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Exhibit 10.22
CREDIT AGREEMENT
Dated as of October 13, 2000
among
KENDLE INTERNATIONAL INC.,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
BANK ONE, NA,
as Agent
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TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS 1
1.1 Definitions 1
1.2 Computation of Time Periods 27
1.3 Accounting Terms 27
1.4 Terms Generally 28
SECTION 2 CREDIT FACILITIES 28
2.1 Revolving Loans 28
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES 30
3.1 Default Rate 30
3.2 Extension and Conversion 30
3.3 Prepayments 31
3.4 Termination and Reduction of Commitments 34
3.5 Fees 34
3.6 Increased Cost and Reduced Return 35
3.7 Limitation on Types of Loans 36
3.8 Illegality 37
3.9 Treatment of Affected Loans 37
3.10 Taxes 38
3.11 Compensation 40
3.12 Pro Rata Treatment 40
3.13 Sharing of Payments 41
3.14 Payments, Computations, Etc 42
3.15 Evidence of Debt 43
SECTION 4 CONDITIONS 44
4.1 Closing Conditions 44
4.2 Conditions to all Extensions of Credit 47
SECTION 5 REPRESENTATIONS AND WARRANTIES 48
5.1 Financial Condition 48
5.2 No Material Change 49
5.3 Organization and Good Standing 49
5.4 Power; Authorization; Enforceable Obligations 50
5.5 No Conflicts 50
5.6 No Default 51
5.7 Ownership of Assets 51
5.8 Indebtedness 51
5.9 Litigation 51
5.10 Taxes 51
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5.11 Compliance with Law 51
5.12 ERISA 52
5.13 Subsidiaries 53
5.14 Governmental Regulations, Etc 53
5.15 Purpose of Loans 54
5.16 Environmental Matters 54
5.17 Intellectual Property 56
5.18 Solvency 56
5.19 Investments 56
5.20 [Intentionally omitted] 56
5.21 Disclosure 56
5.22 No Burdensome Restrictions; Material Contracts 56
5.23 Labor Matters 57
5.24 Nature of Business 57
5.25 Security Documents 57
5.26 Transactions with Affiliates 58
5.27 Insurance 58
SECTION 6 AFFIRMATIVE COVENANTS 58
6.1 Information Covenants 58
6.2 Preservation of Existence and Franchises 61
6.3 Books and Records 62
6.4 Compliance with Law 62
6.5 Payment of Taxes and Other Indebtedness 62
6.6 Insurance; Certain Proceeds 62
6.7 Maintenance of Property 64
6.8 Performance of Obligations 64
6.9 Use of Proceeds 64
6.10 Audits/Inspections 64
6.11 Additional Credit Parties 65
6.12 Liquidity Maintenance 66
SECTION 7 NEGATIVE COVENANTS 66
7.1 Indebtedness 66
7.2 Liens 67
7.3 Nature of Business 67
7.4 Consolidation, Merger, Dissolution, etc 67
7.5 Asset Dispositions 69
7.6 Investments; Acquisitions 70
7.7 Restricted Payments 70
7.8 Prepayments of Indebtedness, etc 70
7.9 Transactions with Affiliates 71
7.10 Fiscal Year; Organizational Documents 71
7.11 Limitation on Restricted Actions 71
7.12 Ownership of Subsidiaries: Limitations on Borrower 72
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7.13 Sale Leasebacks 72
7.14 [intentionally omitted 72
7.15 No Further Negative Pledges 72
7.16 Impairment of Security Interests 72
7.17 Sales of Receivables 73
7.18 Financial Covenants 73
SECTION 8 EVENTS OF DEFAULT 74
8.1 Events of Default 74
8.2 Acceleration; Remedies 77
SECTION 9 AGENCY PROVISIONS 78
9.1 Appointment, Powers and Immunities 78
9.2 Reliance by Agent 79
9.3 Defaults 80
9.4 Rights as Lender 80
9.5 Indemnification 80
9.6 Non-Reliance on Agent and Other Lenders 81
9.7 Resignation of Agent 81
SECTION 10 MISCELLANEOUS 81
10.1 Notices 81
10.2 Right of Set-Off 83
10.3 Benefit of Agreement 83
10.4 No Waiver; Remedies Cumulative 86
10.5 Expenses; Indemnification 86
10.6 Amendments. Waivers and Consents 87
10.7 Counterparts 89
10.8 Headings 89
10.9 Survival 89
10.10 Governing Law, Submission to Jurisdiction; Venue 89
10.11 Severability 90
10.12 Entirety 90
10.13 Binding Effect; Termination 91
10.14 Confidentiality 91
10.15 Source of Funds 91
10.16 Conflict 92
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SCHEDULES
Schedule 1.1A Investments
Schedule 1.1B Liens
Schedule 2.1(a) Commitments
Schedule 5.1 Liabilities
Schedule 5.4 Required Consents, Authorizations, Notices and Filings
Schedule 5.9 Litigation
Schedule 5.10 Tax Investigation
Schedule 5.12 ERISA
Schedule 5.13 Subsidiaries
Schedule 5.16 Environmental Disclosures
Schedule 5.17 Intellectual Property
Schedule 5.22 Material Contracts
Schedule 5.23 Labor Matters
Schedule 5.25 Filing Locations
Schedule 7.1(b) Indebtedness
Exhibit A Form of Pledge Agreement
Exhibit B Form of Guarantee Agreement
Exhibit C Form of Intercompany Note
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Notice of Borrowing
Exhibit F Form of Revolving Note
Exhibit G Form of Notice of Extension/Conversion
Exhibit H Form of Intercreditor and Collateral Agreement
Exhibit I Form of Officer's Compliance Certificate
Exhibit J Form of Joinder Agreement
Exhibit K Form of Opinion of General Counsel
Exhibit L Indemnity, Subrogation and Contribution Agreement
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CREDIT AGREEMENT dated as of October 13, 2000 (as amended, modified,
restated or supplemented from time to time, this "Agreement"), among KENDLE
INTERNATIONAL INC., an Ohio corporation (the "Borrower"), the Lenders (as
defined herein) and BANK ONE, NA, as Agent for the Lenders (in such capacity,
the "Agent").
The Borrower has requested that the Lenders provide a credit facility
to the Borrower in the aggregate principal amount of up to $35,000,000 for the
purposes set forth in this Agreement below. The Lenders have agreed to make the
requested credit facility available to the Borrower on the terms and subject to
the conditions set forth in this Agreement below. Accordingly, the Borrower, the
Lenders and the Agent agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the meanings specified below:
"Additional Guarantor" shall mean each Person that becomes a Domestic
Subsidiary of the Borrower after the Effective Date.
"Adjusted Base Rate" shall mean the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" shall mean the Eurodollar Rate plus the
Applicable Percentage.
"Affected Loans" shall have the meaning assigned to that term in
Section 3.9.
"Affected Type" shall have the meaning assigned to that term in Section
3.9.
"Affiliate" shall mean (a) with respect to any Person (including the
Credit Parties), any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person and
(b) with respect to the Credit Parties, any Person directly or indirectly owning
or holding five percent (5%) or more of the equity interest in such Credit
Parties. For purposes of this definition, "control" when used with respect to
any Person shall mean the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agency Services Address" shall mean Bank One, NA, Bank One Towers,
8044 Montgomery Road, Cincinnati, Ohio 45236-5800, or such other address as may
be identified by written notice from the Agent to the Borrower.
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"Agent" shall have the meaning assigned to that term in the heading
hereof, together with its successors.
"Applicable Lending Office" shall mean, for each Lender and for each
Type of Loan, the "Lending Office" of such Lender (or of an Affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or such
other office of such Lender (or an Affiliate of such Lender) as such Lender may
from time to time specify to the Agent and the Borrower by written notice in
accordance with the terms hereof as the office by which its Loans of such Type
are to be made and maintained.
"Applicable Percentage" shall mean, for purposes of calculating (i) the
applicable interest rate for any day for any Eurodollar Loan, (ii) the
applicable rate of the Facility Fee for any day for purposes of Section 3.5(a),
and (iii) the applicable interest rate for any Base Rate Loan, the appropriate
applicable percentage set forth in the table below corresponding to the Leverage
Ratio as of the most recent Calculation Date:
<TABLE>
<CAPTION>
====================================================================================================================
Pricing Total Applicable
Level Leverage Ratio Percentage for Applicable Percentage Applicable Percentage
Eurodollar Loans For Base Rate Loans For Facility Fees
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<S> <C> <C> <C> <C>
I 1.0 to 1.0 1.00% 0.0% 0.25%
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II 2.0 to 1.0 but 1.25% 0.0% 0.30%
> 1.0 to 1.0
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III 2.5 to 1.0 but 1.50% 0.0% 0.35%
>2.0 to 1.0
====================================================================================================================
</TABLE>
Each Applicable Percentage shall be determined and adjusted quarterly on the
date (each a "Calculation Date") five (5) Business Days after the date by which
the Borrower is required to provide an officer's certificate in accordance with
the provisions of Section 6.1 (c) for the most recently ended fiscal quarter of
the Borrower; provided, that (a) the Applicable Percentages to be used for the
period from the Effective Date through the Agent's receipt of the officer's
certificate in accordance with the provisions of Section 6.1 (c) for the
Borrower's fiscal quarter ending December 31, 2000, shall be based on Pricing
Level I (as shown above) and in the event that such officer's certificate
indicates a Pricing Level other than Pricing Level I (as shown above) was
applicable to such time period, the Borrower shall pay to the Administrative
Agent on behalf of the Lenders, an amount equal to the difference between (1)
the total interest and fees that would have been paid from the Effective Date
through the applicable Calculation Date had the correct Pricing Level been
applicable, and (2) the total interest and fees actually paid during such period
based on Pricing Level I, (b) after the delivery of the officer's certificate
referred to in clause (a) above, the Pricing Level shall be determined by the
Leverage Ratio as of the last day of the most recently ended fiscal quarter of
the Borrower preceding the applicable Calculation Date, and (c) if the Borrower
fails to provide the officer's certificate to the Agency Services Address as
required by Section 6.1(c) for the most recently ended fiscal quarter of the
Borrower preceding the applicable Calculation Date, the Applicable Percentage
from such Calculation Date shall be based on Pricing Level III (as shown above)
until such time as an appropriate
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officer's certificate is provided, whereupon the Pricing Level shall be
determined by the Leverage Ratio as of the last day of the most recently ended
fiscal quarter of the Borrower preceding such Calculation Date. Each Applicable
Percentage shall be effective from one Calculation Date until the next
Calculation Date. Any adjustment in the Applicable Percentages shall be
applicable to all Loans then existing or subsequently made or issued.
"Asset Disposition" shall mean the disposition of any or all of the
assets of any Credit Party (including the Capital Stock of a Subsidiary),
whether by sale, lease (including any Sale and Leaseback Transaction), transfer,
Casualty, Condemnation or otherwise; provided that, the foregoing definition
shall not be deemed to imply that any such Asset Disposition is permitted under
this Agreement. The term "Asset Disposition" shall not include any Equity
Issuance.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and its assignee in the form of Exhibit D or such other
similar form as shall be approved by the Agent and the Borrower.
"Bank One" shall mean Bank One, NA and its successors.
"Bankruptcy Code" shall mean the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time to
time.
"Bankruptcy Event" shall mean, with respect to any Person, the
occurrence of any of the following with respect to such Person: (a) a court or
governmental agency having jurisdiction in the premises shall enter a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial part of
its Property or ordering the winding up or liquidation of its affairs; or (b)
there shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or any case, proceeding or other action for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or for the
winding up or liquidation of its affairs, and such involuntary case or other
case, proceeding or other action shall remain undismissed, undischarged or
unbonded for a period of sixty (60) consecutive days; or (c) such Person shall
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial part of
its Property or make any general assignment for the benefit of creditors; (d)
such Person shall be unable to, or shall admit in writing its inability to, pay
its debts generally as they become due; (e) being in liquidation or provisional
liquidation or under administration (as defined in the
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Corporations Law) or an analogous person appointed to it or any of its property;
or (f) being taken under Section 459F(1) of the Corporations Law to have failed
to comply with a statutory demand. "Corporations Law" shall mean the
Corporations Act 1989 (Cth) as amended from time to time and applied in the
various states and territories of the Commonwealth of Australia.
"Base Rate" shall mean, for any day, the rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus one-half of one percent
(0.5%) and (b) the Prime Rate for such day. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrower" shall mean the Person identified as such in the heading
hereof, together with its permitted successors and assigns.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Cincinnati, Ohio are authorized or required by
law to close; except, that, when used in connection with a Eurodollar Loan, such
day shall also be a day on which dealings between banks are carried on in U.S.
dollar deposits in London, England.
"Calculation Date" shall have the meaning assigned to that term in the
definition of "Applicable Percentage" set forth in this Section 1.1.
"Capital Lease" shall mean, as applied to any Person, any lease of any
Property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" shall mean (a) in the case of a corporation, capital
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests, (e) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person and (f) all rights to purchase, warrants, options
and other securities exercisable for, exchangeable for or convertible into any
of the foregoing.
"Cash Equivalents" shall mean (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve (12) months from the date of acquisition, (b) U.S. dollar
denominated certificates of deposit of (i) any Lender, (ii)
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any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (iii) any bank whose short-term commercial paper
rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at
least P-1 or the equivalent thereof (any such bank being an "Approved Bank"), in
each case with maturities of not more than 270 days from the date of acquisition
(provided however, any such cash equivalents in Borrower's portfolio as of the
date of this Agreement may have a maturity greater than 270 days), (c)
commercial paper and variable or fixed rate notes issued by any Approved Bank
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or
better by S&P or P-1 (or the equivalent thereof) or better by Moody's and
maturing within six (6) months of the date of acquisition, (d) repurchase
agreements with a bank or trust company (including any of the Lenders) or
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States of America in which the Borrower or any Subsidiary shall have a perfected
first priority security interest (subject to no other Liens) and having, on the
date of purchase thereof, a fair market value of at least 100% of the amount of
the repurchase obligations and (e) Investments, classified in accordance with
GAAP as current assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character described in the
foregoing subdivisions (a) through (d).
"Casualty" shall mean any casualty or other loss, damage or destruction
of any Property of any Credit Party.
"Change of Control" shall mean any of the following events: (a) any
person or "group" (within the meaning of Rule 13d-5 under the Exchange Act),
together with its Affiliates, other than Candace Kendle and Christopher C.
Bergen, shall beneficially own, directly or indirectly, the lesser of (i) an
amount of Capital Stock of the Borrower entitled to twenty percent (20%) or more
of the Total Voting Power of the Borrower or (ii) an amount of Capital Stock of
the Borrower entitled to a percentage of the Total Voting Power of the Borrower
in excess of the aggregate of such Capital Stock owned, directly or indirectly,
by Candace Kendle and Christopher C. Bergen; or (b) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Borrower (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Borrower was approved by a vote of sixty-six and 2/3 percent
(66-2/3%) of the directors of the Borrower then still in office who were either
directors at the beginning of such period or whose
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election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Borrower then
in office.
"Chief Financial Officer" of any Person shall mean the chief financial
officer, principal accounting officer or similar officer of such Person.
"Closing Fee" shall have the meaning assigned to such term in Section
3.5(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References to
sections of the Code shall be construed also to refer to any successor sections.
"Collateral" shall mean all the collateral which is identified in, and
at any time is purported to be covered by, the Collateral Documents.
"Collateral Documents" shall mean the Pledge Agreement, the Guarantee
Agreement and such other documents executed and delivered in connection with the
attachment and perfection of the Agent's security interests and liens arising
thereunder and all documents and instruments under and pursuant to Section 6.11.
"Commitment" shall mean with respect to each Lender, the Revolving
Commitment of such Lender.
"Condemnation" shall mean any taking of Property, or any part thereof
or interest therein, for public or quasi-public use under the power of eminent
domain, by reason of any public improvement or condemnation proceeding, or in
any other similar manner.
"Condemnation Award" shall mean all proceeds of any Condemnation or
transfer in lieu thereof.
"Consolidated Capital Expenditures" shall mean, for any period, the sum
of all amounts, in accordance with GAAP, that are included as additions to
property, plant and equipment and other capital expenditures on a consolidated
statement of cash flows for the Borrower and its Consolidated Subsidiaries
during such period (excluding the amounts under any Capital Lease).
Notwithstanding the foregoing, the term "Consolidated Capital Expenditures"
shall not include (a) capital expenditures in respect of the reinvestment of
Insurance Proceeds and Condemnation Awards received by the Borrower and its
Subsidiaries to the extent that such reinvestment is permitted under the Credit
Documents and (b) capital expenditures for Permitted Acquisitions.
"Consolidated Cash Dividends" shall mean, for any period, the aggregate
amount of all dividends or distributions paid in cash in respect of Capital
Stock by the Borrower during such period.
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"Consolidated Cash Taxes" shall mean the aggregate amount of all
Federal, state, local and foreign income, value added and similar taxes based
upon income of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, to the extent the same are paid in
cash or satisfied through credit or refund applied to such taxes by the Borrower
or any of its Consolidated Subsidiaries during such period.
"Consolidated EBITDA" shall mean, for any period, the sum of (a)
Consolidated Net Income (excluding the one-time restructuring charge incurred in
the fiscal quarter ended June 30, 2000) for such period, plus (b) an amount
which, in the determination of Consolidated Net Income for such period, has been
deducted for (i) Consolidated Interest Expense; (ii) Consolidated Cash Taxes;
and (iii) depreciation and amortization expense minus (c) an amount which, in
the determination of Consolidated Net Income for such period, has been added for
any non-cash income or non-cash gains plus (d) an amount which, in the
determination of Consolidated Net Income for such period, has been subtracted
for any non-cash losses, all as determined in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, the gross
amount of interest expense of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, during such period,
including (a) the portion of any payments or accruals with respect to Capital
Leases that are allocable to interest expense in accordance with GAAP, (b) net
costs under Interest Rate Protection Agreements during such period and (c) all
fees, charges, discounts and other costs recognized in Borrower's Consolidated
Net Income in respect of Indebtedness during such period, but, in each case;
provided, that (i) all non-cash interest expense shall be excluded and (ii) any
interest on Indebtedness of another Person that is guaranteed by the Borrower or
any of its Consolidated Subsidiaries or secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) a Lien on, or payable out of the proceeds of the sale of or production from,
assets of the Borrower or any of its Consolidated Subsidiaries (whether or not
such guarantee or Lien is called upon) shall be included.
"Consolidated Net Income" shall mean, for any period, net income (or
loss) after taxes of the Borrower and its Consolidated Subsidiaries, determined
on a consolidated basis in accordance with GAAP, for such period; provided,
that, there shall be excluded from such calculation of net income (or loss) (a)
the income of any Person in which any other Person (other than the Borrower or
any of its Subsidiaries) has any interest, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower or any of its
Subsidiaries by such Person during such period and to the extent such dividend
or distribution actually paid is required by GAAP and the regulations
promulgated by the Securities and Exchange Commission to be reported as income,
(b) the income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries or the date such Person's assets are acquired by the
Borrower or any of its Subsidiaries, (c) the income of any Subsidiary of the
Borrower to the extent that the
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declaration or payment of dividends or similar distributions by such 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 such Subsidiary, (d) except for purposes
of Section 7.18(c), any after-tax gains attributable to sales of assets out of
the ordinary course of business and (e) except for purposes of Section 7.18(c),
to the extent not included in clauses (a) through (d) above, any non-cash
extraordinary gains or non-cash extraordinary losses.
"Consolidated Net Worth" shall mean, as of any date, shareholders'
equity or net worth of the Borrower and its Consolidated Subsidiaries, as
determined on a consolidated basis in accordance with GAAP, excluding amounts
attributable to Disqualified Stock and the cumulative other comprehensive income
adjustments (including translation adjustment) determined on a consolidated
basis in accordance with GAAP.
"Consolidated Rent Expense" shall mean, for any period, the aggregate
amount of fixed and contingent rentals payable by the Borrower and the
Subsidiaries, determined on a consolidated basis in accordance with GAAP, for
such period with respect to Operating Leases.
"Consolidated Scheduled Funded Debt Payments" shall mean, for any
period, with respect to the Borrower and its Consolidated Subsidiaries on a
consolidated basis, the sum of all scheduled payments of principal on Funded
Indebtedness for such period (including the principal component of payments due
on Capital Leases during such period but excluding, as long as no Default or
Event of Default has occurred and is continuing, any principal payments due on
Revolving Loans during such period); provided, that, Consolidated Scheduled
Funded Debt Payments shall not include voluntary prepayments of Funded
Indebtedness, mandatory prepayments required pursuant to Section 3.3 or other
mandatory prepayments of Funded Indebtedness.
"Consolidated Subsidiaries" of any Person shall mean all subsidiaries
of such Person consolidated with such Person for financial reporting purposes in
accordance with GAAP.
"Credit Documents" shall mean a collective reference to this Agreement,
the Notes, each Joinder Agreement, the Fee Letter, the Collateral Documents, the
Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement, the
Intercompany Notes, and all other related agreements and documents issued or
delivered hereunder or thereunder or pursuant hereto or thereto (in each case as
the same may be amended, modified, restated, supplemented, extended, renewed or
replaced from time to time), and "Credit Document" shall mean any one of them.
"Credit Obligations" shall mean, without duplication, (a) all of the
obligations of the Credit Parties to the Lenders and the Agent, whenever
arising, whether monetary or otherwise, under this Agreement, the Notes, the
Collateral Documents, the Guarantee Agreement or any of the other Credit
Documents (including, without limitation, principal
<PAGE> 14
obligations, interest obligations (including any interest accruing after the
occurrence of a Bankruptcy Event with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code) and all
fees, expenses, indemnities and expense reimbursement obligations) and (b) all
liabilities and obligations, whenever arising, owing from the Borrower to any
Lender, or any Affiliate of a Lender, arising under any Lender Hedging
Agreement.
"Credit Parties" shall mean the Borrower and its Subsidiaries, and
"Credit Party" shall mean any one of them.
"Debt Issuance" shall mean the issuance of any Indebtedness for
borrowed money by any Credit Party; provided, that, the foregoing definition
shall not be deemed to imply that any such Debt Issuance is permitted under this
Agreement.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Disqualified Stock" of any Person shall mean (a) any Capital Stock of
such Person which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable), upon the happening
of any event or otherwise (i) matures or is mandatorily redeemable or subject to
any mandatory repurchase requirement, pursuant to a sinking fund obligation or
otherwise, (ii) is convertible into or exchangeable or exercisable for
Indebtedness or Disqualified Stock, (iii) is redeemable or subject to any
repurchase requirement exercisable at the option of the holder thereof, in whole
or in part, in each case on or prior to the first anniversary of the Maturity
Date (or, if earlier, the first anniversary of the date on which all the Credit
Obligations have been indefeasibly paid in full in cash and the Commitments have
been terminated) and (b) if such Person is a Subsidiary of the Borrower, any
Preferred Stock of such Person.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the laws of
any State of the United States or the District of Columbia.
"Effective Date" shall mean the date on which this Agreement is
executed and delivered by the parties hereto and the first Loans are made in
accordance with Section 4.
