extent
permitted by such licensing arrangements) (the "Copyright
Rights"), including, without limitation, each of the
Copyrights, rights, titles and interests in and to the
Copyrights and works protectable by copyright, which are
presently, or in the future may be, owned, created (as a work
for hire for the benefit of such Grantor), authored (as a work
for hire for the benefit of such Grantor), or acquired by such
Grantor, in whole or in part, and all Copyright Rights with
respect thereto and all Copyright Registrations therefor,
heretofore or hereafter granted or applied for, and all
renewals and extensions thereof, throughout the world,
including all proceeds thereof (such as, by way of example and
not by limitation, license royalties and proceeds of
infringement suits), the right (but not the obligation) to
renew and extend such Copyright Registrations and Copyright
Rights and to register works protectable by copyright and the
right (but not the obligation) to sue for past, present and
future infringements of the Copyrights and Copyright Rights;
(iv) all information used or useful or arising from the
business including all goodwill, trade secrets, trade secret
rights, know-how, customer lists, processes of production,
ideas, confidential business information, techniques,
processes, formulas, and all other proprietary information;
(g) to the extent not included in any other paragraph of this
Section 1, all other general intangibles (including, without limitation, tax
refunds, rights to payment or performance, choses in action and judgments taken
on any rights or claims included in the Collateral);
(h) all plant fixtures, business fixtures and other fixtures
and storage and office facilities, and all accessions thereto and products
thereof;
(i) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information
XVI-4
<PAGE>
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon; and
(j) all investment property (as defined in the Uniform
Commercial Code as currently in effect in the State of New York (the "UCC")) of
Grantor, and any securities accounts (as defined in the UCC) held in the name of
Grantor and any security entitlements (as defined in the UCC) held therein;
(k) all proceeds, products, rents and profits of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
Notwithstanding the foregoing provisions of this Section 1,
the grant of a security interest as provided herein shall not extend to, and the
term "Collateral" shall not include: (i) any accounts, contracts, licenses or
other general intangibles of Grantor, or any permits, instruments or chattel
paper of Grantor, if and to the extent such account, contract, license, general
intangible, permit, instruments or chattel paper contains restrictions on
assignments and the creation of Liens, or under which such an assignment or Lien
would cause a default to occur under such account, contract, license, general
intangible, permit, instrument or chattel paper (other than to the extent that
any such term would be rendered ineffective pursuant to Section 9-318(4) of the
Uniform Commercial Code of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity), provided, that
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest in, all such rights and interests as if such
provision had never been in effect; (ii) motor vehicles or other vehicles owned
or leased by Grantor; (iii) the lease of real property by Grantor as lessee or
sublessee not required to be subject to a Mortgage under the Credit Agreement;
or (iv) copyrights, Trademarks, Patents and similar Intellectual Property
interests held under the laws of countries other than the United States of
America other than as set forth on the Exhibit hereto (collectively, "Security
Agreements Excluded Collateral").
SECTION 2. Security for Obligations. This Agreement and the
security interest granted hereunder secure, and the Collateral assigned by each
Grantor is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including, without limitation, the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured
Obligations with respect to such Grantor. "Secured Obligations" means:
(a) with respect to Company, all obligations and liabilities
of every nature of Company to any Agent, Lender, Issuing Lender, Swing
Line Lender or Interest Rate Exchanger now or hereafter existing under
or arising out of or in connection with the Credit Agreement and the
other Loan Documents and any Lender Interest Rate Agreement, and
XVI-5
<PAGE>
(b) with respect to each Subsidiary Grantor and Additional
Grantor, all obligations and liabilities of every nature of such
Grantors now or hereafter existing under or arising out of or in
connection with the Subsidiary Guaranty;
in each case together with all extensions or renewals thereof, whether for
principal, interest (including, without limitation, interest that, but for the
filing of a petition in bankruptcy with respect to Company or any Grantor, would
accrue on such obligations, whether or not a claim is allowed against Company or
such Grantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Letters of Credit, payments for early
termination of Lender Interest Rate Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Lender or
Interest Rate Exchanger as a preference, fraudulent transfer or otherwise and
all obligations of every nature of Grantors now or hereafter existing under this
Agreement.
SECTION 3. Grantors Remain Liable. Anything contained herein
to the contrary notwithstanding, (a) each Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
SECTION 4. Representations and Warranties. Each Grantor
represents and warrants as follows:
(a) Ownership of Collateral. Except as expressly permitted by
the Credit Agreement and for the security interest created by this Agreement,
such Grantor owns the Collateral in which it purports to grant a security
interest free and clear of any Lien. Except as expressly permitted by the Credit
Agreement and such as may have been filed in favor of Secured Party relating to
this Agreement, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office.
(b) Locations of Equipment and Inventory. All of the Equipment
and Inventory is, as of the date hereof, located at the places specified in
Schedule 4(b) annexed hereto.
(c) Negotiable Documents of Title. No Negotiable Documents of
Title are outstanding with respect to any of the Inventory (other than in
respect of (i) Inventory with an aggregate value not in excess of $________ or
(ii) Inventory which, in the ordinary course of business, is in transit either
(A) from a supplier to any Grantor, (B) between the locations specified in
Schedule 4(b) hereto, or (C) to customers of any Grantor).
XVI-6
<PAGE>
(d) Office Locations. The chief executive office, or, if such
Grantor has no chief executive office, its principal place of business, and the
office where Grantor keeps its records regarding the Accounts and all originals
of all chattel paper that evidence Accounts are, and have been for the four
month period preceding the date hereof, (or if such grantor was formed in last 4
months, since such Grantor was formed) located at the locations set forth on
Schedule 4(d) annexed hereto.
(e) Names. No Grantor has in the past done, and no Grantor now
does, business under any other name (including any trade-name or fictitious
business name) except the names listed in Schedule 4(e) annexed hereto.
(f) Delivery of Certain Collateral. All notes and other
instruments (excluding checks) included in the Collateral have been delivered to
Secured Party duly endorsed and accompanied by duly executed instruments of
transfer or assignment in blank.
(g) Intellectual Property Collateral.
(i) A true and complete list of all Trademark Registrations
and Trademark applications owned, held (whether pursuant to a
license or otherwise) or used by such Grantor, in whole or in
part, is set forth in Schedule 1(f)(i);
(ii) a true and complete list of all Patents owned, held
(whether pursuant to a license or otherwise) or used by such
Grantor, in whole or in part, is set forth in Schedule
1(f)(ii);
(iii) a true and complete list of all Copyright Registrations
and applications for Copyright Registrations held (whether
pursuant to a license or otherwise) by such Grantor, in whole
or in part, is set forth in Schedule 1(f)(iii);
(iv) after reasonable inquiry, such Grantor is not aware of
any pending or threatened claim by any third party that any of
the Intellectual Property Collateral owned, held or used by
such Grantor is invalid or unenforceable; and
(v) no effective security interest or other Lien covering all
or any part of the Intellectual Property Collateral is on file
in the United States Patent and Trademark Office or the United
States Copyright Office.
(h) Perfection. The security interests in the Collateral
granted to Secured Party for the ratable benefit of the Lenders and Interest
Rate Exchangers hereunder constitute valid security interests in the Collateral,
securing the payment of the Secured Obligations. Upon the filing of UCC
financing statements naming the applicable Grantor as "debtor", naming Secured
Party as "secured party" and describing the Collateral in the filing offices set
forth on Schedule 4(h) annexed hereto, and in the case of the Intellectual
Property Collateral, in addition, the filing of a Grant of Trademark Security
Interest, substantially in the form of Exhibit I and a Grant of Patent Security
Interest, substantially in the form of Exhibit II, with the United States Patent
and Trademark Office and the filing of a Grant of Copyright Security Interest,
substantially in the form of Exhibit III, with the United States Copyright
Office, the security interests in the Collateral granted to Secured Party for
the ratable benefit of the Lenders and Interest Rate Exchangers will, to the
extent a security interest in the Collateral may be perfected by filing UCC
XVI-7
<PAGE>
financing statements and, in the case of the Intellectual Property Collateral,
in addition to the filing of such UCC Financing Statements, by the filing of a
Grant of Trademark Security Interest and Grant of Patent Security Interest with
the United States Patent and Trademark Office and a Grant of Copyright Security
Interest with the United States Copyright Office, constitute perfected security
interests therein prior to all other Liens (except for Permitted Encumbrances),
and all filings and other actions necessary or desirable to perfect and protect
such security interest have been duly made or taken.
SECTION 5. Further Assurances.
(a) Each Grantor agrees that from time to time, at the expense
of Grantors, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor will: (i) mark conspicuously each item of chattel paper
included in the Accounts, and at the request of Secured Party, each of its
records pertaining to the Collateral, with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) at the request of Secured Party, deliver
and pledge to Secured Party hereunder all promissory notes and other instruments
(including checks) and all original counterparts of chattel paper constituting
Collateral, duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Secured Party,
(iii) take all such further action and execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby (including, without limitation, giving Secured Party control (as
defined in section 8-106 of the Uniform Commercial Code as currently in effect
in the State of New York (the "UCC")) over any Pledged Collateral that is
investment property or uncertificated securities (each as defined in the UCC) in
order to perfect Secured Party's interest in such Pledged Collateral in
accordance with the UCC), (iv) promptly after the acquisition by Grantor of any
item of Equipment constituting Collateral which is covered by a certificate of
title under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, (v) at any reasonable time during normal
business hours of such Grantor, upon no fewer than two Business Days prior
request by Secured Party, exhibit the Collateral to and allow inspection of the
Collateral by Secured Party, or persons designated by Secured Party, and (vi) at
Secured Party's reasonable request, appear in and defend any action or
proceeding that may materially impair Grantor's title to or Secured Party's
security interest in all or any part of the Collateral.
(b) Without limiting the generality of the foregoing clause
(a) and except with respect to any Security Agreement Excluded Collateral, if
any Grantor shall hereafter obtain rights to any new Intellectual Property
Collateral or become entitled to the benefit of (i) any Patent or any
improvement or renewal of any Patent; or (ii) any Copyright Registration,
application for Registration or renewals or extension of any Copyright
Registration; or (iii) any
XVI-8
<PAGE>
Trademark Registration or application for a Trademark Registration , then in any
such case, the provisions of this Agreement shall automatically apply thereto.
Each Grantor shall promptly notify Secured Party in writing of any of the
foregoing rights acquired by such Grantor after the date hereof. Promptly after
the filing of an application for any (1) Trademark Registration; (2) Patent; or
(3) Copyright Registration, each Grantor shall execute and deliver to Secured
Party and record in all places where this Agreement is recorded a Security
Agreement Supplement, substantially in the form of Exhibit IV, pursuant to which
such Grantor shall grant to Secured Party a security interest to the extent of
its interest in such Intellectual Property Collateral.
(c) Each Grantor hereby authorizes Secured Party to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of any Grantor. Each
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by such Grantor shall be sufficient
as a financing statement and may be filed as a financing statement in any and
all jurisdictions.
(d) Each Grantor hereby authorizes Secured Party to modify
this Agreement without obtaining such Grantor's approval of or signature to such
modification by amending Schedules 1(f)(i), 1(f)(ii), and 1(f)(iii), as
applicable, to include reference to any right, title or interest in any existing
Intellectual Property Collateral or any Intellectual Property Collateral
acquired or developed by any Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property
Collateral in which any Grantor no longer has or claims any right, title or
interest.
(e) Each Grantor will furnish to Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantors. Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party five days' prior written notice of any
change in such Grantor's chief place of business, chief executive office or
residence or the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes; and
(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that such Grantor shall in any event pay such taxes, assessments,
XVI-9
<PAGE>
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against such Grantor or any of the Collateral as a result of the failure
to make such payment.
SECTION 7. Special Covenants With Respect to Equipment and
Inventory. Each Grantor shall:
(a) keep the Equipment and Inventory owned by such Grantor in
the jurisdictions therefor specified on Schedule 4(b) annexed hereto or in such
other jurisdictions which such Grantor shall have disclosed to Secured Party
within 15 days of the removal of such Collateral to such other jurisdiction;
provided that all action on the part of such Grantor that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby, or to
enable Secured Party to exercise and enforce its rights and remedies hereunder,
with respect to such Equipment and Inventory shall have been taken or can and
will promptly be taken (including any actions required to continue perfection of
an existing security interest in such Collateral in such new jurisdiction);
(b) cause the Equipment owned by such Grantor to be maintained
and preserved in the same condition, repair and working order as when new,
ordinary wear and tear excepted, and in accordance with such Grantor's past
practices, and shall forthwith make or cause to be made all repairs,
replacements and other improvements in connection therewith that, in the good
faith determination of such Grantor, are necessary or desirable to such end.
Each Grantor shall promptly furnish to Secured Party a statement respecting any
material loss or damage to any of the Equipment owned by such Grantor;
(c) keep correct and accurate records of the Inventory owned
by such Grantor, itemizing and describing the kind, type and quantity of
Inventory, such Grantor's cost therefor and (where applicable) the current list
prices for the Inventory;
(d) if any Inventory is in possession or control of any of
such Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $1,000,000, and in any event upon the occurrence of an Event
of Default (as defined in the Credit Agreement) or the occurrence of an Early
Termination Date (as defined in a Master Agreement or an Interest Rate Swap
Agreement or Interest Rate and Currency Exchange Agreement, each of such
Agreements in the form prepared by the International Swap and Derivatives
Association Inc. or a similar event under any similar swap agreement) under any
Lender Interest Rate Agreement (either such occurrence being an "Event of
Default" for purposes of this Agreement), instruct such agent or processor to
hold all such Inventory for the account of Secured Party and subject to the
instructions of Secured Party; and
(e) promptly upon the issuance and delivery to such Grantor of
any Negotiable Document of Title (other than any one or more Negotiable
Documents of Title covering (i) Inventory with an aggregate value not in excess
of $1,000,000 or (ii) Inventory which, in the ordinary course of business, is in
transit either (A) from a supplier to such Grantor, (B) between the locations
specified in Schedule 4(b) hereto, or (C) to customers of such Grantor), deliver
such Negotiable Document of Title to Secured Party.
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<PAGE>
SECTION 8. Insurance. Each Grantor shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory in accordance
with the terms of the Credit Agreement.
SECTION 9. Special Covenants with respect to Accounts and
Related Contracts.
(a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, in the jurisdictions therefor specified in Section 4 or, in
such other jurisdictions which such Grantor shall have disclosed to Secured
Party within 15 days of the removal to such other jurisdiction; provided that
all action on the part of such Grantor that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken or can and
will promptly be taken (including any actions required to continue perfection of
an existing security interest in such Collateral in such new jurisdiction). Each
Grantor will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours upon
no fewer than two Business Days' prior written notice to inspect and make
abstracts from such records and chattel paper, and each Grantor agrees to render
to Secured Party, at such Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Promptly upon the
request of Secured Party, each Grantor shall deliver to Secured Party complete
and correct copies of each Related Contract.
