UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 1999
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 Number: 0-26126
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SEROLOGICALS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 58-2142225
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
780 Park North Blvd.
Suite 110
Clarkston, Georgia 30021
(Address of principal (Zip Code)
executive offices)
(404) 296-5595
(Registrant's Telephone Number Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past (90) days.
Yes No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at November 5, 1999
----- -------------------------------
Common Stock, $.01 par value per share 22,304,861
INDEX
SEROLOGICALS CORPORATION AND SUBSIDIARIES
PART I.
- -------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
December 27, 1998 and September 26, 1999 . . . . . . . . . . . . .3
Condensed Consolidated Statements of Income (Loss) -
For the three and nine months ended September 27, 1998
and September 26, 1999 . . . . . . . . . . . . . . . . . . . . .4
Condensed Consolidated Statements of Cash Flows -
For the nine months ended September 27, 1998 and
September 26, 1999 . . . . . . . . . . . . . . . . . . . . . . .5
Notes to Condensed Consolidated Financial Statements . . . . . . . .6-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 13-23
Item 3. Quantitative and Qualitative Disclosure about Market Risk. . 23
PART II.
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 24
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
PART I.
Item 1. Financial Statements
SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Dec. 27, Sept. 26,
1998 1999
ASSETS --------- ---------
CURRENT ASSETS:
Cash and cash equivalents $34,940 $1,488
Trade accounts receivable, net 22,072 13,586
Inventories 13,441 36,172
Other current assets 2,563 5,430
------- -------
Total current assets 73,016 56,676
------- -------
PROPERTY AND EQUIPMENT, net 16,332 32,587
OTHER ASSETS: ------- -------
Goodwill, net 51,741 65,662
Other, net 6,242 5,610
------- -------
Total other assets 57,983 71,272
------- -------
$147,331 $160,535
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt and capital
lease obligations $4,406 $1,716
Accounts payable 4,028 6,785
Accrued liabilities 8,172 16,078
Deferred revenue 246 299
------- -------
Total current liabilies 16,852 24,878
------- -------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
less current maturities 878 15,622
------- -------
OTHER LIABILITIES 592 592
------- -------
STOCKHOLDERS' EQUITY:
Common stock 243 249
Additional paid-in capital 84,983 89,392
Retained earnings 43,715 45,091
Accumulated other comprehensive income 68 373
Less: treasury stock, at cost -- (15,662)
------- -------
Total stockholders' equity 129,009 119,443
------- -------
$147,331 $160,535
======= =======
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
3
SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands, except share and per share data)
(Unaudited)
Nine Months Ended Three Months Ended
Sept. 27, Sept. 26, Sept. 27, Sept. 26,
1998 1999 1998 1999
------ ------ ------ ------
Net sales $91,506 $90,147 $31,836 $17,886
Costs and expenses:
Cost of sales 59,953 62,770 21,425 12,858
Selling, general and
administrative expenses 11,527 13,667 3,758 4,469
Interest expense (income),
net (632) 22 (260) 31
Other expense, net (Note 8) 1,995 2,997 535 1,180
Special charges (Note 6) -- 8,575 -- 8,575
Income (loss) before ------ ------ ------ ------
income taxes 18,663 2,116 6,378 (9,227)
Provision (benefit) for
income taxes 6,644 740 2,280 (3,242)
------ ------ ------ ------
Net income (loss) $12,019 $1,376 $4,098 $(5,985)
====== ====== ====== ======
Net income (loss) per
common share:
Basic $0.50 $0.06 $0.17 $(0.26)
====== ====== ====== ======
Diluted $0.47 $0.06 $0.16 $(0.26)
====== ====== ====== ======
Weighted average common
and common equivalent
shares outstanding:
Basic 23,883,699 24,050,749 24,161,470 23,273,869
========== ========== ========== ==========
Diluted 25,792,407 24,852,458 26,047,592 23,273,869
========== ========== ========== ==========
The accompanying notes are an integral part of these condensed
consolidated statements.
SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
Sept. 27, Sept. 26,
1998 1999
---- ----
Operating activities:
Net income $12,019 $1,376
Adjustments to reconcile net
income to net cash
provided by operating activities:
Special charges -- 8,575
Depreciation and amortization 4,160 5,871
Deferred income tax benefit (43) (1)
Changes in operating assets and
liabilities, net of acquisitions of
businesses:
Trade accounts receivable, net (8,394) 9,243
Inventories (2,563) (18,597)
Other current assets 456 (494)
Accounts payable (1,072) 2,267
Accrued expenses 3,248 (3,079)
Deferred revenue (870) 53
------ ------
Total adjustments (5,078) 3,838
Net cash provided by ------ ------
operating activities 6,941 5,214
------ ------
Investing activities:
Purchases of property and equipment (3,746) (14,945)
Acquisitions of businesses, net
of cash acquired (4,566) (27,874)
Other (2,815) 3,345
Net cash used in investing ------ ------
activities (11,127) (39,474)
------ ------
Financing activities:
Net borrowings on revolving line of credit -- 14,767
Payments on long-term debt and
capital lease obligations (108) (46)
Repurchases of common stock -- (15,662)
Proceeds from employee stock plans 5,195 1,749
Net cash provided by ------ ------
financing activities 5,087 808
------ ------
Net increase (decrease) in cash
and cash equivalents 901 (33,452)
Cash and cash equivalents,
beginning of period 31,812 34,940
------- ------
Cash and cash equivalents, end of period $32,713 $1,488
======= ======
Supplemental Disclosures:
Interest Paid $182 $328
Taxes Paid $4,894 $3,410
Conversion of promissory note
into common stock $1,333 $2,667
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
SEROLOGICALS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 26, 1999
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Serologicals Corporation (the "Company") is a leading worldwide provider
of biological materials and services to major healthcare companies. The
Company provides value-added antibody-based products that are used as the
active ingredients in therapeutic products for the treatment and management of
diseases such as Rh incompatibility in newborns, rabies and hepatitis and in
diagnostic products such as blood typing reagents and diagnostic test kits. On
December 29, 1998, the Company acquired substantially all of the
assets of Pentex Blood Proteins ("Pentex"), a unit of Bayer Corporation, a
wholly owned subsidiary of Bayer AG. Located in Kankakee, Illinois, Pentex
supplies a broad line of purified animal and human blood proteins to the
diagnostic and biopharmaceutical industries (Note 2).
As of November 5, 1999, the Company operated 64 donor centers, 17 of
which specialize in the collection of specialty antibodies and 47 of which
primarily collect source plasma containing non-specialty antibodies from which
a number of products, primarily intravenous immune globulin (IVIG), are
produced. The Company is currently performing a strategic review of its non-
specialty operations, the results of which might include a divestiture of all
or a portion of its 47 non-specialty donor centers. The Company is also engaged
in the development, manufacturing and sale of monoclonal antibodies at its
facilities in the United Kingdom and owns a clinical trial site dedicated to
the management and performance of clinical trials for the pharmaceutical and
biotech industries. On September 14, 1999, the Company entered into a non-
binding letter of intent to divest its clinical trial site, which it expects to
complete in the fourth quarter of 1999.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The accompanying statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, the
accompanying unaudited condensed consolidated financial statements reflect all
adjustments, which are of a normal recurring nature, to present fairly the
Company's financial position, results of operations and cash flows at the
dates and for the periods presented. Interim results of operations are not
necessarily indicative of results to be expected for a 12-month period. The
interim financial statements should be read in conjunction with the audited
consolidated financial statements as of December 27, 1998 and the notes
thereto included in the Company's Annual Report on Form 10-K for the year
ended December 27, 1998.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
Earnings (Loss) Per Share
Basic earnings (loss) per share are calculated by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. The calculation of the Company's diluted earnings (loss) per share is
similar to basic earnings (loss) per share, except that the numerator is
adjusted by adding back the after-tax amount of interest recognized on
convertible indebtedness, and the weighted average number of shares includes
the dilutive effect of stock options, warrants, convertible indebtedness and
similar instruments. The potentially dilutive effect of stock options,
warrants and convertible indebtedness have been excluded from the calculation
of diluted loss per share for the three months ended September 26, 1999, as
their effect was anti-dilutive.
6
All share and per share data included herein have been adjusted to
reflect a three-for-two stock split effected in August of 1998.
The following table sets forth the calculation of basic and diluted
earnings (loss) per share (in thousands, except per share amounts):
Nine Months Ended Three Months Ended
Sept. 27 Sept. 26 Sept. 27 Sept. 26
1998 1999 1998 1999
---- ---- ---- ----
Basic earnings (loss) per share:
Net income (loss) $ 12,019 $ 1,376 $ 4,098 $ (5,985)
Weighted average shares of
common stock outstanding 23,884 24,051 24,161 23,274
--------- -------- -------- ---------
Net income (loss) per share $ 0.50 $ 0.06 $ 0.17 $ (0.26)
========= ======== ======== =========
Diluted earnings (loss)
per share:
Net income (loss) $ 12,019 $ 1,376 $ 4,098 $ (5,985)
Plus: interest expense on
convertible indebtedness,
net of tax 53 -- (23) --
Net income (loss), as --------- -------- -------- ---------
adjusted $ 12,072 $ 1,376 $ 4,075 $ (5,985)
--------- -------- -------- ---------
Weighted average shares of
common stock outstanding 23,884 24,051 24,161 23,274
Effect of dilutive securities:
Stock options and warrants 1,562 801 1,576 --
Convertible indebtedness 346 -- 311 --
Weighted average shares of --------- -------- -------- ---------
common stock outstanding,
including dilutive instruments 25,792 24,852 26,048 23,274
========= ======== ======== =========
Net income (loss) per share $ 0.47 $ 0.06 $ 0.16 $ (0.26)
========= ======== ======== =========
Diluted shares outstanding for the three months ended September 26, 1999
exclude approximately 734,000 shares, as the Company incurred a loss in that
period and their inclusion would have been anti-dilutive. Furthermore,
the effect of options to purchase approximately 2.5 million shares
and 2.1 million shares have been excluded from the calculation of diluted
shares outstanding for the three and nine months ended September 26, 1999,
respectively, as their exercise price exceeded the average market price of the
Company's common stock in each period and thus their effect was anti-dilutive.
7
Comprehensive Income (Loss)
The following table sets forth the calculation of the Company's
comprehensive income (loss) for the periods indicated below (in thousands):
Nine Months Ended Three Months Ended
----------------- ------------------
Sept. 27, Sept. 26, Sept. 27, Sept. 26,
1998 1999 1998 1999
------ ------ ------ ------
Net income (loss), as reported $12,019 $1,376 $4,098 $(5,985)
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustments 67 31 136 227
Unrealized gains (losses) on securities:
Unrealized holding (losses)
gains during period (422) 501 (154) 554
Less: reclassification adjustment
for gains included in net
income (loss) -- (227) -- (154)
------ ------ ----- ------
Other comprehensive income (loss),
net of tax (355) 305 (18) 627
------- ------ ------ ------
Comprehensive income (loss) $11,664 $1,681 $4,080 $(5,358)
======= ====== ====== ======
2. ACQUISITION OF PENTEX
On December 29, 1998, the Company acquired Pentex for $27.5 million (the
"Pentex Acquisition") plus the assumption of certain liabilities, before
recording transaction costs and subject to adjustment based on the closing net
assets of Pentex as of the closing date. Payment of an additional $1.5
million for the transfer of certain assets purchased in the Pentex Acquisition
has not been finalized. Pentex is engaged in the research, manufacturing,
marketing and sale of quality purified blood protein products primarily to
customers in the diagnostics and biopharmaceuticals industries in the United
States and approximately 25 other countries worldwide. The Company funded the
acquisition with cash on hand.
The Pentex Acquisition was accounted for as a purchase in accordance with
APB No. 16, and accordingly, the purchase price has been preliminarily
allocated to the net tangible and identifiable intangible assets acquired
based on their estimated fair values as of the acquisition date. The excess
of the cost over the estimated fair values of the net tangible and
identifiable intangible assets acquired has been preliminarily allocated to
goodwill.
The following unaudited data summarize the pro forma results of
operations for the nine months ended September 27, 1998 as if the Pentex
Acquisition had occurred on the first fiscal day of such period. Pro forma
results of operations for the nine months ended September 26, 1999 are not
presented herein as the results of operations for the two days subsequent to
the Company's 1998 fiscal year end and prior to the consummation of the Pentex
Acquisition are immaterial to the Company. The unaudited pro forma
information has been prepared for comparative purposes only and does not
purport to represent what the results of operations would actually have been
had the transaction actually occurred on the date indicated, or what the
results of operations may be in the future (in thousands, except per share
data).
Net sales $ 102,027
Net income $ 13,110
Net income per common share:
Basic $ 0.55
========
Diluted $ 0.51
========
8
3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations at December 27, 1998 and
September 26, 1999 consisted of the following (in thousands):
Dec. 27, Sept. 26,
1998 1999
--------- ---------
Revolving credit agreement, interest at 8.25% $ -- $14,767
Convertible subordinated note payable in
the original principal amount of $4 million,
interest payable quarterly at 4.5%;
maturing on March 7, 2002 2,667 --
Convertible subordinated note payable,
interest payable quarterly at 4.0%;
principal payable on September 23, 2000 2,550 2,550
Capital lease obligations at varying interest
rates and terms, maturing through 2001 67 21
------ ------
5,284 17,338
Less current maturities 4,406 1,716
------ ------
$ 878 $15,622
====== ======
During the second quarter of 1999 and pursuant to the terms of the
related note agreement, the holder of a convertible promissory note in the
original principal amount of $4.0 million opted to convert the outstanding
principal balance of the note of approximately $2.7 million into approximately
213,200 shares of the Company's common stock.
Subsequent to quarter end, on September 28, 1999, the Company amended its
revolving credit facility (the "Revolver) scheduled to mature on October 16,
2000, increasing the total borrowing capacity from $35 million to $75 million.
The Revolver is payable in full on September 28, 2002 and bears interest at
either a floating rate or Eurodollar interest rate plus a margin that
fluctuates based on the Company's leverage ratio. The margin on the
Eurodollar rate ranges from 1.25% to 2.0% and the margin on the floating rate
option ranges from 0% to .5%. The Company is required to pay a fee ranging
from .3% to .5%, depending on the Company's leverage, on the unused portion of
the Revolver. The Revolver also contains certain financial covenants that
require the maintenance of minimum levels of cash flow coverage, debt service
coverage and debt to net worth and also provides for maximum levels of debt to
cash flow and rent expense.
9
4. SEGMENT INFORMATION
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" ("SFAS No. 131"),
established standards for reporting information about operating segments in
annual financial statements and requires selected information in interim
financial reports. Selected financial information is reported below for the
three and nine months ended September 27, 1998 and September 26, 1999 (in
thousands):
Nine Months Ended Three Months Ended
Sept. 27 Sept. 26 Sept. 27 Sept. 26
1998 1999 1998 1999
------ ------ ------ ------
Net sales-unaffiliated
customers:
Therapeutic Products $75,676 $60,783 $26,593 $8,630
Diagnostic Products 15,257 28,723 4,975 9,069
Corporate/Other 573 641 268 187
------ ------ ------ ------
Total $91,506 $90,147 $31,836 $17,886
====== ====== ====== ======
Gross profit (loss):
Therapeutic Products $22,168 $12,168 $7,190 $350
Diagnostic Products 9,310 15,570 3,218 4,799
Corporate/Other 75 (361) 3 (121)
------ ------ ------ ------
Total $31,553 $27,377 $10,411 $5,028
====== ====== ====== ======
Segment operating income (loss):
Therapeutic Products $20,625 $8,222 $6,673 ($1,061)
Diagnostic Products 6,814 10,868 2,365 3,400
Corporate/Other (7,413) (5,380) (2,385) (1,780)
------ ------ ------ ------
Total $20,026 $13,710 $6,653 $ 559
------ ------ ------ ------
Reconciling items:
Other expense, net $1,995 $2,997 $ 535 $1,180
Interest income, net (632) 22 (260) 31
Special charges -- 8,575 -- 8,575
Income (loss) before ------ ------ ------ ------
income taxes $18,663 $2,116 $6,378 ($9,227)
====== ====== ====== ======
Segment operating income (loss) is defined as earnings (loss) before
income taxes, interest, amortization, foreign currency gains and losses,
special charges and other non-operating income and expenses.
"Corporate/Other" includes general corporate expenses, interest income,
interest expense and other operations that do not otherwise meet the SFAS No.
131 criteria for disclosure. The Company had no intersegment sales during
1998 or 1999.
On December 29, 1998, the Company purchased Pentex for $27.5 million in
cash at closing. The cash used was considered a corporate asset, while the
assets purchased are considered assets of the Diagnostic Products segment.
During the third quarter of 1999, the Company wrote off previously capitalized
software development costs of the Therapeutic Products segment in the amount
of $4.2 million. There were no other material changes in identifiable assets
disclosed in the Company's Annual Report on Form 10-K for the year ended
December 27, 1998.
10
5. COMMON STOCK REPURCHASES
During April 1999, the Company's Board of Directors authorized the
repurchase of up to $20 million of the Company's common stock, subject to
market conditions, prevailing stock prices and the Company's capital
resources. The Company has funded and expects to fund any future repurchases
with existing cash balances, cash flow from operations and availability under
its revolving credit facility. As of November 5, 1999, the Company had
repurchased a total of approximately 2.6 million shares of its common stock
for aggregate consideration of approximately $17.0 million.
6. SPECIAL CHARGES
The effect of the following items was recorded in the third quarter of
1999 and is reflected in the accompanying Condensed Consolidated Statements of
Income (Loss) under the caption "special charges":
During 1999, the Company was notified by one of its customers that
certain of the Company's anti-D shipments from the prior year had included
several units of plasma that did not meet this customer's exact product
specifications. The customer has indicated to the Company that the units have
been partially manufactured with other units of plasma and thus have
affected a substantial number of other units. The Company has tentatively
agreed to reimburse this customer for their cost of the product and has
recorded a liability and related expense in the amount of approximately $2.0
million.
On September 14, 1999, the Company entered into a non-binding letter of
intent to dispose of its clinical trial site, which it anticipates completing
during the fourth quarter of 1999. Pursuant to the requirements of Statement
of Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121"), the Company
has recorded an expense of $1.2 million to write down the assets to their fair
value, less costs to sell. The operations of the clinical trial site are
included in the Corporate/Other operating segment (Note 4).
During the third quarter of 1999, the Company terminated a contract with
a third party software vendor that had been developing a custom donor center
operating system, in favor of an alternative vendor. A result of this
decision, the Company wrote off approximately $4.2 million of previously
capitalized costs.
During September of 1999, the Company's chief executive officer resigned
from that position and as a director of the Company. The Company has entered
into separation arrangements with this individual and approximately 15 other
corporate employees. The Company recorded a liability and related expense of
approximately $1.2 million to cover the costs of the separation benefits
payable to these former employees.
7. COMMITMENT AND CONTINGENCIES
During the third quarter of 1999, the Company discovered and notified
a customer that it had inadvertently shipped a unit of source plasma
that did not meet product standards requiring negative test results for
certain viral markers. The customer has indicated to the Company that the
product has been partially manufactured with other units of plasma and
thus has potentially affected a substantial number of units. However, the
customer has notified the Company that the manufacturing pool containing this
unit has tested negative for the particular virus, and therefore may be
available for further manufacture into finished product. While the customer
is seeking FDA approval for the use of this product, it has indicated that
absent such approval it will seek recovery from the Company for up to $3.1
million of costs and damages it has incurred. As the Company is unable to
determine the probability of damages, if any, for which it may ultimately be
responsible, no liability has been recorded as of September 26, 1999.
11
8. GOODWILL AND OTHER INTANGIBLE ASSETS
Owing to increasing margin pressures on its non-specialty antibody
business and other factors, the Company has commenced a strategic review
of these operations, the results of which may include a divestiture of all or
a portion of its 47 non-specialty donor centers. Primarily as a result of
this continuing review, during the third quarter of 1999 and pursuant to the
requirements of FAS 121, the Company performed a review of the recoverability
of its long-lived assets relating to its non-specialty antibody business. While
the review indicated that no impairment exists as the expected undiscounted
future cash flows exceeded the current carrying values of the assets, the
Company determined that the useful lives used for amortizing goodwill and other
acquired intangible assets relating to its non-specialty antibody business
were no longer applicable. As a result, effective as of the beginning of the
third quarter of 1999, the Company reduced the useful lives for amortizing the
goodwill and FDA licenses relating to its non-specialty operations from 25
years to approximately 13 years. The impact of this change was an increase in
amortization expense for the three and nine months of $390,000.
12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward Looking Statements
This Quarterly Report on Form 10-Q contains certain "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which generally can be identified by the use of terms such as "may,"
"expect," "anticipate," "intend," "estimate," "believe," "continue" or similar
variations or the negative thereof. These forward looking statements include,
without limitation, statements regarding increasing regulatory scrutiny; the
impact on the Company of reduced anti-D orders; the impact on the Company of
current industry supply and demand factors and the supply of and demand for
the Company's individual products; the margin pressure on the Company's non-
specialty antibody product line; the potential outcome of a strategic review
of the Company's non-specialty antibody business; the expected divestiture of
the Company's clinical trial site and the timing thereof; the timing and level
of sales that were deferred as a result of the laboratory issue; the level of
cash flows in the fourth quarter of 1999 and the first quarter of 2000; the
cost and timing of implementation of a donor center software system; the
impact of certain operational adjustments regarding anti-D and other antibody
collections; the level of capital expenditures during 1999; the timing of the
validation of the Pentex expansion and the impact thereof; the impact of the
Year 2000 issue, including the cost, timing and ability of the Company to
address the issue; the impact of various factors on the Company's third and
fourth quarter results; and the sufficiency of capital and liquidity to fund
operations, capital expenditures, stock repurchases, working capital needs and
acquisitions and the possible need for supplemental funding. These forward
looking statements are subject to certain risks and uncertainties, including
the Company's ability to continue to attract and retain qualified donors; the
impact of competition; the available supply of anti-D in the market; the
ability of the Company to obtain customer approval to ship certain products;
the ability of the Company to successfully validate its fractionation facility
expansion; changes in government and industry mandated regulations or customer
specifications; changes in the markets for the Company's products and services
and other factors discussed in Part I of the Company's Annual Report on Form
10-K for the year ended December 27, 1998, which could cause actual results to
differ materially.