"Eligible Assignee" shall mean: (a) any Lender; (b) any Affiliate of a
Lender; and (c) any other commercial bank, financial institution or "accredited
investor" (as defined in Regulation D under the Securities Act of 1933, as
amended) approved by the Agent and, unless an Event of Default has occurred and
is continuing at the time any assignment is effected in accordance with Section
10.3(b), the Borrower, such approval
<PAGE> 15
not to be unreasonably withheld or delayed by the Borrower and such approval to
be deemed given by the Borrower if no objection from the Borrower is received by
the assigning Lender and the Agent within five Business Days after notice of
such proposed assignment has been provided by the assigning Lender to the
Borrower; provided, that, neither the Borrower, any Affiliate of the Borrower
nor any direct competitor of the Borrower in the Borrower's business shall
qualify as an Eligible Assignee.
"Environmental Laws" shall mean any and all applicable Federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment, including, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes.
"Equity Issuance" shall mean any issuance by any Credit Party of any
Capital Stock to any Person or the receipt by any such Person of a capital
contribution from any other Person, including the issuance of any of its Capital
Stock pursuant to the exercise of options or warrants or upon the conversion of
any debt securities to equity; provided, that, the foregoing definition shall
not be deemed to imply that any such issuance is permitted under this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, including the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" shall mean an entity which is under common control
with any Credit Party within the meaning of Section 4001(a)(14) of ERISA, or is
a member of a group which includes any Credit Party and which is treated as a
single employer under Sections 414(b) or (c) of the Code.
"ERISA Event" shall mean (a) with respect to any Plan, the occurrence
of a Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (b) the withdrawal by any Credit Party or
any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section 4001(a)(2) of
ERISA), or the termination of a Multiple Employer Plan; (c) the distribution of
a notice of intent to terminate or the actual termination of a Plan pursuant to
Section 4041(a)(2) or 4041A of ERISA; (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under Section 4042 of
ERISA;
<PAGE> 16
(e) any event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (f) the complete or partial withdrawal of any Credit Party
or any ERISA Affiliate from a Multiemployer Plan; (g) the conditions for
imposition of alien under Section 302(f) of ERISA exist with respect to any
Plan; or (h) the adoption of an amendment to any Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loans" shall mean any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" shall mean, for any Eurodollar Loan for any Interest
Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) determined by the Agent to be equal to the quotient obtained by dividing
(a) the Interbank Offered Rate for such Eurodollar Loan for such Interest Period
by (b) 1 minus the Reserve Requirement for such Eurodollar Loan for such
Interest Period.
"Event of Default" shall have the meaning assigned to that term in
Section 8.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Asset Depositions" shall mean (a) any Asset Disposition by
any Credit Party to the Borrower or any Guarantor if, after giving effect to
such Asset Disposition, no Default or Event of Default exists, (b) the
liquidation of Cash Equivalents for the account of the Borrower, (c) the
disposition of worn out, damaged or obsolete tangible assets, so long as the
fair market value (based on the good faith judgment of the Borrower without the
requirement of a third party appraisal) of all property disposed of pursuant to
this clause (c) does not exceed $1,000,000 in the aggregate in any fiscal year,
and (d) Asset Dispositions in the nature of non-material Casualties that do not
result in insurance proceeds or damage to Collateral in excess of $1,000,000 in
the aggregate in any fiscal year.
"Facility" shall mean the Loans provided to the Borrower or
participated in by the Lenders pursuant to this Agreement and the other Credit
Documents.
"Facility Fee" shall have the meaning assigned to that term in Section
3.5(b).
"Facility Fee Calculation Period" shall have the meaning assigned to
that term in Section 3.5(b).
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be
<PAGE> 17
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average quotation for such day received by the Agent from three
Federal Funds brokers of recognized standing as selected by Agent.
"Fee Letter" shall have the meaning assigned to that term in Section
3.5.
"Fees" shall mean all fees payable pursuant to Section 3.5.
"Fixed Charge Coverage Ratio" shall mean, as of any reporting day, the
ratio of (a) Consolidated EBITDA for the period of four consecutive fiscal
quarters of the Borrower ending on, or most recently preceding, such day, minus
Consolidated Capital Expenditures for such period, minus Consolidated Cash
Dividends for such period, to (b) the sum of (i) Consolidated Interest Expense
for such period, plus, (ii) Consolidated Scheduled Funded Debt Payments for such
period.
"Foreign Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person which is not a Domestic Subsidiary of such Person.
"Funded Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness of the
types referred to in clause (f), (g), (i), (k) and (l) of the definition of
"Indebtedness" set forth in this Section 1.1, (b) all Indebtedness of another
Person of the type referred to in clause (a) above secured by (or for which the
holder of such Funded Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all Guaranty Obligations of
such Person with respect to Indebtedness of the type referred to in clause (a)
above of another Person and (d) Indebtedness of the type referred to in clause
(a) above of any partnership or unincorporated joint venture in which such
Person is general partner or for which such Person is otherwise legally
obligated or has a reasonable expectation of being liable with respect thereto.
"GAAP" shall mean generally accepted accounting principles in the
United States applied on a consistent basis, subject to the terms of Section
1.3.
"Governmental Authority" shall mean any Federal, state, local or
foreign governmental court, agency, commission, board, bureau, authority,
instrumentality, judicial or regulatory body, or entity.
"Guarantee Agreement" shall mean the Guarantee Agreement dated the
Effective Date executed by the Guarantors in favor of the Agent, in the form of
Exhibit B as it may be amended, modified, restated or supplemented from time to
time.
<PAGE> 18
"Guarantor" shall mean all Guarantors under the Guarantee Agreement
existing on the Effective Date and each Additional Guarantor which may
thereafter execute a Joinder Agreement, together with their successors and
permitted assigns.
"Guaranty Obligations" shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including any obligation, whether or
not contingent, (a) to purchase any such Indebtedness or any Property
constituting security therefor, (b) to advance or provide funds or other support
for the payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including keep well agreements, maintenance agreements, comfort letters or
similar agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (c) to lease or purchase Property, securities
or services primarily for the purpose of insuring the holder of such
Indebtedness against loss in respect thereof or (d) to otherwise assure or hold
harmless the holder of such Indebtedness against loss in respect thereof. For
purposes hereof, the amount of any Guaranty Obligation shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.
"Indebtedness" of any Person shall mean (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, letters of credit, notes or similar instruments, or upon
which interest payments are customarily made, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to Property
purchased by such Person (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary course of
business), (d) all obligations of such Person issued or assumed as the deferred
purchase price of Property or services purchased by such Person (other than
trade debt incurred in the ordinary course of business and due within six (6)
months of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, Property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Guaranty Obligations of such Person, (h) the principal portion of all
obligations of such Person under Capital Leases, (i) all net obligations of such
Person under Interest Rate Protection Agreements or foreign currency exchange
agreements, (j) the maximum amount of all standby letters of credit issued or
bankers' acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent unreimbursed),
(k) all Disqualified Stock of such Person, and (l) the Indebtedness of
<PAGE> 19
any partnership or unincorporated joint venture in which such Person is a
general partner or a joint venturer.
"Indemnified Party" shall have the meaning assigned to that term in
Section 10.5(b).
"Indemnity Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement dated the Effective Date
executed by the Guarantors in favor of the Agent, in the form of Exhibit L, as
amended, modified, restated or supplemented from time to time.
"Insurance Proceeds" shall mean all insurance proceeds (other than
business interruption insurance proceeds), damages, awards, claims and rights of
action with respect to any Casualty.
"Interbank Offered Rate" shall mean, for any Eurodollar Loan for any
Interest Period, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen FRBD Page (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "Interbank Offered Rate" shall
mean, for any Eurodollar Loan for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page).
"Intercompany Notes" shall mean the promissory notes issued as
contemplated by clauses (f) or (g) of the definition of Permitted Investments,
in the form attached hereto as Exhibit C.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated
the Effective Date by and between Agent and Bank One in the form attached hereto
as Exhibit H, as amended, modified, restated or supplemented from time to time.
"Interest Payment Date" shall mean (a) as to Base Rate Loans, the last
Business Day of each March, June, September and December of each year during the
term of this Agreement and (b) as to Eurodollar Loans, the last day of each
applicable Interest Period for any such Loan and the Maturity Date, and in
addition, where the applicable Interest Period for any such Loan is greater than
three (3) months, the date three (3) months from the beginning of the Interest
Period and each three months thereafter and (c) as to all Loans, the Maturity
Date of such Loans.
"Interest Period" shall mean a period of one (1), two (2), three (3),
six (6) or twelve (12) months' duration, as the Borrower may elect (subject to
availability) commencing, in each case, on the date of the borrowing (including
conversions and extensions thereof) provided, that, (i) if any Interest Period
would end on a day which is
<PAGE> 20
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that in the case of Eurodollar Loans where the
next succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (ii) no Interest Period for any Loan shall
extend beyond the Maturity Date for such Loan and (iii) in the case of
Eurodollar Loans, where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the Interest Period
is to end, such Interest Period shall end on the last Business Day of such
calendar month.
"Interest Rate Protection Agreement" shall mean any interest rate swap,
collar, cap or other arrangement requiring payments contingent upon interest
rates.
"Investment" in any Person shall mean (a) the acquisition (whether for
cash, Property, services, assumption of Indebtedness, securities or otherwise)
of assets, shares of Capital Stock, bonds, notes, debentures, partnership, joint
venture or other ownership interests or other securities of such other Person or
(b) any deposit with, or advance, loan or other extension of credit to, such
Person (other than deposits made in connection with the purchase of equipment or
other assets in the ordinary course of business) or (c) any other capital
contribution to or investment in such Person, including any Guaranty Obligations
(including any support for a letter of credit issued on behalf of such Person)
incurred for the benefit of such Person.
"Joinder Agreement" shall mean a Joinder Agreement substantially in the
form of Exhibit J hereto, executed and delivered by an Additional Guarantor in
accordance with the provisions of Section 6.11.
"Lender" shall mean any of the Persons identified as a "Lender" on the
signature pages hereto, and any Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their successors
and permitted assigns.
"Lender Hedging Agreements" shall mean any Interest Rate Protection
Agreement or foreign currency exchange agreement between the Borrower or any of
its Subsidiaries and any Lender (or any Affiliate of a Lender).
"Lending Party" shall have the meaning assigned to that term in Section
10.14.
"Leverage Ratio" shall mean, as of any reporting day, the ratio of (i)
Funded Indebtedness of the Borrower and its Consolidated Subsidiaries on a
consolidated basis as of the last day of the period of four (4) consecutive
fiscal quarters of the Borrower ending on, or most recently preceding, such day,
less 50% of Cash Equivalents, to (ii) Consolidated EBITDA for such period.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
easement, assignment, deposit arrangement, restriction, restrictive covenant,
lease, sublease, option, security interest, encumbrance, lien (statutory or
otherwise), preference, priority
<PAGE> 21
or charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under the Uniform Commercial Code as adopted and in
effect in the relevant jurisdiction or other similar recording or notice
statute, and any lease in the nature thereof).
"Loan" or "Loans" shall mean the Revolving Loans, which may also be
referred to by Type as either Base Rate Loans or Eurodollar Loans. As the
context requires, a "Loan" of a particular Type refers to a portion of the total
outstanding Loans of such Type as to which a single Interest Period is in
effect.
"Material Adverse Change" shall mean a material adverse change in (a)
the condition (financial or otherwise), operations, business, assets,
liabilities (actual or contingent), historical or projected revenues or cash
flows, material relationships or management of the Credit Parties taken as a
whole; provided, that, a change in the economic condition of a foreign or
domestic jurisdiction in and of itself shall not be deemed to be a Material
Adverse Change pursuant to this clause (a), (b) the ability of any Credit Party
to perform any material obligation under the Credit Documents to which it is a
party or (c) the material rights and remedies of the Lenders under the Credit
Documents. In determining whether any individual event or occurrence of the
foregoing types would result in a Material Adverse Change, notwithstanding that
a particular event or occurrence does not by itself constitute such a change, a
Material Adverse Change shall be deemed to have occurred if the cumulative
effect of such event or occurrence and all other events or occurrences of the
foregoing types which have occurred would result in a Material Adverse Change.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the condition (financial or otherwise), operations, business, assets,
liabilities (actual or contingent), historical or projected revenues or cash
flows, material relationships or management of the Credit Parties taken as a
whole, (b) the ability of any Credit Party to perform any material obligation
under the Credit Documents to which it is a party or (c) the material rights and
remedies of the Lenders under the Credit Documents. In determining whether any
individual event or occurrence of the foregoing types would result in a Material
Adverse Effect, notwithstanding that a particular event or occurrence does not
itself have such effect, a Material Adverse Effect shall be deemed to have
occurred if the cumulative effect of such event or occurrence and all other
events or occurrences of the foregoing types which have occurred would result in
a Material Adverse Effect.
"Material Contracts" shall have the meaning assigned to that term in
Section 5.22.
"Materials of Environmental Concern" shall mean any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products or
any hazardous, toxic, radioactive or explosive substances, materials or wastes,
defined or regulated as
<PAGE> 22
such in or under any Environmental Laws, including asbestos, polychlorinated
biphenyls and ureaformaldehyde insulation and all other substances or wastes of
any nature regulated pursuant to any Environmental Law.
"Maturity Date" shall mean October 13, 2003, unless extended for an
additional one-year period upon written notice from Borrower to Agent not more
than 180 days nor less than 90 days preceding the initial Maturity Date, and
receipt of written consent thereto by the Required Lenders which consent Lenders
shall have no obligation to give.
"Moody's" shall mean Moody's Investors Service, Inc., or any successor
to such company in the business of rating securities.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" shall mean a Plan which any Credit Party or
any ERISA Affiliate and at least one employer other than any Credit Party or any
ERISA Affiliate are contributing sponsors.
"Net Cash Proceeds" shall mean (a) with respect to any Asset
Disposition, (i) the gross amount of cash proceeds (including Insurance Proceeds
and Condemnation Awards in the case of any Casualty or Condemnation except to
the extent and for as long as such Insurance Proceeds or Condemnation Awards are
Reinvestment Funds or unless such Insurance Proceeds or Condemnation Awards are
to be used for repair, restoration or replacement pursuant to plans approved by
the Required Lenders) actually paid to or actually received by any Credit Party
in respect of such Asset Disposition (including cash proceeds subsequently
received at any time in respect of such Asset Disposition from non-cash
consideration initially received or otherwise), less (ii) the sum of (A) the
amount, if any, of all taxes (other than income taxes) and the Borrower's
good-faith best estimate of all income taxes relating thereto (to the extent
that such amount shall have been set aside for the purpose of paying such taxes
when due), and customary fees, brokerage fees, commissions, costs and other
expenses (other than those payable to any Credit Party or any Affiliate of any
such Person) that are incurred in connection with such Asset Disposition and are
payable by the seller or the transferor of the assets or Property to which such
Asset Disposition relates, but only to the extent not already deducted in
arriving at the amount referred to in clause (a)(i) above, (B) appropriate
amounts set aside as a reserve in accordance with GAAP against any liabilities
associated with such Asset Disposition and (C) if applicable, the amount of
Indebtedness secured by a Permitted Lien that has been repaid or refinanced as
required in accordance with its terms with the proceeds of such Asset
Disposition; and (b) with respect to any Equity Issuance or Debt Issuance, the
gross amount of cash proceeds paid to or received by any Credit Party in respect
of such
<PAGE> 23
Equity Issuance or Debt Issuance, as the case may be (including cash proceeds
subsequently received at any time in respect of such Equity Issuance or Debt
Issuance from non-cash consideration initially received or otherwise), net of
underwriting discounts and commissions or placement fees, investment banking
fees, legal fees, consulting fees, accounting fees and other customary fees and
expenses directly incurred by any Credit Party in connection therewith (other
than those payable to any Credit Party or any Affiliate of any such Person).
"Note" or "Notes" shall mean, collectively, the Revolving Notes.
"Notice of Borrowing" shall mean a written notice of borrowing in
substantially the form of Exhibit E, as required by Section 2.1(b)(i).
"Notice of Extension/Conversion" shall mean the written notice of
extension or conversion in substantially the form of Exhibit G, as required by
Section 3.2.
"Operating Lease" shall mean, as applied to any Person, any lease
(including leases which may be terminated by the lessee at any time) of any
Property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"Other Taxes" shall have the meaning assigned to such term in Section
3.10(b).
"Overdraft Agreement" shall mean, collectively, the Advised Revocable
Current Line Sterling Overdraft Facility Repayable On Demand dated October 13,
2000 by and between Bank One, NA, London (or its successors or assigns), as
Lender, and Kendle International Holdings Limited in the amount of up to
$2,000,000 equivalent in Sterling and the Advised Revocable Current Line Euro
Overdraft Facility Repayable On Demand dated October 13, 2000 by and between
Bank One, NA, London (or its successors or assigns), as Lender, and Kendle
International Holdings Limited in an aggregate amount of up to $3,000,000
equivalent in Euro, as the same may be amended, supplemented or restated from
time to time.
"Participation Interest" shall mean a purchase by a Lender of a
participation in any Loans or other obligations as provided in Section 3.13.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Acquisition" shall mean an acquisition by the Borrower or
any Wholly Owned Domestic Subsidiary of the Borrower of the Capital Stock or all
or substantially all of the Property of another Person (including by merger or
consolidation or by incorporation of a new Subsidiary) for up to the fair market
value of the Capital Stock or Property acquired, provided, that, (a) the Capital
Stock or Property acquired in such acquisition relates directly to or is
strategically related to the business of the Borrower or any of its Subsidiaries
as existing on the Effective Date, (b) any Indebtedness issued, incurred or
assumed by the Borrower and its Subsidiaries on a consolidated
<PAGE> 24
basis from such acquisition (as permitted hereunder) shall not in the aggregate
exceed $10,000,000, (c) the Agent shall have received all items in respect of
the Capital Stock or Property acquired in such acquisition (and/or the seller
thereof) required to be delivered by the terms of Section 6.11, (d) in the case
of an acquisition of the Capital Stock of another Person, (i) the board of
directors (or other comparable governing body) of such other Person shall have
duly approved such acquisition and (ii) the Capital Stock acquired shall
constitute 100% of the Total Voting Power and ownership interest of the issuer
thereof, (e) no Default or Event of Default shall have occurred and be
continuing immediately before or immediately after giving effect to such
acquisition and the Borrower shall have delivered to the Agent a Pro Forma
Compliance Certificate demonstrating that, upon giving effect to such
acquisition on a Pro Forma Basis, the Borrower shall be in compliance with all
of the financial covenants set forth in Section 7.18 as of the last day of the
most recent period of four consecutive fiscal quarters of the Borrower which
precedes or ends on the date of such acquisition and with respect to which the
Agent has received the Required Financial Information, (f) the representations
and warranties made by the Credit Parties in each Credit Document shall be true
and correct in all material respects as of the date of such acquisition (as if
made on such date after giving effect thereto) except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct in all
material respects at and as of such earlier date), (g) the aggregate
consideration (including cash, assumption of indebtedness and non-cash
consideration) for any single acquisition (or series of related acquisitions)
shall not exceed $30,000,000 and the aggregate consideration (including cash,
assumption of indebtedness and non-cash consideration) for all such acquisitions
occurring during any calendar year of the Borrower during the term hereof shall
not exceed $30,000,000, (h) the aggregate cash consideration for any single
acquisition (or series of related acquisitions) shall not exceed $20,000,000 and
the aggregate cash consideration for all such acquisitions occurring during any
calendar year of the Borrower during the term hereof shall not exceed
$30,000,000; and (i) if at any time the Fixed Charge Coverage Ratio as of the
most recent Computation Date was, or upon giving effect to such acquisition on a
Pro Forma Basis is, less than 1.25 to 1.00, the receipt of prior written consent
(which consent Lenders shall have no obligation to give) of the Required
Lenders.
"Permitted Investments" shall mean Investments which consist of (a)
cash or Cash Equivalents; (b) trade accounts receivable (and related notes and
instruments) arising in the ordinary course of business in accordance with
customary trade terms; (c) Investments
<PAGE> 25
existing as of the Effective Date and set forth in Schedule 1.1 A; (d) Guaranty
Obligations permitted by Section 7.1; (e) advances or loans to directors,
officers, employees, agents, customers or suppliers that do not exceed $250,000
in the aggregate at any one time outstanding for all of the Borrower and its
Subsidiaries; (f) Investments by the Borrower or any Wholly Owned Subsidiary in
Subsidiaries of the Borrower or by any Subsidiary in the Borrower evidenced by
Intercompany Notes pledged to the Agent for the benefit of the Secured Parties;
provided, that, (i) the aggregate principal amount of such Intercompany Notes
issued by Foreign Subsidiaries of the Borrower to the Borrower or to any
Domestic Subsidiary of the Borrower and outstanding at any time shall not exceed
$10,000,000 in the aggregate, (ii) no Investments shall be made in the Capital
Stock of any Foreign Subsidiary except as a Permitted Acquisition; and (iii)
Investments in a Wholly Owned Subsidiary are permitted only so long as such
person remains a Wholly Owned Subsidiary; or (g) Permitted Acquisitions.
"Permitted Liens" shall mean (a) Liens in favor of the Agent on behalf
of the Secured Parties; (b) Liens (other than Liens created or imposed under
ERISA) for taxes or other governmental charges, assessments or levies which are
not yet due or are being contested in good faith by appropriate proceedings
diligently pursued and for which adequate reserves determined in accordance with
GAAP have been established (and as to which the Property subject to any such
Lien is not yet subject to foreclosure, sale or loss on account thereof); (c)
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and suppliers and other Liens imposed by law or pursuant to
customary reservations or retentions of title arising in the ordinary course of
business, provided, that, such Liens secure only amounts which are not yet due
and payable (or, if due and payable, are unfiled and no other action has been
taken to enforce the same) or are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves determined in
accordance with GAAP have been established (and as to which the Property subject
to any such Lien is not yet subject to foreclosure, sale or loss on account
thereof); (d) Liens (other than Liens created or imposed under ERISA) incurred
or deposits made by the Borrower or any of its Subsidiaries in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, bids, leases, government contracts, performance
and return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of Indebtedness); (e) Liens in connection with
attachments or judgments (including judgment or appeal bonds); provided, that,
the judgments secured shall, within thirty (30) days after the entry thereof,
have been discharged or execution thereof stayed pending appeal (and shall have
been discharged within thirty (30) days after the expiration of any such stay);
(f) easements, rights-of-way, restrictions (including zoning restrictions),
minor defects or irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use of the encumbered
Property for its intended purposes; (g) Liens on Property securing purchase
money Indebtedness (including Capital Leases) to the extent permitted under
Section 7.1(c), provided, that, (i) any such Indebtedness is incurred and such
Lien
<PAGE> 26
attaches to such Property concurrently with or within ninety (90) days after the
acquisition thereof and (ii) such Indebtedness is not secured by a Lien on any
other assets; (h) any interest of title of a lessor under, and Liens arising
from UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases (excluding Capital
Leases) permitted by this Agreement; (i) Liens existing as of the Effective Date
and set forth on Schedule 1.1B; provided, that (A) no such Lien shall at any
time be extended to or cover any Property other than the Property subject
thereto on the Effective Date and (B) the principal amount of the Indebtedness
secured by such Liens shall not be extended, renewed, refunded or refinanced;
and (j) Liens in connection with the Overdraft Agreement.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority or any other entity.