(b) Each Grantor shall, at its own expense, maintain (i)
complete records of each Account, including records of all payments received,
credits granted and merchandise returned, and (ii) all documentation relating
thereto.
(c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts and Related Contracts. In
connection with such collections, each Grantor may take (and from the occurrence
and continuation of an Event of Default, at Secured Party's direction, shall
take) such action as may be necessary or advisable to enforce collection of
amounts due or to become due under the Accounts; provided, however, that Secured
Party shall have the right at any time, upon the occurrence and during the
continuation of an Event of Default or a Potential Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the account
debtors or obligors under any Accounts of the assignment of such Accounts to
Secured Party and to direct such account debtors or obligors to make payment of
all amounts due or to become due to such Grantor thereunder directly to Secured
Party, to notify each Person maintaining a lockbox or similar arrangement to
which account debtors or obligors under any Accounts have been directed to make
payment to remit all amounts representing collections on checks and other
payment items from time to time sent to or deposited in such lockbox or other
arrangement directly to Secured Party and, upon such notification and at the
expense of Grantors, to enforce collection of any such Accounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done. After receipt by such Grantor
of the notice from Secured Party referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including checks and other instruments)
XVI-11
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received by such Grantor in respect of the Accounts and the Related Contracts
shall be received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or
delivered to Secured Party in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section
18, and (ii) such Grantor shall not adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 10. Special Provisions With Respect to the Assigned
Agreements.
(a) Each Grantor shall at its expense:
(i) perform and observe all material terms and provisions of
the Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to
such end as may be from time to time reasonably requested by Secured
Party; and
(ii) furnish to Secured Party, promptly upon receipt thereof,
copies of all notices, requests and other documents received by Grantor
under or pursuant to the Assigned Agreements, and from time to time (A)
furnish to Secured Party such information and reports regarding the
Assigned Agreements as Secured Party may reasonably request and (B)
upon request of Secured Party make to the other parties under such
Assigned Agreements such demands and requests for information and
reports or for action as Grantor is entitled to make under the Assigned
Agreements.
(b) From and after the occurrence and during the continuance
of an Event of Default, no Grantor shall:
(i) cancel or terminate any of the Assigned Agreements or
consent to or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or give
any consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned
Agreements;
(iv) consent to or permit or accept any prepayment of amounts
to become due under or in connection with the Assigned Agreements,
except as expressly provided therein; or
(v) take any other action in connection with the Assigned
Agreements,
in each case to the extent that such action would materially impair the value of
the interest or rights of such Grantor thereunder or that would materially
impair the interest or rights of Secured Party.
SECTION 11. Deposit Accounts. Upon the occurrence and during
the continuation of an Event of Default, Secured Party may exercise dominion and
control over, and
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<PAGE>
refuse to permit further withdrawals (whether of money, securities, instruments
or other property) from any deposit accounts maintained with Secured Party
constituting part of the Collateral.
SECTION 12. Special Provisions With Respect to the
Intellectual Property Collateral.
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the
Intellectual Property Collateral and at all times keep at
least one complete set of its records concerning such
Collateral at its chief executive office or principal place of
business;
(ii) hereafter use best efforts so as not to permit the
inclusion in any contract to which it hereafter becomes a
party of any provision that could or might in any way impair
or prevent the creation of a security interest in, or the
assignment of, such Grantor's rights and interests in any
property included within the definitions of any Intellectual
Property Collateral acquired under such contracts;
(iii) take any and all reasonable steps to protect the secrecy
of all trade secrets relating to the products and services
sold or delivered under or in connection with the Intellectual
Property Collateral, including, without limitation, where
appropriate entering into confidentiality agreements with
employees and labeling and restricting access to secret
information and documents;
(iv) use proper statutory notice in connection with its use of
any of the Intellectual
Property Collateral;
(v) use a commercially appropriate standard of quality (which
may be consistent with such Grantor's past practices) in the
manufacture, sale and delivery of products and services sold
or delivered under or in connection with the Trademarks; and
(vi) furnish to Secured Party from time to time at Secured
Party's reasonable request statements and schedules further
identifying and describing any Intellectual Property
Collateral and such other reports in connection with such
Collateral, all in reasonable detail.
(b) Except as otherwise provided in this Section 12, each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor in respect of the Intellectual Property Collateral or
any portion thereof. In connection with such collections, each Grantor may take
(and, from and after the occurrence and during the continuation of and Event of
Default at Secured Party's reasonable direction, shall take) such action as may
be reasonably necessary or advisable to enforce collection of such amounts;
provided, Secured Party shall have the right at any time, upon the occurrence
and during the continuation of an Event of Default and upon written notice to
such Grantor of its intention to do so, to notify the obligors with respect to
any such amounts of the existence of the security interest created hereby and to
direct such obligors to make payment of all such amounts directly to Secured
Party, and, upon such notification and at the expense of such Grantor, to
enforce
XVI-13
<PAGE>
collection of any such amounts and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Grantor might
have done. After receipt by any Grantor of the notice from Secured Party
referred to in the proviso to the preceding sentence and during the continuation
of any Event of Default, (i) all amounts and proceeds (including checks and
other instruments) received by each Grantor in respect of amounts due to such
Grantor in respect of the Intellectual Property Collateral or any portion
thereof shall be received in trust for the benefit of Secured Party hereunder,
shall be segregated from other funds of such Grantor and shall be forthwith paid
over or delivered to Secured Party in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 19, and (ii) such Grantor shall not adjust, settle or compromise the
amount or payment of any such amount or release wholly or partly any obligor
with respect thereto or allow any credit or discount thereon.
(c) Each Grantor shall have the duty diligently, through
counsel reasonably acceptable to Secured Party, to prosecute, file and/or make,
unless and until such Grantor, in its commercially reasonable judgment, decides
otherwise, (i) any application relating to any of the Intellectual Property
Collateral owned, held or used by such Grantor and identified on Schedules
1(f)(i), 1(f)(ii) or 1(f)(iii), as applicable, that is pending as of the date of
this Agreement, (ii) any Copyright Registration on any existing or future
unregistered but copyrightable works (except for works of nominal commercial
value or with respect to which such Grantor has determined in the exercise of
its commercially reasonable judgment that it shall not seek registration), (iii)
application on any future patentable but unpatented innovation or invention
comprising Intellectual Property Collateral, and (iv) any Trademark opposition
and cancellation proceedings, renew Trademark Registrations and Copyright
Registrations and do any and all acts which are necessary or desirable to
preserve and maintain all rights in all Intellectual Property Collateral. Any
expenses incurred in connection therewith shall be borne solely by Grantors.
Subject to the foregoing, each Grantor shall give Secured Party prior written
notice of any abandonment of any Intellectual Property Collateral or any pending
patent application or any Patent.
(d) Except as provided herein, each Grantor shall have the
right to commence and prosecute in its own name, as real party in interest, for
its own benefit and at its own expense, such suits, proceedings or other actions
for infringement, unfair competition, dilution, misappropriation or other
damage, or reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Secured Party shall provide, at such Grantor's
expense, all reasonable and necessary cooperation in connection with any such
suit, proceeding or action including, without limitation, joining as a necessary
party. Each Grantor shall promptly, following its becoming aware thereof, notify
Secured Party of the institution of, or of any adverse determination in, any
proceeding (whether in the United States Patent and Trademark Office, the United
States Copyright Office or any federal, state, local or foreign court) or
regarding such Grantor's ownership, right to use, or interest in any
Intellectual Property Collateral. Each Grantor shall provide to Secured Party
any information with respect thereto requested by Secured Party.
(e) In addition to, and not by way of limitation of, the
granting of a security interest in the Collateral pursuant hereto, each Grantor,
effective upon the occurrence and during the continuation of an Event of
Default, hereby assigns, transfers and conveys to Secured Party the nonexclusive
right and license to use all trademarks, tradenames, copyrights, patents or
technical processes (including, without limitation, the Intellectual Property
Collateral) owned or used by such Grantor that relate to the Collateral and any
other collateral granted by such Grantor
XVI-14
<PAGE>
as security for the Secured Obligations, together with any goodwill associated
therewith, all to the extent necessary to enable Secured Party to realize on the
Collateral in accordance with this Agreement and to enable any transferee or
assignee of the Collateral to enjoy the benefits of the Collateral. This right
shall inure to the benefit of all successors, assigns and transferees of Secured
Party and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license shall be granted free of
charge, without requirement that any monetary payment whatsoever be made to such
Grantor. In addition, each Grantor hereby grants to Secured Party and its
employees, representatives and agents the right to visit such Grantor's and any
of its Affiliate's or subcontractor's plants, facilities and other places of
business that are utilized in connection with the manufacture, production,
inspection, storage or sale of products and services sold or delivered under any
of the Intellectual Property Collateral (or which were so utilized during the
prior six month period), and to inspect the quality control and all other
records relating thereto upon reasonable advance written notice to such Grantor
and at reasonable dates and times during normal business hours and as often as
may be reasonably requested. If and to the extent that any Grantor is permitted
to license the Intellectual Property Collateral, Secured Party shall promptly
enter into a non-disturbance agreement or other similar arrangement, at such
Grantor's request and expense, with such Grantor and any licensee of any
Intellectual Property Collateral permitted hereunder in form and substance
reasonably satisfactory to Secured Party pursuant to which (i) Secured Party
shall agree not to disturb or interfere with such licensee's rights under its
license agreement with such Grantor so long as such licensee is not in default
thereunder, and (ii) such licensee shall acknowledge and agree that the
Intellectual Property Collateral licensed to it is subject to the security
interest created in favor of Secured Party and the other terms of this
Agreement.
SECTION 13. Transfers and Other Liens. No Grantor shall:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(b) except for the security interest created by this Agreement
and Permitted Encumbrances, create or suffer to exist any Lien upon or with
respect to any of the Collateral to secure the indebtedness or other obligations
of any Person.
SECTION 14. Secured Party Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of Grantor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained
by such Grantor or paid to Secured Party pursuant to Section 8;
(b) to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
XVI-15
<PAGE>
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a) and (b)
above;
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of such Grantor to Secured Party, due and payable immediately without demand;
(f) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Grantors' expense, at any
time or from time to time, all acts and things that Secured Party deems
necessary to protect, preserve or realize upon the Collateral and Secured
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Notwithstanding anything to the contrary in this Section 14,
Secured Party's authority as Pledgor's attorney-in-fact shall be exercisable
only after the occurrence and during the continuance of an Event of Default,
except with respect to any actions necessary or advisable to perfect Secured
Party's security interest in the Collateral.
SECTION 15. Secured Party May Perform. If any Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall be payable by such Grantor under Section 20(b).
SECTION 16. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 17. Remedies. If any Event of Default shall have
occurred and be continuing, Secured Party may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in any relevant
XVI-16
<PAGE>
jurisdiction (the "Code") (whether or not the Code applies to the affected
Collateral), and also may (a) require each Grantor to, and each Grantor hereby
agrees that it will at its expense and upon request of Secured Party forthwith,
assemble all or part of the Collateral as directed by Secured Party and make it
available to Secured Party at a place to be designated by Secured Party that is
reasonably convenient to both parties, (b) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems appropriate, (d)
take possession of any Grantor's premises or place custodians in exclusive
control thereof, remain on such premises and use the same and any of such
Grantor's equipment for the purpose of completing any work in process, taking
any actions described in the preceding clause (c) and collecting any Secured
Obligation, and (e) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and upon such
other terms as are commercially reasonable. Secured Party or any Lender or
Interest Rate Exchanger may be the purchaser of any or all of the Collateral at
any such sale and Secured Party, as agent for and representative of Agents,
Lenders, Issuing Lenders, Swing Line Lender and Interest Rate Exchangers (but
not any Agent or Agents, Lender or Lenders, Issuing Lender or Issuing Lenders,
Swing Line Lender or Interest Rate Exchanger or Interest Rate Exchangers in its
or their respective individual capacities unless Requisite Obligees (as defined
in Section 22(a)) shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Secured Party at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten days' notice to
such Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned, provided, however, that if a sale is postponed for more than 60
days, Secured Party shall re-notice Pledgor of any subsequent sale of the
affected Pledged Collateral in accordance with the second-preceding sentence
hereof. Each Grantor hereby waives any claims against Secured Party to the
extent arising by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might have
been obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree, provided,
however, that the price at which any Collateral shall be sold at any public or
private sale shall be commercially reasonable. If the proceeds of any sale or
other disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be jointly and severally liable for the deficiency
and the fees of any attorneys employed by Secured Party to collect such
deficiency.
SECTION 18. Additional Remedies for Intellectual Property
Collateral.
XVI-17
<PAGE>
(a) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default, (i)
Secured Party shall have the right (but not the obligation) to bring suit, in
the name of any Grantor, Secured Party or otherwise, to enforce any Intellectual
Property Collateral, in which event such Grantor shall, at the request of
Secured Party, do any and all lawful acts and execute any and all documents
required by Secured Party in aid of such enforcement and such Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party as provided in
Sections 10.2 and 10.3 of the Credit Agreement and Section 20 hereof, as
applicable, in connection with the exercise of its rights under this Section,
and, to the extent that Secured Party shall elect not to bring suit to enforce
any Intellectual Property Collateral as provided in this Section, each Grantor
agrees to use all reasonable measures, whether by action, suit, proceeding or
otherwise, to prevent the infringement of any of the Intellectual Property
Collateral by others and for that purpose agrees to use its commercially
reasonable judgement in maintaining any action, suit or proceeding against any
Person so infringing reasonably necessary to prevent such infringement; (ii)
upon written demand from Secured Party, each Grantor shall execute and deliver
to Secured Party an assignment or assignments of the Intellectual Property
Collateral and such other documents as are necessary or appropriate to carry out
the intent and purposes of this Agreement; (iii) each Grantor agrees that such
an assignment and/or recording shall be applied to reduce the Secured
Obligations outstanding only to the extent that Secured Party (or any Lender)
receives cash proceeds in respect of the sale of, or other realization upon, the
Intellectual Property Collateral; and (iv) within five Business Days after
written notice from Secured Party, each Grantor shall make available to Secured
Party, to the extent within such Grantor's power and authority, such personnel
in such Grantor's employ on the date of such Event of Default as Secured Party
may reasonably designate, by name, title or job responsibility, to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection
with the Trademarks, Trademark Registrations and Trademark Rights, such persons
to be available to perform their prior functions on Secured Party's behalf and
to be compensated by Secured Party at such Grantor's expense on a per diem,
pro-rata basis consistent with the salary and benefit structure applicable to
each as of the date of such Event of Default.
