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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
==============================================================================
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1997
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
__________________ TO __________________
Commission File No.0-12744
SUNRISE MEDICAL INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3836867
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2382 FARADAY AVENUE, SUITE 200
CARLSBAD, CA 92008
(Address of principal executive offices)
Registrant's telephone number, including area code: (760) 930-1500
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
Number of shares of common stock outstanding at October 31, 1997: 19,307,854
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SUNRISE MEDICAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 26, June 27,
1997 1997
------------- --------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 2,317 $ 2,823
Trade receivables, net 113,874 114,223
Installment receivables, net 11,546 13,351
Income tax refunds receivable 1,893 3,794
Inventories 89,521 88,757
Deferred income taxes 11,135 11,343
Other current assets 8,201 3,703
-------- --------
Total current assets $238,487 237,994
Property and equipment, net of accumulated
depreciation of $86,770 and $83,420,
respectively 91,954 90,852
Goodwill and other intangible assets, net 270,586 274,410
Other assets, net 6,239 7,293
-------- --------
Total assets $607,266 $610,549
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 4,900 $ 4,942
Trade accounts payable 43,602 47,486
Accrued compensation and other expenses 81,136 81,216
Income taxes 680 2,119
-------- --------
Total current liabilities 130,318 135,763
Long-term debt, less current installments 191,967 188,061
Deferred income taxes 7,713 7,305
Stockholders' equity:
Preferred stock, $1 par. Authorized 5,000
shares; none issued -- --
Common stock, $1 par. Authorized 40,000 shares;
19,307 and 19,304 shares, respectively, issued
and outstanding 19,307 19,304
Additional paid-in capital 202,400 202,379
Retained earnings 56,323 55,978
Cumulative foreign currency translation
adjustment (762) 1,759
-------- --------
Total stockholders' equity 277,268 279,420
-------- --------
Total liabilities and stockholders' equity $607,266 $610,549
-------- --------
-------- --------
(See accompanying notes to condensed consolidated financial statements)
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SUNRISE MEDICAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended
------------------------------
September 26, September 27,
1997 1996
------------ -------------
Net sales $151,063 $165,353
Cost of sales 102,752 110,899
-------- --------
Gross profit 48,311 54,454
-------- --------
Marketing, selling and administrative expenses 35,020 40,264
Research and development expenses 3,871 3,759
Re-engineering expenses 4,606 --
Amortization of goodwill and other intangibles 2,045 2,040
-------- --------
Corporate operating income 2,769 8,391
-------- --------
Other (expense) income:
Interest expense (3,411) (4,002)
Interest income 1,194 779
Other income and expense, net 156 715
-------- --------
(2,061) (2,508)
-------- --------
Income before income taxes 708 5,883
Income taxes 363 2,823
-------- --------
Net income $ 345 $ 3,060
-------- --------
-------- --------
Net income per share $ .02 $ .16
-------- --------
-------- --------
Weighted average number of shares outstanding 19,438 19,023
-------- --------
-------- --------
(See accompanying notes to condensed consolidated financial statements)
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SUNRISE MEDICAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Thirteen Weeks Ended
----------------------------
September 26, September 27,
1997 1996
------------ ------------
Cash flows from operating activities:
Net income $ 345 $ 3,060
Non-cash charges 6,841 6,826
Changes in assets and liabilities, net of
effect of acquisitions:
Receivables, net 3,038 393
Inventories (764) (3,103)
Prepaid expenses and other assets (5,052) (4,700)
Income taxes 462 4,044
Accounts payable and other liabilities (3,964) 2,580
-------- --------
Net cash provided by operating activities 906 9,100
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (5,282) (3,390)
-------- --------
Net cash used for investing activities (5,282) (3,390)
-------- --------
Cash flows from financing activities:
Borrowings of long-term debt 22,900 29,500
Repayments of long-term debt (19,036) (33,009)
Proceeds from issuance of common stock 24 110
-------- --------
Net cash provided by (used for) financing
activities 3,888 (3,399)
-------- --------
Effect of exchange rate changes on cash (18) (1)
-------- --------
Net (decrease) increase in cash and cash
equivalents (506) 2,310
Cash and cash equivalents at beginning of period 2,823 1,785
-------- --------
Cash and cash equivalents at end of period $ 2,317 $ 4,095
-------- --------
-------- --------
(See accompanying notes to condensed consolidated financial statements)
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SUNRISE MEDICAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The information contained in the consolidated financial statements and
footnotes is condensed from that which would appear in the annual
consolidated financial statements. Accordingly, the condensed consolidated
financial statements included herein should be reviewed in conjunction with
the consolidated financial statements and related notes thereto contained in
the Annual Report on Form 10-K for the fiscal year ended June 27, 1997, filed
by Sunrise Medical Inc. (the "company") with the Securities and Exchange
Commission. The unaudited condensed consolidated financial statements as of
September 26, 1997 and for the thirteen-week periods ended September 26, 1997
and September 27, 1996 include all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation. The
results of operations for interim periods are not necessarily indicative of
the results which may be expected for the entire year. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. Inventories
Certain inventories are stated at the lower of last-in, first-out (LIFO) cost or
market value. All other inventories are stated at the lower of the first-in,
first-out (FIFO) cost or market value. Inventories consist of the following (in
thousands):
September 26, June 27,
1997 1997
------- -------
Raw material $35,647 $34,501
Work-in-progress 14,156 11,570
Finished goods 39,718 42,686
------- -------
$89,521 $88,757
------- -------
------- -------
Interim period inventory classifications involve a degree of estimation due to
the timing of physical inventories throughout the fiscal year.
3. Subsequent Event
On October 28, 1997 the company completed a private placement of $100 million
of senior notes, $50 million maturing after seven years, bearing interest at
7.09% and the remaining $50 million maturing after ten years at an interest
rate of 7.25%. The proceeds of this debt issuance was used to reduce the
outstanding debt on the company's unsecured multi-currency credit facility.
As a result of this placement, the maximum borrowing commitment under the
company's multi-currency credit facility has also been reduced by $100
million to $150 million, decreasing to $135 million in January 1999 and to
$115 million in January 2000 in accordance with the terms of the credit
agreement.
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3. Contingencies
The Securities and Exchange Commission ("SEC") has entered a formal order of
private investigation into the circumstances underlying the restatement of the
company's 1995 and 1994 financial results. The company is cooperating fully
with the SEC in its investigation.
6
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SUNRISE MEDICAL INC. AND SUBSIDIARIES
ITEM 1. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The company reports its operating results using three groupings, which
reflect its operating management structure: Home Healthcare Group ("HHG"),
Continuing Care Group ("CCG") (both based in North America) and Sunrise
Medical Europe.
RESULTS OF OPERATIONS
NET SALES
Net sales for the first quarter of fiscal 1998 were $151.1 million compared
to $165.4 million in the comparable period of fiscal 1997, a decrease of 9%.
Sales grew 1% after excluding the 6% effect of the company's divestiture of
its consumer business in October 1996 and the 4% negative impact of foreign
currency translation.
The Home Healthcare Group's sales increased 7% in the first quarter of fiscal
1998 to $68.8 million, compared to $64.4 million in the first quarter of
fiscal 1997. HHG is comprised of three divisions: Mobility Products,
Personal Care Products and Respiratory Products. Increased volume in all
product lines accounted for most of the growth as a competitive pricing
environment continued to deter price increases.
The Continuing Care Group recorded sales of $20.6 million in the first
quarter of fiscal 1998, a decline of 14% from sales of $24.0 million in the
comparable period of fiscal 1997. All product lines with the exception of
patient lifters and slings recorded a significant decrease in unit volumes,
while average selling prices decreased slightly. CCG's order backlog
increased by 22% during the first quarter of fiscal 1998, indicating a
positive trend for future sales. Backlog is considered a meaningful indicator
for CCG, because most of its product lines require a two to three month lead
time for manufacture.
In Europe, sales grew 2% to $61.7 in the first quarter of fiscal 1998, after
excluding the negative 10% impact from foreign currency fluctuations,
compared to $67.0 million in the first quarter of fiscal 1997. The company's
businesses in France, Spain, and its European distribution group all had
solid sales growth, while revenues in the U.K. and Germany declined. During
the first quarter of fiscal 1998, the U.K. was significantly impacted by the
consolidation of four manufacturing sites into one plant. Significant
relocation related turnover in the direct labor workforce caused production
inefficiencies and related shipping delays resulting in a backlog increase of
$3.0 million.
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EXPENSE AND PROFIT ANALYSIS
Key items as a percentage of net sales were:
Thirteen Weeks Ended
-------------------------------
September 26, September 27,
1997 1996
------------ ------------
Gross profit 32.0% 32.9%
Corporate operating income 1.8% 5.1%
Interest expense 2.3% 2.4%
Net income 0.2% 1.9%
Gross profit of $48.3 million in the first quarter of fiscal 1998 was $6.2
million below the $54.5 million recorded in the comparable period of fiscal
1997. The gross margin, or gross profit as a percentage of net sales,
decreased by 0.9% to 32.0%, as a result of pricing and cost pressures on
certain products. In addition, negative foreign exchange rate impacts
resulting primarily from the increase in the pound sterling versus other
European currencies have reduced margins on Sunrise U.K. manufactured
products.
Marketing, selling and administrative expenses decreased by 13% in the first
quarter of fiscal 1998 compared to the prior year period, and declined as a
percentage of net sales to 23.2% compared to 24.4% in the first quarter of
fiscal 1997. Included in the first quarter of 1997 were marketing costs of
approximately $1.4 million in connection with the company's sponsorship of
the 1996 Atlanta Paralympic Games and $1.6 million of expenses incurred at
the company's consumer business, which was divested in October 1996.
Excluding these costs, marketing, selling and administrative expenses
decreased by 6% evidencing the continued results of company-wide operating
cost containment.
Research and development expenses increased to $3.9 million or 2.6% of net
sales in the first quarter of fiscal 1998 as compared to $3.8 million or
2.3% of net sales in fiscal 1997. This increase reflects the company's
renewed focus on new technologies and enhancements as facilities
consolidations near completion.
Re-engineering expenses were $4.6 million in the first quarter of 1998.
These expenses are the costs incurred during the quarter with respect to the
re-engineering and facilities consolidation program announced in fiscal 1997.
Included in this amount are the expenses associated with the costs of new and
upgraded management information systems, temporary duplicate U.K. facilities
costs and the cost of unabsorbed overhead variances and labor inefficiencies
related to the U.K. plant consolidations.
Interest expense for the first quarter of fiscal 1998 was $3.4 million or 15%
lower than interest expense of $4.0 million in the first quarter of the prior
year, attributable to lower average borrowings and a slight decrease in
interest rates.
Interest and other income/expense, decreased to $1.4 million compared to $1.5
million in the first quarter of the prior year. Without the $0.7 million
effect of the favorable resolution of a legal dispute in the 1997 period,
interest income and other increased by $0.6 million, primarily as a result of
interest related to a tax refund.
8
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The effective tax rate of 51.3% in the first quarter of fiscal 1998 was
higher than the rate of 48.0% in the same period of fiscal 1997 as a result
of non-deductible goodwill amortization representing a greater portion of
income before income taxes.
Net income for the first quarter of fiscal 1998 was $0.3 million, or $0.02
per share, compared to net income of $3.1 million ($.16 per share) in the
first quarter of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 1998, the company's working capital
increased by $5.9 million to $108.2 million. Cash of $0.9 million was
provided by operating activities during the period, compared to $9.1 million
in the first quarter of fiscal 1997. Purchases of property and equipment
were $5.3 million, up from $3.4 million in the 1997 period. Long-term debt
increased by $3.9 million in the first quarter of fiscal 1998.
At the end of fiscal 1997, the company announced it would incur approximately
$13 million in costs associated with its re-engineering program in fiscal
1998. This original estimate related to planned expenses associated with the
U.S. and European information systems conversions and upgrades as well as the
costs associated with the consolidation of four U.K. manufacturing divisions
into one plant. Due to the higher than expected costs associated with the U.K
consolidation together with management's decision to accelerate the move of
its Personal Care Products factory to Mexico to occur in fiscal 1998,
management's estimate of costs associated with re-engineering in fiscal 1998
has been increased to $19-$21 million.
The company recorded pre-tax charges from unusual items of $65.2 million in
fiscal 1996. Of these charges, approximately $36.2 million required cash
payments and $29.0 million represented non-cash charges. A total of $28.7
million of the cash amounts had been paid by June 27, 1997, and an additional
$2.2 million was paid during the first quarter of fiscal 1998. Substantially
all of the $5.3 million balance of cash charges is expected to be paid over
the next twelve months.
IMPACT OF INFLATION
Inflation did not have any significant effect on the company's operating
results in the first quarter of fiscal 1998.
FORWARD-LOOKING STATEMENTS
The company has made forward-looking statements in this Form 10-Q, including:
(i) the expected cost of the company's ongoing worldwide re-engineering and
facilities consolidation program; and (ii) the expected future improvements
in revenues of the Continuing Care Group. These statements are only
predictions. Actual events or results may differ materially as a result of
risks and uncertainties facing the company including: (i) the impact of
competitive products and activities; (ii) increased industry pricing
pressures; (iii) disruptions caused by the company's consolidations of
operations; (iv) the rising cost of raw materials; (v) product development,
commercialization and market acceptance risks; (vi)
9
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reductions in government funding for products sold by the company; (vii)
unfavorable governmental regulatory actions (such as by the FDA in the U.S.);
(viii) risks and uncertainties associated with the company's international
activities; (ix) other factors referenced in Securities and Exchange
Commission filings of the company. The company disclaims any obligation to
update any such factors or to announce publicly the result of any revisions
to any of the forward-looking statements contained in this Form 10-Q, or to
make corrections to reflect future events or developments.
10
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SUNRISE MEDICAL INC.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Number Description
-------- -----------
3.1 Certificate of Incorporation of the company and amendments
thereto. (a)
3.3 Amendment to Certificate of Incorporation of the company as set
forth under the caption "Article III - Liability of Director
to the Corporation." (b)
3.9 Amended and Restated Bylaws as of April 29, 1997. (c)
4.1 Amended and Restated Shareholders' Rights Agreement dated
May 16, 1997. (d)
10.17 Third Amended and Restated Credit Agreement and Waiver dated as
of August 28, 1997 among Sunrise Medical Inc. and certain
subsidiary borrowers and guarantors, Bank of America as agent
and other lenders.
10.18 Note Purchase Agreement dated as of October 1, 1997 for $50
million 7.09% Series A Senior Notes Due October 28, 2004 and
for $50 million 7.25% Series B Senior Notes Due October 28,
2007.
27 Financial Data Schedule.
- -------------------
(a) Incorporated herein by reference to the company's Registration
Statement No. 2-86314.
(b) Incorporated herein by reference to the company's 1987 Definitive
Proxy Statement.
(c) Incorporated herein by reference to the company's Form 10-K for the
fiscal year ended June 27, 1997.
(d) Incorporated herein by reference to the company's Form 8-K dated
May 16, 1997.
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(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 26, 1997.
12
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SUNRISE MEDICAL INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUNRISE MEDICAL INC.
Date: November 7, 1997 /s/ TED N. TARBET
--------------------------------
Ted N. Tarbet
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: November 7, 1997 /s/ JOHN M. RADAK
---------------------------------
John M. Radak
Vice President and Controller
(Principal Accounting Officer)
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THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of August 28, 1997
among
SUNRISE MEDICAL, INC.,
THE SUBSIDIARY BORROWERS AND GUARANTORS
FROM TIME TO TIME PARTY HERETO
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged By
BANCAMERICA SECURITIES, INC.
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TABLE OF CONTENTS
Section Page
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS............................................. 1
1.01 Defined Terms....................................................... 1
1.02 Use of Defined Terms................................................ 30
1.03 Accounting Terms.................................................... 30
1.04 Exhibits and Schedules.............................................. 31
1.05 Currency Equivalents Generally...................................... 31
1.06 References to Last Day of Fiscal Period............................. 32
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES............................................ 32
2.01 The Advances........................................................ 32
2.02 Making the Committed Advances....................................... 33
2.03 Fees................................................................ 37
2.04 Repayment of Advances............................................... 38
2.05 Interest Rate Provisions, Etc....................................... 38
2.06 Voluntary Conversions and Continuations of Committed Advances....... 44
2.07 Bid Borrowings...................................................... 46
2.08 Procedure for Bid Borrowings........................................ 47
2.09 The Swing Line...................................................... 51
2.10 Reduction of Commitments............................................ 53
2.11 Mandatory Prepayments............................................... 54
2.12 Optional Prepayments................................................ 55
2.13 Increased Costs..................................................... 55
2.14 Evidence of Debt.................................................... 57
2.15 Payments and Computations........................................... 58
2.16 Taxes............................................................... 60
2.17 Payments on Business Days........................................... 63
2.18 Sharing of Payments, Etc............................................ 64
2.19 Currency Equivalents................................................ 64
2.20 Funding Losses...................................................... 65
2.21 Use of Proceeds..................................................... 65
2.22 Funding Sources..................................................... 66
2.23 Borrower's Agent.................................................... 66
ARTICLE III
AMOUNT AND TERMS OF LETTERS OF CREDIT AND PARTICIPATIONS THEREIN............. 66
3.01 Letters of Credit................................................... 66
3.02 Issuing the Letters of Credit....................................... 67
3.03 Reimbursement Obligations........................................... 67
3.04 Participations Purchased by the Lenders............................. 68
3.05 Letter of Credit Fees............................................... 70
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Section Page
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3.06 Indemnification: Nature of the Issuing Lender's Duties............ 71
3.07 Increased Costs.................................................... 72
3.08 Uniform Customs and Practice....................................... 73
ARTICLE IV
CONDITIONS OF EFFECTIVENESS................................................. 73
4.01 Conditions to Initial Advances..................................... 73
4.02 Conditions Precedent to All Borrowings and All Issuances........... 75
4.03 Conditions to Effectiveness of Subsidiary Borrower Electing to
Participate After the Closing Date................................. 76
ARTICLE V
REPRESENTATIONS AND WARRANTIES.............................................. 77
5.01 Existence and Qualification; Power; Compliance With Laws........... 77
5.02 Authority; Compliance with Other Agreements and Instruments........ 77
5.03 No Governmental Approvals Required................................. 78
5.04 Subsidiaries of Borrower........................................... 78
5.05 Financial Statements............................................... 79
5.06 No Other Liabilities; No Material Adverse Effect................... 79
5.07 Title to Property.................................................. 79
5.08 Intangible Assets.................................................. 79
5.09 Governmental Regulation............................................ 79
5.10 Litigation......................................................... 79
5.11 Binding Obligations................................................ 80
5.12 ERISA.............................................................. 80
5.13 Regulations G and U................................................ 80
5.14 Disclosure......................................................... 81
5.15 Tax Liability...................................................... 81
5.16 Hazardous Materials................................................ 81
5.17 Employee Matters................................................... 81
5.18 Projections........................................................ 81
ARTICLE VI
AFFIRMATIVE COVENANTS....................................................... 82
6.01 Financial and Business Information................................. 82
6.02 Payment of Taxes and Other Potential Liens......................... 85
6.03 Preservation of Existence.......................................... 85
6.04 Maintenance of Properties.......................................... 85
6.05 Maintenance of Insurance........................................... 86
6.06 Compliance With Laws............................................... 86
6.07 Inspection Rights.................................................. 86
6.08 Keeping of Records and Books of Account............................ 86
6.09 Compliance With Agreements......................................... 86
6.10 Hazardous Materials Laws........................................... 86
6.11 Additional Guarantors After the Closing Date....................... 87
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Section Page
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ARTICLE VII
NEGATIVE COVENANTS.......................................................... 87
7.01 Disposition of Property............................................ 88
7.02 Mergers............................................................ 88
7.03 Investments and Acquisitions....................................... 89
7.04 Hostile Tender Offers.............................................. 89
7.05 ERISA.............................................................. 89
7.06 Liens; Negative Pledges; Sales and Leasebacks...................... 90
7.07 Indebtedness....................................................... 91
7.08 Conduct of Business................................................ 92
7.09 Leverage Ratio..................................................... 92
7.11 Interest Coverage Ratio............................................ 93
7.12 Contingent Obligations............................................. 93
7.13 Limitations on Restrictions Affecting Dividends and Other
Payments by Subsidiaries........................................... 94
7.14 Restricted Junior Payments......................................... 94
7.15 Transactions with Affiliates....................................... 95
7.16 Subsidiaries....................................................... 95
7.17 Lease Obligations.................................................. 95
ARTICLE VIII
GUARANTY.................................................................... 96
8.01 Guaranty........................................................... 96
8.02 No Impairment of Guaranties........................................ 97
8.03 Continuation and Reinstatement, Etc................................ 98
8.04 Guarantied Amount.................................................. 99
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT....................... 99
9.01 Events of Default.................................................. 99
9.02 Remedies Upon Event of Default..................................... 101
ARTICLE X
THE AGENT................................................................... 103
10.01 Appointment and Authorization.................................... 103
10.02 Delegation of Duties............................................. 103
10.03 Liability of Agent............................................... 104
10.04 Reliance by Agent................................................ 104
10.05 Notice of Default................................................ 105
10.06 Credit Decision.................................................. 105
10.07 Indemnification.................................................. 106
10.08 Agent in Individual Capacity..................................... 106
10.09 Successor Agent.................................................. 107
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Section Page
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ARTICLE XI
MISCELLANEOUS............................................................... 107
11.01 Cumulative Remedies; No Waiver................................... 107
11.02 Amendments; Consents............................................. 108
11.03 Costs, Expenses and Taxes........................................ 108
11.04 Nature of Lender's Obligations................................... 109
11.05 Survival of Representations and Warranties....................... 110
11.06 Notices.......................................................... 110
11.07 Execution in Counterparts........................................ 110
11.08 Binding Effect; Assignment....................................... 111
11.09 Indemnity by Loan Parties........................................ 115
11.10 Hazardous Materials Indemnity.................................... 116
11.11 Nonliability of Lenders.......................................... 117
11.12 Confidentiality.................................................. 118
11.13 No Third Parties Benefited....................................... 118
11.14 Right of Setoff.................................................. 119
11.15 Judgment Currency................................................ 119
11.16 Further Assurances............................................... 119
11.17 Integration...................................................... 120
11.18 Governing Law.................................................... 120
11.19 Severability of Provisions....................................... 120
11.20 Headings......................................................... 120
11.21 Conflict in Loan Documents....................................... 120
11.22 WAIVER OF TRIAL BY JURY.......................................... 120
11.23 PURPORTED ORAL AMENDMENTS........................................ 121
11.24 Amendment and Restatement of Existing Credit Agreement........... 121
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THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement") is
entered into as of August 28, 1997 by and among Sunrise Medical, Inc., a
Delaware corporation ("Sunrise" or "Borrower"), the subsidiaries of Borrower
from time to time signatory to this Agreement as "Subsidiary Borrowers" or
"Guarantors," Bank of America National Trust and Savings Association, a national
banking association, and the other banks signatory to this Agreement together
with each bank which may hereafter execute and deliver the Commitment Assignment
and Acceptance herein described (collectively, the "Lenders"), and Bank of
America National Trust and Savings Association, as agent for the Lenders (in
such capacity, "Agent").
RECITALS
A. The Borrower, the lenders party thereto, the subsidiary borrowers
and guarantors thereunder and Agent entered into a Credit Agreement dated as of
December 12, 1991, as amended, which agreement was amended and restated by a
First Amended and Restated Credit Agreement dated as of August 17, 1994, as
amended, among the Borrower, the subsidiary borrowers and guarantors thereunder,
the lenders parties thereto and Agent, as further amended and restated by a
Second Amended and Restated Credit Agreement dated as of September 29, 1995, as
amended, among the Borrower, the subsidiary borrowers and guarantors thereunder,
the lenders parties thereto and Agent (the "Existing Credit Agreement").
B. By this Agreement the Existing Credit Agreement is amended and
restated on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth respectively after each:
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"ABSOLUTE RATE" has the meaning specified in Section 2.08(c).
"ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bids
setting forth Absolute Rates pursuant to Section 2.08.
"ABSOLUTE RATE BID ADVANCE" means a Bid Advance that bears interest at
a rate determined with reference to the Absolute Rate.
"ACCUMULATED FUNDING DEFICIENCY" shall mean an accumulated funding
deficiency as defined in Section 302 of ERISA and Section 412 of the Code.
"ACQUISITION" means any transaction, or any series of related
transactions, by which a Person directly or indirectly (a) acquires any ongoing
business or all or substantially all of the assets of any firm, partnership,
joint venture, corporation or division thereof engaged in an ongoing business,
whether through purchase of assets, merger or otherwise, (b) acquires control of
at least a majority of the securities which have ordinary voting power for the
election of directors of a corporation engaged in an ongoing business or (c)
acquires control of a 50% or more ownership interest in any partnership or joint
venture engaged in an ongoing business.
"ADJUSTED CASH FLOW" means, as of the last day of any Fiscal Quarter,
Consolidated Net Income for the four Fiscal Quarters then ending PLUS (a)
depreciation, amortization and other non-Cash expenses (but excluding deferred
taxes), non-Cash amounts relating to non-recurring items to the extent that they
will not result in a future cash outflow of Borrower and its Subsidiaries for
that fiscal period, PLUS (b) Interest Charges expensed during that fiscal
period, MINUS (c) Capital Expenditures made by Borrower or any Subsidiary during
that fiscal period net of asset dispositions in the ordinary course of business
and MINUS (d) the aggregate dividends made by Borrower to its shareholders and
by any Subsidiary which is not a Wholly-Owned Subsidiary to its minority
shareholders, during that fiscal period. Each of the foregoing components of
Adjusted Cash Flow shall be computed without duplication and, in the case of
clauses (a) and (b), only to the extent included in determining Consolidated Net
Income for such fiscal period.
"ADJUSTED DOLLAR EQUIVALENT" means, with respect to Intangible Assets
acquired in Acquisitions completed on or prior to December 29, 1995, the Dollar
equivalent of such assets utilized by the Company in its books and records as of
December 29, 1995; and, with respect to Intangible Assets acquired in
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<PAGE>
Acquisitions completed after December 29, 1995, the Dollar equivalent of such
assets utilized by the Company in its books and records as of the date such
Intangible Asset was acquired. In each case, for purposes of this Agreement, no
subsequent adjustments shall be made to the Dollar equivalent of Intangible
Assets as a result of subsequent fluctuations in foreign currency exchange rates
used to translate Intangible Assets denominated in foreign currencies.
"ADVANCE" means a Committed Advance, a Swing Line Advance or a Bid
Advance.
"AFFILIATE" means, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "CONTROL" (including, with its
correlative meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); provided
that, in any event, any Person which owns directly or indirectly 5% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation that has more than 300 record holders of
such securities or 5% or more of the partnership or other ownership interests of
any other Person that has more than 300 record holders of such interests will be
deemed to control such corporation or other Person.
"AGENT" means Bank of America National Trust and Savings Association,
as agent for the Lenders hereunder and under the other Loan Documents, and each
successor agent.
"AGENT'S ACCOUNT" means, with respect to any payments to be made in
Dollars, the Agent's account maintained at the office of the Agent at Bank of
America, Concord, California, ABA 121-000-358, Attention: Agency Administrative
Services #5596, Account No. 12339-15444 Ref.: Sunrise Medical, Inc., or such
other account (located in the United States) as the Agent may from time to time
specify in writing to the Borrower and the Lenders and, with respect to any
payments to be made in any Alternative Currency, those accounts indicated on
Schedule 1.01(a) hereto, or, in each case, such other account as the Agent may
from time to time specify in writing to the Borrowers and the Lenders.
"AGENT'S OFFICE" means the office of Bank of America National Trust
and Savings Association set forth on Schedule 11.06 under Agent or such other
office as Agent may designate in writing to the Borrower and the Lenders.
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<PAGE>
"AGENT-RELATED PERSONS" means Bank of America and any successor agent
arising under Section 10.09, together with their respective Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"AGREEMENT" means this Third Amended and Restated Credit Agreement,
either as originally executed or as it may from time to time be supplemented,
modified, amended, renewed, extended or supplanted.
"ALTERNATIVE CURRENCIES" means Pounds Sterling, Canadian Dollars,
Danish Krone, Deutsche Marks, Dutch Guilders, Spanish Pesetas, Swiss Francs,
French Francs, Belgian Francs, Italian Lira, ECU, Swedish Krona, Norwegian
Krone, Portuguese Escudo, Australian Dollars, Japanese Yen and any other freely
available currency notified to Agent upon not less than 10 Business Days'
notice.
"ALTERNATIVE CURRENCY SUBLIMIT" means $150,000,000.
"AMORTIZATION AMOUNT" means for the Amortization Date occurring on
January 15, 1999, $15,000,000 (reflecting an earlier prepayment by the Borrower)
and for each Amortization Date thereafter, $20,000,000; provided, however, if
the Final Maturity Date is extended pursuant to Section 2.10(c), the
Amortization Amount otherwise applicable for each year between the date of the
effectiveness of such extension and the Final Maturity Date shall similarly be
extended one year.
"AMORTIZATION DATE" means, subject to Section 2.10(b), January 15,
1999 and January 15 of each year thereafter.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurocurrency Lending Office in the case of a Eurocurrency Rate Advance.
"APPLICABLE MARGIN" means, (a) with respect to each Eurocurrency Rate
Committed Advance, the incremental percentage to be added to the quoted interest
rate based on the then applicable Leverage Ratio in accordance with the
following schedule, (b) with respect to the Standby Letter of Credit fees
referred to in Section 3.05(a), the fee based on the then applicable Leverage
Ratio in accordance with the following schedule and (c) with respect to the
commitment fee referred to in Section 2.03(b), the fee based on the then
applicable Leverage Ratio in accordance with the following schedule:
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<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
APPLICABLE MARGIN
(1) (2) (3)
Eurocurrency Rate
Committed Advances
------------------
Leverage Standby Commitment
Ratio Letter of Credit fees Fee
-------------------------
(a) (b)
EFFECTIVE EFFECTIVE ON
UNTIL AND AFTER
RECEIPT OF RECEIPT OF
6/30/98 6/30/98
COMPLIANCE COMPLIANCE
CERTIFICATE CERTIFICATE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LESS THAN 1.75:1 0.450% 0.450% 0.150%
- -------------------------------------------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 1.75:1 but LESS THAN 2.25:1 0.550% 0.550% 0.175%
- -------------------------------------------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 2.25:1 but LESS THAN 2.75:1 0.625% 0.625% 0.200%
- -------------------------------------------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 2.75:1 but LESS THAN 3.25:1 .900% 0.750% 0.250%
- -------------------------------------------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 3.25:1 but LESS THAN 3.50:1 1.375% 1.000% 0.300%
- -------------------------------------------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 3.50:1 but LESS THAN OR EQUAL TO 3.75:1 1.750% 1.250% 0.375%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Any change in the Applicable Margin shall be effective upon receipt by
the Agent from a Senior Officer of the Borrower of a Compliance Certificate
demonstrating such fact; provided that, with respect to Eurocurrency Rate
Committed Advances, the new Applicable Margin with respect to each such Advance
shall be effective upon the earlier of (i) the termination of the then existing
Interest Period with respect thereto and (ii) the next interest payment date for
such Advance; and with respect to Standby Letters of Credit and the commitment
fee, such change in the Applicable Margin shall be effective immediately;
PROVIDED, HOWEVER, that commencing on the Closing Date until the next Applicable
Margin adjustment date determined as set forth above occurring on or after the
date the Agent receives the Compliance Certificate for the Fiscal Quarter ending
December 31, 1997, the Applicable Margin for Eurocurrency Rate Committed
Advances and fees for Standby Letters of Credit shall be no lower than 1.375%
per annum, and the Applicable Margin for the commitment fee shall be no lower
than 0.300% per annum.
The Applicable Margin for Eurocurrency Rate Committed Advances and
Standby Letter of Credit fees shall be determined by reference to Column 2(a)
until the Applicable Margin adjustment date determined as set forth in the
preceding paragraph occurring
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<PAGE>
on or after the date the Agent receives a Compliance Certificate for the
Fiscal Quarter ending June 30, 1998. Thereafter, the Applicable Margin for
Eurocurrency Rate Committed Advances and Standby Letter of Credit fees shall
be determined by reference to Column 2(b).
"ARRANGER" means BancAmerica Securities, Inc.
"BANK OF AMERICA" means Bank of America National Trust and Savings
Association in its capacity as a Lender.
"BASE RATE" means a fluctuating rate per annum equal to the higher of
(a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest publicly
announced from time to time by Bank of America in San Francisco, California, as
its reference rate. It is a rate set by Bank of America based upon various
factors including Bank of America's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.
"BASE RATE ADVANCE" means an Advance denominated in Dollars which
bears interest as provided in Section 2.05(a).
"BID ADVANCE" means an Advance by a Lender to the Borrower under
Section 2.07, which may be a Eurocurrency Rate Bid Advance or an Absolute Rate
Bid Advance.
"BID ADVANCE NOTE" means each promissory note, substantially in the
form of Exhibit B, executed and delivered by the Borrower to a Lender pursuant
to Section 2.14(c).
"BID BORROWING" means a Borrowing consisting of one or more Bid
Advances made to the Borrower on the same day by one or more Lenders.
"BORROWER" means Sunrise and its successors and permitted assigns;
provided, however, as used in Article II (other than in Sections 2.07, 2.08 and
2.09), Article III and Section 11.24, "Borrowers" or a reference to "a Borrower"
shall be deemed to mean and include, collectively, Sunrise and each Subsidiary
Borrower.
"BORROWING" means a borrowing consisting of Advances of the same
Interest Type made to the Borrower on the same day by the Lenders under Article
II, and may be a Committed Borrowing, a Bid Borrowing or a Swing Line Advance.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in the City of New York,
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<PAGE>
the City of San Francisco or the City of Los Angeles and, with respect to
Eurocurrency Rate Advances, a day on which dealings are carried on in the
London interbank market and banks are open for business in London and in the
country of issue of the currency of such Eurocurrency Rate Advance.
"CAPITAL EXPENDITURE" means any expenditure that is considered a
capital expenditure under Generally Accepted Accounting Principles, including
any amount which is required to be treated as an asset subject to a Capital
Lease.
"CAPITAL LEASE" means, as to any Person, a lease of any property by
that Person as lessee that is, or should be in accordance with Generally
Accepted Accounting Principles (including Financial Accounting Standards Board
Statement No. 13, as amended or superseded from time to time), recorded as a
"capital lease" on a balance sheet of that Person prepared in accordance with
Generally Accepted Accounting Principles.
"CASH" means all monetary items (including currency, coin and bank
demand deposits) that are treated as cash under Generally Accepted Accounting
Principles.
"CASH EQUIVALENTS" means, when used in connection with any Person,
that Person's Investments in:
(a) Government Securities due within one year of the making of
the Investment;
(b) direct obligations of any State of the United States of
America or any political subdivision of any such State given on the date of
such investment a credit rating of at least A by Moody's or A by S&P, in
each case due within one year from the making of the Investment;
(c) certificates of deposit issued by, deposits in, eurodollar
deposits through, bankers' acceptances of, and repurchase and reverse
repurchase agreements covering Government Securities executed by, (i) any
Lender or (ii) any bank doing business in and incorporated under the laws
of the United States of America or any State thereof whose deposits are
insured through the Federal Deposit Insurance Corporation, or any successor
thereto, and having on the date of such Investment combined capital,
surplus and undivided profits of at least $1,000,000,000 and having a
credit rating of at least A by Moody's or A by S&P, in each case due within
one year after the date of the making of the Investment;
- 7 -
<PAGE>
(d) certificates of deposit issued by, bank deposits in,
eurodollar deposits through, banker's acceptances of and repurchase and
reverse repurchase agreements covering Government Securities executed by,
any branch or office located in the United States of America of (i) any
Lender or (ii) any bank incorporated under the laws of any jurisdiction
outside the United States of America whose deposits in the United States of
America are insured through the Federal Deposit Insurance Corporation, or
any successor thereto, and having on the date of such Investment combined
capital, surplus and undivided profits of at least $2,000,000,000 and
having a credit rating of at least A by Moody's or A by S&P, in each case
due within one year after the date of the making of the Investment;
(e) commercial paper of corporations doing business in and
incorporated under the laws of the United States of America or any State
thereof given on the date of such Investment a credit rating of at least
A-1 by Moody's, P-1 by S&P or the highest available rating of any other
national rating agency acceptable to the Agent, in each case due within 270
days after the making of the Investment;
(f) in the case of Investments made by a Foreign Subsidiary,
investment grade securities of the highest rating available in the
jurisdiction in which such Investment is made; and
(g) domestic money market funds as defined in rule 2a-7 under the
Investment Company Act of 1940, as amended, advised and managed by an
organization managing assets valued in excess of $500,000,000 and
registered with the Securities and Exchange Commission as an investment
advisor under the Investment Advisors Act of 1940 and investing primarily
in other types of permitted Cash Equivalents; PROVIDED that any such
investment requires or permits such Person, at its option, to require
repayment on an overnight basis.
"CERTIFICATE OF EXTENSION" means a certificate with respect to the
extension of the Final Maturity Date substantially in the form of Exhibit D,
signed by each Lender, and properly completed to provide all information
required to be included therein.
"CHANGE OF CONTROL" means the occurrence, after the date of this
Agreement, of any Person or two or more Persons acting in concert acquiring
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) (a "13D Group")
but
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<PAGE>
excluding Richard Chandler or a 13D Group of which Richard Chandler is a
member, directly or indirectly, of securities of the Borrower (or other
securities convertible into such securities) representing, together with the
securities already held by such Person or Persons, 25% or more of the
combined voting power of all securities of the Borrower entitled to vote in
the election of directors.
"CHANGE OF OWNERSHIP" means Richard Chandler (together with the 13D
Group of which Richard Chandler is a member) selling or transferring securities
of the Borrower representing (in the aggregate for all such sales or transfers
after the Closing Date) 25% or more of the combined voting power of all
securities of the Borrower entitled to vote in the election of directors owned
by such 13D Group as of the Closing Date; provided however, transfers among
members of such affiliated group shall be excluded for purposes of any such
determination, and PROVIDED, FURTHER, that no Change of Ownership will be deemed
to occur on or after the death of Richard Chandler.
"CLOSING DATE" means the time and Business Day on which the conditions
set forth in Section 4.01 are satisfied or waived pursuant to Section 11.01.
"CODE" means the Internal Revenue Code of 1986, as amended or replaced
and as in effect from time to time.
"COMMERCIAL LETTER OF CREDIT" means a commercial letter of credit in
the customary form used by the Issuing Lender, issued by the Issuing Lender
pursuant to Section 3.01, either as originally issued or as the same from time
to time may be supplemented, modified, amended, renewed or extended.
"COMMITMENT" means, at any time for any Lender, the amount set forth
opposite such Lender's name on Schedule 1.01(b) hereto, as such amount may be
reduced or reinstated from time to time pursuant to the terms of this Agreement.
"COMMITMENT ASSIGNMENT AND ACCEPTANCE" means a Commitment Assignment
and Acceptance executed by a Lender and an Eligible Assignee substantially in
the form of Exhibit C and registered with the Agent pursuant to
Section 11.08(e).
"COMMITTED ADVANCE" means an advance by a Lender to the Borrower
pursuant to Section 2.01(a), which advance may be a Base Rate Advance or a
Eurocurrency Rate Committed Advance.
"COMMITTED ADVANCE NOTE" means each promissory note, substantially in
the form of Exhibit A, executed and delivered by
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<PAGE>
the Borrower or a Subsidiary Borrower to a Lender at the request of such
Lender pursuant to Section 2.14(b).
"COMMITTED BORROWING" means a borrowing consisting of Committed
Advances of the same Interest Type made on the same Business Day pursuant to the
provisions of Section 2.02(a). The number of Borrowings that may be outstanding
at any one time is limited by Section 2.05(b) hereof.
"COMPETITIVE BID" means an offer by a Lender to make a Bid Advance in
accordance with Section 2.08(c).
"COMPETITIVE BID REQUEST" has the meaning specified in
Section 2.08(a).
"COMPLIANCE CERTIFICATE" means a compliance certificate in the form of
Exhibit I signed, on behalf of Borrower, by a Senior Officer of Borrower.
"CONSOLIDATED EBITDA" means, for any period for the Borrower and its
Subsidiaries, an amount equal to the sum of (a) Consolidated Net Income,
(b) Interest Charges, (c) the amount of taxes, based on or measured by income,
used or included in the determination of Consolidated Net Income and (d) the
amount of depreciation and amortization expense deducted in determining
Consolidated Net Income, all determined in conformity with Generally Accepted
Accounting Principles.
"CONSOLIDATED FUNDED INDEBTEDNESS" means, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) the outstanding principal
amount of all obligations and liabilities, whether current or long-term, for
borrowed money (including extensions of credit hereunder), (b) that portion of
obligations with respect to capital leases which is capitalized in the
consolidated balance sheet of the Borrower and its Subsidiaries and (c) all
Contingent Obligations of the Borrower and its Subsidiaries with respect to
Indebtedness of Persons other than the Borrower or any of its Subsidiaries
(without duplication), all determined in conformity with Generally Accepted
Accounting Principles.
"CONSOLIDATED NET INCOME" means, with respect to any fiscal period,
the consolidated net income of the Borrower and its Subsidiaries from continuing
operations after extraordinary items (excluding gains or losses from
Dispositions of assets) for that period, determined in accordance with Generally
Accepted Accounting Principles consistently applied.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date of
determination, Shareholders' Equity of the Borrower and its
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<PAGE>
Subsidiaries on that date, EXCLUDING the cumulative translation adjustment
reported for each applicable Fiscal Quarter, commencing with the Fiscal
Quarter ending March 29, 1996, MINUS the Adjusted Dollar Equivalent of any
Intangible Assets of Borrower and its Subsidiaries on that date PLUS the
after-tax amount of up to $19,000,000 in pre-tax non-recurring charges
exclusive of any portion related to the write-off of Intangible Assets
incurred in the Fiscal Quarter ended June 28, 1996.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of determination,
the consolidated total assets of the Borrower and its Subsidiaries determined in
accordance with Generally Accepted Accounting Principles.
"CONTINGENT OBLIGATION" means, as to any Person, any (a) direct or
indirect guaranty of Indebtedness of, or other obligation performable by, any
other Person, including any endorsement (other than for collection or deposit in
the ordinary course of business), co-making or sale with recourse of the
obligations of any other Person or (b) assurance given to an obligee with
respect to the performance of an obligation by, or the financial condition of,
any other Person, whether direct, indirect or contingent, including any purchase
or repurchase agreement covering such obligation or any collateral security
therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person, or any
"keep-well" or similar arrangement of whatever nature having the effect of
assuring or holding harmless any obligee against loss with respect to any
obligation of such other Person. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation (unless the Contingent Obligation is limited by its
terms to a lesser amount, in which case to the extent of such amount) or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the Person in good faith.
"CONTINUE," "CONTINUATION" and "CONTINUED" each refer to a
continuation of Committed Advances of Dollars or an Alternative Currency, as the
case may be, comprising the same Committed Borrowing, as Committed Advances
denominated in the same currency for a specified Interest Period.
"CONTINUING LETTERS OF CREDIT" has the meaning set forth in Section
3.01.
"CONTRACTUAL OBLIGATION" means, as to any Person, any obligation under
any outstanding securities issued by that Person or any material agreement,
instrument or undertaking to which
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<PAGE>
that Person is a party or by which it or any of its property is bound.
"CONVERT," "CONVERSION" and "CONVERTED" each refers to a conversion of
Committed Advances of one Interest Type into Committed Advances of another
Interest Type pursuant to Section 2.06(a).