Overview and Recent Developments
The Company is a leading worldwide provider of biological materials and
services to major healthcare companies. The Company provides value-added
antibody-based products that are used as the active ingredients in therapeutic
products for the treatment and management of diseases such as Rh
incompatibility in newborns, rabies and hepatitis and in diagnostic products
such as blood typing reagents and diagnostic test kits. Through its protein
fractionation facility, the Company also provides a variety of proteins used
in diagnostic reagents and tissue culture media components for use as
additives in biotech products. As of November 5, 1999, the Company operated
64 donor centers, 17 of which specialize in the collection of specialty
antibodies and 47 of which primarily collect source plasma containing non-
specialty antibodies from which a number of products, primarily IVIG, are
produced. The Company is currently performing a strategic review of its non-
specialty operations, the results of which might include a divestiture of all
or a portion of its 47 non-specialty donor centers. The Company is also engaged
in the development, manufacturing and sale of monoclonal antibodies at its
facilities in the United Kingdom and owns a clinical trial site dedicated to
the management and performance of clinical trials for the pharmaceutical and
biotech industries. On September 14, 1999, the Company entered into a non-
binding letter of intent to divest its clinical trial site, which it expects to
complete in the fourth quarter of 1999.
On December 29, 1998, the Company acquired Pentex for $27.5 million.
Payment of an additional $1.5 million for the transfer of
certain assets purchased in the Pentex Acquisition has not been finalized.
Pentex provides a full range of over 100 distinct animal protein products
derived from different animal species. A number of these products, such as
bovine serum albumin (BSA), are primarily supplied to healthcare companies for
use in diagnostic reagents. The Company also provides a line of highly purified
animal proteins known as tissue culture media components that are used
primarily by biopharmaceutical companies as nutrient additives in cell culture
media. One example of these media components is Bovine EX-CYTE(R), Growth
Enhancement Media Supplement, which is produced through a patented
manufacturing process. The Company accounted for the acquisition as a purchase
in accordance with Accounting Principles Board Opinion Number 16.
13
For management purposes, the operations of the Company's subsidiaries are
organized into two primary operating segments, Therapeutic Products and
Diagnostic Products. These segments are based primarily on the differing
nature of the ultimate end use of the Company's products, the differing
production and other value-added processes performed by the Company with
respect to the products and, to a lesser extent, the differing customer bases
to which each reportable segment sells its products.
The activities of the Therapeutic Products segment primarily include the
collection and sale of specialty and nonspecialty human antibodies that are
used as the active ingredients in therapeutic products for the treatment and
management of diseases such as Rh incompatibility in newborns, hepatitis and
rabies. The activities of the Diagnostic Products segment include the
Company's monoclonal antibody production facilities and certain human-sourced,
polyclonal antibodies. While an increasing number of Pentex-branded products
are being used in therapeutic end products, the management of this business
is performed within the Company's diagnostic business unit and, accordingly, is
included in the Diagnostic Products reportable business segment. The antibodies
and other proteins provided by the Diagnostic Products segment are used in
diagnostic products such as blood typing reagents and diagnostic test kits
and as nutrient additives in biotech products.
During April 1999, the Company was notified by two of its international
customers that their fractionation facilities used in the manufacture of anti-
D immune globulin would be closed for extended periods of time for various
quality control enhancements, due in part to changing regulatory requirements,
and in one case, the validation of manufacturing procedures relating to the
customer's product. The Company does not expect to generate a sufficient level
of incremental shipments to offset the reduced demand from these customers in
the near term. Primarily as a result of these reduced orders, coupled with an
apparent increase in availability of this raw material from other suppliers,
the Company announced in April 1999 that it expected shipments of anti-D
antibodies for 1999 to be approximately 25-30% lower than the previous year.
The Company does not expect a recovery in shipments at least throughout the
remainder of 1999 or into the first nine months of 2000.
During the third quarter of 1999, the Company discovered during an
internal quality assurance audit that a limited number of product tests
performed at its central testing laboratory in Clarkston, Georgia had not been
performed in strict accordance with the Company's standard operating
procedures regarding sample storage requirements. Pending a full
investigation of the matter, the Company ceased shipping all products that
had been tested at its laboratory, including those tested after
the deviation from standard operating procedures had been identified and
corrected. While the affected units that were ultimately deemed unusable and
thus written off amounted to less than $400,000, the unaffected units
representing approximately $19 million in sales have been on hold pending final
Company and customer approval. As of November 5, 1999, the Company had
commenced shipping on a limited basis, and expects substantially all of the
remaining units to be shipped by year-end.
During the third quarter of 1999, the Company recorded special charges
totaling approximately $8.6 million. These charges consisted of (i) $2.0
million in product claims; (ii) a $1.2 million non-cash write-down of the
Company's clinical trial site, which it intends to sell; (iii) a $4.2 million
non-cash write-off of capitalized software development costs resulting from the
cancellation of a custom development project in favor of an alternative vendor
that the Company believes offers a less expensive solution that can be
implemented in a shorter time period; and (iv) $1.2 million of separation and
other employee benefits related to the resignation of the Company's former
chief executive officer and a corporate office reorganization.
Increasing regulatory scrutiny continues to be a significant factor
shaping the biologics industry, resulting in more detailed and frequent Food
and Drug Administration (FDA) inspections of the Company's and its customers'
operations, a potentially greater number of observations, deficiency notices
and warning letters per inspection, and more product recalls and temporary or
permanent closures of facilities. One factor contributing to this trend is
the FDA's implementation of an approach to inspections of donor centers and
laboratory testing and manufacturing facilities, including the Company's
customers', entitled "Team Biologics". Under this approach, substantially all
such inspections are performed by highly trained field investigators who focus
extensively on the FDA's current good manufacturing practices (cGMP) and
quality systems. This approach was first applied to plasma fractionators and
subsequently to other biologic product areas, including certain of the
14
Company's operations. Several large fractionators, including certain of the
Company's customers, have been affected in varying degrees, from complete
shutdowns of manufacturing facilities to operating under a consent decree to
bring their facilities into compliance. Furthermore, the Company believes
certain manufacturers have experienced a longer than anticipated FDA approval
process of new, relocated or expanded manufacturing and laboratory testing
facilities.
On occasion, the Company has received notifications and warning letters
from the FDA related to possible deficiencies in the Company's compliance with
cGMP and other FDA requirements. To date, the Company believes that it has
adequately addressed or corrected such deficiencies and that it is in
substantial compliance with all relevant laws and regulations. However, since
all of the Company's operations have not yet been fully subjected to Team
Biologics inspections, it is unable to determine what impact, if any, such
inspections will have on the Company and its operations when they occur.
Another trend the industry is currently experiencing is the continuing
imposition of more rigorous donor screening and other standards by the FDA and
certain regulatory bodies in foreign countries, in particular those governing
the manufacture and sale of plasma-based products in Germany, which represents
a significant portion of the Company's sales. Furthermore, the Company's
customers and certain industry trade organizations continue to impose stricter
standards. Such standards, including donor age restrictions, the elimination
of one-time and certain other infrequent donors, restrictions on donors who
have traveled to certain foreign countries and the introduction of new testing
techniques have reduced the pool of, and increased the competition for,
potential donors. Furthermore, the Company believes that, owing in part to the
general strength of the national economy, the financial incentives provided
particularly to donors of non-specialty antibodies are potentially becoming
relatively less attractive, further decreasing the pool of potential donors.
While the Company continues to be adversely impacted by reduced
collections of non-specialty antibodies, increased collection costs of certain
of its products, delayed or reduced shipments of certain products and the
other factors identified above, it believes that the current supply and demand
factors affecting the industry may serve to enhance the pricing of non-
specialty antibodies in the future. Furthermore, due in part to the strength
of the end-use demand, the Company remains optimistic about the longer-term
potential for specialty antibodies, including anti-hepatitis, anti-rabies and
anti-D.
In contrast to these constraints impacting the supply of antibodies, in
particular non-specialty antibodies, current demand for certain of the
antibodies the Company offers has increased for a variety of reasons,
including increased demand for the end products into which they are
manufactured, expanded use of the various end products and increased
manufacturing capacity of certain fractionators as they are able to bring
their facilities into compliance. These factors have led to recent, and in
some cases critical, shortages of certain plasma-based products, most notably
IVIG.
In order to meet this increased demand for, and to improve the
profitability of, its non-specialty antibody business, the Company is
pursuing various alternatives to increase production at its non-specialty
donor centers. However, the Company believes that the non-specialty antibody
business may no longer match its strategic objectives of providing high
margin, value-added products to the pharmaceutical, biotech and diagnostic
industries. As a result, the Company is performing a strategic review of its
non-specialty operations, the results of which might include a divestiture of
all or a portion of its 47 non-specialty donor centers. However, there can be
no assurance that the Company's efforts will be successful, or that any
further impact related to any of the factors discussed above will not have a
material adverse effect on the Company or its operations.
15
Results of Operations
The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto.
The following table sets forth certain operating data of the Company
as a percentage of net sales for the periods indicated below.
Nine Months Ended Three Months Ended
------------------- --------------------
Sept. 27, Sept. 26, Sept. 28, Sept. 26,
1998 1999 1998 1999
---- ---- ---- ----
Net sales 100.0% 100.0% 100.0% 100.0%
Gross profit 34.5% 30.4% 32.7% 28.1%
Selling, general and
administrative expenses 12.6% 15.2% 11.8% 25.0%
Net income (loss) 13.1% 1.5% 12.9% (33.5%)
Three Months Ended September 27, 1998 and September 26, 1999
NET SALES
Consolidated
Consolidated net sales decreased approximately $14.0 million, or 43.8%,
from $31.8 million in 1998 to $17.9 million in 1999. The decrease was
primarily attributable to shipping delays affecting approximately $19 million
in sales, offset by approximately $5.5 million of sales related to the Pentex
Acquisition completed at the beginning of the fiscal year. The shipping
delays affected virtually all product tested at the Company's central
testing laboratory, including specialty, certain non-specialty and clinical
diagnostic antibody products.
Therapeutic Products
Net sales of Therapeutic Products decreased approximately $18.0 million,
or 67.5%, from $26.6 million in 1998 to $8.6 million in 1999. The decrease
was primarily attributable to the shipping delays resulting from the
Company's central testing laboratory issue. Total net sales of specialty
antibodies decreased approximately $9.0 million, or 79.1%, from $11.4 million
in 1998 to $2.4 million in the current year, while total net sales of non-
specialty antibodies decreased approximately $9.0 million, or 58.9 %, from
$15.2 million in 1998 to $6.3 million in 1999. The sales of non-specialty
antibodies were affected by the laboratory issue to a lesser degree than sales
of specialty antibodies, as certain of the Company's non-specialty antibody
collections are tested by third party sources, primarily the customers of the
product.
Diagnostic Products
Net sales of Diagnostic Products increased approximately $4.1 million, or
82.3%, from $5.0 million in 1998 to $9.1 million in 1999. The increase was
primarily attributable to the Pentex Acquisition completed at the beginning of
the current fiscal year, offset by decreases in certain other diagnostic
products. Sales of Pentex products, including bovine serum albumin (BSA) and
the EX-CYTE (R) product line, were approximately $5.5 million during 1999, the
first period of ownership by the Company. Total net sales of monoclonal
antibodies decreased approximately $705,000, or 22.2%, from $3.2 million in
1998 to $2.5 million in the third quarter of 1999. The remaining net sales,
primarily human-sourced antibodies used in blood typing reagents and
diagnostic test kits, decreased approximately $679,000, or 37.7%, from $1.8
million in 1998 to $1.1 million in 1999.
16
GROSS PROFIT
Consolidated
Consolidated gross profit decreased approximately $5.4 million, or 51.7%,
from $10.4 million in the third quarter of 1998 to $5.0 million during 1999.
This decrease was primarily the result of decreased sales resulting from the
Company's central testing laboratory issue, offset in part by the Pentex
Acquisition. The Company estimates that the gross profit related to these
deferred sales is approximately $4 million. Gross profit as a percentage of
net sales ("gross margin") decreased from 32.7% in 1998 to 28.1% in the
current year. The decrease was primarily attributable to the write-off of
approximately $400,000 of inventory deemed unusable owing to the issues at the
Company's central testing laboratory, and the increase in certain non-
inventory related fixed costs, such as depreciation, as a percentage of sales.
Therapeutic Products
Gross profit from Therapeutic Products decreased approximately $6.8
million, or 95.1%, from $7.2 million in 1998 to $350,000 in the third quarter
of 1999. This decrease was primarily attributable to the shipping delays
resulting from the Company's laboratory issue, the vast majority of which was
therapeutic products. Gross margins on Therapeutic Products decreased from
27.0% to 4.1%, due in large part to a decrease in sales of higher margin
specialty antibodies as a percentage of total therapeutic sales, from 43% in
1998 to 27% in the current year, the $400,000 inventory write off and the
increase of certain non-inventory related fixed costs, such as depreciation,
as a percentage of net sales. Gross profit and gross margin were also
negatively impacted by increased per liter production costs of non-specialty
antibodies resulting from cost increases and decreased collection volume at many
of the Company's non-specialty donor centers.
Diagnostic Products
Gross profit from Diagnostic Products increased approximately $1.6
million, or 49.1%, from $3.2 million in 1998 to $4.8 million in 1999,
primarily attributable to the Pentex Acquisition, offset in part by lower
sales of certain other diagnostic products. Gross margins on Diagnostic
Products decreased from 64.7% in 1998 to 52.9% during 1999, primarily as a
result of product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased approximately
$711,000, or 18.9%, from $3.8 million in the third quarter of 1998 to $4.5
million in 1999. The increase was primarily attributable to ongoing selling,
general and administrative expenses incurred as a result of the Pentex
Acquisition and marginal increases in general corporate overhead, offset by
decreased product and service development expenses.
OTHER EXPENSE, NET
Other expense, net, increased approximately $645,000, or 120.6%, from
$535,000 in 1998 to $1.2 million in 1999. Of the increase, $390,000 resulted
from a decrease in the useful lives used for intangible assets relating to
the Company's non-specialty antibody operations (see Note 8 to Condensed
Consolidated Financial Statements), and $193,000 was due to the amortization
of goodwill and other intangible assets acquired in the Pentex Acquisition.
17
INTEREST EXPENSE (INCOME), NET
Interest expense (income), net decreased approximately $291,000, or
111.9%, from net interest income of $260,000 in 1998 to net interest expense
of $31,000 in 1999. The decrease was due primarily to the use of $27.5
million in cash for the Pentex Acquisition on December 29, 1998 and the
resulting loss of interest income, and to interest expense incurred on the
Company's revolving line of credit used primarily to fund working capital
needs and repurchases of the Company's common stock.
Nine Months Ended September 27, 1998 and September 26, 1999
NET SALES
Consolidated
Consolidated net sales decreased approximately $1.4 million, or 1.5%,
from $91.5 million in 1998 to $90.1 million in 1999. The decrease was
primarily attributable to shipping delays affecting approximately $19 million
in sales, offset by approximately $15.9 million in sales related to the
Pentex Acquisition completed at the beginning of the fiscal year.
Therapeutic Products
Net sales of Therapeutic Products decreased approximately $14.9 million,
or 19.7%, from $75.7 million in 1998 to $60.8 million in 1999. The decrease
was primarily attributable to the shipping delays resulting from the Company's
central testing laboratory issue and to the reduced orders of anti-D from two
international customers. Total net sales of specialty antibodies decreased
approximately $12.0 million, or 34.5%, from $34.8 million in 1998 to $22.8
million in the current year, while total net sales of non-specialty antibodies
decreased approximately $2.9 million, or 7.0 %, from $40.9 million in 1998 to
$38.0 million in 1999. The sales of non-specialty antibodies were affected to
a lesser degree than sales of specialty antibodies, as certain of the
Company's non-specialty antibody collections are tested by third party
sources, primarily the customers of the product. Furthermore, prior to the
shipping delays, an increasing number of non-specialty antibodies were sold on
a "gross" pricing basis, for which the increased selling price is reflective
of the Company's handling of laboratory testing services and certain
collection related supplies that were previously provided or otherwise borne
by the customer on a net basis.
Diagnostic Products
Net sales of Diagnostic Products increased approximately $13.5 million,
or 88.3%, from $15.3 million in 1998 to $28.7 million in 1999. Of the
increase, $15.9 million was attributable to the Pentex Acquisition completed
at the beginning of the current fiscal year, offset by marginally lower
sales of certain other diagnostic products. Total net sales of monoclonal
antibodies decreased approximately $1.0 million, or 11.0%, from $9.1 million
in 1998 to $8.1 million in the first nine months of 1999. The remaining net
sales, primarily human-sourced antibodies used in blood typing reagents and
diagnostic test kits, decreased approximately $1.4 million, or 22.7%, from
$6.1 million in 1998 to $4.7 million in 1999.
GROSS PROFIT
Consolidated
Consolidated gross profit decreased approximately $4.2 million, or 13.2%,
from $31.6 million in 1998 to $27.4 million during 1999. This decrease was
primarily the result of decreased sales resulting from the Company's central
testing laboratory issue and to the reduced orders from two international
18
customers of higher margin anti-D antibodies, offset by the Pentex
Acquisition. The Company estimates that the gross profit related to the
deferred sales resulting from the laboratory issue is approximately
$4 million. Gross margin decreased from 34.5% in 1998 to 30.4% in 1999. The
decrease was primarily attributable to lower gross margins on non-specialty
antibodies and, to a lesser extent, lower gross margins on the sale of
diagnostic products, primarily a result of product mix. Gross margins were
also adversely impacted by the increase in the percentage of non-specialty
antibodies sold on a gross basis, as there was relatively insignificant gross
profit attributed to this additional revenue.
Therapeutic Products
Gross profit from Therapeutic Products decreased approximately $10.0
million, or 45.1%, from $22.2 million in 1998 to $12.2 million in 1999,
primarily as a result of reduced sales resulting from the laboratory issue and
to the reduced orders from two international customers of higher margin anti-D
antibodies. Gross margins on Therapeutic Products decreased from 29.3% to
20.0%, due in large part to a decrease in sales of higher margin specialty
antibodies as a percentage of total therapeutic sales, from 46% in 1998 to 38%
in the current year and and an increase in the per liter production costs of
non-specialty antibodies resulting from cost increases and lower collection
volume.
Diagnostic Products
Gross profit from Diagnostic Products increased approximately $6.3
million, or 67.2%, from $9.3 million in 1998 to $15.6 million in 1999,
primarily attributable to the Pentex Acquisition, offset in part by lower
gross profit from certain other diagnostic products. Gross margins on
Diagnostic Products decreased from 61.0% in 1998 to 54.2% during 1999,
primarily a result of product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased approximately $2.1
million, or 18.6%, from $11.5 million in 1998 to $13.7 million in 1999. The
increase was primarily attributable to ongoing selling, general and
administrative expenses incurred as a result of the Pentex Acquisition and
marginal increases in general corporate overhead, offset by decreased product
and service development expenses.
OTHER EXPENSE, NET
Other expense, net, increased approximately $1.0 million, or 50.2%, from
$2.0 million in 1998 to $3.0 million in 1999. Of the increase, $578,000 was
due to the amortization of goodwill and other intangible assets acquired in
the Pentex Acquisition and $390,000 resulted from a decrease in the useful
lives used for intangible assets relating to the Company's non-specialty
antibody operations.
INTEREST INCOME, NET
Interest income, net decreased approximately $654,000, or 103.5%, from
net interest income of $632,000 in 1998 to net interest expense of $22,000 in
1999. The decrease was due primarily to the use of $27.5 million in cash for
the Pentex Acquisition on December 29, 1998 and the resulting loss of interest
income, and to interest expense incurred on the Company's revolving line of
credit used primarily to fund working capital needs and repurchases of the
Company's common stock.
19
Liquidity and Capital Resources
The following table sets forth certain indicators of financial condition
and liquidity of the Company as of December 27, 1998 and September 26, 1999:
Dec. 27, Sept. 26,
1998 1999
------- -------
Cash and cash equivalents $34,940 $1,488
Working capital 56,164 31,798
Total long-term debt and capital lease obligations 5,284 17,338
Stockholders' equity 129,009 119,443
Total debt to equity ratio 4.1% 14.5%
Cash and cash equivalents and working capital decreased approximately
$33.5 million and $24.4 million, respectively, from December 27, 1998,
primarily due to the use of $27.5 million of cash on hand for the Pentex
Acquisition, $15.7 million in repurchases of the Company's common stock,
funding increases in working capital and capital expenditures, offset in
part by operating cash flow and borrowings on the Revolver (as defined below).
The Company currently has two principal sources of near-term liquidity:
(i) cash generated by operations, and (ii) available borrowing capacity under
the Revolver. Owing to the shipping delays the Company has
experienced as a result of the issue at its central testing laboratory, the
Company's primary cash needs have been to fund the increase in certain product
inventories. However, management believes the Company's liquidity and capital
resources are sufficient to meet its working capital, capital expenditure,
stock repurchase and other anticipated cash requirements over the next twelve
months and may be available for use in acquisitions. Furthermore, the Company
anticipates a substantial positive cash flow from operations during the fourth
quarter of 1999 and the first quarter of 2000 as the sales deferred from the
third quarter are expected to be realized as the plasma operations are
normalized.
During April 1999, the Company's Board of Directors authorized the
repurchase of up to $20 million of the Company's common stock, subject to
market conditions, prevailing stock prices and the Company's capital
resources. The Company expects to fund any future repurchases primarily with
cash flow from operations and availability under the Revolver. As of November
5, 1999, the Company had repurchased a total of approximately 2.6 million
shares of its common stock for aggregate consideration of approximately $17.0
million.