(b) If (i) an Event of Default shall have occurred and, by
reason of cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment to Secured Party of any rights, title and
interests in and to the Intellectual Property Collateral shall have been
previously made, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor, Secured
Party shall promptly execute and deliver to such Grantor such assignments as may
be necessary to reassign to such Grantor any such rights, title and interests as
may have been assigned to Secured Party as aforesaid, subject to any disposition
thereof that may have been made by Secured Party; provided, after giving effect
to such reassignment, Secured Party's security interest granted pursuant hereto,
as well as all other rights and remedies of Secured Party granted hereunder,
shall continue to be in full force and effect; and provided further, the rights,
title and interests so reassigned shall be free and clear of all Liens other
than Liens (if any) encumbering such rights, title and interest at the time of
their assignment to Secured Party and Permitted Encumbrances.
SECTION 19. Application of Proceeds. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale of, collection
XVI-18
<PAGE>
from, or other realization upon all or any part of the Collateral shall be
applied as provided in subsection 2.4D of the Credit Agreement.
SECTION 20. Indemnity and Expenses.
(a) Grantors jointly and severally agree to indemnify Secured
Party, each Lender and each Interest Rate Exchanger from and against any and all
claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's or Interest Rate Exchanger's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Secured
Party upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or (iv)
the failure by any Grantor to perform or observe any of the provisions hereof.
(c) The obligations of Grantors in this Section 20 shall
survive the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, the Lender Interest Rate Agreements, the
Credit Agreement and the other Loan Documents.
SECTION 21. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Grantors, their respective successors and assigns, and (c) inure, together
with the rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the applicable Grantor. Upon any such termination Secured Party will,
at Grantors' expense, execute and deliver to Grantors such documents as Grantors
shall reasonably request to evidence or effect such termination, and Grantor
shall be entitled to the return, promptly upon its request and at its expense,
of such Collateral which shall previously have been delivered to Secured Party
as shall not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 22. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders and, by their acceptance of the benefits hereof, Interest
Rate Exchangers. Secured Party
XVI-19
<PAGE>
shall be obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including, without limitation, the release or
substitution of Collateral), solely in accordance with this Agreement and the
Credit Agreement; provided that Secured Party shall exercise, or refrain from
exercising, any remedies provided for in Section 17 in accordance with the
instructions of (i) Requisite Lenders or (ii) after payment in full of all
Obligations under the Credit Agreement and the other Loan Documents and subject
to the payment of agreed fees, the holders of a majority of the aggregate
notional amount (or, with respect to any Lender Interest Rate Agreement that has
been terminated in accordance with its terms, the amount then due and payable
(exclusive of expenses and similar payments but including any early termination
payments then due) under such Lender Interest Rate Agreement) under all Lender
Interest Rate Agreements (Requisite Lenders or, if applicable, such holders
being referred to herein as "Requisite Obligees"). In furtherance of the
foregoing provisions of this Section 22(a), each Interest Rate Exchanger, by its
acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Collateral hereunder, it being
understood and agreed by such Interest Rate Exchanger that all rights and
remedies hereunder may be exercised solely by Secured Party for the benefit of
Lenders and Interest Rate Exchangers in accordance with the terms of this
Section 22(a).
(b) Written notice of resignation by Administrative Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Secured Party under this Agreement; removal of Administrative
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute appointment of a successor Secured Party under this Agreement.
Upon the acceptance of any appointment as Administrative Agent under subsection
9.5 of the Credit Agreement by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Secured Party
under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Secured Party, the provisions of this Agreement shall inure
to its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 23. Additional Grantors. The initial Subsidiary
Grantors hereunder shall be such of the Subsidiaries of Company as are
signatories hereto on the date hereof. From time to time subsequent to the date
hereof, additional Subsidiaries of Company may become parties hereto as
additional Grantors (each an "Additional Grantor"), by executing an
acknowledgement to this Agreement substantially in the form of Exhibit V annexed
hereto. Upon delivery of any such acknowledgement to Administrative Agent and
Secured Party, notice of which is hereby waived by Grantors, each such
Additional Grantor shall be a Grantor and shall be
XVI-20
<PAGE>
as fully a party hereto as if such Additional Grantor were an original signatory
hereto. Each Grantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Grantor hereunder, nor by any election of Administrative Agent not to cause any
Subsidiary of Company to become an Additional Grantor hereunder. This Agreement
shall be fully effective as to any Grantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Grantor hereunder.
SECTION 24. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by Secured Party and, in the case of any
such amendment or modification, by Grantors; provided that any amendment hereto
pursuant to Section 23 shall be effective upon execution by any Additional
Grantor, and Grantors hereby waive any requirement of notice of or consent to
any such amendment. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
SECTION 25. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or three Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or such other address as shall be
designated by such party in a written notice delivered to the other parties
hereto.
SECTION 26. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 27. Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 28. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 29. Governing Law; Terms. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW
XVI-21
<PAGE>
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined. The rules of construction set forth in
subsection 1.3 of the Credit Agreement shall be applicable to this Agreement
mutatis mutandis.
SECTION 30. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE AND COUNTY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 25; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 30 RELATING TO JURISDICTION
AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 31. Waiver of Jury Trial. GRANTORS AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Each Grantor and Secured
Party acknowledge that this waiver is a material inducement for Grantors and
Secured Party to enter into a business relationship, that Grantors and Secured
Party have already relied on this waiver in entering into this Agreement and
that each will continue to rely on this waiver in their related future dealings.
Each Grantor and Secured Party further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A
XVI-22
<PAGE>
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 32 AND EXECUTED BY
EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
SECTION 32. Counterparts. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
XVI-23
<PAGE>
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
ARTERIAL VASCULAR ENGINEERING, INC.
By: ____________________________
Name: _______________________
Title: _____________________
Each of the entities listed on Schedule
A annexed hereto
By: ____________________________
on behalf of each of the entities
listed on Schedule A annexed hereto
Name: _______________________
Title: ____________________
XVI-24
<PAGE>
ROYAL BANK OF CANADA, as Administrative
Agent, as Secured Party
By:______________________________
Name:___________________________
Title:__________________________
XVI-25
<PAGE>
Schedule A
Name Notice Address for each Subsidiary Grantor
XVI-26
<PAGE>
SCHEDULE 1(f)(i) TO
SECURITY AGREEMENT
U.S. Trademarks:
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
XVI-27
<PAGE>
SCHEDULE 1(f)(ii) TO
SECURITY AGREEMENT
U.S. Patents Issued:
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
U.S. Patents Pending:
Applicant's Date Application
Name Filed Number Invention Inventor
---- ----- ------ --------- --------
XVI-28
<PAGE>
SCHEDULE 1(f)(iii) TO
SECURITY AGREEMENT
U.S. Copyrights:
Title Registration No. Date of Issue Registered Owner
- - ----- ---------------- ------------- ----------------
Pending U.S. Copyright Registrations & Applications:
Title Reference No. Date of Application Copyright Claimant
- - ----- ------------- ------------------- ------------------
XVI-29
<PAGE>
SCHEDULE 4(b)
TO
SECURITY AGREEMENT
Locations of Equipment and Inventory
Name of Grantor Locations of Equipment and Inventory
- - --------------- ------------------------------------
XVI-30
<PAGE>
SCHEDULE 4(d)
TO
SECURITY AGREEMENT
Office Locations
Name of Grantor Office Locations
- - --------------- ----------------
XVI-31
<PAGE>
SCHEDULE 4(e)
TO
SECURITY AGREEMENT
Other Names
Name of Grantor Other Names
- - --------------- -----------
XVI-32
<PAGE>
SCHEDULE 4(h)
TO
SECURITY AGREEMENT
Filing Offices
--------------
XVI-33
<PAGE>
EXHIBIT I TO
SECURITY AGREEMENT
[FORM OF GRANT OF TRADEMARK SECURITY INTEREST]
GRANT OF TRADEMARK SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"), owns
and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Trademark Collateral (as defined below); and
WHEREAS, Arterial Vascular Engineering, a Delaware corporation
("Company"), has entered into a Credit Agreement dated as of September 30, 1998
(said Credit Agreement, as it may heretofore have been and as it may hereafter
be amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement") with the financial institutions named therein (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DLJ Capital Funding, Inc., as
Syndication Agent, Paribas, as Documentation Agent, and Royal Bank of Canada, as
Administrative Agent (in such capacity, "Secured Party"), pursuant to which
Lenders have made certain commitments, subject to the terms and conditions set
forth in the Credit Agreement, to extend certain credit facilities to Company;
and
WHEREAS, Company may from time to time enter, or may from time to time
have entered, into one or more Interest Rate Agreements (collectively, the
"Lender Interest Rate Agreements") with one or more Lenders (in such capacity,
collectively, "Lender Counterparties"); and
[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and
delivered that certain Subsidiary Guaranty dated as of September 30, 1998 (said
Subsidiary Guaranty, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Guaranty") in favor of Secured Party for
the benefit of Lenders and any Lender Counterparties, pursuant to which Grantor
has guaranteed the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and the other Loan Documents and all
obligations of Company under the Lender Interest Rate Agreements, including
without limitation the obligation of Company to make payments thereunder in the
event of early termination thereof; and]
WHEREAS, pursuant to the terms of a Security Agreement dated as of
September 30, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), among Grantor, Secured Party and the other
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Trademark Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which
XVI-34
<PAGE>
Grantor now has or hereafter acquires an interest and wherever the same may be
located (the "Trademark Collateral"):
(iv) all right, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent
permitted by agreements governing such license or other use)
in and to all trademarks, service marks, designs, logos,
indicia, tradenames, trade dress, corporate names, company
names, business names, fictitious business names, trade styles
and/or other source and/or business identifiers and
applications pertaining thereto, owned by such Grantor, or
hereafter adopted and used, in its business (including,
without limitation, the trademarks specifically identified in
Schedule A) (collectively, the "Trademarks"), all
registrations that have been or may hereafter be issued or
applied for thereon in the United States and any state thereof
(including, without limitation, the registrations and
applications specifically identified in Schedule A) (the
"Trademark Registrations"), all common law and other rights
(but in no event any of the obligations) in and to the
Trademarks in the United States and any state thereof (the
"Trademark Rights"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith
(the "Associated Goodwill"); and
(v) all proceeds, products, rents and profits of or from any
and all of the foregoing Trademark Collateral and, to the
extent not otherwise included, all payments under insurance
(whether or not Secured Party is the loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss
or damage to or otherwise with respect to any of the foregoing
Trademark Collateral. For purposes of this Grant of Trademark
Security Interest, the term "proceeds" includes whatever is
receivable or received when Trademark Collateral or proceeds
are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Trademark Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Trademark Collateral shall include, and Grantor shall be deemed to have granted
a security interest in, all such rights and interests as if such provision had
never been in effect.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Trademark
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
XVI-35
<PAGE>
IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the 30th day of September, 1998.
[NAME OF GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
XVI-36
<PAGE>
SCHEDULE A
TO
GRANT OF TRADEMARK SECURITY INTEREST
United States
Trademark Registration Registration
Registered Owner Description Number Date
- - ---------------- ----------- ------ ----
XVI-37
<PAGE>
EXHIBIT II TO
SECURITY AGREEMENT
[FORM OF GRANT OF PATENT SECURITY INTEREST]
GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"), owns
and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and
WHEREAS, Arterial Vascular Engineering, a Delaware corporation
("Company"), has entered into a Credit Agreement dated as of September 30, 1998
(said Credit Agreement, as it may heretofore have been and as it may hereafter
be amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement") with the financial institutions named therein (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DLJ Capital Funding, Inc., as
Syndication Agent, Paribas, as Documentation Agent, and Royal Bank of Canada, as
Administrative Agent (in such capacity, "Secured Party") and as syndication
agent and arranger, pursuant to which Lenders have made certain commitments,
subject to the terms and conditions set forth in the Credit Agreement, to extend
certain credit facilities to Company; and
WHEREAS, Company may from time to time enter, or may from time to time
have entered, into one or more Interest Rate Agreements (collectively, the
"Lender Interest Rate Agreements") with one or more Lenders (in such capacity,
collectively, "Lender Counterparties"); and
[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and
delivered that certain Subsidiary Guaranty dated as of September 30, 1998 (said
Subsidiary Guaranty, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Guaranty") in favor of Secured Party for
the benefit of Lenders and any Lender Counterparties, pursuant to which Grantor
has guaranteed the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and the other Loan Documents and all
obligations of Company under the Lender Interest Rate Agreements, including
without limitation the obligation of Company to make payments thereunder in the
event of early termination thereof; and]
WHEREAS, pursuant to the terms of a Security Agreement dated as of
September 30, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), among Grantor, Secured Party and the other
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Patent Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which
XVI-38
<PAGE>
Grantor now has or hereafter acquires an interest and wherever the same may be
located (the "Patent Collateral"):
(vi) all right, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent
permitted by agreements governing such license or other use)
in and to all patents and patent applications and rights and
interests in patents and patent applications under any
domestic law that are presently, or in the future may be,
owned or held by such Grantor and all patents and patent
applications and rights, title and interests in patents and
patent applications under any domestic law that are presently,
or in the future may be, owned by such Grantor in whole or in
part (including, without limitation, the patents and patent
applications listed in Schedule A), all rights (but not
obligations) corresponding thereto to sue for past, present
and future infringements and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part
thereof (all of the foregoing being collectively referred to
as the "Patents"); and
(vii) all proceeds, products, rents and profits of or from any
and all of the foregoing Patent Collateral and, to the extent
not otherwise included, all payments under insurance (whether
or not Secured Party is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Patent Collateral. For purposes of this Grant of Patent
Security Interest, the term "proceeds" includes whatever is
receivable or received when Patent Collateral or proceeds are
sold, exchanged, collected or otherwise disposed of, whether
such disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the Patent
Collateral shall include, and Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Patent
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
[The remainder of this page intentionally left blank.]
XVI-39
<PAGE>
IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the 30th day of September, 1998.