"CURRENT MATURITIES OF LONG-TERM DEBT" means, as of any date of
determination, all payments of principal due under the terms of any long-term
Indebtedness within 12 calendar months after such date, determined in accordance
with Generally Accepted Accounting Principles as reported in the Borrower's SEC
filing for the period of determination; provided, however, that the current
maturity of Indebtedness incurred hereunder shall, for purposes of calculating
the Interest Coverage Ratio, be deemed to be $5,000,000 during the twelve months
preceding the Final Maturity Date.
"DEBT SERVICE" means, as of the last day of each Fiscal Quarter,
Interest Charges during the four Fiscal Quarters then ending plus the Current
Maturities of Long-Term Debt.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States of
America, as amended from time to time, and all other applicable dissolution,
liquidation, conservatorship, bankruptcy, moratorium, readjustment of debt,
compromise, rearrangement, receivership, insolvency, reorganization or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.
"DEFAULT" means any event that, with the giving of any applicable
notice or passage of time specified in Section 9.01, or both, would be an Event
of Default.
"DEFAULT RATE" means the Base Rate plus 2%.
"DESIGNATED BIDDER" means (a) an Eligible Assignee or (b) a special
purpose corporation that is engaged in making, purchasing or otherwise investing
in commercial loans in the ordinary course of its business and that issues (or
the parent of which issues) commercial paper rated at least "Prime-1" (or the
then equivalent grade) by Moody's or "A-1" (or the equivalent grade) by S&P
that, in either case, (x) is organized under the laws of the United States or
any state thereof, (y) shall have been designated as such pursuant to Section
2.07(b) and (z) is not otherwise a Lender.
"DISPOSITION" means the sale, transfer or other disposition in any
single transaction or series of related
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<PAGE>
transactions of any asset, or group of related assets, of Borrower or any of
its Subsidiaries, other than (a) the disposition of Cash and (b) the
disposition of equipment (i) that has become obsolete or (ii) that is
replaced by equipment performing substantially the same function not later
than 90 days after such sale or disposition.
"DOLLARS" or "$" means United States of America dollars.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" under its name
on Schedule 11.06 hereto or on Schedule I to the Commitment Assignment and
Acceptance pursuant to which it became a Lender, or such other office or
Affiliate of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.
"DOMESTIC SUBSIDIARIES" means those Subsidiaries of any Borrower which
are incorporated under the laws of any State of the United States and which are
engaged in business primarily in the United States, other than Subsidiaries
which are Subsidiaries of a Foreign Subsidiary.
"ELECTION TO PARTICIPATE" means a certificate of election, in the form
of Exhibit G, to be executed by a Foreign Subsidiary which is to become a
Subsidiary Borrower.
"ELIGIBLE ASSIGNEE" means, as of the date of any Commitment Assignment
and Acceptance, (a) a commercial bank organized under the laws of the United
States of America, or any State thereof, and having at that date total assets in
excess of $1,000,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and
having at that date total assets in excess of $2,000,000,000 provided that such
bank is acting through a branch, subsidiary or agency located in the United
States of America, (c) the central bank of any country which is a member of the
OECD, and (d) any Affiliate (other than an individual) of a bank described in
any of the foregoing clauses which is engaged in the business of commercial
banking.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
any regulations issued pursuant thereto, as amended or replaced and as in effect
from time to time.
"ERISA AFFILIATE" means, with respect to any Person, any Person (or
any trade or business, whether or not
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<PAGE>
incorporated) that is under common control with that Person within the
meaning of Sections 414(b) and (c) of the Code.
"EUROCURRENCY AUCTION" means a solicitation of Competitive Bids
setting forth a Eurocurrency Rate Bid Margin pursuant to Section 2.08.
"EUROCURRENCY LENDING OFFICE" means, with respect to any Lender, the
office of such Lender specified as its "Eurocurrency Lending Office" on
Schedule 11. 06 hereto or on Schedule I to the Commitment Assignment and
Acceptance pursuant to which it became a Lender (or, if no such office is
specified, its Domestic Lending Office), or such other office or Affiliate of
such Lender as such Lender may from time to time specify to the Borrower and the
Agent.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
promulgated by the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EUROCURRENCY RATE" means, for each Interest Period for each
Eurocurrency Rate Advance comprising part of the same Borrowing, a rate of
interest per annum equal at all times during such Interest Period to the rate
per annum obtained by dividing (i) the rate of interest determined solely by the
Agent to be equal to the average (rounded upward to the nearest whole multiple
of 1/16 of 1% per annum, if such average is not such a multiple) of the rates
per annum at which deposits in Dollars (in the case of a Eurocurrency Rate
Advance denominated in Dollars) or the relevant Alternative Currency (in the
case of a Eurocurrency Rate Advance denominated in an Alternative Currency) are
offered by Bank of America to prime banks in the London interbank market at or
about 11:00 A.M. (London time) two Business Days before the first day of such
Interest Period for a period equal to such Interest Period and, (A) in the case
of a Committed Borrowing, in an amount approximately equal to Bank of America's
Eurocurrency Rate Advance comprising part of such Committed Borrowing, and (B)
in the case of a Bid Borrowing, in an amount substantially equal to the
aggregate amount of such Bid Borrowing requested by the Borrower, by (ii) a
percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage for such
Interest Period. The determination by the Agent of the Eurocurrency Rate shall
be conclusive in the absence of manifest error.
"EUROCURRENCY RATE ADVANCE" means an Advance denominated in Dollars
which bears interest as provided in Section 2.05(d), an Advance denominated in
an Alternative Currency which bears interest as provided in Section 2.05(e), or
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a Bid Advance which bears interest based on the Eurocurrency Rate.
"EUROCURRENCY RATE BID ADVANCE" means a Bid Advance denominated in
Dollars made which bears interest based on the Eurocurrency Rate.
"EUROCURRENCY RATE BID MARGIN" has the meaning specified in subsection
2.08(c)(ii)(C).
"EUROCURRENCY RATE COMMITTED ADVANCE" means a Committed Advance
denominated in Dollars which bears interest as provided in Section 2.05(d) or an
Advance denominated in an Alternative Currency which bears interest as provided
in Section 2.05(e).
"EUROCURRENCY RATE RESERVE PERCENTAGE" for each Interest Period for
each Eurocurrency Rate Advance means the reserve percentage applicable during
such Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System or any successor or, in the case of
Eurocurrency Rate Advances denominated in Pounds Sterling, the reserve
percentage applicable during such Interest Period under regulations issued from
time to time by the Lender of England or any successor or, in the case of
Eurocurrency Rate Advances denominated in other foreign currencies, the reserve
percentage applicable during such Interest Period under regulations issued from
time to time by such other foreign central bank or any successors thereto (or,
in each case, if different percentages shall be applicable during different
periods within such Interest Period, the daily average of such percentages
during such Interest Period) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for the Agent with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to such
Interest Period.
"EVENT OF DEFAULT" has the meaning set forth for that term in
Section 9.01.
"EXCLUDED TAXES" has the meaning set forth for that term in
Section 2.16.
"EXISTING CREDIT AGREEMENT" means the Second Amended and Restated
Credit Agreement dated as of September 29, 1995 among the Borrower, the
subsidiary borrowers and guarantors thereunder, the lenders parties thereto and
Bank of America National Trust and Savings Association, as agent, as amended.
"EXTRAORDINARY CAPITAL EXPENDITURES' means Capital Expenditures
actually incurred in each fiscal period set forth
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below not exceeding the amount set forth opposite such fiscal period:
Extraordinary
Capital
Fiscal Period Expenditures
--------------------------------------- ------------
Fiscal Quarter ending December 26, 1996 $5,000,000
Fiscal Quarter ending March 28, 1997 $5,800,000
Fiscal Quarter ending June 27, 1997 $3,700,000
Fiscal year ending June 30, 1998 $4,600,000
"FACILITY USAGE" means, as of any date of determination, the sum of
(a) the Outstanding Advances plus (b) the aggregate Letter of Credit Liability
plus (c) the Restricted Commitment Amount.
"FEDERAL FUNDS RATE" means, as of any date of determination, the rate
per annum (rounded upwards, if necessary, to the nearest one-hundredth (1/100th)
of one percent (1%)), equal to the weighted average of the rates of overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on such date as published by the Federal Reserve Lender
of San Francisco on the Business Day immediately following such date; provided,
however, that: (a) if the date for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such date shall be such rate on such
transactions on the immediately preceding Business Day as published on the
immediately following Business Day; and (b) if such rate is not published for
any Business Day, the Federal Funds Rate for such date shall be the average of
the quotations for such date on such transactions received by the Agent from
three (3) federal funds brokers of recognized standing selected by the Agent.
"FINAL MATURITY DATE" means January 14, 2001, or such later date as
may then be in effect pursuant to Section 2.10(c).
"FISCAL QUARTER" means each of the four 13 or 14 week fiscal quarters
of Borrower ending on a Friday on or about each September 30, December 31, March
31 and June 30.
"FISCAL YEAR" means the 52 or 53-week fiscal year of Borrower ending
on a Friday on or about each June 30.
"FOREIGN SUBSIDIARIES" means those Subsidiaries of any Borrower which
are not Domestic Subsidiaries.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means, as of any date of
determination, accounting principles referenced as
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"generally accepted" in then currently effective Statements of the Auditing
Standards Board of the American Institute of Certified Public Accountants, or
if such statements are not then in effect, accounting principles that are
then approved by a significant segment of the accounting profession in the
United States of America, including in each case, the materiality standards
as generally accepted. The term "CONSISTENTLY APPLIED," as used in
connection therewith, means that the accounting principles applied are
consistent in all material respects to those applied for the prior period.
"GOVERNMENTAL AGENCY" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof, (b) any
governmental agency, authority, board, bureau, commission, department, or
instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency or entity that is vested by a governmental agency with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has given its general
consent.
"GOVERNMENT SECURITIES" means direct full faith and credit obligations
of the United States of America or obligations unconditionally guarantied by the
full faith and credit of the United States of America.
"GUARANTOR" means the Borrower and each Domestic Subsidiary of the
Borrower which has executed this Agreement as a "Guarantor," as identified on
the signature pages hereto, and each Domestic Subsidiary of the Borrower which
becomes a guarantor pursuant to Section 6.11.
"GUARANTY" means the Guaranty set forth in Article VIII hereof.
"HAZARDOUS MATERIALS" means substances regulated as hazardous or toxic
substances or pollutants pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., or
under any other applicable Hazardous Materials Law, in each case as such laws
are amended from time to time.
"HAZARDOUS MATERIALS LAWS" means all applicable federal and state laws
governing the use, disposal or remediation of Hazardous Materials.
"INDEBTEDNESS" means, as to any Person (without duplication), (a) all
indebtedness of such Person for borrowed money, (b) that portion of the
obligations of such Person under
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Capital Leases which is properly recorded as a liability on a balance sheet
of such Person prepared in accordance with Generally Accepted Accounting
Principles, (c) any obligation of such Person that is evidenced by a
promissory note or other instrument representing an extension of credit
(other than trade or other accounts payable in the ordinary course of
business in accordance with customary terms) to such Person, whether or not
for borrowed money, (d) any obligation of such Person for the deferred
purchase price of property or services (other than trade or other accounts
payable in the ordinary course of business in accordance with customary
terms), (e) any obligation of any Person that is secured by a Lien on assets
of such Person, whether or not that Person has assumed such obligation, but
only to the extent of the fair market value of the assets so subject to the
Lien, (f) obligations of such Person arising under acceptance facilities or
under facilities for the discount of accounts receivable of such Person, (g)
obligations of such Person for unreimbursed draws under letters of credit
issued for the account of such Person, (h) any net obligation of such Person
under a Swap Agreement, (i) any obligation of such Person for the unfunded
portion of any pension liability arising under any Plan, (j) any obligation
of such Person arising under any foreign currency hedging transactions, and
(k) all preferred stock of such Person which is subject to a sinking fund
payment or other mandatory redemption or payment (whether fixed or
contingent).
"INDEMNIFIED LIABILITIES" has the meaning given that term in Section
11.09.
"INTANGIBLE ASSETS" means assets that are considered to be intangible
assets under Generally Accepted Accounting Principles, including customer lists,
goodwill, computer software, copyrights, trade names, trade marks, patents,
unamortized deferred charges, unamortized debt discount and capitalized research
and development costs.
"INTERCOMPANY INDEBTEDNESS" means any indebtedness of the Borrower or
any Subsidiary of the Borrower which, in the case of the Borrower, is owing to
any of its Subsidiaries and which, in the case of any Subsidiary of the
Borrower, is owing to the Borrower or any other Subsidiary of the Borrower.
"INTEREST CHARGES" means, as of the last day of any fiscal period, the
sum of (a) all interest, premium payments, fees, charges and related expenses
payable by Borrower and its Subsidiaries with respect to that fiscal period to a
lender in connection with borrowed money (including capitalized interest), or to
a seller in connection with the deferred purchase price of assets, in each case,
that is treated as interest in accordance with Generally Accepted Accounting
Principles, plus (b) the
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portion of rent payable by Borrower and its Subsidiaries with respect to that
fiscal period under Capital Leases that should be treated as interest in
accordance with Generally Accepted Accounting Principles.
"INTEREST COVERAGE RATIO" means the ratio obtained by dividing
Adjusted Cash Flow (excluding Extraordinary Capital Expenditures as of September
27, 1997 through March 31, 1999, inclusive) by Debt Service, calculated
quarterly on a rolling four-quarter basis .
"INTEREST PERIOD" means, for each Eurocurrency Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Advance
or, with respect to Eurocurrency Rate Committed Advances, the effective date of
any Notice of Conversion/Continuance with respect to such Advance, and ending on
the last day of the period selected by the Borrower or a Subsidiary Borrower
pursuant to the provisions below. The duration of each such Interest Period
shall be (i) in the case of a Eurocurrency Rate Committed Advance comprising
part of the same Borrowing and denominated in Dollars, 1, 2, 3 or 6 months (or,
with the consent of all the Lenders, other periods), (ii) in the case of a
Eurocurrency Rate Bid Advance comprising part of the same Borrowing, 1, 2, 3 or
6 months, (iii) in the case of a Eurocurrency Rate Advance comprising part of
the same Borrowing and denominated in an Alternative Currency, 1, 2, 3 or 6
months (or, with the consent of all the Lenders, other periods) and (iv) as to
any Absolute Rate Bid Advance, a period of not less than 14 days and not more
than 180 days as selected by the Borrower in the applicable Competitive Bid
Request; provided, however, that:
(a) Interest Periods commencing on the same date for Committed
Advances comprising part of the same Borrowing shall be of the same
duration;
(b) the duration of any Interest Period for any Advance shall
end on or prior to the Final Maturity Date;
(c) the first day of an Interest Period for any Eurocurrency
Rate Advance shall be either the last day of any then current Interest
Period for such Eurocurrency Rate Advance, or, if there shall be no then
current Interest Period for such Advance, any Business Day; and
(d) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
provided, in the case of any Interest Period for a Eurocurrency Rate
Advance,
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that if such extension would cause the last day of such Interest Period
to occur in the next following month, the last day of such Interest
Period shall occur on the next preceding Business Day.
"INTEREST TYPE" means, (a) with respect to any Committed Advance, a
Base Rate Advance or a Eurocurrency Rate Advance and (b) with respect to any Bid
Advance, an Absolute Rate Bid Advance or a Eurocurrency Rate Bid Advance.
"INVESTMENT" means, when used in connection with any Person, any
investment by that Person, whether by means of purchase or other acquisition of
capital stock or other securities of any other Person or by means of loan,
advance, capital contribution, or other debt or equity participation or interest
in any other Person, including any partnership or joint venture interest in any
other Person. The amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the market
value or book value of such Investment.
"INVITATION FOR COMPETITIVE BIDS" means a solicitation for Competitive
Bids, substantially in the form of Exhibit K.
"ISSUE" means, with respect to any Letter of Credit, either to issue,
or to extend the expiry of, or to renew, or to increase the amount of, such
Letter of Credit or, with respect to any letter of credit issued under the
Existing Credit Agreement, to continue such letter of credit as a Letter of
Credit under this Agreement, and the term "ISSUED" or "ISSUANCE" shall have
corresponding meanings.
"ISSUING LENDER" means, with respect to any Letter of Credit, Bank of
America or such other Lender reasonably acceptable to the Agent as may from time
to time be designated by the Borrower.
"LENDERS" means the Lenders listed on the signature pages hereof and
each Eligible Assignee that becomes a party hereto pursuant to Section 11.08.
"LETTER OF CREDIT" means, collectively, the Commercial Letters of
Credit and the Standby Letters of Credit and the letters of credit issued under
the Existing Credit Agreement which are outstanding on the Closing Date.
"LETTER OF CREDIT LIABILITY" means, as of any date of determination,
all then existing liabilities of the Borrower to the Issuing Lender under this
Agreement in respect of the Letters of Credit Issued for the account of the
Borrower, whether such
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liability is contingent or fixed, and shall, in each case, consist of the sum
of (i) the aggregate maximum amount then available to be drawn under such
Letters of Credit (the determination of such maximum amount to assume
compliance with all conditions for drawing) and (ii) the aggregate amount
which has then been paid by, and not been reimbursed to, the Issuing Lender
under such Letters of Credit, after giving effect to all reimbursements on
such date.
"LEVERAGE RATIO" means, as of any date of determination, the ratio of
Consolidated Funded Indebtedness to Consolidated EBITDA for the four Fiscal
Quarters ending on that date.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, lien or charge of any
kind, sale or discount of accounts receivables, whether voluntarily incurred or
arising by operation of law or otherwise, affecting any property, including any
agreement to grant any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature of a security interest, and/or the
filing of or agreement to give any financing statement (other than a
precautionary financing statement with respect to a lease that is not in the
nature of a security interest) under the Uniform Commercial Code or comparable
law of any jurisdiction with respect to any property.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Swing Line Documents, the Letters of Credit, any Election to Participate, any
Notice of Borrowing, any Request for Letter of Credit, any Request for Extension
and any other agreements of any type or nature heretofore or hereafter executed
and delivered by any Loan Party or any of its Affiliates in favor of the Lenders
in any way relating to or in furtherance of this Agreement in each case either
as originally executed or as the same may from time to time be supplemented,
modified, amended, restated or extended.
"LOAN PARTY" means any of the Subsidiary Borrowers, the Guarantors and
the Borrower.
"MAJORITY LENDERS" means Lenders at any time holding at least 51% of
the then aggregate unpaid principal amount of the Committed Advances owing to
the Lenders, or, if no such principal amount is at such time outstanding,
Lenders having at least 51% of the Total Commitment.
"MATERIAL ADVERSE EFFECT" means any set of circumstances or events
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the
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<PAGE>
validity or enforceability of any Loan Document, (b) is or could reasonably
be expected to be material and adverse to the condition (financial or
otherwise), business operations or prospects of Borrower and its
Subsidiaries, taken as a whole, (c) materially impairs or could reasonably be
expected to materially impair the ability of Borrower and its Subsidiaries,
taken as a whole, to perform the Obligations or (d) materially impairs or
could reasonably be expected to materially impair the ability of the Lenders
to enforce their legal remedies pursuant to the Loan Documents.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE FINANCING" means mortgage financing for a minimum term of 10
years with a minimum average life of 7 years, PROVIDED that such mortgage
financing is non-recourse and is in an initial principal amount equal to not
less than 60% of the appraised value of the property to be financed.
"MULTIEMPLOYER PLAN" means any employee benefit plan of a type
described in Section 4001(a)(3) of ERISA.
"NEGATIVE PLEDGE" means a Contractual Obligation that contains a
covenant binding on Borrower or any of its Subsidiaries that prohibits Liens on
any of its or their property.
"NOTES" means the Committed Advance Notes and the Bid Advance Notes.
"NOTICE OF BORROWING" means a written notice, substantially in the
form of Exhibit E hereto, delivered in accordance with, and within the period
specified in, Section 2.02(a) hereof, wherein the Borrower or a Subsidiary
Borrower requests a Committed Borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a written notice,
substantially in the form of Exhibit F hereto, delivered in accordance with, and
within the period specified in, Section 2.06(a) hereof, wherein the Borrower or
a Subsidiary Borrower elects to Convert Committed Advances and/or elects an
Interest Period and Interest Type for such Converted Committed Advances or
outstanding Committed Advances.
"OBLIGATIONS" means all present and future obligations of every kind
or nature of any Loan Party at any time and from time to time owed to the Agent,
the Lenders or the Issuing Lender or any one or more of them under any one or
more of the Loan Documents, whether due or to become due, matured or unmatured,
liquidated or unliquidated, or contingent or noncontingent,
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including obligations of performance as well as obligations of payment, and
including, to the extent permitted by applicable Debtor Relief Laws, interest
that accrues after the commencement of any proceeding under any Debtor Relief
Law by or against any Loan Party or any Affiliate of any Loan Party.
"OFFICER'S CERTIFICATE" means, when used with reference to any Person,
a certificate signed by a Senior Officer of such Person.
"OUTSTANDING ADVANCES" means, as of any date of determination, the
aggregate principal amount of Advances outstanding on such date.
"OUTSTANDING LETTER OF CREDIT LIABILITY" means, as of any date of
determination, the aggregate amount of Letter of Credit Liability outstanding on
such date, as reduced to the extent that such Letter of Credit Liability has
been cash collateralized pursuant to the terms hereof.
"OVERNIGHT RATE" means, for any day, the rate of interest per annum at
which overnight deposits in the Alternative Currency, in an amount approximately
equal to the amount with respect to which such rate is being determined, would
be offered for such day by Bank of America's principal office in London to major
banks in the London or other applicable offshore interbank market.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto established under ERISA.
"PENSION PLAN" or "PLAN" means any employee benefit or other plan that
is subject to Title IV of ERISA and which is maintained for employees of
Borrower or any of its ERISA Affiliates.
"PERMITTED ACCOUNTS RECEIVABLE FINANCING" means a sale or discount of
accounts receivable owned by SunMed Finance Inc. having a book value not
exceeding $20,000,000 in the aggregate at any time (net of collections by the
purchaser thereof); PROVIDED, HOWEVER, that in connection with any such
financing arrangement (a) there is no recourse to any seller of such accounts
receivable or any other Affiliate of the Borrower on account of the
creditworthiness of the obligor on such accounts receivable; and (b) no negative
pledge or Lien is created on any accounts receivables not actually sold or
discounted.
"PERMITTED ACQUISITIONS" means Acquisitions of the stock or assets of
a Person engaged in business of the same general type as that of the Borrower
and its Subsidiaries (a)
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which do not violate Section 7.04 and (b) with respect to which no Default or
Event of Default exists before and after giving effect thereto.
"PERMITTED ENCUMBRANCES" means:
(a) inchoate Liens incident to construction or maintenance of
real property, or Liens incident to construction or maintenance of real
property now or hereafter filed of record for which adequate reserves have
been set aside and which are being contested in good faith by appropriate
proceedings and have not proceeded to judgment, provided that, by reason of
nonpayment of the obligations secured by such Liens, no such real property
is subject to a material risk of loss or forfeiture prior to judgment;
(b) Liens for taxes and assessments on real property which are
not yet past due, or Liens for taxes and assessments on real property for
which adequate reserves have been set aside and are being contested in good
faith by appropriate proceedings and have not proceeded to judgment,
provided that, by reason of nonpayment of the obligations secured by such
Liens, no such real property is subject to a material risk of loss or
forfeiture prior to judgment;
(c) minor defects and irregularities in title to any real
property which in the aggregate do not materially impair the fair market
value or use of the real property for the purposes for which it is or may
reasonably be expected to be held;
(d) easements, exceptions, reservations, or other agreements for
the purpose of pipelines, conduits, cables, wire communication lines, power
lines and substations, streets, trails, walkways, drainage, irrigation,
water, and sewerage purposes, dikes, canals, ditches, the removal of oil,
gas, coal, or other minerals, and other like purposes affecting real
property which in the aggregate do not materially burden or impair the fair
market value or use of such real property for the purposes for which it is
or may reasonably be expected to be held;
(e) rights reserved to or vested in any Governmental Agency by
law to control or regulate, or obligations or duties under law to any
Governmental Agency with respect to, the use of any real property;
(f) rights reserved to or vested in any Governmental Agency by
law to control or regulate, or
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obligations or duties under law to any Governmental Agency with respect
to, any right, power, franchise, grant, license, or permit;
(g) present or future zoning Laws or other laws restricting the
occupancy, use, or enjoyment of real property;
(h) non-consensual Liens imposed by law, including carrier's,
mechanics, landlord's, warehouseman's or other similar Liens, other than
those described in clauses (a) or (b) above, arising in the ordinary course
of business with respect to obligations which are not delinquent or are
being contested in good faith by appropriate proceedings, provided that, if
delinquent, adequate reserves have been set aside with respect thereto and,
by reason of nonpayment, no property is subject to a material risk of loss
or forfeiture prior to judgment;
(i) Liens consisting of pledges or deposits made in connection
with obligations under workers' compensation laws or similar legislation,
including Liens of judgments thereunder which are not currently
dischargeable;
(j) Liens consisting of security interests, pledges or deposits
of property to secure performance in connection with operating leases made
in the ordinary course of business to which the Borrower or any of its
Subsidiaries is a party as lessee, provided the aggregate value of all such
pledges and deposits in connection with any such lease does not at any time
exceed 10% of the annual fixed rentals payable under such lease;
(k) Liens consisting of deposits of property to secure statutory
obligations of Borrower or a Subsidiary of Borrower in the ordinary course
of its business, including any liens created in connection with any letter
of credit;
(l) Liens consisting of deposits of property to secure (or in
lieu of) surety, appeal or customs bonds in proceedings to which Borrower
or a Subsidiary of Borrower is a party in the ordinary course of its
business in an aggregate amount not to exceed $3,000,000 at any time
outstanding and provided the value of the assets subject to such Lien does
not exceed 100% of the face amount of the bond so secured; and
(m) Liens created by or resulting from any litigation or legal
proceeding involving Borrower or a Subsidiary of Borrower in the ordinary
course of its
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business which is currently being contested in good faith by appropriate
proceedings, provided that adequate reserves have been set aside with
respect thereto and such Liens are discharged or stayed within 30 days of
creation (or such longer period as may be permitted by law or otherwise
binding on a judgment creditor before execution on a judgment is allowed)
and no material property is subject to a material risk of loss or forfeiture
prior to judgment.
"PERSON" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, joint stock company,
trust, estate, unincorporated organization, business association, tribe, firm,
joint venture, Governmental Agency, or otherwise.
"PROJECTIONS" means the financial projections prepared on behalf of
Borrower and its Subsidiaries and heretofore furnished to the Lenders.
"PRO RATA SHARE" means, with respect to each Lender, the percentage
set forth opposite the name of that Lender on Schedule 1.01(b), as such
percentage may be adjusted from time to time pursuant to an assignment under
Section 2.13(c) or Section 11.08.
"REGISTER" has the meaning provided for such term in Section 11.08(e).
"REGULATION G" means Regulation G, as at any time amended, of the
Board of Governors of the Federal Reserve System, or any other regulation in
substance substituted therefor.
"REGULATION U" means Regulation U, as at any time amended, of the
Board of Governors of the Federal Reserve System, or any other regulation in
substance substituted therefor.
"REPORTABLE EVENT" means any reportable event as defined in
Section 4043(b) of ERISA with respect to which the PBGC has not waived the
30-day reporting requirement.
"REQUEST FOR EXTENSION" means a request for an extension of the Final
Maturity Date substantially in the form of Exhibit H, signed by a Senior Officer
of the Borrower, and properly completed to provide all information required to
be included therein.
"REQUEST FOR LETTER OF CREDIT" means a request for a Letter of Credit
in the customary form of letters of credit application and reimbursement
agreement used by the Issuing Lender, signed by a Senior Officer of the Borrower
and properly
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completed to provide all information required to be included therein; provided
that such application and reimbursement agreement shall be deemed to
incorporate by reference each representation of the Borrower set forth in a
Notice of Borrowing.
"REQUIREMENT OF LAW" means, as to any Person, (a) the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, (b) any law applicable to such Person and (c) any
judgment, award, decree, writ or determination of a Governmental Agency,
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"RESTRICTED COMMITMENT AMOUNT" means (x) so long as the Dollar
equivalent of the aggregate then outstanding Eurocurrency Rate Committed
Advances denominated in Alternative Currencies is less than $75,000,000, zero,
and (y) so long as such Dollar equivalent equals or exceeds $75,000,000, an
amount equal to $5,000,000 plus the amount, if any, by which the Dollar
equivalent of the aggregate then outstanding Eurocurrency Rate Committed
Advances denominated in Alternative Currencies minus the amount of any deposits
established or maintained with the Agent as cash collateral for such Advances
exceeds the Alternative Currency Sublimit. The Restricted Commitment Amount
shall be calculated as of the last Business Day of each week in accordance with
Section 1.05.
"RESTRICTED JUNIOR PAYMENT" means, as to any Person, (i) any dividend
or other distribution, direct or indirect, on account of any shares of any class
of stock or other ownership interest of any Loan Party now or hereafter
outstanding, except a dividend payable solely in shares of that class of stock
to the holders of that class, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock or other ownership interest of any Loan Party
now or hereafter outstanding, (iii) any prepayment of principal of, premium, if
any, or redemption, purchase, retirement, defeasance, sinking fund or similar
payment with respect to, any Subordinated Debt (other than prepayments in
respect of any Seller Note that is Subordinated Debt), other than refinancings
thereof on substantially similar terms, and (iv) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of any Loan Party now or hereafter
outstanding.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
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"SEC" means the Securities and Exchange Commission and any successor
commission.
"SELLER NOTE" means a promissory note or other obligation to pay money
(other than payments under customary indemnities) given by the Borrower or any
Subsidiary of the Borrower in connection with an Acquisition, together with all
security agreements, guaranties, pledge agreements or other forms of collateral
or credit support given by any Person in connection therewith.
"SENIOR OFFICER" means the president, the chief executive officer, the
chief financial officer, vice president, general counsel, treasurer and
controller, in each case whatever the title nomenclature may be, of the Person
designated.
"SHAREHOLDERS' EQUITY" means, as of any date of determination,
shareholders' equity as of that date determined in accordance with Generally
Accepted Accounting Principles; provided that there shall be excluded from
Shareholders' Equity any amount attributable to capital stock that is, directly
or indirectly, required by its terms to be redeemed or repurchased by the issuer
thereof at a specified date or upon the occurrence of specified events or at the
election of the holder thereof, if and to the extent that such date is, or such
events or election could occur, prior to the Final Maturity Date.
"STANDBY LETTER OF CREDIT" means a standby letter of credit in the
customary form used by the Issuing Lender, issued by the Issuing Lender pursuant
to Section 3.01, either as originally issued or as the same from time to time
may be supplemented, modified, amended, renewed or extended.
"SUBORDINATED DEBT" means Indebtedness of a Loan Party which is
subordinated in right of payment to the payment of the Obligations hereunder on
terms and conditions substantially similar to those set forth in Exhibit M.
"SUBSIDIARY" means, as of any date of determination and with respect
to any Person, any corporation, partnership or joint venture, whether now
existing or hereafter organized or acquired: (a) in the case of a corporation
or the foreign equivalent organization thereof, of which a majority of the
securities having ordinary voting power for the election of directors or other
governing body (other than securities having such power only by reason of the
happening of a contingency) are at the time beneficially owned, directly or
indirectly, by such Person and/or one or more Subsidiaries of such Person, or
(b) in the case of a partnership or joint venture, of which such Person or a
Subsidiary of such Person is a general partner or joint venturer
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or of which a majority of the partnership or other ownership interests are at
the time beneficially owned, directly or indirectly by such Person and/or one
or more of its Subsidiaries.
"SUBSIDIARY BORROWER" means any Foreign Subsidiary in which the
Borrower, directly or indirectly, has at least an 80% ownership interest and
which is identified on Schedule 1.01(c) or which shall have delivered to the
Agent and the Lenders an Election to Participate, duly executed by such
Subsidiary and the Borrower, and in respect of which the conditions set forth in
Section 4.03 have been satisfied.
"SUBSIDIARY BORROWER SUBLIMIT" means, for each Subsidiary which
becomes a Subsidiary Borrower hereunder, the amount specified as such Subsidiary
Borrower's Sublimit on Schedule 1.01(c).
"SUNRISE" means Sunrise Medical, Inc., a Delaware corporation.
"SWAP AGREEMENT" means one or more written agreements between a Loan
Party and one or more financial institutions providing for "swap," "collar" or
other interest rate protection with respect to any Indebtedness.
"SWING LINE" means the revolving line of credit established by the
Swing Line Lender in favor of Borrower pursuant to Section 2.09.
"SWING LINE ADVANCES" means advances made by the Swing Line Lender to
Borrower pursuant to Section 2.09.
"SWING LINE LENDER" means Bank of America.
"SWING LINE DOCUMENTS" means any promissory note and any other
documents executed by Borrower as requested by the Swing Line Lender from time
to time in favor of the Swing Line Lender in connection with the Swing Line.
"SWING LINE OUTSTANDINGS" means, as of any date of determination, the
aggregate principal Indebtedness of Borrower on all Swing Line Advances then
outstanding.
"TERMINATION EVENT" means (a) a Reportable Event, (b) the withdrawal
of any Loan Party or any of its ERISA Affiliates from a Pension Plan during any
plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, if such withdrawal results in liability pursuant to
Section 4063 of the Code, (c) the filing of a notice of intent to terminate a
Pension Plan or the treatment of an amendment to a Pension Plan
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as a termination thereof pursuant to Section 4041 of ERISA, (d) the institution
of proceedings to terminate a Pension Plan by the PBGC or (e) any other event
or condition which might reasonably be expected to constitute grounds under
ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan.
"TOTAL COMMITMENT" means, as of the date of determination thereof, the
aggregate Commitments of all the Lenders.
"TOTAL LIABILITIES" means, as of any date of determination, all
liabilities that should be reflected as a liability on a consolidated balance
sheet of Borrower and its Subsidiaries on such date prepared in accordance with
Generally Accepted Accounting Principles.
"TO THE BEST KNOWLEDGE OF" means, when modifying a representation,
warranty or other statement of any Person, that such representation, warranty or
statement is a representation, warranty or statement that the Person making it
has no actual knowledge, after performing reasonable due diligence under the
circumstances, of the inaccuracy of the matters therein stated. Where the
Person making the representation, warranty or statement is not a natural Person,
the aforesaid actual or constructive knowledge shall be that of any Senior
Officer of that Person.
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary of Borrower, whether
now existing or hereafter acquired, with respect to which Borrower owns,
directly or indirectly, and controls the power to vote, 100% of the capital
shares, partnership or other ownership interests in such Subsidiary other than
capital shares or partnership or other ownership interests which are held by
certain individuals as director's qualifying shares or are otherwise held by
directors of a Subsidiary in nominal amounts necessary to comply with applicable
local laws.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
1.02 USE OF DEFINED TERMS. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.
1.03 ACCOUNTING TERMS. All accounting terms not specifically defined
in this Agreement shall be construed in conformity with, and all financial data
required to be submitted
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by this Agreement shall be prepared in conformity with, Generally Accepted
Accounting Principles consistently applied, except as otherwise specifically
prescribed herein. In the event that Generally Accepted Accounting Principles
change during the term of this Agreement such that the financial covenants
contained in Sections 7.09 through 7.11 would then be calculated in a different
manner or with different components or would render the same not meaningful
criteria for evaluating Borrower's financial condition, (a) Borrower and the
Lenders agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Borrower's financial
condition to substantially the same criteria as were effective prior to such
change in Generally Accepted Accounting Principles and (b) during the period
pending agreement on such amendments (which may not exceed 60 days absent the
mutual agreement of the Borrower and the Lenders), Borrower shall be deemed to
be in compliance with the financial covenants contained in such Sections
following any such change in Generally Accepted Accounting Principles if and to
the extent that Borrower would have been in compliance therewith under
Generally Accepted Accounting Principles as in effect immediately prior to such
change.
1.04 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified, or amended, are incorporated herein by reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
1.05 CURRENCY EQUIVALENTS GENERALLY. (a) For all purposes of this
Agreement other than Article II (but not for purposes of the preparation of any
financial statements delivered pursuant to this Agreement or any calculation to
be made on the basis of any such financial statements), the equivalent in any
Alternative Currency of an amount in Dollars, and the equivalent in Dollars of
an amount in any Alternative Currency, shall be determined at the rate of
exchange quoted by the Agent in London, England, at 11:00 A.M. (London time) on
the date of determination, to prime banks in London, England for the spot
purchase in the London, England foreign exchange market of such amount of
Dollars with such Alternative Currency, or such amount of such Alternative
Currency with such Dollars, as the case may be.
(b) For purposes of determining compliance with covenants in Article
VII (other than Sections 7.09, 7.10 and 7.11), Dollar equivalents of Alternative
Currency amounts incurred or outstanding shall be deemed to be the Dollar
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equivalent thereof at the time such Alternative Currency amount was incurred or
became outstanding.
1.06 REFERENCES TO LAST DAY OF FISCAL PERIOD. If the last day of any
Fiscal Year or Fiscal Quarter of the Borrower is misstated in any Loan
Document, such date shall be deemed to refer to the last day of the Fiscal Year
or Fiscal Quarter ending nearest to the day actually set forth.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
2.01 THE ADVANCES. (a) COMMITTED ADVANCES. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, to make Committed
Advances to the Borrower and the Subsidiary Borrowers, from time to time on any
Business Day from the date hereof to the Final Maturity Date, in an aggregate
amount (determined in Dollars) not to exceed at any time outstanding the Dollar
amount of such Lender's Commitment; PROVIDED, HOWEVER, that such Lender shall
not be obligated to make any Committed Advance if, after giving effect to such
Committed Advance and the other Committed Advances to be made by the other
Lenders as part of the same Committed Borrowing, (x) the Facility Usage shall
exceed the Total Commitment or (y) in the event such Borrowing is being made by
a Subsidiary Borrower, the aggregate amount of outstanding Advances to such
Subsidiary Borrower shall exceed such Subsidiary Borrower's Subsidiary Borrower
Sublimit; PROVIDED, FURTHER, that such Lender shall not be obligated to make any
Committed Advance in an Alternative Currency if, after giving effect to such
Committed Advance and the other Committed Advances to be made by the other
Lenders as part of the same Committed Borrowing, the then outstanding aggregate
principal amount (determined in Dollars) of all Committed Advances denominated
in Alternative Currencies shall exceed the Alternative Currency Sublimit. Each
Committed Borrowing under this Section 2.01(a) shall (i) be in an aggregate
amount not less than $1,000,000 in the case of Base Rate Advances, $1,000,000 in
the case of Eurocurrency Rate Committed Advances denominated in Dollars and
$1,500,000 in the case of Eurocurrency Rate Committed Advances denominated in an
Alternative Currency, (ii) be in an integral multiple of $100,000 in the case of
Base Rate Advances and $500,000 in the case of each other type of Advance, and
(iii) consist of Committed Advances of the same Interest Type made in the same
currency on the same Business Day by the Lenders ratably according to their
respective Commitments, SUBJECT, HOWEVER, to the provisions of Section 2.02(c).
Within the limits of each Lender's Commitment and subject to the terms and
provisions hereof, the Borrowers may
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from time to time borrow under this Section 2.01(a), prepay pursuant to Section
2.12, and reborrow under this Section 2.01(a).
(b) CURRENCY EQUIVALENTS. For purposes of this Section 2.01 and all
other provisions of this Article II, the equivalent in Dollars of any
Alternative Currency or the equivalent in any Alternative Currency of Dollars or
of any other Alternative Currency shall be determined in accordance with
Section 2.19.
2.02 MAKING THE COMMITTED ADVANCES.
(a) COMMITTED ADVANCES. Each Committed Borrowing shall be of the
same Interest Type and denominated in the same currency, and shall be made by a
Notice of Borrowing received by the Agent:
(x) not later than 9:30 A.M. (San Francisco time) on the date of such
Committed Borrowing if such Committed Borrowing consists of Base Rate
Advances;
(y) not later than 10:00 A.M. (San Francisco time) on the third
Business Day prior to the date of such Committed Borrowing if such
Committed Borrowing consists of Eurocurrency Rate Committed Advances
denominated in Dollars; and
(z) not later than 10:00 A.M. (San Francisco time) on the fifth
Business Day prior to the date of such Committed Borrowing if such
Committed Borrowing consists of Eurocurrency Rate Committed Advances
denominated in an Alternative Currency.
More than one Committed Borrowing may be made on any Business Day; provided no
more than one Committed Borrowing (which excludes Conversions and Continuations)
may be made in any single Currency on the same Business Day. Each such Notice
of Borrowing shall specify therein the (i) date of such Committed Borrowing,
(ii) Interest Type of Committed Advances comprising such Committed Borrowing,
(iii) in the case of a proposed Committed Borrowing comprised of Eurocurrency
Rate Committed Advances, currency of such Committed Borrowing and the Dollar
equivalent of Eurocurrency Rate Committed Advances denominated in Alternative
Currencies as of the date of such Notice, (iv) aggregate amount and Borrower of
such Committed Borrowing, (v) in the case of a proposed Committed Borrowing
comprised of Eurocurrency Rate Committed Advances, initial Interest Period for
each such Committed Advance and (vi) the Applicable Margin, if any, for the
Advances comprising such Committed Borrowing, and shall be given
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in writing or by telecopier or telephone (and if by telephone, confirmed
promptly by telecopier).
In the case of a proposed Committed Borrowing comprised of
Eurocurrency Rate Committed Advances in an Alternative Currency, the Agent
shall, at the request of the relevant Borrower, use its best efforts to
notify such Borrower as to an indicative interest rate with respect to such
proposed Committed Borrowing by 9:00 A.M. (San Francisco time) the fourth
Business Day prior to the date of such Committed Borrowing, and such Borrower
may, by notice to the Agent not later than 10:00 A.M. (San Francisco time) on
the fourth Business Day preceding the date of such proposed Committed
Borrowing, withdraw the Notice of Borrowing relating to such requested
Committed Borrowing and if so withdrawn prior to such time, Borrower shall
not be obligated to pay any costs which might otherwise be payable pursuant
to Section 2.02(b) in connection with the Borrower's failure to incur such
Advance; provided, however, the failure of the Agent to so notify the
Borrower shall not relieve such Borrower of any of its obligations hereunder,
including its obligation to borrow such Eurocurrency Rate Committed Advances
on the date of Borrowing specified in such Notice of Borrowing; and provided
further, notwithstanding anything to the contrary, in no event shall the
Agent have any liability to any Borrower for failing to notify a Borrower of
the interest rate on or prior to 9:00 A.M. (San Francisco time) such fourth
Business Day preceding such date of Borrowing.
If a Lender is unable to fund an Advance requested in an Alternative
Currency (whether due to changes in the interbank market or changes in funding
capabilities of such Lender, including, without limitation, changes due to such
Lender's decision to close a funding office or not to book loans in such
Alternative Currency), such Lender shall notify the Agent of such fact no later
than the later of (i) 10:00 A.M. (San Francisco time) on the fourth Business Day
preceding the applicable date of such Committed Borrowing and (ii) one hour
after being notified by the Agent of the relevant Notice of Borrowing. The
Agent shall promptly notify each other Lender and the Borrower of the Agent's
receipt of any such Notice that a Lender is not going to fund a Committed
Borrowing requested in an Alternative Currency and the Notice of Borrowing shall
be deemed to be withdrawn. In such event, no Lender shall have any obligation
to fund the Advances requested in such Notice of Borrowing and the Borrower
shall not be obligated to pay any costs which might otherwise be payable
pursuant to Section 2.02(b) with respect to any requested Eurocurrency Rate
Committed Advances which are not funded by the Lenders under such withdrawn
Notice of Borrowing.