Net cash provided by operating activities in 1999 was $5.2 million versus
$6.9 million in the previous year. This decrease was attributable to $10.6
million in lower net income, offset by $8.6 million in non-cash special
charges, $1.7 million of additional non-cash depreciation and amortization
expense and a $1.4 million smaller investment in working capital. The
investment in working capital in 1999 was net of a $9.2 million source of
cash from a decrease in accounts receivable and a $18.6 million use of cash
from an increase in inventories, both primarily resulting from the shipping
delays encountered in the third quarter.
Net cash used in investing activities during 1999 was $39.5 million as
compared to $11.1 million in 1998. Investing activities in 1999 consisted
primarily of the Pentex Acquisition, related transaction costs and capital
expenditures relating primarily to the expansion of the Pentex manufacturing
facility and a custom software project. Investing activities in 1998
primarily consisted of the acquisition of four non-specialty donor centers
and a clinical trial site and capital expenditures.
20
The Company expects capital expenditures for the remainder of the year
of approximately $1.9 million, primarily relating to information technology
initiatives and the renovation or relocation of a number of donor centers.
Net cash provided by financing activities was $808,000 in 1999 as compared
to $5.1 million in 1998. Financing activities in 1999 primarily consisted of
approximately $15.7 million of common stock repurchases, offset by borrowings
on the Revolver and proceeds from the exercise of stock options. Financing
activities in 1998 consisted primarily of proceeds from the exercise of stock
options.
Total long-term debt and capital lease obligations increased
approximately $12.1 million, from $5.3 million at December 28, 1998 to $17.3
million at September 26, 1999. The increase was primarily from borrowings on
the Revolver to fund short-term working capital needs and the Company's share
repurchase program, offset in part by the conversion of approximately $2.7
million principal amount of a convertible note into approximately 213,200
shares of the Company's common stock.
Subsequent to quarter end, on September 28, 1999, the Company amended its
revolving credit facility (the "Revolver) scheduled to mature on October 16,
2000, increasing the total borrowing availability from $35 million to $75
million. The Revolver is payable in full on September 28, 2002 and bears
interest at either a floating rate or Eurodollar interest rate plus a margin
that fluctuates on the basis of the Company's leverage ratio. The margin on
the Eurodollar rate ranges from 1.25% to 2.0% and the margin on the floating
rate option ranges from 0% to .5%.
Outlook
Therapeutic Products
Demand for non-specialty antibodies remains strong and generally exceeds
the Company's ability to supply targeted amounts to its customers. However,
the Company expects continued margin pressure on this product line unless and
until it is able to increase its collections of this product and its selling
prices to its customers. Furthermore, the Company believes that the non-
specialty antibody business may no longer match its strategic objectives of
providing high margin, value-added products to the pharmaceutical, biotech and
diagnostic industries. As a result, the Company is performing a strategic
review of its non-specialty operations, the results of which might include a
divestiture of all or a portion of its 47 non-specialty donor centers.
However, there can be no assurance that the Company will be successful in any
of these efforts, that it will be able to regain historical levels of
profitability for this product line or that any further impact from the
factors affecting the business will not have a material adverse effect on the
Company or its operations.
Due in large part to the previously announced reduced demand from two of
its international customers, the Company expects 1999 sales of anti-D
antibodies to be 25-30% lower than the previous year, and does not expect a
recovery throughout the remainder of 1999 or into the first nine months of
2000. Furthermore, additional operational adjustments may be required,
including reducing the level of anti-D specialty antibody collections, which
could adversely affect the per unit production costs of anti-D and other
specialty therapeutic products.
Demand for the Company's other specialty antibody products, anti-
hepatitis and anti-rabies, continues to be strong and is expected to increase
in 2000. The Company expects the demand for anti-hepatitis to exceed its
current production capabilities and is pursuing various strategies to increase
its production, particularly at its 17 specialty donor centers.
Subsequent to quarter end, the Company commenced shipping product tested
at its central testing laboratory on a limited basis. The Company expects
that substantially all of the remaining units deferred as a result of the
laboratory issue, representing approximately $19 million in sales, will be
21
shipped in the fourth quarter of 1999. However, the resumption of certain of
these shipments is contingent on, among other items, customer review and
approval.
Diagnostic Products
The Company anticipates moderate increases in sales of monoclonal and
polyclonal antibodies used in blood typing reagents and antibodies used in
diagnostic test kits. The Company expects demand for its Pentex line of
blood protein products to increase, in particular the EX-CYTE(R) line of
tissue culture media. To increase its capacity and ability to satisfy this
increased demand, the Company recently completed a $13 million expansion of
its manufacturing facilities in Kankakee, Illinois. The Company expects to
complete validation and commence shipping product produced in the expanded
facility in the fourth quarter of 1999.
The Company is developing a line of monoclonal antibodies to be used in
diagnostic test kits, which were historically derived from human donors.
While sales to date have not been significant, the Company believes that this
product line could provide additional opportunities for growth in Diagnostic
Products.
Year 2000 Issue
The Year 2000 issue results from computer-based systems that use two
digits rather than four to define the applicable year. If not corrected, many
computer applications could fail or create erroneous results after December
31, 1999, or before, to the extent a system references future dates. This
Year 2000 issue is believed to affect the majority of all companies and
organizations worldwide, including the Company.
The Company has developed and implemented a plan to achieve Year 2000
readiness. This plan's activities are intended to remediate the Year 2000
issue for any non-compliant critical information technology ("IT") systems and
non-IT devices in use by the Company so that the Company may continue its
operations without interruption or with minimal disruption. The Company's plan
also includes communication with customers, suppliers, outsource laboratories,
financial institutions and other third parties with which it has a material
relationship to determine the expected degree of their Year 2000 compliance,
and to monitor their progress towards Year 2000 readiness. The Company's Year
2000 plan includes five primary phases: (1) inventory, (2) assessment, (3)
remediation, (4) testing/validation, and (5) implementation. The Company has
used a risk-based analysis of its operations to identify those items that are
critical to the Company and at risk.
To date, the Company has successfully completed all phases with regards
to its critical IT systems and Phases 1-4 with regards to its non-critical IT
systems. The Company expects to complete the last phases with respect to the
one remaining non-critical system by December 3, 1999. While the Company had
originally intended to implement a custom-developed donor center operating
system that would have replaced its non-compliant inventory maintenance
systems, parallel remediation efforts of these systems have eliminated any
impact of the cancellation of this software project as it relates to Year 2000
compliance.
The Company is also analyzing all non-IT systems that are material to its
operations that could contain date-sensitive embedded technology, such as its
automated plasmapheresis machines and plasma storage freezers. The Company has
completed all phases of its Year 2000 plan with respect to these systems,
which revealed no compliance issues of any significance.
While the Company currently markets its products to over 200 customers
worldwide, approximately 84% of the Company's net sales during 1998 were made
to its top ten customers. Furthermore, certain plasmapheresis and other
supplies critical to its operations are purchased from a limited number of
suppliers. As a result of these concentrated risks, the inability of any of
the Company's major suppliers to provide it with critical supplies, or any
prolonged delay or other disruption in the manufacturing, laboratory testing
or other processes of the Company's customers and outsource laboratories,
could have a material adverse effect on the Company. The Company has
communicated with all material third parties to determine the status of their
22
Year 2000 compliance. None of the responses received suggests that any of
these third parties expect the Year 2000 issue to cause an interruption in its
operations that would have a material adverse impact on the Company. However,
because these third parties are exposed to the risk of failure not only of
their own systems, but of other third parties, the ultimate effect of the Year
2000 issue is subject to a high degree of uncertainty. Furthermore, due to
the inherent lack of control over these third parties, the Company is able to
give no assurance as to the current readiness or success of these parties'
Year 2000 compliance.
Based on the information known to date, the Company believes that the
most likely worst-case Year 2000 scenario would entail an interruption in its
business, including disruption in the collection or manufacturing of
antibodies due to the inability to obtain critical supplies, and loss of
revenue due to the inability of the Company's customers to further manufacture
the Company's products or to provide the required laboratory testing services.
The Company could also be significantly affected by the failure of
infrastructure services such as electricity. While the Company is unable to
quantify the effect of such a scenario, it could potentially have a material
adverse impact on the Company's results of operations, liquidity or financial
condition.
Based on the analysis the Company has completed to date, it expects the
cost of its Year 2000 compliance program to be approximately $200,000, the
majority of which has already been incurred. The Company believes that it
will be able to complete the remaining phases of its Year 2000 compliance plan
by the end of 1999 and does not currently anticipate any material disruption
of its operations as the result of any failure by the Company to be in
compliance. Furthermore, the Company has developed a contingency plan
addressing the potential noncompliance of material third parties, primarily
suppliers. The Company has also developed a contingency plan for certain
infrastructure services such as electricity, based on its existing contingency
plan for reacting to natural disasters.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes regarding the Company's market risk
position from the information provided in its Annual Report on Form 10-K for
the fiscal year ended December 27, 1998. The quantitative and qualitative
disclosures about market risk are discussed under the caption "Market Risk" in
Item 7-Management's Discussion and Analysis of Financial Condition and Results
of Operations, contained in the Company's Form 10-K.
23
PART II.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
Exhibit 10.1: Third Amended and Restated Credit Agreement dated as
of September 28, 1999.
Exhibit 27: Financial Data Schedule
b. Reports on Form 8-K:
1.) On August 9, 1999, the Company filed a Current Report on
Form 8-K, in which it reported under Item 5-Other Events, on
July 26, 1999 its board of directors had adopted a stockholders
rights plan.
2.) On September 10, 1999, the Company filed a Current
Report on Form 8-K, in which it reported under Item 5-Other
Events, that it expected a loss in its third fiscal quarter of
1999 due to shipping delays, other product related issues and
certain one-time, non-cash charges.
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.
SEROLOGICALS CORPORATION
------------------------
(Registrant)
Date: November 12, 1999 By: /s/ Peter J. Pizzo, III
-----------------------
Peter J. Pizzo, III
Chief Financial Officer
(Principal Financial and
Accounting Officer)
24
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
$75,000,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 28, 1999
by and among
SEROLOGICALS CORPORATION,
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 12.5,
as Lenders,
WACHOVIA BANK, N.A.
and
LASALLE BANK National Association,
each as Co-Agents,
and
BANK OF AMERICA, N.A.,
as Administrative Agent
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
Article I. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2. General; References to Times . . . . . . . . . . . . . . . .21
Section 1.3. Accounting Treatment for Acquired Entities . . . . . . . . .22
Article II. Credit Facility. . . . . . . . . . . . . . . . . . . . . . . .22
Section 2.1. Revolving Loans. . . . . . . . . . . . . . . . . . . . . . .22
Section 2.2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . .23
Section 2.3. Rates and Payment of Interest on Revolving Loans . . . . . .27
Section 2.4. Number of Interest Periods . . . . . . . . . . . . . . . . .27
Section 2.5. Repayment of Loans . . . . . . . . . . . . . . . . . . . . .28
Section 2.6. Prepayments. . . . . . . . . . . . . . . . . . . . . . . . .28
Section 2.7. Continuation . . . . . . . . . . . . . . . . . . . . . . . .28
Section 2.8. Conversion . . . . . . . . . . . . . . . . . . . . . . . . .29
Section 2.9. Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Section 2.10. Reductions of the Commitments . . . . . . . . . . . . . . .29
Section 2.11. Expiration or Maturity Date of Letters of Credit Past
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . .30
Section 2.12. Swingline Loans . . . . . . . . . . . . . . . . . . . . . .30
Section 2.13. Amount Limitations. . . . . . . . . . . . . . . . . . . . .32
Article III. Payments, Fees and Other General Provisions . . . . . . . . .32
Section 3.1. Payments . . . . . . . . . . . . . . . . . . . . . . . . . .32
Section 3.2. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . .33
Section 3.3. Sharing of Payments, Etc . . . . . . . . . . . . . . . . . .33
Section 3.4. Several Obligations. . . . . . . . . . . . . . . . . . . . .34
Section 3.5. Minimum Amounts. . . . . . . . . . . . . . . . . . . . . . .34
Section 3.6. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 3.7. Computations . . . . . . . . . . . . . . . . . . . . . . . .35
Section 3.8. Usury. . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Section 3.9. Agreement Regarding Interest and Charges . . . . . . . . . .36
Section 3.10. Statements of Account . . . . . . . . . . . . . . . . . . .36
Section 3.11. Defaulting Lenders. . . . . . . . . . . . . . . . . . . . .36
Section 3.12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Article IV. Yield Protection, Etc. . . . . . . . . . . . . . . . . . . . .39
Section 4.1. Additional Costs; Capital Adequacy . . . . . . . . . . . . .39
Section 4.2. Suspension of LIBOR Loans. . . . . . . . . . . . . . . . . .41
Section 4.3. Illegality . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 4.4. Compensation . . . . . . . . . . . . . . . . . . . . . . . .41
Section 4.5. Treatment of Affected Loans. . . . . . . . . . . . . . . . .42
Section 4.6. Change of Lending Office . . . . . . . . . . . . . . . . . .43
Section 4.7. Assumptions Concerning Funding of LIBOR Loans. . . . . . . .43
Article V. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . .43
Section 5.1. Initial Conditions Precedent . . . . . . . . . . . . . . . .43
Section 5.2. Conditions Precedent to All Loans and Letters of Credit. . .46
Section 5.3. Conditions to Significant Acquisitions . . . . . . . . . . .47
Section 5.4. Conditions to Non-Significant Acquisitions . . . . . . . . .50
Article VI. Representations and Warranties . . . . . . . . . . . . . . . .51
Section 6.1. Corporate Existence. . . . . . . . . . . . . . . . . . . . .51
Section 6.2. Authorization; No Conflict . . . . . . . . . . . . . . . . .51
Section 6.3. Enforceability . . . . . . . . . . . . . . . . . . . . . . .52
Section 6.4. Approvals. . . . . . . . . . . . . . . . . . . . . . . . . .52
Section 6.5. Financial Condition. . . . . . . . . . . . . . . . . . . . .52
Section 6.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . .53
Section 6.7. Federal Reserve Regulations. . . . . . . . . . . . . . . . .53
Section 6.8. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Section 6.9. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Section 6.10. Investment Company Act. . . . . . . . . . . . . . . . . . .55
Section 6.11. Public Utility Holding Company Act. . . . . . . . . . . . .55
Section 6.12. Material Agreements . . . . . . . . . . . . . . . . . . . .55
Section 6.13. Environmental and Safety Matters. . . . . . . . . . . . . .55
Section 6.14. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . .57
Section 6.15. Compliance with Law . . . . . . . . . . . . . . . . . . . .57
Section 6.16. Capitalization. . . . . . . . . . . . . . . . . . . . . . .58
Section 6.17. Title to Properties . . . . . . . . . . . . . . . . . . . .58
Section 6.18. Conduct of Business . . . . . . . . . . . . . . . . . . . .58
Section 6.19. Representations and Warranties in Acquisition Documents . .58
Section 6.20. Performance of Contracts, Etc . . . . . . . . . . . . . . .58
Section 6.21. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . .58
Section 6.22. Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . .59
Section 6.23. Survival of Representations and Warranties, Etc . . . . . .59
Section 6.24. Representations Regarding Acquisitions . . . . . . . . . . .59
Article VII. Affirmative Covenants . . . . . . . . . . . . . . . . . . . .60
Section 7.1. Corporate Existence; Compliance with Law; Etc. . . . . . . .60
Section 7.2. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .60
Section 7.3. Obligations and Taxes. . . . . . . . . . . . . . . . . . . .60
Section 7.4. Maintaining Records; Access to Properties and Inspections. .61
Section 7.5. Environmental and Safety Matters . . . . . . . . . . . . . .61
Section 7.6. Additional Security. . . . . . . . . . . . . . . . . . . . .62
Section 7.7. Use of Proceeds; Letters of Credit . . . . . . . . . . . . .62
Section 7.8. Additional Material Subsidiaries . . . . . . . . . . . . . .62
Article VIII. Information. . . . . . . . . . . . . . . . . . . . . . . . .62
Section 8.1. Quarterly Financial Statements . . . . . . . . . . . . . . .63
Section 8.2. Year-End Statements. . . . . . . . . . . . . . . . . . . . .63
Section 8.3. Compliance Certificate . . . . . . . . . . . . . . . . . . .63
Section 8.4. Other Information. . . . . . . . . . . . . . . . . . . . . .63
Section 8.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . .66
Article IX. Negative Covenants . . . . . . . . . . . . . . . . . . . . . .67
Section 9.1. Financial Covenants. . . . . . . . . . . . . . . . . . . . .67
Section 9.2. Indebtedness and Guarantees. . . . . . . . . . . . . . . . .67
Section 9.3. Prohibition on Fundamental Changes . . . . . . . . . . . . .68
Section 9.4. Investments. . . . . . . . . . . . . . . . . . . . . . . . .68
Section 9.5. Limitation on Liens. . . . . . . . . . . . . . . . . . . . .69
Section 9.6. Restricted Payments. . . . . . . . . . . . . . . . . . . . .69
Section 9.7. Accounting . . . . . . . . . . . . . . . . . . . . . . . . .69
Section 9.8. Amendment of Certain Documents . . . . . . . . . . . . . . .69
Section 9.9. Sales of Assets. . . . . . . . . . . . . . . . . . . . . . .69
Article X. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Section 10.1. Events of Default . . . . . . . . . . . . . . . . . . . . .70
Section 10.2. Remedies Upon Event of Default. . . . . . . . . . . . . . .73
Section 10.3. Remedies Upon Default . . . . . . . . . . . . . . . . . . .74
Section 10.4. Allocation of Proceeds. . . . . . . . . . . . . . . . . . .74
Section 10.5. Collateral Account. . . . . . . . . . . . . . . . . . . . .75
Section 10.6. Performance by Agent. . . . . . . . . . . . . . . . . . . .75
Section 10.7. Rights Cumulative. . . . . . . . . . . . . . .. . . . . . .76
Article XI. The Agent. . . . . . . . . . . . . . . . . . . . . . . . . . .76
Section 11.1. Authorization and Action. . . . . . . . . . . . . . . . . .76
Section 11.2. Agent's Reliance, Etc . . . . . . . . . . . . . . . . . . .77
Section 11.3. Notice of Defaults. . . . . . . . . . . . . . . . . . . . .77
Section 11.4. Bank of America as Lender . . . . . . . . . . . . . . . . .77
Section 11.5. Approvals of Lenders. . . . . . . . . . . . . . . . . . . .78
Section 11.6. Lender Credit Decision, Etc . . . . . . . . . . . . . . . .78
Section 11.7. Indemnification of Agent. . . . . . . . . . . . . . . . . .79
Section 11.8. Collateral Matters. . . . . . . . . . . . . . . . . . . . .79
Section 11.9. Successor Agent . . . . . . . . . . . . . . . . . . . . . .80
Section 11.10. Co-Agents. . . . . . . . . . . . . . . . . . . . . . . . .81
Article XII. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . .81
Section 12.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . .81
Section 12.2. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .83
Section 12.3. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . .83
Section 12.4. Arbitration . . . . . . . . . . . . . . . . . . . . . . . .83
Section 12.5. Successors and Assigns. . . . . . . . . . . . . . . . . . .85
Section 12.6. Amendments. . . . . . . . . . . . . . . . . . . . . . . . .87
Section 12.7. Nonliability of Agent and Lenders . . . . . . . . . . . . .88
Section 12.8. Confidentiality . . . . . . . . . . . . . . . . . . . . . .88
Section 12.9. Indemnification . . . . . . . . . . . . . . . . . . . . . .88
Section 12.10. Survival . . . . . . . . . . . . . . . . . . . . . . . . .89
Section 12.11. Severability of Provisions . . . . . . . . . . . . . . . .89
Section 12.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .89
Section 12.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . .89
Section 12.14. Obligations with Respect to Loan Parties . . . . . . . . .89
Section 12.15. Entire Agreement . . . . . . . . . . . . . . . . . . . . .90
Section 12.16. Construction . . . . . . . . . . . . . . . . . . . . . . .90
SECTION 12.17. NO NOVATION; EFFECT OF AMENDMENT AND RESTATEMENT . . . . .90
SCHEDULE 6.1. Ownership Structure
SCHEDULE 6.6. Litigation
SCHEDULE 6.8. ERISA
SCHEDULE 6.12. Material Agreements
SCHEDULE 6.13. Environmental and Safety Matters
SCHEDULE 6.16. Capitalization
SCHEDULE 6.17. Title to Properties; Liens
SCHEDULE 9.2. Indebtedness and Guaranties
SCHEDULE 9.4. Existing Investments
EXHIBIT A Form of Accession Agreement to Credit Documents
EXHIBIT B Form of Assignment and Acceptance Agreement
EXHIBIT C Form of Assignment of Acquisition Documents
EXHIBIT D Form of Guaranty
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Notice of Continuation
EXHIBIT G Form of Notice of Conversion
EXHIBIT H Form of Notice of Swingline Borrowing
EXHIBIT I Form of Patent Security Agreement
EXHIBIT J Form of Pledge Agreement
EXHIBIT K Form of Security Agreement
EXHIBIT L Form of Swingline Note
EXHIBIT M Form of Trademark Security Agreement
EXHIBIT N Form of Revolving Note
EXHIBIT O Form of Opinion of Counsel to Loan Parties
EXHIBIT P Form of Compliance Certificate
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of September
28, 1999, by and among SEROLOGICALS, a corporation organized under the laws
of the State of Delaware (the "Borrower"), each of the financial institutions
initially a signatory hereto together with their assignees pursuant to
Section 12.5, each of WACHOVIA BANK, N.A. and LASALLE BANK National
Association as Co-Agents (the "Co-Agents") and BANK OF AMERICA, N.A., as
contractual representative of the Lenders to the extent and in the manner
provided in Article XI below (the "Agent").