"Plan" shall mean any employee benefit plan (as defined in Section 3(3)
of ERISA) which is covered by ERISA and with respect to which any Credit Party
or any ERISA Affiliate is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" within the meaning of
Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge and Security Agreement dated
the Effective Date among the Borrower, the Subsidiaries and the Agent, for the
benefit of the Secured Parties, in the form of Exhibit A; as it may be amended,
modified, restated or supplemented from time to time.
"Pricing Level" shall mean, as of any day, the applicable pricing level
as set forth in the definition of Applicable Percentage.
"Prime Rate" shall mean the per annum rate of interest established from
time to time by Bank One as its prime rate, which rate may not be the lowest
rate of interest charged by Bank One to its customers.
"Preferred Stock", as applied to the Capital Stock of any person, shall
mean Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over the Capital Stock of any other class of
such person.
"Pro Forma Basis" shall mean that, for purposes of calculating
compliance in respect of any transaction with each of the financial covenants
set forth in Section 7.18, such transaction (and any other transaction which
occurred during the relevant four-fiscal quarter period) shall be deemed to have
occurred as of the first day of the most recent period of four consecutive
fiscal quarters of the Borrower preceding the date of such transaction with
respect to which the Agent has received the Required Financial
<PAGE> 27
Information. As used in this definition, "transaction" shall mean (a) any
incurrence or assumption of Indebtedness (and the concurrent retirement of any
other Indebtedness) as referred to in Section 7.1(f)(i), (b) any merger or
consolidation as referred to in Section 7.4(c), (c) any Asset Disposition of a
business or business unit as referred to in Section 7.5(a) or (d) any Permitted
Acquisition referred to in Section 7.6. With respect to any transaction of the
type described in clause (a) above regarding Indebtedness which has a floating
or formula rate, the implied rate of interest for such Indebtedness for the
applicable period for purposes of this definition shall be determined by
utilizing the rate which is or would be in effect with respect to such
Indebtedness as at the relevant date of determination. With respect to any
transaction of the type described in clause (b) or (d) above, any Indebtedness
incurred by the Borrower or any of its Subsidiaries in order to consummate such
transaction (and any other transaction which occurred during the relevant
four-fiscal quarter period) (A) shall be deemed to have been incurred on the
first day of the relevant four fiscal-quarter period and (B) if such
Indebtedness has a floating or formula rate, then the implied rate of interest
for such Indebtedness for the applicable period for purposes of this definition
shall be determined by utilizing the rate which is or would be in effect with
respect to such Indebtedness as at the relevant date of determination. In
connection with any calculation of the financial covenants set forth in Section
7.18 upon giving effect to a transaction on a Pro Forma Basis for purposes of
Section 7.1(f)(i), Section 7.4(c), Section 7.5 or Section 7.6, as applicable:
(i) for purposes of any such calculation in respect of any
incurrence or assumption of Indebtedness (and to the concurrent
retirement of any other Indebtedness) as referred to in Section
7.1(f)(i), any such Indebtedness which is retired shall be excluded and
deemed to have been retired as of the first day of the relevant four
fiscal quarter period;
(ii) for purposes of any such calculation in respect of any
Asset Disposition of a business or business unit as referred to in
Section 7.5, (A) income statement items (whether positive or negative)
attributable to the Property disposed of in such Asset Disposition
shall be excluded to the extent relating to any period prior to the
date of such transaction and (B) any Indebtedness which is retired in
connection with such Asset Disposition shall be excluded and deemed to
have been retired as of the first day of the relevant four
fiscal-quarter period; and
(iii) for purposes of any such calculation in respect of any
merger or consolidation as referred to in Section 7.4(c) or any
Permitted Acquisition as referred to in Section 7.6, (A) any
Indebtedness incurred by the Borrower or any of its Subsidiaries in
connection with such transaction shall be deemed to have been incurred
as of the first day of the relevant four fiscal-quarter period and (B)
income statement items (whether positive or negative) attributable to
the Property acquired in such transaction or to the Investment
comprising such
<PAGE> 28
transaction, as applicable, shall be included to the extent relating to
the relevant four fiscal-quarter period.
"Pro Forma Compliance Certificate" shall mean a certificate of the
chief financial officer of the Borrower (as to which there shall be no
individual, as opposed to corporate, liability) delivered to the Agent in
connection with (a) any incurrence or assumption of Indebtedness (and the
concurrent retirement of any other Indebtedness) as referred to in Section 7.1
(f)(i), (b) any merger or consolidation as referred to in Section 7.4(c), (c)
any Asset Disposition as referred to in Section 7.5(a) or (d) any Permitted
Acquisition as referred to in Section 7.6, as applicable, and containing
reasonably detailed calculations, upon giving effect to the applicable
transaction on a Pro Forma Basis, of the Fixed Charge Coverage Ratio and the
Leverage Ratio as of the last day of the most recent period of four consecutive
fiscal quarters of the Borrower which precede or end on the date of the
applicable transaction and with respect to which the Agent shall have received
the Required Financial Information.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Receivables" shall mean all accounts receivable, receivables, and
obligations for payment created or arising from the sale of inventory or the
rendering of services in the ordinary course of business.
"Register" shall have the meaning assigned to such term in Section
10.3(c).
"Regulation G. T, U or X" shall mean Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a portion thereof.
"Reinvestment Funds" shall mean, with respect to any Insurance Proceeds
from a Casualty or any Condemnation Award from a Condemnation, that portion of
such funds as shall, according to a certificate of a Responsible Officer of the
Borrower delivered to the Agent within thirty (30) days after the occurrence of
such Casualty or Condemnation (and in any case prior to the receipt thereof by
any Credit Party), be reinvested in the repair, restoration or replacement of
the properties and assets that were the subject of such Casualty or
Condemnation; provided, that (a) the aggregate amount of such proceeds with
respect to any such event or series of related events shall not exceed
$10,000,000, (b) such certificate shall be accompanied by evidence reasonably
satisfactory to the Agent that any Property subject to such Casualty or
Condemnation has been or will be repaired, restored or replaced to its condition
immediately prior to such Casualty or Condemnation, (c) pending such
reinvestment, the entire amount of such proceeds shall be deposited in an
account with the Agent for the benefit of the Secured Parties, over which the
Agent shall have sole control and exclusive right of withdrawal, (d) from and
after the date of delivery of such certificate, the Borrower shall diligently
proceed, in a commercially reasonable manner, to
<PAGE> 29
complete the repair, restoration or replacement of the Properties and assets
that were the subject of such Casualty or Condemnation as described in such
certificate and (e) no Default or Event of Default shall have occurred and be
continuing; and provided further that, if any of the foregoing conditions shall
cease to be satisfied at any time, such funds shall no longer be deemed
Reinvestment Funds and such funds shall immediately be applied to prepayment of
the Credit Obligations in accordance with Section 3.3(b).
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles containing any Materials of Environmental Concern).
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice requirement has
been waived by regulation.
"Required Financial Information" shall mean, with respect to any
period, the financial statements of the Borrower with respect to such period as
required pursuant to Section 6.1(a) and 6.1(b) .
"Required Lenders" shall mean, at any time, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent) and
holding in the aggregate more than two-thirds (66 2/3%) of the total of the
Revolving Commitments held by all such Lenders (or, if the Revolving Commitments
have been terminated in whole, the outstanding Revolving Loans). For purposes of
the foregoing, (A) the interest of any Lender holding a Loan in which any other
Lender has a Participation Interest pursuant to Section 3.13 shall be calculated
net of all such Participation Interests of other Lenders and (B) the
Participation Interest of any Lender pursuant to Section 3.13 in a Loan held by
any other Lender shall be counted as if such Lender holding such Participation
Interest held a proportionate part of the related Loan directly.
"Requirement of Law" shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or regulations or other organizational or
governing documents of such Person, and any law, treaty, rule, regulation order,
writ, judgment, injunction, decree, permit or determination of an arbitrator or
a court or other Governmental Authority or other restriction imposed by any
Governmental Authority, in each case applicable to or binding upon such Person
or to which any of its Property is subject.
"Reserve Requirement" shall mean, at any time, the maximum rate at
which reserves (including any marginal, special, supplemental, or emergency
reserves) are required to be maintained under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any successor)
by member banks of the
<PAGE> 30
Federal Reserve System against "Eurocurrency Liabilities" (as such term is used
in Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (a) any category of liabilities which includes
deposits by reference to which the Eurodollar Rate is to be determined or (b)
any category of extensions of credit or other assets which include Eurodollar
Loans. The Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Responsible Officer" shall mean, as to any Person, the president,
chief executive officer, chief operating officer, any financial officer, any
vice president, the Director of Mergers and Acquisitions, or the general counsel
of such Person (or, in the case of a partnership, of the managing general
partner of such Person). It is understood that any certificate delivered to the
Agent or the Lenders hereunder by a Responsible Officer shall be given by the
Person in his or her capacity an officer, and not in any individual capacity
that imparts personal liability to such Person.
"Restricted Payment" shall mean (a) any dividend or other distribution,
direct or indirect, on account of any class of Capital Stock of any Credit
Party, now or hereafter outstanding, (b) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any class of Capital Stock of any Credit Party, now or hereafter
outstanding and (c) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire any class of
Capital Stock of any Credit Party, now or hereafter outstanding.
"Revolving Commitment" shall mean, with respect to any Lender, the commitment of
such Lender, in an aggregate principal amount at any time outstanding of up to
such Lender's Revolving Commitment Percentage of the Revolving Committed Amount,
to make Revolving Loans in accordance with the provisions of Section 2.1 (a).
"Revolving Commitment Percentage" shall mean, for any Lender, the
percentage, if any, identified as its Revolving Commitment Percentage on
Schedule 2.1(a) (or in the Assignment and Acceptance pursuant to which such
Lender assumed its Revolving Commitment), as such percentage may be modified in
connection with any assignment made in accordance with the provisions of this
Agreement.
"Revolving Commitment Amount" shall have the meaning assigned to that
term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to that term in
Section 2.1(a).
"Revolving Notes" shall mean the promissory notes of the Borrower
provided pursuant to Section 2.1(e), in the form of Exhibit F, in favor of each
of the applicable
<PAGE> 31
Lenders evidencing the Revolving Loans, individually or collectively, as
appropriate, as such promissory notes may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.
"S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., or any successor or assignee of the business of such division in the
business of rating securities.
"Sale and Leaseback Transaction" shall mean any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to any Credit Party of any Property, whether owned by any Credit
Party as of the Effective Date or later acquired, which has been or is to be
sold or transferred by any Credit Party to such Person or to any other Person
from whom funds have been, or are to be, advanced by such Person on the security
of such Property.
"Secured Parties" shall mean (a) the Lenders, (b) the Agent, in its
capacity as such under each Credit Document, (c) each Lender or Affiliate
thereof with which the Borrower or any of its Subsidiaries enters into a Lender
Hedging Agreement as permitted hereunder, in its capacity as a party to such
Lender Hedging Agreement, (d) the beneficiaries of each indemnification
obligation undertaken by any Credit Party under any Credit Document and (e) the
successors and permitted assigns of the foregoing.
"Single Employer Plan" shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Solvent" or "Solvency" shall mean, with respect to any Person as of a
particular date, that on such date (a) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they mature
in the normal course of business, (b) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities as they mature in their ordinary
course, taking into account the timing of and amounts of cash to be received by
such Person and the timing of and amounts of cash to be payable on or in respect
of debts and liabilities of such Person, (c) such Person is not engaged in a
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's Property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (d) the fair value of
the Property of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person and (e) the present fair
salable value of the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts and
liabilities as they become absolute and matured. In computing the amount of
contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time,
<PAGE> 32
represents the amount that either probably will become or that is reasonably
possible to become an actual or matured liability.
"Subsidiary" shall mean, as to any Person, (a) any corporation more
than 50% of whose Capital Stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries, and (b) any partnership, association, joint
venture, limited liability company or other business entity in which such Person
directly or indirectly through Subsidiaries has more than 50% of the interest at
any time.
"Taxes" shall have the meaning assigned to such term in Section
3.10(a).
"Total Voting Power" with respect to any Person on any date shall mean
the total number of votes which may be cast in the election of directors of such
Person at any meeting of stockholders of such Person if all securities entitled
to vote in the election of Directors of such Person (on a fully diluted basis,
assuming the exercise, conversion or exchange of all rights, warrants, options
and securities outstanding on such date which are or may thereafter become
exercisable for, exchangeable for or convertible into, such voting securities)
were present and voted at such meeting (other than votes that may be cast only
upon the happening of a contingency).
"Type", with respect to a Loan, refers to whether such Loan is a
Eurodollar Loan or a Base Rate Loan.
"Wholly Owned Subsidiary" of any Person shall mean any Subsidiary 100%
of whose Capital Stock (on a fully diluted basis) is at the time owned by such
Person directly or indirectly through other Wholly Owned Subsidiaries; provided,
that, if any Foreign Subsidiary is required by law to issue a qualifying share
to a director and such qualifying share (a) is non-voting Capital Stock of such
Foreign Subsidiary and (b) represents less than one percent (1%) of the total
outstanding Capital Stock of such Foreign Subsidiary, such Foreign Subsidiary
shall be deemed a Wholly Owned Subsidiary.
1.2 Computation of Time Periods. For purposes of computation of periods
of time hereunder, the word "from" shall mean "from and including" and the words
"to" and "until" each mean "to but excluding."
1.3 Accounting Terms. Except as otherwise expressly provided herein,
all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lenders hereunder shall be prepared, in accordance with GAAP
applied on a consistent basis. All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP
<PAGE> 33
applied on a basis consistent with the most recent annual or quarterly financial
statements delivered pursuant to Section 6.1 (or, prior to the delivery of the
first financial statements pursuant to Section 6.1, consistent with the
financial statements as at June 30, 2000); provided, that, if (i) the Borrower
shall object to determining such compliance on such basis at the time of
delivery of such financial statements due to any change in GAAP or the rules
promulgated with respect thereto after the Effective Date or (ii) the Agent or
the Required Lenders shall so object in writing within ninety (90) days after
delivery of such financial statements, then such calculations shall be made on a
basis consistent with the most recent financial statements delivered by the
Borrower to the Lenders as to which no such objection shall have been made.
1.4 Terms Generally. The definitions in Section 1.1 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references herein to
Sections, Exhibits and Schedules shall be deemed references to Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Unless otherwise expressly provided herein, the word "day" means a
calendar day.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans. (a) Revolving Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations and warranties set
forth herein, each Lender severally agrees to make available to the Borrower
such Lender's Revolving Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("Revolving Loans") from time to time from
the Effective Date until the Maturity Date, or such earlier date as the
Revolving Commitments shall have been terminated as provided herein; provided,
that, the sum of the aggregate principal amount of outstanding Revolving Loans
shall not at any time exceed an amount equal to THIRTY FIVE MILLION AND NO/100
DOLLARS ($35,000,000.00) (as such aggregate maximum amount may be reduced from
time to time as provided in Section 3.4, the "Revolving Committed Amount");
provided, further, with regard to each Lender individually, that such Lender's
outstanding Revolving Loans shall not at any time exceed such Lender's Revolving
Commitment Percentage of the Revolving Committed Amount. Revolving Loans may
consist of Base Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrower may request, and may be repaid and reborrowed in accordance with the
provisions hereof; provided, that, no more than six (6) Eurodollar Loans shall
be outstanding under this Agreement at any time. For purposes hereof, Eurodollar
Loans with different Interest Periods shall be considered as separate Eurodollar
Loans, even if they begin on the same date, although borrowings of Eurodollar
Loans may, in accordance with the provisions hereof, be combined through
extensions or conversions at the end of existing Interest Periods to constitute
a single
<PAGE> 34
new Eurodollar Loan with the same Interest Period. Revolving Loans hereunder may
be repaid and reborrowed in accordance with the provisions of this Agreement.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephonic
notice promptly confirmed in writing), in the form of a Notice
of Borrowing attached hereto as Exhibit E, to the Agent not
later than 12:00 Noon (Cincinnati, Ohio time) on the Business
Day on the date of the requested borrowing in the case of Base
Rate Loans, and on the third Business Day prior to the date of
the requested borrowing in the case of Eurodollar Loans. Each
such request for borrowing shall be irrevocable and shall
specify (A) that a Revolving Loan is requested, (B) the date
of the requested borrowing (which shall be a Business Day),
(C) the aggregate principal amount to be borrowed and (D)
whether the borrowing shall be comprised of Base Rate Loans,
Eurodollar Loans or a combination thereof, and if Eurodollar
Loans are requested, the Interest Period(s) therefor. If the
Borrower shall fail to specify in any such Notice of Borrowing
(y) an applicable Interest Period in the case of a Eurodollar
Loan, then such notice shall be deemed to be a request for an
Interest Period of one (1) month, or (z) the Type of Revolving
Loan requested, then such notice shall be deemed to be a
request for a Base Rate Loan hereunder. The Agent shall give
notice to each Lender promptly upon receipt of each Notice of
Borrowing pursuant to this Section 2.1(b)(i), the contents
thereof and each such Lender's share of any borrowing to be
made pursuant thereto.
(ii) Minimum Amounts. Each Eurodollar Loan that
comprises part of the Revolving Loans shall be in a minimum
aggregate principal amount (for the applicable Lenders,
collectively) of $500,000 and integral multiples of $100,000
in excess thereof (or the then remaining amount of the
Revolving Committed Amount, if less). Each Base Rate Loan that
comprises part of the Revolving Loans shall be in a minimum
aggregate principal amount (for the applicable Lenders,
collectively) of $100,000 and integral multiples of $100,000
in excess thereof (or the then remaining amount of the
Revolving Committed Amount if less).
(iii) Advances. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing
available to the Agent for the account of the Borrower at the
office of the Agent specified in Schedule 2.1(a), or in such
other manner as the Agent may designate in writing, by 3:00
P.M. (Cincinnati, Ohio time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds
immediately available to the Agent. Such borrowing will then
be made available to the Borrower by the Agent by crediting
the account of the Borrower on the
<PAGE> 35
books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as
received by the Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be due
and payable in full on the Maturity Date, unless accelerated pursuant to Section
8.2.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving
Loans shall be comprised in whole or in part of Base Rate
Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the Adjusted Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (and at such other times as may be specified herein).
(e) Revolving Notes. The Revolving Loans made by each Lender shall be
evidenced by a duly executed promissory note of the Borrower to such Lender in
substantially the form of Exhibit F and in a principal amount equal to such
Lender's Revolving Commitment Percentage of the Revolving Committed Amount.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate. Upon the occurrence, and during the continuance, of
an Event of Default, the principal of and, to the extent permitted by law,
interest on the Loans and any other amounts owing hereunder or under the other
Credit Documents shall bear interest, payable on demand, at a per annum rate
equal to (a) in the case of principal of any Loan, the rate applicable to such
Loan during such period pursuant to Section 2, plus 2.00% , (b) in the case of
interest on any Loan, the Adjusted Base Rate for such Loan during such period
plus 2.00% and (c) in the case of any other amount, the Adjusted Base Rate for
Revolving Loans during such period plus 2.00%.
3.2 Extension and Conversion. Subject to the terms of Section 4.2, the
Borrower shall have the option, on any Business Day, to extend existing
Revolving Loans into a subsequent permissible Interest Period or to convert
Revolving Loans into Revolving Loans of another Type; provided, that (a) except
pursuant to Section 3.8, Eurodollar Loans may be converted into Base Rate Loans
only on the last day of the Interest Period applicable thereto, (b) Eurodollar
Loans may be extended, and Base Rate Loans may be converted into Eurodollar
Loans, only if no Default or Event of Default is in existence on the date of
extension or conversion, (c) Revolving Loans
<PAGE> 36
extended as, or converted into, Eurodollar Loans shall be subject to the terms
of the definition of "Interest Period" set forth in Section 1.1 and shall be in
such minimum amounts as provided in Section 2.1(b)(ii), (d) the total number of
Eurodollar Loans outstanding at any time shall be no greater than the maximum
number provided in Section 2.1(a) (it being understood that, for purposes
hereof, Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings may, in accordance with the provisions hereof, be combined through
extensions or conversions at the end of existing Interest Periods to constitute
a single new Eurodollar Loan with the same Interest Period) and (e) any request
for extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
(1) month. Each such extension or conversion shall be effected by the Borrower
by giving a Notice of Extension/Conversion in the form of Exhibit G hereto (or
telephonic notice promptly confirmed in writing) to the office of the Agent
specified in specified in Schedule 2.1(a), or at such other office as the Agent
may designate in writing, prior to 12:00 Noon (Cincinnati, Ohio time) on the
Business Day of, in the case of the conversion of a Eurodollar Loan into a Base
Rate Loan, and on the third Business Day prior to, in the case of the extension
of a Eurodollar Loan as, or conversion of a Base Rate Loan into, a Eurodollar
Loan, the date of the proposed extension or conversion, specifying the date of
the proposed extension or conversion, the Revolving Loans to be so extended or
converted, the Types of Revolving Loans into which such Revolving Loans are to
be converted and, if appropriate, the applicable Interest Periods with respect
thereto. Each request for extension or conversion shall be irrevocable and shall
constitute a representation and warranty by the Borrower of the matters
specified in Section 4.2. In the event the Borrower fails to request an
extension or conversion of any Eurodollar Loan in accordance with this Section
3.2, or any such requested conversion or extension is not permitted by this
Agreement, then such Eurodollar Loan shall be automatically converted into a
Base Rate Loan at the end of the Interest Period applicable thereto. The Agent
shall give each Lender notice as promptly as practicable of any such proposed
extension or conversion of any Revolving Loan. Each extension or conversion
shall be effected by each Lender and the Agent by recording for the account of
such Lender the new Revolving Loan of such Lender resulting from such extension
or conversion and reducing the Revolving Loan (or portion thereof) of such
Lender being extended or converted by an equivalent principal amount. Accrued
interest on a Revolving Loan (or portion thereof) being extended or converted
shall be paid by the Borrower (A) with respect to any Base Rate Loan being
converted to a Eurodollar Loan, on the last day of the first fiscal quarter of
the Borrower ending on or after the date of conversion and (B) otherwise, on the
date of extension or conversion.
3.3 Prepayments. (a) Voluntary Prepayments. The Borrower shall have the
right to prepay Loans in whole or in part from time to time, subject to Section
3.11 but otherwise without premium or penalty; provided, that (i) each partial
prepayment of Eurodollar Loans shall be in a minimum principal amount of
$500,000 and integral multiples of $100,000 and each prepayment of Base Rate
Loans shall be in a minimum principal amount of $100,000 and integral multiples
of $100,000, and (ii) the Borrower
<PAGE> 37
shall have given prior written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Agent, in the case of a Base
Rate Loan by 12:00 Noon (Cincinnati, Ohio time), on the date of prepayment and,
in the case of a Eurodollar Loan, by 11:00 A.M. (Cincinnati, Ohio time), at
least three (3) Business Days prior to the date of prepayment. Each notice of
prepayment shall specify the prepayment date, the principal amount to be
prepaid, whether the Loan to be prepaid is a Eurodollar Loan or Base Rate Loan
and, in the case of a Eurodollar Loan, the Interest Period of such Loan. Each
notice of prepayment shall be irrevocable and shall commit the Borrower to
prepay such Loan by the amount stated therein on the date stated therein.