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Each Lender shall promptly notify the Agent and the Borrower if any
Alternative Currency in which the Borrower has previously received
Eurocurrency Rate Committed Advances is no longer available to such Lender.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may, upon receipt of such a notice, request that
such Lender be replaced with another commercial bank or other financial
institution which has such Alternative Currency available to it selected by
the Borrower and approved in writing by the Agent (which approval shall not
be unreasonably withheld or delayed). Upon any such request by the Borrower,
if the Agent shall have approved the commercial bank or other financial
institution selected by the Borrower, the Lender that is not able to fund in
such Alternative Currency shall execute and deliver a Commitment Assignment
and Acceptance to the Agent pursuant to which such Lender shall assign all of
its Commitment to the commercial bank or other financial institution selected
by the Borrower. If any Lender which has notified the Agent and the Borrower
in accordance with this Section 2.02(a) that an Alternative Currency is no
longer available to it, is not so replaced, such Lender shall promptly notify
the Agent and the Borrower if such Alternative Currency subsequently becomes
available to it.
(b) NOTICES IRREVOCABLE, ETC. Except as otherwise provided in
Section 2.02(a), each Notice of Borrowing shall be irrevocable and binding on
the Borrower delivering any such notice. In the case of any Committed
Borrowing which the related Notice of Borrowing specified is to be comprised
of Eurocurrency Rate Committed Advances, unless such notice is withdrawn or
deemed withdrawn pursuant to Section 2.02(a), such Borrower shall indemnify
each Lender against any reasonable direct out-of-pocket loss, cost or expense
incurred by such Lender as a result of any failure by the Borrowers to
fulfill on or before the date specified in such Notice of Borrowing the
applicable conditions set forth in Article IV hereof, including, without
limitation, any loss or reasonable direct out-of-pocket cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by any Lender to fund the Advance to be made by such Lender as
part of such Committed Borrowing when such Committed Borrowing, as a result
of such failure, is not made on such date.
(c) ADVANCES BY LENDERS. The Agent shall promptly (and in any event
within one Business Day) give each Lender notice of each Notice of Borrowing
received by it. Each Lender shall, before (i) 12:00 Noon (San Francisco time)
with respect to Borrowings in U.S. Dollars, and (ii) 9:00 a.m. (local time at
the Agent's Applicable Lending Office) with respect to Borrowings in Alternative
Currencies, on the date of the Committed Borrowing covered by each such Notice
of Borrowing, make available for the
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account of its Applicable Lending Office to the Agent such Lender's ratable
portion of such Committed Borrowing by depositing the amount of such portion
in the applicable currency and in same day funds in the Agent's Account.
Unless the Agent shall have received written notice from a Lender prior to
the date of any such Committed Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Committed
Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent on the date of such Committed Borrowing in accordance
with this Section 2.02(c) and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount pursuant to Section 2.02(d). If and to the extent any Lender shall
not have made available to the Agent on the date of the Committed Borrowing
such Lender's ratable portion of such Committed Borrowing, such Lender and
the applicable Borrower agrees to pay to the Agent forthwith on demand such
amount together with interest thereon, for each day from the date such amount
is made available to the applicable Borrower until the date such amount is
repaid to the Agent, at an interest rate equal to, in the case of a Borrower,
the interest rate (plus the Applicable Margin, if any) stated in the Notice
of Borrowing applicable thereto, or, in the case of a Lender, the Federal
Funds Rate or, in the case of a payment in an Alternative Currency, the
Overnight Rate. If such Lender shall pay to the Agent such amount, such
amount so paid shall constitute such Lender's Advance as part of such
Committed Borrowing for purposes of this Agreement and to such extent the
Borrower shall have no further obligation under this Section 2.02(c) to repay
such amount.
(d) DISBURSEMENT OF ADVANCES. Upon fulfillment of the applicable
conditions set forth in Article IV hereof, the Agent will make funds for any
Committed Borrowing available to the applicable Borrower, to the extent of
Agent's receipt of such funds from the Lenders. The funds so made available
to the applicable Borrower, subject to the preceding sentence, will be
same-day funds to the extent funds are received by the Agent prior to the
close of business on the day received. Upon request of the applicable
Borrower, the Agent will disburse such funds to such accounts as are
designated by such Borrower, subject to the payment of customary wire
transfer costs.
(e) NATURE OF LENDER'S OBLIGATIONS. The failure of any Lender to
make any Committed Advance to be made by it as part of any Committed
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Committed Advance on the date of such Committed
Borrowing. In no event shall any Lender be responsible for the failure of
any other Lender to make the Committed Advance to be made by such other
Lender on the date of any Committed Borrowing.
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2.03 FEES.
(a) AGENT'S AND ARRANGER'S FEES. The Borrower agrees to pay to the
Agent and the Arranger, for their own accounts, the fees referred to in the
letter agreement dated August 8, 1997 between the Borrower, Bank of America
and the Arranger.
(b) APPROVAL FEE. The Borrower agrees to pay to the Agent, for the
account of each Lender approving this Agreement by August 26, 1997, (i) on
the Closing Date, a fee equal to 0.075% of such Lender's Commitment and (ii)
on December 31, 1997, a fee equal to 0.125% of such Lender's Pro Rata Share
of any portion of the Total Commitment which is in excess of $150,000,000 on
December 31, 1997.
(c) COMMITMENT FEE. The Borrower agrees to pay to the Agent, for
the account of each Lender, a commitment fee on the average daily unused
portion of such Lender's Commitment (as calculated in accordance with Section
2.03(c)) at a rate per annum equal to the Applicable Margin as in effect from
time to time for all periods on and after the Closing Date, payable quarterly
on the last Business Day of each March, June, September and December in each
year and on the Final Maturity Date.
(d) COMMITMENT FEE CALCULATIONS. For purposes of calculating each
Lender's commitment fee pursuant to Section 2.03(c), outstanding Letters of
Credit shall be considered a ratable usage of such Lender's Commitment based
on the Letter of Credit Liability attributable from time to time to such
Letters of Credit; Swing Line Advances and Bid Advances shall not be
considered usage. For purposes of determining the unused portion of each
Lender's Commitment solely in order to calculate the commitment fee under
Section 2.03(c), the equivalent in Dollars of each Eurocurrency Rate
Committed Advance made by such Lender in an Alternative Currency as
determined on the date of the making of such Advance (in accordance with the
provisions of Section 2.19) shall be the amount of such Lender's Commitment
used in connection with such Advance, and no further adjustments shall be
made with respect to the unused portion of such Lender's Commitment based
upon fluctuations thereafter in the value of the Alternative Currency of such
Advance. Any change in the commitment fee because of a change in the
Leverage Ratio shall be effective upon receipt by the Agent from a Senior
Officer of the Borrower of a Compliance Certificate demonstrating such fact.
(e) NATURE OF OBLIGATION. The Borrower's obligation hereunder to
pay the fees referred to in this Section 2.03 shall be absolute and
unconditional and shall survive the making and repaying of Advances and the
termination of this Agreement.
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2.04 REPAYMENT OF ADVANCES.
(a) The Borrower agrees to repay on the Final Maturity Date the
outstanding principal amount of all Committed Advances made to the Borrower.
Notwithstanding any other provision of this Agreement, if a Subsidiary
Borrower shall be a party to this Agreement, the Obligations of each
Borrower, in its capacity as a Borrower, shall be several and not joint and
several. Except as provided in Section 2.06 (c) and (d), each Eurocurrency
Rate Committed Advance denominated in an Alternative Currency, together with
interest thereon as provided herein, shall be repaid in such Alternative
Currency.
(b) Sunrise shall repay each Bid Advance on the last day of the
relevant Interest Period.
2.05 INTEREST RATE PROVISIONS, ETC.
(a) BASE RATE ADVANCES. Except to the extent that the applicable
Borrower shall have elected in the applicable Notice of Borrowing or Notice
of Conversion/Continuation to pay interest on any Committed Advances
denominated in Dollars and comprising part of the same Committed Borrowing
for an Interest Period pursuant to subsection (d) of this Section 2.05, the
Borrowers shall pay interest on the unpaid principal amount of each Committed
Advance denominated in Dollars made to the Borrowers, from the date of such
Advance until such principal amount is paid in full, payable quarterly on the
last Business Day of each March, June, September and December in each year
and on the Final Maturity Date, at a fluctuating interest rate per annum
equal to the Base Rate in effect from time to time; PROVIDED, HOWEVER, that
during any period in which an Event of Default has occurred and is continuing
(but only so long as such Event of Default is continuing), the Borrower shall
pay interest on the unpaid principal amount of each Base Rate Advance made to
it, payable from the date such Event of Default occurs and upon written
demand by the Agent on behalf of the Lenders to the Borrowers, at the Default
Rate.
(b) INTEREST PERIODS. Any Borrower may, pursuant to subsection (d)
below, elect to have the interest on the principal amount of any Committed
Advances made to it denominated in Dollars and comprised or comprising part
of the same Committed Borrowing to be made to the Borrower pursuant to
Section 2.02(a), or on all or any portion of the principal amount of any
outstanding Committed Advances of the same Interest Type, in each case
ratably according to the respective outstanding principal amounts of
Committed Advances of such Interest Type owing to each Lender, determined and
payable for an Interest Period in accordance with subsection (d) below;
PROVIDED, HOWEVER, that the
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Borrowers may not select any Interest Period that ends after the Final
Maturity Date; and, PROVIDED, FURTHER, that the Borrowers may not, unless the
Majority Lenders shall otherwise agree in writing, have more than an
aggregate of 40 Eurocurrency Rate Committed Advances and Bid Advances from
any Lender outstanding at any one time.
(c) BID ADVANCES. Each Bid Advance shall bear interest on the
outstanding principal amount thereof from the Borrowing date at a rate per
annum equal to the Eurocurrency Rate plus (or minus) the Eurocurrency Rate
Bid Margin, or at the Absolute Rate, as the case may be; PROVIDED, HOWEVER,
that during any period in which an Event of Default has occurred and is
continuing (but only so long as such Event of Default is continuing), the
Borrower shall pay interest on the unpaid principal amount of each such Bid
Advance made to it, payable from the date such Event of Default occurs and
upon written demand by the Lender of such Bid Advance, at the rate of 2% per
annum above the rate otherwise applicable in effect at the time of the
occurrence of such Event of Default, until the last day of the then current
Interest Period for such Advance, and thereafter at the Default Rate in
effect from time to time.
(d) EUROCURRENCY RATE COMMITTED ADVANCES DENOMINATED IN DOLLARS.
Any Borrower may, from time to time and on the condition no Event of Default
or Default has occurred and is continuing and subject to the provisions of
subsections (f)-(k) below, elect to pay interest on each Committed Advance
denominated in Dollars and comprising part of the same Committed Borrowing
made to the Borrower during any Interest Period therefor at a rate per annum
equal to the sum of the Eurocurrency Rate for such Interest Period PLUS the
Applicable Margin, by selecting the same either in the Notice of Borrowing
pursuant to which such Committed Advance was made or in a Notice of
Conversion/Continuation covering such Committed Advance, each of which shall
specify the Eurocurrency Rate Committed Advances and the first day and
duration of such Interest Period, and which shall be delivered to the Agent
as specified in Section 2.02(a), Section 2.06(a) or Section 2.06(b), as
applicable. If a Borrower has made such an election for Eurocurrency Rate
Committed Advances for any Interest Period, such Borrower shall, subject to
subsection (1) hereof, pay interest on the unpaid principal amount of each
such Eurocurrency Rate Committed Advance during such Interest Period (i) in
the case of an Interest Period which is three months or less, on the last day
of such Interest Period and (ii) in the case of an Interest Period which is
longer than three months, on the last day of each three-month period of such
Interest Period and on the last day of such Interest Period, at a rate per
annum equal to the sum of the Eurocurrency Rate for such Interest Period for
such Eurocurrency Rate Committed Advance PLUS
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the Applicable Margin; PROVIDED, HOWEVER, that during any period in which an
Event of Default has occurred and is continuing (but only so long as such
Event of Default is continuing), such Borrower shall pay interest on the
unpaid principal amount of each such Eurocurrency Rate Committed Advance made
to it, payable from the date such Event of Default occurs and upon written
demand by the Agent on behalf of the Lenders, at the rate of 2% per annum
above the Eurocurrency Rate PLUS the Applicable Margin for such Eurocurrency
Rate Committed Advance in effect at the time of the occurrence of such Event
of Default, until the last day of the then current Interest Period for such
Advance, and thereafter at the Default Rate in effect from time to time. On
the last day of each Interest Period for any Eurocurrency Rate Committed
Advance denominated in Dollars, the unpaid principal balance thereof shall
automatically become and bear interest as a Base Rate Advance, except to the
extent that the applicable Borrower of such Advance has elected to pay
interest on all or any portion of such amount for a new Interest Period
commencing on such day in accordance with this Section 2.05 and by timely
delivering a Notice of Conversion/Continuation pursuant to Section 2.06(a).
(e) EUROCURRENCY RATE COMMITTED ADVANCES DENOMINATED IN ALTERNATIVE
CURRENCIES. Each Borrower shall pay interest on the unpaid principal amount of
each Committed Advance made to it denominated in an Alternative Currency and
comprising part of the same Committed Borrowing, from the date of such Advance
until such principal amount is paid in full at a rate per annum equal to the sum
of the Eurocurrency Rate, determined with regard to the applicable Alternative
Currency of such Advance and the Interest Period selected by such Borrower
pursuant to Section 2.02(a), 2.06(a) or 2.06(b), for such Interest Period PLUS
the Applicable Margin, payable (i) in the case of an Interest Period which is
one, two or three months, on the last day of such Interest Period and (ii) in
the case of an Interest Period which is six months, on the last day of the third
month of such Interest Period and on the last day of such Interest Period;
PROVIDED, HOWEVER, that during any period in which an Event of Default has
occurred and is continuing (but only so long as such Event of Default is
continuing), each Borrower shall pay interest on the unpaid principal amount of
each Committed Advance made to it denominated in an Alternative Currency,
payable from the date such Event of Default occurs and upon written demand by
the Agent on behalf of the Lenders, at the rate of 2% per annum above the
Eurocurrency Rate plus the Applicable Margin for such Committed Advance in
effect at the time of the occurrence of such Event of Default, until the
principal amount of such Committed Advance is paid in full. On the last day of
each Interest Period for any Committed Advance denominated in an Alternative
Currency, so long as no Event of Default or Default has occurred and is
continuing,
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the unpaid principal balance thereof shall automatically become and bear
interest as a Eurocurrency Rate Committed Advance denominated in the same
Alternative Currency on the basis of a one month Interest Period, except to
the extent that the applicable Borrower has elected to pay interest on all or
any portion of such Advance for a new Interest Period commencing on such day
in accordance with this Section 2.05 and by timely delivering a Notice of
Conversion/Continuation pursuant to Section 2.06(a); PROVIDED, HOWEVER, that
if the Agent shall have notified the Borrower on or prior to 11:00 A.M. (San
Francisco time) on the fourth Business Day preceding the last day of such
Interest Period that any Lender is unable to fund such Alternative Currency
after the expiration of such Interest Period, all Advances denominated in
such Alternative Currency maturing on the last day of such Interest Period
shall, notwithstanding the foregoing, be due and payable on the last day of
such Interest Period.
(f) INTEREST RATE QUOTATIONS. In the event that, prior to the
first day of any Interest Period for any Borrowing, the Agent shall have
determined in good faith (or the Lender of any Eurocurrency Rate Bid Advance
as to which the Borrower has accepted such Lender's Competitive Bid, but as
to which the Borrowing Date has not arrived shall have determined and have
notified the Agent) (which determination shall be conclusive and binding upon
all parties hereto) that (i) Dollar or Alternative Currency deposits of the
relevant amount and for the relevant Interest Period for such Advances are
not available to the Lenders, or (ii) adequate and reasonable means do not
exist for ascertaining the Eurocurrency Rate for any Eurocurrency Rate
Committed Advances denominated in Dollars, or in an Alternative Currency then:
(i) the Agent shall forthwith notify the Borrowers and the
Lenders that the interest rate cannot be determined for such Eurocurrency
Rate Committed Advances denominated in Dollars or in such Alternative
Currency, as the case may be,
(ii) each such Committed Advance denominated in Dollars will
automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance unless an appropriate notice is
given for another Interest Type which is then available,
(iii) each such Committed Advance denominated in such
Alternative Currency will automatically, on the last day of the then
existing Interest Period therefor, be due and payable, and
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(iv) the obligation of the Lenders to make, or to Convert
Advances into, Eurocurrency Rate Committed Advances, shall be suspended
until the Agent shall notify the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist.
(g) CHANGE IN CIRCUMSTANCES. If, with respect to any Eurocurrency
Rate Advances, the Majority Lenders notify the Agent (or the Lender of any
Eurocurrency Rate Bid Advance as to which the Borrower has accepted such
Lender's Competitive Bid, but as to which the Borrowing Date has not arrived
notifies the Agent) that the Eurocurrency Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Majority Lenders
of making or maintaining their respective Eurocurrency Rate Advances for such
Interest Period, the Agent shall forthwith so notify the Borrowers and the
Lenders, whereupon (i) each Eurocurrency Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance, and (ii) the obligation of the Lenders to make, or Convert
Committed Advances into, Eurocurrency Rate Advances shall be suspended until
the Agent shall notify the Borrowers and the Lenders that the circumstances
causing such suspension no longer exist.
(h) FAILURE TO NOTIFY. If any Borrower shall fail to select the
duration of any Interest Period for any Eurocurrency Rate Committed Advances
made to such Borrower in accordance with Section 2.05(d) or Section 2.06(a)
or (b), the Agent will forthwith so notify such Borrower and the Lenders, and
such Advances will automatically, on the last day of the then existing
Interest Period therefor, Convert into Base Rate Advances; PROVIDED, HOWEVER,
that if such failure to select an Interest Period relates to any Eurocurrency
Rate Advance denominated in an Alternative Currency, such Advance will
automatically, on the last day of the existing Interest Period for such
Advance, be continued as a Eurocurrency Rate Advance denominated in such
Alternate Currency with an Interest Period of one month.
(i) MINIMUM AMOUNTS. On the date on which the aggregate unpaid
principal amount of Committed Advances comprising any Committed Borrowing
shall be reduced, by payment or prepayment (but not by reason of fluctuations
in foreign currency exchange rates), to less than $1,000,000, such Advances
shall, if they are Advances of an Interest Type other than Base Rate
Advances, automatically Convert into Base Rate Advances, and on and after
such date the right of the Borrower to Convert such Advances into Advances of
an Interest Type other than Base Rate Advances shall terminate.
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(j) ILLEGALITY. Notwithstanding any other provision of this
Agreement, if the enactment or issuance of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any
central bank or other governmental authority shall assert in writing that it
is unlawful, for any Lender or its Eurocurrency Lending Office to fund or
maintain Eurocurrency Rate Advances denominated in Dollars or in any
Alternative Currencies hereunder, then, on notice thereof by such Lender to
the Borrowers through the Agent, (i) the right of the Borrowers to select
such Interest Type for any Advance pursuant to subsection (d) or (e) above
and pursuant to Section 2.06(a) and (b) or to accept a bid from the affected
Lender pursuant to Section 2.08(e), as the case may be, shall thereupon be
suspended until the Agent shall notify the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist (and each Lender shall
promptly notify Borrower if such circumstance no longer exists), (ii) each
such affected Advance denominated in Dollars shall automatically become a
Base Rate Advance and (iii) the Borrowers shall forthwith prepay in full all
such affected Eurocurrency Rate Advances denominated in an Alternative
Currency of all Lenders then outstanding, together with interest accrued
thereon.
(k) QUOTED RATES. The Agent shall give prompt (and in any event
within one Business Day) notice to the Borrowers and the Lenders of the
applicable interest rate determined by the Agent for the purposes of Section
2.05(c), (d) or (e).
(l) SWING LINE ADVANCES. The Borrower shall pay interest on the
unpaid principal amount of each Swing Line Advance from the date of such
Advance until such principal amount is paid in full, payable on such dates,
not more frequently than monthly, as may be specified by the Swing Line
Lender and in any event on the Final Maturity Date, at a fluctuating interest
rate per annum equal to the Base Rate in effect from time to time; PROVIDED,
HOWEVER, that during any period in which an Event of Default has occurred and
is continuing (but only so long as such Event of Default is continuing), such
Borrower shall pay interest on the unpaid principal amount of each Swing Line
Advance made to it, payable from the date such Event of Default occurs and
upon written demand by the Swing Line Lender to such Borrower, at the Default
Rate. The Swing Line Lender shall be responsible for invoicing such Borrower
for such interest. The interest payable on Swing Line Advances is solely for
the account of the Swing Line Lender.
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2.06 VOLUNTARY CONVERSIONS AND CONTINUATIONS OF COMMITTED ADVANCES.
(a) CONVERSION AND CONTINUATION. The Borrower may, from time to
time and on the condition that no Default or Event of Default shall have
occurred and be continuing, on any Business Day, upon delivery of a Notice of
Conversion/Continuation given to the Agent not later than 10:00 A.M. (San
Francisco time) on the third Business Day (or, in the case of Alternative
Currency Advances, the fifth Business Day) prior to the date of the proposed
Conversion or Continuation and subject to the other provisions of Section
2.05 and this Section 2.06, (i) continue Committed Advances of the same
Interest Type and Interest Period and comprising the same Committed Borrowing
as Committed Advances of such Interest Type or (ii) Convert such Committed
Advances, if such Committed Advances are denominated in Dollars, into
Committed Advances of another Interest Type denominated in Dollars; PROVIDED,
HOWEVER, that any Conversion of any Eurocurrency Rate Committed Advances into
Committed Advances of another Interest Type shall be made on, and only on,
the last day of an Interest Period for such Eurocurrency Rate Committed
Advances; and, PROVIDED, FURTHER, that Eurocurrency Rate Committed Advances
denominated in an Alternative Currency may not be converted into another
Alternative Currency and may only be continued as Eurocurrency Rate Committed
Advances denominated in such Alternative Currency. Each such Notice of a
Conversion/Continuation shall be in writing or by telecopier or telephone
(and if by telephone, confirmed immediately by telecopier), and delivered or
given to the Agent within the time period specified above, and shall specify
(i) the date of such Conversion/Continuation, (ii) the Committed Advances to
be Converted/Continued, and (iii) if such Conversion/Continuation is into
Eurocurrency Rate Committed Advances, the duration of the Interest Period for
each such Advance.
In the case of a Notice of Conversion/Continuation relating to
Eurocurrency Rate Committed Advances in an Alternative Currency, the Agent
shall, at the request of the applicable Borrower, use its best efforts to
notify the Borrower as to an indicative interest rate with respect to such
proposed Continuation/Conversion by 9:00 A.M. (San Francisco time) the fourth
Business Day prior to the date of such Continuation/Conversion, and such
Borrower may, by notice to the Agent not later than 10:00 A.M. (San Francisco
time) on the fourth Business Day preceding the date of such proposed
Continuation/Conversion, withdraw such Notice of Continuation/ Conversion and
submit a new Notice of Continuation/ Conversion not denominated in an
Alternative Currency, and if so withdrawn prior to such time, Borrower shall
not be obligated to pay any costs which might otherwise be payable pursuant
to
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Section 2.06(c) in connection with the Borrower's failure to so Continue;
PROVIDED, HOWEVER, the failure of the Agent to so notify the Borrower shall
not relieve such Borrower of any of its obligations hereunder, including its
obligation to Continue such Eurocurrency Rate Committed Advances on the date
of the Continuation specified in such Notice of Continuation/Conversion; and
PROVIDED, FURTHER, notwithstanding anything to the contrary, in no event
shall the Agent have any liability to any Borrower for failing to notify a
Borrower of the interest rate on or prior to 9:00 A.M. such fourth Business
Day preceding such date of Conversion or Continuation.
In the case of a Notice of Conversion/Continuation with respect to
Eurocurrency Rate Committed Advances denominated in an Alternative Currency,
in the event any Lender notifies the Agent that it is no longer able to
continue such Advance in an Alternative Currency (whether due to changes in
the interbank market or changes in funding capabilities of such Lender,
including, without limitation, changes due to such Lender's decision to close
a funding office or not to book loans in such Alternative Currency), such
Lender shall notify the Agent of such fact no later than the later of (x)
10:00 A.M. (San Francisco time) on the fourth Business Day preceding the
requested effective date of such Continuation or (y) one hour after being
notified by the Agent of the relevant Notice of Conversion/Continuation. The
Agent shall promptly notify the other Lenders and the Borrower of the receipt
of any such notice and the relevant Notice of Conversion/Continuation shall
be deemed to be withdrawn by the relevant Borrower. The Borrower shall not
be obligated to pay any costs which might otherwise be payable pursuant to
Section 2.06(c) in connection with any Notice of Conversion/Continuation
withdrawn or deemed withdrawn, in accordance with this paragraph.
(b) NOTICES IRREVOCABLE. Except as otherwise provided herein, each
notice by a Borrower under this Section 2.06 shall be irrevocable, and the
Borrowers shall indemnify each Lender against any reasonable direct
out-of-pocket loss, cost or expenses incurred by such Lender as a result of any
failure by the Borrower to fulfill on or before the date specified by such
notice the applicable conditions set forth in this Section 2.06 or Article IV.
The Agent promptly (and in any event within one Business Day) will give each
Lender notice of each Notice of Conversion/Continuation received by it.
(c) ALTERNATIVE CURRENCY CONVERSION. Notwithstanding anything herein
to the contrary, upon the occurrence and continuation of an Event of Default
resulting from the failure of a Borrower to make any payment of principal or
interest on any Obligation, upon notice from the Agent, all of the Advances
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denominated in an Alternative Currency shall automatically be converted to
Base Rate Advances in a principal amount equal to the Dollar equivalent of
such Alternative Currency on the date of such conversion. Such Borrower
shall be responsible for all costs associated with such conversion to the
full extent of each indemnity provided herein in connection with a conversion
prior to the last day of an Interest Period.
2.07 BID BORROWINGS.
(a) In addition to Committed Borrowings pursuant to Section 2.02,
each Lender severally agrees that Sunrise may, as set forth in Section 2.08,
from time to time request the Lenders prior to the Final Maturity Date to
submit offers to make Bid Advances to such Borrower; PROVIDED, HOWEVER, that
the Lenders may, but shall have no obligation to, submit such offers and such
Borrower may, but shall have no obligation to, accept any such offers;
PROVIDED, FURTHER, that no Bid Advance shall be made if, after giving effect
to such Bid Advance and the other Bid Advances to be made by the other
Lenders as part of the same Bid Borrowing, (a) the Facility Usage shall
exceed the Total Commitment, (b) the outstanding aggregate principal amount
of all Bid Advances made by all Lenders shall exceed $137,500,000; or (c) the
number of Interest Periods for Bid Advances then outstanding plus the number
of Interest Periods for Committed Advances then outstanding exceeds 40.
(b) Each Lender may designate one Designated Bidder to have a right
to offer and make Bid Advances as a Lender pursuant to Sections 2.07 and
2.08; PROVIDED, HOWEVER, that (i) each such Lender shall retain the right to
make Bid Advances as a Lender, (ii) each such designation shall be of a
Designated Bidder and (iii) the parties to each such designation shall
execute and deliver to the Agent, for its acceptance, an agreement and
acknowledgment substantially in the form of Exhibit N hereto, whereby such
Designated Bidder agrees to be bound by the terms and conditions of this
Agreement as a Lender for purposes of Bid Advances. Upon the Agent accepting
an appropriately completed agreement and acknowledgment, the Designated
Bidder shall be deemed to be a direct party to this Agreement as a Lender for
purposes of Bid Advances only, and each reference to "Lender" in Section
2.07(a) and 2.08 (and the defined terms used therein) shall be deemed to
include a reference to each Designated Bidder. Except (A) that each
Designated Bidder shall be solely responsible to the other parties hereto for
the performance of its obligations relating to its Bid Advances, and (B) for
the right of each Designated Bidder to offer and make Bid Advances (and
receive notices directly from the Agent in connection therewith) and to
receive payments as a Lender with respect to its Bid Advances, each
Designated Bidder shall be deemed to have
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only the rights of a participant in a Bid Advance hereunder, as set forth in
(and limited by) Section 11.08(g) (but with no rights under Section 2.13(a),
3.07, 11.02, 11.08, 11.10 or 11.14), and the Agent shall be entitled to deal
solely with the Lender designating such Designated Bidder for all matters,
including voting. Upon the request of the Designated Bidder made through the
Agent, Sunrise shall execute and deliver a Bid Advance Note to evidence Bid
Advances made by each Designated Bidder. A Lender may revoke any designation
of a Designated Bidder at any time upon written notice to the Agent, but such
revocation shall not affect the rights and obligations of a Designated Bidder
as to any of its Bid Advances remaining outstanding.
2.08 PROCEDURE FOR BID BORROWINGS.
(a) When Sunrise wishes to request the Lenders to submit offers to
make Bid Advances hereunder, it shall transmit to the Agent by telephone call
followed promptly by facsimile transmission a notice in substantially the
form of Exhibit J (a "Competitive Bid Request") so as to be received no later
than 9:00 a.m. (San Francisco time) (x) four Business Days prior to the date
of a proposed Bid Borrowing in the case of a Eurocurrency Auction, or (y) one
Business Day prior to the date of a proposed Bid Borrowing in the case of an
Absolute Rate Auction, specifying: (i) the date of such Bid Borrowing, which
shall be a Business Day; (ii) the aggregate amount of such Bid Borrowing,
which shall be a minimum amount of $5,000,000 or in multiples of $1,000,000
in excess thereof; (iii) whether the Competitive Bids requested are to be for
Eurocurrency Rate Bid Advances or Absolute Rate Bid Advances or both; and
(iv) the duration of the Interest Period applicable thereto, subject to the
provisions of the definition of "Interest Period" herein. Subject to
subsection 2.08(c), such Borrower may not request Competitive Bids for more
than four Interest Periods in a single Competitive Bid Request and may not
request Competitive Bids more than twice in any period of five Business Days.
Sunrise shall pay to the Agent for the Agent's sole benefit a bid auction
fee of $400 on the day of each Absolute Rate Auction and Eurocurrency Auction.
(b) Upon receipt of a Competitive Bid Request, the Agent will
promptly send to the Lenders by facsimile transmission an Invitation for
Competitive Bids, which shall constitute an invitation by Sunrise to each
Lender to submit Competitive Bids offering to make the Bid Advances to which
such Competitive Bid Request relates in accordance with this Section 2.08.
(c) (i) Each Lender may at its discretion submit a Competitive
Bid containing an offer or offers to make
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Bid Advances in response to any Invitation for Competitive Bids. Each
Competitive Bid must comply with the requirements of this subsection
2.08(c) and must be submitted to the Agent by facsimile transmission
at the Agent's office for notices set forth on Schedule 11.06 hereto
not later than 7:00 a.m. (San Francisco time) (1) three Business Days
prior to the proposed date of Borrowing, in the case of a Eurocurrency
Auction or (2) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction; PROVIDED that Competitive Bids submitted by Bank
of America (or any Affiliate of Bank of America) in the capacity of a
Lender may be submitted, and may only be submitted, if Bank of America or
such Affiliate notifies the Agent of the terms of the offer or offers
contained therein not later than 6:45 a.m. (San Francisco time) (A)
three Business Days prior to the proposed date of Borrowing, in the
case of a Eurocurrency Auction or (B) on the proposed date of
Borrowing, in the case of an Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially the
form of Exhibit L, specifying therein: (A) the proposed date of
Borrowing; (B) the principal amount of each Bid Advance for which such
Competitive Bid is being made, which principal amount (x) may be equal
to, greater than or less than the Commitment of the quoting Lender,
(y) must be $5,000,000 or in multiples of $1,000,000 in excess
thereof, and (z) may not exceed the principal amount of Bid Advances
for which Competitive Bids were requested; (C) in case the Borrower
elects a Eurocurrency Auction, the margin above or below the
Eurocurrency Rate (the "Eurocurrency Rate Bid Margin") offered for
each such Bid Advance, expressed as a percentage (rounded to the
nearest 1/100th of 1%) to be added to or subtracted from the
Eurocurrency Rate and the Interest Period applicable thereto; (D) in
case the Borrower elects an Absolute Rate Auction, the rate of
interest per annum (rounded upward to the nearest 1/100th of 1%) (the
"Absolute Rate") offered for each such Bid Advance; and (E) the
identity of the quoting Lender. A Competitive Bid may contain up to
three separate offers by the quoting Lender with respect to each
Interest Period specified in the related Invitation for Competitive
Bids.
(iii) Any Competitive Bid shall be disregarded if it: (A)
is not substantially in conformity with Exhibit L or does not specify
all of
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the information required by subsection (c)(ii) of this Section;
(B) contains qualifying, conditional or similar language; (C) proposes
terms other than or in addition to those set forth in the applicable
Invitation for Competitive Bids; or (D) arrives after the time set
forth in subsection (c)(i).
(iv) Notwithstanding anything to the contrary contained in
this section, a Competitive Bid by Bank of America may contain, and
will not be disregarded if it does contain, a restriction on the use
of proceeds consistent with Section 2.21.
(d) Promptly on receipt and not later than 7:30 a.m. (San Francisco
time) (i) three Business Days prior to the proposed date of Borrowing in the
case of a Eurocurrency Auction, or (ii) on the proposed date of Borrowing, in
the case of an Absolute Rate Auction, the Agent will notify Sunrise of the terms
(A) of any Competitive Bid submitted by a Lender that is in accordance with
subsection 2.08(c), and (B) of any Competitive Bid that amends, modifies or is
otherwise inconsistent with a previous Competitive Bid submitted by such Lender
with respect to the same Competitive Bid Request. Any such subsequent
Competitive Bid shall be disregarded by the Agent unless such subsequent
Competitive Bid is submitted solely to correct a manifest error in such former
Competitive Bid and only if received within the times set forth in subsection
2.08(c). The Agent's notice to the Borrower shall specify (1) the aggregate
principal amount of Bid Advances for which offers have been received for each
Interest Period specified in the related Competitive Bid Request; and (2) the
respective principal amounts and Eurocurrency Rate Bid Margins or Absolute
Rates, as the case may be, so offered. Subject only to the provisions of
Sections 2.05(g), 2.05(j) and 4.02 and the provisions of this subsection (d),
any Competitive Bid shall be irrevocable except with the written consent of the
Agent given on the written instructions of the Borrower.
(e) Not later than 8:00 a.m. (San Francisco time) (i) three Business
Days prior to the proposed date of Borrowing, in the case of a Eurocurrency
Auction, or (ii) on the proposed date of Borrowing, in the case of an Absolute
Rate Auction, the Borrower shall notify the Agent of its acceptance or
non-acceptance of the offers so notified to it pursuant to subsection 2.08(d).
Such Borrower shall be under no obligation to accept any offer and may choose to
reject all offers. In the case of acceptance, such notice shall specify the
aggregate principal amount of offers for each Interest Period that is accepted.
Such Borrower may accept any Competitive Bid in whole or in part; PROVIDED that:
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(i) the aggregate principal amount of each Bid Borrowing
may not exceed the applicable amount set forth in the related
Competitive Bid Request;
(ii) the aggregate principal amount of Bid Borrowing on
each day must be $5,000,000 or in any multiple of $1,000,000 in excess
thereof;
(iii) acceptance of offers may only be made on the basis of
ascending Eurocurrency Rate Bid Margins or Absolute Rates within each
Interest Period, as the case may be; and
(iv) such Borrower may not accept any offer that is
described in subsection 2.08(c)(iii) or that otherwise fails to comply
with the requirements of this Agreement.
(f) If offers are made by two or more Lenders with the same
Eurocurrency Rate Bid Margins or Absolute Rates, as the case may be, for a
greater aggregate principal amount than the amount in respect of which such
offers are accepted for the related Interest Period, the principal amount of Bid
Advances in respect of which such offers are accepted shall be allocated by the
Agent among such Lenders as nearly as possible (in such multiples, not less than
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determination by the Agent of the amounts of
Bid Advances shall be conclusive in the absence of manifest error.
(g) (i) The Agent will promptly notify each Lender having submitted
a Competitive Bid if its offer has been accepted and, if its offer has been
accepted, of the amount of the Bid Advance or Bid Advances to be made by it
on the date of the Bid Borrowing.
(ii) Each Lender, which has received notice pursuant to
subsection 2.08(g)(i) that its Competitive Bid has been accepted,
shall make the amounts of such Bid Advances available to the Agent for
the account of the Borrower at the Agent's Office, by 11:00 a.m. (San
Francisco time) in the case of Absolute Rate Bid Advances, and by
11:00 a.m. (San Francisco time) in the case of Eurocurrency Rate Bid
Advances, on such date of Bid Borrowing, in funds immediately
available to the Agent for the account of such Borrower at the Agent's
Office.
(iii) Promptly following each Bid Borrowing, the Agent
shall notify each Lender of the ranges of
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bids submitted and the highest and lowest Bids accepted for each Interest
Period requested by the Borrower and the aggregate amount borrowed pursuant
to such Bid Borrowing.
(iv) From time to time, the Borrower and the Lenders shall
furnish such information to the Agent as the Agent may request
relating to the making of Bid Advances, including the amounts,
interest rates, dates of borrowings and maturities thereof, for
purposes of the allocation of amounts received from such Borrower for
payment of all amounts owing hereunder.
(h) If, on or prior to the proposed date of Borrowing, the
Commitments have not been terminated and if, on such proposed date of Borrowing
all applicable conditions to funding referenced in Sections 4.01 and 4.02 are
satisfied, the Lender or Lenders whose offers Sunrise has accepted will fund
each Bid Advance so accepted. Nothing in this Section 2.08 shall be construed
as a right of first offer in favor of the Lenders or to otherwise limit the
ability of the Borrower to request and accept credit facilities from any Person
(including any of the Lenders), provided that no Default or Event of Default
would otherwise arise or exist as a result of such Borrower executing,
delivering or performing under such credit facilities.
(i) Each outstanding Bid Advance shall be deemed to utilize the
Commitment of each lender by an amount equal to such Lender's Pro Rata Share
TIMES the amount of such Bid Advance.
2.09 THE SWING LINE.
(a) AVAILABILITY. The Swing Line Lender shall from time to time
through the day prior to the Final Maturity Date make Swing Line Advances in
Dollars to Sunrise in such amounts as Sunrise may request, PROVIDED that
(i) giving effect to such Swing Line Advance, the Swing Line Outstandings shall
not exceed $10,000,000 and the Facility Usage shall not exceed the Total
Commitment, (ii) without the consent of the Majority Lenders, no Swing Line
Advance may be made during the continuation of an Event of Default and (iii) the
Swing Line Lender has not given at least twenty-four (24) hours prior notice to
Sunrise that availability under the Swing Line is suspended or terminated.
Sunrise may borrow, repay and reborrow under this Section. Unless notified to
the contrary by the Swing Line Lender, Borrowings under the Swing Line may be
made in a minimum amounts of $100,000 and multiples of $25,000 in excess thereof
upon telephonic request made to the Swing Line Lender not later than 3:00 p.m.,
San Francisco time, on the Business Day of the requested Borrowing (which
telephonic request shall be promptly
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confirmed in writing by a Senior Officer of Sunrise by telecopier with
telephonic notice to the Agent). Promptly after receipt of such a request
for borrowing, the Swing Line Lender shall obtain telephonic verification
from the Agent that, giving effect to such request, availability for Advances
will exist under Section 2.01(a) (and such verification shall be promptly
confirmed in writing by telecopier). Unless notified to the contrary by the
Swing Line Lender, each repayment of a Swing Line Advance shall be in an
amount which is an integral multiple of $25,000. If Sunrise instructs the
Swing Line Lender to debit its demand deposit account at the Swing Line
Lender in the amount of any payment with respect to a Swing Line Advance, or
the Swing Line Lender otherwise receives repayment, after 3:00 p.m., San
Francisco time, on a Business Day, such payment shall be deemed received on
the next Business Day. The Swing Line Lender shall promptly notify the Agent
of the Swing Advance Outstandings each time there is a change therein. The
Swing Line Lender may at any time in its sole discretion notify Sunrise that
availability under the Swing Line is suspended or terminated.
(b) REPAYMENT OF SWING LINE ADVANCES. In the event that there are
Swing Line Outstandings on five (5) consecutive Business Days, then on the next
Business Day (unless Sunrise has made other arrangements acceptable to the Swing
Line Lender to reduce the Swing Line Outstandings to zero), Sunrise shall
request a Committed Advance pursuant to Section 2.02(a) in an amount complying
with Section 2.01 and sufficient to reduce the Swing Line Outstandings to zero.
The Agent shall automatically provide such amount directly to the Swing Line
Lender (which the Swing Line Lender shall then apply to the Swing Line
Outstandings) and credit any balance of the Committed Advance in immediately
available funds as provided in Section 2.02(d). In the event that Sunrise fails
to request a Committed Advance within the time specified by Section 2.02 on any
such date, the Agent may, but is not required to, without notice to or the
consent of Sunrise, cause Committed Advances to be made by the Lenders under the
Commitments in the amount necessary to comply with Section 2.01 and sufficient
to reduce the Swing Line Outstandings to $5,000,000 and, for this purpose, the
conditions precedent set forth in Sections 4.01 and 4.02 shall not apply. The
proceeds of such Committed Advances shall be paid to the Swing Line Lender for
application to the Swing Line Outstandings.
(c) PURCHASE OF PARTICIPATIONS. Upon the making of a Swing Line
Advance, each Lender shall be deemed to have purchased from the Swing Line
Lender a participation therein in an amount equal to that Lender's Pro Rata
Share of the Commitment TIMES the amount of the Swing Line Advance. Upon demand
made by the Swing Line Lender, each Lender shall, according to its Pro Rata
Share of the Commitment, promptly provide to the Swing Line Lender its
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purchase price therefor in an amount equal to its participation therein. The
obligation of each Lender to so provide its purchase price to the Swing Line
Lender shall be absolute and unconditional and shall not be affected by the
occurrence of an Event of Default or any other occurrence or event.
2.10 REDUCTION OF COMMITMENTS.
(a) VOLUNTARY REDUCTIONS. Sunrise shall have the right, upon
written notice to the Agent not later than 10:00 A.M. (San Francisco Time) on
the fifth Business Day prior thereto, to terminate in whole or reduce ratably
in part the unused portions of the respective Commitments of the Lenders;
PROVIDED, HOWEVER, that each partial reduction shall be in the amount of
$5,000,000 or any multiple of $l,000,000 in excess thereof. At the direction
of Sunrise, any voluntary reduction made pursuant to this Section 2.10(a) may
be credited against the next scheduled reductions required pursuant to
Section 2.10(b).
(b) SCHEDULED REDUCTIONS. The Total Commitment shall automatically
reduce on each Amortization Date by an amount equal to the Amortization
Amount unless the Final Maturity Date is extended within the three months
preceding such Amortization Date in accordance with Section 2.10(c) below, in
which case each Amortization Date shall be delayed by one year. The Total
Commitment shall be reduced to zero on the Final Maturity Date.
(c) EXTENSION OF FINAL MATURITY DATE. Provided that there is no
Default or Event of Default and Borrower has theretofore delivered to the
Lenders the financial statements required under Section 6.01(b) for the
immediately preceding Fiscal Year and the projected financial statements
required under Section 6.01(c) for the forthcoming Fiscal Years, Borrower may
by delivery of a Request for Extension to the Agent and the Lenders request
that the Final Maturity Date be extended by one year. The Request for
Extension shall not be delivered earlier than March 14, commencing March 14,
1996, nor later than April 15 in any year. Each Lender shall use its best
efforts to respond either affirmatively or negatively (in its sole and
absolute discretion) to such Request for Extension by written notice to
Borrower and the Agent within thirty days after receipt thereof from
Borrower. If each Lender so notifies Borrower and the Agent in writing that
such Lender consents to the extension of the Final Maturity Date, then the
Agent shall by written notice to Borrower and the Lenders in the form of a
Certificate of Extension certify that the Final Maturity Date has been so
extended and the term "Final Maturity Date" shall be deemed amended to mean
the date which is the January 15 subsequent to the then effective Final
Maturity Date. If any Lender, in its sole and absolute discretion, notifies
Borrower and the Agent in
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writing within said thirty-day period that it does not consent to such
extension of the Final Maturity Date, or fails to respond in writing within
said thirty-day period, the Final Maturity Date shall not be so extended.