WHEREAS, Bank of America, N.A., successor to NationsBank, N.A. (South)
("Bank of America"), and the Borrower entered into that certain Second
Amended and Restated Credit Agreement dated as of October 16, 1997 (as
amended and in effect immediately prior to the date hereof, the "Existing
Credit Agreement"), pursuant to which Bank of America made available to the
Borrower a credit facility, all on the terms and conditions contained
therein; and
WHEREAS, the parties hereto desire to amend and restate the Existing
Credit Agreement to increase the amount of such credit facility to
$75,000,000, to permit all of the Lenders to provide credit to the Borrower
on the terms contained herein, to appoint Bank of America as contractual
representative for the Lenders, and for the other purposes provided herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the
parties hereto agree that the Existing Credit Agreement is amended and
restated in its entirety as follows:
ARTICLE I. DEFINITIONS
Section 1.1. Definitions.
In addition to terms defined elsewhere herein, the following terms shall
have the following meanings for the purposes of this Agreement:
"ABRA" shall mean the American Blood Resources Association.
"Account Receivable" shall mean, as of any date of determination
thereof, the unpaid portion of the obligation of a customer of a Subsidiary
(other than any Foreign Subsidiary) in respect of services actually rendered
as stated on the invoice therefore, in each case net of any unpaid credits,
rebates, offsets or commissions.
"Accession Agreement" shall mean an Accession Agreement to Credit
Documents executed by any Loan Party in favor of the Agent and substantially
in the form of Exhibit A.
"Acquisition" shall mean, with respect to a Seller, the acquisition by
the Borrower directly, or indirectly through its Subsidiaries, in one or a
series of transactions, of (a) all or substantially all of the assets of such
Seller or all or substantially all of a line or lines of business conducted
by such Seller or a division of such Seller or (b) a controlling equity
interest in such Seller, whether by purchase of such equity interest or upon
the exercise of an option or warrant for, or conversion of securities into,
such equity interest.
"Acquisition Date" means, with respect to an Acquisition, the date on
which such Acquisition is consummated.
"Acquisition Documents" means, with respect to an Acquisition,
collectively, the related Purchase Agreement for such Acquisition and all
related agreements and conveyance instruments executed in connection
therewith or pursuant thereto.
"Acquisition Historical Financial Statements" has the meaning given that
term in Section 5.3.(a).
"Acquisition Pro Forma Financial Statements" has the meaning given that
term in Section 5.3.(b).
"Additional Costs" has the meaning given that term in Section 4.1.
"Adjusted Eurodollar Rate" means, with respect to each Interest Period
for any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest
Period by (b) a percentage equal to 1 minus the stated maximum rate (stated
as a decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate
on LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of any Lender outside of the United
States of America to residents of the United States of America).
"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 and, if such Person is an individual, any member of the immediate
family (including parents, spouse and children) of such individual, any trust
whose principal beneficiary is such individual or one or more members of such
individual's immediate family and any Person who is controlled by any such
member or trust. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of management or policies of the subject Person (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 10% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation
or 10% or more of the partnership or other ownership interests of any other
Person (other than as a limited partner of such other Person) will be deemed
an Affiliate of such corporation or other Person; provided further that, with
respect to any Person permitted to file a report on Schedule 13G under the
Exchange Act and which owns directly or indirectly any securities having
ordinary voting power for the election of directors or other governing body
of the Borrower or any Subsidiary, neither the Borrower nor any Subsidiary
shall be deemed to be an Affiliate of such Person and such Person shall not
be deemed to be an Affiliate of the Borrower or any Subsidiary unless such
Person owns directly or indirectly 20% or more of such voting securities of
the Borrower or such Subsidiary, as the case may be.
"Agent" means Bank of America, N.A., as contractual representative for
the Lenders under the terms of this Agreement, and any of its successors.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Commitment Fee" means at any time the percentage set forth
in the table below corresponding to the Level at which the "Applicable
Margin" is then determined in accordance with the definition thereof:
Level Applicable
Commitment Fee
4 0.500%
3 0.375%
2 0.375%
1 0.300%
Any change in the applicable Level at which the Applicable Margin is
determined shall result in a corresponding and simultaneous change in the
Applicable Commitment Fee.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"Applicable Margin" means the percentage rate set forth below for a
given Type of Loan corresponding to the ratio of Funded Debt to EBITDA of the
Borrower and its Consolidated Subsidiaries as determined in accordance with
Section 9.1. in effect at such time:
Level Ratio of Funded Applicable Margin Applicable Margin
Debt to EBITDA for Base Rate Loans for LIBOR Loans
4 Greater than or equal 0.50% 2.00%
to 2.50 to 1.0
3 Less than 2.50 to 1.0 0.25% 1.75%
but greater than or
equal to 2.0 to 1.0
2 Less than 2.0 to 1.0 0.00% 1.50%
but greater than or
equal to 1.50 to 1.0
1 Less than 1.50 to 1.0 0.00% 1.25%
The Agent shall confirm the Applicable Margin based on the calculations set
forth in Compliance Certificates delivered under Section 8.3. from time to
time, and shall notify the Borrower and the Lenders thereof. Each change in
the Applicable Margin shall take effect on the date five Business Days
following the date by which the Borrower is required to deliver the quarterly
financial statements pursuant to Section 8.1. or the annual financial
statements pursuant to Section 8.2., as the case may be. Until first
determined as provided above, the Applicable Margin shall be determined by
reference to Level 1. If the Borrower fails to deliver any such Compliance
Certificate by the date required under Section 8.3., then the Applicable
Margin shall be determined by reference to Level 4 until such time as the
Borrower delivers such Compliance Certificate.
"Assignee" has the meaning given that term in Section 12.5.(d).
"Assignment and Acceptance Agreement" means an Assignment and Acceptance
Agreement among a Lender, an Assignee and the Agent, substantially in the
form of Exhibit B.
"Assignment of Acquisition Documents" means the Amended and Restated
Assignment of Acquisition Documents executed by certain of the Loan Parties
in favor of the Agent and substantially in the form of Exhibit C.
"Bank of America" means Bank of America, N.A., , together with its
successors and assigns.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
amended from time to time, or any successor federal statute.
"BAS" means Banc of America Securities LLC, together with its successors
and assigns.
"Base Rate" means the per annum rate of interest equal to the greater of
(a) the Prime Rate or (b) the Federal Funds Rate plus one-half of one percent
(0.5%). Any change in the Base Rate resulting from a change in the Prime Rate
or the Federal Funds Rate shall become effective as of 12:01 a.m. on the
Business Day on which each such change occurs. The Base Rate is a reference
rate used by the Agent in determining interest rates on certain loans and is
not intended to be the lowest rate of interest charged by the Agent or any
Lender on any extension of credit to any debtor.
"Base Rate Loan" means a Revolving Loan bearing interest at a rate based
on the Base Rate.
"Borrower" has the meaning set forth in the introductory paragraph
hereof and shall include the Borrower's successors and permitted assigns.
"Business Day" means (a) any day other than a Saturday, Sunday or other
day on which banks in Atlanta, Georgia or Charlotte, North Carolina are
authorized or required to close and (b) with reference to a LIBOR Loan, any
such day that is also a day on which dealings in Dollar deposits are carried
out in the London interbank market.
"Capital Expenditures" means, without duplication, for any period of
computation thereof, the aggregate of all expenditures on a consolidated
basis including deposits (whether paid in cash or property or accrued as
liabilities and including the aggregate amount of all principal payments due
for the entire term of all Capitalized Lease Obligations) made by the
Borrower and its Consolidated Subsidiaries that, in conformity with GAAP,
are required to be included in the property, plant, or equipment, or similar
fixed asset account.
"Capitalized Lease Obligation" means as to any Person, the obligations
of such Person with respect to any lease of (or other agreement conveying the
right to use) any property (whether real, personal or mixed) which is or
should be classified and accounted for as a capital lease on a balance sheet
of such Person under GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board) and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including
such Statement No. 13).
"Cash Equivalents" shall mean, as to any Person (a) securities issued or
directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (b) time deposits, Euro-dollar
deposits, certificates of deposit or bankers' acceptances of any commercial
bank organized under the laws of the United States or any state thereof or
the District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than
$200,000,000, in each case with maturities of not more than one year from the
date of acquisition by such Person, (c) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (a) above entered into with any bank meeting the qualifications
specified in clause (b) above, (d) commercial paper issued by any Person
incorporated in the United States rated at least A-2 or the equivalent
thereof by S&P or at least P-2 or the equivalent thereof by Moody's and in
each case maturing not more than one year after the date of acquisition by
such Person, (e) marketable direct obligations issued by the District of
Columbia or any State of the United States or any political subdivision of
any such State or any public instrumentality thereof maturing within one year
from the date of acquisition and, at the time of acquisition, having one of
the two highest ratings obtainable from either S&P or Moody's, (f)
investments in money market funds at least 85% of whose assets are comprised
of securities of the types described in clauses (a) through (e) above, and
(g) in the case of any Foreign Subsidiary, (A) direct obligations of the
sovereign nation( or any agency thereof) in which such Foreign Subsidiary is
organized or is conducting business or in obligations fully and
unconditionally guaranteed by such sovereign nation (or any agency thereof)
and rated at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody's and in each case having maturities of not
more than the year from the date of acquisition or (B) of the type and
maturity described in clauses (b), (c) or (d) above of foreign obligors,
which obligations or obligors (or the parents of such obligors) having
ratings described in such clauses or equivalent ratings from comparable
foreign rating agencies reasonably acceptable to the Agent.
"Cash Flow" means, for any period of computation thereof, an amount
equal to the following: (i) EBITDA for such period minus (ii) cash payments
actually made during such period in respect of taxes on income of the
Borrower and its Consolidated Subsidiaries.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
successor federal statute.
"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Inventory System.
"CLIA" means the Clinical Laboratory Improvement Amendments of 1988, as
amended.
"Closing Date" means the later of (a) the Agreement Date and (b) the
date on which all of the conditions precedent set forth in Section 5.1 shall
have been fulfilled or waived in writing by the Agent.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute.
"Collateral" means any collateral security now or hereafter pledged by
any Loan Party to secure the Obligations or any portion thereof and includes
all "Collateral" as defined in the Security Agreement, the "Trademark
Collateral" as defined in any Trademark Security Agreement, and the "Pledged
Collateral" as defined in the Pledge Agreement.
"Collateral Account" means a special non-interest bearing deposit
account maintained at the Principal Office of the Agent and under its sole
dominion and control.
"Commitment" means, as to each Lender, such Lender's obligation to make
Revolving Loans pursuant to Section 2.1. and to issue (in the case of the
Agent) or participate in (in the case of the other Lenders) Letters of Credit
pursuant to Section 2.2. (a) and 2.2.(i) respectively, in an amount up to,
but not exceeding (but in the case of the Agent excluding the aggregate
amount of participations in the Letters of Credit held by other Lenders), the
amount set forth for such Lender on its signature page hereto as such
Lender's "Commitment Amount" or as set forth in the applicable Assignment and
Acceptance Agreement, as the same may be reduced from time to time pursuant
to Section 2.10. or as appropriate to reflect any assignments to or by such
Lender effected in accordance with Section 12.5.
"Commitment Percentage" means, as to each Lender, the ratio, expressed
as a percentage, of (a) the amount of such Lender's Commitment to (b) the
aggregate amount of the Commitments of all Lenders hereunder; provided,
however, that if at the time of determination the Commitments have terminated
or been reduced to zero, the "Commitment Percentage" of each Lender shall be
the Commitment Percentage of such Lender in effect immediately prior to such
termination or reduction.
"Compliance Certificate" has the meaning given that term in Section 8.3.
"Consolidated Subsidiary" means, as to any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should be) consolidated with the
financial statements of such Person in accordance with GAAP.
"Consolidated Total Assets" means, at the time of determination, the net
book value of all assets of the Borrower and its Consolidated Subsidiaries as
determined in accordance with GAAP.
"Continue", "Continuation" and "Continued" each refers to the
continuation of a LIBOR Loan from one Interest Period to another Interest
Period pursuant to Section 2.7.
"Convert", "Conversion" and "Converted" each refers to the conversion of
a Loan of one Type into a Loan of another Type pursuant to Section 2.8.
"Credit Documents" means, collectively, this Agreement, the Note, the
Guaranty, the Security Documents, and any other documents and instruments
executed and delivered by any Loan Party in connection with this Agreement or
any of the foregoing documents.
"Credit Event" means any of the following: (a) the making (or deemed
making) of any Loan, (b) the Conversion of a Loan and (c) the issuance of a
Letter of Credit.
"Debt Service" means, on the date of determination thereof, (a) current
maturities of long term debt of the Borrower and its Consolidated
Subsidiaries for the four fiscal quarter period then beginning, plus
(b) current maturities of Capitalized Lease Obligations of the Borrower and
its Consolidated Subsidiaries for such period, plus (c) the aggregate amount
of cash dividends and other distributions scheduled to be paid or accrued
during such period in respect of Redeemable Stock.
"Default" means any of the events specified in Section 10.1., whether or
not there has been satisfied any requirement for the giving of notice, the
lapse of time, or both.
"Defaulting Lender" has the meaning set forth in Section 3.11.
"Disposition" means any sale, lease, assignment, transfer or other
disposition of any property (including any capital stock or other equity
interest in a Subsidiary but excluding sales of Inventory in the ordinary
course) by the Borrower or any other Loan Party.
"Dollars" or "$" means the lawful currency of the United States of
America.
"Donor Center" means any location of the Borrower or any Subsidiary
where such Loan Party collects, analyzes, processes and sells human blood,
plasma and other human biological products or components or provides related
healthcare services.
"EBIT" means, for any period of computation thereof, the sum of, without
duplication, (i) Net Income for such period plus (ii) Interest Expense for
such period plus (iii) taxes on income of the Borrower and its Consolidated
Subsidiaries accrued during such period plus (iv) any extraordinary expense
or loss, and any non-recurring non-cash expense or loss, of the Borrower or
any Consolidated Subsidiary for such period to the extent included in
determining Net Income for such period.
"EBITDA" means, for any period of computation thereof, the sum of
(i) EBIT for such period plus (ii) amortization expense of the Borrower and
its Consolidated Subsidiaries for such period plus (iii) without duplication,
depreciation expense of the Borrower and its Consolidated Subsidiaries for
such period.
"Eligible Assignee" means any Person who is: (i) currently a Lender;
(ii) a commercial bank, trust company, insurance company, investment bank or
pension fund organized under the laws of the United States of America, or any
state thereof, and having total assets in excess of $5,000,000,000; (iii) a
savings and loan association or savings bank organized under the laws of the
United States of America, or any state thereof, and having a tangible net
worth of at least $500,000,000; or (iv) a commercial bank organized under the
laws of any other country, or a political subdivision of any such country,
and having total assets in excess of $10,000,000,000, provided that such bank
is acting through a branch or agency located in the United States of America.
If such Person is not currently a Lender, such Person's senior unsecured long
term indebtedness must be rated BBB or higher by S&P, Baa2 or higher by
Moody's, or the equivalent or higher of either such rating by another Rating
Agency acceptable to the Agent.
"Employee Benefit Plan" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by any Loan
Party or any of its ERISA Affiliates, other than a Multiemployer Plan.
"Environmental Claim" shall mean, with respect to any Person, any
notice, claim, demand or other communication (whether written or oral)
alleging or asserting such Person's liability for investigatory costs,
cleanup costs, governmental response costs, damages to natural resources or
other property, personal injuries, fines, or penalties arising out of, based
on or resulting from (a) the presence, handling, generation, treatment,
storage, disposal, Release (as such term is defined in 42 U.S.C. 9601(22),
or any successor federal statute or analogous state law) or threatened
Release into the environment of any Hazardous Material at any location,
whether or not owned by such Person or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental and Safety Law.
"Environmental and Safety Laws" shall mean any and all federal, state,
local and foreign statutes, laws, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations and all contractual obligations to which Borrower
or any Subsidiary is bound or subject and common law concerning public health
or safety, worker health or safety or pollution or protection of the
environment, including without limitation those relating to any emissions,
discharges or Releases of Hazardous Materials to ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, control, clean-up
or handling of Hazardous Materials.
"Equipment" means all equipment, machinery, apparatus, fittings,
fixtures and other tangible personal property (other than Inventory) of every
kind and description used in any Loan Party's business operations or owned by
any Loan Party or in which any Loan Party has an interest, and all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor statute.
"ERISA Affiliate" of any Person shall mean any corporation or trade or
business which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as such Person or which is
under common control (within the meaning of Section 414(c) of the Code) with
such Person.
"ERISA Event" with respect to any Person shall mean (a) the occurrence
of a reportable event, within the meaning of Section 4043 of ERISA, with
respect to any Plan of such Person or any of its ERISA Affiliates, unless the
30-day notice requirement with respect to such event has been waived by the
PBGC; (b) the provision by the administrator of any Plan of such Person or
any of its ERISA Affiliates of a notice of intent to terminate such Plan
pursuant to Section 4041(a)(2) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(a)(2) of ERISA);
(c) the cessation of operations at a facility of such Person or any of its
ERISA Affiliates in the circumstances described in Section 4062(e) of ERISA
with respect to a Plan; (d) the withdrawal by such Person or any of its ERISA
Affiliates from a Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (e) the failure by such
Person or any of its ERISA Affiliates to make a payment to a Plan required
under Section 302(f)(1) of ERISA; (f) the adoption of an amendment to a Plan
of such Person or any of its ERISA Affiliates requiring the provision of
security to such Plan pursuant to Section 307 of ERISA; or (g) the
institution by the PBGC of proceedings to terminate a Plan of such Person or
any of its ERISA Affiliates pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA that
could constitute grounds for the termination of, or the appointment of a
trustee to administer, such Plan.
"Event of Default" means any of the events specified in Section 10.1.,
provided that any requirement for notice or lapse of time or any other
condition has been satisfied.
"Exchange Act" has the meaning given that term in Section 10.1. (i).
"Excluded Taxes" has the meaning given that term in Section 3.12. (a).
"FDA" shall mean the United States Food and Drug Administration or any
entity succeeding to any or all of its functions under Applicable Law.
"Federal Assignment of Claims Act" shall mean the Assignment of Claims
Act of 1940, as amended from time to time, or any successor federal statute.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if such day is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Agent (in its individual capacity) on such day on such transactions as
determined by the Agent.
"Fees" means the fees and commissions provided for or referred to in
Section 3.6. and any other fees payable by the Borrower hereunder or under
any other Credit Document.
"Foreign Lender" means any Lender organized under the laws of a
jurisdiction outside of the United States of America.
"Foreign Subsidiary" means a Subsidiary not organized under the laws of
the United States of America, any state thereof, or the District of Columbia.
"FSC" means Serologicals (Barbados), Inc., a Barbados corporation and a
"foreign sales corporation" under the Code.
"Funded Debt" shall mean all Indebtedness of the Borrower and its
Consolidated Subsidiaries excluding short-term Indebtedness in an aggregate
principal amount not to exceed $1,000,000 incurred by the Borrower or any
Consolidated Subsidiary to finance insurance premiums.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, which are applicable to the circumstances as of
the date of determination.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to,
all Governmental Authorities.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity (including,
without limitation, the Federal Deposit Insurance Corporation, the
Comptroller of the Currency or the Federal Reserve Board, any central bank or
any comparable authority) or any arbitrator with authority to bind a party at
law.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of,
or otherwise to be or become contingently liable under or with respect to,
any Indebtedness or other obligations, net worth, working capital or earnings
of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock or equity interests of any Person, or an
agreement to purchase, sell or lease (as lessee or lessor) property,
products, materials, supplies or services primarily for the purpose of
enabling a debtor to make payment of its obligations or an agreement to
assure a creditor against loss, and including, without limitation, causing
a bank to issue a letter of credit for the benefit of another Person, but
excluding endorsements for collection or deposit in the ordinary course of
business.
"Guaranty" means the Second Amended and Restated Guaranty executed by
certain Loan Parties in favor of the Agent and the Lenders and substantially
in the form of Exhibit D.
"Guarantor" means any Person that is a party to the Guaranty as a
"Guarantor" and in any event shall include all Subsidiaries of the Borrower
excluding Foreign Subsidiaries.
"Hazardous Materials" shall mean, collectively, all substances with
respect to which liability or standards of conduct may be imposed pursuant to
RCRA, CERCLA or any other Environmental and Safety Law.
"Historical Financial Statements" has the meaning given such term in
Section 5.1.(xix).
"Indebtedness" means, without duplication, as to any Person
(a) indebtedness created, issued or incurred by such Person for borrowed
money (whether by loan or the issuance or sale of debt securities) whether or
not recourse is limited to specific assets of such Person; (b) obligations of
such Person to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable and accrued expenses arising in
the ordinary course of business so long as such trade accounts payable and
accrued expenses are not for borrowed money; (c) Indebtedness of others
secured by a Lien on the property of such Person, whether or not the
Indebtedness so secured has been assumed by such Person; (d) reimbursement
obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for
the account of such Person; (e) Capitalized Lease Obligations of such Person;
(f) Indebtedness of others Guaranteed by such Person; and (g) all obligations
of such Person in respect of Redeemable Stock valued at its involuntary
maximum fixed repurchase price plus accrued and unpaid dividends, if any.
"Insufficiency" shall mean, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Interest Expense" shall mean for any period of computation thereof,
cash interest expense attributable to Indebtedness for money borrowed
(including without limitation, Capitalized Lease Obligations) of the Borrower
and its Consolidated Subsidiaries actually paid during such period.
"Interest Period" means, with respect to any LIBOR Loan, each period
commencing on the date such LIBOR Loan is made or the last day of the next
preceding Interest Period for such Loan and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Borrower may select in a Notice of Borrowing, Notice of
Continuation or Notice of Conversion, as the case may be, except that each
Interest Period that commences on the last Business Day of a calendar month
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month. Notwithstanding the foregoing:
(a) if any Interest Period would otherwise end after the Termination Date,
such Interest Period shall end on the Termination Date; (b) each Interest
Period that would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day (or, if such next succeeding Business
Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (c) notwithstanding the immediately preceding clause (a),
no Interest Period for any LIBOR Loan shall have a duration of less than one
month and, if the Interest Period for any LIBOR Loan would otherwise be a
shorter period, such Loan shall not be available hereunder for such period.