Subject to the foregoing terms, amounts prepaid under this Section 3.3(a) shall
be applied as the Borrower may elect; provided, that, if the Borrower fails to
specify the application of a voluntary prepayment then such prepayment shall be
applied first to Base Rate Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. All prepayments under this Section 3.3(a) shall be
subject to Section 3.11.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time, the sum of the
aggregate principal amount of outstanding Revolving Loans shall exceed
the Revolving Committed Amount, the Borrower immediately shall prepay,
within one (1) day of such occurrence, the Loans in an aggregate amount
sufficient to eliminate such excess. Any payments pursuant to this
Section 3.3(b)(i) shall be applied as set forth in clause (iv) below.
(ii) Asset Dispositions. Immediately upon the occurrence of
any Asset Disposition (other than Excluded Asset Dispositions), the
Borrower shall prepay the Loans in an aggregate amount equal to 100% of
the Net Cash Proceeds of the related Asset Disposition. Any payments
pursuant to this Section 3.3(b)(ii) shall be applied as set forth in
clause (iv) below.
(iii) Debt Issuances. Immediately upon the occurrence of any
Debt Issuance (other than Indebtedness permitted by Section 7.1(a)
through (e) inclusive, 7.1(g) and 7.1(h)), the Borrower shall prepay
the Loans in an aggregate amount equal to 100% of the Net Cash Proceeds
of such Debt Issuance. Any payments pursuant to this Section
3.3(b)(iii) shall be applied as set forth in clause (iv) below.
(iv) Application of Mandatory Prepayments. Prepayments shall
be applied first ratably to Base Rate Loans and then, subject to
subsection (v) below, to Eurodollar Loans in direct order of Interest
Period maturities. All prepayments under this Section 3.3(b) shall be
subject to Section 3.11. All prepayments under this Section 3.3(b)
shall be accompanied by accrued interest on the principal amount being
prepaid to the date of payment.
(v) Prepayment Accounts. Amounts to be applied as provided in
subsection (iv) above to the prepayment of Loans shall be applied first
to reduce
<PAGE> 38
ratably outstanding Base Rate Loans. Any amounts remaining after each
such application shall, at the option of the Borrower, be applied to
prepay Eurodollar Loans immediately and/or shall be deposited in a
separate Prepayment Account (as defined below) for the Loans. The Agent
shall apply any cash deposited in the Prepayment Account for any Loans
to prepay Eurodollar Loans on the last day of their respective Interest
Periods (or, at the direction of the Borrower, on any earlier date)
until all outstanding Loans have been prepaid or until all the
allocable cash on deposit in the Prepayment Account has been exhausted.
For purposes of this Agreement, the term "Prepayment Account" for any
Loans shall mean an account established by the Borrower with the Agent
and over which the Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal for application in
accordance with this subsection. The Agent will, at the request of the
Borrower, invest amounts on deposit in the Prepayment Account for any
Loans in Cash Equivalents that mature prior to the last day of the
applicable Interest Periods of the Eurodollar Loans to be prepaid;
provided, that (i) the Agent shall not be required to make any
investment that, in its sole judgment, would require or cause the Agent
to be in, or would result in any, violation of any law, statute, rule
or regulation, (ii) such Cash Equivalents shall be subjected to a first
priority perfected security interest in favor of the Agent and (iii) if
an Event of Default shall have occurred and be continuing, the
selection of such investments shall be in the sole discretion of the
Agent. The Borrower shall indemnify the Agent for any losses, other
than losses due solely to the Agent's gross negligence, relating to the
investments so that the amount available to prepay Eurodollar Loans on
the last day of the applicable Interest Periods is not less than the
amount that would have been available had no investments been made
pursuant thereto. Other than any interest or profits earned on such
investments, the Prepayment Accounts shall not bear interest. Interest
or profits, if any, on the investments in any Prepayment Account shall
accumulate in such Prepayment Account. If the maturity of the Loans has
been accelerated pursuant to Section 8.2, the Agent may, in its sole
discretion, apply all amounts on deposit in the Prepayment Account for
any Loans to satisfy any of the Credit Obligations related to such
Loans. The Borrower hereby pledges and assigns to the Agent, for its
benefit and the benefit of the Lenders, each Prepayment Account
established hereunder to secure the Credit Obligations related to such
Loans.
(vi) Notice. The Borrower shall give to the Agent and the
Lenders at least five (5) Business Days' prior written or telecopy
notice of each and every event or occurrence requiring a prepayment
under Section 3.3(b)(ii) and (iii), including the amount of Net Cash
Proceeds expected to be received therefrom and the expected schedule
for receiving such proceeds; provided, that in the case of any
prepayment event consisting of a Casualty or Condemnation, the Borrower
shall give such notice within five (5) Business Days after the
occurrence of such event.
<PAGE> 39
3.4 Termination and Reduction of Commitments. (a) Voluntary Reductions.
The Borrower may from time to time permanently reduce or terminate the Revolving
Committed Amount in whole or in part (in minimum aggregate amounts of $500,000
or in integral multiples of $100,000 in excess thereof (or, if less, the full
remaining amount of the then applicable Revolving Committed Amount)) upon five
(5) Business Days' prior written or telecopy notice to the Agent; provided,
that, no such termination or reduction shall be made which would cause the sum
at any time of the aggregate principal amount of outstanding Revolving Loans to
exceed the Revolving Committed Amount as so terminated or reduced, unless,
concurrently with such termination or reduction, the Loans are repaid to
eliminate such excess. The Agent shall promptly notify each affected Lender of
the receipt by the Agent of any notice from the Borrower pursuant to this
Section 3.4(a).
(b) Mandatory Reductions. Unless otherwise consented by the Required
Lenders, on any date that the Loans are required to be prepaid (or would be so
required if any Loans were outstanding) pursuant to Section 3.3(b)(iii), the
Revolving Committed Amount shall be automatically and permanently reduced by the
total amount of such required prepayments (and, in the event that the amount of
any payment referred to in Section 3.3(b)(iii) which is allocable to the Credit
Obligations exceeds the amount of all outstanding Credit Obligations, the
Revolving Committed Amount shall be further reduced by 100% of such excess).
(c) Maturity Date. The Revolving Commitments of the Lenders shall
automatically terminate on the Maturity Date.
(d) General. The Borrower shall pay to the Agent for the account of the
Lenders in accordance with the terms of Section 3.5(a), on the date of each
termination or reduction of the Revolving Committed Amount, the Facility Fee
accrued through the date of such termination or reduction on the amount of the
Revolving Committed Amount so terminated or reduced.
3.5 Fees. (a) Closing Fee. In consideration of the Loans of the Lenders
hereunder, the Borrower agrees to pay to the Agent for the account of each
Lender a one time closing fee (the "Closing Fee") equal to 0.18% of the
Revolving Committed Amount. The Closing Fee shall be payable in full on the
Effective Date and shall be fully earned when paid and nonrefundable for any
reason.
(b) Facility Fee. In consideration of the Revolving
Commitments of the Lenders hereunder, the Borrower agrees to pay to the Agent
for the account of each Lender a fee (the "Facility Fee") on such Lender's
Revolving Commitment Percentage of the Revolving Committed Amount computed for
each day during the applicable Facility Fee Calculation Period at a per annum
rate equal to the Applicable Percentage in effect from time to time. The
Facility Fee shall commence to accrue on the Effective Date and shall be due and
payable in arrears on the last business day of each March, June, September and
December (and any date that the Revolving Committed Amount
<PAGE> 40
is reduced as provided in Section 3.4(a) or (b) and the Maturity Date) for the
immediately preceding quarter or portion thereof (each such quarter or portion
thereof being herein referred to as an "Facility Fee Calculation Period"),
beginning with the first of such dates to occur after the Effective Date.
(c) Agent Fees. The Borrower agrees to pay to the Agent, for its own
account, to the extent not previously paid, the fees set forth in the fee letter
dated August 30, 2000, as amended or supplemented to the date hereof, among the
Agent and the Borrower (the "Fee Letter") in the amounts and on the dates
provided in the Fee Letter. Such fees shall be in addition to reimbursement of
the Agent's reasonable out-of-pocket expenses pursuant to Section 10.5 hereof.
3.6 Increased Cost and Reduced Return. (a) If, after the date hereof,
the adoption of any applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change 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 request or
directive (whether or not having the force of law) of any such Governmental
Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, any of its Notes, or its obligation to make
Eurodollar Loans, or change the basis of taxation of any amounts
payable to such Lender (or its Applicable Lending Office) under this
Agreement or any of its Notes in respect of any Eurodollar Loans (other
than franchise taxes and taxes imposed on the overall net income, gross
receipts or revenues of such Lender by the jurisdiction in which such
Lender has its principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, compulsory loan, or similar requirement
(other than the Reserve Requirement utilized in the determination of
the Adjusted Eurodollar Rate) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or
commitments of, such Lender (or its Applicable Lending Office),
including any of the Commitments of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the London interbank market any other condition affecting
this Agreement or any of its Notes or any of such extensions of credit
or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, converting into, extending, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Agreement or any of
its Notes with respect to any Eurodollar Loans, then the Borrower shall pay to
such Lender on demand such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any
<PAGE> 41
Lender requests compensation by the Borrower under this Section 3.6, the
Borrower may, by notice to such Lender (with a copy to the Agent), suspend the
obligation of such Lender to make or extend Revolving Loans of the Type with
respect to which such compensation is requested, or to convert Revolving Loans
of any other Type into Revolving Loans of such Type, until the event or
condition giving rise to such request ceases to be in effect (in which case the
provisions of Section 3.9 shall be applicable); provided, that, such suspension
shall not affect the right of such Lender to receive the compensation so
requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change 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 any request or
directive 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 corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section 3.6 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 3.6 shall furnish to the Borrower and the Agent
a statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
3.7 Limitation on Types of Loans. If on or prior to the first day of
any Interest Period for any Eurodollar Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall
be conclusive) and notify the Agent that the Adjusted Eurodollar Rate
will not
<PAGE> 42
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant amounts or periods, and so long as such condition remains in effect,
the Lenders shall be under no obligation to make additional Eurodollar Loans,
extend Eurodollar Loans or to convert Base Rate Loans into Eurodollar Loans and
the Borrower shall, on the last day(s) of the then current Interest Period(s)
for the outstanding Eurodollar Loans, either prepay such Loans or convert such
Loans into Base Rate Loans in accordance with the terms of this Agreement.
3.8 Illegality. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Loans hereunder, then such Lender
shall promptly notify the Borrower thereof and such Lender's obligation to make
or extend Eurodollar Loans and to convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.9 shall be
applicable).
3.9 Treatment of Affected Loans. If the obligation of any Lender to
make Eurodollar Loans or to extend, or to convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Section 3.6 or 3.8 hereof
(Revolving Loans of such Type being herein called "Affected Loans" and such Type
being herein called the "Affected Type"), such Lender's Affected Loans shall be
automatically converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a conversion
required by Section 3.8 hereof, on such earlier date as such Lender may specify
to the Borrower with a copy to the Agent) and, unless and until such Lender
gives notice as provided below that the circumstances specified in Section 3.6
or 3.8 hereof that gave rise to such conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been
so converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or extended by such
Lender as Loans of the Affected Type shall be made or extended instead
as Base Rate Loans, and all Loans of such Lender that would otherwise
be converted into Loans of the Affected Type shall be converted instead
into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.6 or 3.8 hereof that gave rise to the
conversion of such Lender's Affected Loans pursuant to this Section 3.9 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time
<PAGE> 43
when Loans of the Affected Type made by other Lenders are outstanding, such
Lender's Base Rate Loans shall be automatically converted, on the first day(s)
of the next succeeding Interest Period(s) for such outstanding Loans of the
Affected Type, to the extent necessary so that, after giving effect thereto, all
Loans held by the Lenders holding Loans of the Affected Type and by such Lender
are held pro rata (as to principal amounts, Types, and Interest Periods) in
accordance with their respective Commitments.
3.10 Taxes. (a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Credit Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Lender and
the Agent, taxes imposed on its income, gross receipts and revenues and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender (or its Applicable Lending Office) or the Agent (as the case may be) is
organized or any political subdivision thereof (all such non-excluded taxes,
duties, levies, imposts, deductions, charges, withholdings, and liabilities
being hereinafter referred to as "Taxes"). If the Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable under this
Agreement or any other Credit Document to any Lender or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.10) such Lender or the Agent receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower shall
make such deductions, (iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law, and (iv) the Borrower shall furnish to the Agent, at the office of the
Agent specified in Schedule 2.1(a), the original or a certified copy of a
receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies (including mortgage recording taxes and similar taxes)
which arise from any payment made under this Agreement or any other Credit
Document or from the execution or delivery of, or otherwise with respect to,
this Agreement or any other Credit Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section 3.10) paid
by such Lender or the Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case
<PAGE> 44
of each Lender listed on the signature pages hereof and on or prior to the date
on which it becomes a Lender in the case of each other Lender, and from time to
time thereafter if requested in writing by the Borrower or the Agent (but only
so long as such Lender remains lawfully able to do so), shall provide the
Borrower and the Agent with (i) Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which reduces the rate of withholding tax
on payments of interest or certifying that the income receivable pursuant to
this Agreement is effectively connected with the conduct of a trade or business
in the United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
and (iii) any other form or certificate required by any taxing authority
(including any certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Lender is entitled to an exemption
from or a reduced rate of tax on payments pursuant to this Agreement or any of
the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide
the Borrower and the Agent with the appropriate form pursuant to Section 3.10(d)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 3.10(a) or
3.10(b) with respect to Taxes imposed by the United States; provided, that,
should a Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 3.10, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the reasonable judgment of such Lender, is
not otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 3.10 shall survive the termination of the Commitments and the
payment in full of the Notes.
3.11 Compensation. Upon the request of any Lender, the Borrower shall
pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion
<PAGE> 45
of such Lender) to compensate it for any loss, cost or expense (including loss
of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or extension of a Eurodollar Loan
for any reason (including the acceleration of the Loans pursuant to
Section 8.2) on a date other than the last day of the Interest Period
for such Loan; or
(b) any failure by the Borrower for any reason (including the
failure of any condition precedent specified in Section 4 to be
satisfied) to borrow, convert, extend, or prepay, as applicable, a
Eurodollar Loan on the date for such borrowing, conversion, extension,
or prepayment specified in the relevant notice of borrowing,
prepayment, extension, or conversion, all as provided under this
Agreement; or
(c) without duplication of any amounts paid under Section 3.11
(a) and (b), any breakage costs, charges or fees incurred by any Lender
during the period from the Closing Date through and including the date
that is 180 days from the Closing Date in respect of any Eurodollar
Loan on account to any sale or assignment of any portion of the Loans
on the Commitments to a financial institution such that the financial
institution is or will become a Lender hereunder.
3.12 Pro Rata Treatment. Except to the extent otherwise provided
herein:
(a) Revolving Loans. Each Revolving Loan, each payment or
prepayment of principal of any Revolving Loan, each payment of interest
on the Revolving Loans, each payment of Facility Fees, each reduction
of the Revolving Committed Amount and each conversion or extension of
any Revolving Loan, shall be allocated pro rata among the Lenders in
accordance with the respective principal amounts of their outstanding
Revolving Loans and Participation Interests.
(b) Advances. No Lender shall be responsible for the failure
or delay by any other Lender in its obligation to make its ratable
share of a borrowing hereunder; provided, that, the failure of any
Lender to fulfill its obligations hereunder shall not relieve any other
Lender of its obligations hereunder. Unless the Agent shall have been
notified by any Lender prior to the date of any requested borrowing
that such Lender does not intend to make available to the Agent its
ratable share of such borrowing to be made on such date, the Agent may
assume that such Lender has made such amount available to the Agent on
the date of such borrowing, and the Agent in reliance upon such
assumption, may (in its sole discretion but without any obligation to
do so) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent, the
Agent shall be able to recover such corresponding amount from such
Lender. If such Lender does not pay such corresponding amount forthwith
upon the Agent's demand therefor, the Agent
<PAGE> 46
will promptly notify the Borrower, and the Borrower shall immediately
pay such corresponding amount to the Agent (and such payment by the
Borrower shall be without prejudice to Borrower's rights and remedies
in respect to the defaulting Lenders). The Agent shall also be entitled
to recover from the Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the
date such corresponding amount was made available by the Agent to the
Borrower to the date such corresponding amount is recovered by the
Agent at a per annum rate equal to (i) from the Borrower, the
applicable rate for the applicable borrowing pursuant to the Notice of
Borrowing and (ii) from a Lender, if paid within two (2) Business Days
of the date such corresponding amount was made available by the Agent
to the Borrower, the Federal Funds Rate and, if paid thereafter, the
Base Rate.
3.13 Sharing of Payments. The Lenders agree among themselves that, in
the event that any Lender shall obtain payment in respect of any Loan or any
other obligation owing to such Lender under this Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means (whether voluntarily or involuntarily by
set-off or otherwise), in excess of its pro rata share of such payment as
provided for in this Agreement, such Lender shall promptly purchase from the
other Lenders a Participation Interest in such Loan or other obligation in such
amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in accordance with
their respective ratable shares as provided for in this Agreement. The Lenders
further agree among themselves that if payment to a Lender obtained by such
Lender through the exercise of a right of setoff, banker's lien, counterclaim or
other event as aforesaid shall be rescinded or must otherwise be restored, each
Lender which shall have shared the benefit of such payment shall, by repurchase
of a Participation Interest theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
The Borrower agrees that any Lender so purchasing such a Participation Interest
pursuant to this Section 3.13 may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or counterclaim,
with respect to such Participation Interest as fully as if such Lender were a
holder of such Loan or other obligation in the amount of such Participation
Interest. Except as otherwise expressly provided in this Agreement, if any
Lender or the Agent shall fail to remit to the Agent or any other Lender an
amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from the date such
amount is due until the date such amount is paid to the Agent or such other
Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.13 applies, such
Lender shall, to the
<PAGE> 47
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders under this Section 3.13 to
share in the benefits of any recovery on such secured claim.
3.14 Payments, Computations, Etc. (a) Except as otherwise specifically
provided herein, all payments hereunder shall be made to the Agent in Dollars in
immediately available funds, without offset, deduction, counterclaim or
withholding of any kind, at the Agent's office specified in Schedule 2.1(a) not
later than 2:00 P.M. (Cincinnati, Ohio time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Agent may (but shall not be obligated to) debit the
amount of any such payment which is not made by such time to any ordinary
deposit account of the Borrower maintained with the Agent (with notice to the
Borrower). The Borrower shall, at the time it makes any payment under this
Agreement, specify to the Agent the Loans, Fees, interest or other amounts
payable by the Borrower hereunder to which such payment is to be applied (and in
the event that it fails so to specify, or if such application would be
inconsistent with the terms hereof, the Agent shall distribute such payment to
the Lenders in such manner as the Agent may determine to be appropriate in
respect of obligations owing by the Borrower hereunder, subject to the terms of
Section 3.12(a)). The Agent will distribute such payments to such Lenders, if
any such payment is received prior to 12:00 Noon (Cincinnati, Ohio time) on a
Business Day in like funds as received prior to the end of such Business Day and
otherwise the Agent will distribute such payment to such Lenders on the next
succeeding Business Day. Whenever any payment hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day (subject to accrual of interest and Fees for
the period of such extension), except that in the case of Eurodollar Loans, if
the extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day. Except as expressly provided otherwise herein, all computations of interest
and Fees shall be made on the basis of actual number of days elapsed over a year
of 360 days (or 365 or 366 days, as the case may be, in the case of Facility
Fees and Base Rate Loans based on the Prime Rate). Interest shall accrue from
and include the date of borrowing, but shall exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Agent or any other Lender on account of the Credit Obligations or any
other amounts outstanding under any of the Credit Documents or in respect of the
Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including reasonable attorneys' fees but excluding the
allocated cost of internal counsel) of the Agent in connection with
enforcing the rights of the Secured Parties under the Credit Documents
and any protective advances made
<PAGE> 48
by the Agent with respect to the Collateral under or pursuant to the
terms of the Collateral Documents;
SECOND, to payment of any Fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including reasonable attorneys' fees but excluding the
cost of internal counsel) of each of the Lenders in connection with
enforcing its rights under the Credit Documents or otherwise with
respect to the Credit Obligations owing to such Lender;
FOURTH, to the payment of all of the Credit Obligations
consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of
the Credit Obligations;
SIXTH, to all other Credit Obligations and other obligations
which shall have become due and payable under the Credit Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "FIFTH"
above; and
SEVENTH, to the payment of the surplus, if any, to whomever
may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding Loans
held by such Lender bears to the aggregate amount of the then outstanding
Revolving Loans of amounts available to be applied pursuant to clauses "THIRD",
"FOURTH", "FIFTH" and "SIXTH" above.
3.15 Evidence of Debt. (a) Each Lender shall maintain an account or
accounts evidencing each Loan made by such Lender to the Borrower from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to promptly
update its account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section 10.3(c),
and a subaccount for each Lender, in which Register and subaccounts (taken
together) shall be recorded (i) the amount, Type and Interest Period of each
such Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from or for the account of the
Borrower and each Lender's share thereof. The Agent will make reasonable efforts
to maintain the accuracy of the subaccounts
<PAGE> 49
referred to in the preceding sentence and to promptly update such subaccounts
from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower therein recorded;
provided, that, the failure of any Lender or the Agent to maintain any such
account, such Register or such subaccount, as applicable, or any error therein,
shall not in any manner affect the obligation of the Borrower to repay the Loans
made by such Lender in accordance with the terms hereof.
SECTION 4
CONDITIONS
4.1 Closing Conditions. The obligations of the Lenders to make the
initial Loans under this Agreement shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Agent and the
Lenders):
(a) Executed Credit Documents. The Agent shall have received duly
executed copies of (i) this Agreement; (ii) the Notes, (iii) the Collateral
Documents and (iv) the Intercreditor Agreement, each in form and substance
reasonably acceptable to the Lenders.
(b) Corporate Documents. The Agent shall have received the following:
(i) Charter Documents. To the extent available, copies of the
articles or certificates of incorporation or other charter documents of
Borrower, each Guarantor and each Foreign Subsidiary whose Capital
Stock is pledged pursuant to the Pledge Agreement certified to be true
and complete as of a recent date by the appropriate Governmental
Authority of the state or other jurisdiction of its incorporation and
certified by a secretary or assistant secretary of such Credit Party to
be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws or regulations of Borrower,
each Guarantor and each Foreign Subsidiary whose Capital Stock is
pledged pursuant to the Pledge Agreement certified by a secretary or
assistant secretary of such Credit Party to be true and correct as of
the Effective Date.
(iii) Resolutions. Copies of resolutions of the Board of
Directors of Borrower and each Guarantor approving and adopting the
Credit Documents to which it is a party, the transactions contemplated
therein and authorizing the execution, delivery and performance
thereof, certified by a secretary or assistant secretary of such Credit
Party to be true and correct and in full force and effect as of the
Effective Date.
<PAGE> 50
(iv) Good Standing. Copies of (A) to the extent available,
certificates of good standing, existence or the equivalent with respect
to Borrower and each Guarantor certified as of a recent date by the
appropriate Governmental Authority of its state or other jurisdiction
of incorporation and each other jurisdiction in which the failure to be
qualified to do business and in good standing could have a Material
Adverse Effect and (B) to the extent available, a certificate
indicating payment of all corporate franchise taxes certified as of a
recent date by the appropriate governmental taxing authority of its
state or other jurisdiction of incorporation and each other
jurisdiction referred to in clause (A) above.