Notwithstanding the fact that the Final Maturity Date is not extended
pursuant to any Request for Extension, the Borrower may nonetheless request a
one-year extension the following year.
2.11 MANDATORY PREPAYMENTS.
(a) REDUCTION IN COMMITMENTS. If, at any time, the Facility Usage
shall exceed the then existing Commitments of the Lenders, the Borrowers shall
(i) prepay at least such amount of the outstanding principal amount of Advances
and/or (ii) cash collateralize at least such amount of Outstanding Letter of
Credit Liability and/or Advances, as is necessary to make the then existing
Facility Usage less than or equal to the then existing Commitments of the
Lenders; PROVIDED, HOWEVER, that all such prepayments shall be made as specified
by the applicable Borrower, and if not so specified, in the order set forth in
Section 2.15(e). All prepayments of Advances pursuant to this Section 2.11(a),
except in the case of prepayments of Base Rate Advances, shall be made together
with accrued interest to the date of such payment on the principal amount
repaid, together with any amounts payable under Section 2.20.
(b) ALTERNATIVE CURRENCY EXCHANGE RATE FLUCTUATIONS. If the Dollar
equivalent of the aggregate outstanding principal amount of all Committed
Advances denominated in Alternative Currencies exceeds the Alternative Currency
Sublimit, the Borrowers shall, as of the last day of each Interest Period with
respect to an Alternative Currency which ends thereafter, repay Advances
denominated in Alternative Currencies or cash collateralize such Advances in
either case in an amount equal to the lesser of (i) the amount by which the
Dollar equivalent of outstanding Alternative Currencies exceeds the Alternative
Currency Sublimit on the last day of such Interest Period and (ii) the Dollar
equivalent of the Advance with respect to which such Interest Period is
expiring.
(c) OTHER MANDATORY PREPAYMENTS. If the Borrowers are required to
make any mandatory prepayments of Advances pursuant to Section 7.06(e), 7.06(f)
or 7.12(d), the Borrowers shall prepay such advances on the required date (the
"prepayment date") together with, in the case of prepayment of Eurocurrency Rate
Committed Advances, (i) accrued interest to the date of such prepayment on the
principal amounts prepaid and (ii) any additional amount for which the Borrowers
shall be obligated pursuant to Section 2.20. Any prepayments pursuant to this
section shall be applied first to Base Rate Advances then
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outstanding and then to Eurocurrency Rate Committed Advances with the
shortest Interest Periods remaining; PROVIDED, HOWEVER, that if any
prepayment of Eurocurrency Rate Committed Advances on any prepayment date
would result in the Borrowers being required to pay any amounts pursuant to
Section 2.20, the Borrowers may wait to prepay such Eurocurrency Rate
Committed Advances until the earlier of (x) the date the Interest Periods
relating to such Eurocurrency Rate Committed Advances expires and (y) 10 days
after such prepayment date.
2.12 OPTIONAL PREPAYMENTS. The Borrowers may, upon at least four
Business Days' written notice to the Agent in the case of Eurocurrency Rate
Committed Advances and on the date of prepayment to the Agent in the case of
Base Rate Advances, stating the proposed date and aggregate principal amount of
the prepayment (and if such notice is given the Borrowers shall), prepay, in
whole or in part, the outstanding principal amounts of the Advances comprising
the same Committed Borrowing, together with, in the case of prepayment of
Eurocurrency Rate Committed Advances, (i) accrued interest to the date of such
prepayment on the principal amounts prepaid and (ii) any additional amount for
which the Borrowers shall be obligated pursuant to Section 2.20; PROVIDED,
HOWEVER, that each partial prepayment shall be in an aggregate principal amount
not less than $500,000 or any multiple of $100,000 (or the equivalent thereof in
an Alternative Currency) in excess thereof, except with respect to Base Rate
Advances, which shall be in an aggregate principal amount not less than $300,000
or any multiple of $100,000 in excess thereof, and if not otherwise specified by
the applicable Borrower, shall be applied in accordance with Section 2.15(e);
PROVIDED, FURTHER, that no partial prepayment of any Eurocurrency Rate Committed
Advances denominated in an Alternative Currency and comprising part of the same
Committed Borrowing shall be permitted if less than $1,500,000 Dollar equivalent
principal amount of such Advances shall remain outstanding after giving effect
to such prepayment. Bid Advances may not be voluntarily prepaid without the
consent of the Lender making such Bid Advance.
2.13 INCREASED COSTS. (a) If, due to either (i) the enactment or
issuance of or any change (including, without limitation, any change by way of
imposition or increase of reserve requirements other than as provided in the
definition of Eurocurrency Rate Reserve Percentage in Section 1.01) in or in the
interpretation of any law or regulation by any governmental or regulatory body
or agency having jurisdiction over the Lenders or (ii) the compliance by any
Lender with any written guideline or request from any central bank or other
governmental authority having jurisdiction, whether or not having the force of
law, there shall be any increase in the cost to any Lender of agreeing to make
or making, funding or maintaining Eurocurrency Rate
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Committed Advances, then the Borrowers shall from time to time, upon demand
by such Lender (with a copy of such demand to the Agent), promptly (and in
any event within five Business Days) pay to the Agent for account of such
Lender additional amounts sufficient to reimburse such Lender for such
increased cost. Any Lender making a demand under this Section 2.13(a) shall
promptly notify the Borrowers of the event or condition giving rise to such
demand; provided however that, failure to give such notice promptly shall not
relieve the Borrowers of any obligation or liability hereunder. A
certificate as to the amount of such increased costs setting forth in
reasonable detail the basis for the calculations of such increased costs
shall be submitted to the Borrowers and the Agent by such Lender and such
certificate shall be conclusive and binding for all purposes, absent manifest
error.
(b) If, at any time after the Closing Date, any Lender determines
that compliance with any law or regulation as adopted, amended or otherwise
modified after the Closing Date or with any written guideline or request from
any central bank or other governmental authority having jurisdiction published
after the Closing Date, whether or not having the force of law, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender (whether by increasing the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender or otherwise) as a consequence of, or with reference to,
such Lender's Commitments or its making or maintaining Committed Advances below
the rate that the Lender or any such other corporation, as the case may be,
could have achieved but for compliance therewith (taking into account the
policies of such Lender or any such corporation with regard to capital), then
the Borrowers shall from time to time, upon demand by such Lender (with a copy
of such demand to the Agent), promptly (and in any event within five Business
Days) pay to such Lender additional amounts sufficient to compensate such Lender
or any such other corporation, as the case may be, for such reduction. A
certificate setting forth in reasonable detail the basis for the calculation of
such amounts shall be submitted to the Borrowers and the Agent by such Lender,
which certificate shall be conclusive and binding for all purposes, absent
manifest error.
(c) Upon any Lender (an "Affected Lender") (i) making a claim for
compensation pursuant to this Section 2.13, or (ii) giving a notice under
Section 2.05(f) or (g) and Section 3.07(a) and (b), the Borrower may: (A)
request the Affected Lender to use its reasonable efforts to obtain a
replacement bank or financial institution satisfactory to the Borrower to
acquire and assume all or part of such Affected Lender's Advances and Commitment
pursuant to a Commitment Assignment and Acceptance (a
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"Replacement Lender"); (B) request one more of the other Lenders to acquire
and assume all or part of such Affected Lender's Advances and Commitment; or
(C) designate a Replacement Lender. Any such designation of a Replacement
Lender under clause (A) or (C) shall be subject to the prior written consent
of the Agent (which consent shall not be unreasonably withheld). This
section shall not affect or limit the rights of any Affected Lender under
Section 2.05(f) or 2.13 in respect of any period prior to such Lender being
replaced hereunder.
(d) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.13 shall survive the payment in full of the Obligations.
2.14 EVIDENCE OF DEBT. (a) The Committed Advances made by each Lender
shall be evidenced by one or more loan accounts or records maintained by such
Lender in the ordinary course of business. The loan accounts or records
maintained by the Agent and each Lender shall be conclusive absent manifest
error of the amount of the Committed Advances made by the Lenders to the
Borrowers and the interest and payments thereon. Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrowers hereunder to pay any amount owing with respect to
the Committed Advances.
(b) The Committed Advances made by such Lender may, at the request of
a Lender, be evidenced by one or more Committed Advance Notes, instead of loan
accounts. Each such Lender shall endorse on the schedules annexed to its
Committed Advance Note(s) the date, amount and maturity of each Committed
Advance made by it and the amount of each payment of principal made by each
Borrower with respect thereto. Each such Lender is irrevocably authorized by
the Borrowers to endorse its Committed Advance Note(s) and each Lender's record
shall be conclusive absent manifest error; PROVIDED, HOWEVER, that the failure
of a Lender to make, or an error in making, a notation thereon with respect to
any Committed Advance shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under any such Committed Advance Note to such Lender.
(c) The Bid Advances made by such Lender shall be evidenced by one or
more Bid Advance Notes, instead of loan accounts. Each such Lender shall
endorse on the schedules annexed to its Bid Advance Note(s) the date, amount and
maturity of each Bid Advance made by it and the amount of each payment of
principal made by each Borrower with respect thereto. Each such Lender is
irrevocably authorized by the Borrowers to endorse its Bid Advance Note(s) and
each Lender's record shall be conclusive absent manifest error; PROVIDED,
HOWEVER, that the failure of a
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Lender to make, or an error in making, a notation thereon with respect to any
Bid Advance shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under any such Bid Advance Note to such Lender.
(d) The Swing Line Advances shall be evidenced by one or more loan
accounts maintained by the Swing Line Lender in the ordinary course of business,
and such accounts shall be presumptive evidence of the principal amount owing
under the Swing Line. Any failure to so record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Borrower to pay
any amount owing with respect to Swing Line Advances; PROVIDED, HOWEVER, that
the Swing Line Lender may request such Borrower to execute and deliver a
promissory note to evidence the Swing Line Advances, and such Borrower agrees to
execute and deliver such a promissory note, and such other Swing Line Documents
as the Swing Line Lender may from time to time reasonably request.
2.15 PAYMENTS AND COMPUTATIONS. (a) Except as provided in
Section 2.16, the Borrowers shall pay all amounts due to the Agent, Lenders and
the Issuing Lender hereunder or under any other Loan Document to which it is a
party (except, in each case, with respect to principal of, interest on and other
amounts relating to, Advances denominated in an Alternative Currency),
irrespective of, and without condition or deduction for, any counterclaim,
defense, recoupment or setoff, in lawful money of the United States and in same
day funds delivered to the Agent not later than 12:00 noon (San Francisco time)
on the day when due in Dollars by deposit of such funds to the Agent's Account
maintained for payments in Dollars. The Borrowers shall make each payment due
hereunder with respect to principal of, interest on and other amounts relating
to Advances denominated in an Alternative Currency not later than 9:00 a.m.
(local time for the city specified for such Alternative Currency on Schedule
1.01(a)) on the day when due in such Alternative Currency to the Agent in same
day funds by deposit of such funds to the Agent's Account maintained for
payments in such Alternative Currency. The Agent will promptly thereafter cause
to be distributed like funds relating to the payment of principal (including
reimbursement for payments under Letters of Credit), interest, or commitment
fees, or letter of credit fees ratably (other than amounts payable to any Lender
or the Issuing Lender pursuant to Section 2.03(a), 2.08, 2.09, 2.13, 2.20 or
3.07 or amounts subject to Taxes pursuant to Section 2.16) to the Lenders, for
the account of their respective Applicable Lending Offices, or the Issuing
Lender and like funds relating to the payment of any other amount payable to any
Lender or the Issuing Lender to such Lender, for the account of its Applicable
Lending Office, or to the Issuing Lender, in each case to be applied in
accordance with, and
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subject to, the terms of this Agreement. Upon its acceptance of a
Commitment Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 11.08, from and after
the effective date specified in such Commitment Assignment and Acceptance,
the Agent shall make all payments hereunder and under any other Loan Document
in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) Each Borrower hereby authorizes each Lender and the Issuing
Lender if and to the extent payment owing to such Lender or the Issuing Lender,
as the case may be, from the Borrower is not made when due hereunder to charge
from time to time against any or all of such Borrower's accounts (other than any
trust or segregation account maintained for the benefit of any Person that is
not a Subsidiary or an Affiliate any of the Borrowers) with such Lender or the
Issuing Lender, as the case may be, any amount so due.
(c) All computations of interest based on the Eurocurrency Rate
(other than with respect to Pound Sterling denomination) or the Federal Funds
Rate and of commitment and letter of credit fees shall be made by the Agent on
the basis of a year of 360 days, and computations of interest based on the Base
Rate or Eurocurrency Rate with respect to Pound Sterling denominations shall be
made by the Agent on the basis of a year of 365 or 366 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes absent manifest error.
(d) Unless the Agent shall have received notice from the applicable
Borrower prior to the date on which any payment is due to the Lenders or the
Issuing Lender, as the case may be, hereunder that such Borrower will not make
such payment in full to the Agent, the Agent may assume that such Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Lender or the
Issuing Lender, as the case may be, on such due date an amount equal to the
amount then due to such Lender or the Issuing Lender, as the case may be. If
and to the extent such Borrower shall not have so made such payment in full to
the Agent, each Lender or the Issuing Lender, as the case may be, shall repay to
the Agent forthwith on demand such amount distributed to such Lender or the
Issuing Lender, as the case may be, together with interest thereon, for each day
from the date such amount is distributed to such Lender or the Issuing Lender,
as the case may be, until the date such Lender or the Issuing Lender,
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as the case may be, repays such amount to the Agent, at the Federal Funds
Rate or, in the case of a payment in an Alternative Currency, the Overnight
Rate.
(e) Amounts received by the Agent for application to amounts due and
payable to the Agent, the Lenders or the Issuing Lender shall be applied, if not
specified by the applicable Borrower or if received after the occurrence and
continuance of an Event of Default, to amounts due and payable as follows:
FIRST, to any amounts due and payable under Section 11.03, SECOND, to the
ratable payment of any accrued interest or fees that are then due and payable,
THIRD, to the payment of the outstanding Swing Line Advances, FOURTH, to the
ratable payment of the outstanding Base Rate Advances, FIFTH to the ratable
payment of other outstanding Advances in the order of nearest expiring Interest
Periods, and SIXTH, to cash collateralize Letter of Credit Liability, together
with, in the case of payment of Eurocurrency Rate Advances, any additional
amount for which the Borrowers shall be obligated in respect of the payment of
Eurocurrency Rate Advances pursuant to Section 2.20. Any cash collateralization
of Letter of Credit Liability pursuant to this Section 2.15(e) shall be effected
by documentation prepared by the Issuing Lender having terms consistent with
those in documentation customarily employed by the Issuing Lender for purposes
of establishing and maintaining cash collateral for letters of credit issued by
the Issuing Lender. Payments for reimbursement of amounts drawn under any
Letter of Credit shall be applied as set forth in Section 3.04(c).
2.16 TAXES. (a) Subject to subsection (e) below, any and all payments
by the Borrowers hereunder or any other Loan Document shall be made, in
accordance with Section 2.15, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING, (i) in the
case of each Lender, the Issuing Lender and the Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender, the Issuing Lender or the Agent (as the case may be) is
organized or any political subdivision thereof, (ii) in the case of each Lender
and the Issuing Lender, taxes imposed on its income, and franchise taxes imposed
on it, by the jurisdiction of such Lender's Applicable Lending Office or of the
Issuing Lender's office through which it Issues Letters of Credit, as the case
may be, or any political subdivision thereof and (iii) in the case of each
Lender, the Issuing Lender and the Agent, taxes imposed by the United States by
means of withholding taxes if and to the extent that such withholding taxes
shall be in effect and shall be applicable on the date hereof under current laws
and
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regulations (including judicial and administrative interpretations thereof)
to payments to be made for the account of such Lender's Applicable Lending
Office or to the Issuing Lender or to the Agent (all taxes described in
subclauses (i), (ii) and (iii) being referred to as "EXCLUDED TAXES" and all
taxes, levies, imposts, deductions, charges, withholdings and liabilities not
described in subclauses (i), (ii) and (iii) being hereinafter referred to as
"TAXES"). If any Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any other Loan Document
to any Lender, the Issuing Lender or the Agent, (x) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.16) such Lender, the Issuing Lender or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (y) such Borrower shall make such deductions and (z)
such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrowers agree to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any other
Loan Document or from the execution, delivery or registration or filing or
recording of, or otherwise with respect to, this Agreement or any other Loan
Document (including, without limitation, tangible or intangible property or ad
valorem taxes) or document delivered hereunder or under any other Loan Document
(hereinafter referred to as "OTHER TAXES").
(c) The Borrowers will indemnify each Lender, the Issuing Lender and
the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.16) paid by such Lender, the Issuing Lender or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. This indemnification shall
be made within 30 days from the date such Lender, the Issuing Lender or the
Agent (as the case may be) makes written demand therefor, which demand shall
specify in reasonable detail the basis for such demand.
(d) Within 30 days after the date of any payment of Taxes by the
Borrower, the Borrowers will furnish to the Agent, at its address referred to in
Section 11.06, the original or a certified copy of a receipt or other evidence
satisfactory to the Agent of payment thereof.
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(e) Prior to the date of the initial Committed Borrowing in the case
of each Lender or Issuance of the initial Letter of Credit in the case of the
Issuing Lender, on the date of the Commitment Assignment and Acceptance pursuant
to which it became a Lender in the case of each other Lender, or if otherwise
requested from time to time by the Borrowers or the Agent, each Lender organized
under the laws of a jurisdiction outside the United States and the Issuing
Lender, if organized under the laws of a jurisdiction outside the United States,
shall provide the Agent and the Borrowers with three counterparts of each of the
forms prescribed by the Internal Revenue Service (Form 1001 or 4224, or
successor form(s), as the case may be) of the United States certifying as to
such Lender's or Issuing Lender's (if applicable) status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to such Lender or the Issuing Lender under any Loan
Document.
(f) Without affecting its rights under this Section 2.16 or any
provision of this Agreement, each Lender and the Issuing Lender agree that if
any Taxes or Other Taxes are imposed and required by law to be paid or to be
withheld from any amount payable to such Lender or its Applicable Lending Office
or the Issuing Lender, as the case may be, with respect to which any Borrower
would be obligated pursuant to this Section 2.16 to increase any amounts payable
to such Lender or the Issuing Lender, as the case may be, or to pay any such
Taxes or Other Taxes, such Lender shall use reasonable efforts to select an
alternative Applicable Lending Office and the Issuing Lender shall use
reasonable efforts to select an alternative office for purposes of issuing and
receiving payments in respect of Letters of Credit, as the case may be, which
would not result in the imposition of such Taxes or Other Taxes; PROVIDED,
however, that none of the Lenders or the Issuing Lender shall be obligated to
select any such alternative office if such Lender or the Issuing Lender, as the
case may be, determined that (i) as a result of such selection it would be in
violation of an applicable law, regulation or treaty or (ii) such selection
would result in additional costs to such Lender or the Issuing Lender, as the
case may be.
(g) Each Lender and the Issuing Lender agree with the Borrowers that
it will take all reasonable actions by all usual means (i) to secure and
maintain all benefits available to it under the provisions of any applicable tax
treaty concluded to which it may be entitled, if such benefit would reduce the
amount payable by the Borrowers in accordance with this Section 2.16, (ii)
otherwise to cooperate with the Borrowers to minimize the amount payable by any
Borrower pursuant to this Section 2.16 and (iii) to assist the Borrowers, at the
expense of the Borrowers,
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in contesting any such Taxes or Other Taxes; PROVIDED, HOWEVER, that none of
the Lenders or the Issuing Lender, as the case may be, shall be obliged to
disclose to any Borrower any information regarding its tax affairs or tax
computations, to reorder its tax affairs or tax planning pursuant hereto nor
to incur any cost or additional expense as a result thereof. If any Lender
or the Issuing Lender makes a demand under this Section 2.16 for the payment
by any Borrower of any Taxes or Other Taxes and as a result of any such
payment by such Borrower, such Lender or the Issuing Lender, as the case may
be, receives a direct cash benefit (either by the receipt of a refund or a
reduction in the amount of taxes otherwise payable), the Lender or the
Issuing Lender, as the case may be, receiving such direct cash benefit shall,
to the extent permitted by applicable law, refund the amount of such cash
benefit to the appropriate Borrower.
(h) So long as no Default or Event of Default shall have occurred and
be continuing, the Borrower may, within the 30-day period commencing on the day
that any Borrower receives a demand for the payment of Taxes or Other Taxes from
any Lender pursuant to this Section 2.16, or notification that Taxes or Other
Taxes may become due, demand that the Lender making such demand be replaced with
another commercial bank or other financial institution selected by the Borrower
and approved in writing by the Agent (which approval shall not be unreasonably
withheld or delayed). Upon any such demand by the Borrower, if the Agent shall
have approved the commercial bank or other financial institution selected by the
Borrower, the Lender that made a demand pursuant to this Section 2.16 shall
execute and deliver a Commitment Assignment and Acceptance to the Agent pursuant
to which such Lender shall assign all of its Commitment to the commercial bank
or other financial institution selected by the Borrower.
(i) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.16 shall survive the payment in full of the Obligations
hereunder for a period expiring concurrently with the expiration of the statute
of limitations applicable to claims made by the tax authorities to collect Taxes
or Other Taxes.
2.17 PAYMENTS ON BUSINESS DAYS. Whenever any payment hereunder shall
be stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or commitment
fee, as the case may be; PROVIDED, HOWEVER, that if such extension would cause
payment of interest on or principal of Eurocurrency Rate Advances to be made in
the next following
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month, such payment shall be made on the next preceding Business Day.
2.18 SHARING OF PAYMENTS, ETC. If any Lender or the Issuing Lender
shall obtain any payment whether voluntary, involuntary, through the exercise
of any right of setoff, or otherwise (other than amounts payable to any
Lender or the Issuing Lender pursuant to Section 2.03(a), 2.08, 2.09, 2.13,
2.20 or 3.07 or amounts subject to Taxes pursuant to Section 2.16) in excess
of its ratable share of payments on account of the Committed Advances or
Letter of Credit Liability owing to all the Lenders, such Lender or the
Issuing Lender, as the case may be, shall forthwith purchase from the other
Lenders such participations in the Committed Advances or Letter of Credit
Liability owing to them as shall be necessary to cause such purchasing Lender
or the Issuing Lender, as the case may be, to share the excess payment
ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of
such excess payment is thereafter recovered from such purchasing Lender or
the Issuing Lender, as the case may be, such purchase from each Lender shall
be rescinded and such Lender or the Issuing Lender, as the case may be, shall
repay to the purchasing Lender or the Issuing Lender, as the case may be, the
purchase price to the extent of such recovery, together with an amount equal
to such Lender's ratable share (according to the proportion of (i) the amount
of such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable
by the purchasing Lender or the Issuing Lender, as the case may be, in
respect of the total amount so recovered. The Borrower agrees that any
Lender or the Issuing Lender, as the case may be, purchasing a participation
from another Lender pursuant to this Section 2.18, Section 3.04 or 11.08(g)
may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of setoff) with respect to such participation as
fully as if such Lender or the Issuing Lender, as the case may be, were the
direct creditor of the Borrower in the amount of such participation.
2.19 CURRENCY EQUIVALENTS. For purposes of determining the amount
of any Advance, Conversion or Continuation requested pursuant to this Article
II, (i) the equivalent in Dollars of any Alternative Currency shall be
determined by using the quoted spot rate at which Bank of America's principal
office in London offers to exchange Dollars for such Alternative Currency in
London, England at 11:00 A.M. (London time) two Business Days prior to the
date on which such equivalent is to be determined, (ii) the equivalent in any
Alternative Currency of any other Alternative Currency shall be determined by
using the quoted spot rate at which Bank of America's principal office in
London offers to exchange such Alternative Currency for such other
Alternative
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Currency in London, England at 11:00 A.M. (London time) two Business Days
prior to the date on which such equivalent is to be determined, and (iii) the
equivalent in any Alternative Currency of Dollars shall be determined by
using the quoted spot rate at which Bank of America's principal office in
London offers to exchange such Alternative Currency for Dollars in London,
England at 11:00 A.M. (London time) two Business Days prior to the date on
which such equivalent is to be determined. For purposes of determining the
unused portion of each Lender's Commitment and the amount of any or all
Advances outstanding on any date (except for Advances to be Converted or
Continued pursuant to the Notice of Borrowing or the Notice of
Continuation/Conversion, as the case may be, with respect to which any
calculation is made), the calculations shall be based on the rate quoted by
Bank of America's principal office in London for offers to exchange such
Alternative Currency for the equivalent Dollar amount on the date of
determination.
2.20 FUNDING LOSSES. Except as otherwise provided, if any payment
of principal of, or any Conversion of, any Eurocurrency Rate Advance is made
by any Borrower to or for the account of a Lender other than on the last day
of the Interest Period for such Advance, as a result of a Conversion pursuant
to Section 2.06, a prepayment pursuant to Section 2.08 or 2.09, acceleration
of the maturity of the Advances pursuant to Section 9.02 or for any other
reason, the applicable Borrower shall, upon demand by such Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender any amounts required to compensate such Lender for any additional
losses, costs or expenses which it may reasonably incur as a result of such
payment or Conversion, including, without limitation, any reasonable direct
out-of-pocket loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Advance.
2.21 USE OF PROCEEDS. The Borrowers shall use the proceeds of
Advances to continue the Borrowers' outstanding obligations under the
Existing Credit Agreement and for the general working capital needs of the
Borrowers and for other general corporate purposes of the Borrowers,
including, without limitation, acquisitions permitted hereunder. The
Borrowers shall not, directly or indirectly, use any portion of any Advance
proceeds (i) knowingly to purchase Ineligible Securities from a Section 20
Subsidiary during any period in which such Section 20 Subsidiary makes a
market in such Ineligible Securities, (ii) knowingly to purchase during the
underwriting or placement period Ineligible Securities being underwritten or
privately placed by a Section 20 Subsidiary, or (iii) to make payments of
principal or interest on Ineligible Securities underwritten or privately
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placed by a Section 20 Subsidiary and issued by or for the benefit of the
Borrowers or any Affiliate of the Borrower. As used in this Section,
"Section 20 Subsidiary" means the Subsidiary of the bank holding company
controlling any Lender, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible
Securities; and "Ineligible Securities" means securities which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (as U.S.C. Section 24, Seventh), as
amended.
2.22 FUNDING SOURCES. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for its share of any Advance in any
particular place or manner or to constitute a representation by any Lender
that it has obtained or will obtain the funds for its share of any Advance in
any particular place or manner.
2.23 BORROWER'S AGENT. Each Subsidiary Borrower hereby authorizes
Sunrise to execute and deliver on its behalf, and as its agent, any notice or
request permitted by or required of a Borrower under this Article II and
under Article III, and the Agent and the Lenders shall be entitled to rely on
any such notice or request delivered by Sunrise as if the same had been
delivered by such Subsidiary Borrower.
ARTICLE III
AMOUNT AND TERMS OF LETTERS OF
CREDIT AND PARTICIPATIONS THEREIN
3.01 LETTERS OF CREDIT. The Issuing Lender agrees, on the terms and
conditions hereinafter set forth, to Issue, including the continuance of the
letter(s) of credit issued under the Existing Credit Agreement as Letters of
Credit hereunder (the "Continuing Letters of Credit") for the account of any
Borrower, one or more Letters of Credit from time to time during the period
from the Closing Date until the date which occurs 90 days before the Final
Maturity Date in an aggregate undrawn amount not to exceed at any time
$25,000,000, each such Letter of Credit upon its Issuance to expire on or
before the earlier of (i) the date which occurs (x) in the case of Commercial
Letters of Credit, 180 days from the date of its Issuance and (y) in the case
of Standby Letters of Credit, 24 months from the date of its Issuance or (ii)
the Final Maturity Date; provided, however, that the Issuing Lender shall not
be obligated to Issue any Letter of Credit if:
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(i) after giving effect to the Issuance of such Letter of
Credit, the then existing Facility Usage shall exceed the Total Commitment;
or
(ii) the Agent or the Majority Lenders shall have notified the
Issuing Lender and the Borrower that no further Letters of Credit are to be
Issued by the Issuing Lender due to a continuing failure to meet any of the
applicable conditions set forth in Article IV, and such notice has not
expired or been withdrawn by the Agent or the Majority Lenders.
Within the limits of the obligations of the Issuing Lender set forth above,
any Borrower may request the Issuing Lender to Issue one or more Letters of
Credit, reimburse the Issuing Lender for payments made thereunder pursuant to
Section 3.03(a), and request the Issuing Lender to Issue one or more
additional Letters of Credit under this Section 3.01.
3.02 ISSUING THE LETTERS OF CREDIT. Except with respect to
Continuing Letters of Credit, which letters of credit are hereby
automatically incorporated herein without any further action, each Standby
Letter of Credit shall be Issued on at least three Business Days' notice and
each Commercial Letter of Credit shall be Issued on at least one Business
Day's notice, in each case from the applicable Borrower to the Issuing Lender
specifying the date, amount, expiry, and beneficiary thereof, accompanied by
such application and agreement for letter of credit as the Issuing Lender may
specify to the Borrower, each in form and substance satisfactory to the
Issuing Lender. On the date specified by such Borrower in such notice and
upon fulfillment of the applicable conditions set forth in Section 3.01 and
Article IV hereof, the Issuing Lender will Issue such Letter of Credit in the
form specified in such notice and such application and agreement for letter
of credit and shall promptly notify the Agent thereof.
3.03 REIMBURSEMENT OBLIGATIONS. (a) Notwithstanding any
provisions to the contrary in any application and agreement for letter of
credit applicable to any Letter of Credit, the applicable Borrower shall:
(i) pay to the Issuing Lender an amount equal to, and in
reimbursement for, each amount which the Issuing Lender pays under any
Letter of Credit on or before the earlier of (A) the time specified
therefor in the application and agreement for letter of credit applicable
to such Letter of Credit or (B) after timely notice by the Issuing Lender,
the date which occurs one Business Day after
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payment of such amount by the Issuing Lender under such Letter of Credit;
and
(ii) pay to the Issuing Lender interest on any amount remaining
unpaid under clause (i) above from the date on which the Issuing Lender
pays such amount under any Letter of Credit until such amount is reimbursed
in full to the Issuing Lender pursuant to clause (i) above, payable on
demand, at a fluctuating rate per annum equal to the Base Rate in effect
from time to time, PROVIDED that any such amount which is not reimbursed to
the Issuing Lender within one Business Day after notice thereof by the
Issuing Lender shall thereafter bear interest, until the amount is
reimbursed in full to such Issuing Lender pursuant to clause (i) above,
payable on demand, at the Default Rate in effect from time to time.
(b) All amounts to be reimbursed to the Issuing Lender in
accordance with subsection (a) above may, subject to the limitations set
forth in Section 2.01, be paid from the proceeds of Committed Advances. Each
Borrower hereby authorizes the Lenders, upon notice to the Borrower, to make
pursuant to Section 2.02(a) Committed Advances which are in the amounts of
the reimbursement obligations of the Borrower set forth in subsection (a)
above, and further authorizes the Agent (i) to give the Lenders, pursuant to
Section 2.02(a), a Notice of Borrowing with respect to the Committed
Borrowing comprised of such Advances (which shall be Base Rate Advances) and
(ii) to distribute the proceeds of such Advances to the Issuing Lender to pay
such amounts. Each Borrower agrees that all such Advances so made shall be
deemed to have been requested by it, and directs that all proceeds thereof
shall be used to pay such reimbursement obligations under subsection (a)
above.
(c) Notwithstanding any other provision of this Agreement, if a
Subsidiary Borrower shall be a party to this Agreement, the Obligations of
each such Borrower with respect to Letters of Credit Issued hereunder, in its
capacity as a Borrower, shall be several and not joint and several.
3.04 PARTICIPATIONS PURCHASED BY THE LENDERS. (a) On the date of
Issuance of each Letter of Credit (including the continuance of letters of
credit issued under the Existing Credit Agreement as Letters of Credit
hereunder, the Issuing Lender shall be deemed irrevocably and unconditionally
to have sold and transferred to each Lender without recourse or warranty, and
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received from such Issuing Lender, an undivided interest and
participation, to the extent of such Lender's Pro Rata Share, in effect from
time to time, in such Letter of Credit
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and all Letter of Credit Liability relating to such Letter of Credit and all
Loan Documents securing, guarantying, supporting or otherwise benefiting the
payment of such Letter of Credit Liability. Promptly after the end of each
calendar month, the Agent will notify each Lender of the Letters of Credit
Issued during the prior month and of their dates of Issue, amounts, expiries
and reference numbers.
(b) In the event that any reimbursement obligation under Section
3.03(a) is not paid when due to the Issuing Lender with respect to any Letter
of Credit, the Issuing Lender shall promptly notify the Agent to that effect,
and the Agent shall promptly notify the Lenders of the amount of such
reimbursement obligation and each Lender shall immediately pay to the Issuing
Lender, in lawful money of the United States and in same day funds, an amount
equal to such Lender's Pro Rata Share then in effect of the amount of such
unpaid reimbursement obligation with interest at the Federal Funds Rate for
each day after such notification until such amount is paid to the Issuing
Lender.
(c) Promptly after the Issuing Lender receives a payment on account
of a reimbursement obligation with respect to any Letter of Credit, the
Issuing Lender shall promptly pay to the Agent, and the Agent shall promptly
pay to each Lender which funded its participation therein, in lawful money of
the United States and in the kind of funds so received, an amount equal to
such Lender's ratable share thereof.
(d) Upon the request of any Lender, the Issuing Lender shall
furnish to such Lender copies of any Letter of Credit and any application and
agreement for letter of credit and other documents related thereto as may be
reasonably requested by such Lender.
(e) The obligation of each Lender to make payments under subsection
(b) above shall be unconditional and irrevocable and shall be made under all
circumstances, including, without limitation, any of the circumstances
referred to in Section 3.06(b).
(f) If any payment received on account of any reimbursement
obligation with respect to a Letter of Credit and distributed to a Lender as
a participant under Section 3.04(c) is thereafter recovered from the Issuing
Lender in connection with any bankruptcy or insolvency proceeding relating to
any Borrower, each Lender which received such distribution shall, upon demand
by the Agent, repay to the Issuing Lender such Lender's ratable share of the
amount so recovered together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's
required repayment to (ii) the total
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amount so recovered) of any interest or other amount paid or payable by the
Issuing Lender in respect of the total amount so recovered.
3.05 LETTER OF CREDIT FEES. (a) The Borrowers hereby agree to pay
to the Issuing Lender a standby letter of credit fee equal to the greater of
$150 or 0.125% per annum of the face amount (as such amount may be reduced
from time to time pursuant to the terms of such letter of credit) for the
term of each Standby Letter of Credit quarterly in arrears on the last
Business Day of each quarter. In addition to such standby letter of credit
fee, the Borrowers hereby agree to pay to the Agent for the account of each
Lender (including the Issuing Lender, if applicable), according to each
Lender's Pro Rata Share, a fee equal to the Applicable Margin per annum of
the face amount (as such amount may be reduced from time to time pursuant to
the terms of such letter of credit) for the term of such Standby Letter of
Credit, quarterly in arrears on the last Business Day of each quarter.
(b) The Borrowers shall pay to the Agent for the account of each
Lender (including the Issuing Lender, if applicable), according to each
Lender's Pro Rata Share, and the Issuing Lender a letter of credit fee on
each Commercial Letter of Credit equal to the greater of $150 or .25% of the
negotiated face amount of such Commercial Letter of Credit quarterly in
arrears on the last Business Day of any quarter in which there has been any
negotiation thereof. Of such Commercial Letter of Credit fee, the Agent
shall pay to the Issuing Lender for its own account an amount equal to the
greater of $150 or 0.125% of the negotiated face amount of such Commercial
Letter of Credit.
(c) The Borrowers shall pay to the Issuing Lender, for its own
account and on demand, sums equal to standard fees (in addition to its letter
of credit fee payable pursuant to clause (a) above), charges and expenses,
including origination fees, that such Issuing Lender may impose, pay or incur
in connection with the Issuance, amendment, administration, transfer or
cancellation of any or all Letters of Credit or in connection with any
payment by such Issuing Lender thereunder. The Issuing Lender shall give the
applicable Borrower notice of any change in its standard fees, charges or
expenses payable by such Borrower to the Issuing Lender pursuant to this
Section 3.05(c); PROVIDED, HOWEVER, that any failure by the Issuing Lender to
give such notice shall not affect such Borrower's obligations under this
Section 3.05(c) to pay the Issuing Lender's reasonable current standard fees,
charges or expenses in accordance herewith.
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(d) All fees payable in respect of Letters of Credit shall be
nonrefundable.
3.06 INDEMNIFICATION: NATURE OF THE ISSUING LENDER'S DUTIES. (a)
The Borrowers agree to indemnify and save harmless the Agent, the Issuing
Lender and each Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees, which the Agent, the Issuing Lender or such
Lender may incur or be subject to as a consequence, direct or indirect, of
(i) the Issuance of any Letter of Credit or (ii) any action or proceeding
relating to a court order, injunction, or other process or decree restraining
or seeking to restrain the Issuing Lender from paying any amount under any
Letter of Credit.
(b) The obligations of the Borrowers hereunder with respect to
Letters of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms hereof under all circumstances,
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit or Loan Document or any agreement or instrument relating thereto;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against the beneficiary, or any
transferee, of any Letter of Credit, or the Issuing Lender, any Lender, or
any other Person;
(iii) any draft, certificate, or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) any lack of validity, effectiveness, or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part;
(v) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or
of the proceeds thereof;
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(vi) any failure of the beneficiary of a Letter of Credit to
strictly comply with the conditions required in order to draw upon any
Letter of Credit;
(vii) any misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or
(viii) any other circumstance or happening whatsoever, whether
or not similar to the foregoing;
PROVIDED, THAT, notwithstanding the foregoing, the Issuing Lender shall not
be relieved of any liability it may otherwise have as a result of its gross
negligence or willful misconduct.
3.07 INCREASED COSTS. (a) CHANGE IN LAW. If any change after the
Closing Date in any law or regulation or in the interpretation thereof by any
court or administrative or governmental authority charged with the
administration thereof shall either (i) impose, modify or deem applicable any
reserve, special deposit or similar requirement against letters of credit
issued by the Issuing Lender or (ii) impose on the Issuing Lender or any
Lender any other condition regarding letters of credit or, in the case of
such Lender, its participation hereunder in Letters of Credit, and the result
of any event referred to in the preceding clause (i) or (ii) shall be to
increase the out-of-pocket cost to the Issuing Lender of Issuing or
maintaining or, in the case of such Lender, having a participation in Letters
of Credit, then, upon demand by the Issuing Lender or such Lender (with a
copy to the Agent), the Borrower shall promptly (and in any event within five
Business Days) pay to the Issuing Lender or such Lender from time to time as
specified by such Issuing Lender or such Lender (with a copy to the Agent)
additional amounts which shall be sufficient to compensate the Issuing Lender
or such Lender for such increased cost. A certificate as to such increased
cost, and amount thereof, incurred by the Issuing Lender or any Lender as a
result of any event mentioned in clause (i) or (ii) above, shall be submitted
by the Issuing Lender or such Lender to the Borrower and the Agent, which
certificate shall set out in reasonable detail the calculation of such
amounts and be conclusive and binding for all purposes, absent manifest error.
(b) CAPITAL. If, at any time after the Closing Date, the Issuing
Lender or any Lender determines that compliance with any law or regulation as
adopted, amended or otherwise modified after the Closing Date or with any
written guideline or request from any central bank or other governmental
authority published after the Closing Date (a copy of which shall be sent by
the Issuing Lender or such Lender, as the case may be, to the
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Borrower), whether or not having the force of law, has or would have the
effect of reducing the rate of return on the capital of the Issuing Lender or
such Lender or any corporation controlling the Issuing Lender or such Lender
(whether by increasing the amount of capital required or expected to be
maintained by the Issuing Lender or such Lender or any corporation
controlling the Issuing Lender or such Lender or otherwise) as a consequence
of, or with reference to, such Issuing Lender's commitment to issue, the
issuance of, or, with respect to such Lender's commitment, to participate in,
any Letter of Credit hereunder below the rate that the Issuing Lender or such
Lender or such other corporation could have achieved but for compliance
therewith (taking into account the policies of the Issuing Lender, such
Lender or corporation with regard to capital), then the Borrower shall from
time to time, upon demand by the Issuing Lender or such Lender (with a copy
of such demand to the Agent), immediately pay to the Issuing Lender or such
Lender additional amounts sufficient to compensate the Issuing Lender or such
Lender or other corporation for such reduction. A certificate as to such
amounts shall be submitted to the Borrower and the Agent by the Issuing
Lender or such Lender, as the case may be, which certificate shall be
conclusive and binding for all purposes absent manifest error.
(c) SURVIVAL. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 3.07 shall survive the payment of all
Obligations.
3.08 UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and Practice
for Documentary Credits as most recently published by the International
Chamber of Commerce shall in all respects be deemed a part of this Article
III as if incorporated herein and shall apply to the Letters of Credit.
ARTICLE IV
CONDITIONS OF EFFECTIVENESS
4.01 CONDITIONS TO INITIAL ADVANCES. The obligations of the Lenders
to, on and after the Closing Date, continue advances outstanding under the
Existing Credit Agreement as Advances hereunder, make the initial Advances
hereunder and receive through the Agent the initial Competitive Bid Request
and the initial Notice of Conversion/Continuation, and the obligation of the
Issuing Lender to, on and after the Closing Date, continue any letter of
credit outstanding under the Existing Credit Agreement as a Letter of Credit
hereunder and issue any Letter of Credit hereunder, are subject to the
following conditions precedent, each of which shall be satisfied prior to or
on the Closing Date:
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(a) The Agent shall have received all of the following in form
and substance reasonably satisfactory to the Agent and legal counsel for
the Agent (unless otherwise specified or unless the Agent otherwise
agrees):
(1) executed counterparts of this Agreement signed by
the Borrower, the Agent and at least the Majority Lenders,
sufficient in number for distribution to the Borrower, the Agent
and each Lender;
(2) with respect to each Guarantor: (i) if the
certificate of incorporation of any Guarantor that was a
guarantor under the Existing Credit Agreement has been amended
since the date last delivered to the Agent, a copy of such
certificate and the bylaws of such Guarantor as in effect on the
Closing Date, certified by the Secretary or Assistant Secretary
of such Guarantor as of the Closing Date; (ii) with respect to
each other Guarantor, its certificate of incorporation and bylaws
as in effect on the Closing Date, certified by the secretary of
state of the state of its incorporation as of a recent date and
by the Secretary or Assistant Secretary of such Guarantor as of
the Closing Date; and (iii) a good standing certificate for each
Guarantor from the secretary of state of the state of its
incorporation;
(3) certified copies of (i) the resolutions of the
Board of Directors of the Borrower and each Guarantor approving
this Agreement and each other Loan Document to which it is or is
to be a party and the transactions contemplated hereby and
thereby, and (ii) all documents evidencing other necessary
corporate action and governmental approvals with respect to each
Loan Document and the transactions contemplated thereby;
(4) a certificate of the Secretary or an Assistant
Secretary of the Borrower and each Guarantor certifying the names
and true signatures of the officers of such Loan Party authorized
to sign each Loan Document to which it is or is to be a party and
the other documents to be delivered by it hereunder which
certificates may be conclusively relied on by the Agent until the
Agent shall receive a further certification of the
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Secretary or Assistant Secretary of such Loan Party cancelling
or amending the prior certificate of such Loan Party and
submitting the names and signatures of the officers named in
such further certificate;
(5) a certificate signed by a Senior Officer of the
Borrower, dated as of the Closing Date stating that: (i) the
representations and warranties contained in Article V are true
and correct on and as of the Closing Date; (ii) no Default or
Event of Default exists on the Closing Date; and (iii) there has
occurred since June 28, 1996, no event or circumstance that
constitutes a Material Adverse Effect;
(6) such other assurances, certificates, documents,
consents or opinions as the Agent may reasonably require.