[NAME OF GRANTOR]
By:_____________________________
Name:__________________________
Title:___________________________
XVI-40
<PAGE>
SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
Patents Issued:
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
Patents Pending:
Applicant's Date Application
Name Filed Number Invention Inventor
---- ----- ------ --------- --------
XVI-41
<PAGE>
EXHIBIT III TO
SECURITY AGREEMENT
[FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]
GRANT OF COPYRIGHT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"), owns
and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Copyright Collateral (as defined below); and
WHEREAS, Arterial Vascular Engineering, a Delaware corporation
("Company"), has entered into a Credit Agreement dated as of September 30, 1998
(said Credit Agreement, as it may heretofore have been and as it may hereafter
be amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement") with the financial institutions named therein (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DLJ Capital Funding, Inc., as
Syndication Agent, Paribas, as Documentation Agent, and Royal Bank of Canada, as
Administrative Agent (in such capacity, "Secured Party") and as syndication
agent and arranger, pursuant to which Lenders have made certain commitments,
subject to the terms and conditions set forth in the Credit Agreement, to extend
certain credit facilities to Company; and
WHEREAS, Company may from time to time enter, or may from time to time
have entered, into one or more Interest Rate Agreements (collectively, the
"Lender Interest Rate Agreements") with one or more Lenders (in such capacity,
collectively, "Lender Counterparties"); and
[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and
delivered that certain Subsidiary Guaranty dated as of September 30, 1998 (said
Subsidiary Guaranty, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Guaranty") in favor of Secured Party for
the benefit of Lenders and any Lender Counterparties, pursuant to which Grantor
has guaranteed the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and the other Loan Documents and all
obligations of Company under the Lender Interest Rate Agreements, including
without limitation the obligation of Company to make payments thereunder in the
event of early termination thereof; and]
WHEREAS, pursuant to the terms of a Security Agreement dated as of
September 30, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), among Grantor, Secured Party and the other
grantors named therein, Grantor has agreed to create in favor of Secured Party a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Copyright Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which
XVI-42
<PAGE>
Grantor now has or hereafter acquires an interest and wherever the same may be
located (the "Copyright Collateral"):
(i) all right, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent
permitted by agreements governing such license or other use)
under copyright in various published and unpublished works of
authorship including, without limitation, computer programs,
computer data bases, other computer software layouts, trade
dress, drawings, designs, writings, and formulas (including,
without limitation, the works listed on Schedule A, as the
same may be amended pursuant hereto from time to time)
(collectively, the "Copyrights"), all copyright registrations
issued to Grantor and applications for copyright registration
that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof (including,
without limitation, the registrations listed on Schedule A, as
the same may be amended pursuant hereto from time to time)
(collectively, the "Copyright Registrations"), all common law
and other rights in and to the Copyrights in the United States
and any state thereof including all copyright licenses (but
with respect to such copyright licenses, only to the extent
permitted by such licensing arrangements) (the "Copyright
Rights"), including, without limitation, each of the
Copyrights, rights, titles and interests in and to the
Copyrights and works protectable by copyright, which are
presently, or in the future may be, owned, created (as a work
for hire for the benefit of Grantor), authored (as a work for
hire for the benefit of Grantor), or acquired by Grantor, in
whole or in part, and all Copyright Rights with respect
thereto and all Copyright Registrations therefor, heretofore
or hereafter granted or applied for, and all renewals and
extensions thereof, throughout the world, including all
proceeds thereof (such as, by way of example and not by
limitation, license royalties and proceeds of infringement
suits), the right (but not the obligation) to renew and extend
such Copyright Registrations and Copyright Rights and to
register works protectable by copyright and the right (but not
the obligation) to sue in the name of such Grantor or in the
name of Secured Party or Lenders for past, present and future
infringements of the Copyrights and Copyright Rights; and
(ii) all proceeds, products, rents and profits of or from any
and all of the foregoing Copyright Collateral and, to the
extent not otherwise included, all payments under insurance
(whether or not Secured Party is the loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss
or damage to or otherwise with respect to any of the foregoing
Copyright Collateral. For purposes of this Grant of Copyright
Security Interest, the term "proceeds" includes whatever is
receivable or received when Copyright Collateral or proceeds
are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.
XVI-43
<PAGE>
Notwithstanding anything herein to the contrary, in no event shall the
Copyright Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Copyright Collateral shall include, and Grantor shall be deemed to have granted
a security interest in, all such rights and interests as if such provision had
never been in effect.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Copyright
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
[The remainder of this page intentionally left blank.]
XVI-44
<PAGE>
IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the 30th day of September, 1998.
[NAME OF GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
XVI-45
<PAGE>
SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST
U.S. Copyrights:
Title Registration No. Date of Issue Registered Owner
- - ----- ---------------- ------------- ----------------
Pending U.S. Copyright Registrations & Applications:
Title Reference No. Date of Application Copyright Claimant
- - ----- ------------- ------------------- ------------------
XVI-46
<PAGE>
EXHIBIT IV TO
SECURITY AGREEMENT
SECURITY AGREEMENT SUPPLEMENT
This SECURITY AGREEMENT SUPPLEMENT, dated ____________, ____, is
delivered pursuant to the Security Agreement, dated as of September 30, 1998 (as
it may be from time to time amended, modified or supplemented, the "Security
Agreement"), among Arterial Vascular Engineering, Inc., the other Grantors named
therein, and Royal Bank of Canada, as Secured Party. Capitalized terms used
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Security Agreement.
Subject to the terms and conditions of the Security Agreement, Grantor
hereby grants to Secured Party a security interest in all of Grantor's right,
title and interest in and to the Intellectual Property Collateral listed on
Supplemental Schedule [1(f)(i)] [1(f)(ii)] [1(f)(iii)] attached hereto, in each
case whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located. All such Intellectual
Property Collateral shall be deemed to be part of the Collateral and hereafter
subject to each of the terms and conditions of the Security Agreement.
IN WITNESS WHEREOF, Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of ______________.
[GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
XVI-47
<PAGE>
EXHIBIT V TO
SECURITY AGREEMENT
[FORM OF ACKNOWLEDGEMENT]
This ACKNOWLEDGEMENT, dated _______, ____, is delivered pursuant to
Section 23 of the Security Agreement referred to below. The undersigned hereby
agrees that this Acknowledgement may be attached to the Security Agreement,
dated as of September 30, 1998 (as it may be from time to time amended, modified
or supplemented, the "Security Agreement"; capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed therein), among
Arterial Vascular Engineering, Inc., the other Grantors named therein, and Royal
Bank of Canada, as Secured Party, that the undersigned by executing and
delivering this Acknowledgement hereby becomes a Grantor under the Security
Agreement in accordance with Section 24 thereof and agrees to be bound by all of
the terms thereof, and that the Patents, Trademarks, Trademark Registrations,
Copyrights and Copyright Registrations described on this Acknowledgement shall
be deemed to be part of the and shall become part of the Collateral and shall
secure all Secured Obligations.
[NAME OF ADDITIONAL GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
XVI-48
<PAGE>
U.S. Trademarks:
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
XVI-49
<PAGE>
U.S. Patents Issued:
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
U.S. Patents Pending:
Applicant's Date Application
Name Filed Number Invention Inventor
---- ----- ------ --------- --------
XVI-50
<PAGE>
U.S. Copyrights:
Copyright Registration No. Date of Issue Registered Owner
- - --------- ---------------- ------------- ----------------
Pending U.S. Copyrights:
Copyright Reference No. Date of Application Copyright Claimant
- - --------- ------------- ------------------- ------------------
XVI-51
<PAGE>
EXHIBIT XVII
[FORM OF SUBSIDIARY GUARANTY]
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY is entered into as of September 30,
1998 by THE UNDERSIGNED (each a "Guarantor" and collectively, "Guarantors") in
favor of and for the benefit of ROYAL BANK OF CANADA, as Administrative Agent,
for the benefit of Agents, Issuing Lenders, Swing Line Lender and Lenders party
to the Credit Agreement referred to below and any Interest Rate Exchangers (as
hereinafter defined), and, subject to subsection 3.14, for the benefit of the
other Beneficiaries (as hereinafter defined)(in such agent capacity for all such
parties, the "Guaranteed Party" herein).
RECITALS
A. ARTERIAL VASCULAR ENGINEERING, INC., a Delaware corporation
("Company"), has entered into that certain Credit Agreement dated as of
September 30, 1998 with Guaranteed Party, Agents, and Lenders (said Credit
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement"; capitalized terms defined
therein and not otherwise defined herein being used herein as therein defined).
B. Company may from time to time enter, or may from time to
time have entered, into one or more Interest Rate Agreements (collectively, the
"Lender Interest Rate Agreements") with or one or more Lenders (in such
capacity, collectively, "Interest Rate Exchangers") in accordance with the terms
of the Credit Agreement, and it is desired that the obligations of Company under
the Lender Interest Rate Agreements, including, without limitation, the
obligation of Company to make payments thereunder in the event of early
termination thereof (all such obligations being the "Interest Rate
Obligations"), together with all obligations of Company under the Credit
Agreement and the other Loan Documents, be guaranteed hereunder.
C. A portion of the proceeds of the Loans may be advanced by
Company to Guarantors and thus the Guaranteed Obligations (as hereinafter
defined) are being incurred for and will inure to the benefit of Guarantors
(which benefits are hereby acknowledged).
D. It is a condition precedent to the making of the initial
Loans under the Credit Agreement that Company's obligations thereunder be
guaranteed by Guarantors.
E. Guarantors are willing irrevocably and unconditionally to
guaranty such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Lenders and Guaranteed Party to enter into
the Credit Agreement and to make Loans and other extensions of credit thereunder
and to induce the Agents to undertake their obligations and Interest Rate
Exchangers to enter into the Lender Interest Rate Agreements, Guarantors hereby
agree as follows:
XVII-1
<PAGE>
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Guaranty, the
following terms shall have the following meanings unless the context otherwise
requires:
"Beneficiaries" means Guaranteed Party, Agents,
Lenders, Issuing Lenders, Swing Line Lender and any Interest
Rate Exchangers.
"Guaranteed Obligations" has the meaning assigned to
that term in subsection 2.1.
"Guaranty" means this Subsidiary Guaranty dated as of
September 30, 1998, as it may be amended, supplemented or
otherwise modified from time to time.
"payment in full", "paid in full" or any similar term
means payment in full of the Guaranteed Obligations,
including, without limitation, all principal, interest, costs,
fees and expenses (including, without limitation, reasonable
legal fees and expenses) of Beneficiaries as required under
the Loan Documents and the Lender Interest Rate Agreements.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall
be to Sections and subsections, respectively, of this Guaranty
unless otherwise specifically provided.
(b) In the event of any conflict or inconsistency
between the terms, conditions and provisions of this Guaranty
and the terms, conditions and provisions of the Credit
Agreement, the terms, conditions and provisions of this
Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guaranteed Obligations. Subject to the
provisions of subsection 2.2(a), Guarantors jointly and severally hereby
irrevocably and unconditionally guaranty, as primary obligors and not merely as
sureties, the due and punctual payment in full of all Guaranteed Obligations
when the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)). The term "Guaranteed
Obligations" is used herein in its most comprehensive sense and includes:
(a) any and all Obligations of Company to Guaranteed
Party, Agents, Issuing Lenders, Swing Line Lender and Lenders
and any and all Interest Rate Obligations, in each case now or
hereafter made, incurred or created, whether absolute or
contingent, liquidated or unliquidated, whether due or not
due, and however arising under or in connection with the
Credit Agreement and the other Loan Documents and the Lender
Interest Rate Agreements, including those arising under
successive borrowing transactions under the Credit Agreement
which shall
XVII-2
<PAGE>
either continue the Obligations of Company or from time to
time renew them after they have been satisfied and including
interest which, but for the filing of a petition in bankruptcy
with respect to Company, would have accrued on any Guaranteed
Obligations, whether or not a claim is allowed against Company
for such interest in the related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 Limitation on Amount Guaranteed; Contribution by
Guarantors. (a) Anything contained in this Guaranty to the contrary
notwithstanding, if any Fraudulent Transfer Law (as hereinafter defined) is
determined by a court of competent jurisdiction to be applicable to the
obligations of any Guarantor under this Guaranty, such obligations of such
Guarantor hereunder shall be limited to a maximum aggregate amount equal to the
largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11
of the United States Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after giving effect
to all other liabilities of such Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Guarantor (x) in respect of intercompany indebtedness to
Company or other affiliates of Company to the extent that such indebtedness
would be discharged in an amount equal to the amount paid by such Guarantor
hereunder and (y) under any guaranty of Permitted Subordinated Debt which
guaranty contains a limitation as to maximum amount similar to that set forth in
this subsection 2.2(a), pursuant to which the liability of such Guarantor
hereunder is included in the liabilities taken into account in determining such
maximum amount) and after giving effect as assets to the value (as determined
under the applicable provisions of the Fraudulent Transfer Laws) of any rights
to subrogation, reimbursement, indemnification or contribution of such Guarantor
pursuant to applicable law or pursuant to the terms of any agreement (including,
without limitation, any such right of contribution under subsection 2.2(b).
(b) Guarantors under this Guaranty together desire to allocate
among themselves in a fair and equitable manner their obligations arising under
this Guaranty. Accordingly, in the event any payment or distribution is made on
any date by any Guarantor under this Guaranty (a "Funding Guarantor") that
exceeds its Fair Share (as defined below) as of such date, that Funding
Guarantor shall be entitled to a contribution from each of the other Guarantors
in the amount of such other Guarantor's Fair Share Shortfall (as defined below)
as of such date, with the result that all such contributions will cause each
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share as of
such date. "Fair Share" means, with respect to a Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Guarantor to (y) the aggregate of
the Adjusted Maximum Amounts with respect to all Guarantors multiplied by (ii)
the aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations guaranteed. "Fair
Share Shortfall" means, with respect to a Guarantor as of any date of
determination, the excess, if any, of the Fair Share of such Guarantor over the
Aggregate Payments of such Guarantor. "Adjusted Maximum Amount" means, with
respect to a Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Guarantor under this Guaranty determined as of
such date in accordance with subsection 2.2(a); provided that, solely for
purposes of calculating the "Adjusted Maximum Amount" with respect to any
Guarantor for purposes of this subsection 2.2(b), any assets or liabilities of
such
XVII-3
<PAGE>
Guarantor arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall
not be considered as assets or liabilities of such Guarantor. "Aggregate
Payments" means, with respect to a Guarantor as of any date of determination, an
amount equal to (i) the aggregate amount of all payments and distributions made
on or before such date by such Guarantor in respect of this Guaranty (including,
without limitation, in respect of this subsection 2.2(b)) minus (ii) the
aggregate amount of all payments received on or before such date by such
Guarantor from the other Guarantors as contributions under this subsection
2.2(b). The amounts payable as contributions hereunder shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Guarantors of their obligations as set
forth in this subsection 2.2(b) shall not be construed in any way to limit the
liability of any Guarantor hereunder to Guaranteed Party, Agents, Lenders,
Interest Rate Exchangers or other Beneficiaries.
2.3 Payment by Guarantors; Application of Payments. Subject to
the provisions of subsection 2.2(a), Guarantors hereby jointly and severally
agree, in furtherance of the foregoing and not in limitation of any other right
which any Beneficiary may have at law or in equity against any Guarantor by
virtue hereof, that upon the failure of Company to pay any of the Guaranteed
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)),
Guarantors will upon demand pay, or cause to be paid, in cash, to Guaranteed
Party for the ratable benefit of Beneficiaries, an amount equal to the sum of
the unpaid principal amount of all Guaranteed Obligations then due as aforesaid,
accrued and unpaid interest on such Guaranteed Obligations (including, without
limitation, interest which, but for the filing of a petition in bankruptcy with
respect to Company, would have accrued on such Guaranteed Obligations, whether
or not a claim is allowed against Company for such interest in the related
bankruptcy proceeding) and all other Guaranteed Obligations then owed to
Beneficiaries as aforesaid. All such payments shall be applied promptly from
time to time by Guaranteed Party as provided in subsection 2.4D of the Credit
Agreement.