(v) Incumbency. A certificate of each Credit Party as to the
incumbency and specimen signature of each officer executing any Credit
Document or any other document delivered in connection herewith on
behalf of such Credit Party, certified by a secretary or assistant
secretary of such Credit Party to be true and correct as of the
Effective Date.
(c) Opinion of Counsel. The Agent shall have received a legal opinion,
dated the Effective Date, of Keating, Muething & Klekamp P.L.L., general counsel
for the Credit Parties, substantially in the form of Exhibit K.
(d) Fees and Expenses. The Credit Parties shall have paid all Fees and
other fees and expenses owed by them to the Agent or any Lender under this
Agreement or otherwise.
(e) Collateral. The Agent shall have received (i) all stock
certificates evidencing the Capital Stock pledged to the Agent pursuant to the
Pledge Agreement, together with duly executed in blank undated stock powers
attached thereto (unless, with respect to the pledged Capital Stock of any
Foreign Subsidiary, such stock powers are deemed unnecessary by the Agent in its
sole discretion under the law of the jurisdiction of incorporation of such
Person) and Intercompany Notes, (ii) searches of Uniform Commercial Code filings
in the jurisdiction of the chief executive office of each Credit Party and each
jurisdiction where any Collateral is located or where a filing would need to be
made in order to perfect the Agent's security interest in the Collateral, copies
of the financing statements on file in such jurisdictions and evidence that no
Liens exist other than Permitted Liens, and (iii) duly executed financing
statements (Form UCC-1) for each appropriate jurisdiction as is necessary, in
the Agent's sole discretion, to perfect the Agent's security interest in the
Collateral.
(f) Priority of Liens. The Agent, on behalf of the Secured Parties,
shall hold a perfected, first priority Lien, subject to no other Liens other
than Permitted Liens, on all Collateral.
<PAGE> 51
(g) Evidence of Insurance. The Agent shall have received satisfactory
evidence that insurance satisfying the requirements set forth in the Credit
Documents is in effect.
(h) Corporate Structure. The ownership, capital, corporate, tax,
organizational and legal structure (including articles of incorporation and
bylaws, shareholder agreements and management) of the Credit Parties shall be
reasonably satisfactory to the Lenders.
(i) Consents and Approvals. The Borrower and the other Credit Parties
shall have obtained all governmental, shareholder and third party consents and
approvals necessary or, in the reasonable opinion of the Agent, desirable in
connection with the execution, delivery and performance of this Agreement and
the other Credit Documents (including the exercise of remedies under the
Collateral Documents), the other related financings and transactions
contemplated hereby and the continuing operations of the Borrower and its
Subsidiaries following the Effective Date.
(j) Material Adverse Effect. From the Closing Date to the Effective
Date, nothing shall have occurred (and neither the Lenders nor the Agent shall
have become aware of any facts or circumstances not previously known) which has,
or could reasonably be expected to have, a Material Adverse Effect.
(k) Litigation. Except as set forth in Schedule 5.9, there shall not
exist any order, decree, judgment, ruling or injunction or any pending or
threatened action, suit, investigation or proceeding that purports to affect the
Facility or that could reasonably be expected to have a Material Adverse Effect.
(l) Other Indebtedness. The Credit Parties shall have no material
liabilities (actual or contingent) or Preferred Stock other than (i) the
Indebtedness under the Credit Documents, (ii) Indebtedness that is set forth on
Schedule 7.1(b) and satisfactory to the Lenders, (iii) as disclosed in the most
recent interim balance sheet referred to in Section 5.1(a) and on Schedule 5.1,
and (iv) for accounts payable incurred in the ordinary course of business
consistent with past practice since the date of the most recent interim balance
sheet referred to in Section 5.1(a).
(m) Solvency Opinion. The Agent shall have received a certificate of
the Borrower in form and substance satisfactory to the Agent, from the Chief
Financial Officer of the Borrower, as to the financial condition and solvency of
each of the Borrower and its Subsidiaries.
(n) Officer's Certificates. The Agent shall have received a certificate
or certificates executed by a Responsible Officer of the Borrower as of the
Effective Date stating that (A) each Credit Party is in compliance with all
existing financial obligations, and (B) conditions set forth in subsections
4.1(d), (h), (i), (j), (k) and (l) shall have been
<PAGE> 52
satisfied, certified by a Responsible Officer of the Borrower to be true and
correct as of the Effective Date.
(o) Other. The Lenders shall have received such other documents,
instruments, agreements or information as reasonably requested by any Lender,
including information regarding litigation, investigations and other
proceedings, compliance with applicable laws, regulations and consent orders,
tax matters, accounting matters, labor agreements and other employee-related
matters, insurance coverage, pension liabilities (actual or contingent) and
other employee benefits, real estate leases, material contracts and
relationships, debt agreements, transactions with Affiliates and former
Affiliates, property ownership, Capital Leases, trademarks, other proprietary
rights and related licenses, capital stock, options and warrants, and contingent
liabilities of the Credit Parties.
4.2 Conditions to all Extensions of Credit. The obligations of each
Lender to make any Loan (including the initial Loans), convert any existing Loan
into a Loan of another Type or extend any existing Loan into a subsequent
Interest Period are subject, in addition to satisfaction on the Effective Date
of the conditions set forth in Section 4.1, to satisfaction on the date such
Loan is made, converted or extended, as applicable, to satisfaction of the
following conditions:
(a) The Borrower shall have delivered in the case of any Revolving
Loan, an appropriate Notice of Borrowing or Notice of Extension/Conversion;
(b) The representations and warranties set forth in Section 5 shall be
true and correct in all material respects as of such date (except for those
which expressly relate to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects on and as of
such earlier date);
(c) There shall not have been commenced against any Credit Party an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or any case, proceeding or other action for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial part of
its Property or for the winding up or liquidation of its affairs, which
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded;
(d) No Default or Event of Default shall exist and be continuing either
prior to the making, conversion or extension of such Loan or after giving effect
thereto; and
(e) Immediately after giving effect to the making, conversion or
extension of such Loan (and the application of the proceeds thereof), as
applicable, the aggregate principal amount of outstanding Revolving Loans shall
not exceed the limitations applicable thereto set forth in Section 2.
<PAGE> 53
The delivery of each Notice of Borrowing and each Notice of Extension/Conversion
shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (b), (c), (d) and (e) above.
SECTION 5
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents to the Agent and each Lender that:
5.1 Financial Condition. (a) The audited consolidated and unaudited
consolidating balance sheets of the Borrower and its Subsidiaries as of December
31, 1999, and the audited consolidated and unaudited consolidating statements of
earnings and statements of cash flows of the Borrower and its Subsidiaries for
the years ended December 31, 1997, December 31, 1998 and December 31, 1999 have
heretofore been furnished to each Lender. Such financial statements (including
the notes thereto) (i) with respect to the consolidated statements only, have
been audited by a nationally recognized accounting firm reasonably acceptable to
the Agent, (ii) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby and (iii) present fairly in all material
respects (on the basis disclosed in the footnotes to such financial statements)
the consolidated and consolidating financial condition, results of operations
and cash flows of the Borrower and its Subsidiaries as of such dates and for
such periods. The unaudited interim balance sheets of the Borrower and its
Subsidiaries as at the end of, and the related unaudited interim statements of
earnings and of cash flows for, each quarterly period ended after June 30, 2000
and prior to the Effective Date for which financial information is available
have heretofore been furnished to each Lender. Such interim financial statements
for each such period (i) have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby, except for the absence of
footnotes, and (ii) present fairly in all material respects the consolidated and
consolidating financial condition, results of operations and cash flows of the
Borrower and its Subsidiaries as of such dates and for such periods, except for
recurring annual audit adjustments. During the period from the Closing Date to
and including the Effective Date, there has been no sale, transfer or other
disposition by any Credit Party of any material part of the business or property
of the Credit Parties, taken as a whole, and no purchase or other acquisition by
any of them of any business or property (including any capital stock of any
other Person) material in relation to the consolidated financial condition of
the Credit Parties, taken as a whole, in each case, which, is not reflected in
the foregoing financial statements or in the notes thereto. Except as disclosed
in Schedule 5.1, the balance sheets and the notes thereto included in the
foregoing financial statements disclose all material liabilities, actual or
contingent, of the Borrower and its Subsidiaries as of the dates thereof.
(b) As of the Effective Date, the Credit Parties do not have any
material liabilities, actual or contingent, or Preferred Stock except (i) as
disclosed in the most recent interim balance sheet referred to in subsection (a)
above, (ii) for items disclosed
<PAGE> 54
in Schedule 5.1, (iii) for accounts payable incurred in the ordinary course of
business consistent with past practice since the date of the most recent interim
balance sheet referred to in subsection (a) above (iv) Indebtedness under the
Credit Documents and (v) Indebtedness set forth on Schedule 7.1(b).
(c) [intentionally omitted]
(d) The financial statements delivered to the Lenders pursuant to
Section 6.1(a) and (b), (i) have been prepared in accordance with GAAP (except
as may otherwise be permitted under Section 6.1(a) and (b)) and (ii) present
fairly in all material respects (on the basis disclosed in the footnotes to such
financial statements, if any) the consolidated and consolidating financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries as of the respective dates thereof and for the respective periods
covered thereby.
5.2 No Material Change. Since the Closing Date, (a) there has been no
development or event relating to or affecting a Credit Party which has had or
could reasonably be expected to have a Material Adverse Effect and (b) no
dividends or other distributions have been declared, paid or made upon the
Capital Stock of any Credit Party nor has any of the Capital Stock of any Credit
Party been redeemed, retired, purchased or otherwise acquired for value.
5.3 Organization and Good Standing. Each of the Credit Parties (a) is
duly organized, validly existing and is in good standing (or the local law
equivalent, in the case of Foreign Subsidiaries) under the laws of the
jurisdiction of its incorporation or organization, (b) has the corporate or
other necessary power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged and (c) is duly qualified as a foreign
entity and in good standing (or the local law equivalent, in the case of Foreign
Subsidiaries) under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not reasonably be expected to have a
Material Adverse Effect.
5.4 Power; Authorization; Enforceable Obligations. Each of the Credit
Parties has the corporate or other necessary power and authority, and the legal
right, to execute, deliver and perform the Credit Documents to which it is a
party, and in the case of the Borrower, to obtain extensions of credit
hereunder, and each Credit Party has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the terms and
conditions of this Agreement and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the borrowings or
other extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability
<PAGE> 55
of the Credit Documents to which such Credit Party is a party, except for (i)
consents, authorizations, notices and filings disclosed in Schedule 5.4, all of
which have been (or will as of the Effective Date) obtained or made, and (ii)
filings to perfect the Liens created by the Collateral Documents. This Agreement
has been, and each other Credit Document to which any Credit Party is a party
will be, duly executed and delivered on behalf of such Credit Party. This
Agreement constitutes, and each other Credit Document to which any Credit Party
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of such Credit Party and, to the knowledge of the Credit
Parties, enforceable against such Person in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
5.5 No Conflicts. Neither the execution and delivery by each Credit
Party of the Credit Documents to which it is a party, nor the consummation of
the transactions contemplated therein, nor performance of and compliance with
the terms and provisions thereof by such Credit Party, nor the exercise of
remedies by the Secured Parties under the Credit Documents, will (a) violate or
conflict with any provision of its articles or certificate of incorporation or
bylaws or other organizational or governing documents of such Person, (b)
violate, contravene or conflict with any Requirement of Law (including
Regulation U or Regulation X), applicable to it or its Properties, (c) violate,
contravene or conflict with contractual provisions of, cause an event of default
under, or give rise to material increased, additional, accelerated or guaranteed
rights of any Person under, any indenture, loan agreement, mortgage, deed of
trust, contract or other agreement or instrument to which it is a party or by
which it may be bound, or (d) result in or require the creation of any Lien
(other than the Lien of the Collateral Documents) upon or with respect to its
Properties.
5.6 No Default. No Credit Party is in default in any respect under any
loan agreement, indenture, mortgage, security agreement or other agreement
relating to Indebtedness or any other contract, lease, agreement or obligation
to which it is a party or by which any of its Properties is bound which default
could reasonably be expected to have a Material Adverse Effect. No Default or
Event of Default has occurred or exists.
5.7 Ownership of Assets. Each Credit Party is the owner of, and has
good and marketable title to, all of its respective assets, and none of such
assets is subject to any Lien other than Permitted Liens.
5.8 Indebtedness. Except as permitted under Section 7.1, the Credit
Parties have no Indebtedness.
5.9 Litigation. Except as disclosed in Schedule 5.9, there are no
actions, suits, investigations or legal, equitable, arbitration or
administrative proceedings pending for which service of process or other written
notice has been received or, to the knowledge
<PAGE> 56
of any Credit Party, threatened against or affecting any Credit Party which
could reasonably be expected to have a Material Adverse Effect or which are
pending or threatened as of the Effective Date.
5.10 Taxes. Each Credit Party has filed, or caused to be filed, all
material tax returns (including Federal, state, local and foreign tax returns)
required to be filed and paid (a) all amounts of taxes shown thereon to be due
(including interest and penalties) and (b) all other material taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangibles taxes) owing by it, except for such
taxes (i) which are not yet delinquent or (ii) that are being contested in good
faith and by proper proceedings diligently pursued, and against which adequate
reserves are being maintained in accordance with GAAP. Except as disclosed in
Schedule 5.10, no Credit Party knows as of the Effective Date of any pending
investigation of such party by any taxing authority or proposed tax assessments
against it or any other Credit Party.
5.11 Compliance with Law. Each Credit Party is in compliance with all
Requirements of Law (including Environmental Laws) applicable to it or to its
Properties, except for any such failure to comply which could not reasonably be
expected to have a Material Adverse Effect. No Requirement of Law could
reasonably be expected to cause a Material Adverse Effect. To the knowledge of
the Credit Parties, as of the Effective Date, none of the Credit Parties or any
of their respective material Properties or assets is subject to or in default
with respect to any judgment, writ, injunction, decree or order of any court or
other Governmental Authority. None of the Credit Parties has received any
written communication prior to the Effective Date from any Governmental
Authority that alleges that any of the Credit Parties is not in compliance in
any material respect with any Requirement of Law, except for allegations that
have been satisfactorily resolved and are no longer outstanding.
5.12 ERISA. Except as disclosed in Schedule 5.12:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any ERISA Event
could reasonably be expected to occur, with respect to any Plan; (ii)
no "accumulated funding deficiency," as such term is defined in Section
302 of ERISA and Section 412 of the Code, whether or not waived, has
occurred with respect to any Plan; (iii) each Plan has been maintained,
operated, and funded in compliance with its own terms and in material
compliance with the provisions of ERISA, the Code, and any other
applicable Federal or state laws, and (iv) no Lien in favor of the PBGC
or a Plan has arisen or is reasonably likely to arise on account of any
Plan.
(b) The actuarial present value of all "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA), whether or not vested,
under each Single
<PAGE> 57
Employer Plan, as of the last annual valuation date prior to the date
on which this representation is made or deemed made (determined, in
each case, utilizing the actuarial assumptions used in such Plan's most
recent actuarial valuation report), did not exceed as of such valuation
date the fair market value of the assets of such Plan.
(c) Neither any Credit Party nor any ERISA Affiliate has
incurred, or, to the knowledge of the Credit Parties, could be
reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither any Credit
Party nor any ERISA Affiliate would become subject to any withdrawal
liability under ERISA if any Credit Party or any ERISA Affiliate were
to withdraw completely from all Multiemployer Plans and Multiple
Employer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. Neither any Credit
Party nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization (within the meaning of Section
4241 of ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title IV of
ERISA), and no Multiemployer Plan is, to the knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or
terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or may subject any Credit Party or any ERISA Affiliate to any liability
under Section 406, 409, 502(i) or 502(l) of ERISA or Section 4975 of
the Code, or under any agreement or other instrument pursuant to which
any Credit Party or any ERISA Affiliate has agreed or is required to
indemnify any Person against any such liability.
(e) Neither any Credit Party nor any ERISA Affiliate has any
material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards
Board Statement 106.
5.13 Subsidiaries. Schedule 5.13 sets forth a complete and accurate
list of all Subsidiaries of the Borrower, discloses the jurisdiction of
incorporation of each such Subsidiary, the number of authorized shares of each
class of Capital Stock of each such Subsidiary, the number of outstanding shares
of each class of Capital Stock, the number and percentage of outstanding shares
of each class of Capital Stock of each such Subsidiary owned (directly or
indirectly) by any Person, and the number and effect, if exercised, of all
outstanding options, warrants, rights of conversion or purchase and all other
similar rights with respect to Capital Stock of each such Subsidiary. Except for
director qualifying shares in certain Foreign Subsidiaries, all the outstanding
Capital Stock of each such Subsidiary is validly issued, fully paid and
non-assessable and is owned by the Borrower, directly or indirectly, free and
clear of all Liens (other than those arising under the Collateral Documents).
Other than as
<PAGE> 58
disclosed in Schedule 5.13, no Credit Party has outstanding any securities
convertible into or exchangeable for its Capital Stock nor does any such Person
have outstanding any rights to subscribe for or to purchase or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its Capital Stock.
5.14 Governmental Regulations, Etc. (a) No portion of the proceeds of
the Loans will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation G or Regulation U,
or for the purpose of purchasing or carrying or trading in any securities. If
requested by any Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in Regulation U. No indebtedness being
reduced or retired out of the proceeds of the Loans was or will be incurred for
the purpose of purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation T.
"margin stock" within the meaning of Regulation U does not constitute more than
25% of the value of the consolidated assets of the Credit Parties. None of the
transactions contemplated by this Agreement (including the direct or indirect
use of the proceeds of the Loans) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Exchange Act or regulations issued
pursuant thereto, or Regulation G, T, U or X.
(b) No Credit Party is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act or the Investment Company Act
of 1940, each as amended. In addition, no Credit Party is (i) an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, (ii) controlled by such a company, or (iii) a "holding
company", a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal holder of Capital Stock
of any Credit Party is a director, executive officer or principal shareholder of
any Lender. For the purposes hereof the terms "director", "executive officer"
and "principal shareholder" (when used with reference to any Lender) have the
respective meanings assigned thereto in Regulation O issued by the Board of
Governors of the Federal Reserve System.
(d) Each Credit Party has obtained and holds in full force and effect
all material franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights or way and other rights,
consents and approvals which are necessary for the ownership of its respective
Property and to the conduct of its respective businesses as presently conducted.
<PAGE> 59
(e) Each Credit Party is current with all material reports and
documents, if any, required to be filed with any state or Federal securities
commission or similar agency and is in compliance in all material respects with
all applicable rules and regulations of such commissions, except where the
failure to be in compliance would not have a Material Adverse Effect.
5.15 Purpose of Loans. The proceeds of the Loans made on or after the
Effective Date will be used to provide for: (a) working capital requirements of
the Borrower and its Subsidiaries; (b) permitted Consolidated Capital
Expenditures; (c) Permitted Acquisitions; (d) for the general corporate purposes
of the Borrower and its Subsidiaries; (e) repurchases of Capital Stock of
Borrower to the extent permitted hereunder; and (f) refinance existing
indebtedness of Borrower to one or more of the Lenders.
5.16 Environmental Matters. Except as disclosed in Schedule 5.16:
(a) Each of the facilities and properties owned, leased or operated by
the Credit Parties (the "Company Properties") and all operations at the Company
Properties are in compliance in all material respects with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Company Properties or the businesses operated by the Credit
Parties (the "Businesses"), and there are no conditions or circumstances
relating to the Businesses or Company Properties or any former facilities,
properties or businesses of the Credit Parties that could give rise to liability
of any Credit Party under any applicable Environmental Laws or under any
agreement or other instrument pursuant to which any Credit Party has agreed or
is required to indemnify any Person against any such liability.
(b) None of the Company Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or under the Company
Properties in amounts or concentrations that constitute or constituted a
violation of, or could give rise to liability of any Credit Party under,
Environmental Laws or under any agreement or other instrument pursuant to which
any Credit Party has agreed or is required to indemnify any Person against any
such liability.
(c) No Credit Party has received any written or verbal notice of, or
inquiry from any Governmental Authority regarding, any violation, alleged
violation, noncompliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Company Properties or the Businesses, nor does any Credit Party have
knowledge or reason to believe that any such notice will be received or is being
threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Company Properties, or generated, treated, stored or
disposed of at, on or under any of the Company Properties or any other location,
in each case by or on behalf of any Credit Party in violation of, or in a manner
that could give rise to liability
<PAGE> 60
of any Credit Party under, any applicable Environmental Law or under any
agreement or other instrument pursuant to which any Credit Party has agreed or
is required to indemnify any Person against any such liability.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which any Credit Party is or will be named as a party, nor
are there any consent decrees, consent orders, administrative orders, other
decrees or orders or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Credit Parties, the Company
Properties or the Businesses.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Company Properties, or arising from or
related to the operations (including disposal) of any Credit Party in connection
with the Company Properties or otherwise in connection with the Businesses, in
violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws or under any agreement or other instrument pursuant to
which any Credit Party has agreed or is required to indemnify any Person against
any such liability.
5.17 Intellectual Property. Except as disclosed in Schedule 5.17, each
Credit Party owns, or has the legal right to use, all trademarks, trade names,
copyrights, service marks, proprietary techniques, patents, patent applications,
trade secrets, technology, know how and processes necessary for each of them to
conduct its business as currently conducted except for those the failure to own
or have such legal right to use could not reasonably be expected to have a
Material Adverse Effect.
5.18 Solvency. Each Credit Party is and, after the Effective Date, will
be Solvent.
5.19 Investments. All Investments of each Credit Party are Permitted
Investments.
5.20 [Intentionally omitted].
5.21 Disclosure. Neither this Agreement nor any financial statements
delivered to the Lenders pursuant hereto nor any other document, certificate or
statement furnished to the Lenders by or on behalf of any Credit Party in
connection with the transactions contemplated hereby (other than final
projections) contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained therein or
herein not misleading. All financial projections that have been made available
to the Agent or the Lenders by any Credit Party or any representatives thereof
in connection with the transactions contemplated hereby have been prepared in
good faith based upon assumptions believed by the Credit Parties to be
reasonable.
<PAGE> 61
5.22 No Burdensome Restrictions; Material Contracts. (a) No Credit
Party is a party to any agreement or instrument or subject to any other
obligation or any charter or corporate restriction or any provision of any
applicable law, rule or regulation which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. Schedule 5.22
sets forth a complete and accurate list of each agreement, contract, lease,
license, commitment, commercial arrangement or other instrument to which any
Credit Party is a party or by which it or any of its properties or assets are or
may be bound as of the Effective Date the loss of which could, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect
(collectively, the "Material Contracts").
(b) Each Material Contract will be in all material respects valid,
binding and in full force and effect and will be enforceable by the Borrower or
the Subsidiary of the Borrower which is a party thereto in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors' rights generally
and general equitable principles (whether in equity or at law). Each of the
Borrower and the Subsidiaries will have performed in all
<PAGE> 62
material respects all obligations required to be performed by it to date under
the Material Contracts and it will not be (with or without the lapse of time or
the giving of notice, or both) in breach or default in any material respect
thereunder and, to the knowledge of the Credit Parties, no other party to any of
the Material Contracts will be (with or without the lapse of time or the giving
of notice, or both) in breach or default in any material respect thereunder.