"Inventory" shall mean (a) all inventory of each of the Subsidiaries
(other than any Foreign Subsidiary) and all goods intended for sale or lease
by such Subsidiaries, (b) all work-in-process, (c) all raw materials and
other materials and supplies of every nature and description used or which
might be used in connection with the manufacture, packing, shipping, selling
or furnishing of such goods or otherwise used or consumed in the business of
such Subsidiaries, and (d) all documents (as such term is defined in the UCC)
relating to any of the foregoing.
"Investment" in any Person shall mean (a) the acquisition (whether for
cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other
securities of, or any contribution to the capital of, such Person; (b) any
deposit with, or advance, loan or other extension of credit to, such Person
and (without duplication) any amount committed to be advanced, lent or
extended to such Person (other than any such advance, loan, extension of
credit or commitment representing the purchase price of inventory or supplies
sold in the ordinary course of business); or (c) any Guarantee
"L/C Commitment Amount" means an amount equal to $10,000,000.
"Lender" means each financial institution from time to time party hereto
as a "Lender", together with its respective successors and permitted assigns.
"Lending Office" means, for each Lender and for each Type of Loan, the
office of such Lender specified as such on its signature page hereto or in
the applicable Assignment and Acceptance Agreement, or such other office of
such Lender as such Lender may notify the Agent in writing from time to time.
"Letter of Credit" has the meaning set forth in Section 2.2.(a).
"Letter of Credit Documents" means, with respect to any Letter of
Credit, collectively, any application therefor, any certificate or other
document presented in connection with a drawing under such Letter of Credit
and any other agreement, instrument or other document governing or providing
for (a) the rights and obligations of the parties concerned or at risk with
respect to such Letter of Credit or (b) any collateral security for any of
such obligations.
"Letter of Credit Liabilities" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the Stated Amount
of such Letter of Credit plus (b) the aggregate unpaid principal amount of
all Reimbursement Obligations of the Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of
this Agreement, a Lender (other than the Agent in its capacity as such) shall
be deemed to hold a Letter of Credit Liability in an amount equal to its
participation interest in the related Letter of Credit under Section 2.2.(i),
and the Agent shall be deemed to hold a Letter of Credit Liability in an
amount equal to its retained interest in the related Letter of Credit after
giving effect to the acquisition by the Lenders other than the Agent of their
participation interests under such Section.
"LIBOR" means, for any LIBOR Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR" shall mean, for any LIBOR Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page
as the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"LIBOR Loans" means Revolving Loans bearing interest at a rate based on
LIBOR.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind whatsoever in
respect of such asset. For purposes of this Agreement, a Loan Party or any
of its Subsidiaries shall be deemed to own subject to a Lien any asset which
it has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Limited" means Serologicals Limited, formerly known as Bioscot Limited,
a corporation organized under the laws of Scotland.
"Loan" means a Revolving Loan or a Swingline Loan.
"Loan Party" means each of the Borrower, its Subsidiaries and each
Person who guarantees all or a portion of the Obligations and/or who pledges
any collateral security to secure all or a portion of the Obligations; as of
the date hereof, the Loan Parties are the Borrower and each of its
Subsidiaries set forth on Schedule 6.16.
"Material Adverse Effect" means any event, circumstance or condition
that, individually or when aggregated with all other similar events,
circumstances or conditions, could reasonably be expected to have a material
adverse effect on (a) the business, property, assets, liabilities, condition
(financial or otherwise), operations, results of operations or prospects of
the Borrower and its Subsidiaries taken as a whole; (b) the ability of the
Borrower or any Material Loan Party to perform its obligations under any of
the Credit Documents to which it is a party; (c) the validity or
enforceability of any of the Credit Documents; or (d) the rights and remedies
of the Agent or the Lenders under any of the Credit Documents, taken as
whole. As used in this definition, the term "Material Loan Party" means, as
of the date of any determination thereof, any Loan Party (other than the
Borrower) which either (a) owns assets having a book value greater than or
equal to 10% of Consolidated Total Assets or (b) had net income (as
determined in a manner consistent with determining Net Income of the Borrower
and its Consolidated Subsidiaries) greater than or equal to 10% of Net Income
for the four fiscal quarter period most recently ending prior to the date of
determination.
"Material Contract" shall mean, with respect to the Borrower and the
other Loan Parties, any contract, agreement or binding understanding or
arrangement (whether or not in written form) the performance, termination or
the loss of which could reasonably be expected to have a Material Adverse
Effect.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" of any Person shall mean a multiemployer plan
defined as such in Section 3(37) of ERISA to which contributions have been
made by such Person or any ERISA Affiliate of such Person and which is
covered by Title IV of ERISA.
"Net Income" means for any applicable period, the aggregate of all
amounts which, in accordance with GAAP, would be included as net income (or
net loss) on a consolidated statement of income of the Borrower and its
Consolidated Subsidiaries for such period; provided, however, that Net Income
shall exclude (i) the effect of any extraordinary or other non-recurring gain
or loss outside the ordinary course of business and (ii) any write-up in the
value of any asset (but only to the extent such write-up exceeds any write-
down taken in connection with such asset).
"Net Proceeds" means with respect to a Disposition, the aggregate amount
of all cash received (including without limitation, all cash payments
received by way of deferred payment of principal or interest pursuant to a
note or installment receivable or otherwise, but only as and when received),
directly or indirectly, by the Borrower or any other Loan Party in connection
with such Disposition net of (i) the amount of any out-of-pocket legal fees,
title and recording tax expenses, commissions and other customary fees and
expenses actually incurred by the Borrower or such other Loan Party in
connection with such Disposition, (ii) any taxes reasonably estimated in good
faith to be payable or receivable by the Borrower or such other Loan Party in
connection with such Disposition and other taxes thereon to the extent such
other taxes are actually paid by the Borrower or such other Loan Party, and
(iii) any repayments by the Borrower or such other Loan Party of Indebtedness
(other than Indebtedness under any of the Credit Documents) to the extent
that such Indebtedness is secured by a Lien on the property that is the
subject of such Disposition.
"Net Worth" means, as at any date, the total shareholders' equity
(including capital stock, additional paid-in capital and retained earnings,
after deducting treasury stock) of the Borrower and its Consolidated
Subsidiaries which would appear as such on a consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries prepared in accordance with
GAAP.
"New Subsidiary" means, with respect to an Acquisition, any Subsidiary
of the Borrower formed in connection with, and for the purpose of effecting,
such Acquisition. If all of the outstanding capital stock of a Seller is
being acquired by the Borrower or any of its Subsidiaries in connection with
an Acquisition, then such Seller shall also constitute a New Subsidiary.
"Note" means a Revolving Note or a Swingline Note.
"Notice of Borrowing" means a notice in the form of Exhibit E to be
delivered to the Agent pursuant to Section 2.1., (b) evidencing the
Borrower's request for a borrowing of Revolving Loans.
"Notice of Continuation" means a notice in the form of Exhibit F to be
delivered to the Agent pursuant to Section 2.7. evidencing the Borrower's
request for the Continuation of a LIBOR Loan.
"Notice of Conversion" means a notice in the form of Exhibit G to be
delivered to the Agent pursuant to Section 2.8. evidencing the Borrower's
request for the Conversion of a Loan from one Type to another Type.
"Notice of Swingline Borrowing" means a notice in the form of Exhibit H
to be delivered to the Swingline Lender pursuant to Section 2.12.(b)
evidencing the Borrower's request for a Swingline Loan.
"Obligations" means, individually and collectively and without
duplication: (a) the aggregate principal balance of, and all accrued and
unpaid interest on, all Loans; (b) all Reimbursement Obligations and all
other Letter of Credit Liabilities; (c) all other indebtedness, liabilities,
obligations, covenants and duties of the Borrower and the other Loan Parties
owing to the Agent, any Lender or the Swingline Lender of every kind, nature
and description, under or in respect of this Agreement or any of the other
Credit Documents, including, without limitation, the Fees and indemnification
obligations, whether direct or indirect, absolute or contingent, due or not
due, contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any promissory note; (d) all Swap Obligations owing to any
Lender and (e) any and all renewals, modifications, extensions and
supplements to any of the foregoing. Without limitation of the foregoing,
the term "Obligations" shall include any Indebtedness of the Borrower to any
other Loan Party which now or hereafter becomes owing to the Agent or any
Lender as assignee of such other Loan Party pursuant to any of the Security
Documents or otherwise.
"Operating Account" means the account maintained by the Borrower with
the Agent which the Borrower and the Agent have designated in writing as the
"Operating Account."
"Participant" has the meaning given that term in Section 12.5.(c).
"Patent Security Agreement" means a Patent Security Agreement executed
by a Loan Party in favor of the Agent and substantially in the form of
Exhibit I.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"Permitted Investments" of any Person shall mean: (a) Cash Equivalents;
and (b) the deferment of the payment of accrued but unpaid royalties due from
Limited to the Borrower in connection with the licensing of intellectual
property of the Borrower to Limited.
"Permitted Liens" means:
(a) Liens created pursuant to the Security Documents;
(b) Liens imposed by any Governmental Authority for taxes, assessments
or charges not yet due or which are being contested in accordance with
Section 7.3.;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business not yet
delinquent or which are being contested in accordance with Section 7.3.;
(d) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts (other
than a trade contract which constitutes Indebtedness), leases (other than
Capitalized Lease Obligations), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(f) easements, rights-of-way, zoning restrictions and other similar
encumbrances of record on real property incurred in the ordinary course of
business which, in the aggregate, are not material in dollar amount, and
which do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of the
Borrower or any of the other Loan Parties;
(g) Liens existing on the date hereof and disclosed on Schedule 6.17.
hereto;
(h) Liens on real property or Equipment of the Borrower or any
Subsidiary securing Indebtedness of the Borrower and its Subsidiaries
permitted under Section 9.2.(c); and
(i) Ownership interests in anticoagulant, harnesses, bowls, bags,
bottles, needles and other similar disposable "soft goods" inventory claimed
by suppliers of such property made available to the Borrower or any
Subsidiary in the ordinary course of business and which interests do not
secure any Indebtedness owing to such suppliers.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Plan" of the Borrower or any of the other Loan Parties shall mean an
employee benefit or other plan established or maintained by such Person or
any ERISA Affiliate of such Person and which is covered by Title IV of ERISA,
other than a Multiemployer Plan of such Person.
"Pledge Agreement" means the Amended and Restated Pledge Agreement
executed by the Borrower and certain other Loan Parties in favor of the Agent
and substantially in the form of Exhibit J.
"Post-Default Rate" means, in respect of any principal of any Loan or
any other Obligation that is not paid when due (whether at stated maturity,
by acceleration, by optional or mandatory prepayment or otherwise), a rate
per annum equal to two percent (2%) plus the Base Rate as in effect from time
to time.
"Prime Rate" means the rate of interest per annum announced publicly by
the Agent as its prime rate from time to time. The Prime Rate is not
necessarily the best or the lowest rate of interest offered by the Agent or
any Lender.
"Principal Office" means the office of the Agent located at 101 North
Tryon Street, Charlotte, North Carolina 28255, or such other office of the
Agent as the Agent may designate from time to time.
"Purchase Agreement" shall mean, with respect to an Acquisition, the
asset purchase agreement, stock purchase agreement or other primary agreement
to which the Borrower and/or one or more of its Subsidiaries is a party and
which evidences the terms of such Acquisition.
"QPP" shall mean the Quality Plasma Program of ABRA.
"Redeemable Stock" means any class or series of capital stock or other
equity interest to the extent that, either by its terms, by the terms of any
security into which it is convertible or exchangeable, or by contract or
otherwise, is or upon the happening of an event or passage of time would be,
required to be redeemed or is redeemable at the option of the holder thereof
at any time, or is convertible into or exchangeable for debt securities at
any time.
"Register" has the meaning given that term in Section 12.5.(e).
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976, as
amended.
"Regulations T, U and X" shall mean, respectively, Regulations T, U and
X of the Board of Governors of the Federal Reserve System (or any successor),
as the same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to any Lender, any change
effective after the Agreement Date in Applicable Law (including without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks, including such Lender,
of or under any Applicable Law (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) by any
Governmental Authority or monetary authority charged with the interpretation
or administration thereof.
"Regulatory Permits" shall mean (i) FDA establishment licenses, (ii) FDA
product licenses, (iii) CLIA registrations, (iv) QPP certifications, and (v)
state licenses or permits relating to the operation of Donor Centers,
including those applicable to medical waste, clinical laboratory testing, and
drug testing.
"Reimbursement Obligation" means the absolute, unconditional and
irrevocable obligation of the Borrower to reimburse the Agent for any drawing
honored by the Agent under a Letter of Credit.
"Release" shall mean any "release" as such term is defined in 42 U.S.C.
9601(22), or any successor federal statute or analogous state law.
"Rental Expense" means, with respect to any period of determination, all
lease, rental and all other payments made in respect of or in connection with
the use of property (whether real, personal or mixed) by the Borrower and its
Consolidated Subsidiaries with respect to such period other than those with
respect to Capitalized Lease Obligations.
"Responsible Officer" means, as to any Person, the president, chief
executive officer, chief operating officer, any financial officer, any vice
president or the general counsel of such Person (or, in the case of a
partnership, of the managing general partner of such Person).
"Requisite Lenders" means, as of any date, Lenders having at least 66
2/3% of the aggregate amount of the Commitments, or, if the Commitments have
been terminated or reduced to zero, Lenders holding at least 66 2/3% of the
principal amount of the Loans and Letter of Credit Liabilities.
"Restricted Payment" means dividends by or on behalf of a Loan Party on,
or other payments or distributions on account of or with respect to, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of capital stock of or other equity interest in such Loan Party.
"Revolving Loan" means a loan made by a Lender to the Borrower pursuant
to Section 2.1.(a).
"Revolving Note" has the meaning given that term in Section 2.9.(a).
"Securities Act" means the Securities Act of 1933, as amended from time
to time, together with all rules and regulations issued thereunder.
"Security Agreement" means the Amended and Restated Security Agreement
executed by certain Loan Parties in favor of the Agent and substantially in
the form of Exhibit K.
"Security Document" means (a) the Guaranty, the Security Agreement and
the Pledge Agreement; (b) the Assignment of Acquisition Documents, each
Trademark Security Agreement and each Patent Security Agreement; (c) each of
the UCC Financing Statements naming a Loan Party as debtor and the Agent, as
secured party and covering any of the Collateral; and (d) any other document
or instrument executed by a Loan Party providing for collateral security for
any of the Obligations.
"Seller" shall mean the Person being acquired (or whose assets are being
acquired) in an Acquisition.
"Seramed" shall mean Seramed, Inc., formerly known as Seramune, Inc., a
corporation organized under the laws of the State of Delaware.
"Seramed Disposition" means the sale by the Borrower and its
Subsidiaries of all or substantially all of Seramed and its respective
Subsidiaries, whether such sale is effected by means of a single transaction
or series of related transactions and whether structured as a sale of assets
or capital stock.
"Serologicals" shall mean Serologicals, Inc., a corporation organized
under the laws of the State of Georgia.
"Significant Acquisition" shall mean any Acquisition in which the
aggregate amount of consideration payable by the Borrower and its
Subsidiaries in connection therewith equals or exceeds (i) 100% of EBITDA for
the four fiscal quarter period most recently ending provided that the ratio
of Funded Debt to EBITDA of the Borrower and its Consolidated Subsidiaries as
determined in accordance with Section 9.1.(b) is less than or equal to 2.0 to
1.0 as of the end of such four fiscal quarter period or (ii) 75% of EBITDA
for such four fiscal quarter period in any other case. For purposes of this
definition, such consideration shall include, but shall not be limited to,
the following without duplication: (a) the amount of cash paid, together
with the fair market value of all other assets (excluding assets of the type
described in the following clause (b)) conveyed, by the Borrower and its
Subsidiaries in consideration for such Acquisition; (b) the market value of
all capital stock, warrants and options to acquire capital stock, of the
Borrower conveyed by the Borrower in consideration for such Acquisition;
(c) the aggregate amount of Indebtedness acquired, incurred or assumed by the
Borrower and its Subsidiaries in connection with such Acquisition; (d) all
amounts paid or to be paid by the Borrower and its Subsidiaries in respect of
any covenant not to compete granted in connection with such Acquisition and
accruing to the benefit of any New Subsidiary or other Loan Party; (e) the
aggregate capitalized amount of consulting or other similar fees or payments
to be paid by such New Subsidiary or other Loan Party to a Seller or any
Affiliate of such Seller in connection with, or as a result of, such
Acquisition; (f) to the extent reasonably determinable as of the Acquisition
Date, the aggregate amount of earn-out payments, similar payments or other
contingent obligations required to be made by the Borrower and its
Subsidiaries in connection with such Acquisition and which payments or other
obligations are to be capitalized by the Borrower and its Subsidiaries and
(g) the amount of all transaction fees and expenses (including, without
limitation, legal, accounting and brokers' fees and expenses) incurred by the
Borrower and its Subsidiaries in connection with such Acquisition.
"Specified Loan Party" means each of the Borrower, Serologicals, Inc.,
Limited, Seramed and Serologicals Proteins, Inc..
"S&P" means Standard & Poor's Rating Services, a division of McGraw-Hill
Companies, Inc.
"Stated Amount" means the amount available to be drawn by a beneficiary
under a Letter of Credit from time to time, as such amount may be increased
or reduced from time to time in accordance with the terms of such Letter of
Credit.
"Subordinated Debt" means all Funded Debt, the payment of principal and
interest of which is subordinate in right of payment to the Obligations on
terms approved of in writing by (a) the Agent in its sole discretion in the
case of Funded Debt in aggregate outstanding principal amount not in excess
of $5,000,000 evidenced by promissory notes issued by the Borrower or any
Subsidiary in connection with Acquisitions and (b) the Agent and the
Requisite Lenders in their sole discretion in all other cases.
"Subsidiary" means, as to any Person, any corporation, partnership or
joint venture, whether now existing or hereafter organized or acquired: (i)
in the case of a corporation, of which at least a majority of the outstanding
shares of stock having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation (other than stock
having such voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person and/or one
or more of its Subsidiaries or (ii) in the case of a partnership or joint
venture, in which such Person or a Subsidiary of such Person is a general
partner or joint venturer or of which a majority of the partnership or other
ownership interests are at the time owned by such Person and/or one or more
of its Subsidiaries.
"Swap Obligations" means all obligations, whether direct or indirect,
absolute or contingent, due or not due, contractual or tortious, liquidated
or unliquidated, owing by the Borrower or any other Loan Party to any Lender
under (a) any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement or other similar contractual agreement or
arrangement between the Borrower or such Loan Party and such Lender for the
purpose of protecting against fluctuations in interest rates or (b) any
foreign exchange contract, currency swap agreement or other similar agreement
or arrangement between the Borrower or such Loan Party and such Lender
designed to protect the Borrower or such Loan Party against fluctuations in
currency values.
"Swingline Commitment" means Swingline Lender's obligation to make
Swingline Loans pursuant to Section 2.12. in an amount up to, but not
exceeding, $5,000,000, as such amount may be reduced from time to time in
accordance with the terms hereof.
"Swingline Lender" means Bank of America, N.A., together with its
successors and permitted assigns.
"Swingline Loan" means a loan made by the Swingline Lender to the
Borrower pursuant to Section 2.12.(a).
"Swingline Note" means the promissory note of the Borrower payable to
the order of the Swingline Lender in a maximum principal amount equal to the
amount of the Swingline Commitment as originally in effect and otherwise duly
completed, substantially in the form of Exhibit L.
"Taxes" has the meaning given that term in Section 3.12.
"Termination Date" means September 28, 2002.
"Total Capitalization" means Funded Debt plus Net Worth.
"Trademark Security Agreement" means a Trademark Security Agreement
executed by a Loan Party in favor of the Agent and substantially in the form
of Exhibit M.
"Transactions" shall mean (a) any Acquisition, (b) the execution and
delivery of each of the Credit Documents, and the Acquisition Documents,
(c) the making by the Lenders and the Swingline Lender, and the borrowing by
the Borrower, of the Loans hereunder and (d) the consummation of all of the
other transactions contemplated by the Acquisition Documents and the Credit
Documents.
"Type" with respect to any Loan, refers to whether such Loan is a LIBOR
Loan or Base Rate Loan.
"Wholly-Owned Subsidiary" of a Person shall mean any corporation,
association or other business entity of which 100% of the outstanding shares
of all classes of capital stock or other ownership interests is at the time
owned directly or indirectly by, such Person or one or more of the other
Wholly-Owned Subsidiaries of such Person or a combination thereof.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of Georgia.
"Year 2000 Problem" means the inability of certain computer applications
to recognize correctly and perform date-sensitive functions involving dates
prior to, on and after December 31, 1999.
Section 1.2. General; References to Times.
Unless otherwise indicated, all accounting terms, ratios and
measurements shall be interpreted or determined in accordance with GAAP in
effect as of the Agreement Date. References in this Agreement to "Sections",
"Articles", "Exhibits" and "Schedules" are to sections, articles, exhibits
and schedules herein and hereto unless otherwise indicated. References in
this Agreement to any document, instrument or agreement (a) shall include all
exhibits, schedules and other attachments thereto, (b) shall include all
documents, instruments or agreements issued or executed in replacement
thereof, to the extent permitted hereby and (c) shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as amended,
supplemented, restated or otherwise modified from time to time to the extent
permitted hereby and in effect at any given time. Wherever from the context
it appears appropriate, each term stated in either the singular or plural
shall include the singular and plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, the feminine and the
neuter. Unless explicitly set forth to the contrary, a reference to
"Subsidiary" means a Subsidiary of the Borrower or a Subsidiary of such
Subsidiary and a reference to an "Affiliate" means a reference to an
Affiliate of the Borrower. Titles and captions of Articles, Sections,
subsections and clauses in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement. Unless otherwise
indicated, all references to time are references to Atlanta, Georgia time.