2.4 Liability of Guarantors Absolute. Each Guarantor agrees
that its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which constitutes a
legal or equitable discharge of a guarantor or surety other than payment in full
of the Guaranteed Obligations. In furtherance of the foregoing and without
limiting the generality thereof, each Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due
and not of collectibility.
(b) Guaranteed Party may enforce this Guaranty upon
the occurrence of an Event of Default under the Credit
Agreement or the occurrence of an Early Termination Date (as
defined in a Master Agreement or an Interest Rate Swap
Agreement or Interest Rate and Currency Exchange Agreement;
each of such agreements in the form prepared by the
International Swap and Derivatives Association Inc. or a
similar event under any similar swap agreement) under any
Lender Interest Rate Agreement (either such occurrence being
an "Event of Default" for purposes of this Guaranty)
notwithstanding the existence of any
XVII-4
<PAGE>
dispute between Company and any Beneficiary with respect to
the existence of such Event of Default.
(c) The obligations of each Guarantor hereunder are
independent of the obligations of Company under the Loan
Documents or the Lender Interest Rate Agreements and the
obligations of any other guarantor (including any other
Guarantor) of the obligations of Company under the Loan
Documents or the Lender Interest Rate Agreements, and a
separate action or actions may be brought and prosecuted
against such Guarantor whether or not any action is brought
against Company or any of such other guarantors and whether or
not Company is joined in any such action or actions.
(d) Payment by any Guarantor of a portion, but not
all, of the Guaranteed Obligations shall in no way limit,
affect, modify or abridge any Guarantor's liability for any
portion of the Guaranteed Obligations which has not been paid.
Without limiting the generality of the foregoing, if
Guaranteed Party is awarded a judgment in any suit brought to
enforce any Guarantor's covenant to pay a portion of the
Guaranteed Obligations, such judgment shall not be deemed to
release such Guarantor from its covenant to pay the portion of
the Guaranteed Obligations that is not the subject of such
suit, and such judgment shall not, except to the extent
satisfied by such Guarantor, limit, affect, modify or abridge
any other Guarantor's liability hereunder in respect of the
Guaranteed Obligations.
(e) Any Beneficiary, upon such terms as it deems
appropriate, without notice or demand and without affecting
the validity or enforceability of this Guaranty or giving rise
to any reduction, limitation, impairment, discharge or
termination of any Guarantor's liability hereunder, from time
to time may (i) renew, extend, accelerate, increase the rate
of interest on, or otherwise change the time, place, manner or
terms of payment of the Guaranteed Obligations, (ii) settle,
compromise, release or discharge, or accept or refuse any
offer of performance with respect to, or substitutions for,
the Guaranteed Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of
any other obligations; (iii) request and accept other
guaranties of the Guaranteed Obligations and take and hold
security for the payment of this Guaranty or the Guaranteed
Obligations; (iv) release, surrender, exchange, substitute,
compromise, settle, rescind, waive, alter, subordinate or
modify, with or without consideration, any security for
payment of the Guaranteed Obligations, any other guaranties of
the Guaranteed Obligations, or any other obligation of any
Person (including any other Guarantor) with respect to the
Guaranteed Obligations; (v) enforce and apply any security now
or hereafter held by or for the benefit of such Beneficiary in
respect of this Guaranty or the Guaranteed Obligations and
direct the order or manner of sale thereof, or exercise any
other right or remedy that such Beneficiary may have against
any such security, in each case as is consistent with the
Credit Agreement or the applicable Lender Interest Rate
Agreement and any applicable security agreement, including
foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of
any such sale is commercially reasonable, and even though such
action operates to impair or extinguish any right of
reimbursement or subrogation
XVII-5
<PAGE>
or other right or remedy of any Guarantor against Company or
any security for the Guaranteed Obligations; and (vi) exercise
any other rights available to it under the Loan Documents or
the Lender Interest Rate Agreements.
(f) This Guaranty and the obligations of Guarantors
hereunder shall be valid and enforceable and shall not be
subject to any reduction, limitation, impairment, discharge or
termination for any reason (other than payment in full of the
Guaranteed Obligations), including, without limitation, the
occurrence of any of the following, whether or not any
Guarantor shall have had notice or knowledge of any of them:
(i) any failure or omission to assert or enforce or agreement
or election not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or
demand or any right, power or remedy (whether arising under
the Loan Documents or the Lender Interest Rate Agreements, at
law, in equity or otherwise) with respect to the Guaranteed
Obligations or any agreement relating thereto, or with respect
to any other guaranty of or security for the payment of the
Guaranteed Obligations; (ii) any rescission, waiver, amendment
or modification of, or any consent to departure from, any of
the terms or provisions (including, without limitation,
provisions relating to events of default) of the Credit
Agreement, any of the other Loan Documents, any of the Lender
Interest Rate Agreements or any agreement or instrument
executed pursuant thereto, or of any other guaranty or
security for the Guaranteed Obligations, in each case whether
or not in accordance with the terms of the Credit Agreement or
such Loan Document, such Lender Interest Rate Agreement or any
agreement relating to such other guaranty or security; (iii)
the Guaranteed Obligations, or any agreement relating thereto,
at any time being found to be illegal, invalid or
unenforceable in any respect; (iv) the application of payments
received from any source (other than payments received
pursuant to the other Loan Documents or any of the Lender
Interest Rate Agreements or from the proceeds of any security
for the Guaranteed Obligations, except to the extent such
security also serves as collateral for indebtedness other than
the Guaranteed Obligations) to the payment of indebtedness
other than the Guaranteed Obligations, even though any
Beneficiary might have elected to apply such payment to any
part or all of the Guaranteed Obligations; (v) any
Beneficiary's consent to the change, reorganization or
termination of the corporate structure or existence of Company
or any of its Subsidiaries and to any corresponding
restructuring of the Guaranteed Obligations; (vi) any failure
to perfect or continue perfection of a security interest in
any collateral which secures any of the Guaranteed
Obligations; (vii) any defenses, set-offs or counterclaims
which Company may allege or assert against any Beneficiary in
respect of the Guaranteed Obligations, including but not
limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and
satisfaction and usury; and (viii) any other act or thing or
omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of any
Guarantor as an obligor in respect of the Guaranteed
Obligations.
XVII-6
<PAGE>
2.5 Waivers by Guarantors. Each Guarantor hereby waives, for
the benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a
condition of payment or performance by such Guarantor, to (i)
proceed against Company, any other guarantor (including any
other Guarantor) of the Guaranteed Obligations or any other
Person, (ii) proceed against or exhaust any security held from
Company, any such other guarantor or any other Person, (iii)
proceed against or have resort to any balance of any deposit
account or credit on the books of any Beneficiary in favor of
Company or any other Person, or (iv) pursue any other remedy
in the power of any Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity,
lack of authority or any disability or other defense of
Company including, without limitation, any defense based on or
arising out of the lack of validity or the unenforceability of
the Guaranteed Obligations or any agreement or instrument
relating thereto or by reason of the cessation of the
liability of Company from any cause other than payment in full
of the Guaranteed Obligations;
(c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than
that of the principal;
(d) any defense based upon any Beneficiary's errors
or omissions in the administration of the Guaranteed
Obligations, except behavior which amounts to gross negligence
or bad faith;
(e) (i) any principles or provisions of law,
statutory or otherwise, which are or might be in conflict with
the terms of this Guaranty and any legal or equitable
discharge of such Guarantor's obligations hereunder, (ii) the
benefit of any statute of limitations affecting such
Guarantor's liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims,
and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any security
interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices
of protest, notices of dishonor and notices of any action or
inaction, including acceptance of this Guaranty, notices of
default under the Credit Agreement, the Lender Interest Rate
Agreements or any agreement or instrument related thereto,
notices of any renewal, extension or modification of the
Guaranteed Obligations or any agreement related thereto,
notices of any extension of credit to Company and notices of
any of the matters referred to in subsection 2.4 and any right
to consent to any thereof; and
(g) any defenses or benefits that may be derived from
or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms
of this Guaranty.
XVII-7
<PAGE>
2.6 Certain California Law Waivers. As used in this subsection
2.6, any reference to "the principal" includes Company, and any reference to
"the creditor" includes each Beneficiary. In accordance with Section 2856 of the
California Civil Code:
(a) each Guarantor agrees (i) to waive any and all rights of
subrogation and reimbursement against Company or against any collateral
or security granted by Company for any of the Guaranteed Obligations
and (ii) to withhold the exercise of any and all rights of contribution
against any other guarantor of any of the Guaranteed Obligations and
against any collateral or security granted by any such other guarantor
for any of the Guaranteed Obligations until the Guaranteed Obligations
shall have been paid in full and the Commitments shall have terminated
and all Letters of Credit shall have expired or been cancelled and any
drawings thereunder shall have been reimbursed, all as more fully set
forth in subsection 2.7;
(b) each Guarantor waives any and all other rights and defenses
available to such Guarantor by reason of Sections 2787 to 2855,
inclusive, 2899 and 3433 of the California Civil Code, including
without limitation any and all rights or defenses such Guarantor may
have by reason of protection afforded to the principal with respect to
any of the Guaranteed Obligations, of to any other guarantor (including
any other Guarantor) of any of the Guaranteed Obligations with respect
to any of such guarantor's obligations under its guaranty, in either
case pursuant to the antideficiency or other laws of the State of
California limiting or discharging the principal's indebtedness or such
guarantor's obligations, including without limitation Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure; and
(c) each Guarantor waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security
for any Guaranteed Obligation, has destroyed such Guarantor's rights of
subrogation and reimbursement against the principal by the operation of
Section 580d of the Code of Civil Procedure or otherwise; and even
though that election of remedies by the creditor, such as nonjudicial
foreclosure with respect to security for an obligation of any other
guarantor (including any other Guarantor) of any of the Guaranteed
Obligations, has destroyed such Guarantor's rights of contribution
against such other guarantor.
No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this subsection 2.6.
In accordance with subsection 3.6 below, this Guaranty shall be governed by, and
shall be construed and enforced in accordance with, the internal laws of the
State of New York, without regard to conflicts of laws principles. This
subsection 2.6 is included solely out of an abundance of caution, and shall not
be construed to mean that any of the above-referenced provisions of California
law are in any way applicable to this Guaranty or to any of the Guaranteed
Obligations.
2.7 Guarantors' Rights of Subrogation, Contribution, Etc. Each
Guarantor hereby waives any claim, right or remedy, direct or indirect, that
such Guarantor now has or may hereafter have against Company or any of its
assets in connection with this Guaranty or the performance by such Guarantor of
its obligations hereunder, in each case whether such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise and
XVII-8
<PAGE>
including, without limitation, (a) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against
Company, (b) any right to enforce, or to participate in, any claim, right or
remedy that any Beneficiary now has or may hereafter have against Company, and
(c) any benefit of, and any right to participate in, any collateral or security
now or hereafter held by any Beneficiary. In addition, until the Guaranteed
Obligations shall have been indefeasibly paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been cancelled
and any drawings thereunder shall have been reimbursed, each Guarantor shall
withhold exercise of any right of contribution such Guarantor may have against
any other guarantor (including any other Guarantor) of the Guaranteed
Obligations (including, without limitation, any such right of contribution).
Each Guarantor further agrees that, to the extent the waiver or agreement to
withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights any Beneficiary may have against Company, to all
right, title and interest any Beneficiary may have in any such collateral or
security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to any Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guaranteed Obligations shall not have been paid in full, such amount
shall be held in trust for Guaranteed Party on behalf of Beneficiaries and shall
forthwith be paid over to Guaranteed Party for the benefit of Beneficiaries to
be credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms hereof.
2.8 Subordination of Other Obligations. Any indebtedness of
Company now or hereafter held by any Guarantor is hereby subordinated in right
of payment to the Guaranteed Obligations, and any such indebtedness of Company
to such Guarantor collected or received by such Guarantor after an Event of
Default has occurred and is continuing shall be held in trust for Guaranteed
Party on behalf of Beneficiaries and shall forthwith be paid over to Guaranteed
Party for the benefit of Beneficiaries to be credited and applied against the
Guaranteed Obligations but without affecting, impairing or limiting in any
manner the liability of such Guarantor under any other provision of this
Guaranty.
2.9 Expenses. Guarantors jointly and severally agree to pay,
or cause to be paid, on demand, and to save Beneficiaries harmless against
liability for, any and all costs and expenses (including fees and disbursements
of counsel and allocated costs of internal counsel) incurred or expended by any
Beneficiary in connection with the enforcement of or preservation of any rights
under this Guaranty.
2.10 Continuing Guaranty. This Guaranty is a continuing
guaranty and shall remain in effect until all of the Guaranteed Obligations
shall have been paid in full and the Commitments shall have terminated and all
Letters of Credit shall have expired or been cancelled and any drawings
thereunder shall have been reimbursed. Each Guarantor hereby irrevocably waives
any right to revoke this Guaranty as to future transactions giving rise to any
Guaranteed Obligations.
XVII-9
<PAGE>
2.11 Authority of Guarantors or Company. It is not necessary
for any Beneficiary to inquire into the capacity or powers of any Guarantor or
Company or the officers, directors or any agents acting or purporting to act on
behalf of any of them.
2.12 Financial Condition of Company. Any Loans may be granted
to Company or continued from time to time, and any Lender Interest Rate
Agreements may be entered into from time to time, in each case without notice to
or authorization from any Guarantor regardless of the financial or other
condition of Company at the time of any such grant or continuation or at the
time such Lender Interest Rate Agreement is entered into, as the case may be. No
Beneficiary shall have any obligation to disclose or discuss with any Guarantor
its assessment, or any Guarantor's assessment, of the financial condition of
Company. Each Guarantor has adequate means to obtain information from Company on
a continuing basis concerning the financial condition of Company and its ability
to perform its obligations under the Loan Documents and the Lender Interest Rate
Agreements, and each Guarantor assumes the responsibility for being and keeping
informed of the financial condition of Company and of all circumstances bearing
upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby
waives and relinquishes any duty on the part of any Beneficiary to disclose any
matter, fact or thing relating to the business, operations or conditions of
Company now known or hereafter known by any Beneficiary.
2.13 Rights Cumulative. The rights, powers and remedies given
to Beneficiaries by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to Beneficiaries by virtue
of any statute or rule of law or in any of the other Loan Documents, any of the
Lender Interest Rate Agreements or any agreement between any Guarantor and any
Beneficiary or Beneficiaries or between Company and any Beneficiary or
Beneficiaries. Any forbearance or failure to exercise, and any delay by any
Beneficiary in exercising, any right, power or remedy hereunder shall not impair
any such right, power or remedy or be construed to be a waiver thereof, nor
shall it preclude the further exercise of any such right, power or remedy.