Neither the Borrower nor any of the Subsidiaries, nor, to the knowledge of the
Borrower, any other party to any Material Contract, will have given notice of
termination of, or taken any action inconsistent with the continuation of, any
Material Contract. Except as disclosed in Schedule 5.22, none of such other
parties will have any presently exercisable right to terminate any Material
Contract nor will any such other party have any right to terminate any Material
Contract on account of the execution, delivery or performance of the Credit
Documents.
5.23 Labor Matters. Except as disclosed in Schedule 5.23, there are no
collective bargaining agreements or Multiemployer Plans covering the employees
of a Credit Party as of the Effective Date and none of the Credit Parties has
suffered any strike, walkout, work stoppage, unfair labor practice complaint or
other material labor difficulty within the five years prior to the Effective
Date. To the knowledge of the Credit Parties, as of the Effective Date, no union
representation question exists with respect to the employees of the Credit
Parties and no union organizing activities are taking place. The hours worked by
and payments made to employees of the Credit Parties have not been in violation
in any material respect of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All payments due
from any Credit Party, or for which any claim may be made against any Credit
Party, on account of wages, employee health and welfare insurance or other
benefits, have been paid or accrued as a liability on the books of the Credit
Parties.
5.24 Nature of Business. As of the Effective Date, the Credit Parties
are engaged in the business of providing outsourced and clinical research and
products development services to pharmaceutical and biotechnology companies.
5.25 Security Documents. (a) The Pledge Agreement is effective to
create in favor of the Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable first priority security interest in 100% of the
issued and outstanding Capital Stock of all Subsidiaries (provided that no
shares of Capital Stock of any issuer incorporated in a jurisdiction outside of
the United States of America shall be pledged to the extent that the aggregate
amount of shares of Capital Stock of such issuer pledged under the Pledge
Agreement would exceed 65% of the Capital Stock of such issuer to the extent,
and for so long as, the pledge of any greater percentage would have adverse tax
consequences for the pledging party) and, when the Pledged Securities (as
defined in the Pledge Agreement) are delivered to the Agent, the Pledge
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and
<PAGE> 63
interest of the grantors thereunder in such of the Collateral in which a
security interest can be perfected under Article 8 or 9 of the Uniform
Commercial Code, prior and superior in right to any other Person, other than
with respect to Permitted Liens.
(b) The Agent, for the ratable benefit of the Secured Parties, will at
all times have the Liens provided for in the Collateral Documents and the
Collateral Documents will at all times constitute a valid and continuing lien of
record and first priority perfected security interest in all the Collateral
referred to therein, except as priority may be affected by Permitted Liens. No
filings or recordings are required in order to perfect the security interests
created under the Collateral Documents, except for filings or recordings listed
on Schedule 5.25. All such listed filings and recordings will have been made on
or prior to the Effective Date.
5.26 Transactions with Affiliates. Except for agreements and
arrangements among the Borrower and its Wholly Owned Subsidiaries or among
Wholly Owned Subsidiaries of the Borrower, neither the Borrower nor any of its
Subsidiaries is a party to or engaged in any transaction with, and none of the
properties and assets of the Borrower or any of its Subsidiaries is subject to
or bound by, any Affiliate of any Credit Party.
5.27 Insurance. The Credit Parties maintain policies of fire and
casualty, liability, business interruption and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are in
accordance with normal industry practice for the business and assets of the
Credit Parties. All such policies are in full force and effect, all premiums due
and payable thereon have been paid (other than retroactive or retrospective
premium adjustments that are not yet, but may be, required to be paid with
respect to any prior period under comprehensive general liability and workmen's
compensation insurance policies), and no notice of cancellation or termination
has been received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancellation. The
activities and operations of the Credit Parties have been conducted in a manner
so as to conform in all material respects to all applicable provisions of such
insurance policies.
SECTION 6
AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that so long as this Agreement
is in effect or any amounts payable hereunder or under any other Credit Document
shall remain outstanding and until all of the Commitments hereunder shall have
terminated:
6.1 Information Covenants. The Borrower will furnish, or cause to be
furnished, to the Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any event
within ninety (90) days after the end of each fiscal year of the Borrower, an
audited
<PAGE> 64
consolidated and unaudited consolidating balance sheet and income statement of
the Borrower and its Consolidated Subsidiaries, as of the end of such fiscal
year, together with related consolidated and consolidating statements of
operations and retained earnings and of cash flows for such fiscal year, setting
forth in comparative form consolidated and consolidating figures for the
preceding fiscal year, all such financial statements to be in reasonable form
and detail and, with respect to the consolidated statements only, audited by
independent certified public accountants of recognized national standing
reasonably acceptable to the Agent and accompanied by with respect to the
consolidated statements, an opinion of such accountants (which shall not be
qualified or limited in any material respect), and, with respect to the
consolidating statement, a certificate of the Chief Financial Officer of the
Borrower (as to which certificate there shall be no individual, as opposed to
corporate, liability), to the effect that such financial statements have been
prepared in accordance with GAAP and fairly present in all material respects the
consolidated financial position and consolidated results of operations and cash
flows of the Borrower and its Consolidated Subsidiaries in accordance with GAAP
consistently applied (except for changes with which such accountants concur).
(b) Quarterly Financial Statements. As soon as available, and in any
event within forty-five (45) days after the end of each of the first three
fiscal quarters in each fiscal year of the Borrower, an unaudited consolidated
and consolidating balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal quarter, together with related
consolidated and consolidating statements of operations and retained earnings
and of cash flows for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in comparative form consolidated and consolidating
figures for the corresponding period of the preceding fiscal year, all such
financial statements to be in reasonable form and detail and reasonably
acceptable to the Agent, and accompanied by a certificate of the Chief Financial
Officer of the Borrower (as to which certificate there shall be no individual,
as opposed to corporate, liability) to the effect that such quarterly financial
statements have been prepared in accordance with GAAP and fairly present in all
material respects the consolidated financial position and consolidated results
of operations and cash flows of the Borrower and its Consolidated Subsidiaries
in accordance with GAAP consistently applied, subject to changes resulting from
normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 6.1(a) and 6.1(b) above, a certificate of
the Chief Financial Officer of the Borrower (as to which certificate there shall
be no individual, as opposed to corporate, liability) substantially in the form
of Exhibit I (i) demonstrating compliance with the financial covenants contained
in Section 7.18 by calculation thereof as of the end of each such fiscal period,
(ii) stating that no Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and extent thereof and what
action the Borrower proposes to take with respect thereto and (iii) stating
whether, since the date of the most recent financial statements delivered
hereunder, there has been any material change in the GAAP applied in the
preparation of the financial
<PAGE> 65
statements of the Borrower and its Consolidated Subsidiaries, and, if so,
describing such change.
(d) Annual Budgets and Projections. Within (90) days following the end
of each fiscal year of the Borrower, beginning with the fiscal year ending
December 31, 2000, (i) an annual budget of the Borrower and its Consolidated
Subsidiaries for the current year and (ii) updated projected financial
statements (including balance sheets, income statements and statements of cash
flows) for the next three (3) fiscal years.
(e) Compliance With Certain Provisions of this Agreement. Within ninety
(90) days after the end of each fiscal year of the Borrower, a certificate
containing information regarding the amount of Net Cash Proceeds from Asset
Dispositions (other than Excluded Asset Dispositions), Debt Issuances and Equity
Issuances that were made during the prior fiscal year.
(f) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided for in Section 6.1(a), a certificate of the
accountants conducting the annual audit stating that they have reviewed this
Agreement and stating further whether, in the course of their audit, they have
become aware of any Default or Event of Default and, if any such Default or
Event of Default exists, specifying the nature and extent thereof.
(g) Auditor's Reports. Promptly upon receipt thereof, a copy of any
other report or "management letter" submitted by independent accountants to any
Credit Party in connection with any annual, interim or special audit of the
books of such Credit Party.
(h) Reports. Promptly upon transmission or receipt thereof, (i) copies
of all filings and registrations with, and reports to or from, the Securities
and Exchange Commission, or any successor agency, and copies of all financial
statements, proxy statements, notices and reports as any Credit Party shall send
to its shareholders or to a holder of any Indebtedness owed by any Credit Party
in its capacity as such a holder and (ii) upon the request of the Agent or the
Required Lenders, all reports and written information to and from the United
States Environmental Protection Agency, or any state or local agency responsible
for environmental matters, the United States Occupational Health and Safety
Administration, or any state or local agency responsible for health and safety
matters, or any successor agencies or authorities concerning environmental,
health or safety matters.
(i) Notices. Upon obtaining knowledge thereof, the Borrower will give
written notice to the Agent (i) immediately of the occurrence of any event or
condition consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Borrower proposes to take with respect
thereto, and (ii) promptly following the occurrence of any of the following with
respect to any Credit Party: (A) the pendency or commencement of any litigation,
arbitral or governmental proceeding
<PAGE> 66
against such Person which if adversely determined could reasonably be expected
to have a Material Adverse Effect and (B) the institution of any proceedings
against such Person with respect to, or the receipt of notice by such Person of
potential liability or responsibility (direct or indirect) for violation, or
alleged violation of any Federal, state or local law, rule or regulation,
including Environmental Laws, the violation of which could have a Material
Adverse Effect.
(j) ERISA. The Borrower will give written notice to the Agent promptly
(and in any event within five (5) Business Days after any officer of any Credit
Party obtains knowledge thereof) of: (i) any event or condition, including any
Reportable Event, that constitutes, or might reasonably lead to, an ERISA Event;
(ii) with respect to any Multiemployer Plan, the receipt of notice as prescribed
in ERISA or otherwise of any withdrawal liability assessed against the Borrower
or any of its ERISA Affiliates, or of a determination that any Multiemployer
Plan is in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due date
(including extensions) thereof of all amounts which any Credit Party or any
ERISA Affiliate is required to contribute to each Plan pursuant to its terms and
as required to meet the minimum funding standard set forth in ERISA and the Code
with respect thereto; or (iv) any change in the funding status of any Plan that
could have a Material Adverse Effect, together with a description of any such
event or condition or a copy of any such notice and a statement by the chief
financial officer of the Borrower briefly setting forth the details regarding
such event, condition or notice and the action, if any, which has been or is
being taken or is proposed to be taken by the Borrower with respect thereto.
Promptly upon request, the Credit Parties shall furnish the Agent and the
Lenders with such additional information concerning any Plan as may be
reasonably requested, including copies of each annual report/return (Form 5500
series), as well as all schedules and attachments thereto required to be filed
with the Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Code, respectively, for each "plan year" (within the meaning of
Section 3(39) of ERISA).
(k) Other Information. With reasonable promptness upon request
therefor, such other information regarding the business, properties or financial
condition of any Credit Party as the Agent or the Required Lenders may
reasonably request.
6.2 Preservation of Existence and Franchises. Except as a result of or
in connection with a dissolution, merger or disposition of a Subsidiary
permitted under Section 7.4 or Section 7.5, each of the Credit Parties will do
all things necessary to preserve and keep in full force and effect its
existence, rights, franchises and authority.
6.3 Books and Records. Each of the Credit Parties will keep complete
and accurate books and records of its transactions in accordance with good
accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
<PAGE> 67
6.4 Compliance with Law. Each of the Credit Parties will comply with
all Requirements of Law applicable to it and its Property to the extent that
noncompliance with any such Requirement of Law could reasonably be expected to
have a Material Adverse Effect.
6.5 Payment of Taxes and Other Indebtedness. Each of the Credit Parties
will pay and discharge (a) all material taxes, assessments and other
governmental charges or levies imposed upon it, or upon its income or profits,
or upon any of its Properties, before they shall become delinquent, (b) all
material lawful claims (including claims for labor, materials and supplies)
which, if unpaid, might give rise to a Lien upon any of its Properties, and (c)
except as prohibited hereunder, all of its other Indebtedness as it shall become
due; provided, that, no Credit Party shall be required to pay any such tax,
assessment, charge, levy, claim or Indebtedness which is being contested in good
faith by appropriate proceedings diligently pursued and as to which adequate
reserves therefor have been established in accordance with GAAP, unless the
failure to make any such payment (i) could give rise to an immediate right to
foreclose on a Lien securing such amounts or (ii) could reasonably be expected
to have a Material Adverse Effect.
6.6 Insurance; Certain Proceeds. (a) Each of the Credit Parties will at
all times maintain in full force and effect insurance (including domestic
worker's compensation insurance, liability insurance, casualty insurance and
business interruption insurance) in such amounts, covering such risks and
liabilities and with such deductibles or self-insurance retentions as are in
accordance with normal industry practice (or as are otherwise required by the
Collateral Documents). The Agent shall be named as loss payee or mortgagee, as
its interest may appear, with respect to all such property policies and an
additional insured with respect to the commercial general liability policy, and
each provider of any such insurance shall agree, by endorsement upon the policy
or policies issued by it or by independent instruments furnished to the Agent,
that if the insurance carrier shall have received written notice from the Agent
of the occurrence of an Event of Default, the insurance carrier shall pay all
proceeds otherwise payable to the Credit Parties under such policies directly to
the Agent (which agreement shall be evidenced by a "standard" or "New York"
lender's loss payable endorsement in the name of the Agent on Accord Form 27)
and that it will give the Agent thirty (30) days' prior written notice before
any such policy or policies shall be altered or canceled, and that no act or
default of any Credit Party or any other Person shall affect the rights of the
Agent or the Lenders under such policy or policies.
(b) In case of any Casualty or Condemnation with respect to any
Property of any Credit Party or any part thereof, the Borrower shall promptly
give written notice thereof to the Agent generally describing the nature and
extent of such damage, destruction or taking. In such case the Borrower shall,
or shall cause such Credit Party to, promptly repair, restore or replace the
Property of such Credit Party which was subject to such Casualty or Condemnation
at such Credit Party's cost and expense, whether or not Insurance Proceeds or a
Condemnation Award, if any, received on
<PAGE> 68
account of such event shall be sufficient for that purpose; provided, that, such
Property need not be repaired, restored or replaced to the extent the failure to
make such repair, restoration or replacement (i)(A) is desirable to the proper
conduct of the business of such Credit Party in the ordinary course and
otherwise in the best interest of such Credit Party and (B) would not materially
impair the rights and benefits of the Agent or the Secured Parties under the
Collateral Documents or any other Credit Document or (ii) the failure to repair,
restore or replace the Property is attributable to the application of the
Insurance Proceeds from such Casualty or the Condemnation Award from such
Condemnation to payment of the Credit Obligations in accordance with the
provisions of Section 3.3(b). In the event a Credit Party shall receive any
Insurance Proceeds or Condemnation Awards, such Credit Party will immediately
pay over such proceeds to the Agent, for payment on the Credit Obligations in
accordance with Section 3.3(b) or, if such funds constitute Reinvestment Funds,
to be held by the Agent. The Agent agrees to release such Insurance Proceeds or
Condemnation Awards to the Borrower as needed from time to time to pay for the
replacement or restoration of the portion of the Property subject to the
Casualty or Condemnation, if, but only if, the conditions set forth in the
definition of "Reinvestment Funds" are satisfied at the time of such request.
(c) In connection with the covenants set forth in this Section 6.6, it
is understood and agreed that:
(i) none of the Agent, the Lenders or their respective agents
or employees shall be liable for any loss or damage insured by the
insurance policies required to be maintained under this Section 6.6, it
being understood that (A) the Credit Parties shall look solely to their
insurance companies or any other parties other than the aforesaid
parties for the recovery of such loss or damage and (B) such insurance
companies shall have no rights of subrogation against the Agent, the
Lenders or their agents or employees. If, however, the insurance
policies do not provide waiver of subrogation rights against such
parties, as required above, then each Credit Party hereby agrees, to
the extent permitted by law, to waive its right of recovery, if any,
against the Agent, the Lenders and their agents and employees;
(ii) Upon the occurrence of an Event of Default, the Credit
Parties will permit an insurance consultant retained by the Agent, at
the expense of the Borrower, to review from time to time the insurance
policies maintained by the Credit Parties; and
(iii) Upon the occurrence of an Event of Default, the Required
Lenders shall have the right to require the Credit Parties to keep
other insurance in such form and amount as the Agent or the Required
Lenders may reasonably request; provided, that, such insurance shall be
obtainable on commercially reasonable terms; and provide further, that,
the designation of any form, type or amount of insurance coverage by
the Agent or the Required Lenders under this Section 6.6 shall in no
event be deemed a representation, warranty or advice by the Agent or
<PAGE> 69
the Lenders that such insurance is adequate for the purposes of the
business of the Credit Parties or the protection of their properties.
6.7 Maintenance of Property. Each of the Credit Parties will maintain
and preserve its properties and equipment material to the conduct of its
business in good repair, working order and condition, normal wear and tear and
Casualty and Condemnation excepted, and will make, or cause to be made, as to
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses.
6.8 Performance of Obligations. Each of the Credit Parties will perform
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.
6.9 Use of Proceeds. The Borrower will use the proceeds of the Loans
solely for the purposes set forth in Section 5.15.
6.10 Audits/Inspections. Upon reasonable notice and during normal
business hours, the Borrower will, and will cause each of its Subsidiaries to,
permit representatives appointed by the Agent or the Required Lenders, including
independent accountants, agents, employees, attorneys and appraisers, to visit
and inspect its Property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representatives obtain and shall permit the Agent or such
representatives to investigate and verify the accuracy of information provided
to the Lenders and to discuss all such matters with the officers, employees,
independent accountants, attorneys and representatives of the Credit Parties.
The Borrower agrees that the Agent, and its representatives, may conduct an
annual audit of the Collateral, at the expense of the Borrower upon the
occurrence of an Event of Default. The Borrower will direct all accountants and
auditors employed by
<PAGE> 70
it at any time during the term of this Agreement to exhibit and deliver to the
Agent and the Lenders, upon request, copies of any of the financial statements,
trial balances or other accounting records of any sort of the Credit Parties in
the accountant's or auditor's possession, and to disclose to the Agent and the
Lenders any information they may have concerning the financial status and
business operation of the Credit Parties. Upon request of the Agent or the
Required Lenders, the Borrower will authorize all Federal, state and municipal
authorities to furnish to the Lenders copies of reports or examinations relating
to the Credit Parties, whether made by any Credit Party or otherwise.
6.11 Additional Credit Parties. Contemporaneously with any Person
becoming a direct or indirect Domestic Subsidiary of any Credit Party, the
Borrower shall provide the Agent with written notice thereof and shall (i) cause
such Person to execute a Joinder Agreement in substantially the same form as
Exhibit J, (ii) cause 100% of the Capital Stock of such Person to be delivered
to the Agent (together with undated stock powers signed in blank) and to be
subject at all times to a first priority, perfected Lien in favor of the Agent
pursuant to the Collateral Documents, subject only to Permitted Liens, and (iii)
deliver such other documentation as the Agent may reasonably request in
connection with the foregoing, including appropriate UCC-1 financing statements,
certified resolutions and other organizational and authorizing documents of such
Person, favorable opinions of counsel to such Person (which shall cover, among
other things, the legality, validity, binding effect and enforceability of the
documentation referred to above and the perfection of the Agent's liens
thereunder), all in form, content and scope reasonably satisfactory to the
Agent. Contemporaneously with any Person becoming a direct Foreign Subsidiary of
the Borrower or any Domestic Subsidiary of the Borrower (Borrower covenants and
agrees that any Permitted Acquisition of Foreign Subsidiary shall be
accomplished as a direct Foreign Subsidiary of either Borrower or any Domestic
Subsidiary of Borrower), the Borrower or such Domestic Subsidiary shall provide
the Agent with written notice thereof and shall cause sixty-five percent (65%)
of such Person's Capital Stock (for so long as the pledge of any greater
percentage would have adverse tax consequences to the Credit Parties), to be
delivered to the Agent (together with undated stock powers signed in blank
unless such stock powers are deemed unnecessary by the Agent in its reasonable
discretion under the law of the jurisdiction of incorporation of such Person)
and to be subject at all times to a first priority, perfected Lien in favor of
the Agent pursuant to the Collateral Documents, subject only to Permitted Liens
and shall further deliver such other documentation as the Agent may reasonably
request in connection with the foregoing including appropriate UCC-1 financing
statements, certified resolutions and other organizational and authorizing
documents of such Person, favorable opinions of counsel to such Person which
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above and the perfection of the
Agent's liens thereunder.
6.12 Liquidity Maintenance. If at any time the Fixed Charge Coverage
Ratio as of the most recent Computation Date is less than 1.25 to 1.00, Borrower
will maintain
<PAGE> 71
cash or Cash Equivalents, free and clear of all liens, charges and encumbrances
of not less than $10,000,000 (exclusive of any Cash Equivalents otherwise
required to be maintained pursuant to this Agreement, including Sections 2.2(l)
and 3.3(b)(v) hereof).
SECTION 7
NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, so long as this
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding and until all of the Commitments
hereunder shall have terminated:
7.1 Indebtedness. None of the Credit Parties will contract, create,
incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Agreement and the other
Credit Documents;
(b) Indebtedness of the Borrower and its Subsidiaries in
existence on the Effective Date to the extent disclosed in Schedule
7.1(b) (but not including any renewal, refinancing or extension
thereof);
(c) purchase money Indebtedness (including Capital Leases)
incurred by the Borrower or any of its Subsidiaries after the Closing
Date to finance the purchase of fixed assets acquired after the Closing
Date; provided, that (i) the total of all such Indebtedness for the
Borrower and its Subsidiaries taken together shall not exceed an
aggregate principal amount of $10,000,000 at any time outstanding; (ii)
such Indebtedness when incurred shall not exceed the purchase price of
the asset(s) financed; and (iii) such Indebtedness is issued and any
Liens securing such Indebtedness are created at the time of, or within
ninety (90) days after, the acquisition of such assets and such
Indebtedness is not secured by a Lien on any other assets;
(d) obligations of the Borrower or any of its Subsidiaries in
respect of Lender Hedging Agreements entered into in order to limit
exposure to floating rate indebtedness or foreign currency fluctuation
and exchange rate risk of the Borrower or any of its Subsidiaries, and
not for speculative purposes;
(e) intercompany Indebtedness arising out of loans and
advances permitted under Section 7.6;
(f) in addition to the Indebtedness otherwise permitted by
this Section 7.1,
(i) other Indebtedness incurred after the Effective
Date by the Borrower or any of its Subsidiaries; provided,
that, (A) the loan
<PAGE> 72
documentation with respect to such Indebtedness shall not
contain covenants or default provisions relating to any Credit
Party that are more restrictive than the covenants and default
provisions contained in the Credit Documents, (B) no Default
or Event of Default shall have occurred and be continuing
immediately before or immediately after giving effect to such
incurrence and the Borrower shall have delivered to the Agent
a Pro Forma Compliance Certificate demonstrating that, upon
giving effect on a Pro Forma Basis to the incurrence of such
Indebtedness and to the concurrent retirement of any other
Indebtedness of any Credit Party, the Credit Parties shall be
in compliance with all of the financial covenants set forth in
Section 7.18 and (C) the aggregate principal amount of such
Indebtedness plus the aggregate principal amount of
Indebtedness permitted pursuant to clauses 7.1(b) and 7.1(c)
above and 7.1(h) below shall not exceed $20,000,000 at any
time outstanding; and
(ii) Guaranty Obligations of any Credit Party (other
than the Borrower) with respect to any Indebtedness of the
Borrower permitted under this Section 7.1 (other than this
subparagraph (f)); and
(g) Indebtedness of Foreign Subsidiaries arising under
overdraft agreements (including the Overdraft Agreement); provided,
that, the total of all such Indebtedness shall not exceed an aggregate
principal amount of $5,000,000.