(b) The Agent shall have received the fees described in
Section 2.03(a) and 2.03(b) due on the Closing Date;
(c) The reasonable allocated fees and expenses of Bank of
America's inhouse counsel invoiced to the Closing Date, relating to the
Loan Documents shall have been paid by Borrower;
(d) The representations and warranties contained in Article V
shall be true and correct in all material respects;
(e) No Default or Event of Default shall have occurred and be
continuing; and
(f) Each Lender shall have satisfactorily completed its due
diligence with respect to this Agreement.
4.02 CONDITIONS PRECEDENT TO ALL BORROWINGS AND ALL ISSUANCES. The
obligation of each Lender to make an Advance on the occasion of any
Borrowing, or any Bid Advance as to which the Borrower has accepted the
relevant Competitive Bid (including the initial Borrowing) and the obligation
of the Issuing Lender to issue any Letter of Credit (including the initial
Letter of Credit), shall be subject to the conditions precedent that on the
date of such Borrowing or Issuance (a) the following statements shall be true
and each of the giving of the applicable Notice of Borrowing, Competitive Bid
Request or the applicable request for Issuance (as the case may be) and the
acceptance by the Borrower
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of the proceeds of such Borrowing or the Issuance of such Letter of Credit
shall constitute a representation and warranty by the Borrower or such
Subsidiary Borrower that on the date of such Borrowing or Issuance, as the
case may be, such statements are true:
(i) each representation and warranty contained in Article V
hereof is true and correct in all material respects on and as of the date
of such Borrowing or Issuance, before and after giving effect to such
Borrowing and to the application of the proceeds therefrom or to such
Issuance (as the case may be), as though made on and as of such date except
to the extent any such representation and warranty is made as of any other
date;
(ii) no event has occurred and is continuing, or would result
from such Borrowing or from the application of the proceeds therefrom or
from such Issuance (as the case may be) which constitutes an Event of
Default or a Default;
(iii) no event or circumstance shall have occurred since the
Closing Date that constitutes a Material Adverse Effect; and
(iv) there shall not be then pending or, to the knowledge of any
Loan Party, threatened any action, suit, proceeding or investigation
against or affecting Borrower or any of its Subsidiaries or any property of
any of them that constitutes a Material Adverse Effect;
and (b) the Agent shall have received such other approvals or documents
relating to the validity or enforceability of any Loan Documents as any
Lender through the Agent may reasonably request.
4.03 CONDITIONS TO EFFECTIVENESS OF SUBSIDIARY BORROWER ELECTING TO
PARTICIPATE AFTER THE CLOSING DATE. It is a condition precedent to the
effectiveness of any election by a Subsidiary to become a Subsidiary Borrower
that each Lender receives the following:
(a) a duly executed and delivered Notice of Election to Participate;
(b) a Committed Advance Note duly executed by such Subsidiary
Borrower in favor of any Lender requesting a promissory note in a principal
amount equal to such Lender's Pro Rata Share of the Subsidiary Borrower
Sublimit;
(c) the documentation specified in Section 4.01(a)(5) and (6) with
respect to such Subsidiary Borrower; and
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(d) a favorable opinion of counsel in the jurisdiction in which
such Subsidiary Borrower is incorporated confirming, among other things, that
(i) such Subsidiary Borrower's obligations under this Agreement and its Notes
are legal, valid, binding and enforceable against such Subsidiary Borrower,
(ii) the execution, delivery and performance of the Loan Documents by such
Subsidiary Borrower will not violate any law, decree or judgment or violate
any material agreement to which such Subsidiary Borrower is a party or by
which its assets are bound and (iii) no government approvals, consents,
registrations or filings are required by the Subsidiary Borrower; PROVIDED
that such opinion shall be subject to such modifications as are acceptable to
the Agent in its sole discretion.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Lenders that:
5.01 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS. The
Borrower and each of its Subsidiaries is a corporation, partnership or joint
venture duly organized and existing and in good standing under the laws of
its respective jurisdiction of organization. The Borrower and each of its
Subsidiaries is duly qualified and is in good standing, in each other
jurisdiction in which the conduct of its business or the ownership or leasing
of its properties makes such qualification necessary, except where the
failure so to qualify and to be in good standing would not constitute a
Material Adverse Effect. The Borrower and each of its Subsidiaries has the
requisite power and authority to conduct its business as now being conducted
and to own its property, and to execute and deliver each Loan Document to
which it is a party and to perform its Obligations. The Borrower and each of
its Subsidiaries is in compliance with all laws applicable to its business,
has obtained all authorizations, consents, approvals, orders, licenses and
permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from,
any Governmental Agency that are necessary for the transaction of its
business, except where the failure to do any of the foregoing would not
constitute a Material Adverse Effect.
5.02 AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS.
The execution, delivery and performance by each
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Loan Party of the Loan Documents to which it is a party have been duly
authorized by all necessary action, and do not:
(a) require any consent or approval not heretofore obtained of
any partner, stockholder, security holder or creditor of any Loan Party;
(b) violate or conflict with any provision of any Loan Party's
articles or certificate of incorporation or bylaws or other equivalent
instruments, as applicable;
(c) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or leased by any Loan Party;
(d) violate any Requirement of Law applicable to such Loan
Party; or
(e) result in a breach of or default under, or would with the
giving of notice or the lapse of time or both constitute a breach of or
default under, or cause or permit the acceleration of any obligation owed
under any indenture or loan or credit agreement or any other Contractual
Obligation to which such Loan Party is a party or by which such Loan Party
or any of its material property is bound or affected;
and none of the Loan Parties is in violation of, or default under, any
Requirement of Law applicable to it or Contractual Obligation applicable to
it, or any indenture or credit agreement described in Section 5.02(e), in any
respect that in such case constitutes a Material Adverse Effect.
5.03 NO GOVERNMENTAL APPROVALS REQUIRED. No authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is required by any Loan Party to
authorize or permit under applicable laws the execution, delivery and
performance by such Loan Party of the Loan Documents.
5.04 SUBSIDIARIES OF BORROWER. All of the Subsidiaries of Borrower,
as of the date of this Agreement, are identified in Schedule 5.04 hereto.
The capital stock of each such Subsidiary identified in Schedule 5.04 is duly
authorized, validly issued, fully paid and nonassessable. Schedule 5.04
correctly sets forth the ownership interest as of the date hereof of Borrower
in each of its subsidiaries. Each active Domestic Subsidiary is party hereto
as a Guarantor.
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5.05 FINANCIAL STATEMENTS. Borrower has furnished to the Lenders
and the Agent the audited consolidated financial statements of Borrower and
its Subsidiaries as of June 28, 1996 and for the Fiscal Year then ended.
Such financial statements fairly present the financial position and results
of operations of Borrower and its Subsidiaries as of the dates and for the
periods indicated in accordance with Generally Accepted Accounting
Principles, consistently applied.
5.06 NO OTHER LIABILITIES; NO MATERIAL ADVERSE EFFECT. As of June
28, 1996, Borrower and its Subsidiaries do not have any liability or
contingent liability that is material to Borrower and its Subsidiaries, taken
as a whole, that is not reflected in, reserved for or against or otherwise
disclosed in the financial statements described in Section 5.05, other than
liabilities and contingent liabilities (x) that in accordance with Generally
Accepted Accounting Principles are not required to be reflected or disclosed
in such financial statements or (y) that are disclosed on any schedule to
this Agreement. As of the Closing Date, no event or circumstance has
occurred since June 28, 1996 that constitutes a Material Adverse Effect.
5.07 TITLE TO PROPERTY. Borrower and its Subsidiaries have good and
valid title to the property reflected in the financial statements described
in Section 5.05 (other than property subsequently sold or disposed of to the
extent permitted under this Agreement) free and clear of all Liens, other
than those permitted by Section 7.06.
5.08 INTANGIBLE ASSETS. Borrower and its Subsidiaries own, or
possess the right to use to the extent necessary in their respective
businesses, all trademarks, trade names, copyrights, patents, patent rights,
computer software, licenses and other Intangible Assets that are used or are
necessary in any material respect in the conduct of their businesses as now
operated. No such Intangible Asset, to the best knowledge of any Loan Party,
conflicts with the valid trademark, trade name, copyright, patent, patent
right or Intangible Asset of any other Person to the extent that such
conflict constitutes a Material Adverse Effect.
5.09 GOVERNMENTAL REGULATION. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, the
Investment Company Act of 1940 or, to the best knowledge of the Borrower, any
other law limiting or regulating its ability to incur the Obligations.
5.10 LITIGATION. Except for matters set forth in Schedule 5.10 or
otherwise disclosed pursuant to Section 6.01(i),
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there are no actions, suits, proceedings or investigations pending as to
which Borrower or its Subsidiaries have been served or have received notice
or, to the knowledge of the Borrower, threatened against or affecting
Borrower or its Subsidiaries or any property of any of them before any
Governmental Agency which, if determined adversely to Borrower or its
Subsidiaries, could reasonably be expected to constitute a Material Adverse
Effect.
5.11 BINDING OBLIGATIONS. Each of the Loan Documents to which each
Loan Party is a party will, when executed and delivered by such Loan Party,
constitute the legal, valid and binding obligation of such Loan Party
enforceable against such Loan Party in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies
as a matter of judicial discretion.
5.12 ERISA. Borrower and its Subsidiaries are in compliance in all
material respects with the applicable provisions of ERISA and the Code
relating to Plans except to the extent as would not have a Material Adverse
Effect. No Plan is a Multiemployer Plan. As of the date hereof, neither
Borrower nor any Subsidiary has, with respect to any Plan established or
maintained by it, engaged in a prohibited transaction which would subject it
to a tax or penalty on prohibited transactions imposed by ERISA or Section
4975 of the Code which tax or penalty would have or could reasonably be
expected to have a Material Adverse Effect. To the Borrower's knowledge, no
liability to the PBGC that is material is reasonably expected to be incurred
with respect to the Plans and there has been no Reportable Event and no other
event or condition that, in either case, presents a material risk of
termination of a Plan by the PBGC. Neither Borrower nor any of its
Subsidiaries has engaged in a transaction described in Section 4069 of ERISA
during the last five years which would result in the incurrence of a material
liability. No Accumulated Funding Deficiency, whether or not waived, exists
with respect to any of the Plans, determined as of the last day of the most
recently ended fiscal year of each Plan. Neither Borrower nor any of its
Subsidiaries has incurred any Withdrawal Liability with respect to any
Multiemployer Plan.
5.13 REGULATIONS G AND U. No part of the proceeds of any Advance
hereunder will be used to purchase or carry, or to extend credit to others
for the purpose of purchasing or carrying, any "margin stock" (as such term
is defined in Regulations G and U) in violation of Regulation G or U.
Neither Borrower nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any such "margin stock."
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5.14 DISCLOSURE. No written statement made by a Senior Officer of
any Loan Party to the Agent or the Lenders in connection with this Agreement,
or in connection with any Advance, contains any untrue statement of a
material fact or omits a material fact necessary in order to make the
statement made not misleading in light of all the circumstances existing at
the date the statement was made. There is no fact known to any Loan Party
which would constitute a Material Adverse Effect that has not been disclosed
in writing to the Lenders, other than general economic conditions.
5.15 TAX LIABILITY. Borrower and its Subsidiaries have filed all
material tax returns which are required to be filed, and have paid all taxes
due and payable by Borrower or its Subsidiaries with respect to the periods,
property or transactions covered by said returns, or pursuant to any
assessment received by Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith by appropriate
proceedings and as to which adequate reserves have been established and
maintained.
5.16 HAZARDOUS MATERIALS. To the extent that any Hazardous
Materials have been, or are, used, generated or stored by Borrower or any of
its Subsidiaries on any real property, or transported to or from such real
property by Borrower or its Subsidiaries, such use, generation, storage and
transportation have been, to the best knowledge of each Loan Party, and are
in compliance in all material respects with all Hazardous Materials Laws.
5.17 EMPLOYEE MATTERS. There is no strike, work stoppage or labor
dispute with any union or group of employees pending or, to the best
knowledge of each Loan Party, overtly threatened involving Borrower or any of
its Subsidiaries that would constitute a Material Adverse Effect.
5.18 PROJECTIONS. As of the Closing Date, to the best knowledge of
the Borrower the assumptions set forth in the Projections are reasonable and
consistent with each other and the Projections are reasonably based on such
assumptions. Nothing in this Section 5.18 shall be construed as a
representation, warranty or covenant that the Projections in fact will be
achieved.
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ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Advance remains unpaid, any Letter of Credit remains
outstanding or any other Obligation remains unpaid, or any portion of the
Commitment remains outstanding, Borrower shall, and shall cause each of its
Subsidiaries to, unless the Agent (with the approval of the Majority Lenders)
otherwise consents in writing:
6.01 FINANCIAL AND BUSINESS INFORMATION. Deliver to the Agent and
the Lenders at Borrower's sole expense:
(a) As soon as practicable, and in any event within 50 days
after the end of each Fiscal Quarter (other than the fourth Fiscal Quarter
in any Fiscal Year), (i) the consolidated and consolidating balance sheets
of Borrower and its Subsidiaries as at the end of such Fiscal Quarter, and
(ii) consolidated and consolidating statements of income and cash flow, in
each case of Borrower and its Subsidiaries for such Fiscal Quarter and for
the portion of the Fiscal Year ended with such Fiscal Quarter, all in
reasonable detail sufficient to calculate compliance with financial
covenants, and presented in a manner comparing such financial statements to
the financial statements for the comparable fiscal periods of the prior
Fiscal Year and to Borrower's budget for the current Fiscal Year. Such
financial statements shall be certified by a Senior Officer of Borrower as
fairly presenting the financial condition, results of operations and cash
flow of Borrower and its Subsidiaries in accordance with Generally Accepted
Accounting Principles (other than any requirement for footnote
disclosures), consistently applied (except for those changes to which the
independent public accountants of Borrower have concurred), as at such date
and for such periods, subject only to normal year-end audit adjustments;
(b) As soon as practicable, and in any event within 100 days
after the end of each Fiscal Year, (i) the consolidated and consolidating
balance sheets of Borrower and its Subsidiaries as at the end of such
Fiscal Year, and (ii) consolidated and consolidating statement of income
and statement of cash flow, in each case of Borrower and its Subsidiaries
for such Fiscal Year, all in reasonable detail sufficient to calculate
compliance with financial covenants, and presented in a manner comparing
such financial statements to the financial-statements for the comparable
fiscal periods of the prior Fiscal Year and to Borrower's budget for the
current Fiscal Year. Such financial
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statements shall be prepared in accordance with Generally Accepted
Accounting Principles, consistently applied (except for those changes to
which the independent public accountants of Borrower have concurred), and
such consolidated financial statements shall be accompanied by a report
and opinion of KPMG Peat Marwick or another of the six largest firms of
independent public accountants of recognized national standing, which
report and opinion shall be prepared in accordance with generally
accepted auditing standards as at such date, and shall not be subject to
any qualifications or exceptions as to the scope of the audit nor to any
other qualification, exception or explanation which the Majority Lenders
determine reflects a Material Adverse Effect;
(c) Not later than 120 days after the commencement of each Fiscal
Year, (i) the Borrower's business plan for such Fiscal Year, (ii)
projected consolidated financial statements showing the financial
condition and results of operation, by Fiscal Quarter, of Borrower and
its Subsidiaries for such Fiscal Year, including pro forma compliance (or
non-compliance, as the case may be) with the financial covenants set
forth in this Agreement, and (iii) projected consolidated financial
statements showing such financial condition and results of operation by
Fiscal Year for the next five succeeding Fiscal Years, in reasonable
detail and in a form reasonably satisfactory to the Agent, together with
a description of the material assumptions used in preparing such
projected financial statements and, as promptly as practicable after any
revision thereof is approved by the chief financial officer of Borrower,
a copy of such revision;
(d) Promptly after receipt thereof, Borrower will make available
for inspection copies of any detailed audit reports or recommendations
submitted to Borrower or any of its Subsidiaries by independent
accountants in connection with the accounts or books of Borrower or any
of its Subsidiaries, or any audit of any of them;
(e) Promptly after the same are available, and in any event within
10 days after the sending or filing thereof, copies of each annual
report, proxy or financial statement or other report or communication
sent to the shareholders of Borrower and copies of all annual, regular,
periodic and special reports and registration statements, in each case
which Borrower may file or be required to file with the SEC under the
Securities Act of 1933 or the Securities Exchange Act of 1934;
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(f) Promptly after request by the Agent or any Lender, copies of
any other specific report or other document that was filed by Borrower or
any of its Subsidiaries with any Governmental Agency;
(g) Promptly upon a Senior Officer of Borrower obtaining actual
knowledge, and in any event within ten (10) Business Days after he obtains
actual knowledge, of the occurrence of any (i) Reportable Event, or (ii) a
material non-exempt "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) in connection with any
Pension Plan, other than a Multiemployer Plan, or any trust created
thereunder, a written notice specifying the nature thereof, what action
Borrower and any of its Subsidiaries is taking or proposes to take with
respect thereto, and, when known, any action taken by the Internal Revenue
Service with respect thereto;
(h) Promptly after the Borrower or any Subsidiary Borrower
obtains actual knowledge of the existence of any condition or event which
constitutes a Default, written notice specifying the nature and period of
existence thereof and specifying what action Borrower or any of its
Subsidiaries are taking or propose to take with respect thereto;
(i) Promptly after the Borrower or any Subsidiary Borrower
obtains actual knowledge that (i) any Person has commenced a legal
proceeding with respect to a claim against Borrower or any of its
Subsidiaries which alleges liability equal to or greater than $1,000,000
and which is not covered by insurance (subject to standard deductibles),
(ii) any creditor or lessor under a written credit agreement with respect
to Indebtedness or a material lease has asserted in writing a material
default thereunder on the part of Borrower or any of its Subsidiaries,
(iii) any other event or circumstance occurs or exists that would
constitute a Material Adverse Effect, in each case a written notice
describing the pertinent facts relating thereto and what action Borrower or
any of its Subsidiaries are taking or propose to take with respect thereto;
(j) Such other data and information relating to the performance
of the Obligations or the business, condition or affairs of Borrower and
its Subsidiaries as from time to time may be reasonably requested by the
Agent or any Lender;
(k) Promptly after entering into any letter of intent and/or
definitive contract with respect to any
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proposed Acquisition, notify the Agent and, if the Borrower
desires, each Lender directly of such fact; and
(l) Concurrently with delivery of the financial statements
referred to in Sections 6.01(a) and 6.01(b), deliver a Compliance
Certificate dated as of the last day of the Fiscal Quarter or Fiscal Year,
as the case may be.
6.02 PAYMENT OF TAXES AND OTHER POTENTIAL LIENS. Pay and discharge
promptly all material taxes, assessments and governmental charges or levies
imposed upon any of them, upon their respective property or any part thereof
and upon their respective income or profits or any part thereof except that
Borrower and its Subsidiaries shall not be required to pay or cause to be
paid any tax, assessment, charge or levy that is not yet past due, or is
being contested in good faith by appropriate proceedings, so long as Borrower
or its Subsidiaries has established and maintains adequate reserves for the
payment of the same and by reason of such nonpayment and contest no material
item or portion of property of Borrower and its Subsidiaries, taken as a
whole, is in jeopardy of being seized, levied upon or forfeited prior to
judgment.
6.03 PRESERVATION OF EXISTENCE. Preserve and maintain their
respective existences in the respective jurisdictions of their formation and
all authorizations, rights, franchises, privileges, consents, approvals,
orders, licenses, permits, or registrations from any Governmental Agency that
are necessary for the transaction of their respective businesses, except
where the failure to so preserve and maintain would not constitute a Material
Adverse Effect; and qualify and remain qualified as a foreign corporation in
each jurisdiction in which such qualification is necessary in view of their
respective businesses or the ownership of their respective properties, except
(a) where the failure to so qualify and remain qualified would not constitute
a Material Adverse Effect and (b) that a merger permitted under Section 7.02
shall not constitute a violation of this covenant.
6.04 MAINTENANCE OF PROPERTIES. Maintain, preserve and protect all
of their respective depreciable properties necessary to their operations in
good order and condition, subject to wear and tear in the ordinary course of
business, and not permit any waste of their respective material properties,
except that the failure to maintain, preserve and protect a particular item
of depreciable property that is not of significant value, either
intrinsically or to the operations of Borrower and its Subsidiaries, taken as
a whole, shall not constitute a violation of this covenant.
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6.05 MAINTENANCE OF INSURANCE. Maintain liability, casualty and
other insurance (subject to customary deductibles and retentions) with
responsible insurance companies in such amounts and against such risks as is
carried by responsible companies engaged in similar businesses and owning
similar assets in the general areas in which Borrower and its Subsidiaries
operate.
6.06 COMPLIANCE WITH LAWS. Comply with all Requirements of Law
noncompliance with which would constitute a Material Adverse Effect, except
that Borrower and its Subsidiaries need not comply with a Requirement of Law
then being contested by any of them in good faith by appropriate proceedings.
6.07 INSPECTION RIGHTS. Upon reasonable notice, at any mutually
agreeable times during regular business hours (but not so as to materially
interfere with the business of Borrower and its Subsidiaries), permit the
Agent or any Lender, or any authorized employee, agent or representative
thereof reasonably acceptable to Borrower, to examine, audit and make copies
and abstracts from the records and books of account of, and to visit and
inspect the properties of, Borrower and its Subsidiaries and to discuss the
affairs, finances and accounts of Borrower and its Subsidiaries with any of
their respective officers, key employees, accountants, customers and vendors.
6.08 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Make and keep books,
records and accounts which reflect in reasonable detail all transactions as
necessary to permit preparation of financial statements in conformity with
Generally Accepted Accounting Principles.
6.09 COMPLIANCE WITH AGREEMENTS. Promptly and fully comply with
all Contractual Obligations under all material agreements, indentures, leases
and/or instruments to which any one or more of them is a party, whether such
material agreements, indentures, leases or instruments are with the Lenders
or another Person, where the failure to so comply would constitute a Material
Adverse Effect.
6.10 HAZARDOUS MATERIALS LAWS. Keep and maintain the real property
owned or leased by it and each portion thereof in compliance in all material
respects with all Hazardous Materials Laws; promptly advise the Agent in
writing of (a) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened in
writing pursuant to any applicable Hazardous Materials Laws, (b) any and all
claims made or threatened in writing by any third party against Borrower or
any Guarantor or any such real property relating to
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damage, contribution, cost recovery, compensation, loss or injury resulting
from any Hazardous Materials and (c) discovery by any Senior Officer of any
Loan Party of any occurrence or condition on any such real property that
could reasonably be expected to cause any such real property or any part
thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of the real property under any Hazardous Materials
Laws.
6.11 ADDITIONAL GUARANTORS AFTER THE CLOSING DATE. If the Borrower
or any Subsidiary of Borrower creates or otherwise acquires any active
Domestic Subsidiary at any time after the Closing Date, the Borrower shall
cause such Domestic Subsidiary to become a Guarantor hereunder by delivering
to the Agent:
(a) an instrument referring to this Agreement wherein such
Guarantor agrees to be bound by all the terms and conditions applicable to
a Guarantor under this Agreement as of the date thereof;
(b) the documentation specified in Section 4.01(a)(5) and (6)
with respect to such Guarantor; and
(c) with respect to any such Guarantor whose total assets
constitute at least 10% of Consolidated Total Assets at the time it becomes
a Guarantor, a favorable opinion of counsel in the jurisdiction in which
such Guarantor is incorporated confirming, among other things, that (i)
such Subsidiary's obligations under this Agreement are legal, valid,
binding and enforceable against such Subsidiary, (ii) the execution,
delivery and performance of the Loan Documents by such Subsidiary will not
violate any law, decree or judgment or violate any material agreement to
which such Subsidiary is a party or by which its assets are bound and (iii)
no government approvals, consents, registrations or filings are required by
the Subsidiary; PROVIDED that such opinion shall be subject to such
modifications as are acceptable to the Agent in its sole discretion.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Advance remains unpaid, any Letter of Credit remains
outstanding or any other Obligation remains unpaid, or any portion of the Total
Commitment remains outstanding, Borrower shall not, and shall cause each of its
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Subsidiaries to not, unless the Agent (with the approval of the Majority
Lenders) otherwise consents in writing:
7.01 DISPOSITION OF PROPERTY. Make any Disposition, whether now
owned or hereafter acquired, other than:
(a) Dispositions of inventory, machinery and equipment in
the ordinary course of business;
(b) Dispositions of assets, the aggregate net book value of
which does not exceed in the aggregate for the Borrower and all
Subsidiaries (a) $10,000,000 during Fiscal Year 1997 and (b)
$15,000,000 during any Fiscal Year thereafter;
(c) Dispositions in connection with a Permitted Accounts
Receivable Financing;
(d) Transfers of accounts receivable from Sunrise Medical
CCG, Inc. and Sunrise Medical HHG, Inc. to SunMed Finance, Inc.;
(e) Dispositions in connection with sale and leaseback
transactions permitted by Section 7.06(e); and
(f) Dispositions of assets by Guarantors to other
Guarantors, and Dispositions of assets by Foreign Subsidiaries to
other Foreign Subsidiaries, provided that if either of such Foreign
Subsidiaries is a Subsidiary Borrower, the surviving entity will
assume all such Subsidiary Borrower obligations hereunder.
7.02 MERGERS. Merge, consolidate or amalgamate with or into any
Person, provided that (i) any Subsidiary of Borrower may be merged with and
into Borrower (with Borrower as the surviving entity), (ii) any Domestic
Subsidiary may be merged with and into another Domestic Subsidiary, so long
as, if either of such Subsidiaries was a Guarantor, the surviving entity is a
Guarantor, (iii) any Foreign Subsidiary may be merged with another Foreign
Subsidiary, provided that if either of such Subsidiaries is a Subsidiary
Borrower, the surviving entity will assume all such Subsidiary Borrower
obligations hereunder and (iv) a Subsidiary may be merged with any other
Person to the extent such merger is consummated to effect (x) a Disposition
permitted pursuant to Section 7.01(b) or (y) an Acquisition permitted
pursuant to Section 7.03.
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7.03 INVESTMENTS AND ACQUISITIONS. Make any Acquisition or enter
into any agreement to make any Acquisition, or make or suffer to exist any
Investment, except:
(a) Investments existing on the Closing Date and disclosed in
Schedule 7.03(a);
(b) Investments consisting of Cash Equivalents;
(c) Investments in Persons which immediately before and after
giving effect to such Investment are Wholly-Owned Domestic Subsidiaries
which have become Guarantors hereunder;
(d) Investments in Subsidiaries in which the Borrower has at
least an 80% ownership interest, PROVIDED that (i) if such Subsidiary is a
partnership or a joint venture (A) the partner or joint venture entity in
such Subsidiary shall be a Wholly-Owned Subsidiary of the Borrower, and (B)
the Investment by the Borrower in such Wholly-Owned Subsidiary which is the
partner or joint venture entity shall not exceed the amount being invested
in the partnership or joint venture, and (ii) if such Subsidiary is an
active Domestic Subsidiary, such Subsidiary shall have become a Guarantor
hereunder and each holder of a minority ownership interest in such
Subsidiary shall have executed a consent to the Guaranty; and
(e) Additional Permitted Acquisitions, where the purchase price paid
for, and the Indebtedness assumed in, all such Permitted Acquisitions do
not exceed (i) $10,000,000 for any single Permitted Acquisition or group of
related Permitted Acquisitions or (ii) $20,000,000 in the aggregate for all
Permitted Acquisitions in any Fiscal Year.
7.04 HOSTILE TENDER OFFERS. Make any tender offer to purchase or
acquire any outstanding capital stock of any corporation or other business
entity without the prior approval of the board of directors of that
corporation or business entity.
7.05 ERISA.
(a) At any time, permit any Pension Plan maintained by it or by
any ERISA Affiliate, to:
(i) engage in any non-exempt "prohibited transaction," as
such term is defined in Section 4975 of the Code, that would subject
any Loan Party to a liability that may reasonably be expected to
constitute a Material Adverse Effect;
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(ii) incur any material Accumulated Funding Deficiency; or
(iii) suffer a Termination Event to occur which may
reasonably be expected to result in liability of any Loan Party or any
ERISA Affiliate thereof to the Pension Plan or to the PBGC or the
imposition of a Lien on the property of any Loan Party or any ERISA
Affiliate thereof pursuant to Section 4068 of ERISA and such liability
or Lien may reasonably be expected to constitute a Material Adverse
Effect.
(b) Fail, upon a Senior Officer of Borrower becoming aware
thereof, promptly to notify the Agent of the occurrence of any Reportable
Event, or of any material nonexempt "prohibited transaction" (as defined in
Section 4975 of the Code) with respect to any Pension Plan maintained by it
or any trust created thereunder.
(c) At any time, permit any Pension Plan (other than a
Multiemployer Plan) maintained by it to fail to comply with ERISA or other
applicable Laws in any respect that constitutes a Material Adverse Effect.
7.06 LIENS; NEGATIVE PLEDGES; SALES AND LEASEBACKS. Create, incur,
assume or suffer to exist any Lien of any nature upon or with respect to any
of their respective properties, whether now owned or hereafter acquired; or
suffer to exist any Negative Pledge; or engage in any sale and leaseback
transaction with respect to its property; except:
(a) Permitted Encumbrances;
(b) Liens and Negative Pledges in favor of the Lenders;
(c) Liens in connection with a Permitted Accounts Receivable
Financing;
(d) Liens on property acquired pursuant to Acquisitions
permitted hereunder, provided such Liens were not incurred in contemplation
of such Acquisition;
(e) Sale and leaseback transactions which, together with
operating leases permitted by Section 7.17(b), do not exceed in the
aggregate $10,000,000 in aggregate payment obligations in any Fiscal Year,
and Liens and Negative Pledges solely on assets and the proceeds thereof
the subject of such transactions, provided that the Advances are prepaid in
an amount equal to the net Cash proceeds received
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from such transactions, concurrently upon the receipt thereof, in accordance
with Section 2.11(c);
(f) Negative Pledges in favor of lenders providing financing
permitted under Section 7.07(f) PROVIDED that (i) the Advances are prepaid
in an amount equal to the net proceeds from such financing concurrently
upon receipt thereof by the Borrowers or any of their Subsidiaries in
accordance with Section 2.11(c), and (ii) the Total Commitment is reduced
by an amount equal to such net proceeds (whether or not the Total
Commitment is fully utilized at such time); PROVIDED, FURTHER, that if any
such required prepayment is postponed in accordance with the proviso to
Section 2.11(c), the reduction in Total Commitment set forth in this
subsection shall also be correspondingly postponed; PROVIDED, FURTHER, that
any such reduction in the Total Commitment shall not be in lieu of the
reductions in the Total Commitment scheduled to occur on the immediately
following Amortization Dates; the Total Commitment shall continue to
automatically reduce on each scheduled Amortization Date by an amount equal
to the Amortization Amount pursuant to Section 2.10(b);
(g) Liens in connection with transfers of accounts receivable
permitted by Section 7.01(d);
(h) Liens and Negative Pledges solely on assets leased in
connection with leases permitted by Section 7.17;
(i) Negative Pledge solely on assets of Sunrise Medical Ltd. and
its Subsidiaries in connection with its European Coal and Steel Community
financing; and
(j) Other Liens and Negative Pledges solely on assets securing
Indebtedness or incurred in connection with sale and leaseback transactions
permitted by Section 7.06(e) where the obligations secured do not exceed
10% of Shareholders' Equity in the aggregate at any time.
7.07 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness except:
(a) Indebtedness under Swap Agreements incurred in the ordinary
course of business;
(b) Subordinated Debt of the Borrower or a Subsidiary incurred
in connection with permitted Acquisitions; PROVIDED that Majority Lenders
shall have approved the subordination provisions of any such Subordinated
Debt in excess of $5,000,000;
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(c) Indebtedness in respect of contracts to exchange, settle or
otherwise hedge foreign currency exposure incurred in the ordinary course
of business;
(d) Indebtedness in respect of a Permitted Accounts Receivable
Financing;
(e) Indebtedness in connection with transfers of accounts
receivable permitted by Section 7.01(d); and
(f) Consolidated Funded Indebtedness, the creation, incurrence,
assumption or existence of which would not cause the Leverage Ratio to
exceed the maximum Leverage Ratio permitted under Section 7.09 after giving
effect to such Indebtedness on a pro forma basis as of the date of the most
recently delivered Compliance Certificate; PROVIDED, HOWEVER, that any
unsecured Indebtedness of any Foreign Subsidiary shall not exceed, together
with the face amount of any letters of credit issued on behalf of such
Foreign Subsidiary (other than Letters of Credit), $15,000,000 for any one
Foreign Subsidiary; PROVIDED, FURTHER, that all unsecured Indebtedness for
all Foreign Subsidiaries, together with the face amount of all letters of
credit issued on behalf of any Foreign Subsidiary (other than Letters of
Credit), shall not exceed $45,000,000 in the aggregate at any one time
outstanding.
7.08 CONDUCT OF BUSINESS. Engage in any business OTHER THAN
businesses of the same nature as that which the Borrower and its Subsidiaries
conduct as of the Closing Date; provided, however, notwithstanding any other
provision of this Agreement, Borrower and its Subsidiaries may enter into
foreign exchange and commodity hedging agreements so long as such arrangements
are not for speculative purposes.
7.09 LEVERAGE RATIO. Permit the Leverage Ratio, as of the end of any
Fiscal Quarter, to exceed the following ratio:
Fiscal Quarters Ending Maximum Ratio
------------------------------ -------------
9/26/97 through 6/30/98 3.75 to 1.00
9/30/98 through 3/31/99 3.50 to 1.00
Thereafter 3.25 to 1.00
7.10 MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Permit at the end of
any Fiscal Quarter Consolidated Tangible Net Worth to be less than (a)
- -$16,000,000 PLUS (b) 50% of Consolidated Net Income for each Fiscal Quarter
ending after June 28, 1996 (not to be reduced by any losses incurred) PLUS (c)
50% of the net proceeds from the issuance of any equity securities of the
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Borrower after June 28, 1996 LESS (d) 50% of the Adjusted Dollar Equivalent
of Intangible Assets related to Acquisitions completed after December 27,
1996.
7.11 INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio, as
of the end of any Fiscal Quarter, to be less than the following ratio:
Fiscal Quarters Ending Minimum Ratio
----------------------------- -------------
9/26/97 through 3/31/99 1.40 to 1.00
6/30/99 1.50 to 1.00
Thereafter 1.75 to 1.00
7.12 CONTINGENT OBLIGATIONS. Create or become or be liable with
respect to any Contingent Obligations except:
(a) Contingent Obligations of the Borrower or any Subsidiary
supporting obligations of the Borrower or a Subsidiary entered into in the
ordinary course of Business;
(b) Guaranties by the Borrower of operating leases and
performance bonds of any Subsidiary of the Borrower; PROVIDED, that such
guaranties with respect to Foreign Subsidiaries shall not exceed
$12,000,000 in the aggregate outstanding at any one time; PROVIDED,
FURTHER, that, for purposes of calculating the amount of a guaranty of an
operating lease, such guaranty shall be deemed to be a guaranty of the next
12 months rent due under the operating lease so guarantied;
(c) Guaranties by the Borrower of any obligation of any of its
Subsidiaries permitted under Section 7.07(a), (b), (c) or (f);
(d) Guaranties by any of Borrower's Subsidiaries of any
Indebtedness of Borrowers permitted under Section 7.07(f) PROVIDED that (i)
the Advances are prepaid in an amount equal to the net proceeds from such
Indebtedness concurrently upon receipt thereof by the Borrowers or any of
their Subsidiaries in accordance with Section 2.11(c), and (ii) the Total
Commitment is reduced by an amount equal to such net proceeds (whether or
not the Total Commitment is fully utilized at such time); PROVIDED,
FURTHER, that if any such required prepayment is postponed in accordance
with the proviso to Section 2.11(c), the reduction in Total Commitment set
forth in this subsection shall also be correspondingly postponed; PROVIDED,
FURTHER, that any such reduction in the Total Commitment shall not be in
lieu of the reductions in the Total Commitment scheduled to occur on
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the immediately following Amortization Dates; the Total Commitment shall
continue to automatically reduce on each scheduled Amortization Date by an
amount equal to the Amortization Amount pursuant to Section 2.10(b);
(e) Guaranties by the Borrower, which are Subordinated Debt of
the Borrower, of any obligation of any of its Subsidiaries permitted under
Section 7.07(b);
(f) Other Contingent Obligations not incurred in the ordinary
course of business; PROVIDED that the maximum aggregate liability of the
Borrower and its Subsidiaries in respect of all such Contingent Obligations
shall at no time exceed $10,000,000 outstanding; and
(g) Contingent Obligations in favor of the Lenders under this
Agreement and the Letters of Credit issued hereunder.
7.13 LIMITATIONS ON RESTRICTIONS AFFECTING DIVIDENDS AND OTHER
PAYMENTS BY SUBSIDIARIES. Create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
of Borrower to (a) pay dividends or make any other distributions on its capital
stock or any other interest or participation in, or measured by, its profits, or
pay any Indebtedness owed to Borrower or any of its Subsidiaries or (b) make
loans or advances to Borrower or any of its Subsidiaries, except, in each case,
for such encumbrances or restrictions, if any, imposed by law or by this
Agreement, or (c) amend the terms of this Agreement.
7.14 RESTRICTED JUNIOR PAYMENTS. Make any Restricted Junior Payment
except:
(a) Restricted Junior Payments that in the aggregate do not
exceed, during any 12-month period, an amount equal to the lesser of (i)
10% of Shareholders' Equity calculated as of the end of the most recently
ended Fiscal Quarter and (ii) 50% of Consolidated Net Income during such
period; PROVIDED, HOWEVER, that after giving effect to such Restricted
Junior Payment (a) the Leverage Ratio, calculated as of the end of the most
recently ended Fiscal Quarter (adjusted to give effect to such Restricted
Junior Payment) shall be less than 3.25 to 1.00, and (b) no Default or
Event of Default shall exist.
(b) Restricted Junior Payments of the type described in clauses (i),
(ii) or (iv) of the definition of Restricted Junior Payments which are made
by a Subsidiary of the
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Borrower with respect to shares of any class of stock or other
ownership interest owned by the Borrower; and
(c) Purchases and redemptions from the Borrower's shareholders of any
warrants, options or other rights to acquire shares of the Borrower's stock
granted to shareholders pursuant to a shareholders' rights plan; PROVIDED
that (i) the repurchase and redemption provisions of such shareholders'
rights plan shall be in form and substance satisfactory to the Lenders in
their absolute discretion, and (ii) the aggregate amount of Restricted
Junior Payments made pursuant to this clause (c) shall not exceed $200,000
during the period beginning on the Closing Date and ending on the Final
Maturity Date.
7.15 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of
any kind with any Affiliate of Borrower other than (i) transactions between
or among Borrower and its Wholly-Owned Subsidiaries or between or among its
Wholly-Owned Subsidiaries and (ii) transactions on terms at least as
favorable to Borrower or its Subsidiaries as would be the case in any
arm's-length transaction between unrelated parties of equal knowledge
respecting the subject matter thereof and equal bargaining power.
7.16 SUBSIDIARIES. Create, acquire or permit to exist any
Subsidiary less than 80% of the ownership interest of which is legally and
beneficially owned, directly or indirectly, by the Borrower.
7.17 LEASE OBLIGATIONS. Create or suffer to exist any obligations
for the payment of rent for any property under any lease or agreement to
lease, except for:
(a) leases of the Borrower and of Subsidiaries in existence on
June 27, 1996 and any renewal, replacement, extension or refinancing
thereof;
(b) additional operating leases entered into by the Borrower or
any Subsidiary after June 27, 1996 in the ordinary course of business
which, together with sale and leaseback transactions permitted by
Section 7.06(e), do not exceed in the aggregate $10,000,000 in
aggregate payment obligations in any Fiscal Year, and Liens in
connection therewith;
(c) leases entered into by the Borrower or any Subsidiary after
June 27, 1996 pursuant to sale-leaseback transactions permitted under
Section 7.06(e); and
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(d) Capital Leases permitted under Section 7.07.
ARTICLE VIII
GUARANTY
8.01 GUARANTY.
(a) Each Guarantor, jointly and severally, unconditionally and
irrevocably guaranties the due and punctual payment and performance of the
Obligations (including in each case interest accruing on and after the
filing of any petition in bankruptcy or of reorganization of the obligor
whether or not post filing interest is allowed in such proceeding). Each
Guarantor further agrees that the Obligations may be extended or renewed,
in whole or in part, without notice or further assent from it (except as
may be otherwise required herein), and it will remain bound upon this
guaranty notwithstanding any extension or renewal of any Obligation.
(b) Each Guarantor waives presentation to, demand for payment
from and protest to, as the case may be, the Borrower or any Subsidiary
Borrower or any other guarantor, and also waives notice of protest for
nonpayment. The obligations of each Guarantor hereunder shall not be
affected by (i) the failure of the Agent or the Lenders to assert any claim
or demand or to enforce any right or remedy against the Borrower or any
Subsidiary Borrower or any other guarantor under the provisions of this
Agreement or any other agreement or otherwise; (ii) any extension or
renewal of any provision hereof or thereof; (iii) the failure of the Agent
to obtain the consent of the Guarantors with respect to any rescission,
waiver, compromise, acceleration, amendment or modification of any of the
terms or provisions of this Agreement, the Notes or of any other agreement;
(iv) the release, exchange, waiver or foreclosure of any security held by
the Agent or the Lenders for the Obligations or any of them; (v) the
failure of the Agent to exercise any right or remedy against any other
guarantor of the Obligations; (vi) the release or substitution of any
guarantor; (vii) any defense based upon an election of remedies (including,
if available, an election to proceed by non-judicial foreclosure) by the
Agent or a Lender which destroys or otherwise impairs the subrogation
rights of any Guarantor or the right of any Guarantor to proceed against
the Borrower or any Subsidiary Borrower for reimbursement, or both; or
(viii) any rights or defenses created by the anti-deficiency statutes of
the State of California. Without limiting the
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generality of the foregoing or any other provision hereof, any Guarantor
hereby expressly waives any and all benefits which might otherwise be
available to it under California Civil Code Sections 2809, 2910, 2819,
2839, 2845, 2849, 2850, 2899 and 3433 and California Code of Civil
Procedure Sections 580a, 580b, 580d and 726.
(c) Each Guarantor further agrees that this guaranty constitutes
a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the
Agent or the Lenders to any security held for payment of the Obligations or
to any balance of any deposit, account or credit on the books of the Agent
in favor of the Borrower, any Subsidiary Borrower, any other guarantor or
to any other Person.
(d) Each Guarantor hereby expressly assumes all responsibilities
to remain informed of the financial condition of the Borrower or each
Subsidiary Borrower, as the case may be, and any circumstances affecting
the ability of the Borrower or any Subsidiary Borrower to perform under
this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations, the
Notes or any other instrument evidencing any Obligations, or by the
existence, validity, enforceability, perfection, or extent of any
collateral therefor or by any other circumstance relating to the
Obligations which might otherwise constitute a defense to these Guaranties.
The Agent makes no representation or warranty in respect to any such
circumstances and has no duty or responsibility whatsoever to the
Guarantors in respect to the management and maintenance of the Obligations
or any collateral security for the Obligations.