2.14 Bankruptcy; Post-Petition Interest; Reinstatement of
Guaranty. (a) So long as any Guaranteed Obligations remain outstanding, no
Guarantor shall, without the prior written consent of Guaranteed Party acting
pursuant to the instructions of Requisite Obligees (as defined in subsection
3.12), commence or join with any other Person in commencing any bankruptcy,
reorganization or insolvency proceedings of or against Company. The obligations
of Guarantors under this Guaranty shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership, reorganization,
liquidation or arrangement of Company or by any defense which Company may have
by reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest
on any portion of the Guaranteed Obligations which accrues after the
commencement of any proceeding referred to in clause (a) above (or, if interest
on any portion of the Guaranteed Obligations ceases to accrue by operation of
law by reason of the commencement of said proceeding, such interest as would
have accrued on such portion of the Guaranteed Obligations if said proceedings
had not been commenced) shall be included in the Guaranteed Obligations because
it is the intention of Guarantors and Beneficiaries that the Guaranteed
Obligations which are guaranteed by
XVII-10
<PAGE>
Guarantors pursuant to this Guaranty should be determined without regard to any
rule of law or order which may relieve Company of any portion of such Guaranteed
Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor
in possession, assignee for the benefit of creditors or similar person to pay
Guaranteed Party, or allow the claim of Guaranteed Party in respect of, any such
interest accruing after the date on which such proceeding is commenced.
(c) In the event that all or any portion of the Guaranteed
Obligations are paid by Company, the obligations of Guarantors hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from any Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guaranteed Obligations for all purposes under this
Guaranty.
2.15 Notice of Events. As soon as any Guarantor obtains
knowledge thereof, such Guarantor shall give Guaranteed Party written notice of
any condition or event which has resulted in (a) a material adverse change in
the financial condition of any Guarantor or Company or (b) a breach of or
noncompliance with any term, condition or covenant contained herein or in the
Credit Agreement, any other Loan Document, any Lender Interest Rate Agreement or
any other document delivered pursuant hereto or thereto.
2.16 Set Off. In addition to any other rights any Beneficiary
may have under law or in equity, if any amount shall at any time be due and
owing by any Guarantor to any Beneficiary under this Guaranty, such Beneficiary
is authorized at any time or from time to time, without notice (any such notice
being hereby expressly waived), to set off and to appropriate and to apply any
and all deposits (general or special, including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness of such Beneficiary owing to such Guarantor and any other
property of such Guarantor held by any Beneficiary to or for the credit or the
account of such Guarantor against and on account of the Guaranteed Obligations
and liabilities of such Guarantor to any Beneficiary under this Guaranty.
2.17 Discharge of Guaranty Upon Sale of Guarantor. If all of
the stock of any Guarantor or any of its successors in interest under this
Guaranty shall be sold or otherwise disposed of (including by merger or
consolidation) in an Asset Sale not prohibited by subsection 7.7 of the Credit
Agreement or otherwise consented to by Requisite Lenders, the Guaranty of such
Guarantor or such successor in interest, as the case may be, hereunder shall
automatically be discharged and released without any further action by any
Beneficiary or any other Person effective as of the time of such Asset Sale;
provided that, as a condition precedent to such discharge and release,
Guaranteed Party shall have received evidence satisfactory to it that
arrangements satisfactory to it have been made for delivery to Guaranteed Party
of the applicable Net Asset Sale Proceeds to the extent required under
subsection 2.4B(iii) of the Credit Agreement.
SECTION 3. MISCELLANEOUS
3.1 Survival of Warranties. All agreements, representations
and warranties made herein shall survive the execution and delivery of this
Guaranty and the other Loan Documents and the Lender Interest Rate Agreements
and any increase in the Commitments under the Credit Agreement.
XVII-11
<PAGE>
3.2 Notices. Any communications between Guaranteed Party and
any Guarantor and any notices or requests provided herein to be given may be
given by mailing the same, postage prepaid, or by telex, facsimile transmission
or cable to each such party at its address set forth in the Credit Agreement, on
the signature pages hereof or to such other addresses as each such party may in
writing hereafter indicate. Any notice, request or demand to or upon Guaranteed
Party or any Guarantor shall not be effective until received.
3.3 Severability. In case any provision in or obligation under
this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
3.4 Amendments and Waivers. No amendment, modification,
termination or waiver of any provision of this Guaranty, and no consent to any
departure by any Guarantor therefrom, shall in any event be effective without
the written concurrence of Guaranteed Party and, in the case of any such
amendment or modification, each Guarantor against whom enforcement of such
amendment or modification is sought. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
3.5 Headings. Section and subsection headings in this Guaranty
are included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
3.6 Applicable Law. THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF GUARANTORS AND BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
3.7 Successors and Assigns. This Guaranty is a continuing
guaranty and shall be binding upon each Guarantor and its respective successors
and assigns. This Guaranty shall inure to the benefit of Beneficiaries and their
respective successors and assigns. No Guarantor shall assign this Guaranty or
any of the rights or obligations of such Guarantor hereunder without the prior
written consent of all Lenders. Any Beneficiary may, without notice or consent,
assign its interest in this Guaranty in whole or in part. The terms and
provisions of this Guaranty shall inure to the benefit of any transferee or
assignee of any Loan, and in the event of such transfer or assignment the rights
and privileges herein conferred upon such Beneficiary shall automatically extend
to and be vested in such transferee or assignee, all subject to the terms and
conditions hereof.
3.8 Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO
THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE AND COUNTY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH GUARANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
XVII-12
<PAGE>
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GUARANTOR AT
ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 3.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GUARANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT;
(V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST SUCH GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION
3.8 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND
ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK
GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
3.9 Waiver of Trial by Jury. EACH GUARANTOR AND, BY ITS
ACCEPTANCE OF THE BENEFITS HEREOF, EACH BENEFICIARY HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including, without limitation,
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each Guarantor and, by its acceptance of the benefits hereof,
each Beneficiary, each (i) acknowledges that this waiver is a material
inducement for such Guarantor and Beneficiaries to enter into a business
relationship, that such Guarantor and Beneficiaries have already relied on this
waiver in entering into this Guaranty or accepting the benefits thereof, as the
case may be, and that each will continue to rely on this waiver in their related
future dealings and (ii) further warrants and represents that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SUBSECTION 3.9 AND EXECUTED BY GUARANTEED PARTY AND EACH GUARANTOR), AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS
XVII-13
<PAGE>
GUARANTY. In the event of litigation, this Guaranty may be filed as a written
consent to a trial by the court.
3.10 No Other Writing. This writing is intended by Guarantors
and Beneficiaries as the final expression of this Guaranty and is also intended
as a complete and exclusive statement of the terms of their agreement with
respect to the matters covered hereby. No course of dealing, course of
performance or trade usage, and no parole evidence of any nature, shall be used
to supplement or modify any terms of this Guaranty.
There are no conditions to the full effectiveness of this Guaranty.
3.11 Further Assurances. At any time or from time to time,
upon the request of Guaranteed Party, Guarantors shall execute and deliver such
further documents and do such other acts and things as Guaranteed Party may
reasonably request in order to effect fully the purposes of this Guaranty.
3.12 Additional Guarantors. The initial Guarantors hereunder
shall be such of the Subsidiaries of Company as are signatories hereto on the
date hereof. From time to time subsequent to the date hereof, additional
Subsidiaries of Company may become parties hereto, as additional Guarantors
(each an "Additional Guarantor"), by executing a counterpart of this Guaranty.
Upon delivery of any such counterpart to Administrative Agent, notice of which
is hereby waived by Guarantors, each such Additional Guarantor shall be a
Guarantor and shall be as fully a party hereto as if such Additional Guarantor
were an original signatory hereof. Each Guarantor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Guarantor hereunder, nor by any election of
Administrative Agent not to cause any Subsidiary of Company to become an
Additional Guarantor hereunder. This Guaranty shall be fully effective as to any
Guarantor that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Guarantor hereunder.
3.13 Counterparts; Effectiveness. This Guaranty may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original for all purposes; but all such counterparts together
shall constitute but one and the same instrument. This Guaranty shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart hereof shall have been executed by
any other Guarantor) and receipt by Guaranteed Party of written or telephonic
notification of such execution and authorization of delivery thereof.
3.14 Guaranteed Party as Agent.
(a) Guaranteed Party has been appointed to act as Guaranteed
Party hereunder by Lenders. Guaranteed Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action,
solely in accordance with this Guaranty and the Credit Agreement; provided that
Guaranteed Party shall exercise, or refrain from exercising, any remedies
hereunder in accordance with the instructions of (i) Requisite Lenders or (ii)
after payment in full of all Obligations under the Credit Agreement and the
other Loan Documents and subject to the
XVII-14
<PAGE>
payment of agreed fees, the holders of a majority of the aggregate notional
amount (or, with respect to any Lender Interest Rate Agreement that has been
terminated in accordance with its terms, the amount then due and payable
(exclusive of expenses and similar payments but including any early termination
payments then due) under such Lender Interest Rate Agreement) under all Lender
Interest Rate Agreements (Requisite Lenders or, if applicable, such holders
being referred to herein as "Requisite Obligees"). In furtherance of the
foregoing provisions of this subsection 3.14, each Interest Rate Exchanger, by
its acceptance of the benefits hereof, agrees that it shall have no right
individually to enforce this Guaranty, it being understood and agreed by such
Interest Rate Exchanger that all rights and remedies hereunder may be exercised
solely by Guaranteed Party for the benefit of Beneficiaries in accordance with
the terms of this subsection 3.14.
(b) Written notice of resignation by Administrative Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Guaranteed Party under this Guaranty; removal of
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute removal as Guaranteed Party under this Guaranty; and appointment
of a successor Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute appointment of a successor Guaranteed Party
under this Guaranty. Upon the acceptance of any appointment as Administrative
Agent under subsection 9.5 of the Credit Agreement by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Guaranteed Party under this Guaranty, and the retiring or removed
Guaranteed Party under this Guaranty shall promptly (i) transfer to such
successor Guaranteed Party all sums held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance
of the duties of the successor Guaranteed Party under this Guaranty, and (ii)
take such other actions as may be necessary or appropriate in connection with
the assignment to such successor Guaranteed Party of the rights created
hereunder, whereupon such retiring or removed Guaranteed Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Administrative Agent's resignation or removal hereunder as
Guaranteed Party, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guaranteed Party hereunder.
[Remainder of page intentionally left blank]
XVII-15
<PAGE>
IN WITNESS WHEREOF, each of the undersigned Guarantors has
caused this Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of the date first written above.
[NAME OF GUARANTOR]
By____________________________
Title_________________________
Address:______________________
______________________
______________________
______________________
[NAME OF GUARANTOR]
By____________________________
Title_________________________
Address:______________________
______________________
______________________
______________________
XVII-16
<PAGE>
IN WITNESS WHEREOF, the undersigned Additional Guarantor has
caused this Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of ______________,______ .
_________________________________________
(Name of Additional Guarantor)
By____________________________
Title_________________________
Address:______________________
______________________
______________________
______________________
XVII-17
<PAGE>
EXHIBIT XVIII
[FORM OF SUBSIDIARY PLEDGE AGREEMENT]
SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (this "Agreement") is dated
as of September 30, 1998 and entered into by and between [INSERT NAME OF PLEDGOR
IN CAPS], a corporation ("Pledgor"), and ROYAL BANK OF CANADA, as Administrative
Agent, for the benefit of Agents, Issuing Lenders, Swing Line Lender and Lenders
party to the Credit Agreement referred to below and any Interest Rate Exchangers
(as hereinafter defined)(in such agent capacity for all such parties, the
"Secured Party" herein).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of (i) the shares
of stock (the "Pledged Shares") described in Part A of Schedule I annexed hereto
and issued by the corporations named therein and (ii) the indebtedness (the
"Pledged Debt") described in Part B of said Schedule I and issued by the
obligors named therein.
B. Secured Party, Agents and Lenders have entered into a
Credit Agreement dated as of September 30, 1998 (said Credit Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Arterial Vascular
Engineering, Inc., a Delaware corporation ("Company"), pursuant to which Agents
have undertaken certain obligations and Lenders have made certain commitments,
subject to the terms and conditions set forth in the Credit Agreement, to extend
certain credit facilities to Company.
C. Company may from time to time enter, or may from time to
time have entered, into one or more Interest Rate Agreements with one or more
Lenders (collectively, the "Lender Interest Rate Agreement") (such Lenders in
such capacity, collectively, "Interest Rate Exchangers").
D. Pledgor has executed and delivered that certain Subsidiary
Guaranty dated as of September 30, 1998 (said Subsidiary Guaranty, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "Guaranty") in favor of Secured Party for the benefit of Lenders,
Issuing Lenders, Swing Line Lender and any Interest Rate Exchangers, pursuant to
which Pledgor has guaranteed the prompt payment and performance when due of all
obligations of Company under the Credit Agreement and all obligations of Company
under the Lender Interest Rate Agreements, including without limitation the
obligation of Company to make payments thereunder in the event of early
termination thereof.
E. It is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
XVIII-1
<PAGE>
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement (including, without limitation, the issuance of Letters of Credit or
the purchase of participation therein) and to induce the Agents to undertake
their obligations and to induce the Interest Rate Exchangers to enter into the
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees
with Secured Party as follows:
SECTION 1. Pledge of Security. Pledgor hereby pledges and
assigns to Secured Party, and hereby grants to Secured Party a security interest
in, all of Pledgor's right, title and interest in and to the following (the
"Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares , any securities accounts in which the Pledged Shares may be held
and any securities entitlements represented thereby, and any interest of Pledgor
in the entries on the books of any securities intermediary pertaining to the
Pledged Shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing the
Pledged Debt, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities convertible
into and warrants, options and other rights to purchase or otherwise acquire,
stock of any issuer of the Pledged Shares from time to time acquired by Pledgor
in any manner (which shares shall be deemed to be part of the Pledged Shares),
the certificates or other instruments representing such additional shares,
securities, warrants, options or other rights, any securities accounts in which
the Pledged Shares may be held and any securities entitlements represented
thereby, and any interest of Pledgor in the entries on the books of any
securities intermediary pertaining to such additional shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional shares, securities, warrants, options or other
rights;
(d) all additional indebtedness from time to time owed to
Pledgor by any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of Pledgor (which shares shall be deemed to be
part of the Pledged Shares), the certificates or other instruments representing
such shares, securities, warrants, options or other rights and any interest of
Pledgor in the entries on the books of any securities intermediary pertaining to
such shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time
XVIII-2
<PAGE>
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares, securities, warrants, options or other rights;
(f) all indebtedness from time to time owed to Pledgor by any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct or indirect Subsidiary of Pledgor, and all interest, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f)
above, all proceeds of any or all of the foregoing Pledged Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Pledged Collateral or proceeds are sold, exchanged, collected
or otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, proceeds of any indemnity or guaranty payable
to Pledgor or Secured Party from time to time with respect to any of the Pledged
Collateral.