Section 1.3. Accounting Treatment for Acquired Entities.
If any Loan Party shall have acquired (i) all or substantially all of
the assets of another Person, (ii) all or substantially all of a line or
lines of business conducted by another Person, (iii) a division of another
Person or (iv) a controlling equity interest in another Person (such assets,
lines of business, division or, in the case of an equity interest, such
Person, being a "Target"), during any applicable period for which the
Borrower's compliance with the financial covenants in Section 9.1. is to be
determined or for which EBIT, EBITDA, Cash Flow or Interest Expense is to be
calculated (including, without limitation, calculating EBITDA for the purpose
of determining whether an Acquisition is a Significant Acquisition), then
such Target shall be deemed to have been acquired by such Loan Party at the
beginning of such four fiscal quarter period so long as the Lenders have been
provided with financial statements with respect to such Target for the fiscal
year most recently ending, such financial statements to be in form and
substance satisfactory to the Requisite Lenders.
ARTICLE II. CREDIT FACILITY
Section 2.1. Revolving Loans.
(a) Generally. Subject to the terms and conditions hereof, including
without limitation Section 2.13., during the period from the Closing Date to
but excluding the Termination Date, each Lender severally and not jointly
agrees to make Revolving Loans to the Borrower in an aggregate principal
amount at any one time outstanding up to, but not exceeding, the amount of
such Lender's Commitment. Subject to the terms and conditions of this
Agreement, the Borrower may borrow, repay and reborrow Revolving Loans.
(b) Requesting Revolving Loans. The Borrower shall give the Agent
notice pursuant to a Notice of Borrowing or telephonic notice of each
borrowing of Revolving Loans. Each Notice of Borrowing shall be delivered to
the Agent before 11:30 a.m. (a) in the case of LIBOR Loans, on the date 3
Business Days prior to the proposed date of such borrowing and (b) in the
case of Base Rate Loans, on the date of such borrowing (which must be a
Business Day). Any such telephonic notice shall include all information to
be specified in a written Notice of Borrowing and shall be promptly confirmed
in writing by the Borrower pursuant to a Notice of Borrowing sent to the
Agent by telecopy on the same day of the giving of such telephonic notice.
The Agent will transmit by telecopy the Notice of Borrowing (or the
information contained in such Notice of Borrowing) to each Lender promptly
upon receipt by the Agent. Each Notice of Borrowing or telephonic notice of
each borrowing shall be irrevocable once given and binding on the Borrower.
(c) Disbursements of Revolving Loan Proceeds. No later than 2:00 p.m.
on the date specified in the Notice of Borrowing, each Lender will make
available for the account of its applicable Lending Office to the Agent at
the Principal Office, in immediately available funds, the proceeds of the
Revolving Loan to be made by such Lender. With respect to Revolving Loans to
be made after the Closing Date, unless the Agent shall have been notified by
any Lender prior to the specified date of borrowing that such Lender does not
intend to make available to the Agent the Revolving Loan to be made by such
Lender on such date, the Agent may assume that such Lender will make the
proceeds of such Revolving Loan available to the Agent on the date of the
requested borrowing as set forth in the Notice of Borrowing and the Agent may
(but shall not be obligated to), in reliance upon such assumption, make
available to the Borrower the amount of such Revolving Loan to be provided by
such Lender. Subject to satisfaction of the applicable conditions set forth
in Article V. for such borrowing, the Agent will make the proceeds of such
borrowing available to the Borrower no later than 2:00 p.m. on the date and
at the account specified by the Borrower in such Notice of Borrowing.
Section 2.2. Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement, the Agent, on behalf of the Lenders, agrees to issue for the
account of the Borrower during the period from and including the Closing Date
to, but excluding, the date 30 days prior to the Termination Date one or more
letters of credit (each a "Letter of Credit") up to a maximum aggregate
Stated Amount at any one time outstanding not to exceed the L/C Commitment
Amount.
(b) Terms of Letters of Credit. At the time of issuance, the amount,
form, terms and conditions of each Letter of Credit, and of any drafts or
acceptances thereunder, shall be subject to approval by the Agent and the
Borrower. Notwithstanding the foregoing, in no event may the expiration date
of any Letter of Credit extend beyond the date 10 days prior to the
Termination Date, and any Letter of Credit containing an automatic renewal
provision shall also contain a provision pursuant to which, notwithstanding
any other provisions thereof, it shall have a final expiration date no later
than the date 10 days prior to the Termination Date.
(c) Requests for Issuance of Letters of Credit. The Borrower shall
give the Agent written notice (or telephonic notice promptly confirmed in
writing) not later than 11:00 a.m. on the date 3 Business Days prior to the
requested date of issuance of a Letter of Credit, such notice to describe in
reasonable detail the proposed terms of such Letter of Credit and the nature
of the transactions or obligations proposed to be supported by such Letter of
Credit, and in any event shall set forth with respect to such Letter of
Credit (i) the proposed initial Stated Amount, (ii) the beneficiary or
beneficiaries, (iii) whether such Letter of Credit is a commercial or standby
letter of credit and (iv) the proposed expiration date. The Borrower shall
also execute and deliver such customary letter of credit application forms as
reasonably requested from time to time by the Agent. Provided the Borrower
has given the notice required by this subsection and subject to Section 2.13.
and the other terms and conditions of this Agreement, including the
satisfaction of any applicable conditions precedent set forth in Article V.,
the Agent shall issue the requested Letter of Credit on the requested date of
issuance. Upon the written request of the Borrower, the Agent shall deliver
to the Borrower a copy of each issued Letter of Credit within a reasonable
time after the date of issuance thereof. To the extent any term of a Letter
of Credit Document is inconsistent with a term of any Credit Document, the
term of such Credit Document shall control.
(d) Reimbursement Obligations. Upon receipt by the Agent from the
beneficiary of a Letter of Credit of any demand for payment under such Letter
of Credit, the Agent shall promptly notify the Borrower of the amount to be
paid by the Agent as a result of such demand and the date on which payment is
to be made by the Agent to such beneficiary in respect of such demand. The
Borrower hereby unconditionally and irrevocably agrees to pay and reimburse
the Agent for the amount of each demand for payment under such Letter of
Credit on or prior to the date on which payment is to be made by the Agent to
the beneficiary thereunder, without presentment, demand, protest or other
formalities of any kind. Upon receipt by the Agent of any payment in respect
of any Reimbursement Obligation, the Agent shall promptly pay to each Lender
that has acquired a participation therein under the second sentence of
Section 2.2. (i) such Lender's Commitment Percentage of such payment.
(e) Manner of Reimbursement. Upon its receipt of a notice referred to
in the immediately preceding subsection (d), the Borrower shall advise the
Agent whether or not the Borrower intends to borrow hereunder to finance its
obligation to reimburse the Agent for the amount of the related demand for
payment and, if it does, the Borrower shall submit a timely Notice of
Borrowing or Notice of Swingline Borrowing, as appropriate. If the Borrower
fails to so advise the Agent, or if the Borrower fails to reimburse the Agent
for a demand for payment under a Letter of Credit by the date of such
payment, then (i) if the applicable conditions contained in Article V. would
permit the making of Revolving Loans, the Borrower shall be deemed to have
requested a borrowing of Revolving Loans (which shall be Base Rate Loans) in
an amount equal to the unpaid Reimbursement Obligation and the Agent shall
give each Lender prompt notice of the amount of the Revolving Loan (which
shall not be subject to the limitations of Section 3.5.) to be made by such
Lender, the proceeds of which such Lender shall make available to the Agent
not later than 1:00 p.m. and (ii) if such conditions would not permit the
making of Revolving Loans, the provisions of subsection (j) of this Section
shall apply.
(f) Effect of Letters of Credit on Commitments. Upon the issuance by
the Agent of any Letter of Credit and until such Letter of Credit shall have
expired or been terminated, the Commitment of each Lender shall be deemed to
be utilized for all purposes of this Agreement in an amount equal to such
Lender's Commitment Percentage of the Stated Amount of such Letter of Credit
plus any related Reimbursement Obligations then outstanding.
(g) Agent's Duties Regarding Letters of Credit; Unconditional Nature of
Reimbursement Obligation. In examining documents presented in connection
with drawings under Letters of Credit and making payments under such Letters
of Credit against such documents, the Agent shall use the same standard of
care as it uses in connection with examining documents presented in
connection with drawings under letters of credit in which it has not sold
participations and making payments under such letters of credit. The
Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of such Letters of Credit.
In furtherance and not in limitation of the foregoing, neither the Agent nor
any of the Lenders shall be responsible for (i) the form, validity,
sufficiency, accuracy, genuineness or legal effects of any document submitted
by any party in connection with the application for and issuance of or any
drawing honored under any Letter of Credit even if it should in fact prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit, or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) failure of the
beneficiary of any Letter of Credit to comply fully with conditions required
in order to draw upon such Letter of Credit; (iv) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telex, telecopy or otherwise, whether or not they be in cipher absent
gross negligence or willful misconduct by the Agent or except to the extent
found in a final, non-appealable judgment by a court of competent
jurisdiction or by a binding determination of any arbitral body, as
applicable, to have resulted from the bad faith of the Agent; (v) errors in
interpretation of technical terms absent gross negligence or willful
misconduct by the Agent or except to the extent found in a final, non-
appealable judgment by a court of competent jurisdiction or by a binding
determination of any arbitral body, as applicable, to have resulted from the
bad faith of the Agent; (vi) 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; (vii) the misapplication by the
beneficiary of any such Letter of Credit, or the proceeds of any drawing
under such Letter of Credit; or (viii) any consequences arising from causes
beyond the control of the Agent or the Lenders. None of the above shall
affect, impair or prevent the vesting of any of the Agent's rights or powers
hereunder. Any action taken or omitted to be taken by the Agent under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create against the Agent
any liability to the Borrower or any Lender; provided, however, nothing
contained in this subsection shall be deemed to constitute a waiver of any
remedy the Borrower may have against the Agent or any Lender to the extent
resulting from the gross negligence or willful misconduct of the Agent or
such Lender, as the case may be, or to the extent resulting from the bad
faith of the Agent or a Lender, as the case may be, as determined in a final,
non-appealable judgment by a court of competent jurisdiction or by binding
arbitration, as applicable. In this connection, the obligation of the
Borrower to reimburse the Agent for any drawing made under any Letter of
Credit shall be absolute, unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including without limitation, the following
circumstances: (A) any lack of validity or enforceability of any Letter of
Credit Document or any term or provisions therein; (B) any amendment or
waiver of or any consent to departure from all or any of the Letter of Credit
Documents; (C) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against the Agent, any Lender, any
beneficiary of a Letter of Credit or any other Person, whether in connection
with this Agreement, the transactions contemplated hereby or in the Letter of
Credit Documents or any unrelated transaction; (D) any breach of contract or
dispute between the Borrower, the Agent, any Lender or any other Person;
(E) any demand, statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein or made in connection therewith being untrue
or inaccurate in any respect whatsoever; (F) any non-application or
misapplication by the beneficiary of a Letter of Credit of the proceeds of
any drawing under such Letter of Credit; (G) payment by the Agent under the
Letter of Credit against presentation of a draft or certificate which does
not strictly comply with the terms of the Letter of Credit; and (H) any other
act, omission to act, delay or circumstance whatsoever that might, but for
the provisions of this Section, constitute a legal or equitable defense to or
discharge of the Borrower's Reimbursement Obligations. Nothing herein
provides a waiver of any remedies the Borrower may have for (i) the Agent's
or any Lender's gross negligence or willful misconduct or (ii) actions taken
(or not taken) by the Agent or the Lenders to the extent found in a final,
non-appealable judgment by a court of competent jurisdiction or by a binding
determination of any arbitral body, as applicable, to have been taken (or not
taken) in bad faith.
(h) Amendments, Etc. The issuance by the Agent of any amendment,
supplement or other modification to any Letter of Credit shall be subject to
the same conditions applicable under this Agreement to the issuance of new
Letters of Credit (including, without limitation, that the request therefor
be made through the Agent), and no such amendment, supplement or other
modification shall be issued unless either (i) the respective Letter of
Credit affected thereby would have complied with such conditions had it
originally been issued hereunder in such amended, supplemented or modified
form or (ii) the Requisite Lenders shall have consented thereto.
(i) Lenders' Participation in Letters of Credit. Immediately upon the
issuance by the Agent of any Letter of Credit each Lender shall be deemed to
have irrevocably and unconditionally purchased and received from the Agent,
without recourse or warranty, an undivided interest and participation to the
extent of such Lender's Commitment Percentage of the liability of the Agent
with respect to such Letter of Credit and each Lender thereby shall
absolutely, unconditionally and irrevocably assume, as primary obligor and
not as surety, and shall be unconditionally obligated to the Agent to pay and
discharge when due, such Lender's Commitment Percentage of the Agent's
liability under such Letter of Credit. In addition, upon the making of each
payment by a Lender to the Agent in respect of any Letter of Credit pursuant
to the immediately following subsection (j), such Lender shall, automatically
and without any further action on the part of the Agent or such Lender,
acquire (i) a participation in an amount equal to such payment in the
Reimbursement Obligation owing to the Agent by the Borrower in respect of
such Letter of Credit and (ii) a participation in a percentage equal to such
Lender's Commitment Percentage in any interest or other amounts payable by
the Borrower in respect of such Reimbursement Obligation (other than the Fees
payable to the Agent pursuant to the last sentence of Section 3.6.(b)).
(j) Payment Obligation of Lenders. Each Lender severally agrees to pay
to the Agent on demand in immediately available funds in Dollars the amount
of such Lender's Commitment Percentage of each drawing paid by the Agent
under each Letter of Credit to the extent such amount is not reimbursed by
the Borrower pursuant to Section 2.2.(d) and is not available from funds then
on deposit in the Collateral Account. Each such Lender's obligation to make
such payments to the Agent under this subsection, and the Agent's right to
receive the same, shall be absolute, irrevocable and unconditional and shall
not be affected in any way by any circumstance whatsoever, including without
limitation, (i) the failure of any other Lender to make its payment under
this subsection, (ii) the financial condition of the Borrower or any other
Loan Party, (iii) the existence of any Default or Event of Default, including
any Event of Default described in Section 10.1.(e) or 10.1.(f) or (iv) the
termination of the Commitments. Each such payment to the Agent shall be made
without any offset, abatement, withholding or deduction whatsoever.
(k) Information to Lenders. Upon the request of any Lender from time
to time, the Agent shall deliver to such Lender any information reasonably
requested by such Lender with respect to each Letter of Credit then
outstanding. Other than as set forth in this subsection, the Agent shall
have no duty to notify the Lenders regarding the issuance or other matters
regarding Letters of Credit issued hereunder. The failure of the Agent to
perform its requirements under this subsection shall not relieve any Lender
from its obligations under Section 2.2.(j).
Section 2.3. Rates and Payment of Interest on Revolving Loans.
(a) Rates. The Borrower promises to pay to the Agent for the account
of each Lender interest on the unpaid principal amount of each Revolving Loan
made by such Lender for the period from and including the date of the making
of such Revolving Loan to but excluding the date such Revolving Loan shall be
paid in full, at the following per annum rates:
(i) during such periods as such Revolving Loan is a Base Rate
Loan, at the Base Rate (as in effect from time to time), plus the
Applicable Margin; and
(ii) during such periods as such Revolving Loan is a LIBOR Loan,
at the Adjusted Eurodollar Rate for such Loan for the Interest Period
therefor, plus the Applicable Margin.
Notwithstanding the foregoing, during the continuance of an Event of Default,
the Borrower shall pay to the Agent for the account of each Lender interest
at the Post-Default Rate on the outstanding principal amount of any Loan made
by such Lender, on all Reimbursement Obligations and on any other amount
payable by the Borrower hereunder or under the Notes held by such Lender to
or for the account of such Lender (including without limitation, accrued but
unpaid interest to the extent permitted under Applicable Law).
(b) Payment of Interest. Accrued interest on each Loan shall be
payable (i) in the case of a Base Rate Loan, monthly in arrears on the last
Business Day of each calendar month, (ii) in the case of a LIBOR Loan, on the
last day of each Interest Period therefor and, if such Interest Period is
longer than three months, at three-month intervals following the first day of
such Interest Period, and (iii) in the case of any Loan, upon the payment,
prepayment or Continuation thereof or the Conversion of such Loan to a Loan
of another Type (but only on the principal amount so paid, prepaid or
Converted). Interest payable at the Post-Default Rate shall be payable from
time to time on demand. Promptly after the determination of any interest
rate provided for herein or any change therein, the Agent shall give notice
thereof to the Lenders to which such interest is payable and to the Borrower.
All determinations by the Agent of an interest rate hereunder shall be
conclusive and binding on the Lenders and the Borrower for all purposes,
absent manifest error.
Section 2.4. Number of Interest Periods.
There may be no more than 6 different Interest Periods outstanding at
the same time.
Section 2.5. Repayment of Loans.
The Borrower shall repay the entire outstanding principal amount of, and
all accrued but unpaid interest on, the Loans on the Termination Date.
Section 2.6. Prepayments.
(a) Optional. Subject to Section 4.4, the Borrower may prepay any Loan
at any time without premium or penalty. The Borrower shall give the Agent
notice of the prepayment of any Revolving Loan in writing (or by telephone
promptly confirmed in writing) no later than 11:30 a.m. (a) in the case of
the prepayment of any LIBOR Loans, on the date 3 Business Days prior to the
proposed date of repayment and (b) in the case of the prepayment of Base Rate
Loans, on the date of such prepayment.
(b) Mandatory. If at any time the aggregate principal amount of all
outstanding Revolving Loans, together with the aggregate amount of all Letter
of Credit Liabilities and the aggregate principal amount of all outstanding
Swingline Loans, exceeds the aggregate amount of the Commitments in effect at
such time, the Borrower shall immediately pay to the Agent for the accounts
of the Lenders the amount of such excess. Such payment shall be applied to
pay all amounts of principal outstanding on the Loans and any Reimbursement
Obligations pro rata in accordance with Section 3.2. and the remainder, if
any, shall be deposited into the Collateral Account for application to any
Reimbursement Obligations. If the Borrower is required to pay any
outstanding LIBOR Loans by reason of this Section prior to the end of the
applicable Interest Period therefor, the Borrower shall pay all amounts due
under Section 4.4.
Section 2.7. Continuation.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, with respect to any LIBOR
Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR
Loan by selecting a new Interest Period for such LIBOR Loan. Each new
Interest Period selected under this Section shall commence on the last day of
the immediately preceding Interest Period. Each selection of a new Interest
Period shall be made by the Borrower giving to the Agent a Notice of
Continuation not later than 11:00 a.m. on the third Business Day prior to the
date of any such Continuation. Such notice by the Borrower of a Continuation
shall be in writing and in the form of a Notice of Continuation, specifying
(a) the proposed date of such Continuation, (b) the LIBOR Loan and portion
thereof subject to such Continuation and (c) the duration of the selected
Interest Period, all of which shall be specified in such manner as is
necessary to comply with all limitations on Loans outstanding hereunder.
Each Notice of Continuation shall be irrevocable by and binding on the
Borrower once given. Promptly after receipt of a Notice of Continuation, the
Agent shall notify each Lender of the proposed Continuation. If the Borrower
shall fail to select in a timely manner a new Interest Period for any LIBOR
Loan in accordance with this Section, such Loan will automatically, on the
last day of the current Interest Period therefor, Convert into a Base Rate
Loan notwithstanding failure of the Borrower to comply with Section 2.8.
Section 2.8. Conversion.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, upon the Borrower's giving
of a Notice of Conversion to the Agent, Convert all or a portion of a Loan of
one Type into a Loan of another Type. Any Conversion of a LIBOR Loan into a
Base Rate Loan shall be made on, and only on, the last day of an Interest
Period for such LIBOR Loan and, upon Conversion of a Base Rate Loan into a
LIBOR Loan, the Borrower shall pay accrued interest to the date of Conversion
on the principal amount so Converted. Each such Notice of Conversion shall
be given not later than 11:00 a.m. on the date of any proposed Conversion
into Base Rate Loans and on the third Business Day prior to the date of any
proposed Conversion into LIBOR Loans. Promptly after receipt of a Notice of
Conversion, the Agent shall notify each Lender of the proposed Conversion.
Subject to the restrictions specified above, each Notice of Conversion shall
be in writing and in the form of a Notice of Conversion specifying (a) the
requested date of such Conversion, (b) the Type of Loan to be Converted,
(c) the portion of such Type of Loan to be Converted, (d) the Type of Loan
such Loan is to be Converted into and (e) if such Conversion is into a LIBOR
Loan, the requested duration of the Interest Period of such Loan. Each
Notice of Conversion shall be irrevocable by and binding on the Borrower once
given.
Section 2.9. Notes.
(a) Revolving Note. The Revolving Loans made by each Lender shall, in
addition to this Agreement, also be evidenced by a promissory note of the
Borrower substantially in the form of Exhibit N (each a "Revolving Note"),
payable to the order of such Lender in a principal amount equal to the amount
of its Commitment as originally in effect and otherwise duly completed.
(b) Records; Endorsement on Transfer. The date, amount of each
Revolving Loan made by each Lender to the Borrower, and each payment made
on account of the principal thereof, shall be recorded by such Lender on its
books and such entries shall be binding on the Borrower absent manifest
error. Prior to the transfer of any Note, the Lender shall endorse such
items on such Note or any allonge thereof; provided that the failure of such
Lender to make any such recordation or endorsement shall not affect the
obligations of the Borrower to make a payment when due of any amount owing
hereunder or under such Note in respect of the Loans evidenced by such Note.
Section 2.10. Reductions of the Commitments.