8.02 NO IMPAIRMENT OF GUARANTIES.
The obligations of the Guarantors hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality of
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantors hereunder shall
not be discharged or impaired or otherwise affected by the failure of the Agent
or the Lenders to assert any claim or demand or to enforce any remedy under this
Agreement or any other agreement, by any waiver or modification
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of any provision thereof, by any default, failure or modification of any
provision thereof, by any default, failure or delay, willful or otherwise, in
the performance of the Obligations, or by any other act or thing or omission
or delay to do any other act or thing which may or might in any manner or to
any extent vary the risk of the Guarantors or would otherwise operate as a
discharge of the Guarantors as a matter of law, unless and until the
Obligations are paid in full.
8.03 CONTINUATION AND REINSTATEMENT, ETC.
(a) Each Guarantor further agrees that its guaranty hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation
is rescinded or must otherwise be restored by the Agent or the Lenders upon
the bankruptcy or reorganization of the Borrower, any of the Subsidiary
Borrowers or the Guarantors, or otherwise. In furtherance of the provisions
of this Article VIII, and not in limitation of any other right which the
Agent or the Lenders may have at law or in equity against the Borrower, any
Subsidiary Borrower or any Guarantor by virtue hereof, upon failure of the
Borrower or any Subsidiary Borrower to pay any Obligation when and as the
same becomes due, whether at maturity, by acceleration, after notice or
otherwise, each Guarantor hereby promises to and will, upon receipt of
written demand by the Agent on behalf of the Lenders, forthwith pay or cause
to be paid to the Agent on behalf of the Lenders in cash an amount equal to
the unpaid amount of all the Obligations in each case with interest thereon
at a rate of interest equal to the rate specified in Article II hereof, and
thereupon the Agent and the Lenders shall assign such Obligation, together
with all security interests, if any, then held by the Agent or the Lenders in
respect of such Obligation, to the Guarantors making such payment.
(b) Upon payment by any Guarantor of any sums to the Agent for the
benefit of the Lenders hereunder, all rights of such Guarantor against the
Borrower or any Subsidiary Borrower, as the case may be, arising as a result
thereof by way of right of subrogation or otherwise, shall in all respects be
subordinate and junior in right of payment to the prior final and
indefeasible payment in full of all Obligations to the Agent of the Lenders.
If any amount shall be paid to such Guarantor for the account of the
Borrower's or any Subsidiary Borrower's Obligations hereunder, such amount
shall be held in trust for the benefit of the Agent and shall forthwith be
paid to the Agent on behalf of the Lenders to be credited and applied to the
Obligations, whether matured or unmatured.
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8.04 GUARANTIED AMOUNT.
(a) Notwithstanding any other provision of this Article VIII, the
amount guarantied by each Guarantor hereunder shall be limited to the extent,
if any, required so that its obligations under this Article VIII shall not be
subject to avoidance under Section 548 of the Bankruptcy Code or to being set
aside or annulled under any applicable state law relating to fraud on
creditors. In determining the limitations, if any, on the amount of any
Guarantor's obligations hereunder pursuant to the preceding sentence, any
rights of subrogation or contribution which such Guarantor may have under
this Article VIII or applicable law shall be taken into account.
(b) Notwithstanding any provision in this Agreement to the
contrary, each Loan Party agrees that any Intercompany Indebtedness of any
Guarantor shall be subordinated in right of payment to the Obligations of
such Guarantor under this Guaranty and the other Loan Documents to the
Lenders.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
UPON EVENTS OF DEFAULT
9.01 EVENTS OF DEFAULT. The existence or occurrence of any one or
more of the following events, whatever the reason therefor and under any
circumstance whatsoever, shall constitute an Event of Default:
(a) any Loan Party fails to pay any principal on any Obligation
or any principal or interest on any Bid Advance on the date when due; or
(b) any Loan Party fails to pay any interest or premium on any
Obligation or any fees due to the Agent or the Lenders within five days
after the date when due or fails to pay any other fee or amount payable to
the Agent or the Lenders under any Loan Document, or any portion thereof,
within five days after demand therefor; or
(c) any Loan Party fails to perform or observe any of the
covenants contained in Section 6.01(h), 6.03 or 6.06 or in Article VII; or
(d) any Loan Party fails to perform or observe any of the
covenants contained in Sections 6.01(a)-(c) within 5 days after the giving
of written notice by the Agent of such Default; or
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(e) any Loan Party fails to perform or observe any other
covenant or agreement contained in any Loan Document on its part to be
performed or observed within 30 days after the giving of written notice by
the Agent of such Default; or
(f) any representation or warranty of any Loan Party made in any
Loan Document or in any certificate delivered pursuant to any Loan Document
proves to have been incorrect when made or reaffirmed in any respect that
is materially adverse to the interests of the Lenders; or
(g) Borrower or any of its Subsidiaries (i) fails to pay the
principal, or any principal installment, of any present or future
Indebtedness for borrowed money in an amount exceeding $1,000,000, or any
guaranty of present or future Indebtedness for borrowed money in an amount
exceeding $1,000,000, on its part to be paid, when due (or within any
stated grace period), whether at the stated maturity, upon acceleration, by
reason of required prepayment or otherwise or (ii) fails to perform or
observe any other term, covenant, or agreement on its part to be performed
or observed, or suffers any event to occur in connection with any present
or future Indebtedness for borrowed money in an amount exceeding
$1,000,000, or of any guaranty of present or future Indebtedness for
borrowed money in an amount exceeding $1,000,000, if as a result of such
failure or sufferance any holder or holders thereof (or an agent or trustee
on its or their behalf) has the right to declare such Indebtedness due
before the date on which it otherwise would become due unless any such
failure or sufferance is waived by such holders thereof (or an agent or
trustee on its or their behalf); or
(h) any Loan Document, at any time after its execution and
delivery and for any reason other than the agreement of the Lenders or
satisfaction in full of the Obligations, ceases to be in full force and
effect or is declared by a court of competent jurisdiction to be null and
void, invalid, or unenforceable in any respect which, in the opinion of the
Majority Lenders is materially adverse to their interest; or any Loan Party
thereto denies that it has any or further liability or obligation under any
Loan Document or purports to revoke, terminate or rescind same; or
(i) a judgment against any Loan Party is entered by a court of
competent jurisdiction for the payment of money in excess of $500,000 and
absent procurement of a stay of execution, such judgment remains unbonded
or unsatisfied
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for 30 calendar days after the date of entry of judgment or such longer
period as may be permitted by law or otherwise binding on the judgment
creditor before execution on such judgment is allowed, or in any event
later than five days prior to the date of any proposed sale thereunder; or
(j) any Loan Party institutes or consents to any proceeding
under a Debtor Relief Law relating to it or to all or any material part of
its property, or is unable or admits in writing its inability to pay its
debts as they mature, or makes an assignment for the benefit of creditors
or applies for or consents to the appointment of any receiver, trustee,
custodian, conservator, liquidator, rehabilitator, or similar officer for
it or for all or any part of its property; or any receiver, trustee,
custodian, conservator, liquidator, rehabilitator, or similar officer is
appointed without the application or consent of that Person and the
appointment continues undischarged or unstayed for 30 calendar days or any
proceeding under any Debtor Relief Law relating to any such Person or to
all or any material part of its property is instituted without the consent
of that Person and continues undismissed or unstayed for 30 calendar days
or results in the entry of an order for relief; or any judgment, writ,
warrant of attachment or execution, or similar process is issued or levied
against all or any material part of the property of any such Person and is
not released, vacated, or fully bonded within 30 calendar days after its
issue or levy; or
(k) the occurrence of a Termination Event with respect to any
Pension Plan if the aggregate liability of Borrower and its ERISA
Affiliates under ERISA as a result thereof exceeds $1,000,000; or the
complete or partial withdrawal subsequent to the Closing Date by Borrower
or any of its ERISA Affiliates from any Multiemployer Plan if the aggregate
liability of Borrower and its ERISA Affiliates as a result thereof would
constitute a Material Adverse Effect; or
(l) a Change of Control or a Change of Ownership shall have
occurred.
9.02 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other
rights or remedies of the Agent or the Lenders provided for elsewhere in this
Agreement or the Loan Documents, or by applicable law, or in equity, or
otherwise:
(a) Upon the occurrence, and during the continuance, of any
Event of Default (other than an Event of Default described in
Section 9.01(j)):
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(i) the Commitments and all other obligations of the Agent
and the Lenders under the Loan Documents shall be suspended without
notice to or demand upon any Loan Party, which are expressly waived by
each Loan Party to the fullest extent permitted by applicable law,
except that the Majority Lenders may waive the Event of Default or,
without waiving, determine, upon terms and conditions satisfactory to
the Majority Lenders, to reinstate the Commitments;
(ii) the Majority Lenders may request the Issuing Lender to,
and the Issuing Lender thereupon shall, demand immediate payment by
each Loan Party of an amount equal to the aggregate outstanding face
amount of all Letters of Credit, which amount shall be deposited into
a deposit account established by or maintained with the Agent as cash
collateral for any reimbursement obligations under the Letters of
Credit as and when drawings are made thereunder (and each Loan Party
hereby grants to the Agent and the Lenders a security interest in such
account); and
(iii) the Majority Lenders may request the Agent to, and
the Agent thereupon shall, terminate the Commitments and declare all
or any part of the unpaid principal of the Notes, all interest accrued
and unpaid thereon, and all other amounts payable under the Loan
Documents to be forthwith due and payable, whereupon the same shall
become and be forthwith due and payable, without protest, presentment
for payment, notice of dishonor, demand, or further notice of any
kind, all of which are expressly waived by each Loan Party to the
fullest extent permitted by applicable law.
(b) Upon the occurrence of any Event of Default described in
Section 9.01(j):
(i) the Commitments and all other obligations of the Agent
and the Lenders under the Loan Documents shall terminate without
notice to or demand upon any Loan Party, which are expressly waived by
each Loan Party to the fullest extent permitted by applicable law;
(ii) an amount equal to the aggregate outstanding face
amount of the Letters of Credit shall be forthwith due and payable to
the Issuing Lender without protest, presentment, notice of dishonor,
demand or further notice of any kind, all of which are
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waived by each Loan Party to the fullest extent permitted by
applicable law, which amount shall be deposited into a deposit
account established by or maintained with the Agent as cash
collateral for any reimbursement obligations under the Letters of
Credit as when drawings are made thereunder (and each Loan Party
hereby grants to the Agent and the Lenders a security interest in
such account); and
(iii) the unpaid principal of the Advances, all interest
accrued and unpaid thereon and all other amounts payable under the
Loan Documents shall be forthwith due and payable, without protest,
presentment for payment, notice of dishonor, demand or further notice
of any kind, all of which are expressly waived by each Loan Party to
the fullest extent permitted by applicable law.
(c) Upon the occurrence of any Event of Default, the Agent,
without notice to (except as expressly provided for in any Loan Document)
or demand upon each Loan Party, which are expressly waived by any Loan
Party to the fullest extent permitted by applicable law, may proceed to
protect, exercise, and enforce the rights and remedies of the Agent and the
Lenders under the Loan Documents against each Loan Party and such other
rights and remedies as are provided by law or equity.
ARTICLE X
THE AGENT
10.01 APPOINTMENT AND AUTHORIZATION. Each Lender hereby
irrevocably appoints, designates and authorizes the Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
10.02 DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement or any other Loan Document by
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or through agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects with reasonable care.
10.03 LIABILITY OF AGENT. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the
Lenders for any recital, statement, representation or warranty made by the
Borrower or any Subsidiary or Affiliate of the Borrower, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document,
or for any failure of the Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person
shall be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any of the Borrower's
Subsidiaries or Affiliates.
10.04 RELIANCE BY AGENT.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel
(including counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate and, if it so requests, 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 or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement or any other
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Loan Document in accordance with a request or consent of the Majority
Lenders and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Lender that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to
such Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory
to the Lender unless such Lender notifies the Agent to the contrary.
10.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and
fees required to be paid to the Agent for the account of the Lenders, unless
the Agent shall have received written notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action
with respect to such Default or Event of Default as may be requested by the
Majority Lenders in accordance with Article IX; PROVIDED, HOWEVER, that
unless and until the Agent has received any such request, 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 or in the best interest of the Lenders.
10.06 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Borrower and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without
reliance upon any Agent-Related
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Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and
made its own decision to enter into this Agreement and to extend credit to
the Borrower and its Subsidiaries hereunder. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the
other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower. Except
for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into the
possession of any of the Agent-Related Persons.
10.07 INDEMNIFICATION. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of
the Borrowers and without limiting the obligation of the Borrower to do so),
pro rata, from and against any and all Indemnified Liabilities; PROVIDED,
HOWEVER, that no Lender shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender shall reimburse the Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of
the Borrowers. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of the Agent.
10.08 AGENT IN INDIVIDUAL CAPACITY. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business
with the Borrower and its Subsidiaries and Affiliates as though Bank of
America were not the Agent hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding the Borrower or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Subsidiary) and acknowledge that
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the Agent shall be under no obligation to provide such information to them.
With respect to its Advances, Bank of America shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" include
Bank of America in its individual capacity.
10.09 SUCCESSOR AGENT. The Agent may, and at the request of the
Majority Lenders shall, resign as Agent upon 30 days' notice to the Borrower
and the Lenders. If the Agent resigns under this Agreement, the Majority
Lenders shall appoint from among the Lenders a successor agent for the
Lenders which successor agent shall be approved by the Borrower. If no
successor agent is appointed prior to the effective date of the resignation
of the Agent, the Agent may appoint, after consulting with the Lenders and
approval of the Borrower, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the retiring
Agent and the term "Agent" shall mean such successor agent and the retiring
Agent's appointment, powers and duties as Agent shall be terminated. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Article X and Sections 11.03 and 11.09 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the
date which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Majority Lenders appoint a successor agent as
provided for above, with the approval of the Borrower.
ARTICLE XI
MISCELLANEOUS
11.01 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers,
privileges and remedies of the Agent or any Lender provided herein or in any
Note or other Loan Document are cumulative and not exclusive of any right,
power, privilege or remedy provided by law or equity. No failure or delay on
the part of the Agent or any Lender in exercising any right, power, privilege
or remedy may be, or may be deemed to be, a waiver thereof; nor may any
single or partial exercise of any right, power, or remedy preclude any other
or further exercise of any other right, power, privilege or remedy. The
terms and conditions of Sections 4.01 and 4.02 hereof are inserted for the
sole benefit of the Lenders and the Agent may (with the approval of the
Majority Lender) waive them in whole or in part with or
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without terms or conditions in respect of any Advance or Letter of Credit,
without prejudicing the Lenders' rights to assert them in whole or in part in
respect of any other Advance or Letter of Credit.
11.02 AMENDMENTS; CONSENTS. No amendment, modification,
supplement, termination, or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure by any Loan Party
therefrom, may in any event be effective unless in writing signed by the
Agent with the written approval of the Majority Lender, and then only in the
specific instance and for the specific purpose given; and without the
approval in writing of all the Lenders, no amendment, modification,
supplement, termination, waiver, or consent may be effective:
(a) to amend or modify the principal of, or decrease the amount
of principal prepayments or the rate of interest payable on, any Obligation
or increase the amount of any of the Commitments or decrease the amount of
any fee payable to any Lender;
(b) to postpone any date fixed for any payment of principal of,
prepayment of principal of, or any interest on, any Obligation or any fee
or to extend the term of any of the Commitments;
(c) to amend or modify the provisions of the definition of
"Majority Lender" or of Section 11.02, 11.09 or 11.10;
(d) to amend or modify any provision of Section 2.10;
(e) release any Guarantor from the Guaranty unless such
Guarantor is merged, consolidated or disposed of as permitted by Section
7.01 or 7.02; or
(f) to amend or modify any provision of this Agreement or the
Loan Documents that expressly requires the consent or approval of all the
Lenders.
Any amendment, modification, supplement, termination, waiver, or consent
pursuant to this Section 11.02 shall apply equally to, and shall be binding
upon, all the Lenders and the Agent.
11.03 COSTS, EXPENSES AND TAXES. Borrower shall pay on demand the
reasonable costs and reasonable expenses of the Agent in connection with the
negotiation, preparation, execution and delivery of the Loan Documents, or
any amendment or waiver
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thereto requested by the Borrower, including reasonable travel expenses, and
other out of pocket expenses and the reasonable fees and out of pocket
expenses of any legal counsel (including without limitation, the reasonable
allocated fees and expenses of Agent's in-house counsel and staff),
independent public accountants, and other outside experts retained by the
Agent, and the reasonable costs, expenses or fees incurred or suffered by the
Agent in connection with or during the course of any bankruptcy or insolvency
proceedings of Borrower, or any Subsidiary of Borrower. After the occurrence
and during the continuation of a Default or an Event of Default, Borrower
shall pay on demand the reasonable costs and expenses of the Agent and each
of the Lenders in connection with the amendment, waiver, refinancing,
restructuring, reorganization (including a bankruptcy reorganization) and
enforcement or attempted enforcement of any Loan Documents and any matter
related thereto, including reasonable travel expenses and other out of pocket
expenses and the reasonable fees and other out of pocket expenses of any
legal counsel retained by or employed by any of the Lenders, including any
reasonable costs, expenses or fees incurred or suffered by any of the Lenders
in connection with or during the course of any bankruptcy or insolvency
proceedings of Borrower, or any Subsidiary of Borrower. Borrower shall pay
any and all documentary and other taxes (other than income or gross receipts
taxes generally applicable to such type of lender) and all costs, expenses,
fees and charges payable or determined to be payable in connection with the
filing or recording of any Loan Document or any other instrument or writing
to be delivered hereunder or thereunder, or in connection with any
transaction pursuant hereto or thereto, and shall reimburse, hold harmless
and indemnify the Agent and each Lender from and against any and all loss,
liability or legal or other expense with respect to or resulting from any
delay in paying or failure to pay any tax, cost, expense, fee or charge that
any of them may suffer or incur by reason of the failure of any Loan Party to
perform any of its Obligations. Any amount payable to the Agent or any
Lender under this Section 11.03 shall be due and payable and bear interest
from the date which is 10 days after the date of receipt of demand for
payment at the Base Rate.
11.04 NATURE OF LENDER'S OBLIGATIONS. Each Lender's obligation to
make any Advance pursuant hereto is several and not joint or joint and
several. A default by any Lender will not increase the Pro Rata Share of the
Commitments attributable to any other Lender. Any Lender not in default may,
if it desires, assume in such proportion as the nondefaulting Lenders agree
the obligations of any Lender in default, but is not obligated to do so. The
Agent agrees that it will use its best efforts either to induce the other
Lenders to assume the obligations of a Lender in
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default or to obtain another Lender, reasonably satisfactory to Borrower, to
replace such a Lender in default.
11.05 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or in any other Loan Document
or in any certificate or other writing delivered by or on behalf of any one
or more of the parties to any Loan Document, will survive the making of the
Advances hereunder and the execution and delivery of the Notes,
notwithstanding any investigation made by the Agent or any Lender or on their
behalf.
11.06 NOTICES. Except as otherwise expressly provided in the Loan
Documents, (a) all notices, requests, demands, directions, and other
communications provided for hereunder and under any other Loan Document must
be in writing and must be mailed, telegraphed, telecopied, delivered, or sent
by telex, or cable to the appropriate party at the address set forth on
Schedule 11.06 or other applicable Loan Document or, as to any party to any
Loan Document, at any other address as may be designated by it in a written
notice sent to all other parties to such Loan Document in accordance with
this Section 11.06 and (b) any notice, request, demand, direction, or other
communication given by telegram, telecopier, telex, or cable must be
confirmed within 48 hours by letter mailed or delivered to the appropriate
party at its respective address. Except as otherwise expressly provided in
any Loan Document if any notice, request, demand, direction, or other
communication required or permitted by any Loan Document is given by mail it
will be effective on the earlier of receipt or the third calendar day after
deposit in the United States mail with first class or airmail postage
prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telex or telecopier, when received;
or if given by personal delivery, when delivered.
11.07 EXECUTION IN COUNTERPARTS. Unless the Agent otherwise
specifies with respect to any Loan Document, this Agreement and any other
Loan Document may be executed in any number of counterparts and any party
hereto or thereto may execute any counterpart, each of which when executed
and delivered will be deemed to be an original and all of which counterparts
of this Agreement or any other Loan Document, as the case may be, taken
together will be deemed to be but one and the same instrument. The execution
of this Agreement or any other Loan Document by any party hereto or thereto
will not become effective until counterparts hereto or thereto will not
become effective until counterparts hereof or thereof, as the case may be,
have been executed by all the parties hereto or thereto.
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11.08 BINDING EFFECT; ASSIGNMENT.
(a) This Agreement and the other Loan Documents shall be binding
upon and inure to the benefit of the Borrower, each Guarantor and each
Subsidiary Borrower, the Agent, each of the Lenders, and their respective
successors and assigns, except that the Borrower, each Guarantor and each
Subsidiary Borrower may not assign its rights hereunder or thereunder or
any interest herein or therein without the prior written consent of all the
Lenders, except for any such assignment resulting from any merger permitted
by this Agreement. Each Lender and the Agent shall have the right to sell
or transfer any participation interest in this Agreement. Each Lender and
the Agent shall have the right to sell or transfer any participation
interest in this Agreement, the Advances, the Notes, the Commitments and
the Letters of Credit in accordance with the provisions of this
Section 11.08. Each Lender represents that it is not acquiring its Notes
with a view to the distribution thereof within the meaning of the
Securities Act of 1933, as amended (subject to any requirement that
disposition of such Notes must be within the control of such Lender). Any
Lender may at any time pledge its Notes or any other instrument evidencing
its rights as a Lender under this Agreement to a Federal Reserve Lender,
but no such pledge shall release that Lender from its obligations
hereunder.
(b) From time to time each Lender may, with the prior consent of
Borrower, assign to one or more Eligible Assignees a portion of its Pro
Rata Share of the Commitments (including its interest in the Letters of
Credit); provided that (i) such Eligible Assignee, if not then a Lender,
shall be reasonably acceptable to the Agent, (ii) such assignment shall be
evidenced by a Commitment Assignment and Acceptance, a copy of which shall
be furnished to the Agent for registration as hereinbelow provided,
(iii) the assignment shall not assign a portion of the Commitments in an
amount less than $15,000,000, without the Borrower's consent, and (iv) the
effective date of any such assignment shall be as specified in the
Commitment Assignment and Acceptance, but not earlier than the date which
is five (5) Business Days after the later of the date Borrower has
consented to such assignment and the date the Agent has registered the
Commitment Assignment and Acceptance in the register kept for that purpose
by the Agent as described below. The prior consent of Borrower referred to
in the previous sentence shall not be unreasonably withheld; provided, that
it shall not be unreasonable for the Borrower to withhold consent to any
assignment to an Eligible Assignee which (x) is not capable of funding in
Pounds
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Sterling, Canadian Dollars, Deutsche Marks, Spanish Pesetas, Swiss
Francs, French Francs, Belgian Francs, Italian Lira, ECU, Swedish Krona,
Norwegian Krone, Australian Dollars, Japanese Yen or such other Alternative
Currency in which the Borrower has previously received Eurocurrency Rate
Committed Advances and (y) is unable to enter into a funding arrangement,
reasonably acceptable to the Borrower and the Agent, pursuant to which an
existing Lender will fund such currencies on such Eligible Assignee's
behalf. Upon the effective date of such Commitment Assignment and
Acceptance, the Eligible Assignee named therein shall be a Lender for all
purposes of this Agreement, with the Pro Rata Share of the Commitments
therein set forth and, to the extent of such Pro Rata Share, the assigning
Lender shall be released from all of its obligations under this Agreement
assumed by such assignee Lender. The Borrower agrees that it shall, upon
the request of the assignee Lender, execute and deliver (against delivery
by the assigning Lender to such Loan Party of any Committed Advance Notes)
to such assignee Lender, a Committed Advance Note evidencing that assignee
Lender's Pro Rata Share of the Commitment, and to the assigning Lender, if
requested by such assigning Lender, a Committed Advance Note evidencing the
remaining Pro Rata Share retained by the assigning Lender. The Borrower
agrees that it shall also execute and deliver (against delivery by the
assigning Lender to such Borrower of its Bid Notes) to such assignee
Lender, a Bid Advance Note evidencing that assignee Lender's Bid Advances,
and to the assigning Lender, a Bid Advance Note evidencing the Bid Advances
of the assigning Lender.
(c) By executing and delivering a Commitment Assignment and
Acceptance, the assigning Lender thereunder: (i) other than as provided in
such Commitment Assignment and Acceptance, assigns without recourse and
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other instrument or document furnished pursuant
hereto; and (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or
the performance or observance by any Loan Party of any of its Obligations
under this Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto.
(d) By executing and delivering a Commitment Assignment and
Acceptance, the assignee Lender or Eligible Assignee thereunder
acknowledges and agrees that: (i) other
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than the representation and warranty that it is the legal and beneficial
owner of the Pro Rata Share of the Commitments being assigned thereby fee
and clear of any adverse claim, the assigning Lender has made no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness or sufficiency of this Agreement or any other Loan Document;
(ii) the assigning Lender has made no representation or warranty and assumes
no responsibility with respect to the financial condition of any Loan Party
or the performance by any Loan Party of the Obligations; (iii) it has
received a copy of this Agreement together with copies of the most recent
financial statements delivered pursuant to this Agreement and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Commitment Assignment and
Acceptance; (iv) it will, independently and without reliance upon the Agent,
the assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement;
(v) if not then a Lender, it is an Eligible Assignee; (vi) it appoints and
authorizes the Agent and the Issuing Lender to take such action and to
exercise such powers under this Agreement as are delegated to the Agent and
the Issuing Lender by Article X and Section 3.06; and (vii) it will perform
in accordance with their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(e) The Agent shall maintain at the Agent's Office a copy of
each Commitment Assignment and Acceptance delivered to it and a register
(the "Register") for recordation, upon payment to the Agent by the
assigning Lender of a registration fee of $3,500.00, of the names and
addresses of the Lenders and their respective Pro Rata Shares of the
Commitments. The entries in the Register shall be conclusive for all
purposes, in the absence of manifest error, and each Loan Party, 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. Such
Register shall be available for inspection by any Loan Party or any Lender
at any reasonable time and from time to time upon reasonable prior notice.
Promptly following any entry in the Register, the Agent shall provide to
each Loan Party and the Lenders a revised Schedule 1.01 giving effect
thereto.
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(f) Upon its receipt of a Commitment Assignment and Acceptance
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, the Agent shall, if such Commitment Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, and subject to receipt of the written consent of Borrower and the
Agent, if required hereby, (i) accept such Commitment Assignment and
Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to each Loan Party.
(g) Each Lender may from time to time, with the consent of
Borrower (or without the consent of the Borrower in the case of granting a
participation solely in a Bid Advance), grant participations to one or more
Lenders or other financial institutions (or any Person, in the case of
granting a participation solely in a Bid Advance) in all or a portion of
its Pro Rata Share of the Commitments, including its interest in the
Letters of Credit; 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 participating Lenders or other entities shall not be
a Lender hereunder for any purpose except, if the participation agreement
so provides, for the purposes of Sections 2.13(a), 2.18, 2.20, 3.07, 11.09,
11.10 and 11.14 but only to the extent that such costs payable by each Loan
Party do not exceed the cost which each Loan Party would have incurred in
respect of such Lender absent the participation, (iv) each Loan Party, the
Agent, the Issuing Lender and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and (v) no Lender shall grant
any participation under which the consent of the holder of the
participation interest is required for amendments or waivers of provisions
of the Loan Documents other than those which (A) increase the monetary
amount of any of the Commitments, (B) postpone any date fixed for any
scheduled payments of principal or interest with respect to the Advances or
any fees or other amounts payable to such Lender hereunder in which such
participant has a direct monetary interest or (C) reduce the rate of
interest on the Advances, any fee or any other monetary amount payable to
the Lenders in which such participant has a direct monetary interest;
PROVIDED that holder of a participation in a Bid Advance shall have the
right to consent only to the actions described in clauses (B) and (C), and
then only if it affects such Bid Advance. The prior consent of Borrower
referred to in the previous sentence shall not be unreasonably withheld.
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11.09 INDEMNITY BY LOAN PARTIES. The Borrower and each Subsidiary
Borrower hereby agrees to indemnify, save, and hold harmless the Agent and each
Lender and their Affiliates, directors, officers, agents, attorneys, and
employees (collectively, the "Indemnitees") from and against: (a) any and all
claims, demands, actions, or causes of action that are asserted against any
Indemnitee by any Person (other than any Loan Party or any Lender) if the claim,
demand, action, or cause of action primarily relates to a claim, demand, action,
or cause of action that such Person asserts or may assert against any Loan
Party, any Affiliate of any Loan Party or any officer, director or shareholder
of any Loan Party; (b) any and all claims, demands, actions or causes of action
that are asserted against any Indemnitee by any Person (other than any Loan
Party or any Lender) if the claim, demand, action or cause of action arises out
of or relates to the Commitments, the use or contemplated use of proceeds of any
Advance, or the relationship of any Loan Party and the Lenders under this
Agreement; (c) any administrative or investigative proceeding by any
Governmental Agency arising out of or related to a claim, demand, action or
cause of action described in clauses (a) or (b) above; and (d) any and all
liabilities, losses, costs, or expenses (including reasonable attorneys' fees
and disbursements and fees for other professional services) that any Indemnitee
suffers or incurs as a result of any of the foregoing; provided, that no
Indemnitee shall be entitled to indemnification for any liability, loss, cost or
expense caused directly or indirectly by any Indemnitee's own gross negligence
or willful misconduct (collectively the "Indemnified Liabilities"). If any
claim, demand, action or cause of action is asserted against any Indemnitee and
such Indemnitee intends to claim indemnification from any Loan Party under this
Section, such Indemnitee shall promptly notify such Loan Party, but the failure
to so promptly notify such Loan Party shall not affect such Loan Party's
obligations under this Section unless such failure materially prejudices such
Loan Party's right to participate in the contest of such claim, demand, action
or cause of action, as hereinafter provided. Each Indemnitee may, and if
requested by such Loan Party in writing shall, in good faith contest the
validity, applicability and amount of such claim, demand, action or cause of
action with counsel selected by such Indemnitee and reasonably acceptable to
such Loan Party, and shall permit such Loan Party to participate in such
contest. Any Indemnitee that proposes to settle or compromise any claim or
proceeding for which such Loan Party may be liable for payment of indemnity
hereunder shall obtain such Loan Party's prior written consent, which consent
shall not be unreasonably withheld. In connection with any claim, demand,
action or cause of action covered by this Section against more than one
Indemnitee, all such Indemnitees shall be represented by the same legal counsel
selected by the Indemnitees and reasonably acceptable to
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Borrower; provided, that if such legal counsel determines in good faith and
advises Borrower in writing that representing all such Indemnitees would or
could result in a conflict of interest under laws or ethical principles
applicable to such legal counsel or that a defense or counterclaim is
available to an Indemnitee that is not available to all such Indemnitees,
then to the extent reasonably necessary to avoid such a conflict of interest
or to permit unqualified assertion of such a defense or counterclaim, each
Indemnitee shall be entitled to separate representation by legal counsel
selected by that Indemnitee and reasonably acceptable to Borrower. Any
obligation or liability of any Loan Party to any Indemnitee under this
Section shall survive the expiration or termination of this Agreement and the
repayment of all Advances and the payment and performance of all other
Obligations owed to the Lenders for the applicable statute of limitations
period.
11.10 HAZARDOUS MATERIALS INDEMNITY. The Borrower and the Subsidiary
Borrowers each hereby agree to indemnify, hold harmless and defend (by counsel
reasonably satisfactory to the Agent) each of the Lenders and their respective
directors, officers, employees, agents, successors and assigns from and against
any and all claims, losses, damages, liabilities, fines, penalties and charges,
resulting from any administrative and judicial proceedings and orders,
judgments, or remedial enforcement actions of any kind, and all costs and
expenses incurred in connection therewith (including but not limited to
reasonable attorneys' fees and expenses to the extent that the defense of any
such action has not been assumed by any Loan Party), arising directly or
indirectly, in whole or in part, out of (i) the presence, any release or
discharge of any Hazardous Materials on, under or from the real property and
(ii) any activity carried on or undertaken on or off the real property by
Borrower or any of its Subsidiaries or any of their respective predecessors in
title, whether prior to or during the term of this Agreement, and whether by
Borrower or any of its Subsidiaries or any of their respective predecessors in
title or any employees, agents, contractors or subcontractors of Borrower or any
of its Subsidiaries or any of their respective predecessors in title, or any
third persons at any time occupying or present on the real property, in
connection with the handling, treatment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Materials at any time located
or present on or under the real property. The foregoing indemnity shall further
apply to any residual contamination on or under the real property, or affecting
any natural resources, and to any contamination of any property or natural
resources arising in connection with the generation, use, handling, storage,
transport or disposal of any such Hazardous Materials, and irrespective of
whether any of such activities were or will be undertaken in
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accordance with applicable Laws, but the foregoing indemnity shall not apply
to Hazardous Materials on the real property, the presence of which is
directly caused by the Agent or the Lenders.
11.11 NONLIABILITY OF LENDERS. Each Loan Party acknowledges and
agrees that:
(a) Any inspections of any property of any Loan Party made by or
through the Agent or the Lenders are for purposes of administration of the
Loan Documents only and such Loan Party is not entitled to rely upon the
same;
(b) By accepting or approving anything required to be observed,
performed, fulfilled or given to the Lenders or the Agent pursuant to the
Loan Documents, neither the Lenders nor the Agent shall be deemed to have
warranted or represented the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision or condition thereof, and
such acceptance or approval thereof shall not constitute a warranty or
representation to anyone with respect thereto by the Lenders or the Agent;
(c) The relationship between the Loan Parties and the Lenders
arising out of or related to this Agreement is, and shall at all times
remain, solely that of a borrower and bank; neither the Agent nor any of
the Lenders shall under any circumstance be construed to be a partner or a
joint venturer of any Loan Party or any of their Affiliates; neither the
Agent nor any of the Lenders shall under any circumstance be deemed to be
in a fiduciary relationship with any Loan Party or their Affiliates in
connection with this Agreement, or to owe any fiduciary duty to any Loan
Party or their Affiliates in connection with this Agreement; neither the
Agent nor any of the Lenders undertakes or assumes any responsibility or
duty to any Loan Party or their Affiliates to select, review, inspect,
supervise, pass judgment upon or inform any Loan Party or their Affiliates
of any matter in connection with their property or the operations of the
Loan Parties or their Affiliates; each Loan Party and its Affiliates shall
rely entirely upon their own judgment with respect to such matters; and any
review, inspection, supervision, exercise of judgment or supply of
information undertaken or assumed by the Lenders or the Agent in connection
with such matters is solely for the protection of the Agent and the Lenders
and neither the Loan Parties nor any other Person is entitled to rely
thereon; and
(d) Neither the Agent nor any of the Lenders shall be
responsible or liable to any Person for any loss,
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damage, liability or claim of any kind relating to injury or death
to Persons or damage to property or other loss, damage, liability
or claim caused by the actions, inaction or negligence of any Loan
Party and/or its Affiliates.
11.12 CONFIDENTIALITY. Each Lender agrees to hold any confidential
information which it may receive from any Loan Party pursuant to or in
connection with this Agreement or the exercise of any rights hereunder in
confidence and to cause its officers, employees, agents and professional
advisors to do likewise. The foregoing shall not, however, restrict disclosure
of any such confidential information by any Lender (a) to other Lenders; (b) to
legal counsel, accountants and other professional advisors to any Loan Party or
that Lender retained in connection with this Agreement; (c) to regulatory
officials having jurisdiction over that Lender; (d) as required by law or legal
process or in connection with any legal proceeding to which that Lender and any
Loan Party are adverse parties; or (e) to another financial institution in
connection with a disposition or proposed disposition to that financial
institution of an assignment of or a participation interest in its Commitment
and/or Advances, provided that such disclosure is made subject to an appropriate
written confidentiality agreement on terms substantially similar to this Section
and provided further that Borrower is advised substantially concurrently with
such disclosure of the identity of such financial institution. For purposes of
the foregoing, "confidential information" shall mean any information respecting
Borrower or its Subsidiaries designated by Borrower or any Subsidiary to be
confidential, other than (i) information previously filed with any Governmental
Agency and available to the public without filing a request under the Freedom of
Information Act, (ii) information previously published in any public medium not
furnished directly or indirectly, by that Lender and (iii) information
previously disclosed by any Loan Party to any Person not associated or
affiliated with any Loan Party or any of its officers, directors, agents,
attorneys or employees without an appropriate confidentiality agreement and
subsequently disclosed by that Person. Nothing in this Section shall be
construed to create or give rise to any fiduciary duty on the part of the Agent
or the Lenders to any Loan Party.
11.13 NO THIRD PARTIES BENEFITED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
each Loan Party, the Agent and the Lenders with respect to the Advances, and is
made for the sole benefit of each Loan Party, the Agent and the Lenders, and the
Agent's and the Lenders' successors and assigns. Except as provided in Sections
11.08 and 11.10, no other Person shall have any rights of any nature hereunder
or by reason hereof.
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<PAGE>
11.14 RIGHT OF SETOFF. Upon the occurrence of an Event of Default,
each Loan Party hereby specifically authorizes each Lender (subject to the
approval of the Majority Lenders) in which they maintain deposit accounts
(whether a general or special deposit account, other than trust accounts) or a
certificate of deposit to setoff any Obligations owned to the Lenders against
such deposit account or certificate of deposit without prior notice to such Loan
Party (which notice is hereby waived) whether or not such deposit account or
certificate of deposit has then matured. Nothing in this Section shall limit or
restrict the exercise by a Lender of any right to setoff or banker's lien under
applicable Law, subject to the approval of the Majority Lenders.
11.15 JUDGMENT CURRENCY.
(a) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder or under any instrument delivered
hereunder in any currency (the "Original Currency") into another currency
(the "Other Currency"), the parties hereto agree, to the fullest extent
permitted by law, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase the
Original Currency with the Other Currency on the Business Day preceding
that on which final judgment is given.
(b) The obligation of each Loan Party in respect of any sum due
from it hereunder in the Original Currency shall, notwithstanding any
judgment in any Other Currency, be discharged only to the extent that on
the Business Day following receipt of any sum adjudged to be so due in such
Other Currency the Agent may in accordance with normal banking procedures
purchase such Original Currency with such Other Currency; if the amount of
the Original Currency so purchased is less than the sum originally due in
the Original Currency, such Loan Party agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Lender or Person to
whom such amount was owing against such loss.
11.16 FURTHER ASSURANCES. Borrower and its Subsidiaries shall do,
execute, and deliver such further acts and documents as any Lender or the Agent
from time to time reasonably requires for the assuring and confirming unto the
Lenders or the Agent the rights hereby created or facilitating the exercise of
remedies or other rights available to the Lenders under any Loan Document.
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<PAGE>
11.17 INTEGRATION. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof. Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.
11.18 GOVERNING LAW. Each Loan Document shall be governed by, and
construed and enforced in accordance with the laws of California without regard
to conflicts of laws.
11.19 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid as to any party or in
any jurisdiction shall, as to that party or that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions or the
operation, enforceability, or validity of that provision as to any party or in
any other jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
11.20 HEADINGS. Article and Section headings in this Agreement and
the other Loan Documents are included for convenience of reference only and are
not part of this Agreement or the other Loan Documents for any other purpose.
11.21 CONFLICT IN LOAN DOCUMENTS. To the extent there is any actual
irreconcilable conflict between the provisions of this Agreement and any other
Loan Document, the provisions of this Agreement shall prevail.
11.22 WAIVER OF TRIAL BY JURY. WITH RESPECT TO ANY PROCEEDING IN A
COURT OF LAW, EACH LOAN PARTY (ON ITS BEHALF AND ON BEHALF OF ITS AFFILIATES)
AND THE AGENT AND EACH OF THE LENDERS HEREBY IN ANY EVENT EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF SUCH PERSONS OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT,
OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH SUCH PERSON HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY TRIAL COURT WITHOUT A JURY, AND THAT ANY
OTHER PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT OF TRIAL BY JURY.
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<PAGE>
11.23 PURPORTED ORAL AMENDMENTS. EACH LOAN PARTY EXPRESSLY
ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE
AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED,
BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.02. EACH LOAN PARTY
AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR
ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF AGENT OR ANY LENDER THAT
DOES NOT COMPLY WITH SECTION 11.02 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER
OR SUPPLEMENT TO THE AGREEMENT OR THE OTHER LOAN DOCUMENTS.
11.24 AMENDMENT AND RESTATEMENT OF EXISTING CREDIT AGREEMENT. (a)
This Agreement amends and restates the Existing Credit Agreement, and, upon
execution and delivery by at least the Majority Lenders, the Agent and the
Borrower, is effective as to the Borrower, the Agent and all Lenders whether or
not signed by all Lenders. Advances outstanding under the Existing Credit
Agreement which are not paid or prepaid on or prior to the Closing Date
("Continuing Advances") shall be deemed to continue as Advances outstanding
hereunder with the same Interest Periods hereunder, and Continuing Letters of
Credit shall be deemed to continue as Letters of Credit outstanding hereunder.
The Applicable Margin set forth in this Agreement with respect to Eurocurrency
Rate Committed Advances, Standby Letter of Credit fees and commitment fees shall
become effective immediately on the Closing Date. Continuing Advances which are
Bid Advances shall continue with the same interest period and shall continue to
bear interest at the existing interest rate. Any interest, fees and other
amounts accrued, but unpaid under the Existing Credit Agreement shall continue
to accrue and be payable hereunder on the dates set forth herein for such types
of interest, fees and other amounts.
(b) Sections 7.01(d) and 7.01(f) of this Agreement shall be deemed
effective June 28, 1997.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
BORROWER:
--------
SUNRISE MEDICAL, INC.,
as Borrower and as a Guarantor
By:
---------------------------
Ted N. Tarbet
Senior Vice President and
Chief Financial Officer
GUARANTORS
----------
SUNMED FINANCE INC.
SUNRISE MARIN HOLDINGS INC.
SUNRISE MEDICAL CCG INC.
SUNRISE MEDICAL HHG INC.
By:
--------------------------
Ted N. Tarbet
Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Agent
By:
---------------------------
Charles Graber
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Lender
By:
--------------------------
Vice President
(Signatures continue)
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<PAGE>
NATIONSBANK OF TEXAS, N.A.
By:
---------------------------
Name:
Title:
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<PAGE>
ABN AMRO BANK NV Los Angeles
International Branch
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
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<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By:
---------------------------
Name:
Title:
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<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
---------------------------
Name:
Title:
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<PAGE>
DEUTSCHE BANK AG, New York
Branch and/or Caymen Islands
Branch
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
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<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By:
---------------------------
Name:
Title:
- 128 -
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SUNRISE MEDICAL, INC.