SECTION 2. Security for Obligations. This Agreement and the
pledges hereunder secure, and the Pledged Collateral is collateral security for,
the prompt payment or performance in full when due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
ss.362(a)), of all obligations and liabilities of every nature of Pledgor to the
Agents, Lenders, Issuing Lenders, Swing Line Lender and Interest Rate Exchangers
now or hereafter existing under or arising out of or in connection with the
Guaranty and all extensions or renewals thereof, whether for principal, interest
(including without limitation interest that, but for the filing of a petition in
bankruptcy with respect to Company, would accrue on such obligations, whether or
not a claim is allowed against Company for such interest in the related
bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit,
payments for early termination of Lender Interest Rate Agreements, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
or any Agent, Lender, Issuing Lender, Swing Line Lender or Interest Rate
Exchanger as a preference, fraudulent transfer or otherwise, and all obligations
of every nature of Pledgor now or hereafter existing under this Agreement (all
such obligations of Pledgor being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party. Upon the occurrence and during the continuation of an Event of
Default (as defined in the Credit Agreement) or the occurrence of an Early
Termination Date (as defined in a Master Agreement or an Interest Rate Swap
Agreement or Interest Rate and Currency Exchange Agreement, each of such
agreements in the form prepared by the International Swap and
XVIII-3
<PAGE>
Derivatives Association Inc. or a similar event under any similar swap
agreement) under any Lender Interest Rate Agreement (either such occurrence
being an "Event of Default" for purposes of this Agreement), Secured Party shall
have the right, without notice to Pledgor, to transfer to or to register in the
name of Secured Party or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 7(a). In
addition, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Pledgor represents
and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares have been duly authorized and validly issued and are fully paid
and non-assessable. All of the Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged Shares
constitute all of the issued and outstanding shares of stock of each issuer
thereof which is a Domestic Subsidiary and 65% of the issued and outstanding
shares of stock of each issuer thereof that is a Foreign Subsidiary, and there
are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged Shares.
The Pledged Debt constitutes all of the issued and outstanding intercompany
indebtedness evidenced by a promissory note of the respective issuers thereof
owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the legal,
record and beneficial owner of the Pledged Collateral free and clear of any Lien
except for the security interest created by this Agreement.
SECTION 5. Transfers and Other Liens; Additional Pledged
Collateral; etc. Pledgor shall:
(a) not, except as expressly permitted by the Credit
Agreement, (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
(ii) create or suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement, or
(iii) permit any issuer of Pledged Shares to merge or consolidate unless all the
outstanding capital stock of the surviving or resulting corporation is, upon
such merger or consolidation, pledged hereunder and no cash, securities or other
property is distributed in respect of the outstanding shares of any other
constituent corporation; provided that in the event Pledgor makes an Asset Sale
permitted by the Credit Agreement and the assets subject to such Asset Sale are
Pledged Shares, upon appropriate notice Secured Party shall release the Pledged
Shares that are the subject of such Asset Sale to Pledgor free and clear of the
lien and security interest under this Agreement concurrently with the
consummation of such Asset Sale; provided, further that, as a condition
precedent to such release, Secured Party shall have received evidence
satisfactory to it that arrangements satisfactory to it
XVIII-4
<PAGE>
have been made for delivery to Secured Party of the Net Asset Sale Proceeds of
such Asset Sale to the extent required under subsection 2.4B(iii) of the Credit
Agreement;
(b) (i) cause each issuer of Pledged Shares not to issue any
stock or other securities in addition to or in substitution for the Pledged
Shares issued by such issuer, except to Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer of Pledged Shares
such that all of the shares of stock or other securities of each issuer which is
a Domestic Subsidiary and 65% of the shares of stock or other securities of each
issuer which is a Foreign Subsidiary shall be pledged to Secured Party hereunder
after giving effect to such acquisition, and (iii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all shares of
stock of any Person that, after the date of this Agreement, becomes, as a result
of any occurrence, a direct Domestic Subsidiary of Pledgor and 65% of any and
all shares of stock of any Person that, after the date of this Agreement,
becomes, as a result of any occurrence, a direct Foreign Subsidiary of Pledgor;
(c) (i) pledge hereunder, immediately upon their issuance, any
and all instruments or other evidences of additional indebtedness from time to
time owed to Pledgor by any obligor on the Pledged Debt, and (ii) pledge
hereunder, immediately upon their issuance, any and all instruments or other
evidences of indebtedness from time to time owed to Pledgor by any Person that
after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of Pledgor;
(d) promptly notify Secured Party of any event of which
Pledgor becomes aware causing a loss or depreciation in the value of the Pledged
Collateral that would reasonably be expected to have a Material Adverse Effect;
(e) promptly deliver to Secured Party all written notices
received by it with respect to the Pledged Collateral; and
(f) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the Pledged
Collateral, except to the extent the validity thereof is being contested in good
faith; provided that Pledgor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against Pledgor or any of the Pledged Collateral as a result of the
failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the expense of
Pledgor, Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral. Without limiting the generality of the foregoing,
Pledgor will: (i) take all such further action and execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to
XVIII-5
<PAGE>
be granted hereby (including, without limitation, giving Secured Party control
(as defined in section 8-106 of the Uniform Commercial Code as currently in
effect in the State of New York (the "UCC")) over any Pledged Collateral that is
investment property or uncertificated securities (each as defined in the UCC) in
order to perfect Secured Party's interest in such Pledged Collateral in
accordance with the UCC) and (ii) at Secured Party's reasonable request, appear
in and defend any action or proceeding that may materially impair Pledgor's
title to or Secured Party's security interest in all or any part of the Pledged
Collateral.
(b) Pledgor further agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder
as provided in Section 5(b) or (c), promptly (and in any event within five
Business Days) deliver to Secured Party a Pledge Amendment, duly executed by
Pledgor, in substantially the form of Schedule II annexed hereto (a "Pledge
Amendment"), in respect of the additional Pledged Shares or Pledged Debt to be
pledged pursuant to this Agreement. Pledgor hereby authorizes Secured Party to
attach each Pledge Amendment to this Agreement and agrees that all Pledged
Shares or Pledged Debt listed on any Pledge Amendment delivered to Secured Party
shall for all purposes hereunder be considered Pledged Collateral; provided that
the failure of Pledgor to execute a Pledge Amendment with respect to any
additional Pledged Shares or Pledged Debt pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have
occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Credit
Agreement or any other Loan Document; provided, however, that
Pledgor shall not exercise or refrain from exercising any such
right if Secured Party shall have notified Pledgor that, in
Secured Party's judgment, such action would have a material
adverse effect on the value of the Pledged Collateral or any
part thereof; and provided, further, that Pledgor shall give
Secured Party at least five Business Days' prior written
notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right. It is
understood, however, that neither (A) the voting by Pledgor of
any Pledged Shares for or Pledgor's consent to the election of
directors at a regularly scheduled annual or other meeting of
stockholders or with respect to incidental matters at any such
meeting nor (B) Pledgor's consent to or approval of any action
otherwise permitted under this Agreement and the Credit
Agreement or any other Loan Document shall be deemed
inconsistent with the terms of this Agreement or the Credit
Agreement within the meaning of this Section 7(a)(i), and no
notice of any such voting or consent need be given to Secured
Party;
(ii) Pledgor shall be entitled to receive and retain,
and to utilize free and clear of the security interest granted
under this Agreement, any and all dividends and
XVIII-6
<PAGE>
interest paid in respect of the Pledged Collateral; provided,
however, that any and all
(A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or
in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable
in cash in respect of any Pledged Collateral in connection with
a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
respect of principal or in redemption of or in exchange for any
Pledged Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in
trust for the benefit of Secured Party, be segregated from the other
property or funds of Pledgor and be forthwith delivered to Secured
Party as Pledged Collateral in the same form as so received (with all
necessary indorsements); and
(iii) Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to Pledgor all
such proxies, dividend payment orders and other instruments as
Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other
consensual rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal or
interest payments which it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an
Event of Default:
(i) upon written notice from Secured Party to
Pledgor, all rights of Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled
to exercise pursuant to Section 7(a)(i) shall cease, and all
such rights shall thereupon become vested in Secured Party
which shall thereupon have the sole right to exercise such
voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends
and interest payments which it would otherwise be authorized
to receive and retain pursuant to Section 7(a)(ii) shall
cease, and all such rights shall thereupon become vested in
Secured Party who shall thereupon have the sole right to
receive and hold as Pledged Collateral such dividends and
interest payments; and
(iii) all dividends, principal and interest payments
which are received by Pledgor contrary to the provisions of
paragraph (ii) of this Section 7(b) shall be received in trust
for the benefit of Secured Party, shall be segregated from
other funds of Pledgor and shall forthwith be paid over to
Secured Party as Pledged Collateral in the same form as so
received (with any necessary indorsements).
XVIII-7
<PAGE>
(c) In order to permit Secured Party to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant to
Section 7(b)(i) and to receive all dividends and other distributions which it
may be entitled to receive under Section 7(a)(ii) or Section 7(b)(ii) or (iii),
(i) Pledgor shall promptly execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies, dividend payment orders and other
instruments as Secured Party may from time to time reasonably request and (ii)
without limiting the effect of the immediately preceding clause (i), Pledgor
hereby grants to Secured Party an irrevocable proxy to vote the Pledged Shares
and to exercise all other rights, powers, privileges and remedies to which a
holder of the Pledged Shares would be entitled (including, without limitation,
giving or withholding written consents of shareholders, calling special meetings
of shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares or any officer or agent
thereof) or any consent of Pledgor, upon the occurrence of an Event of Default
and which proxy shall only terminate upon the waiver or cure of such Event of
Default in accordance with the Credit Agreement or the payment in full of the
Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:
(a) to file one or more financing or continuation statements,
or amendments thereto, relative to all or any part of the Pledged Collateral
without the signature of Pledgor;
(b) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made
payable to Pledgor representing any dividend, principal or interest payment or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same; and
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Pledged Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Pledged Collateral.
Notwithstanding anything to the contrary in this Section 8,
Secured Party's authority as Pledgor's attorney-in-fact under subsections (b),
(c) and (d) above shall be exercisable only after the occurrence and during the
continuance of an Event of Default.
SECTION 9. Secured Party May Perform. If Pledgor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall be payable by Pledgor under Section 10.2 of the
Credit Agreement.
XVIII-8
<PAGE>
SECTION 10. Standard of Care. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Pledged Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Pledged Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Pledged Collateral, it being
understood that Secured Party shall have no responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Collateral, whether or not
Secured Party has or is deemed to have knowledge of such matters, (b) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Pledged Collateral) to preserve
rights against any parties with respect to any Pledged Collateral, (c) taking
any necessary steps to collect or realize upon the Secured Obligations or any
guaranty therefor, or any part thereof, or any of the Pledged Collateral, or (d)
initiating any action to protect the Pledged Collateral against the possibility
of a decline in market value. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment substantially equal
to that which Secured Party accords its own property consisting of negotiable
securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Pledged Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"Code") (whether or not the Code applies to the affected Pledged Collateral),
and Secured Party may also in its sole discretion, without notice except as
specified below, sell the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange or broker's board or at any
of Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral. Secured
Party or any Lender or Interest Rate Exchanger may be the purchaser of any or
all of the Pledged Collateral at any such sale and Secured Party, as agent for
and representative of Agents, Lenders, Issuing Lenders, Swing Line Lender and
Interest Rate Exchangers (but not any Agent or Agents, Lender or Lenders,
Issuing Lender or Issuing Lenders, Swing Line Lender or Interest Rate Exchanger
or Interest Rate Exchangers in its or their respective individual capacities
unless Requisite Obligees (as defined in Section 16(a)) shall otherwise agree in
writing), shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Pledged Collateral
sold at any such public sale, to use and apply any of the Secured Obligations as
a credit on account of the purchase price for any Pledged Collateral payable by
Secured Party at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor hereby waives (to the extent permitted by applicable law) all rights
of redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of Pledged
Collateral
XVIII-9
<PAGE>
regardless of notice of sale having been given. Secured Party may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned, provided, however, that if a sale is
postponed for more than 60 days, Secured Party shall re-notice Pledgor of any
subsequent sale of the affected Pledged Collateral in accordance with the
second-preceding sentence hereof. Pledgor hereby waives any claims against
Secured Party to the extent arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree, provided, however, that the price at which
any Pledged Collateral shall be sold at any public or private sale shall be
commercially reasonable. If the proceeds of any sale or other disposition of the
Pledged Collateral are insufficient to pay all the Secured Obligations, Pledgor
shall be liable for the deficiency and the fees of any attorneys employed by
Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of such
Pledged Collateral under the Securities Act and/or such state securities laws,
to limit purchasers to those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable than those obtainable through
a public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances, Pledgor agrees that Secured Party shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Pledged Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it, and any assessment of
commercial reasonableness in connection with a private sale shall take into
account Pledgor's agreement that private sales are an acceptable means to
Secured Party's realization of the value of the Pledged Collateral.
(c) If Secured Party determines to exercise its right to sell
any or all of the Pledged Collateral, upon written request, Pledgor shall and
shall cause each issuer of any Pledged Shares to be sold hereunder from time to
time to furnish to Secured Party all such information as Secured Party may
request in order to determine the number of shares and other instruments
included in the Pledged Collateral which may be sold by Secured Party in exempt
transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.
SECTION 12. Application of Proceeds. All proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Pledged Collateral shall be applied as provided in
subsection 2.4D of the Credit Agreement.
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<PAGE>
SECTION 13. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Secured Party, each Lender and
each Interest Rate Exchanger from and against any and all claims, losses and
liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including, without
limitation, enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount
of any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Secured Party hereunder, or (iv) the failure by Pledgor to perform or
observe any of the provisions hereof.
SECTION 14. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the payment in
full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the benefit
of Secured Party and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall automatically terminate and all rights to the
Pledged Collateral shall revert to Pledgor. Upon any such termination Secured
Party will, at Pledgor's expense, execute and deliver to Pledgor such documents
as Pledgor shall reasonably request to evidence or effect such termination and
Pledgor shall be entitled to the prompt return, upon its request and at its
expense, against receipt and without recourse to Secured Party, of such of the
Pledged Collateral as shall not have been sold or otherwise applied pursuant to
the terms hereof.
SECTION 15. Secured Party as Agent.
(a) Secured Party has been appointed to act as Administrative
Agent by Agents, Lenders and, by their acceptance of the benefits hereof,
Interest Rate Exchangers. Secured Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Pledged Collateral), solely
in accordance with this Agreement and the Credit Agreement; provided that
Secured Party shall exercise, or refrain from exercising, any remedies provided
for in Section 11 in accordance with
XVIII-11
<PAGE>
the instructions of (i) Requisite Lenders or (ii) after payment in full of all
Obligations under the Credit Agreement and the other Loan Documents and subject
to the payment of agreed fees, the holders of a majority of the aggregate
notional amount (or, with respect to any Lender Interest Rate Agreement that has
been terminated in accordance with its terms, the amount then due and payable
(exclusive of expenses and similar payments but including any early termination
payments then due) under such Lender Interest Rate Agreement) under all Lender
Interest Rate Agreements (Requisite Lenders or, if applicable, such holders
being referred to herein as "Requisite Obligees"). In furtherance of the
foregoing provisions of this Section 15(a), each Interest Rate Exchanger, by its
acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Pledged Collateral hereunder, it being
understood and agreed by such Interest Rate Exchanger that all rights and
remedies hereunder may be exercised solely by Secured Party for the benefit of
Agents, Lenders and Interest Rate Exchangers in accordance with the terms of
this Section 15(a).