(a) Voluntary. The Borrower shall have the right to terminate or
reduce the aggregate unused amount of the Commitments (for which purpose use
of the Commitments shall be deemed to include the aggregate amount of Letter
of Credit and the aggregate principal amount of all outstanding Swingline
Loans) at any time and from time to time without penalty or premium upon not
less than 5 Business Days prior written notice to the Agent of each such
termination or reduction, which notice shall specify the effective date
thereof and the amount of any such reduction and shall be irrevocable once
given and effective only upon receipt by the Agent. The Agent will promptly
transmit such notice to each Lender. The Commitments, once terminated or
reduced may not be increased or reinstated. Any reduction in the aggregate
amount of the Commitments shall result in a proportionate reduction (rounded
to the next lowest integral multiple of multiple of $100,000) in each of the
Swingline Commitment and the L/C Commitment Amount.
(b) Mandatory. To the extent Net Proceeds of the Seramed Disposition
are not within 540 days of receipt thereof either (i) used by the Borrower
to finance a Restricted Payment permitted under Section 9.6.(b)(ii) or
(ii) applied by the Loan Parties to finance Acquisitions or to acquire,
construct or improve properties or capital assets to be used by any of the
Loan Parties in the same or similar line(s) of business as those described
in Section 6.18., then the aggregate amount of the Commitments shall
automatically and permanently be reduced by an amount equal to such excess.
Section 2.11. Expiration or Maturity Date of Letters of Credit Past
Termination Date.
If on the date (the "Facility Termination Date") the Commitments are
terminated (whether voluntarily, by reason of the occurrence of an Event of
Default or otherwise), there are any Letters of Credit outstanding hereunder,
the Borrower shall, on the Facility Termination Date, pay to the Agent an
amount of money equal to the Stated Amount of such Letter(s) of Credit for
deposit into the Collateral Account. If a drawing pursuant to any such
Letter of Credit occurs on or prior to the expiration date of such Letter of
Credit, the Borrower authorizes the Agent to use the monies deposited in the
Collateral Account to make payment to the beneficiary with respect to such
drawing or the payee with respect to such presentment.
Section 2.12. Swingline Loans.
(a) Swingline Loans. Subject to the terms and conditions hereof,
including without limitation, Section 2.13., the Swingline Lender agrees to
make Swingline Loans to the Borrower, during the period from the Closing
Date to but excluding the Termination Date, in an aggregate principal amount
at any one time outstanding up to, but not exceeding, the amount of the
Swingline Commitment. If at any time the aggregate outstanding principal
amount of the Swingline Loans exceeds the Swingline Commitment in effect at
such time, the Borrower shall immediately pay to the Agent for the account
of the Swingline Lender the amount of such excess. Subject to the terms and
conditions of this Agreement, the Borrower may borrow, repay and reborrow
Swingline Loans hereunder. Except as otherwise provided in Section 2.10 ,
the borrowing of a Swingline Loan shall not constitute usage of any Lender's
Commitment for purposes of calculation of the fee payable under Section
3.6.(a) or otherwise.
(b) Procedure for Borrowing Swingline Loans. With respect to any
Swingline Loan not being made to the Borrower as contemplated under
subsection (f) below, the Borrower shall give the Agent and Swingline Lender
notice pursuant to a Notice of Swingline Borrowing or otherwise given to the
Agent and Swingline Lender in such manner, and no later than such time, as
may be agreed to by the Borrower and the Swingline Lender in writing from
time to time. Not later than such time as may be agreed to by the Borrower
and the Swingline Lender from time to time and subject to satisfaction of
the applicable conditions set forth in Article V. for such borrowing, the
Swingline Lender will make the proceeds of such Swingline Loan available to
the Borrower in Dollars, in immediately available funds, at the account
specified by the Borrower in the Notice of Swingline Borrowing or as
otherwise directed by the Borrower in writing.
(c) Interest. Swingline Loans shall bear interest (i) at a per annum
rate equal to the Base Rate (as in effect from time to time) per annum or
(ii) at such other rate or rates as the Borrower and Swingline Lender may
agree from time to time in writing. Interest payable on Swingline Loans is
solely for the account of the Swingline Lender. All accrued and unpaid
interest on Swingline Loans shall be payable on the dates and in the manner
provided in Section 2.3. with respect to interest on Base Rate Loans (except
as the Swingline Lender and the Borrower may otherwise agree in writing in
connection with any particular Swingline Loan).
(d) Swingline Note. The Swingline Loans shall, in addition to this
Agreement, be evidenced by the Swingline Note.
(e) Repayment and Participations of Swingline Loans. The Borrower
agrees to repay each Swingline Loan within one Business Day of demand
therefor by the Swingline Lender. Notwithstanding the foregoing, the
Borrower shall repay the entire outstanding principal amount of, and all
accrued but unpaid interest on, the Swingline Loans on the Termination Date
(or such earlier date as the Swingline Lender and the Borrower may agree in
writing). In lieu of demanding repayment of any outstanding Swingline Loan
from the Borrower, the Swingline Lender may at any time, on behalf of the
Borrower (which hereby irrevocably directs the Swingline Lender to act on
its behalf), request a borrowing of Base Rate Loans (which shall not be
subject to the amount limitations of Section 3.5.) from the Lenders in an
aggregate amount equal to the principal balance of such Swingline Loan. The
Swingline Lender shall give notice to the Agent of any such borrowing of
Base Rate Loans not later than 11:00 a.m. on the proposed date of such
borrowing. Each Lender will make available to the Agent for the account
of the Swingline Lender, in immediately available funds, the proceeds of the
Loan to be made by such Lender. The Agent shall pay the proceeds of such
Loans to the Swingline Lender, which shall apply such proceeds to repay such
Swingline Loan. If Lenders are prohibited from making Loans required to be
made under this subsection for any reason whatsoever, including without
limitation, the occurrence of any of the Defaults or Events of Default
described in Sections 10.1.(e) or 10.1.(f), each Lender shall purchase from
the Swingline Lender, without recourse or warranty, an undivided interest
and participation to the extent of such Lender's Pro Rata Share of such
Swingline Loan, by directly purchasing a participation in such Swingline
Loan in such amount and paying the proceeds thereof to the Agent for the
account of the Swingline Lender in Dollars and in immediately available
funds. A Lender's obligation to purchase such a participation in a Swingline
Loan shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including without limitation, (i) any claim of
setoff, counterclaim, recoupment, defense or other right which such Lender
or any other Person may have or claim against the Agent, the Swingline Lender
or any other Person whatsoever, (ii) the occurrence or continuation of a
Default or Event of Default (including without limitation, any of the
Defaults or Events of Default described in Sections 10.1.(e) or (f)) or the
termination of any Lender's Commitment, (iii) the existence (or alleged
existence) of an event of condition which has had or could have a Material
Adverse Effect, (iv) any breach of any Credit Document by the Agent, any
Lender or the Borrower or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. If such amount
is not in fact made available to the Swingline Lender by any Lender, the
Swingline Lender shall be entitled to recover such amount on demand from
such Lender, together with accrued interest thereon for each day from the
date of demand thereof, at the Federal Funds Rate. If such Lender does not
pay such amount forthwith upon the Swingline Lender's demand therefor, and
until such time as such Lender makes the required payment, the Swingline
Lender shall be deemed to continue to have outstanding Swingline Loans in
the amount of such unpaid participation obligation for all purposes of the
Loan Documents (other than those provisions requiring the other Lenders to
purchase a participation therein). Further, such Lender shall be deemed to
have assigned any and all payments made of principal and interest on its
Loans, and any other amounts due to it hereunder, to the Swingline Lender to
fund Swingline Loans in the amount of the participation in Swingline Loans
that such Lender failed to purchase pursuant to this Section until such
amount has been purchased (as a result of such assignment or otherwise).
(f) Auto Borrow/Auto Sweep Programs. Until the occurrence of a Default
or Event of Default, at 5:00 p.m. on each Business Day the Borrower shall be
deemed to have requested that the Swingline Lender make to the Borrower a
Swingline Loan in an amount equal to the amount by which drafts against the
Operating Account exceed the available balance of funds then on deposit in
the Operating Account. The Agent shall notify the Swingline Lender of the
amount of such excess. The Swingline Lender shall make the proceeds of each
such Swingline Loan available to the Borrower by paying the same to the Agent
for deposit into the Operating Account. At 5:00 p.m. on each Business Day,
the Borrower shall repay a principal amount of Swingline Loans by an amount
equal to the positive balance, if any, of available funds then on deposit in
the Operating Account as determined by the Agent at such time. The Borrower
hereby authorizes the Agent to deduct such amount from the Operating Account
without notice to the Borrower, and to pay such amount to the Swingline
Lender in repayment of the then outstanding principal balance of Swingline
Loans.
Section 2.13. Amount Limitations.
Notwithstanding any other term of this Agreement or any other Credit
Document, at no time may the aggregate principal amount of all outstanding
Revolving Loans, together with the aggregate amount of all Letter of Credit
Liabilities and the aggregate principal amount of all outstanding Swingline
Loans, exceed the aggregate amount of the Commitments as in effect at that
time.
ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS
Section 3.1. Payments.
Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this
Agreement or any other Credit Document shall be made in Dollars, in
immediately available funds, without deduction, set-off or counterclaim,
to the Agent at its Principal Office, not later than 2:00 p.m. on the date
on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). Subject to Sections 3.2. and 3.3., the Agent, or any Lender
for whose account any such payment is made, may (but shall not be obligated
to) debit the amount of any such payment which is not made by such time from
any special or general deposit account of the Borrower with the Agent or such
Lender, as the case may be (with notice to the Borrower, the other Lenders
and the Agent). The Borrower shall, at the time of making each payment under
this Agreement or any Note, specify to the Agent the amounts payable by the
Borrower hereunder to which such payment is to be applied. Each payment
received by the Agent for the account of a Lender under this Agreement or any
Note shall be paid to such Lender at the applicable Lending Office of such
Lender no later than 5:00 p.m. on the date of receipt. Each payment received
by Agent for the account of Swingline Lender under this Agreement or the
Swingline Note shall be paid to Swingline Lender in accordance with the
payment instructions provided by Swingline Lender to the Agent from time to
time. If the due date of any payment under this Agreement or any other
Credit Document would otherwise fall on a day which is not a Business Day
such date shall be extended to the next succeeding Business Day and interest
shall be payable for the period of such extension.
Section 3.2. Pro Rata Treatment.
Except to the extent otherwise provided herein: (a) each borrowing from
the Lenders under Section 2.1. (a) shall be made from the Lenders, each
payment of the Fees under Section 3.6.(a) and the first sentence of Section
3.6.(b) shall be made for the account of the Lenders, and each termination or
reduction of the amount of the Commitments under Section 2.10. or otherwise
shall be applied to the respective Commitments of the Lenders, pro rata
according to the amounts of their respective Commitments; (b) each payment
or prepayment of principal of Revolving Loans by the Borrower shall be made
for the account of the Lenders pro rata in accordance with the respective
unpaid principal amounts of the Revolving Loans held by them, provided that
if immediately prior to giving effect to any such payment in respect of any
Revolving Loans the outstanding principal amount of the Revolving Loans shall
not be held by the Lenders pro rata in accordance with their respective
Commitments in effect at the time such Loans were made, then such payment
shall be applied to the Revolving Loans in such manner as shall result, as
nearly as is practicable, in the outstanding principal amount of the
Revolving Loans being held by the Lenders pro rata in accordance with their
respective Commitments; (c) each payment of interest on Revolving Loans by
the Borrower shall be made for the account of the Lenders pro rata in
accordance with the amounts of interest on such Loans then due and payable
to the respective Lenders; (d) the making, Conversion and Continuation of
Revolving Loans of a particular Type (other than Conversions provided for by
Section 4.5.) shall be made pro rata among the Lenders according to the
amounts of their respective Commitments (in the case of making of Loans) or
their respective Loans (in the case of Conversions and Continuations of
Loans) and the then current Interest Period for each Lender's portion of each
Loan of such Type shall be coterminous; and (e) the Lenders' participation
in, and payment obligations in respect of, Letters of Credit under Section
2.2. and Swingline Loans under Section 2.12., shall be pro rata in accordance
with their respective Commitments.
Section 3.3. Sharing of Payments, Etc.
If a Lender shall obtain payment of any principal of, or interest on,
any Loan made by it to the Borrower under this Agreement, or shall obtain
payment on any other Obligation owing by the Borrower or a Loan Party through
the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise or through voluntary prepayments directly to a
Lender or other payments made by the Borrower to a Lender not in accordance
with the terms of this Agreement and such payment should be distributed to
the Lenders pro rata in accordance with Section 3.2. or Section 10.4., as
applicable, such Lender shall promptly pay such amounts to the other Lenders
and make such other adjustments from time to time as shall be equitable, to
the end that all the Lenders shall share the benefit of such payment (net of
any reasonable expenses which may be incurred by such Lender in obtaining or
preserving such benefit) pro rata in accordance with Section 3.2. or Section
10.4. To such end, all the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored. The Borrower agrees that
any Lender so purchasing a participation (or direct interest) in the Loans or
other Obligations owed to such other Lenders may exercise all rights of
set-off, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans in the
amount of such participation. Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect
to any other indebtedness or obligation of the Borrower. All payments of
principal, interest, fees and other amounts in respect of the Swingline Loans
shall be for the account of Swingline Lender only (except to the extent any
Lender shall have acquired a participating interest in any such Swingline
Loan pursuant to Section 2.12.(e)).
Section 3.4. Several Obligations.
No Lender shall be responsible for the failure of any other Lender to
make a Loan or to perform any other obligation to be made or performed by
such other Lender hereunder, and the failure of any Lender to make a Loan or
to perform any other obligation to be made or performed by it hereunder shall
not relieve the obligation of any other Lender to make any Loan or to perform
any other obligation to be made or performed by such other Lender.
Section 3.5. Minimum Amounts.
(a) Borrowings. Each borrowing of Base Rate Loans shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in
excess thereof. Each borrowing of LIBOR Loans shall be in an aggregate
minimum amount of $1,000,000 and integral multiples of $100,000 in excess of
that amount.
(b) Prepayments. Each voluntary prepayment of Revolving Loans shall be
in an aggregate minimum amount of $1,000,000 and integral multiples of
$100,000 in excess thereof (or such lesser amount as may be the outstanding
principal amount of such Revolving Loans).
(c) Reductions of Commitments. Each reduction of the Commitments under
Section 2.10. shall be in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess thereof (or such lesser amount as
may be the remaining aggregate amount of the Commitments).
(d) Conversions. Each Conversion of a Loan from a Base Rate Loan to
a LIBOR Loan shall be in an aggregate minimum amount for the Loans of all
Lenders of $1,000,000 or integral multiples of $100,000 in excess thereof.
(e) Letters of Credit. The initial Stated Amount of each Letter of
Credit shall be at least $50,000.
Section 3.6. Fees.
(a) Commitment Fee. The Borrower agrees to pay to the Agent for the
account of the Lenders a commitment fee on the average daily amount by which
the Commitments (as the amount of the Commitments may be reduced from time to
time pursuant to Section 2.10. or otherwise) exceed the aggregate principal
balance of all outstanding Revolving Loans, together with the aggregate
amount of all Letter of Credit Liabilities, at a rate per annum equal to the
Applicable Commitment Fee for the period from and including the Agreement
Date to but excluding earlier of the date the Commitments are terminated or
reduced to zero or the Termination Date. As provided in the last sentence of
Section 2.12. (a), the borrowing of a Swingline Loan shall not constitute
usage of any Lender's Commitment for purposes of calculating such commitment
fee. Such commitment fee shall be payable in arrears on (i) the last
Business Day of March, June, September and December in each year commencing
with September 30, 1999, (ii) on the Termination Date, and (iii) on the date
the Commitments are otherwise terminated or reduced to zero.
(b) Letter of Credit Fees. The Borrower agrees to pay to the Agent for
the account of each Lender a letter of credit fee at a rate per annum equal
to the Applicable Margin for LIBOR Loans of the daily average Stated Amount
of each Letter of Credit for the period from and including the date of
issuance of such Letter of Credit to and including the date such Letter of
Credit is drawn in full, expires or is terminated. The fees provided for in
the immediately preceding sentence shall be nonrefundable and paid in arrears
(i) the last Business Day of March, June, September and December in each year
commencing with September 30, 1999, (ii) on the Termination Date, (iii) on
the date the Commitments are terminated or reduced to zero and
(iv) thereafter from time to time on demand of the Agent. The Borrower shall
pay directly to the Agent from time to time on demand all commissions,
charges, costs and expenses in the amounts customarily charged by the Agent
from time to time in like circumstances with respect to the issuance of each
Letter of Credit, drawings, amendments and other transactions relating
thereto.
(c) Administrative and Other Fees. The Borrower agrees to pay the
administrative and other fees of the Agent and BAS, and any other Fees of the
Lenders, as may be agreed to in writing from time to time.
Section 3.7. Computations.
Unless otherwise expressly set forth herein, any accrued interest on any
Loan and any other Obligations due hereunder, and any Fees due hereunder,
shall be computed on the basis of a year of 360 days and the actual number of
days elapsed; provided, however, accrued interest on any Base Rate Loan shall
be computed on the basis of a year of 365 or 366 days, as applicable, and the
actual number of days elapsed.
Section 3.8. Usury.
In no event shall the amount of interest due or payable on the Loans or
other Obligations exceed the maximum rate of interest allowed by Applicable
Law and, if any such payment is paid by the Borrower or received by any
Lender, then such excess sum shall be credited as a payment of principal,
unless the Borrower shall notify the respective Lender in writing that the
Borrower elects to have such excess sum returned to it forthwith. It is
the express intent of the parties hereto that the Borrower not pay and the
Lenders not receive, directly or indirectly, in any manner whatsoever,
interest in excess of that which may be lawfully paid by the Borrower under
Applicable Law.
Section 3.9. Agreement Regarding Interest and Charges.
The parties hereto hereby agree and stipulate that the only charge
imposed upon the Borrower for the use of money in connection with this
Agreement is and shall be the interest specifically described in Section
2.3.(a) and, with respect to Swingline Loans, in Section 2.12.(c).
Notwithstanding the foregoing, the parties hereto further agree and stipulate
that all agency fees, syndication fees, commitment fees, letter of credit
fees, underwriting fees, default charges, late charges, funding or "breakage"
charges, increased cost charges, attorneys' fees and reimbursement for costs
and expenses paid by the Agent or any Lender to third parties or for damages
incurred by the Agent or any Lender, are charges made to compensate the Agent
or any such Lender for underwriting or administrative services and costs or
losses performed or incurred, and to be performed or incurred, by the Agent
and the Lenders in connection with this Agreement and shall under no
circumstances be deemed to be charges for the use of money pursuant to
Official Code of Georgia Annotated Sections 7-4-2 and 7-4-18. All charges
other than charges for the use of money shall be fully earned and
nonrefundable when due.
Section 3.10. Statements of Account.
The Agent will account to the Borrower with a statement of Loans,
Letters of Credit, accrued interest and Fees, charges and payments made
pursuant to this Agreement and the other Credit Documents, and such statement
rendered by the Agent shall be deemed conclusive upon Borrower absent
manifest error. The failure of the Agent to deliver such a statement shall
not relieve or discharge the Borrower from any of its obligations hereunder.
Section 3.11. Defaulting Lenders.
(a) Generally. If for any reason any Lender (a "Defaulting Lender")
shall fail or refuse to perform any of its obligations under this Agreement
or any other Credit Document to which it is a party within the time period
specified for performance of such obligation or, if no time period is
specified, if such failure or refusal continues for a period of two Business
Days after notice from the Agent, then, in addition to the rights and
remedies that may be available to the Agent or the Borrower under this
Agreement or Applicable Law, such Defaulting Lender's right to participate
in the administration of the Loans, this Agreement and the other Credit
Documents, including without limitation, any right to vote in respect of,
to consent to or to direct any action or inaction of the Agent or to be taken
into account in the calculation of the Requisite Lenders, shall be suspended
during the pendency of such failure or refusal. If a Lender is a Defaulting
Lender because it has failed to make timely payment to the Agent of any
amount required to be paid to the Agent hereunder (without giving effect to
any notice or cure periods), in addition to other rights and remedies which
the Agent or the Borrower may have under the immediately preceding provisions
or otherwise, the Agent shall be entitled (i) to collect interest from such
Defaulting Lender on such delinquent payment for the period from the date on
which the payment was due until the date on which the payment is made at the
Federal Funds Rate, (ii) to withhold or setoff and to apply in satisfaction
of the defaulted payment and any related interest, any amounts otherwise
payable to such Defaulting Lender under this Agreement or any other Credit
Document and (iii) to bring an action or suit against such Defaulting Lender
in a court of competent jurisdiction to recover the defaulted amount and any
related interest. Any amounts received by the Agent in respect of a
Defaulting Lender's Loans shall not be paid to such Defaulting Lender and
shall be held uninvested by the Agent and either applied against the purchase
price of such Loans under the following subsection (b) or paid to such
Defaulting Lender upon the Defaulting Lender's curing of its default.