----------------
NOTE PURCHASE AGREEMENT
----------------
DATED AS OF OCTOBER 1, 1997
$50,000,000 7.09% SERIES A SENIOR NOTES DUE OCTOBER 28, 2004
$50,000,000 7.25% SERIES B SENIOR NOTES DUE OCTOBER 28, 2007
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. AUTHORIZATION OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . 1
2. SALE AND PURCHASE OF NOTES . . . . . . . . . . . . . . . . . . . . . . 2
3. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . 3
4.2 Performance; No Default. . . . . . . . . . . . . . . . . . . . . 3
4.3 Compliance Certificates. . . . . . . . . . . . . . . . . . . . . 3
4.4 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . 3
4.5 Purchase Permitted By Applicable Law, etc. . . . . . . . . . . . 4
4.6 Sale of Other Notes. . . . . . . . . . . . . . . . . . . . . . . 4
4.7 Payment of Special Counsel Fees. . . . . . . . . . . . . . . . . 4
4.8 Private Placement Numbers. . . . . . . . . . . . . . . . . . . . 4
4.9 Changes in Structure . . . . . . . . . . . . . . . . . . . . . . 4
4.10 Reduction of Credit Agreement Availability . . . . . . . . . . . 4
4.11 Proceedings and Documents. . . . . . . . . . . . . . . . . . . . 5
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS . . . . . . . . . . . . 5
5.1 Organization; Power and Authority. . . . . . . . . . . . . . . . 5
5.2 Authorization, etc.. . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Organization and Ownership of Shares of Material Subsidiaries;
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Compliance with Laws, Other Instruments, etc.. . . . . . . . . . 8
5.7 Governmental Authorizations, etc.. . . . . . . . . . . . . . . . 8
5.8 Litigation; Observance of Agreements, Statutes and Orders. . . . 8
5.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.10 Title to Property; Leases. . . . . . . . . . . . . . . . . . . . 9
5.11 Licenses, Permits, etc.. . . . . . . . . . . . . . . . . . . . . 9
5.12 Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.13 Private Offering by the Company. . . . . . . . . . . . . . . . . 11
5.14 Use of Proceeds; Margin Regulations. . . . . . . . . . . . . . . 11
5.15 Existing Debt; Future Liens. . . . . . . . . . . . . . . . . . . 11
5.16 Foreign Assets Control Regulations, etc. . . . . . . . . . . . . 12
5.17 Status under Certain Statutes. . . . . . . . . . . . . . . . . . 12
5.18 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 12
5.19 Obligors Interdependent. . . . . . . . . . . . . . . . . . . . . 13
6. REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . . . . . . . . . 13
i
<PAGE>
TABLE OF CONTENTS (cont.)
PAGE
----
6.1 Purchase for Investment. . . . . . . . . . . . . . . . . . . . . 13
6.2 Source of Funds. . . . . . . . . . . . . . . . . . . . . . . . . 13
7. INFORMATION AS TO COMPANY. . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Financial and Business Information . . . . . . . . . . . . . . . 15
7.2 Officer's Certificate. . . . . . . . . . . . . . . . . . . . . . 17
7.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8. PREPAYMENT OF THE NOTES. . . . . . . . . . . . . . . . . . . . . . . . 18
8.1 Required Prepayments . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Optional Prepayments of Notes with Make-Whole Amount . . . . . . 18
8.3 Allocation of Note Partial Prepayments . . . . . . . . . . . . . 19
8.4 Notes; Maturity; Surrender, etc. . . . . . . . . . . . . . . . . 19
8.5 Purchase of Notes. . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 Make-Whole Amount. . . . . . . . . . . . . . . . . . . . . . . . 20
9. INTEREST ON THE NOTES. . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Series A Notes' Semi-Annual Interest Payments. . . . . . . . . . 21
9.2 Series B Notes' Semi-Annual Interest Payments. . . . . . . . . . 21
10. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 22
10.1 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . 22
10.2 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.3 Maintenance of Properties. . . . . . . . . . . . . . . . . . . . 22
10.4 Payment of Taxes and Claims. . . . . . . . . . . . . . . . . . . 22
10.5 Corporate Existence, etc.. . . . . . . . . . . . . . . . . . . . 23
10.6 Pari Passu Obligations . . . . . . . . . . . . . . . . . . . . . 23
10.7 Maintenance of Guaranties of Subsidiaries. . . . . . . . . . . . 23
11. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.1 Transactions with Affiliates . . . . . . . . . . . . . . . . . . 25
11.2 Merger, Consolidation, etc . . . . . . . . . . . . . . . . . . . 25
11.3 Incurrence of Debt . . . . . . . . . . . . . . . . . . . . . . . 27
11.4 Incurrence of Priority Debt. . . . . . . . . . . . . . . . . . . 27
11.5 Consolidated Net Worth; Restricted Payments. . . . . . . . . . . 28
11.6 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.7 Sale of Assets, etc. . . . . . . . . . . . . . . . . . . . . . . 31
11.8 Line of Business . . . . . . . . . . . . . . . . . . . . . . . . 34
ii
<PAGE>
TABLE OF CONTENTS (cont.)
PAGE
----
12. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13. REMEDIES ON DEFAULT, ETC.. . . . . . . . . . . . . . . . . . . . . . . 36
13.1 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.2 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.3 Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.4 No Waivers or Election of Remedies, Expenses, etc. . . . . . . . 38
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. . . . . . . . . . . . . 38
14.1 Registration of Notes. . . . . . . . . . . . . . . . . . . . . . 38
14.2 Transfer and Exchange of Notes . . . . . . . . . . . . . . . . . 38
14.3 Replacement of Notes . . . . . . . . . . . . . . . . . . . . . . 39
15. PAYMENTS ON NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.1 Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . 39
15.2 Home Office Payment. . . . . . . . . . . . . . . . . . . . . . . 39
16. EXPENSES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.1 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . 40
16.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT . . . . . 40
18. AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.1 Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 41
18.2 Solicitation of Holders of Notes . . . . . . . . . . . . . . . . 41
18.3 Binding Effect, etc. . . . . . . . . . . . . . . . . . . . . . . 41
18.4 Notes held by Company, etc.. . . . . . . . . . . . . . . . . . . 42
19. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
20. REPRODUCTION OF DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . 42
21. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 43
22. SUBSTITUTION OF PURCHASER. . . . . . . . . . . . . . . . . . . . . . . 44
23. GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
23.1 Guaranteed Obligations . . . . . . . . . . . . . . . . . . . . . 45
23.2 Performance under this Agreement and the Other Agreements. . . . 45
iii
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TABLE OF CONTENTS (cont.)
PAGE
----
23.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
23.4 Certain Waivers of Subrogation, Reimbursement and Indemnity. . . 47
23.5 Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
23.6 Marshaling . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
23.7 Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
23.8 Character of Obligation. . . . . . . . . . . . . . . . . . . . . 48
23.9 Election to Perform Obligations. . . . . . . . . . . . . . . . . 50
23.10 No Election. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
23.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 50
23.12 Other Enforcement Rights . . . . . . . . . . . . . . . . . . . . 50
23.13 Delay or Omission; No Waiver . . . . . . . . . . . . . . . . . . 50
23.14 Restoration of Rights and Remedies . . . . . . . . . . . . . . . 51
23.15 Cumulative Remedies. . . . . . . . . . . . . . . . . . . . . . . 51
23.16 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
23.17 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . 51
24. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
24.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 52
24.2 Payments Due on Non-Business Days. . . . . . . . . . . . . . . . 52
24.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 52
24.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . 52
24.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 52
24.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 53
iv
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SUNRISE MEDICAL, INC.
2382 FARADAY AVENUE, SUITE 200
CARLSBAD, CA 92008
$50,000,000 7.09% SERIES A SENIOR NOTES DUE OCTOBER 28, 2004
$50,000,000 7.25% SERIES B SENIOR NOTES DUE OCTOBER 28, 2007
Dated as of October 1, 1997
[Separately addressed to each of
the Purchasers identified on Schedule A]
Ladies and Gentlemen:
SUNRISE MEDICAL, INC., a Delaware corporation (together with its permitted
successors, the "COMPANY"), SUNMED FINANCE INC., a Delaware corporation
(together with its permitted successors, "SUNMED"), SUNRISE MARIN HOLDINGS INC.,
a California corporation (together with its permitted successors, "SMH"),
SUNRISE MEDICAL CCG INC., a Wisconsin corporation (together with its permitted
successors, "CCG"), SUNRISE MEDICAL HHG INC., a California corporation (together
with its permitted successors, "HHG" and, together with Sunmed, SMH and CCG, and
each other Person becoming a Guarantor hereunder pursuant to Section 10.7, are
referred to herein individually as a "GUARANTOR" and collectively as the
"GUARANTORS"; the Company, together with the Guarantors, are referred to herein
individually as an "OBLIGOR" and collectively as the "OBLIGORS"), hereby agree,
jointly and severally, with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of
(a) $50,000,000 aggregate principal amount of its 7.09% Series A
Senior Notes due October 28, 2004 (the "SERIES A NOTES"), and
<PAGE>
(b) $50,000,000 aggregate principal amount of its 7.25% Series B
Senior Notes due October 28, 2007 (the "SERIES B NOTES").
The term "SERIES A NOTES" as used in this Agreement shall include each Series A
Note delivered pursuant to this Agreement and the Other Agreements (as
hereinafter defined) and any such notes issued in substitution therefor pursuant
to Section 14 of this Agreement or the Other Agreements; the term "SERIES B
NOTES" as used in this Agreement shall include each Series B Note delivered
pursuant to this Agreement and the Other Agreements and any such notes issued in
substitution therefor pursuant to Section 14 of this Agreement or the Other
Agreements. The term "NOTES" as used in this Agreement shall include each
Series A Note and each Series B Note. The Series A Notes and the Series B Notes
shall be substantially in the forms set out in Exhibits 1A and 1B, respectively,
with such changes therefrom, if any, as may be approved by you and the Company.
Certain capitalized terms used in this Agreement are defined in Schedule B;
references to a "SCHEDULE" or an "EXHIBIT" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount and of the Series
specified below your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Company is entering into separate Note Purchase Agreements (the "OTHER
AGREEMENTS") identical with this Agreement with each of the other purchasers
named in Schedule A (the "OTHER PURCHASERS"), providing for the sale at such
Closing to each of the Other Purchasers of Notes in the principal amount and of
the Series specified below its name in Schedule A. Your obligation hereunder
and the obligations of the Other Purchasers under the Other Agreements are
several and not joint obligations and you shall have no obligation under any
Other Agreement and no liability to any Person for the performance or
non-performance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of
2
<PAGE>
Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York, at
10:00 a.m., local time, at a closing (the "CLOSING") on October 28, 1997 or
on such other Business Day thereafter as may be agreed upon by the Company
and you and the Other Purchasers. At the Closing the Company will deliver to
you the Notes of the Series to be purchased by you in the form of a single
Note (or such greater number of Notes in denominations of at least $500,000
as you may request), dated the date of the Closing and registered in your
name (or in the name of your nominee), against delivery by you to the Company
or its order of immediately available funds in the amount of the purchase
price therefor by wire transfer of immediately available funds for the
account of the Company as indicated on Schedule C. If at the Closing the
Company shall fail to tender such Notes to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have
been fulfilled to your satisfaction, you shall, at your election, be relieved
of all further obligations under this Agreement, without thereby waiving any
rights you may have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Obligors in this Agreement shall
be correct when made and at the time of the Closing.
4.2 PERFORMANCE; NO DEFAULT.
Each Obligor shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and, after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Schedule 5.14) no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by
Section 11.1 had such Section applied since such date.
3
<PAGE>
4.3 COMPLIANCE CERTIFICATES.
(a) OBLIGOR'S OFFICER'S CERTIFICATES. Each Obligor shall have
delivered to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Section 4.1, Section 4.2 and
Section 4.9 have been fulfilled.
(b) OBLIGOR SECRETARY'S CERTIFICATES. Each Obligor shall have
delivered to you a certificate of its Secretary or one of its Assistant
Secretaries, dated the date of the Closing, certifying as to the
resolutions attached thereto and other proceedings relating to the
authorization, execution and delivery of the Notes, this Agreement and the
Other Agreements.
4.4 OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to you,
dated the date of the Closing,
(a) from Steven Jaye, Esq., General Counsel of the Company and the
Guarantors, substantially in the form set out in Exhibit 4.4(a) and
covering such other matters incident to the transactions contemplated
hereby as you or your counsel may reasonably request (and the Company
hereby instructs its counsel to deliver such opinion to you),
(b) from Hebb & Gitlin, special counsel for the Company,
substantially in the form set out in Exhibit 4.4(b) and covering such other
matters incident to the transactions contemplated hereby as you or your
counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to you) and
(c) from Orrick, Herrington & Sutcliffe LLP, your special counsel
in connection with the transactions contemplated hereby.
4.5 PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (a) be permitted by
the laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the
4
<PAGE>
particular investment, (b) not violate any applicable law or regulation
(including, without limitation, Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and (c) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date of your execution and
delivery of this Agreement. If requested by you, you shall have received an
Officer's Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
4.6 SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
4.7 PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 16.1, the Company shall have
paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the date of the Closing.
4.8 PRIVATE PLACEMENT NUMBERS.
A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau
(in cooperation with the Securities Valuation Office of the National Association
of Insurance Commissioners) shall have been obtained for each Series of the
Notes.
4.9 CHANGES IN STRUCTURE.
The Obligors shall not have changed their jurisdiction of incorporation or
organization or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Schedule 5.5.
4.10 REDUCTION OF CREDIT AGREEMENT AVAILABILITY.
The Company shall have, contemporaneously with the sale of the Notes (and
in conjunction with the application of the
5
<PAGE>
proceeds of the Notes as set forth in Section 5.14), paid all of such
proceeds to the agent under the Credit Agreement for application to the
principal amount of the Debt outstanding thereunder and shall have,
contemporaneously therewith, caused the amount of its commitment availability
thereunder to be permanently reduced by $100,000,000, and you shall have
received evidence reasonably satisfactory to you of all such actions.
4.11 PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
Each Obligor, jointly and severally, represents and warrants to you, as of
the date of the Closing, that:
5.1 ORGANIZATION; POWER AND AUTHORITY.
Each Obligor is a corporation, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and each is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each Obligor has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute and
deliver this Agreement, the Other Agreements and the Notes and to perform the
provisions hereof and thereof.
5.2 AUTHORIZATION, ETC.
(a) THE COMPANY. This Agreement, the Other Agreements and the
Notes have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement constitutes, and upon
6
<PAGE>
execution and delivery thereof each Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(b) THE GUARANTORS. This Agreement and the Other Agreements have
been duly authorized by all necessary corporate action on the part of each
Guarantor, and this Agreement constitutes a legal, valid and binding
obligation of each such Guarantor, enforceable against each such Guarantor
in accordance with its terms, except as such enforceability may be limited
by (i) applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) SOLVENCY OF GUARANTORS. None of the Guarantors intends to
incur any obligations hereunder or otherwise make any transfers in
connection herewith, with actual intent to hinder, delay or defraud either
present or future creditors. Before, and after giving effect to, the
consummation of the transactions contemplated hereby, without limitation,
the issuance of the Notes and the delivery of the Guarantees:
(i) the assets of each Guarantor at a fair valuation
thereof on a going concern basis will not be less than the amount
that will be required to pay the probable liability with respect to
its debts (including, without limitation, contingent, subordinated,
unmatured and unliquidated liabilities on existing debts, as such
liabilities may become absolute and matured), in each case both
prior to and after giving effect to the transactions contemplated by
this Agreement,
(ii) no Guarantor is currently engaged in or about to engage
in a business or transaction for
7
<PAGE>
which the property remaining in its respective hands is an
unreasonably small capital and
(iii) each Guarantor will be able to pay its respective debts
as they mature.
5.3 DISCLOSURE.
(a) The Obligors, through the Placement Agents, have delivered to
you and each Other Purchaser a copy of a Confidential Private Placement
Memorandum, dated September 1997 (the "MEMORANDUM"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal
properties of the Company and its Subsidiaries. Except as disclosed in
Schedule 5.3, this Agreement, the Memorandum, the documents, certificates
or other writings delivered to you by or on behalf of the Obligors in
connection with the transactions contemplated hereby and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein (taken as a whole) not misleading
in light of the circumstances under which they were made. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or
in one of the documents, certificates or other writings identified therein,
or in the financial statements listed in Schedule 5.5, since June 27, 1997,
there has been no change in the financial condition, operations, business,
properties or prospects of the Obligors except changes that individually or
in the aggregate could not reasonably be expected to have a Material
Adverse Effect. There is no fact known to a Senior Financial Officer that
could reasonably be expected to have a Material Adverse Effect that has not
been set forth herein or in the Memorandum or in the other documents,
certificates and other writings delivered to you by or on behalf of the
Obligors specifically for use in connection with the transactions
contemplated hereby, provided that no representation is made as to general
economic conditions.
(b) The material assumptions used in the preparation of the
projected information with respect to the Company and its Subsidiaries
included in the Memorandum, taken as a whole, were made in good faith, were
believed to be reasonable when made and the
8
<PAGE>
Company believes such assumptions continue to be reasonable. All
material assumptions and principles of accounting on which such
projections were based are disclosed therein. Such projections were
prepared in good faith, have a reasonable basis and represent the good
faith opinion of the Company as to the projected results of the
operations of the Company and its Subsidiaries after giving effect to
the transactions contemplated hereby. The estimates of future
performance and financial condition set forth in such projections, taken
as a whole, are, in the Company's opinion, reasonable; however, actual
events or results may differ materially from such estimates. There is
no fact known to a Senior Financial Officer that has occurred since the
preparation of such projections that would materially affect such
projections, except such facts that the Memorandum or other written
statements delivered to you disclose have occurred or may occur.
5.4 ORGANIZATION AND OWNERSHIP OF SHARES OF MATERIAL SUBSIDIARIES;
AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, identifying the
Subsidiaries that are Material Subsidiaries, showing, as to each Material
Subsidiary, the correct name thereof, the jurisdiction of its organization
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other
Subsidiary, (ii) of the Company's Affiliates, other than Subsidiaries, and
(iii) of the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Material Subsidiary shown in Schedule 5.4 as being
owned by the Company and its Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Company or another
Subsidiary free and clear of any Lien (except as otherwise disclosed in
Schedule 5.4).
(c) Each Material Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in
good standing (to the extent such concept is recognized) under the laws of
its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required
9
<PAGE>
by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Each such Material Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and
proposes to transact.
(d) No Material Subsidiary is a party to, or otherwise subject to
any legal restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Material Subsidiary
to pay dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns outstanding
shares of capital stock or similar equity interests of such Material
Subsidiary.
5.5 FINANCIAL STATEMENTS.
The Company has delivered to you and each Other Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule
5.5. All of said financial statements (including in each case the related
schedules and notes) fairly present, in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and
have been prepared in accordance with GAAP consistently applied throughout
the periods involved except as set forth in the notes thereto (subject, in
the case of any interim financial statements, to normal year-end adjustments).
5.6 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of the Notes and by
the Obligors of this Agreement will not
(a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of
any Obligor or any Subsidiary under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, lease, corporate charter, bylaws
or other constitutive document, or any other material agreement or
instrument to which such
10
<PAGE>
Obligor or such Subsidiary is bound or by which such Obligor or such
Subsidiary or any of their respective properties may be bound or
affected,
(b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to any Obligor or
any Subsidiary, or
(c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to any Obligor or any
Subsidiary.
5.7 GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance of the Notes by the Company or this Agreement
by any of the Obligors.
5.8 LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Obligors,
threatened against or affecting the Company or any Subsidiary or any
property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it
is bound, or any order, judgment, decree or ruling of any court, arbitrator
or Governmental Authority or is in violation of any applicable law,
ordinance, rule or regulation (including, without limitation, Environmental
Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
11
<PAGE>
5.9 TAXES.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes
shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (a) the amount of which is not individually or in the aggregate
Material or (b) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company, any other Obligor or any Subsidiary, as the case may be,
has established adequate reserves in accordance with GAAP. The Obligors know
of no basis for any other tax or assessment that could reasonably be expected
to have a Material Adverse Effect. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including
the fiscal year ended June 30, 1993.
5.10 TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient title to their
respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance
sheet referred to in Section 5.5 or purported to have been acquired by the
Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear
of Liens prohibited by this Agreement. All leases that individually or in
the aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.
5.11 LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in
the
12
<PAGE>
aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Obligors, no product or practice
of the Company or any Subsidiary infringes in any material respect any
license, permit, franchise, authorization, patent, copyright, service
mark, trademark, trade name or other right owned by any other Person,
which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect; and
(c) to the best knowledge of the Obligors, there is no material
violation by any Person of any right of any Obligor or any Subsidiary
with respect to any patent, copyright, service mark, trademark, trade
name or other right owned or used by such Person which, individually or
in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
5.12 PENSION PLANS.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan (other than any Multiemployer Plan) in compliance
with all applicable laws except for such instances of noncompliance as
have not resulted in and could not reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability in the nature of a penalty, excise tax or
fine pursuant to Title I of ERISA, any liability under Title IV of ERISA
or any liability under sections 4971 through 4980E of the Code, and no
event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability
by the Company or any ERISA Affiliate, or in the imposition of any Lien
on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or pursuant
to sections 4971 through 4980E of the Code or pursuant to section
401(a)(29) or 412 of the Code, other than such liabilities or Liens as
would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under
all of the Plans subject to Title IV of ERISA (other than Multiemployer
Plans), determined as of the end of each such Plan's most recently ended
plan year on the basis of the actuarial assumptions specified for
13
<PAGE>
funding purposes in such Plan's most recent actuarial valuation report,
did not exceed the aggregate current value of the assets of all such
Plans by an amount that is Material. The term "BENEFIT LIABILITIES" has
the meaning specified in section 4001 of ERISA and the terms "CURRENT
VALUE" and "PRESENT VALUE" have the meaning specified in section 3 of
ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
(d) The unfunded expected postretirement benefit obligation
(determined as of the last day of the Company's most recently ended
fiscal year in accordance with Financial Accounting Standards Board
Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of the
Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of section 406 of ERISA or in connection
with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D)
of the Code. The representation by the Obligors in the first sentence
of this Section 5.12(e) is made in reliance upon and subject to the
accuracy of your representation in Section 6.2 as to the sources of the
funds used to pay the purchase price of the Notes to be purchased by you.
(f) All Non-US Pension Plans have been established, operated,
administered and maintained in compliance with all laws, regulations and
orders applicable thereto, except where any failure to so comply would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except where they would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect, all premiums, contributions and any other amounts required to be
paid pursuant to applicable Non-US Pension Plan documents or applicable
laws governing such Non-US Pension Plans have been paid or accrued as
required.
(g) The Multiemployer Plans in respect of which any Obligor or any
ERISA Affiliate makes contributions or has
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any liability or obligation are set forth on Schedule 5.12(g). The
Plans constituting "defined benefit plans" (as defined in section
(3)(35) of ERISA) are set forth on Schedule 5.12(g).
5.13 PRIVATE OFFERING BY THE COMPANY.
Neither the Obligors nor anyone acting on their behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy
any of the same from, or otherwise approached or negotiated in respect
thereof with, any Person other than you, the Other Purchasers and not more
than 72 other Institutional Investors, each of which has been offered the
Notes at a private sale for investment. Neither any of the Obligors nor
anyone acting on their behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
section 5 of the Securities Act.
5.14 USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as
to involve the Company in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of Regulation T of
said Board (12 CFR 220). Margin stock does not constitute more than 1% of
the value of the consolidated assets of the Obligors and the Obligors do not
have any present intention that margin stock will constitute more than 1% of
the value of such assets. As used in this Section, the terms "MARGIN STOCK"
and "PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them
in said Regulation G.
5.15 EXISTING DEBT; FUTURE LIENS.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Debt of the Obligors and
their Subsidiaries as of September 27, 1997 (other than outstanding
items of Debt that individually do not exceed $1,000,000 and, in the
aggregate for all such items, do not exceed $5,000,000), since which
date there has been no
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Material change in the amounts, interest rates, sinking funds,
instalment payments or maturities of the Debt of the Obligors and their
Subsidiaries except as described in Schedule 5.15. Neither any Obligor
nor any Subsidiary is in default and no waiver of default is currently
in effect, in the payment of any principal or interest on any Debt of
any Obligor or such Subsidiary, and no event or condition exists with
respect to any Debt of any Obligor or Subsidiary which event or
condition would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Debt to become due
and payable before its stated maturity or before its regularly scheduled
dates of payment.
(b) Except as disclosed in Schedule 5.15, no Obligor or Subsidiary
has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted
by Section 11.6.
5.16 FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto.
5.17 STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Transportation Acts (49 U.S.C.), as
amended, or the Federal Power Act, as amended.
5.18 ENVIRONMENTAL MATTERS.
Neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of
their respective real properties now or formerly owned, leased or operated by
any of them or other assets, alleging any damage to the environment or
violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result
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in a Material Adverse Effect. Except as otherwise disclosed to you in
writing,
(a) neither the Company nor any Subsidiary has knowledge of any
facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them in a manner contrary to any Environmental Laws
and has not disposed of any Hazardous Materials in a manner contrary to
any Environmental Laws in each case in any manner that could reasonably
be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance
with applicable Environmental Laws, except where failure to comply could
not reasonably be expected to result in a Material Adverse Effect.
5.19 OBLIGORS INTERDEPENDENT.
The Company and the Guarantors are directly dependent upon each other
for and in connection with their borrowing activities. Each Guarantor will
receive direct and indirect economic, financial and other benefits from the
indebtedness incurred hereunder and under the Notes by the Company, and under
the Guarantee of each Guarantor, and the incurrence of such indebtedness is
in the best interests of the Company and each Guarantor. The Company and the
Guarantors have explicitly induced the Purchasers to purchase the Notes based
on and in reliance on the consolidated financial condition of the Company and
the Guarantors.
6. REPRESENTATIONS OF THE PURCHASER.
6.1 PURCHASE FOR INVESTMENT.
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You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one
or more pension or trust funds (or commingled pension trust funds) or for the
account of one or more "accredited investors" within the meaning of
Regulation D under the Securities Act for whom you are acting as investment
manager, agent or investment adviser, and not with a view to the distribution
thereof, PROVIDED that the disposition of your or their property shall at all
times be within your or their control. You understand that the Notes have
not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that
the Company is not required to register the Notes.
6.2 SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" as
defined in Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (60 FR 35925, July 12, 1995) and in respect thereof you represent
that there is no "employee benefit plan" (as defined in section 3(3) of
ERISA and section 4975(e)(1) of the Code, treating as a single plan all
plans maintained by the same employer or employee organization or
affiliate thereof) with respect to which the amount of the general
account reserves and liabilities of all contracts held by or on behalf
of such plan exceed 10% of the total reserves and liabilities of such
general account (exclusive of separate account liabilities) PLUS
surplus, as set forth in the NAIC Annual Statement filed with your state
of domicile; or
(b) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest, other
than a separate account that is maintained solely in connection with
your fixed contractual obligations under which the amounts payable, or
credited, to such plan and to any participant or beneficiary of such
plan (including any
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annuitant) are not affected in any manner by the investment performance
of the separate account; or
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE
91-38 (issued July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (c), no employee benefit
plan or group of plans maintained by the same employer, affiliate of
such employer or employee organization beneficially owns more than 10%
of all assets allocated to such pooled separate account or collective
investment fund; or
(d) (i) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), (ii) no employee benefit plan's assets
that are included in such investment fund, when combined with the assets
of all other employee benefit plans established or maintained by the
same employer or by an affiliate (within the meaning of Section V(c)(1)
of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, (iii) the conditions of Part I(c) and (g)
of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in any Obligor and (iv) the identity of such QPAM and the names
of all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing pursuant
to this paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this paragraph (f); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
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As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(A) QUARTERLY STATEMENTS -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of operations, stockholders'
equity and cash flows for the Company and its Subsidiaries, for
such quarter and (in the case of the second and third quarters) for
the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year of the Company, all in
reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a Senior
Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results
of operations and cash flows, subject to changes resulting from year-end
adjustments, PROVIDED that delivery within the time period specified
above of copies of the Company's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a);
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(b) ANNUAL STATEMENTS -- within 120 days after the end of each
fiscal year of the Company, duplicate copies of
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of operations, stockholders'
equity and cash flows of the Company and its Subsidiaries, for such
year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP,
and accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion
shall state that such financial statements present fairly, in
all material respects, the financial position of the companies
being reported upon and the results of their operations and
cash flows and have been prepared in conformity with GAAP, and
that the examination of such accountants in connection with
such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances, and
(B) by a certificate of such accountants stating that they
have reviewed this Agreement and stating further whether, in
making their audit, they have become aware of any condition or
event that then constitutes a Default or an Event of Default,
and, if they are aware that any such condition or event then
exists, specifying the nature and period of the existence
thereof (it being understood that such accountants shall not be
liable, directly or indirectly, for any failure to obtain
knowledge of any Default or Event of Default unless such
accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards
or did not make such an audit),
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PROVIDED that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange
Commission, together with the accountant's certificate described in clause
(B) above, shall be deemed to satisfy the requirements of this Section
7.1(b);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public securities
holders generally, and (ii) each regular or periodic report, each
registration statement (without exhibits except as expressly requested by
such holder), and each prospectus and all amendments thereto filed by the
Company or any Subsidiary with the Securities and Exchange Commission and
of all press releases and other statements made available generally by the
Company or any Subsidiary to the public concerning developments that are
Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any
event within 5 days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given
any notice or taken any action with respect to a claimed default hereunder
or that any Person has given any notice or taken any action with respect to
a claimed default of the type referred to in Section 12(f), a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within 5 days after
a Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043 of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such
regulations as in effect from time to time; or
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(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to
have a Material Adverse Effect;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Federal or state Governmental Authority
relating to any order, ruling, statute or other law or regulation that
could reasonably be expected to have a Material Adverse Effect;
(g) REQUESTED INFORMATION -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations under this Agreement, the Other Agreements and the Notes as
from time to time may be reasonably requested by any such holder of Notes.
7.2 OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate of
a Senior Financial Officer setting forth:
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(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 11.2 through Section 11.7,
inclusive, during the quarterly or annual period covered by the statements
then being furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an Event of Default or, if any such condition or event existed or exists
(including, without limitation, any such event or condition resulting from
the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof
and what action the Company shall have taken or proposes to take with
respect thereto.
7.3 INSPECTION.
The Company shall permit the representatives of each holder of Notes that
is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the Company,
to visit the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with the
Company's officers, and (with the consent of the Company, which consent
will not be unreasonably withheld) its independent public accountants, and
(with the consent of the Company, which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and
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(b) DEFAULT -- if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said accountants
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such reasonable times and as often as may be
reasonably requested.
8. PREPAYMENT OF THE NOTES.
8.1 REQUIRED PREPAYMENTS.
(a) SERIES A NOTES. There shall be no scheduled principal
prepayments on account of the Series A Notes. The unpaid principal amount
of each Series A Note, together with accrued unpaid interest thereon, shall
be due and payable on October 28, 2004.
(b) SERIES B NOTES. There shall be no scheduled principal
prepayments on account of the Series B Notes. The unpaid principal amount
of each Series B Note, together with accrued unpaid interest thereon, shall
be due and payable on October 28, 2007.
8.2 OPTIONAL PREPAYMENTS OF NOTES WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below, prepay at
any time all, or from time to time any part of, any of the Series A Notes or the
Series B Notes in an amount not less than 5% of the aggregate principal amount
of the Notes of such Series then outstanding in the case of a partial
prepayment, at 100% of the principal amount so prepaid and accrued interest
thereon to the date of prepayment, PLUS the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The Company will give
each holder of Notes of any Series to be prepaid under this Section 8.2 written
notice of such optional prepayment not less than 30 days and not more than 60
days prior to the date fixed for such prepayment (which shall be a Business
Day). Each such notice shall specify such date, the Series of such Note, the
aggregate principal amount of the Notes to be prepaid on such
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date, the principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid on
the prepayment date with respect to such principal amount being prepaid, and
shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to
such prepayment, the Company shall deliver to each holder of a Note to be
optionally prepaid under this Section 8.2 a certificate of a Senior Financial
Officer specifying the calculation of the Make-Whole Amount in respect of
such Notes as of the specified prepayment date. For the purposes of avoidance
of doubt, the Company may effect multiple partial prepayments of the Notes of
any Series pursuant to, and in accordance with the terms of, this Section 8.2.
8.3 ALLOCATION OF NOTE PARTIAL PREPAYMENTS.
Except as provided in the second paragraph of Section 8.4 with respect to
Debt Offered Prepayment Applications accepted by any holder of Notes, in the
case of each partial prepayment of Notes of any Series, the principal amount of
the Notes to be prepaid shall be allocated among all of the Notes of such Series
at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
8.4 NOTES; MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each such Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
Any Debt Offered Prepayment Application in respect of the Notes shall be on
terms as set forth in Section 8.2 and this Section 8.4, PROVIDED that only those
holders who shall have
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accepted any offer in respect of such Debt Offered Prepayment Application
shall have their Notes prepaid, in whole or part, in connection therewith.
8.5 PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except upon the payment or prepayment of the Notes in accordance with the
terms of this Agreement and the Notes (including, without limitation, any
prepayment of the Notes contemplated in connection with a Debt Offered
Prepayment Application accepted by any holder of Notes). The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6 MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value with respect to
the Called Principal of such Note over the amount of such Called Principal,
PROVIDED that the Make-Whole Amount may in no event be less than zero.
For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2
or has become or is declared to be immediately due and payable
pursuant to Section 13.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Note, the amount obtained by discounting the amount of such
Called Principal and interest payable in respect thereof from, in
the case of the Called Principal, the maturity date in respect of
such Note to the Settlement Date and, in the case of such interest,
the scheduled dates of payment hereunder in respect thereof to the
Settlement Date, in accordance with accepted financial practice and
at a discount factor (applied on the same periodic basis as that on
which interest on such Note is
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payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, the sum of (a) 0.50% PER ANNUM plus (b) the
yield to maturity implied by (i) the yields reported, as of
10:00 a.m. (New York City time) on the second Business Day preceding
the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Dow Jones Market Service (or
such other display as may replace Page 678 on Dow Jones Market
Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are
not ascertainable (including by interpolation), the Treasury
Constant Maturity Series Yields reported, for the latest day for
which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such
implied yield will be determined, if necessary, by (1) converting
U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (2) interpolating
linearly between (A) the actively traded U.S. Treasury security with
the maturity closest to and greater than the Remaining Average Life
and (B) the actively traded U.S. Treasury security with the maturity
closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to the Called
Principal of any Note, the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement
Date with respect to such Called Principal and the maturity date of
the Note in respect thereof.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be
prepaid pursuant to Sec-
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tion 8.2 or has become or is declared to be immediately due and
payable pursuant to Section 13.1, as the context requires.
9. INTEREST ON THE NOTES.
9.1 SERIES A NOTES' SEMI-ANNUAL INTEREST PAYMENTS.
Interest (computed on the basis of a 360-day year of twelve 30-day months)
shall accrue on the unpaid principal balance of the Series A Notes at 7.09% PER
ANNUM from the date of each Series A Note, and shall be payable to the holders
thereof semi-annually, on April 28 and October 28 in each year, commencing with
the later of April 28, 1998 and the payment date next succeeding the date of
such Series A Note, until the principal thereof shall have become due and
payable, and to the extent permitted by law in respect of any Series A Note on
any overdue payment of principal, any overdue payment of interest and any
overdue payment of Make-Whole Amount with respect thereto, payable, on demand,
at a rate PER ANNUM equal to the Series A Default Rate.
9.2 SERIES B NOTES' SEMI-ANNUAL INTEREST PAYMENTS.
Interest (computed on the basis of a 360-day year of twelve 30-day months)
shall accrue on the unpaid principal balance of the Series B Notes at 7.25% PER
ANNUM from the date of each Series B Note, and shall be payable to the holders
thereof semi-annually, on April 28 and October 28 in each year, commencing with
the later of April 28, 1998 and the payment date next succeeding the date of
such Series B Note, until the principal thereof shall have become due and
payable, and to the extent permitted by law in respect of any Series B Note on
any overdue payment of principal, any overdue payment of interest and any
overdue payment of Make-Whole Amount with respect thereto, payable, on demand,
at a rate PER ANNUM equal to the Series B Default Rate.
10. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
10.1 COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject, including, without
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limitation, Environmental Laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or
to the conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
10.2 INSURANCE.
The Company will and will cause each of its Subsidiaries to, maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
10.3 MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to maintain and
keep, or cause to be maintained and kept, their respective properties in good
repair, working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly conducted at all
times, PROVIDED that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
10.4 PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its Subsidiaries to file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they
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have become delinquent and all claims for which sums have become due and
payable that have or might become a Lien on properties or assets of the
Company or any Subsidiary (including, without limitation, mechanic's liens or
other similar construction liens), PROVIDED that neither the Company nor any
Subsidiary need pay any such tax or assessment or claims if (a) the amount,
applicability or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or such Subsidiary has established adequate reserves therefor
in accordance with GAAP on the books of the Company or such Subsidiary or (b)
the nonpayment of all such taxes and assessments and claims in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
10.5 CORPORATE EXISTENCE, ETC.
The Company will and will cause each Guarantor to at all times preserve
and keep in full force and effect its respective corporate or other entity
existence. Subject to Section 11.2 and Section 11.7, the Company will at all
times preserve and keep in full force and effect the corporate or other
entity existence of each of its other Subsidiaries (unless merged into the
Company or a Subsidiary) and all rights and franchises of the Company and its
Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
10.6 PARI PASSU OBLIGATIONS.
The Company covenants that its obligations under the Notes and the
Obligors' obligations under this Agreement and the Other Agreements do and
will rank at least PARI PASSU in right of payment with all their respective
other present and future unsecured and unsubordinated Debt.
10.7 MAINTENANCE OF GUARANTIES OF SUBSIDIARIES.
(A) ADDITIONAL DOMESTIC SUBSIDIARIES AS GUARANTORS. If the Company
or any Domestic Subsidiary creates or otherwise acquires any active
Domestic Subsidiary at any time after the date of Closing, the Company
shall cause such Domestic Subsidiary to become a Guarantor hereunder and
under the Other Agreements by delivering to each holder of Notes an
instrument referring to this Agreement and the Other
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Agreements wherein such Domestic Subsidiary agrees to be bound by all of
the terms and conditions applicable to a "Guarantor" under this Agreement
and the Other Agreements as of the date thereof, which instrument shall
be substantially in the form of Exhibit 10.7. In connection with the
delivery of such instrument, the Company shall also deliver the following
to each of the holders of Notes:
(i) a certificate of the secretary or assistant secretary
of such Domestic Subsidiary certifying the names and true signatures
of the officers of such Domestic Subsidiary authorized to execute
such instrument and the proper adoption of a resolution of the board
of directors or stockholders of such Subsidiary approving the
execution, delivery and performance of such instrument;
(ii) a certificate executed by a Senior Financial Officer,
dated as of the date of such instrument, stating that (i) except as
to such exceptions as shall be set forth in writing therein, the
representations and warranties contained in Section 5 are true and
correct on and as of the date of such instrument to the extent such
representations and warranties are applicable to such Domestic
Subsidiary as a "Guarantor" or "Obligor" hereunder and (ii) no
Default or Event of Default exists as of the date of such
instrument; and
(iii) with respect to any such Domestic Subsidiary whose
total assets constitute at least 10% of Consolidated Total Assets,
determined as of the last day of the Group Fiscal Quarter then most
recently ended, an opinion or opinions of counsel (which may be
counsel employed by the Company or such Domestic Subsidiary as
inside counsel) confirming that (i) such Domestic Subsidiary's
obligations under such instrument and the obligations of a
"Guarantor" hereunder and under the Other Agreements are legal,
valid, binding and enforceable against such Domestic Subsidiary,
(ii) the execution, delivery and performance of such instrument and
the performance of this Agreement and the Other Agreements by such
Domestic Subsidiary will not violate any law, decree or judgment or
violate any material agreement to which such Domestic Subsidiary is
a party or by which its assets are bound and (iii) no government
approvals, consents,
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registrations or filings are required by such Domestic Subsidiary
in connection with the execution, delivery and performance of its
obligations under such instrument and the performance of this
Agreement and the Other Agreements, PROVIDED that such opinion or
opinions shall be subject to customary exceptions and
qualifications.
For the avoidance of doubt, (A) if a Domestic Subsidiary is considered to
be "active" under any bank credit agreement (including, without limitation,
the Credit Agreement) or is otherwise required to become a guarantor,
obligor or co-obligor thereunder, it shall be treated as an active Domestic
Subsidiary for purposes of this clause (a) and (B) if a Domestic Subsidiary
has incurred and has outstanding any Debt, possesses any material assets or
conducts any material business operations, it shall be deemed to be an
active Domestic Subsidiary hereunder and under the Other Agreements.
(B) FOREIGN SUBSIDIARIES AS GUARANTORS. The Company will not
permit any Foreign Subsidiary to become a guarantor, obligor or co-obligor
in respect of any bank credit agreement of the Company (including, without
limitation, the Credit Agreement) unless the Company shall have taken such
reasonable action with respect to such Foreign Subsidiary such that the
holders of Notes under this Agreement and the Other Agreements would have
contractual rights against such Foreign Subsidiary that would be
substantially equivalent, in the reasonable judgment of the Required
Holders, to the contractual rights that the banks under such bank credit
agreement would have against such Foreign Subsidiary by virtue of its
becoming a guarantor, obligor or co-obligor.
(C) RELEASE OF GUARANTEES OF DOMESTIC OR FOREIGN SUBSIDIARIES. If,
with respect to any Domestic Subsidiary that is a Guarantor or any Foreign
Subsidiary that becomes a Guarantor pursuant to Section 10.7(b),
(i) all, or substantially all, of the assets of such
Guarantor are Transferred in accordance with the requirements of
Section 11.7 and such Guarantor is wound-up and terminated in
accordance with the requirements of Section 10.5,
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(ii) all of the Company's and any Subsidiary's capital stock
or other equity ownership interests in such Guarantor is Transferred
in accordance with the requirements of Section 11.7, or
(iii) such Guarantor became a Guarantor hereunder and under
the Other Agreements only pursuant to paragraph (b) of this Section
10.7 and such Guarantor has ceased to be a guarantor, obligor or
co-obligor under or in respect of the bank credit agreement of the
Company (including, without limitation, the Credit Agreement),
then the Company may elect to cause the withdrawal of the Guarantee of such
Guarantor hereunder and under the Other Agreements. Such election shall be
exercised by a Senior Financial Officer informing, in writing, each holder
of Notes of such election, certifying in such writing that the requirements
of this Section 10.7 have been satisfied and that no Default or Event of
Default exists. Thereafter, the Guarantee of such Guarantor shall be null
and void and without effect and such Guarantor shall no longer be, or be
deemed to be, a party to this Agreement or any of the Other Agreements,
PROVIDED that, if the aforesaid requirements under this Section 10.7(c)
(including, without limitation, the requirements of clause (i), clause (ii)
or clause (iii), as the case may be) shall not have been satisfied
(including, without limitation, the satisfaction of the requirements of
Section 10.5 or Section 11.7 referred to above), then the Guarantee of such
Guarantor shall continue in full force and effect and such Guarantor shall
continue to be a party hereto and to the Other Agreements notwithstanding
the delivery of such writing by the Company to each of the holders of Notes
until all of such requirements shall have been satisfied.
11. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
11.1 TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary to enter into
directly or indirectly any transaction or Material group of related transactions
(including, without limitation, the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the
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Company or a Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate, PROVIDED that, for the avoidance of doubt,
nothing in this Section 11.1 shall prohibit the Company or any Subsidiary
from entering into transactions and agreements with, and making payments to,
its senior executive officers or former senior executive officers in respect
of compensation, bonus or incentive plans (including stock option plans),
welfare and benefit plans, employment agreements, consulting agreements and
retirement and/or severance agreements, or the like, on the condition that
such transactions, agreements and payments are made in good faith and with a
bona fide business purpose.