7.2 Liens. None of the Credit Parties will contract, create, incur,
assume or permit to exist any Lien with respect to any of its Property, whether
now owned or hereafter acquired, except for Permitted Liens.
7.3 Nature of Business. None of the Credit Parties will substantively
alter the character or conduct of the business conducted by such Person as of
the Effective Date (except that any Credit Party may enter into lines of
business strategically related to such Credit Party's existing business) or, in
the case of any Person acquired in a Permitted Acquisition, as of the date of
such Permitted Acquisition.
7.4 Consolidation, Merger, Dissolution, etc. Except in connection with
an Asset Disposition permitted by the terms of Section 7.5, none of the Credit
Parties will enter into any transaction of merger or consolidation or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution); provided,
that, notwithstanding the foregoing provisions of this Section 7.4:
(a) the Borrower may merge or consolidate with any of its
Wholly Owned Subsidiaries; provided, that (i) the Borrower shall be the
continuing or surviving corporation in such merger or consolidation,
(ii) the Credit Parties shall cause to be executed and delivered such
documents, instruments and certificates as the Agent may request so as
to cause the Credit Parties to be in
<PAGE> 73
compliance with the terms of Section 6.11 after giving effect to such
transaction and (iii) no Default or Event of Default shall have
occurred and be continuing immediately before or immediately after
giving effect to such transaction;
(b) any Wholly Owned Subsidiary of the Borrower may merge or
consolidate with any other Wholly Owned Subsidiary of the Borrower;
provided, that (i) the Credit Parties shall cause to be executed and
delivered such documents, instruments and certificates as the Agent may
request so as to cause the Credit Parties to be in compliance with the
terms of Section 6.11 after giving effect to such transaction, (ii) no
Default or Event of Default shall have occurred and be continuing
immediately before or immediately after giving effect to such
transaction and (iii) no merger or consolidation shall be permitted by
this clause (b) if a Foreign Subsidiary is the survivor of a merger or
consolidation between a Domestic Subsidiary and a Foreign Subsidiary;
(c) any Subsidiary of the Borrower may merge with any Person
other than a Credit Party in connection with a Permitted Acquisition if
(i) such Subsidiary shall be the continuing or surviving corporation in
such merger or consolidation, (ii) the Credit Parties shall cause to be
executed and delivered such documents, instruments and certificates as
the Agent may request so as to cause the Credit Parties to be in
compliance with the terms of Section 6.11 after giving effect to such
transaction, (iii) no Default or Event of Default shall have occurred
and be continuing immediately before or immediately after giving effect
to such transaction and (iv) the Borrower shall have delivered to the
Agent a Pro Forma Compliance Certificate demonstrating that, upon
giving effect on a Pro Forma Basis to such transaction, the Credit
Parties shall be in compliance with all of the financial covenants set
forth in Section 7.18 as of the last day of the most recent period of
four consecutive fiscal quarters of the Borrower which precedes or ends
on the date of such acquisition and with respect to which the Agent has
received the Required Financial Information; and
(d) any Wholly Owned Subsidiary of the Borrower may dissolve,
liquidate or wind up its affairs at any time; provided, that (i) the
Credit Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Agent may request to cause the
Credit Parties to be in compliance with the terms of Section 6.11 after
giving effect to such transaction and (ii) no Default or Event of
Default shall have occurred and be continuing immediately before or
after giving effect to such transaction.
7.5 Asset Dispositions. (a) None of the Credit Parties will make any
Asset Disposition; provided, that, the foregoing provisions of this Section 7.5
shall not prohibit the following:
(i) any Asset Disposition by any Credit Party to the Borrower
or any Guarantor if (A) the Credit Parties shall cause to be executed
and delivered such
<PAGE> 74
documents, instruments and certificates as the Agent may request so as
to cause the Credit Parties to be in compliance with the terms of
Section 6.11 after giving effect to such Asset Disposition and (B)
after giving effect such Asset Disposition, no Default or Event of
Default exists;
(ii) the sale of inventory in the ordinary course of business;
(iii) the liquidation or sale of Cash Equivalents for the
account of the Borrower; and
(iv) any other Asset Disposition; provided, that (A) the
consideration therewith is cash or Cash Equivalents; (B) if such
transaction is a Sale and Leaseback Transaction, such transaction is
permitted by the terms of Section 7.13; (C) if such Asset Disposition
is a Casualty or Condemnation, the Net Cash Proceeds resulting
therefrom are applied as required by this Agreement; (D) such
transaction does not involve the sale or other disposition of an equity
interest in any Credit Party; (E) the aggregate net book value of all
of the assets sold or otherwise disposed of by the Credit Parties in
all such transactions in reliance on this paragraph 7.5(a)(iv)
(inclusive of the amount of any Excluded Asset Dispositions pursuant to
clauses (c) and/or (d) of the definitions thereof) shall not exceed
$5,000,000 in any fiscal year of the Borrower during the term of this
Agreement; and (F) no Default or Event of Default shall have occurred
and be continuing immediately before or immediately after giving effect
to such transaction.
(b) Upon consummation of an Asset Disposition permitted by this Section
7.5, the Agent shall (to the extent applicable) deliver to the Borrower, upon
the Borrower's request and at the Borrower's expense, such documentation as is
reasonably necessary to evidence the release of the Agent's security interest,
if any, in the assets being disposed of, including amendments or terminations of
UCC financing statements, if any, the return of stock certificates, if any, and
the release of such Subsidiary from all of its obligations, if any, under the
Credit Documents.
7.6 Investments; Acquisitions. None of the Credit Parties will make any
Investment in, to or for the benefit of any Person or to purchase, lease or
otherwise acquire (in one transaction or a series of transactions) all or any
substantial part of the assets of any other Person; provided, that, any Credit
Party may purchase inventory in the ordinary course of business and may make
Permitted Investments.
7.7 Restricted Payments. None of the Credit Parties will, directly or
indirectly, declare, order, make or set apart any sum for or pay any Restricted
Payment, except (a) dividends payable solely in common stock of such Person, (b)
dividends or other distributions payable to (i) the Borrower or any Wholly Owned
Domestic Subsidiary of the Borrower, and (ii) the shareholders of the common
stock of the Borrower, (c) repurchases of common stock of the Borrower from any
employee or director of, or
<PAGE> 75
consultant to, the Credit Parties upon the termination of employment of such
employee, such directorship or of the consulting relationship with such
consultant; provided that, the aggregate amount paid in all such repurchases
shall not exceed $1,000,000 in any fiscal year of the Borrower during the term
of this Agreement, and (d) repurchases of common stock of the Borrower in
addition to the repurchases permitted pursuant to clause (c) of this section
7.7; provided, that, the aggregate amount paid in all such repurchases permitted
pursuant to this clause (d) shall not exceed $500,000 during the term of this
Agreement; provided, that after such time and for so long as the Fixed Charge
Coverage Ratio as of the most recent Computation Date is greater than 1.25 to
1.00, the aggregate amount paid in all such repurchases during the term of this
Agreement shall not exceed $10,000,000; provided, that, in each case as set
forth in clauses (a) through (d) above, no Default or Event of Default has
occurred and is continuing at such time or would exist after giving effect to
such payment on a pro forma basis as if it had been made on the first day of the
most recently completed period of four consecutive fiscal quarters of the
Borrower.
7.8 Prepayments of Indebtedness, etc. None of the Credit Parties will
(a) after the issuance thereof, amend, waive or modify (or permit the amendment,
waiver or modification of) any of the terms, agreements, covenants or conditions
of or applicable to any Indebtedness issued by such Credit Party if such
amendment, waiver or modification would add or change any terms, agreements,
covenants or conditions in a manner adverse to any Credit Party, or shorten the
final maturity or average life to maturity or require any payment to be made
sooner than originally scheduled or increase the interest rate applicable
thereto or change any subordination provision thereof, (b) if any Default or
Event of Default has occurred and is continuing or would exist after giving
effect to such payment on a pro forma basis as if it had been made on the first
day of the most recently completed period of four consecutive fiscal quarters of
the Borrower, directly or indirectly redeem, purchase, pay or prepay, retire,
defease or otherwise acquire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Indebtedness (other than Credit
Obligations), or set aside any funds for such purpose, whether such redemption,
purchase, prepayment, retirement or acquisition is made at the option of any
Credit Party or at the option of the holder thereof, and whether or not any such
redemption, purchase, prepayment, retirement or acquisition is required under
the terms and conditions applicable thereto or (c) release, cancel, compromise
or forgive in whole or in part the Indebtedness evidenced by the Intercompany
Notes.
7.9 Transactions with Affiliates. None of the Credit Parties will enter
into or permit to exist any transaction or series of transactions with (a) any
officer, director, shareholder, Subsidiary or Affiliate of any Credit Party or
(b) any Affiliate of any such officer, director, shareholder, Subsidiary or
Affiliate, other than (i) transfers of assets to any Credit Party permitted by
Section 7.5, (ii) transactions expressly permitted by Section 7.1, Section 7.4,
Section 7.5, Section 7.6 or Section 7.7, (iii) normal compensation and
reimbursement of reasonable expenses of officers and directors, and (iv) other
transactions which are entered into in the ordinary course of such
<PAGE> 76
Person's business on terms and conditions as favorable to such Person as would
be obtainable by it in a comparable arms'-length transaction with an
independent, unrelated third party.
7.10 Fiscal Year; Organizational Documents. None of the Credit Parties
will (a) change its fiscal year or (b) amend, modify or change its articles of
incorporation (or corporate charter or other similar organizational document) in
any respect or amend, modify or change its bylaws (or other similar document) in
any manner adverse in any respect to the rights or interests of the Lenders or
(c) enter into any amendment, modification or waiver that is adverse in any
respect to the Lenders to (i) any Material Contract as in effect on the Closing
Date or (ii) the Credit Documents as in effect on the Effective Date. The
Borrower will cause the Credit Parties to promptly provide the Lenders with
copies of all proposed amendments to the foregoing documents and instruments as
in effect as of the Effective Date.
7.11 Limitation on Restricted Actions. None of the Credit Parties will,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Person to
(a) pay dividends or make any other distributions to any Credit Party on its
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits, (b) pay any Indebtedness or other obligation owed to
any Credit Party, (c) make loans or advances to any Credit Party, (d) sell,
lease or transfer any of its properties or assets to any Credit Party or (e) act
as a Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Agreement
and the other Credit Documents, (ii) applicable law, (iii) any document or
instrument governing Indebtedness incurred pursuant to Section 7.1(c); provided,
that, any such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith (and any renewals, refinancings,
exchanges, refundings or extensions thereof, so long as the terms of such
encumbrances or restrictions are no more onerous than those with respect to such
Indebtedness upon the original incurrence thereof) or (iv) customary
non-assignment provisions in any lease governing a leasehold interest.
7.12 Ownership of Subsidiaries: Limitations on Borrower.
Notwithstanding any other provisions of this Agreement to the contrary, the
Borrower will not (i) permit any Person (other than the Borrower or any Wholly
Owned Domestic Subsidiary of the Borrower) to own any Capital Stock of any
Subsidiary of the Borrower, (ii) permit any Subsidiary of the Borrower to issue
Capital Stock to any Person, except (A) the Borrower or any Wholly Owned
Domestic Subsidiary of the Borrower or (B) to qualify directors where required
by applicable law or to satisfy other requirements of applicable law with
respect to the ownership of Capital Stock of Foreign Subsidiaries or (iii) issue
or permit any Subsidiary of the Borrower to issue any shares of Disqualified
Stock or Preferred Stock.
<PAGE> 77
7.13 Sale Leasebacks. None of the Credit Parties will, directly or
indirectly, become or remain liable as lessee or as guarantor or other surety
with respect to any lease, whether an Operating Lease or a Capital Lease, of any
Property (whether real or personal or mixed), whether now owned or hereafter
acquired, (a) which such Credit Party has sold or transferred or is to sell or
transfer to a Person which is not a Credit Party or (b) which such Credit Party
intends to use for substantially the same purpose as any other Property which
has been sold or is to be sold or transferred by such Credit Party to another
Person which is not a Credit Party in connection with such lease.
7.14 [intentionally omitted]
7.15 No Further Negative Pledges. None of the Credit Parties will enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation,
except (a) pursuant to this Agreement and the other Credit Documents and (b)
pursuant to any document or instrument governing Indebtedness incurred pursuant
to Section 7.1(c), provided that any such restriction contained therein relates
only to the asset or assets constructed or acquired in connection therewith.
7.16 Impairment of Security Interests. None of the Credit Parties will
take or omit to take any action, which action or omission might or would have
the result of materially impairing the security interests in favor of the Agent
on behalf of the Secured Parties with respect to the Collateral, and none of the
Credit Parties will grant to any Person (other than the Secured Parties pursuant
to the Collateral Documents) any interest whatsoever in the Collateral, except
for Permitted Liens.
7.17 Sales of Receivables. None of the Credit Parties will sell with
recourse, discount or otherwise sell or dispose of its notes or accounts
receivable.
7.18 Financial Covenants.
(a) Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed
Charge Coverage Ratio, as of the last day of any fiscal quarter of the Borrower,
to be less than the ratio specified for such fiscal quarter in the table set
forth below:
Fixed Charge
From To and Including Coverage Ratio
--------------------------------------------------------------------------------
September 30, 2000
December 30, 2000
1.50 to 1.00
<PAGE> 78
December 31, 2000
March 30, 2001
-0.50 to 1.00
March 31, 2001
June 29, 2001
-1.45 to 1.00
June 30, 2001
September 29, 2001
0.05 to 1.00
September 30, 2001
March 30, 2002
1.50 to 1.00
March 31, 2002
Maturity Date
1.75 to 1.00
(b) Leverage Ratio. The Borrower will not permit the Leverage Ratio, as
of the last day of any fiscal quarter of the Borrower, to be greater than 2.50
to 1.00.
(c) Consolidated Net Worth. The Borrower will not permit the
Consolidated Net Worth as of the last day of any fiscal quarter of the Borrower
after giving pro forma effect to the transaction contemplated hereby, to be less
than the "Minimum Compliance Level". The Minimum Compliance Level shall be, on
the Effective Date, an amount equal to $116,250,000 and shall be increased as of
the last day of each fiscal quarter of the Borrower ending after the Effective
Date, commencing with the fiscal quarter ending September 30, 2000 by an amount
equal to the sum of (i) 50% of Consolidated Net Income (if positive) of the
Borrower for such fiscal quarter, (ii) 100% of the Net Cash Proceeds of any
Equity Issuance by any Credit Party during such fiscal quarter and (iii) 100% of
amount of any net worth increase resulting from any acquisition by any Credit
Party during such fiscal quarter. The foregoing increases in the Minimum
Compliance Level shall be fully cumulative and no reduction in the Minimum
Compliance Level shall be made to reflect negative Net Income for any period.
SECTION 8
EVENTS OF DEFAULT
8.1 Events of Default. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "Event of
Default"):
(a) Payment. Any Credit Party shall:
(i) default in the payment when due of any principal of any of
the Loans when and as the same shall become due and payable, whether at
the due
<PAGE> 79
date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise; or
(ii) default, and such default shall continue unremedied for
three (3) or more Business Days, in the payment when due of any
interest on the Loans, or of any Fees or other Credit Obligations or
other amounts owing hereunder, under any of the other Credit Documents
or in connection herewith or therewith;
(b) Representations. Any representation, warranty or statement made or
deemed to be made by any Credit Party herein, in any of the other Credit
Documents or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to have been false or
misleading in any material respect on the date as of which it was made, deemed
to have been made or delivered; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 6.1(a), (b), (c), (f) or
(j), Sections 6.2, 6.9, 6.11, 6.12, Section 7.1 or Sections 7.3 through
7.18, inclusive;
(ii) default in the due performance or observance of any term,
covenant or agreement contained in Sections 6.1(d), (e), (g), (h), (i)
and (k) and such default shall continue unremedied for a period of at
least five (5) Business Days after the earlier of a Responsible Officer
of a Credit Party becoming aware of such default or notice thereof by
the Agent or the Required Lenders; or
(iii) default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section 8.1) contained
in this Agreement, any of the other Credit Documents or any Lender
Hedging Agreements and such default shall continue unremedied for a
period of fifteen (15) Business Days after the earlier of a Responsible
Officer of a Credit Party becoming aware of such default or notice
thereof by the Agent or the Required Lenders;
(d) Other Credit Documents. Except as applicable to a Subsidiary of the
Borrower as a result of or in connection with a dissolution, merger or
disposition of such Subsidiary permitted under this Agreement, any Credit
Document shall fail to be in full force and effect or to give the Agent or any
other Secured Party the Liens, rights, powers and privileges purported to be
created thereby (excluding such as are solely the result of the negligence or
omission of the Secured Parties, or any of them), or any Credit Party or any
Person acting by or on behalf of any Credit Party shall so state in writing;
(e) Guarantees. The Guarantee Agreement or any provision thereof shall
cease to be in full force and effect as to any Guarantor, as applicable, and the
Borrower or such Guarantor shall fail, within thirty (30) days of notice by the
Agent or the
<PAGE> 80
Required Lenders, to replace such Guarantee Agreement or provision thereof with
another credit support agreement or acceptable substitute collateral reasonably
satisfactory to the Agent and the Required Lenders, or any Guarantor or any
Person acting by or on behalf of such Guarantor shall deny or disaffirm such
Guarantor's obligations under any such Guarantee Agreement, except as the result
of a dissolution, merger or disposition of such Guarantor permitted under this
Agreement, or any Guarantor shall default in the due performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant to any such guarantee agreement and such default shall not be cured
within the applicable cure or grace period;
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
any Credit Party;
(g) Defaults under Other Agreements.
(i) Any Credit Party shall default in the performance or
observance (beyond the applicable grace period with respect thereto, if
any) of any material obligation or condition of any contract, lease or
other agreement material to the Credit Parties, taken as a whole;
(ii) With respect to any Indebtedness (other than Indebtedness
outstanding under the Credit Documents) in excess of $2,000,000 in the
aggregate for the Credit Parties taken as a whole, (A) any Credit Party
shall default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness, (B) any
Credit Party shall default in the observance or performance of any
other term, covenant, condition or agreement relating to such
Indebtedness or contained in any instrument or agreement evidencing or
securing such Indebtedness or relating thereto, or any other event or
condition shall occur or condition exist, the effect of which default
or other event or condition is to cause, or permit the holder or
holders of such Indebtedness (or trustee or agent on behalf of such
holders) to cause (determined without regard to whether any notice or
lapse of time is required), any such Indebtedness (or any portion
thereof) to become due prior to its stated maturity, (C) any such
Indebtedness (or any portion thereof) shall be declared due and
payable, or shall be required to be prepaid (other than by a regularly
scheduled required payment) prior to the stated maturity thereof or (D)
any Credit Party shall be required by the terms of such Indebtedness to
offer to prepay or repurchase such Indebtedness (or any portion
thereof) prior to the stated maturity thereof;
(h) Judgments. One or more judgments or decrees shall be entered
against one or more of the Credit Parties involving a liability of $2,000,000 or
more in the aggregate (to the extent not paid or fully covered by insurance
provided by a carrier which has acknowledged coverage and has the ability to
perform) and any such
<PAGE> 81
judgments or decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within sixty (60) days from the entry thereof, or any action
shall be legally taken by a judgment creditor to levy upon assets or properties
of any Credit Party to enforce any such judgment;
(i) ERISA. Any of the following events or conditions, if such event or
condition, together with all other such events or conditions, could have a
Material Adverse Effect: (i) any "accumulated funding deficiency," as such term
is defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, shall exist with respect to any Plan, or any lien shall arise on the
assets of any Credit Party or any ERISA Affiliate in favor of the PBGC or a
Plan; (ii) an ERISA Event shall occur with respect to a Single Employer Plan,
which is, in the opinion of the Agent or the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA; (iii) an
ERISA Event shall occur with respect to a Multiemployer Plan or Multiple
Employer Plan, which is, in the opinion of the Agent or the Required Lenders,
likely to result in (A) the termination of such Plan for purposes of Title IV of
ERISA or (B) any Credit Party or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency of (within the meaning of Section 4245 of
ERISA) such Plan; or (iv) any prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject any Credit Party or any ERISA
Affiliate to any liability under Section 406, 409, 502(i) or 502(l) of ERISA or
Section 4975 of the Code or under any agreement or other instrument pursuant to
which any Credit Party or any ERISA Affiliate has agreed or is required to
indemnify any Person against any such liability;
(j) [Intentionally omitted];
(k) Change of Control. There shall occur any Change of Control;
(l) Material Contracts. Any Material Contract shall be declared by any
Governmental Authority to be invalid or unenforceable in whole or in part or
shall for any other reason not be, or shall be reasonably asserted by any Credit
Party or any Person acting by or on behalf of any Credit Party not to be, in
full force and effect and enforceable in accordance with its terms and such
event or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(m) Environmental Matters. Either (i) any Credit Party shall be liable,
whether directly, indirectly through required indemnification of any Person or
otherwise, for the costs of investigation and/or remediation of any Materials of
Environmental Concern originating from or affecting any property or properties,
whether or not owned, leased or operated by any Credit Party, which liability,
together with all other such liabilities, could reasonably be expected to exceed
$1,000,000 in the aggregate or require payments exceeding $1,000,000 in any
fiscal year of the Borrower or (ii) any Federal, state,
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regional, local or other environmental regulatory agency or authority shall
commence an investigation or take any other action that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
8.2 Acceleration; Remedies. Upon the occurrence of an Event of Default,
and at any time thereafter unless and until such Event of Default has been
waived by the requisite Lenders (pursuant to the voting requirements of Section
10.6) or cured to the satisfaction of the requisite Lenders (pursuant to the
voting requirements of Section 10.6), the Agent may, and upon the request and
direction of the Required Lenders shall (subject to Section 9.1), by written
notice to the Borrower, take any or all of the following actions (without
prejudice to the rights of the Agent or any Lender to enforce its claims against
the Credit Parties, except as otherwise expressly provided for in this
Agreement):
(a) Termination of Commitments. Declare the Commitments terminated,
whereupon the Commitments shall be immediately terminated.
(b) Acceleration. Declare the unpaid principal of all Loans, all
accrued interest in respect thereof, all accrued and unpaid Fees and other
Credit Obligations and any and all other indebtedness or obligations of any and
every kind owing by any Credit Party to the Agent and/or any of the Secured
Parties under the Credit Documents to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived.
(c) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents including all rights and
remedies existing
<PAGE> 83
under the Collateral Documents, all rights and remedies against the Guarantors
and all rights of set-off.
Notwithstanding the foregoing, if (x) an Event of Default specified in
Section 8.1(f) or Section 8.1(k) shall occur, then the Commitments shall
automatically terminate and all Loans, all accrued interest in respect thereof,
all accrued and unpaid Fees and other Credit Obligations and any and all other
indebtedness or obligations owing to the Agent and/or any of the Secured Parties
under the Credit Documents automatically shall immediately become due and
payable without the giving of any notice or other action by the Agent or the
Lenders, and (y) upon the request and at the direction of Required Lenders, the
Agent shall take the actions specified in Section 8.2(a).