(b) Written notice of resignation by Administrative Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Secured Party under this Agreement; removal of Administrative
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute appointment of a successor Secured Party under this Agreement.
Upon the acceptance of any appointment as Administrative Agent under subsection
9.5 of the Credit Agreement by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Secured Party
under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Secured Party, the provisions of this Agreement shall inure
to its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 16. Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 17. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or three Business Days
after depositing it in the United States mail with postage prepaid and properly
XVIII-12
<PAGE>
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 18. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 19. Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 20. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. Governing Law; Terms. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.
SECTION 22. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE AND COUNTY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, PLEDGOR, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
XVIII-13
<PAGE>
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO PLEDGOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 17;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER
PLEDGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT;
(V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST PLEDGOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 22
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND
ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK
GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 23. Waiver of Jury Trial. PLEDGOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including, without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Pledgor and Secured Party
each acknowledge that this waiver is a material inducement for Pledgor and
Secured Party to enter into a business relationship, that Pledgor and Secured
Party have already relied on this waiver in entering into this Agreement and
that each will continue to rely on this waiver in their related future dealings.
Pledgor and Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SECTION 23 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 24. Counterparts. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple
XVIII-14
<PAGE>
separate counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
[Remainder of page intentionally left blank]
XVIII-15
<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF PLEDGOR]
By: _______________________
Title:
Notice Address:
_____________________
_____________________
_____________________
ROYAL BANK OF CANADA, as Administrative
Agent, as Secured Party
By: _______________________
Title:
Notice Address:
_____________________
_____________________
_____________________
XVIII-16
<PAGE>
SCHEDULE I
Attached to and forming a part of the Subsidiary Pledge
Agreement dated as of September 30, 1998 between _______________, as Pledgor,
and Royal Bank of Canada, as Administrative Agent, as Secured Party.
Part A
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- - ------------ ----- ----------- ----- ------
Part B
Debt Issuer Amount of Indebtedness
- - ----------- ----------------------
XVIII-17
<PAGE>
SCHEDULE II
PLEDGE AMENDMENT
This Subsidiary Pledge Amendment, dated ____________, _____,
is delivered pursuant to Section 6(b) of the Subsidiary Pledge Agreement
referred to below. The undersigned hereby agrees that this Subsidiary Pledge
Amendment may be attached to the Subsidiary Pledge Agreement dated as of
September 30, 1998, between the undersigned and Royal Bank of Canada, as
Administrative Agent, as Secured Party (the "Pledge Agreement," capitalized
terms defined therein being used herein as therein defined), and that the
[Pledged Shares] [Pledged Debt] listed on this Pledge Amendment shall be deemed
to be part of the [Pledged Shares] [Pledged Debt] and shall become part of the
Pledged Collateral and shall secure all Secured Obligations.
[NAME OF PLEDGOR]
By: _______________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- - ------------ ----- ----------- ----- ------
Debt Issuer Amount of Indebtedness
- - ----------- ----------------------
XVIII-18
<PAGE>
EXHIBIT XIX
FINANCIAL CONDITION CERTIFICATE
This FINANCIAL CONDITION CERTIFICATE (this "Certificate") is
delivered in connection with that certain Credit Agreement dated as of September
30, 1998 (the "Credit Agreement") by and among Arterial Vascular Engineering,
Inc., a Delaware corporation ("Company"), the financial institutions referred to
therein as Lenders ("Lenders"), DLJ Capital Funding, Inc., as Syndication Agent,
Paribas, as Documentation Agent, and Royal Bank of Canada, as Administrative
Agent ("Administrative Agent"). Capitalized terms used herein without definition
have the same meanings as in the Credit Agreement.
A. I am, and at all pertinent times mentioned herein have
been, the duly qualified and acting chief financial officer of Company. In such
I have participated actively in the management of its financial affairs and am
familiar with its financial statements and those of its Subsidiaries. I have,
together with other officers of Company, acted on behalf of Company in
connection with the negotiation of the Credit Agreement and I am familiar with
the terms and conditions thereof.
B. I have carefully reviewed the contents of this Certificate,
and I have conferred with counsel for Company for the purpose of discussing the
meaning of its contents.
C. In connection with preparing for the consummation of the
transactions and financings contemplated by the Credit Agreement (the "Proposed
Transactions"), I have participated in the preparation of, and I have reviewed,
pro forma projections of net income and cash flows for Company and its
Subsidiaries for the fiscal years of Company ending June 30, 1999 through June
30, 2005, inclusive (the "Projected Financial Statements"). The Projected
Financial Statements, attached hereto as Exhibit A, give effect to the
consummation of the Proposed Transactions and assume that the debt obligations
of Company will be paid from the cash flow generated by the operations of
Company and its Subsidiaries and other cash resources. The Projected Financial
Statements were prepared on the basis of information available at June 30, 1998.
I know of no facts that have occurred since such date that would lead me to
believe that the Projected Financial Statements are inaccurate in any material
respect. The Projected Financial Statements do not reflect (i) any potential
changes in interest rates from those assumed in the Projected Financial
Statements, (ii) any potential material, adverse changes in general business
conditions, or (iii) any potential changes in income tax laws.
D. I have also participated in the preparation of, and I have
reviewed, a pro forma summary balance sheet of Company and its Subsidiaries (the
"Fair Value Summary Balance Sheet") as of June 30, 1998, giving effect to the
Proposed Transactions. The Fair Value Summary Balance Sheet is attached hereto
as Exhibit B and has been prepared as described in paragraphs F and G below and
not in accordance with GAAP.
E. In connection with the preparation of the Projected
Financial Statements, I have made such investigations and inquiries as I have
deemed necessary and prudent therefor and, specifically, have relied on
historical information with respect to revenues, expenses and other
XIX-1
<PAGE>
relevant items supplied by the supervisory personnel of Company and its
Subsidiaries directly responsible for the various operations involved. The
assumptions upon which the Projected Financial Statements are based are stated
therein. Although any assumptions and any projections by necessity involve
uncertainties and approximations, I believe, based on my discussions with other
members of management, that the assumptions on which the Projected Financial
Statements are based are reasonable based upon the facts and circumstances known
to me at the time such assumptions were made. Based thereon, I believe that the
projections for Company and its Subsidiaries, taken as a whole, reflected in the
Projected Financial Statements provide reasonable estimations of future
performance, subject, as stated above, to the uncertainties and approximations
inherent in any projections.
F. The Fair Value Summary Balance Sheet has been prepared in a
manner which I believe reflects a conservative estimate of the fair value of the
assets of Company and its Subsidiaries on a consolidated basis and the probable
liability on all of their debts, contingent or otherwise. For purposes of this
Certificate, I understand "fair value" of any assets to mean the amount which
may be realized within a reasonable time, either through collection of such
assets or through sale of such assets at the regular market value thereof,
conceiving of the latter as the amount which could be obtained for the property
in question within such period by a capable and diligent businessman from an
interested buyer who is willing to purchase under ordinary selling conditions.
The specific methodology used by management for valuing Company and its
Subsidiaries is set forth in paragraph G below.
G. For purposes of constructing the Fair Value Summary Balance
Sheet, I have utilized the following procedures:
With respect to the asset values reflected in the Fair Value
Summary Balance Sheet (including the asset values used to calculate the fair
value of the stock of each of Company's Subsidiaries), I have included the net
working capital of Company and each of its Subsidiaries, calculated as the
difference between the current assets and current liabilities reported in their
June 30, 1998 financial statements, and I have relied on a discounted cash flow
methodology utilizing standard corporate finance modeling techniques as
described further in Exhibit C hereto.
With respect to liabilities reflected in the Fair Value
Summary Balance Sheet (including liabilities used to calculate the fair value of
the stock of each of Company's Subsidiaries), I have included long-term
liabilities reported by Company and each of its Subsidiaries in their June 30,
1998 financial statements and debts to be incurred or assumed by Company and
each of its Subsidiaries under the Credit Agreement and the Proposed
Transactions. In addition, with respect to contingent liabilities (such as
litigation, guaranties and pension plan liabilities), I have consulted with
legal, financial and other personnel of Company and each of its Subsidiaries and
have reflected as liabilities our best judgment as to the maximum exposure that
can reasonably be expected to result therefrom in light of all the facts and
circumstances existing at this time, recognizing that any such estimation is
inherently subject to uncertainties.
Based on the foregoing, I have reached the following
conclusions:
1. Company is not now, nor will the incurrence of the Obligations under
the Credit Agreement and the incurrence of the other obligations
contemplated by the Proposed
XIX-2
<PAGE>
Transactions render Company "insolvent" as defined in this paragraph 1.
The recipients of this Certificate and I have agreed that, in this
context, "insolvent" means that the present fair value of assets is
less than the amount that will be required to pay the probable
liability on existing debts as they become absolute and matured. We
have also agreed that the term "debts" includes any legal liability,
whether matured or unmatured, liquidated or unliquidated, absolute,
fixed or contingent. My conclusion expressed above is supported by the
Fair Value Summary Balance Sheet. Valuation of Company on the basis
thereof would reflect the net value of Company as $__________
representing the difference between asset values of $__________ and
liabilities of $__________.
2. By the incurrence of the Obligations under the Credit Agreement and
the incurrence of the other obligations contemplated by the Proposed
Transactions, Company will not incur debts beyond its ability to pay as
such debts mature. I have based my conclusion in part on the Projected
Financial Statements, which demonstrate that Company will have positive
cash flow after paying all of its scheduled anticipated indebtedness
(including scheduled payments under the Credit Agreement, the other
obligations contemplated by the Proposed Transactions and other
permitted indebtedness). I have concluded that the realization of
current assets in the ordinary course of business will be sufficient to
pay recurring current debt and short-term and long-term debt service as
such debts mature, and that the cash flow (including earnings plus
non-cash charges to earnings [and the disposition of surplus fixed
assets held for sale]) will be sufficient to provide cash necessary to
repay the Loans and other Obligations under the Credit Agreement, the
other obligations contemplated by the Proposed Transactions and other
long-term indebtedness as such debt matures.
3. The incurrence of the Obligations under the Credit Agreement and the
incurrence of the other obligations contemplated by the Proposed
Transactions will not leave Company with property remaining in its
hands constituting "unreasonably small capital." In reaching this
conclusion, I understand that "unreasonably small capital" depends upon
the nature of the particular business or businesses conducted or to be
conducted, and I have reached my conclusion based on the needs and
anticipated needs for capital of the businesses conducted or
anticipated to be conducted by Company and its Subsidiaries in light of
the Projected Financial Statements and available credit capacity.
4. To the best of my knowledge, Company has not executed the Credit
Agreement or any documents mentioned therein, or made any transfer or
incurred any obligations thereunder, with actual intent to hinder,
delay or defraud either present or future creditors.
XIX-3
<PAGE>
I understand that Lenders are relying on this Financial
Condition Certificate in connection with the extension of credit to Company
pursuant to the Credit Agreement.
I represent the foregoing information to be, to the best of my
knowledge and belief and based on the assumptions set forth herein, accurate and
complete in all material respects and execute this Certificate this 1st day of
October, 1998.
ARTERIAL VASCULAR ENGINEERING,
INC.
By: _____________________________
Name: __________________________
Title: _________________________
XIX-4
<PAGE>
EXHIBIT XX
[FORM OF PRICING LEVEL DETERMINATION CERTIFICATE
This PRICING LEVEL DETERMINATION CERTIFICATE (this
"Certificate") is delivered in connection with that certain Credit Agreement
dated as of September 30, 1998 (as in effect on the date hereof, the "Credit
Agreement") by and among Arterial Vascular Engineering, Inc., a Delaware
corporation ("Company"), the financial institutions referred to therein as
Lenders ("Lenders"), DLJ Capital Funding, Inc., as Syndication Agent, Paribas,
as Documentation Agent, and Royal Bank of Canada, as Administrative Agent
("Administrative Agent"). Capitalized terms used herein without definition have
the same meanings as in the Credit Agreement.
A. I am, and [at all pertinent times mentioned herein] [since
_________, 19__] have been, the duly qualified and acting [chief financial
officer, principal accounting officer, controller or treasurer] of Company.
B. The most recent ratings of the Loans received by the
Company are _________ from Moody's on [date] and ___________ from S & P on
[date].
I represent the foregoing information to be, to the best of my
knowledge and belief, true and correct and execute this Certificate this ____
day of _________, ____.
ARTERIAL VASCULAR
ENGINEERING, INC.
By: _____________________________
Name: __________________________
Title: _________________________
XX-1
<PAGE>
<TABLE>
SCHEDULE 2.1
LENDERS' COMMITMENTS AND PRO RATA SHARES
<CAPTION>
Revolving Loan Pro Rata Share Tranche A Pro Rata Share Tranche B Pro Rata Share
Lender Commitment (re: Rev. Loans) Term Loan (re: Tranche A) Term Loan (re: Tranche B
- - ------ ---------- ---------------- Commitment Term Loans) Commitment Term Loans)
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ % $ % $ %
- - ------------- -------------
TOTAL $ 100% $ 100% $ 100%
</TABLE>
Schedule 2.1
<PAGE>
<TABLE>
SCHEDULE 5.1
SUBSIDIARIES OF COMPANY
<CAPTION>
Ownership
Jurisdiction of Direct by (Each)
Entity Incorporation Parent(s) Direct Parent
- - ------------------------------ ------------------ ------------------------------- -------------------
<S> <C> <C>
AVE Manufacturing, Inc. California %
Proprietary Extrusion
Technologies, Inc. California
Schedule 2.1
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 135,555
<SECURITIES> 96,729
<RECEIVABLES> 99,576
<ALLOWANCES> 9,120
<INVENTORY> 11,544
<CURRENT-ASSETS> 358,013
<PP&E> 86,293
<DEPRECIATION> 7,720
<TOTAL-ASSETS> 437,927
<CURRENT-LIABILITIES> 98,945
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 338,918
<TOTAL-LIABILITY-AND-EQUITY> 437,927
<SALES> 161,268
<TOTAL-REVENUES> 161,268
<CGS> 24,574
<TOTAL-COSTS> 24,574
<OTHER-EXPENSES> 51,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 88,629
<INCOME-TAX> 35,452
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,177
<EPS-PRIMARY> 0.84
<EPS-DILUTED> 0.80
</TABLE>