11.2 MERGER, CONSOLIDATION, ETC.
The Company will not and will not permit any of its Subsidiaries to
consolidate, amalgamate or merge with or into any other Person or convey,
transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to any Person (except that (x) any
Subsidiary may consolidate, amalgamate or merge with or into, or convey,
transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to, any Obligor, (y) any Subsidiary
that is not an Obligor may consolidate, amalgamate or merge with or into, or
convey, transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to, any Wholly-Owned Subsidiary and (z)
any Subsidiary may transfer or lease all or substantially all of its assets
if permitted pursuant to Section 11.7(d)), PROVIDED that the foregoing
restrictions do not apply to
(a) the consolidation, amalgamation or merger of any Obligor with
or into, or the conveyance, transfer or lease of all or substantially all
of the assets of such Obligor in a single transaction or series of
transactions to, any Person so long as:
(i) the successor formed by such consolidation or
amalgamation or the survivor of such merger or the Person that
acquires by conveyance, transfer or lease all or substantially all
of the assets of such Obligor as an entirety, as the case may be (as
used in this Section 11.2(a), the
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"SUCCESSOR COMPANY"), shall be a solvent corporation organized and
existing under the laws of the United States of America or any
State thereof (including, without limitation, the District of
Columbia);
(ii) if such Obligor is not the Successor Company, such
Successor Company shall have executed and delivered to each holder
of any Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement, the
Other Agreements and the Notes to which such Obligor is subject and
shall have caused to be delivered to each holder of any Notes an
opinion of nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the Required Holders,
to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply
with the terms hereof;
(iii) each Guarantor (excluding any Guarantor that shall have
delivered the assumption referred to in paragraph (ii) above) shall
have confirmed, in writing, its Guarantee and other obligations
hereunder and under the Other Agreements;
(iv) immediately after giving effect to such transaction the
Successor Company would be permitted by the provisions of Section
11.3(c) to incur at least $1 of additional Debt; and
(v) immediately after giving effect to such transaction no
Default or Event of Default would exist.
(b) Except as expressly provided in Section 10.7, no such
conveyance, transfer or lease of all or substantially all of the assets of
any Obligor under this Section 11.2 shall have the effect of releasing the
Company, any Successor Company (as such term is used in Section 11.2(a)) or
any Guarantor from its liability under this Agreement, the Other Agreement
or the Notes.
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11.3 INCURRENCE OF DEBT.
The Company will not and will not permit any of its Subsidiaries to
directly or indirectly create, incur, assume, guarantee, or otherwise become
liable with respect to, any Debt, UNLESS
(a) such Debt is the Notes,
(b) such Debt is outstanding on the date of the Closing and is
referred to in Schedule 5.15 or is Debt which, directly or indirectly, is
extending, renewing or refunding any such Debt (provided that any such
extension, renewal or refunding shall not have the effect of (x) increasing
the principal amount of such Debt outstanding immediately prior to such
time or (y) reducing the average life of such Debt from that as determined
immediately prior to such time), or
(c) on the date on which the Company or such Subsidiary becomes
liable with respect to such Debt and immediately after giving effect
thereto and the concurrent retirement of any other Debt with the proceeds
thereof,
(i) no Default or Event of Default exists, and
(ii) Consolidated Total Debt as of such date does not exceed
60% of Consolidated Total Capitalization as of such date.
For the purposes of this Section 11.3, any Person becoming a member of the
Group after the date of the Closing shall be deemed, at the time it becomes
such a member, to have incurred all of its then outstanding Debt.
11.4 INCURRENCE OF PRIORITY DEBT.
The Company will not and will not permit any of its Subsidiaries to
directly or indirectly create, incur, assume, guarantee, or otherwise become
liable in respect of
(a) in the case of the Company or any Guarantor, any Debt to be
incurred after the date of the Closing and secured by Liens permitted
pursuant to clause (j) of Section 11.6 or
(b) in the case of any Foreign Subsidiary (other than a Guarantor),
any Debt (whether secured or unsecured)
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to be incurred by such Foreign Subsidiary after the date of the Closing,
unless, after giving effect to the incurrence of such Debt and the
application of the proceeds thereof, the aggregate principal amount (without
duplication) of (i) all Debt previously incurred in respect of clause (a)
above and then outstanding (excluding, in any case, any such Debt owing to
the Company, a Guarantor or a Wholly-Owned Subsidiary) and (ii) all
Consolidated Foreign Subsidiary Debt then outstanding does not exceed the
greater of
(A) $45,000,000 and
(B) 20% of Consolidated Net Worth, determined as of the
then last day of the most recently ended Group Fiscal Quarter.
11.5 CONSOLIDATED NET WORTH; RESTRICTED PAYMENTS.
(a) The Company will not permit at any time the difference of
Consolidated Net Worth as of the end of the then most recently ended Group
Fiscal Quarter MINUS the aggregate amount of Restricted Investments at such
time to be less than the sum of
(i) $215,000,000, PLUS
(ii) an aggregate amount equal to 50% of Consolidated Net
Income (but only if a positive number) for each Group Fiscal Year
ended on or after June 1998.
(b) The Company will not directly or indirectly make any Restricted
Payment, or permit any Subsidiary to make any Restricted Payment, unless
(i) immediately after giving effect to such Restricted
Payment, the Company would be permitted by the provisions of Section
11.3(c) to incur at least $1 of additional Debt and
(ii) immediately after giving effect to such Restricted
Payment, no Default or Event of Default would exist.
11.6 LIENS.
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The Company will not and will not permit any of its Subsidiaries to
directly or indirectly create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property or asset (including, without limitation, any document or instrument
in respect of goods or accounts receivable) of the Company or such
Subsidiary, whether now owned or held or hereafter acquired, or any income or
profits therefrom or assign or otherwise convey any right to receive such
income or profits (unless it makes, or causes to be made, effective provision
whereby the Notes will be equally and ratably secured with any and all other
obligations thereby secured, such security to be pursuant to an agreement
reasonably satisfactory to the Required Holders and, in any such case, the
Notes shall have the benefit, to the fullest extent that, and with such
priority as, the holders of the Notes may be entitled under applicable law,
of an equitable Lien on such property), PROVIDED that the foregoing
restrictions and limitations shall not apply to:
(a) (i) Liens for taxes, assessments or other governmental
charges the payment of which is not at the time required by Section
10.4, and
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen, inventory suppliers and other
similar Liens, in each case, incurred in the ordinary course of
business for sums not yet due or the payment of which is not at the
time required by Section 10.4;
(b) Liens
(i) arising from judicial attachments and judgments,
(ii) securing appeal bonds or supersedeas bonds, or
(iii) arising in connection with court proceedings
(including, without limitation, surety bonds and letters of credit
or any other instrument serving a similar purpose),
PROVIDED that (1) the execution or other enforcement of such Liens is
effectively stayed, (2) the claims secured thereby are being actively
contested in good faith and by appropriate proceedings and (3) adequate
book reserves
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shall have been established and maintained with respect thereto in
accordance with GAAP;
(c) Liens incurred or deposits made in the ordinary course of
business (i) in connection with workers' compensation, unemployment
insurance and other types of social security or retirement benefits, or
(ii) to secure (or to obtain letters of credit that secure) the performance
of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases
(other than Capital Leases), performance bonds, purchase, construction or
sales contracts, leases and other similar obligations, in each case not
incurred or made in connection with the borrowing of money, the obtaining
of advances or credit or the payment of the deferred purchase price of
property, and which Liens do not, in the aggregate, materially impair the
use of the property subject thereto in the operation of the business of the
Group or the value of such property for the purposes of such business;
(d) leases or subleases granted to others, easements,
rights-of-way, restrictions, zoning restrictions, governmental restrictions
in respect of any property or property right or franchise of a member of
the Group and other similar charges or encumbrances, in each case
incidental to, and not interfering with, the ordinary conduct of the
business of the Group, taken as a whole, PROVIDED that such charges and
encumbrances do not, in the aggregate, materially detract from the value of
such property;
(e) Liens existing on the date of the Closing and referred to in
Schedule 5.15;
(f) Liens on property or assets of any member of the Group securing
Debt owing to any other member of the Group;
(g) Liens created to secure all or any part of the purchase price,
or to secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property (or any improvement
thereon) acquired or constructed by any member of the Group, PROVIDED that
all of the following conditions are satisfied:
(i) any such Lien shall extend solely to the item or items
of such property (or improvement thereon) or proceeds thereof so
acquired or constructed and,
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if required by the terms of the instrument originally creating such
Lien, other property (or improvement thereon) which is an
improvement to or is acquired for specific use in connection with
such acquired or constructed property (or improvement thereon) or
which is real property being improved by such acquired or
constructed property (or improvement thereon),
(ii) the principal amount of the Debt secured by any such
Lien shall at no time exceed an amount equal to the lesser of (A)
the cost to such member of the property (or improvement thereon) so
acquired or constructed and (B) the Fair Market Value (as determined
in good faith by the Board of Directors of the Company) of such
property (or improvement thereon) at the time of such acquisition or
construction,
(iii) if such Lien secures Debt, the incurrence of such Debt
shall have been permitted pursuant to Section 11.3(c), and
(iv) any such Lien shall be created contemporaneously with,
or within 180 days after, the acquisition or construction of such
property;
(h) Liens existing on property of a Person immediately prior to its
being consolidated or amalgamated with or merged into any member of the
Group or its becoming a Subsidiary, or any Lien existing on any property
acquired by any member of the Group at the time such property is so
acquired (whether or not the Debt secured thereby shall have been assumed),
PROVIDED that
(i) no such Lien shall have been created or assumed in
contemplation of such consolidation, amalgamation or merger or such
Person's becoming a Subsidiary or such acquisition of property,
(ii) each such Lien shall extend solely to the item or items
of property so acquired and proceeds thereof and, if required by the
terms of the instrument originally creating such Lien, other
property which is an improvement to or is acquired for specific use
in connection with such acquired property,
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(iii) if such Lien secures Debt, the incurrence of Debt
deemed to occur upon the consolidation, amalgamation, merger,
becoming a Subsidiary or acquisition of property shall have been
permitted pursuant to Section 11.3(c), and
(iv) the principal amount of the Debt secured by any such
Lien shall at no time exceed an amount equal to the Fair Market
Value (as determined in good faith by the Board of Directors of the
Company) of such property (or improvement thereon) at the time of
such consolidation, amalgamation, merger, becoming a Subsidiary or
acquisition; and
(i) Liens renewing, extending or replacing Liens permitted by
clauses (a) through (h) above, PROVIDED that all of the following
conditions are satisfied:
(i) no such new Lien shall extend to any property of the
Group other than property already encumbered by the existing Lien
being so renewed, extended or replaced,
(ii) the principal amount of the underlying obligation
secured by such existing Lien outstanding at the time of such
renewal, extension or replacement shall not be increased in
connection with such renewal, extension or replacement and the
average life thereof shall not be reduced, and
(iii) immediately after such renewal, extension or refunding
no Default or Event of Default shall have existed and the Company
shall have been permitted to incur at least $1 of additional Debt
under Section 11.3(c);
(j) any Lien (other than a Lien permitted under clause (a) through
clause (i) above) securing any Debt of any member of the Group,
(i) which Debt was permitted to be incurred pursuant to
Section 11.3(c), and
(ii) which Debt, as of the date of the creation of such
Lien, did not exceed the difference of
(A) the greater of (A) $45,000,000 and (B) 20% of
Consolidated Net Worth, determined as
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of the end of the then most recently ended Group Fiscal
Quarter, MINUS
(B) the sum (without duplication) of (1) the aggregate
principal amount of all Consolidated Foreign Subsidiary Debt
outstanding as of the date of creation of such Lien PLUS (2)
the total amount of all other secured Debt of the Company and
the Guarantors outstanding as of the date of creation of such
Lien (other than Debt owing to the Company, any Guarantor or
another Subsidiary) and previously incurred under this clause
(j) by the Company or any Guarantor.
For the purposes of this Section 11.6, any Person becoming a member of the
Group after the date of the Closing shall be deemed, at the time it becomes such
a member, to have incurred all of its then existing Liens securing outstanding
Debt.
11.7 SALE OF ASSETS, ETC.
The Company will not and will not permit any of its Subsidiaries to make
any Transfer, PROVIDED that the foregoing restriction does not apply to a
Transfer if:
(a) the property that is the subject of such Transfer constitutes
either (i) inventory or (ii) equipment, fixtures, supplies or materials no
longer required in the operation of the business of any member of the Group
or that is obsolete, and, in each case, such Transfer is in the ordinary
course of business;
(b) such Transfer is (i) from a Subsidiary to the Company, a
Guarantor or a Wholly-Owned Subsidiary, (ii) from the Company to a
Guarantor or a Wholly-Owned Subsidiary or (iii) from a Guarantor to the
Company or a Wholly-Owned Subsidiary;
(c) such Transfer is subject to Section 11.2 and satisfies the
requirements thereof; or
(d) such Transfer is not a Transfer described in clause (a) through
clause (c) above (each such Transfer is referred to as a "BASKET
TRANSFER"), and all of the following conditions shall have been satisfied
with respect to such Transfer:
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(i) in the good faith opinion of the Board of Directors of
the Company, the Transfer is in exchange for consideration with a
Fair Market Value at least equal to that of the property exchanged,
and is in the best interests of the Group,
(ii) immediately after giving effect to such transaction no
Default or Event of Default would exist and the Company would be
able to incur at least $1 of additional Debt under Section 11.3(c),
and
(iii) immediately after giving effect to such Transfer,
(A) the book value of all property that was the subject
of each Basket Transfer occurring in the then current Group
Fiscal Year would not exceed 15% of Consolidated Total Assets
as of the end of the then most recently ended Group Fiscal
Quarter, and
(B) the book value of all property that was the subject
of each Basket Transfer occurring on or after the date of the
Closing would not exceed 30% of Consolidated Total Assets as
of the end of the then most recently ended Group Fiscal
Quarter.
If the Net Proceeds Amount for any Basket Transfer is applied
to a Debt Offered Prepayment Application and/or is applied to, or
committed in writing to, a Property Reinvestment Application, in
each case within 545 days after the consummation of such Transfer
(and, in the case of any such commitment, such Property Reinvestment
Application is actually consummated within 30 days after the
expiration of such 545-day period), then such Basket Transfer shall
be excluded from any calculations set forth above in subclause (iii)
of this clause (d), PROVIDED that
(y) if a Debt Offered Prepayment Application and/or
Property Reinvestment Application in respect of all of such Net
Proceeds Amount shall not have been effected within 90 days
after the consummation of such Basket Transfer and such Basket
Transfer (but for the paragraph to which this proviso is
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attached) would have caused the maximum amounts permitted under
subclause (iii) of this clause (d) to have been exceeded, the
Company shall deliver to each holder of Notes a writing stating
that
(I) such Basket Transfer has caused such maximum
amounts to be exceeded,
(II) such Basket Transfer is excluded from the
calculation of such maximum amounts subject to the Net
Proceeds Amount thereof being applied to a Debt Offered
Prepayment Application and/or a Property Reinvestment
Application within 545 days after the consummation of such
Basket Transfer and
(III) the Company has decided to apply any then
remaining unapplied Net Proceeds Amount of such Basket
Transfer in excess of such maximum amounts to either a Debt
Offered Prepayment Application or a Property Reinvestment
Application (but not both; it being the intention of the
parties hereto that the Company shall choose which
application to utilize (such application being specified in
such writing), although the Company shall not be required to
specify at the time of making such choice the particular
utilizations within such chosen application) and
(z) for the avoidance of doubt, a Basket Transfer that
would (but for the paragraph to which this proviso is attached)
have caused the maximum amounts permitted under subclause (iii)
of this clause (d) to be exceeded shall be excluded from such
calculations unless and until such time as the Company shall
have failed to comply with the requirements of such paragraph
(including, without limitation, the requirements of
subparagraph (y) above).
For purposes of determining the book value of any property that is the
subject of a Transfer, such book value shall be the book value of such property,
as determined in accordance with GAAP, at the time of the consummation of
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such Transfer, PROVIDED that, in the case of a Transfer of any capital stock
or other equity interests of a Subsidiary, the book value thereof shall be
deemed to be an amount equal to
(A) the difference (determined after eliminating all intra-Group
transactions, assets and liabilities in accordance with GAAP) of
(1) the book value of the total net assets of such
Subsidiary LESS
(2) the liabilities of such Subsidiary
TIMES
(B) a percentage that is equal to the percentage of total equity
interests of such Subsidiary attributable to the capital stock or other
equity interest being so Transferred.
11.8 LINE OF BUSINESS.
The Company will not and will not permit any of its Subsidiaries to engage
in any business if, as a result, the general nature of the business in which the
Obligors and their Subsidiaries, taken as a whole, would then be engaged would
be substantially changed from the general nature of the business in which the
Obligors and their Subsidiaries, taken as a whole, are engaged on the date of
the Closing as described in the Memorandum.
12. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than 5 Business Days after the same becomes due and payable; or
(c) any Obligor defaults in the performance of or compliance with
any term contained in any of Section
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11.2 through Section 11.7, inclusive, or Section 7.1(d); or
(d) any Obligor defaults in the performance of or compliance
with any term contained herein or in any Other Agreement (other than those
referred to in paragraphs (a), (b), (c) or (k) of this Section 12) and such
default is not remedied within 30 days after the earlier of (i) a
Responsible Officer obtaining actual knowledge of such default and (ii) the
Company receiving written notice of such default from any holder of a Note
(any such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (d) of Section 12); or
(e) any representation or warranty made in writing by or on behalf
of any Obligor or by any officer of any Obligor in this Agreement, any
Other Agreement or in any writing furnished in connection with the
transactions contemplated hereby or thereby (including, without limitation,
in any instrument delivered pursuant to Section 10.7) proves to have been
false or incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Debt
(other than Debt under this Agreement, the Other Agreements and the
Notes) beyond any period of grace provided with respect thereto,
that individually or together with such other Debt as to which any
such failure exists has an aggregate outstanding principal amount of
at least $5,000,000 (or its equivalent in other applicable
currencies), or
(ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any
Debt (other than indebtedness under this Agreement, the Other
Agreements and the Notes), that individually or together with such
other Debt as to which any such failure exists has an aggregate
outstanding principal amount of at least $5,000,000 (or its
equivalent in other applicable currencies), or of compliance of any
mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition
such Debt has become, or has
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been declared, due and payable before its stated maturity or before
its regularly scheduled dates of payment, or
(iii) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right
of the holder of Debt to convert such Debt into equity interests),
(A) the Company or any Subsidiary has become obligated
(other than at its election) to purchase or repay Debt before
its regular maturity or before its regularly scheduled dates of
payment in an aggregate outstanding principal amount of at
least $5,000,000 (or its equivalent in other applicable
currencies), or
(B) one or more Persons have the right to require the
Company or any Subsidiary to purchase or repay Debt in an
aggregate outstanding principal amount of at least $5,000,000
(or its equivalent in other applicable currencies) and have
exercised such right; or
(g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of,
a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of
any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any
Subsidiary, a custodian, receiver, trustee or other officer with similar
powers with respect to the Company or any Subsidiary or with respect to any
substantial part of the property of the Company or any Subsidiary, or
constituting an order for relief or approving
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a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any Subsidiary, or any such
petition shall be filed against the Company or any Subsidiary and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 (or its equivalent in other applicable
currencies) are rendered against one or more of the Company and the
Subsidiaries and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or section 412 of the Code for any plan year or
part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of the
Code,
(ii) a notice of intent to terminate any Plan shall have
been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under section 4042 of ERISA to
terminate or appoint a trustee to administer any Plan or the PBGC
shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of section 4001(a)(18) of ERISA) under all Plans
subject to Title IV of ERISA, determined in accordance with Title IV
of ERISA, shall exceed $5,000,000,
(iv) the Company or any ERISA Affiliate shall have incurred
or is reasonably expected to incur any liability in the nature of a
penalty, excise tax or fine pursuant to Title I of ERISA, any
liability under Title IV of ERISA or any liability under section
4971 through section 4980E of the Code,
(v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or
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(vi) the Company or any Domestic Subsidiary establishes or
amends any employee welfare benefit plan that provides post-
employment welfare benefits in a manner that would increase the
liability of the Company or such Domestic Subsidiary thereunder;
and any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect; or
(k) the Guarantee in respect of any Guarantor or any provision
thereof shall cease to be in full force or effect except as otherwise
provided herein, or any Guarantor or any Person acting by or on behalf of
such Guarantor shall deny or disaffirm such Guarantor's obligations under
such Guarantee, or any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed
pursuant to Section 23.
As used in Section 12(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in section 3 of ERISA.
13. REMEDIES ON DEFAULT, ETC.
13.1 ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or paragraph (h) of Section 12 (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause
(vi) of paragraph (g) by virtue of the fact that such clause encompasses
clause (i) of paragraph (g)) has occurred, all the Notes then outstanding
shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
any holder or holders of more than 50% in principal amount of the Notes at
the time outstanding may at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 12 has occurred and is continuing, any holder or holders of Notes
at the time
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outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes
held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 13.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, PLUS (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in such Note free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that such Note is prepaid or
is accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
13.2 OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 13.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
13.3 RESCISSION.
At any time after any Notes have been declared due and payable pursuant to
clause (b) or clause (c) of Section 13.1, the holders of more than 50% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal due
and payable on any Notes other than by reason of such declaration, and all
interest on such overdue principal, if any, and any Make-Whole Amount that is
due and
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payable in respect of the Notes other than by reason of such declaration
and any interest thereon and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the applicable Default Rate,
(b) all Events of Default and Defaults, other than non-payment of amounts that
have become due solely by reason of such declaration, have been cured or have
been waived pursuant to Section 18, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 13.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
13.4 NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 16,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 13, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
14.1 REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
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complete and correct copy of the names and addresses of all registered holders
of Notes.
14.2 TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the Company
for registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note and of the
same Series as such surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
Exhibit 1A or Exhibit 1B, as the case may be. Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$500,000, PROVIDED that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than $500,000. Any transferee, by its acceptance of a Note registered in its
name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2.
14.3 REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note is,
or is a nominee for, an original Purchaser or another holder of a Note with
a minimum net
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worth of at least $250,000,000, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, of the same Series as such lost, stolen, destroyed or mutilated Note,
dated and bearing interest from the date to which interest shall have been paid
on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
15. PAYMENTS ON NOTES.
15.1 PLACE OF PAYMENT.
Subject to Section 15.2, payments of principal, Make-Whole Amount, if any,
and interest becoming due and payable on the Notes shall be made in Carlsbad,
California at the principal office of the Company in such jurisdiction. The
Company may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either a
principal office of the Company in the United States of America or a principal
office of a bank or trust company in the United States of America.
15.2 HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 15.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 15.1. Prior to any sale or other disposition
of any Note held by you
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or your nominee you will, at your election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been paid
thereon or surrender such Note to the Company in exchange for a new Note or
Notes of the same Series as such surrendered Note pursuant to Section 14.2.
The Company will afford the benefits of this Section 15.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 15.2.
16. EXPENSES, ETC.
16.1 TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated, the
Obligors will pay all costs and expenses (including reasonable attorneys' fees
of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or the
Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Obligors will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you).
16.2 SURVIVAL.
The obligations of the Obligors under this Section 16 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes and the termination of this Agreement.
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17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Obligors pursuant to this Agreement shall be
deemed representations and warranties of the Obligors under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Obligors and supersede
all prior agreements and understandings relating to the subject matter hereof.
18. AMENDMENT AND WAIVER.
18.1 REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any term
hereof or of the Notes may be waived (either retroactively or prospectively),
with (and only with) the written consent of the Company and the Required
Holders, except that (a) no amendment or waiver of any of the provisions of any
of Sections 1, 2, 3, 4, 5, 6 and 22, or any defined term (as it is used
therein), will be effective as to you unless consented to by you in writing, and
(b) no such amendment or waiver may, without the written consent of the holder
of each Note at the time outstanding affected thereby, (i) subject to the
provisions of Section 13 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 12(a), 12(b), 13, 18, 21
and 23. No amendment or waiver provided for in this Section 18.1 shall become
effective unless each Guarantor shall have consented to the same in writing and,
in connection therewith, shall have reconfirmed, in writing, its obligations
hereunder.
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18.2 SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a decision
is required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 18 to each
holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the entering into by
any holder of Notes or any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each holder
of Notes then outstanding even if such holder did not consent to such
waiver or amendment.
18.3 BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 18 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Obligors without regard to whether such Note has
been marked to indicate such amendment or waiver. No such amendment or waiver
will extend to or affect any obligation, covenant, agreement, Default or Event
of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
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18.4 NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
19. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other address
as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing,
(iii) if to the Company, to the Company at its address set forth
at the beginning hereof to the attention of the Chief Financial Officer,
telecopier: (760) 930-1580, or at such other address as the Company shall
have specified to the holder of each Note in writing, or
(iv) if to any Guarantor, to such Guarantor in care of the Company
at its address set forth at the beginning hereof to the attention of the
Chief Financial Officer, telecopier: (760) 930-1580, or at such other
address as such Guarantor shall have specified to the holder of each Note
in writing.
Notices under this Section 19 will be deemed given only when actually received.
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20. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Obligors agree and stipulate that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 20
shall not prohibit the Obligors or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
21. CONFIDENTIAL INFORMATION.
For the purposes of this Section 21, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of any Obligor and any Subsidiary
of any Obligor in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Obligors and their Subsidiaries, PROVIDED
that such term does not include information that
(a) was publicly known or otherwise known to you prior to the time
of such disclosure,
(b) subsequently becomes publicly known through no act or omission
by you or any Person acting on your behalf,
(c) otherwise becomes known to you other than through disclosure by
any Obligor or any Subsidiary of an Obligor, or
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(d) constitutes financial statements delivered to you under Section
7.1 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good faith to protect confidential
information of third parties delivered to you, PROVIDED that you may deliver or
disclose Confidential Information to:
(i) your directors, officers, trustees, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates
to the administration of the investment represented by your Notes),
(ii) your financial advisors and other professional advisors who
agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 21,
(iii) any other holder of any Note other than a Competitor,
(iv) any Institutional Investor to which you sell or offer to sell
such Note or any part thereof or any participation therein (if such Person
has agreed in writing prior to its receipt of such Confidential Information
to be bound by the provisions of this Section 21),
(v) any Person other than a Competitor from which you offer to
purchase any security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 21),
(vi) any federal or state regulatory authority having jurisdiction
over you,
(vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that
requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure may be
necessary or appropriate
(A) to effect compliance with any law, rule, regulation or
order applicable to you,
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(B) in response to any subpoena or other legal process,
(C) in connection with any litigation to which you are a
party, or
(D) if an Event of Default has occurred and is continuing,
to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies under your Notes and this
Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 21 as
though it were a party to this Agreement. On reasonable request by any Obligor
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Obligors embodying the provisions
of this Section 21.
22. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon
receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 22), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted
as a purchaser hereunder and such Affiliate thereafter transfers to you all
of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "you" is used in this Agreement
(other than in this Section 22), such word shall no longer be deemed to refer
to such Affiliate, but shall refer to you, and you shall have all the rights
of an original holder of the Notes under this Agreement.
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23. GUARANTEE.
23.1 GUARANTEED OBLIGATIONS.
Each of the Guarantors hereby irrevocably, unconditionally, absolutely,
jointly and severally guarantees to each holder of Notes, as and for each
such Guarantor's own debt, until final and indefeasible payment has been made:
(a) the due and punctual payment by the Company of the principal
of, and interest (including default interest and post-petition interest),
and the Make-Whole Amount (if any) on, the Notes at any time outstanding
and the due and punctual payment of all other amounts payable, and all
other indebtedness owing, by the Company to the holders of the Notes under
this Agreement, the Other Agreements and the Notes (all such obligations so
guarantied are herein collectively referred to as the "GUARANTEED
OBLIGATIONS"), in each case when and as the same shall become due and
payable, whether at maturity, pursuant to mandatory or optional prepayment,
by acceleration or otherwise, all in accordance with the terms and
provisions hereof and thereof; it being the intent of each of the
Guarantors that the guarantee set forth in this Section 23 (the
"GUARANTEE") shall be a guarantee of payment and not a guarantee of
collection; and
(b) the punctual and faithful performance, keeping, observance, and
fulfillment by the Company of all duties, agreements, covenants and
obligations of the Company contained in this Agreement, the Other
Agreements and the Notes.
23.2 PERFORMANCE UNDER THIS AGREEMENT AND THE OTHER AGREEMENTS.
In the event the Company fails to make, on or before the due date thereof,
any payment of the Guaranteed Obligations, or if the Company shall fail to
perform, keep, observe, or fulfill any other obligation referred to in clause
(a) or clause (b) of Section 23.1 in the manner provided in this Agreement, the
Other Agreements or the Notes after in each case giving effect to any applicable
grace periods or cure provisions or waivers or amendments, the Guarantors shall
cause forthwith to be paid the moneys, or to be performed, kept, observed, or
fulfilled each of such obligations, in respect of which such failure has
occurred in accordance with the terms and
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provisions of this Agreement, the Other Agreements and the Notes.
23.3 WAIVERS.
To the fullest extent permitted by law, each Guarantor does hereby waive:
(a) notice of acceptance of the Guarantee;
(b) notice of any purchase of the Notes under this Agreement or the
Other Agreements, or the creation, existence or acquisition of any of the
Guaranteed Obligations, subject to such Guarantor's right to make inquiry
of each holder of Notes to ascertain the amount of the Guaranteed
Obligations at any reasonable time;
(c) notice of the amount of the Guaranteed Obligations, subject to
such Guarantor's right to make inquiry of each holder of Notes to ascertain
the amount of the Guaranteed Obligations at any reasonable time;
(d) notice of adverse change in the financial condition of the
Company, any other Guarantor or any Subsidiary or any other fact that might
increase or expand such Guarantor's risk hereunder;
(e) notice of presentment for payment, demand, protest, and notice
thereof as to the Notes or any other instrument;
(f) notice of any Default or Event of Default (except if such
notice or demand is specifically otherwise required to be given to such
Guarantor pursuant to the terms of this Agreement);
(g) all other notices and demands to which such Guarantor might
otherwise be entitled (except if such notice or demand is specifically
otherwise required to be given to such Guarantor pursuant to the terms of
this Agreement);
(h) the defense of the "single action" rule or any similar right or
protection (including, without limitation, any rights or defenses created
by the anti-deficiency statutes of the State of California), and the right
by statute or otherwise to require any holder of Notes to institute suit
against the Company or any other Guarantor or to
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exhaust its rights and remedies against the Company or any other Guarantor,
such Guarantor being bound to the payment of each and all Guaranteed
Obligations, whether now existing or hereafter accruing, as fully as if such
Guaranteed Obligations were directly owing to the holders of Notes by such
Guarantor;
(i) any defense of the Company under this Agreement, the Other
Agreements and the Notes other than the full and timely performance
thereof;
(j) any defense relating to the validity or enforceability (or
absence or failure thereof) of any term of this Agreement, the Other
Agreements and the Notes;
(k) any defense arising by reason of any disability or other
defense (other than the defense that the Guaranteed Obligations shall have
been fully and finally performed and indefeasibly paid) of the Company or
by reason of the cessation from any cause whatsoever of the liability of
the Company in respect thereof, and any other defense that such Guarantor
may otherwise have against the Company or any holder of Notes;
(l) any stay (except in connection with a pending appeal),
valuation, appraisal, redemption or extension law now or at any time
hereafter in force which, but for this waiver, might be applicable to any
sale of property of such Guarantor made under any judgment, order or decree
based on this Agreement, and such Guarantor covenants that it will not at
any time insist upon or plead, or in any manner claim or take the benefit
or advantage of such law; and
(m) any other defense which a Guarantor may have to the full and
complete performance of its obligations hereunder (including, without
limitation, any benefits which might otherwise be available under
California Civil Code Sections 2809, 2910, 2819, 2839, 2845, 2849, 2850,
2899 and 3433 and California Code of Civil Procedure Sections 580a, 580b,
580d and 726).
23.4 CERTAIN WAIVERS OF SUBROGATION, REIMBURSEMENT AND INDEMNITY.
Until all of the Guaranteed Obligations shall have been fully and finally
paid, no Guarantor shall have any right of subrogation, reimbursement or
indemnity whatsoever and no
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right of recourse to or with respect to any assets or property of the
Company. Nothing shall discharge or satisfy the liability of any of the
Guarantors hereunder except the full and final performance and indefeasible
payment of the Guaranteed Obligations.
23.5 RELEASES.
Each of the Guarantors consents and agrees that, without notice to or by
such Guarantor and without impairing, releasing, abating, deferring, suspending,
reducing, terminating or otherwise affecting the obligations of such Guarantor
hereunder, each holder of Notes, in the manner provided herein, by action or
inaction, may:
(a) compromise or settle, renew or extend the period of duration or
the time for the payment, or discharge the performance of, or may refuse
to, or otherwise not, enforce, or may, by action or inaction, release all
or any one or more parties to, any one or more of this Agreement, the Other
Agreements or the Notes;
(b) assign, sell or transfer, or otherwise dispose of, any one or
more of the Notes;
(c) grant waivers, extensions, consents and other indulgences to
the Company or any other Guarantor in respect of any one or more of this
Agreement, the Other Agreements or the Notes;
(d) amend, modify or supplement in any manner and at any time (or
from time to time) any one or more of this Agreement, the Other Agreements
and the Notes;
(e) release or substitute any one or more of the endorsers or
guarantors of the Guaranteed Obligations whether parties hereto or not;
(f) sell, exchange, release or surrender any property at any time
pledged or granted as security in respect of the Guaranteed Obligations,
whether so pledged or granted by such Guarantor or another guarantor of the
Company's obligations under this Agreement, the Other Agreements and the
Notes;
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(g) exchange, enforce, waive, or release, by action or inaction,
any security for the Guaranteed Obligations or any other guarantee of any
of the Notes; and
(h) any other act or event which could have the effect of releasing
a Guarantor from the full and complete performance of its obligations
hereunder.
23.6 MARSHALING.
Each Guarantor consents and agrees that:
(a) each holder of Notes shall be under no obligation to marshal
any assets in favor of such Guarantor or against or in payment of any or
all of the Guaranteed Obligations; and
(b) to the extent the Company or another Guarantor makes a payment
or payments to any holder of Notes, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required, for any of the foregoing reasons or
for any other reason, to be repaid or paid over to a custodian, trustee,
receiver, or any other party under any bankruptcy law, common law, or
equitable cause, then to the extent of such payment or repayment, the
obligation or part thereof intended to be satisfied thereby shall be
revived and continued in full force and effect as if said payment or
payments had not been made and such Guarantor shall be primarily liable for
such obligation.
23.7 LIABILITY.
Each Guarantor agrees that the liability of such Guarantor in respect of
this Section 23 shall be immediate and shall not be contingent upon the exercise
or enforcement by any holder of Notes of whatever remedies such holder may have
against the Company or any other Guarantor or the enforcement of any Lien or
realization upon any security such holder may at any time possess.
23.8 CHARACTER OF OBLIGATION.
The Guarantee set forth in this Section 23 is a primary and original
obligation of each Guarantor and is an absolute, unconditional, continuing and
irrevocable guarantee of payment and performance (and not of collectibility) and
shall
66
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remain in full force and effect until the full, final and indefeasible
payment of the Guaranteed Obligations without respect to future changes in
conditions.
The obligations of the Guarantors under this Section 23 are joint and
several. The obligations of each Guarantor under this Guarantee and the rights
of the holders of Notes to enforce such obligations by any proceedings, whether
by action at law, suit in equity or otherwise, shall not be subject to any
reduction, limitation, impairment or termination, whether by reason of any claim
of any character whatsoever or otherwise, including, without limitation, claims
of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense, set-off, counterclaim, recoupment or termination
whatsoever.
Without limiting the generality of the foregoing, the obligations of each
Guarantor hereunder shall not be discharged or impaired or otherwise affected
by:
(a) any default, failure or delay, willful or otherwise, in the
performance by the Company of any obligations of any kind or character
whatsoever of the Company (including, without limitation, the obligations
and undertakings of the Company hereunder or under any of the Other
Agreements);
(b) any creditors' rights, bankruptcy, receivership or other
insolvency proceeding of the Company or any other Person or in respect of
the property of the Company or any other Person or any merger,
consolidation, reorganization, dissolution, liquidation or winding up of
the Company or any other Person;
(c) impossibility or illegality of performance on the part of the
Company of its obligations hereunder, under the Other Agreements or under
the Notes;
(d) the validity or enforceability of this Agreement, the Other
Agreements or the Notes;
(e) in respect of the Company or any other Person, any change of
circumstances, whether or not foreseen or foreseeable, whether or not
imputable to the Company or any other Person, or other impossibility of
performance through fire, explosion, accident, labor disturbance, floods,
droughts, embargoes, wars (whether or not declared), civil commotions, acts
of God or the public
67
<PAGE>
enemy, delays or failure of suppliers or carriers, inability to obtain
materials, action of any federal or state regulatory body or agency,
change of law or any other causes affecting performance, or any other
FORCE MAJEURE, whether or not beyond the control of the Company or any
other Person and whether or not of the kind hereinbefore specified;
(f) any attachment, claim, demand, charge, lien, order, process,
encumbrance or any other happening or event or reason, similar or
dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, indebtedness,
obligations or liabilities of any character, foreseen or unforeseen, and
whether or not valid, incurred by or against any Person, or any claims,
demands, charges or Liens of any nature, foreseen or unforeseen, incurred
by any Person, or against any sums payable hereunder or under the Other
Agreements, so that such sums would be rendered inadequate or would be
unavailable to make the payments herein provided;
(g) any order, judgment, decree, law, ruling or regulation (whether
or not valid) of any court of any nation or of any political subdivision
thereof or any body, agency, department, official or administrative or
regulatory agency of any thereof or any other action, happening, event or
reason whatsoever which shall delay, interfere with, hinder or prevent, or
in any way adversely affect, the performance by any party of its respective
obligations under any instruments; or
(h) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Guarantor in respect of the
obligations of such Guarantor under this Guarantee.
23.9 ELECTION TO PERFORM OBLIGATIONS.
Any election by any Guarantor to pay or otherwise perform any of the
obligations of the Company under this Agreement, the Other Agreements or the
Notes, whether pursuant to this Section 23 or otherwise, shall not release the
Company or any other Guarantor from such obligations or any of such Person's
other obligations under this Agreement, the Other Agreements or the Notes.
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<PAGE>
23.10 NO ELECTION.
Each holder of Notes shall have the right to seek recourse against each of
the Guarantors to the fullest extent provided for in this Section 23 and
elsewhere as provided in this Agreement, the Other Agreements and the Notes, and
against the Company, to the full extent provided for in this Agreement, the
Other Agreements and the Notes. No election to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of the right of such holder of Notes to proceed in any other form of
action or proceeding or against other parties unless such holder of Notes has
expressly waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by any holder of Notes
against the Company or any Guarantor under any document or instrument evidencing
obligations of the Company or such Guarantor to such holder of Notes shall serve
to diminish the liability of any Guarantor under this Agreement (including,
without limitation, this Section 23) except to the extent that such holder of
Notes finally and unconditionally shall have realized payment by such action or
proceeding, notwithstanding the effect of any such action or proceeding upon
such Guarantor's right of subrogation against the Company.
23.11 SEVERABILITY.
Subject to Section 13 hereof, each of the rights and remedies granted under
this Section 23 to the holder of Notes in respect of the Notes held by such
holder may be exercised by such holder without notice by such holder to, or the
consent of or any other action by, any other holder of Notes.
23.12 OTHER ENFORCEMENT RIGHTS.
Each holder of Notes may proceed to protect and enforce the Guarantee under
this Section 23 by suit or suits or proceedings in equity, at law or in
bankruptcy, and whether for the specific performance of any covenant or
agreement contained in this Section 23 or in execution or aid of any power
herein granted or for the recovery of judgment for or in respect of the
Guaranteed Obligations or for the enforcement of any other proper, legal or
equitable remedy available under applicable law.
69
<PAGE>
23.13 DELAY OR OMISSION; NO WAIVER.
No course of dealing on the part of any holder of Notes and no delay or
failure on the part of such holder to exercise any right under this Agreement,
the Other Agreements or the Notes (including this Section 23) shall impair such
right or operate as a waiver of such right or otherwise prejudice such holder's
rights, powers and remedies hereunder. Every right and remedy given in or by
this Section 23 or by law to any holder of Notes may be exercised from time to
time as often as may be deemed expedient by such Person.
23.14 RESTORATION OF RIGHTS AND REMEDIES.
If any holder of Notes shall have instituted any proceeding to enforce any
right or remedy in this Section 23, under this Agreement or any Other Agreement
or under any Note held by such holder and such proceeding shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to such holder, then and in every such case each such holder, the
Company and each of the Guarantors shall, except as may be limited or affected
by any determination in such proceeding, be restored severally and respectively
to its respective former positions hereunder and thereunder, and thereafter the
rights and remedies of such holder shall continue as though no such proceeding
had been instituted.
23.15 CUMULATIVE REMEDIES.
No remedy under this Agreement (including, without limitation, this Section
23), the Other Agreements or the Notes is intended to be exclusive of any other
remedy, but each and every remedy shall be cumulative and in addition to any and
every other remedy given pursuant to this Agreement (including, without
limitation, this Section 23) or the Other Agreements, or pursuant to the Notes.
23.16 SURVIVAL.
So long as the Guaranteed Obligations shall not have been fully and finally
performed and indefeasibly paid, the obligations of each Guarantor under this
Section 23 shall survive the transfer and payment of any Note and the payment in
full of all the Notes.
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<PAGE>
23.17 MISCELLANEOUS.
If an Event of Default exists, then the holders of Notes (as provided in
Section 13) shall have the right to declare all of the Guaranteed Obligations to
be, and such Guaranteed Obligations shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which have been expressly waived by the Company and the Guarantors, and
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such Guaranteed Obligations from becoming automatically due and
payable) as against the Company. In any such event, the holders of Notes shall
have immediate recourse to each of the Guarantors to the fullest extent set
forth herein.
Notwithstanding any other provision of this Section 23, the Guaranteed
Obligations of each Guarantor under this Section 23 shall be limited to the
extent, if any, required so that its obligations under this Section 23 shall
not be subject to avoidance under Section 548 of the Bankruptcy Code or to
being set aside or annulled under any applicable state law relating to fraud
on creditors. In determining the limitations, if any, on the amount of any
Guarantor's obligations under this Section 23 pursuant to the preceding
sentence, any rights of subrogation or contribution which such Guarantor may
have under this Section 23 or applicable law shall be taken into account.
Notwithstanding any provision in this Agreement or the Other Agreements to
the contrary, each Obligor agrees that any indebtedness of a Guarantor owing to
the Company or another Obligor shall be subordinated in right of payment to the
Guaranteed Obligations of such Guarantor under this Section 23 owing to the
holders of Notes.
24. MISCELLANEOUS.
24.1 SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
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24.2 PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or Make-Whole Amount or interest on any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
24.3 SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
24.4 CONSTRUCTION.
(a) Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(b) This Agreement and the wording contained herein have been
arrived at by mutual negotiation of the parties hereto, and no provision
hereof shall be interpreted or construed against one party in favor of the
other party by reason of draftsmanship.
24.5 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute one instrument.
Each counterpart may consist of a number of copies hereof, each signed by less
than all, but together signed by all, of the parties hereto.
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<PAGE>
24.6 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
[Remainder of page intentionally blank. Next page is signature page.]
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<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Obligors.
Very truly yours,
SUNRISE MEDICAL, INC.
By
----------------------------
Name:
Title:
SUNMED FINANCE INC.
By
----------------------------
Name:
Title:
SUNRISE MARIN HOLDINGS INC.
By
----------------------------
Name:
Title:
SUNRISE MEDICAL CCG INC.
By
----------------------------
Name:
Title:
SUNRISE MEDICAL HHG INC.
By
----------------------------
74
<PAGE>
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
[PURCHASER]
By
-------------------------------
Name:
Title:
75
<PAGE>
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<PAGE>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 26, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 26, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
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<FISCAL-YEAR-END> JUN-26-1998
<PERIOD-END> SEP-26-1997
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<RECEIVABLES> 137,921
<ALLOWANCES> 10,608
<INVENTORY> 89,521
<CURRENT-ASSETS> 238,487
<PP&E> 178,724
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<CURRENT-LIABILITIES> 130,318
<BONDS> 191,967
0
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<SALES> 151,063
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<CGS> 102,752
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<OTHER-EXPENSES> 45,542
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