In case any one or more of the covenants and/or agreements set forth in
this Agreement or any other Credit Document shall have been breached by any
Credit Party, then the Agent may proceed to protect and enforce the Lenders'
rights either by suit in equity and/or by action at law, including an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Agreement or such other
Credit Document. Without limitation of the foregoing, the Borrower agrees that
failure to comply with any of the covenants contained herein will cause
irreparable harm and that specific performance shall be available in the event
of any breach thereof. The Agent acting pursuant to this paragraph shall be
indemnified by the Borrower against all liability, loss or damage, together with
all reasonable costs and expenses related thereto (including reasonable legal
and accounting fees and expenses but excluding the fees and expenses of internal
legal counsel) in accordance with and subject to the limitations in Section
10.5.
SECTION 9
AGENCY PROVISIONS
9.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
appoints and authorizes the Agent to act as its administrative agent under this
Agreement and the other Credit Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Credit Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 9.5 and
the first two sentences of Section 9.6 hereof shall include its Affiliates and
its own and its Affiliates' officers, directors, employees, and agents): (a)
shall not have any duties or responsibilities except those expressly set forth
in this Agreement and the other Credit Documents and shall not be a trustee or
fiduciary for any Lender or other Secured Party; (b) shall not be responsible to
the Secured Parties for any recital, statement, representation or warranty
(whether written or oral) made in or in connection with any Credit Document or
any certificate or other document referred to or provided for in, or received by
any of them under, any Credit Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any Credit
Document, or any other document referred to or provided for therein or for any
failure by any Credit Party
<PAGE> 84
or any other Person to perform any of its obligations thereunder; (c) shall not
be responsible for or have any duty to ascertain, inquire into or verify the
performance or observance of any covenants or agreements by any Credit Party or
the satisfaction of any condition or the use of the proceeds of the Loans or the
existence or possible existence of any Default or Event of Default or to inspect
the property (including the books and records) of any Credit Party or any of its
Subsidiaries or Affiliates; (d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Credit Document; and (e) shall
not be responsible for any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Without limiting the
generality of the foregoing, the Agent is hereby expressly authorized to execute
any and all documents (including releases) with respect to the Collateral and
the rights of the Lenders with respect thereto, as contemplated by and in
accordance with the provisions of this Agreement and the Collateral Documents.
The provisions of this Section 9 are solely for the benefit of the Agent and the
Lenders and none of the Credit Parties shall have any rights as a third party
beneficiary of the provisions hereof. In performing its functions and duties
under this Agreement and the other Credit Documents, the Agent shall act solely
as agent of the Lenders and does not assume and shall not be deemed to have
assumed any obligation or relationship of agency or trust with or for any Credit
Party or any of their respective Affiliates.
9.2 Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing or other communication (including any
thereof by telephone or telecopy) believed by it to be genuine and correct and
to have been signed, sent or made by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel for
any Credit Party), independent accountants and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the holder thereof
for all purposes hereof unless and until the Agent receives and accepts an
Assignment and Acceptance executed in accordance with Section 10.3 hereof. As to
any matters not expressly provided for by this Agreement and the other Credit
Documents, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders (or to the extent specifically provided in Section 10.6,
all the Lenders), and such instructions shall be binding on all of the Lenders;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to any Credit
Document or applicable law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.
9.3 Defaults. The Agent shall not be deemed to have knowledge or notice
of the occurrence of a Default or Event of Default unless the Agent has received
written notice from a Lender or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives
<PAGE> 85
such a notice of the occurrence of a Default or Event of Default, the Agent
shall give prompt notice thereof to the Lenders. The Agent shall (subject to
Section 9.2 hereof) take such action with respect to such Default or Event of
Default as shall reasonably be directed by the Required Lenders, provided that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.4 Rights as Lender. With respect to its Commitments and the Loans
made by it, Bank One (and any successor acting as Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. Bank One (and any successor acting
as Agent) and its Affiliates may (without having to account therefor to any
Lender) accept deposits from, lend money to, make investments in, provide
services to, and generally engage in any kind of lending, trust or other
business with any Credit Party or any of its Subsidiaries or Affiliates as if it
were not acting as Agent, and Bank One (and any successor acting as Agent) and
its Affiliates may accept fees and other consideration from any Credit Party or
any of its Subsidiaries or Affiliates for services in connection with this
Agreement or otherwise without having to account for the same to the Secured
Parties.
9.5 Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under Section 10.5 hereof, but without limiting the
obligations of the Borrower under Section 10.5) ratably in accordance with their
respective Commitments (or, if the Commitments have expired or been terminated,
in accordance with the respective principal amounts of outstanding Loans and
Participation Interests of the Lenders), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees) or disbursements of any kind and nature
whatsoever that may at any time (including at any time following the final
payment of all of the obligations of the Borrower hereunder and under the other
Credit Documents) be imposed on, incurred by or asserted against the Agent
(including by any Lender) in any way relating to or arising out of any Credit
Document or the transactions contemplated thereby or any action taken or omitted
by the Agent under any Credit Document; provided, that, no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under Section 10.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements contained
in this Section 9.5 shall survive payment in full of the Loans and all other
amounts payable under the Credit Documents and the termination of the
Commitments hereunder.
9.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that the Agent has not made any representations or warranties to it
and
<PAGE> 86
that no act by the Agent hereinafter taken, including any review of the affairs
of any Credit Party or any of their respective Affiliates, shall be deemed to
constitute any representation or warranty by the Agent to any Secured Party.
Each Lender agrees that it has, independently and without reliance on the Agent
or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Credit Parties and
decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under the Credit
Documents. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of any Credit Party or any of their Affiliates that may come into the
possession of the Agent or any of its Affiliates.
9.7 Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 9 shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
SECTION 10
MISCELLANEOUS
10.1 Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number set forth below, (c) on the Business Day
following the day on which the same has been delivered prepaid to a reputable
national overnight air courier service or (d) on the fifth Business Day
following the day on which the same is sent by certified or registered mail,
postage prepaid, in each case to the respective parties at the address, in the
case of the Borrower and the Agent, set forth below, and, in the case of the
Lenders, set forth on Schedule 2.1(a), or at such other address as such party
may specify by written notice to the other parties hereto:
<PAGE> 87
if to the Borrower:
Kendle International Inc.
1200 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202
Attn: Mr. Timothy M. Mooney
Telephone: (800) 733-1572
Telecopy: (513) 562-1789
with a copy to:
Keating, Muething & Klekamp P. L. L.
1400 Provident Tower
One East 4th Street
Cincinnati, Ohio 45202
Attn: Edward E. Steiner, Esq.
Telephone: (513) 579-6468
Telecopy: (513) 579-6578
if to the Agent:
Bank One, NA
Bank One Towers
8044 Montgomery Road
OH3-4107
P.O. Box 365800
Cincinnati, Ohio 45236-5800
Attn: Richard B. Kuertz
Telephone: (513) 985-5113
Telecopier: (513) 985-5030
with a copy to:
Katz, Teller, Brant & Hild
255 East Fifth Street, Suite 2400
Cincinnati, Ohio 45202-4724
Attn: John R. Gierl, Esq.
Telephone: (513) 721-4532
Telecopier: (513) 721-7120
10.2 Right of Set-Off. Upon the occurrence and during the continuance
of an Event of Default, each Lender (and each of its Affiliates) is authorized
at any time and from time to time, to the fullest extent permitted by law,
without presentment, demand,
<PAGE> 88
protest or other notice of any kind (all of which rights being hereby expressly
waived), to set-off and to appropriate and apply any and all deposits (general
or special, time or demand, provisional or final) and any other indebtedness at
any time held or owing by such Lender (including branches, agencies or
Affiliates of such Lender wherever located) to or for the credit or the account
of any Credit Party against obligations and liabilities of such Person to such
Lender (and its Affiliates) hereunder, under the Notes, under the other Credit
Documents or otherwise, irrespective of whether such Lender (or Affiliate) shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured. Any such set-off shall
be deemed to have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books of such Lender
subsequent thereto. Each Lender agrees promptly to notify the Borrower after any
such set-off and application made by such Lender (or any of its Affiliates);
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. Any Person purchasing a Participation
Interest in the Loans and Commitments hereunder pursuant to Section 2.2(c), 3.13
or 10.3(d) may exercise all rights of setoff with respect to its Participation
Interest as fully as if such Person were a Lender hereunder. The rights of each
Lender (and its Affiliates) under this Section 10.2 are in addition to (and not
in limitation of) any other rights end remedies (including other rights of
set-off) that such Lender may have under applicable law or otherwise.
10.3 Benefit of Agreement. (a) Generally. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, that, the Borrower may
not assign or transfer any of its interests and obligations without prior
written consent of all the Lenders (and any such purported assignment or
transfer without such consent shall be void); provided further that the rights
of each Lender to transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth in this Section 10.3.
(b) Assignments. Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Loans, its Notes and its Commitments);
provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) each such assignment shall be in an amount at least equal
to $5,000,000, except in the case of an assignment to another Lender or
any Affiliate of a Lender or an assignment of all of a Lender's rights
and obligations under this Agreement;
(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under
this Agreement and the other Credit Documents; and
<PAGE> 89
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance, together
with any Notes subject to such assignment and a processing fee of
$3,000 to be paid by the parties to such assignment.
Upon the later of (A) the execution, delivery and acceptance of such Assignment
and Acceptance and (B) the effective date specified in such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the extent
of such assignment, have the obligations, rights and benefits of a Lender under
this Agreement and the other Credit Documents and the assigning Lender shall, to
the extent of such assignment, relinquish its rights and be released from its
obligations under this Agreement and the other Credit Documents. Upon the
consummation of any assignment pursuant to this Section 10.3(b), the assignor,
the Agent and the Borrower shall make appropriate arrangements so that, if
required, new promissory notes reflecting such assignment are issued to the
assignor and the assignee in the amount of their respective interests and in
substantially the form of the original Notes (but with notation thereon that
such new Notes are given in substitution for and replacement of the original
Notes or any replacements thereof). If the assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall deliver to
the Borrower and the Agent certification as to exemption from deduction or
withholding of Taxes in accordance with Section 3.10.
(c) Register. The Agent shall maintain at its address referred to in
Schedule 2.1(a) a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitments of, and principal amounts and Interest Periods
of the Loans of each Type owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Upon its receipt of an Assignment and
Acceptance executed by the parties thereto, together with any Notes subject to
such assignment and payment of the processing fee, the Agent shall, if such
Assignment and Acceptance has been completed and is in accordance with the
applicable requirements hereof, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the parties thereto.
(d) Participations. Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments and its Loans); provided,
however, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participant shall be
entitled to the benefit of the provisions contained
<PAGE> 90
in Sections 3.6, 3.9, 3.10 and 3.11 and the right of set-off contained in
Section 10.2 on the same basis as if it were a Lender, (iv) the Borrower shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and such Lender shall
retain the sole right to enforce the obligations of the Borrower relating to its
Loans, its Notes and its Commitments (except for the obligations to such
participant referred to in the foregoing clause (iii)) and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing the amount of principal of or
the rate at which interest is payable on such Loans or Notes in which such
participant is participating, extending any scheduled principal payment date or
scheduled interest payment date in respect of such Loans or Notes in which such
participant is participating, extending such Commitments in which such
participant is participating or, except as expressly provided in the Credit
Documents, releasing all or substantially all the Collateral from the lien of
the Collateral Documents or all or substantially all the Guarantors from the
Guarantee Agreement) (v) subparticipations by any participant shall be
prohibited, and (vi) each such participation shall be in an amount at least
equal to $5,000,000 except in the case of a participation to another Lender or
any Affiliate of a Lender or a participation of all of a Lender's rights and
obligations under this Agreement.
(e) Regulatory Matters. Notwithstanding any other provision set forth
in this Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Lender from
its obligations hereunder.
(f) Confidentiality. Any Lender may furnish any information concerning
any Credit Party or any of its Subsidiaries or other Affiliates in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants), subject, however, to the
provisions of Section 10.14 hereof.
10.4 No Waiver; Remedies Cumulative. No failure or delay on the part of
the Agent or any other Secured Party in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Agent or any other Secured Party and any of the Credit Parties shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies of the Agent and the
other Secured Parties hereunder and under the other Credit Documents are
cumulative and not exclusive of any rights or remedies which the Agent or any
other Secured Party would otherwise have at law or otherwise. No notice to or
demand on any Credit Party in any case shall entitle the Borrower or any other
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the other
Secured Parties to any
<PAGE> 91
other or further action in any circumstances without notice or demand except
where notice or demand is required under the Credit Documents.
10.5 Expenses; Indemnification. (a) The Borrower agrees to pay within
five (5) Business Days all reasonable costs and expenses of the Agent actually
incurred in connection with the syndication, preparation, execution, delivery,
administration, modification and amendment of this Agreement, the other Credit
Documents and the other documents to be delivered hereunder, including the
reasonable fees and expenses of counsel for the Agent (but specifically
excluding the cost of internal counsel) with respect thereto and with respect to
advising the Agent as to its rights and responsibilities under the Credit
Documents. The Borrower further agrees to pay within five (5) Business Days
after demand all costs and expenses of the Agent and the Lenders, if any
(including reasonable attorneys' fees and expenses but specifically excluding
the cost of internal counsel) actually incurred in connection with (i) the
enforcement (whether through negotiations, legal proceedings or otherwise) of
the Credit Documents and the other documents to be delivered hereunder and (ii)
any claim in respect of any of the Credit Obligations in any bankruptcy or
insolvency proceeding relating to any Credit Party.
(b) The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and each of their Affiliates and their respective officers,
directors, employees, agents and advisors (each, an "Indemnified Party") from
and against any and all claims, damages, losses, liabilities, reasonable costs
and expenses (including reasonable attorneys' fees) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including in connection with any
investigation, litigation or proceeding or preparation of defense in connection
therewith but specifically excluding the cost of internal counsel) (i) the
Credit Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans but specifically excluding, except as
otherwise expressly provided herein, any fees or expenses by Lender in the
participation of any of the Loans or (ii) the presence or Release of any
Materials of Environmental Concern at, under or from any Property owned,
operated or leased by any Credit Party, or the failure by any Credit Party to
comply with any Environmental Law, except to the extent such claim, damage,
loss, liability, cost or expense results from or is attributable to such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 10.5(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any Credit Party, its
directors, shareholders or creditors or an Indemnified Party or any other Person
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. The Borrower agrees not to
assert any claim against the Agent, any Lender, any other Secured Party, any of
their Affiliates or any of their respective directors, officers, employees,
attorneys, agents and advisers, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of
<PAGE> 92
or otherwise relating to the Credit Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 10.5 shall survive the payment in full of the Loans and all other
amounts payable under this Agreement.
10.6 Amendments. Waivers and Consents. Neither this Agreement nor any
other Credit Document nor any of the terms hereof or thereof may be amended,
modified or waived, unless such amendment, modification or waiver is in writing
entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, that, no such amendment, modification or waiver shall:
(a) extend the final maturity of any Loan without the prior written
consent of each Lender holding such Loan;
(b) reduce the rate of interest applicable to any Credit Obligation
(other than as a result of waiving the applicability of any post-default
increase in interest rates), extend the time of payment of any interest thereon
(other than as a result of waiving any mandatory prepayment), reduce any Fees
payable hereunder or extend the time of payment of any Fees hereunder, without
the prior written consent of each Lender to whom such interest, Credit
Obligation or Fee is owed;
(c) reduce or waive the principal amount of any Loan without the prior
written consent of each Lender holding such Loan;
(d) increase the Commitment of a Lender over the amount thereof in
effect or extend the date fixed for the termination of the Commitment of a
Lender (it being understood and agreed that a waiver of any Default or Event of
Default of any mandatory reduction in the Commitments shall not constitute an
increase in the terms of any Commitment of any Lender), without the prior
written consent of such Lender,
(e) release all or substantially all of the Collateral from the Lien of
the Collateral Documents (except as expressly provided in the Credit Documents),
without the prior written consent of each Lender;
(f) release the Borrower or, except as expressly provided in the Credit
Documents, all or substantially all of the Guarantors from its or their
obligations under the Credit Documents, without the prior written consent of
each Lender;
(g) amend, modify or waive any provision of this Section 10.6 or
Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 8.1(a), 10.2, 10.3, 10.5 or
10.9, without the prior written consent of each Lender;
<PAGE> 93
(h) reduce any percentage specified in, or otherwise modify, the
definition of Required Lenders, or otherwise change the percentage of the
Commitments, the percentage of the aggregate unpaid principal amount of the
Notes or the number of Lenders which shall be required for the Lenders or any of
them to take action under any provision of this Agreement or any other Credit
Document, without the prior written consent of each Lender;
(i) consent to the assignment or transfer by the Borrower or any
Guarantor of any of its rights and obligations under or in respect of the Credit
Documents (except as expressly provided in the Credit Documents), without the
prior written consent of each Lender;
(j) increase the total Commitments or otherwise increase the aggregate
principal amount of obligations which are secured by the Collateral, without the
prior written consent of each Lender;
(k) effect any waiver, amendment or modification of Section 7.8(a) with
respect to the subordination provisions of any Indebtedness, without the prior
written consent of each Lender; or
(l) amend any provision of Section 9 or otherwise affect any rights or
duties of the Agent, without the prior written consent of the Agent.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersedes the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding. The various
requirements of this Section 10.6 are cumulative. Each Lender and each holder of
a Note shall be bound by any waiver, amendment or modification authorized by
this Section 10.6 regardless of whether its Note shall have been marked to make
reference thereto, and any consent by any Lender or holder of a Note pursuant to
this Section 10.6 shall bind any Person subsequently acquiring a Note from it,
whether or not such Note shall have been so marked.
10.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart for each of the parties hereto. Delivery by facsimile by
any of the parties hereto of an executed counterpart of this Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered,
but the failure to deliver a manually
<PAGE> 94
executed counterpart shall not affect the validity, enforceability or binding
effect of this Agreement.
10.8 Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
10.9 Survival. All indemnities set forth herein, including in Sections
2.2(i), 3.6, 3.10, 3.11, 9.5 and 10.5, and the undertakings set forth in Section
10.14, shall survive the execution and delivery of this Agreement, the making of
the Loans, the repayment of the Loans and other obligations under the Credit
Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Borrower herein and by the Lenders in
Section 10.15 herein shall survive delivery of the Notes and the making of the
Loans hereunder.
10.10 Governing Law, Submission to Jurisdiction; Venue. (a) THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN
SUCH OTHER CREDIT DOCUMENTS) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of Ohio in Hamilton County, or of the United States for
the Southern District, Western Division of Ohio, and, by execution and delivery
of this Agreement, the Borrower hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the nonexclusive
jurisdiction of such courts. The Borrower further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set forth for notices pursuant to Section
10.1, such service to become effective five (5) days after such mailing. Nothing
herein shall affect the right of the Agent or any Lender to serve process in any
other manner permitted by law or to commence legal proceedings or to otherwise
proceed against any Credit Party in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in subsection (a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS AND
THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING
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OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
10.11 Severability. If any provision of any of the Credit Documents is
judicially determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions. In such event, the parties hereto shall endeavor in
good faith negotiations to replace any such invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
10.12 Entirety. This Agreement, the other Credit Documents and the
Lender Hedging Agreements, if any, represent the entire agreement of the parties
hereto and thereto regarding the subject matter hereof and thereof and supersede
all prior agreements and understandings, oral or written, if any (including any
commitment letters or correspondence), relating to such subject matters. Nothing
in this Agreement or any other Credit Document, expressed or implied, is
intended to confer upon any party (other than the parties hereto and thereto and
the other Secured Parties) any rights, remedies, obligations or liabilities
under or by reason of this Agreement and the other Credit Documents.
10.13 Binding Effect; Termination. (a) This Agreement shall become
effective at such time on or after the Effective Date when it shall have been
executed by the Borrower and the Agent, and the Agent shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the signatures
of each Lender, and thereafter this Agreement shall be binding upon and inure to
the benefit of the Borrower, the Agent and each Lender and their respective
permitted successors and assigns.
(b) The term of this Agreement shall be until no Loans or any other
amounts payable hereunder or under any of the other Credit Documents shall
remain outstanding, all of the Credit Obligations have been irrevocably
satisfied in full and all of the Commitments hereunder shall have expired or
been terminated.
10.14 Confidentiality. Each of the Agent and the Lenders (each, a
"Lending Party") agrees, during the term of this Agreement and at all times
thereafter, to keep confidential any information furnished or made available to
it by any Credit Party pursuant to this Agreement that is marked confidential or
that is disclosed pursuant to written instructions from the Credit Party that
the confidentiality of such information must be maintained by the Lending
Parties; provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent or advisor of any
Lending Party or Affiliate of any Lending Party, (b) as required by any law,
rule or regulation, (c) upon the order of any court of administrative agency,
(d) upon the request or demand of any regulatory agency or authority, (e) that
is or becomes
<PAGE> 96
available to the public or that is or becomes available to any Lending Party
other than as a result of a disclosure by any Lending Party prohibited by this
Agreement, (f) in connection with any litigation to which such Lending Party or
any of its Affiliates maybe a party, (g) to the extent necessary in connection
with the exercise of any remedy under this Agreement or any other Credit
Document, (h) subject to provisions substantially similar to those contained in
this Section 10.14, to any actual or proposed participant or assignee and (i) to
the extent that the Borrower shall have consented in writing to such disclosure.
Nothing set forth in this Section 10.14 shall obligate the Agent or any Lender
to return any materials furnished by the Credit Parties.
10.15 Source of Funds. Each of the Lenders hereby represents and
warrants to the Borrower that at least one of the following statements is an
accurate representation as to the source of funds to be used by such Lender in
connection with the financing hereunder:
(a) no part of such funds constitutes assets allocated to any separate
account maintained by such Lender in which any employee benefit plan (or its
related trust) has any interest;
(b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by such Lender, such Lender has
disclosed to the Borrower the name of each employee benefit plan whose assets in
such account exceed 10% of the total assets of such account as of the date of
such purchase (and, for purposes of this subsection (b), all employee benefit
plans maintained by the same employer or employee organization are deemed to be
a single plan);
(c) to the extent that any part of such funds constitutes assets of an
insurance company's general account, such insurance company has complied with
all of the requirements of the regulations issued under Section 401(c)(1)(A) of
ERISA; or
(d) such funds constitute assets of one or more specific benefit plans
which such Lender has identified in writing to the Borrower.
As used in this Section 10.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
10.16 Conflict. To the extent that there is a conflict or inconsistency
between any provision hereof, on the one hand, and any provision of any other
Credit Document, on the other hand, this Agreement shall control.
[Signature Page to Follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
BORROWER: KENDLE INTERNATIONAL INC.,
an Ohio corporation
By:
Name:
Title:
LENDERS:
BANK ONE, NA, THE FIFTH THIRD BANK
individually in its capacity as a
Lender and in its capacity as Agent
By: _________________________________ By:
Name: _______________________________ Name: ___________________________
Title: ______________________________ Title:
Applicable Lending Office: Applicable Lending Office:
8044 Montgomery Road Fifth Third Center
Suite 350 38 Fountain Square, 5th Floor
Cincinnati, Ohio 45236 Cincinnati, Ohio 45263
KEYBANK NATIONAL ASSOCIATION
By:
Name: _______________________________
Title:
Applicable Lending Office:
525 Vine Street
Cincinnati, Ohio 45202