(b) Purchase of Defaulting Lender's Commitment. Any Lender who is not
a Defaulting Lender shall have the right, but not the obligation, in its sole
discretion, to acquire all of a Defaulting Lender's Commitment. Any Lender
desiring to exercise such right shall give written notice thereof to the
Agent no sooner than 2 Business Days and not later than 10 Business Days
after such Defaulting Lender became a Defaulting Lender. If more than one
Lender exercises such right, each such Lender shall have the right to acquire
an amount of such Defaulting Lender's Commitment in proportion to the
Commitments of the other Lenders exercising such right. If after such 10th
Business Day, the Lenders have not elected to purchase all of the Commitment
of such Defaulting Lender, then any Eligible Assignee may purchase such
Commitment. Neither the Agent nor any of the Lenders shall have any
obligation whatsoever to initiate any such replacement or to assist in
finding an Eligible Assignee. Upon any such purchase, the Defaulting
Lender's interest in the Loans and its rights hereunder (but not its
liability in respect thereof or under the Credit Documents or this Agreement
to the extent the same relate to the period prior to the effective date of
the purchase) shall terminate on the date of purchase, and the Defaulting
Lender shall promptly execute all documents reasonably requested to surrender
and transfer such interest to the purchaser thereof, including an appropriate
Assignment and Acceptance Agreement and, notwithstanding Section 12.5(d),
shall pay to the Agent an assignment fee in the amount of $7,000. The
purchase price for the Commitment of a Defaulting Lender shall be equal to
the amount of the principal balance of the Loans outstanding and owed by the
Borrower to the Defaulting Lender. Prior to payment of such purchase price
to a Defaulting Lender, the Agent shall apply against such purchase price any
amounts retained by the Agent pursuant to the last sentence of the
immediately preceding subsection (a). The Defaulting Lender shall be
entitled to receive amounts owed to it by the Borrower under the Credit
Documents which accrued prior to the date of the default by the Defaulting
Lender, to the extent the same are received by the Agent from or on behalf of
the Borrower. There shall be no recourse against any Lender or the Agent for
the payment of such sums except to the extent of the receipt of payments from
any other party or in respect of the Loans. If, prior to a Lender's
acquisition of a Defaulting Lender's Commitment pursuant to this subsection,
such Defaulting Lender shall cure the event or condition which caused it to
become a Defaulting Lender to the satisfaction of the Agent and shall have
paid all amounts owing by it hereunder as a result thereof, then such Lender
shall no longer have the right to acquire such Defaulting Lender's
Commitment.
Section 3.12. Taxes.
(a) Taxes Generally. All payments by the Borrower of principal of, and
interest on, the Loans and all other Obligations shall be made free and clear
of and without deduction for any present or future excise, stamp or other
taxes, fees, duties, levies, imposts, charges, deductions, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding the following (collectively, "Excluded Taxes"): (i) franchise
taxes, (ii) any taxes (other than withholding taxes) that would not be
imposed but for a connection between the Agent or a Lender and the
jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of the Agent or such Lender pursuant to or in
respect of this Agreement or any other Credit Document), (iii) any taxes
imposed on or measured by any Lender's assets, net income, receipts or branch
profits and (iv) any taxes arising after the Agreement Date solely as a
result of or attributable to a Lender changing its designated Lending Office
after the date such Lender becomes a party hereto (such items other than
Excluded Taxes being collectively called "Taxes"). If any withholding or
deduction from any payment to be made by the Borrower hereunder is required
in respect of any Taxes pursuant to any Applicable Law, then the Borrower
will:
(i) pay directly to the relevant Governmental Authority the
full amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or other
documentation reasonably satisfactory to the Agent evidencing such
payment to such Governmental Authority; and
(iii) pay to the Agent for its account or the account of the
applicable Lender, as the case may be, such additional amount or
amounts as is necessary to ensure that the net amount actually received
by the Agent or such Lender will equal the full amount that the Agent
or such Lender would have received had no such withholding or deduction
been required.
(b) Tax Indemnification. If the Borrower fails to pay any Taxes when
due to the appropriate Governmental Authority or fails to remit to the Agent,
for its account or the account of the respective Lender, as the case may be,
the required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental Taxes, interest
or penalties that may become payable by the Agent or any Lender as a result
of any such failure. For purposes of this Section, a distribution hereunder
by the Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
(c) Tax Forms. Prior to the date that any Lender or participant
organized under the laws of a jurisdiction outside the United States of
America becomes a party hereto, such Person shall deliver to the Borrower and
the Agent such certificates, documents or other evidence, as required by the
Code or Treasury Regulations issued pursuant thereto (including Internal
Revenue Service Forms 4224 or 1001, as applicable, or appropriate successor
forms), properly completed, currently effective and duly executed by such
Lender or participant establishing that payments to it hereunder and under
the Notes are (i) not subject to United States Federal backup withholding tax
or (ii) not subject to United States Federal withholding tax under the Code
because such payment is either effectively connected with the conduct by such
Lender or participant of a trade or business in the United States or totally
exempt from United States Federal withholding tax by reason of the
application of the provisions of a treaty to which the United States is a
party or such Lender is otherwise exempt. Any Lender who fails to remit to
the Borrower or the Agent any such required certificates, documents, evidence
or necessary forms shall reimburse the Borrower and the Agent for any
penalties paid by the Borrower or the Agent, as applicable, to the extent
resulting of the failure of the Borrower or the Agent, as applicable, to
withhold the required amounts that are caused by such Lender's failure to
provide such items when due.
(d) Refunds and Credits. If the Agent or any Lender shall become aware
that it is entitled to a refund or credit in respect of Taxes for which it
has been indemnified by the Borrower pursuant to this Section, the Agent or
such Lender shall promptly notify the Borrower of the availability of such
refund or credit and shall, within 30 days after receipt of a written request
by the Borrower, apply for such refund or credit at the Borrower's sole cost
and expense. So long as no Default or Event of Default shall have occurred
and be continuing, if the Agent or any Lender shall receive a refund or
credit in respect of any such Taxes as to which it has been indemnified by
the Borrower pursuant to this Section, the Agent or such Lender shall
promptly notify the Borrower of such refund or credit and shall, within
10 days of receipt or any refund or the effective date of any credit, pay
such refund or an amount equal to the amount of such credit, as the case may
be, but only to the extent of amounts that have been paid by the Borrower
under this Section with respect to such refund and not previously reimbursed,
to the Borrower, net of all reasonable out-of-pocket expenses of such Lender
or the Agent and without interest (other than the interest, if any, included
in such refund or in respect of such credit).
ARTICLE IV. YIELD PROTECTION, ETC.
Section 4.1. Additional Costs; Capital Adequacy.
(a) Additional Costs. The Borrower shall promptly pay to the Agent for
the account of a Lender from time to time such amounts as such Lender may
determine in good faith to be necessary to compensate such Lender for any
costs incurred by such Lender that it reasonably determines are attributable
to its making or maintaining of any Loans or its obligation to make any Loans
hereunder, any reduction in any amount receivable by such Lender under this
Agreement or any of the other Credit Documents in respect of any of such
Loans or such obligation or the maintenance by such Lender of capital in
respect of its Loans or its Commitments (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change that: (i) changes the basis of taxation
of any amounts payable to such Lender under this Agreement or any of the
other Credit Documents in respect of any of such Loans or its Commitments
(other than with respect to Excluded Taxes); or (ii) imposes or modifies any
reserve, special deposit or similar requirements (including, without
limitation, any reserves required to be maintained against (1) "Eurocurrency
liabilities" as specified in Regulation D of the Board of Governors of the
Federal Reserve System or (2) any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR Loans is
determined or (3) any category of extensions of credit or other assets which
includes loans by an office of any Lender outside of the United States of
America to residents of the United States of America)) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender, or any commitment of such Lender (including,
without limitation, the Commitments of such Lender hereunder); or (iii) has
or would have the effect of reducing the rate of return on capital of such
Lender to a level below that which such Lender could have achieved but for
such Regulatory Change (taking into consideration such Lender's policies with
respect to capital adequacy).
(b) Lender's Suspension of LIBOR Loans. Without limiting the effect of
the provisions of the immediately preceding subsection (a), if by reason of
any Regulatory Change, any Lender either (i) incurs Additional Costs based on
or measured by the excess above a specified level of the amount of a category
of deposits or other liabilities of such Lender that includes deposits by
reference to which the interest rate on LIBOR Loans is determined as provided
in this Agreement or a category of extensions of credit or other assets of
such Lender that includes LIBOR Loans or (ii) becomes subject to restrictions
on the amount of such a category of liabilities or assets that it may hold,
then, if such Lender so elects by notice to the Borrower (with a copy to the
Agent), the obligation of such Lender to make or Continue, or to Convert any
other Type of Loans into, LIBOR Loans hereunder shall be suspended until such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 4.5. shall apply).
(c) Additional Costs in Respect of Letters of Credit. Without limiting
the obligations of the Borrower under the preceding subsections of this
Section (but without duplication), if as a result of any Regulatory Change or
any risk-based capital guideline or other requirement heretofore or hereafter
issued by any Governmental Authority there shall be imposed, modified or
deemed applicable any tax, reserve, special deposit, capital adequacy or
similar requirement against or with respect to or measured by reference to
Letters of Credit and the result shall be to increase the cost to the Agent
of issuing (or any Lender purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit or reduce any amount receivable by the Agent or any Lender hereunder
in respect of any Letter of Credit, then, upon demand by the Agent or such
Lender, the Borrower shall pay immediately to the Agent for its account or
the account of such Lender, as applicable, from time to time as specified by
the Agent or a Lender, such additional amounts as the Agent or such Lender,
as the case may be, shall have determined in good faith to be sufficient to
compensate the Agent or such Lender for such increased costs or reductions in
amount.
(d) Notification and Determination of Additional Costs. Each of the
Agent and each Lender agrees to notify the Borrower of any event occurring
after the Agreement Date entitling the Agent or such Lender to compensation
under any of the preceding subsections of this Section as promptly as
practicable; provided, however, the failure of the Agent or any Lender to
give such notice shall not release the Borrower from any of its obligations
hereunder. The Agent and or such Lender agrees to furnish to the Borrower a
certificate setting forth the basis and amount of each request by the Agent
or such Lender for compensation under this Section. Determinations by the
Agent or any Lender of the effect of any Regulatory Change shall be
conclusive, absent manifest error and provided that such determinations are
made reasonably and in good faith.
Section 4.2. Suspension of LIBOR Loans.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted Eurodollar Rate for any Interest Period:
(a) the Agent determines reasonably and in good faith (which
determination shall be conclusive) that by reason of circumstances
affecting the relevant market, adequate and reasonable means do not
exist for ascertaining the Adjusted Eurodollar Rate for such Interest
Period, or
(b) the Agent reasonably determines (which determination shall
be conclusive) that the Adjusted Eurodollar Rate will not adequately and
fairly reflect the cost to the Lenders of making or maintaining LIBOR
Loans for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under
no obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR
Loans or Convert Loans into LIBOR Loans and the Borrower shall, on the last
day of each current Interest Period for each outstanding LIBOR Loan, either
repay such Loan or Convert such Loan into a Base Rate Loan.
Section 4.3. Illegality.
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for any Lender to honor its obligation to make or maintain LIBOR
Loans hereunder, then such Lender shall promptly notify the Borrower thereof
(with a copy to the Agent) and such Lender's obligation to make or Continue,
or to Convert Loans of any other Type into, LIBOR Loans shall be suspended
until such time as such Lender may again make and maintain LIBOR Loans (in
which case the provisions of Section 4.5. shall be applicable).
Section 4.4. Compensation.
The Borrower shall pay to the Agent for the account of each Lender, upon
the request of such Lender through the Agent, such amount or amounts as shall
be sufficient to compensate such Lender for any loss, cost or expense that
such Lender determines in good faith is attributable to:
(a) any payment or prepayment (whether mandatory or optional) of
a LIBOR Loan, or Conversion of a LIBOR Loan, made by such Lender for any
reason (including, without limitation, acceleration) on a date other
than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any of the applicable conditions
precedent specified in Article V. to be satisfied) to borrow a LIBOR
Loan from such Lender on the requested date for such borrowing, or to
Convert a Base Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on
the requested date of such Conversion or Continuation,
such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest that otherwise would have
accrued on the principal amount so paid, prepaid or Converted or not borrowed
for the period from the date of such payment, prepayment, Conversion or
failure to borrow or Convert to the last day of the then current Interest
Period for such Loan (or, in the case of a failure to borrow or Convert, the
Interest Period for such Loan that would have commenced on the date specified
for such borrowing or Conversion) at the applicable rate of interest for such
Loan provided for herein plus such Lender's normal administrative charges, if
any, associated with such payment, prepayment, Conversion or failure to
borrow over (ii) the amount of interest that otherwise would have accrued on
such principal amount at a rate per annum equal to LIBOR at such time for an
amount comparable to such principal amount and for a maturity comparable to
such period (as reasonably determined by such Lender). Upon the Borrower's
request, any Lender requesting compensation under this Section shall provide
the Borrower with a statement setting forth the basis for requesting such
compensation and the method for determining the amount thereof. Any such
statement shall be conclusive absent manifest error.
Section 4.5. Treatment of Affected Loans.
If the obligation of any Lender to make LIBOR Loans or to Continue, or
to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to
Section 4.1.(b), 4.2. or 4.3., then such Lender's LIBOR Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion
required by Section 4.1.(b) or 4.3., on such earlier date as such Lender may
specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 4.1., 4.2. or 4.3. that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's LIBOR Loans have been so
Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's LIBOR Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as LIBOR Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into LIBOR Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that
the circumstances specified in Section 4.1. or 4.3. that gave rise to the
Conversion of such Lender's LIBOR Loans pursuant to this Section no longer
exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when LIBOR Loans made by other Lenders are
outstanding, then such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s)
for such outstanding LIBOR Loans, to the extent necessary so that, after
giving effect thereto, all Loans held by the Lenders holding LIBOR Loans
and by such Lender are held pro rata (as to principal amounts, Types and
Interest Periods) in accordance with their respective Commitments.
Section 4.6. Change of Lending Office.
Each Lender agrees that it will use reasonable efforts to designate an
alternate Lending Office with respect to any of its Loans affected by the
matters or circumstances described in Sections 3.12., 4.1. or 4.3. to reduce
the liability of the Borrower or avoid the results provided thereunder, so
long as such designation is not disadvantageous to such Lender as determined
by such Lender in its sole discretion, except that such Lender shall have no
obligation to designate a Lending Office located in the United States of
America.
Section 4.7. Assumptions Concerning Funding of LIBOR Loans.
Calculation of all amounts payable to a Lender under this Article IV.
shall be made as though such Lender had actually funded LIBOR Loans through
the purchase of deposits in the relevant market bearing interest at the rate
applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR
Loans and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit and the foregoing assumption shall be used only for
calculation of amounts payable under this Article IV.
ARTICLE V. CONDITIONS PRECEDENT
Section 5.1. Initial Conditions Precedent.
The effectiveness of the amendment and restatement of the Existing
Credit Agreement contemplated hereby, as well as the obligation of the
Lenders to effect or permit the occurrence of the first Credit Event
hereunder, whether as the making of a Loan or the issuance of a Letter of
Credit, are subject to the following conditions precedent:
(a) The Agent shall have received each of the following, in form and
substance satisfactory to the Agent:
(i) a counterpart of this Agreement executed by the Borrower and
each of the Lenders;
(ii) the Revolving Notes executed by the Borrower, payable to each
of the Lenders and complying with the terms of Section 2.9., and the
Swingline Note executed by the Borrower, payable to the Swingline
Lender;
(iii) the Guaranty executed by each Guarantor;
(iv) the Pledge Agreement executed by each of the Borrower and each
other Loan Party owning any equity interest in any other Loan Party. In
addition, the Agent shall have received each of the following: (i) all
certificates representing all (or in the case of any Foreign Subsidiary,
65%) of the issued and outstanding capital stock or other equity
interests of each of such other Loan Parties and (ii) stock powers duly
endorsed in blank relating to all such certificates;
(v) the Assignment of Acquisition Documents executed by each of
the Borrower and the other Loan Parties;
(vi) Trademark Security Agreements executed by each of the Borrower
and Serologicals Royalty Company;
(vii) Patent Security Agreements executed by Serologicals Royalty
Company;
(viii) the Security Agreement executed by each of the Borrower and
the other Loan Parties (excluding Foreign Subsidiaries);
(ix) with respect to each of the Uniform Commercial Code financing
statements naming any Loan Party as debtor and Bank of America (or any
entity of which it is a successor) as secured party, and filed pursuant
to the Existing Credit Agreement, a Uniform Commercial Code assignment
statement executed by Bank of America as assignor in favor of the Agent
as assignee;
(x) favorable UCC, tax and lien search reports with respect to
each Specified Loan Party in all necessary or appropriate jurisdictions
and under all legal and appropriate trade names indicating that there
are no prior Liens on any of the Collateral of such Specified Loan
Parties other than Permitted Liens or Liens to be terminated prior to
the Closing Date;
(xi) an opinion of Swidler Berlin Shereff Friedman, LLP, counsel to
the Loan Parties, substantially in the form of Exhibit O;
(xii) the articles of incorporation, articles of organization,
certificate of limited partnership or other comparable organizational
instrument (if any) of each Specified Loan Party certified as of a
recent date by the Secretary of State of the state of formation of such
Specified Loan Party and a certificate signed by the Secretary or
Assistant Secretary (or other individual performing similar functions)
of each other Loan Party to the effect that except as otherwise
indicated in such certificate the organizational documents of such Loan
Party have not been modified, amended or rescinded since October 16,
1997 and remain in full force and effect as of the Closing Date;
(xiii) a certificate of good standing (or other certificate of
similar meaning) with respect to each Loan Party issued as of a recent
date by the Secretary of State of the state of formation of each such
Loan Party and with respect to the Specified Loan Parties, certificates
of qualification to transact business or other comparable certificates
issued by each Secretary of State (and any state department of taxation,
as applicable) of each state in which each such Specified Loan Party is
required to be so qualified;
(xiv) a certificate of incumbency signed by the Secretary or
Assistant Secretary (or other individual performing similar functions)
of each Loan Party with respect to each of the officers of such Loan
Party authorized to execute and deliver the Loan Documents to which such
Loan Party is a party, and in the case of the Borrower, to execute and
deliver Notices of Borrowing, Notices of Conversion, Notices of
Continuation, Notices of Swingline Borrowing and requests for the
issuance of Letters of Credit;
(xv) copies certified by the Secretary or Assistant Secretary of
each Loan Party (or other individual performing similar functions) of
(i) in the case of each Specified Loan Party, the by-laws of such Loan
Party, if a corporation, the operating agreement, if a limited liability
company, the partnership agreement, if a partnership, or other
comparable document in the case of any other form of legal entity, or a
certificate signed by the Secretary or Assistant Secretary (or other
individual performing similar functions) of each other Loan Party that
the by-laws of such Loan Party have not been modified, amended or
rescinded since October 16, 1997 and remain in full force and effect as
of the Closing Date and (ii) all corporate, partnership, member or other
necessary action taken by such Loan Party to authorize the execution,
delivery and performance of the Loan Documents to which it is a party;
(xvi) a certificate executed by the chief executive officer or
chief financial officer of the Borrower, stating that: (i) on such
date, and after giving effect to the transactions contemplated hereby,
no Default or Event of Default has occurred and is continuing and
(ii) the representations and warranties made or deemed made by the
Borrower or any other Loan Party in the Credit Documents are true and
correct in all material respects on and as of such date with the same
effect as though made on and as of such date;
(xvii) certificates of insurance evidencing the existence of all
insurance required to be maintained by each Loan Party pursuant to the
Credit Documents, together with loss payable clauses as required by such
Credit Documents;
(xviii) the Fees, if any, then due under Section 3.6., and evidence
that all accrued and unpaid interest and fees owing under the Existing
Credit Agreement have been paid;
(xix) (i) audited consolidated balance sheets and statements of
operations and cash flows of the Borrower and its Consolidated
Subsidiaries for the fiscal year ended December 27, 1998 and
(ii) unaudited consolidated balance sheets and statements of operations
and cash flows of the Borrower and its Consolidated Subsidiaries for the
fiscal quarter ended March 28, 1999 (collectively, the "Historical
Financial Statements");
(xx) information confirming that (i) the Borrower, its
Subsidiaries and each other Loan Party are taking necessary and
appropriate steps to ascertain the extent of, and to quantify and
successfully address, business and financial risks facing the Borrower,
its Subsidiaries and each other Loan Party in connection with their
material computer applications resulting from the Year 2000 Problem,
including risk resulting from the failure of the Borrower, its
Subsidiaries and the other Loan Parties to address successfully the Year
2000 Problem and (ii) such material computer applications will, on a
timely basis, adequately address the Year 2000 Problem in all material
respects; and
(xxi) such other documents, instruments and agreements as the Agent
or any Lender through the Agent may reasonably request; and
(b) In the good faith judgment of the Agent:
(i) there shall not have occurred a material adverse change since
March 28, 1999 in the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole or in the facts
and information regarding the Loan Parties as represented to the Agent
and the Lenders prior to the Closing Date;
(ii) no litigation, action, suit, investigation or other arbitral,
administrative or judicial proceeding shall be pending or threatened
which could reasonably be expected to (1) have a Material Adverse Effect
or (2) restrain or enjoin, impose materially burdensome conditions on,
or otherwise materially and adversely affect the ability of the Borrower
or any other Loan Party to fulfill its respective obligations under the
Credit Documents to which it is a party;
(iii) the Borrower, and the other Loan Parties shall have received
all approvals, consents and waivers, and shall have made or given all
necessary filings and notices as shall be required to consummate the
transactions contemplated hereby without the occurrence of any default
under, conflict with or violation of (1) any Applicable Law or (2) any
agreement, document or instrument to which any Loan Party is a party or
by which any of them or their respective properties is bound, except for
such approvals, consents, waivers, filings and notices the receipt,
making or giving of which would not reasonably be likely to (A) have a
Material Adverse Effect, or (B) restrain or enjoin, impose materially
burdensome conditions on, or otherwise materially and adversely affect
the ability of the Borrower or any other Loan Party to fulfill its
respective obligations under the Credit Documents to which it is a
party; and
(iv) there shall not have occurred or exist any material
disruption of, or a material adverse change in conditions in, the
financial, banking or capital markets which the Agent and BAS, in their
reasonable discretion, deem material in connection with the transactions
contemplated by the Credit Documents.
Section 5.2. Conditions Precedent to All Loans and Letters of Credit.
The obligation of the Lenders to make any Loans, of the Swingline Lender
to make any Swingline Loan and of the Agent to issue Letters of Credit, in
each case, is subject to the further condition precedent that: (a) no Default
or Event of Default shall have occurred and be continuing as of the date of
the making of such Loan or date of issuance of such Letter of Credit or would
exist immediately after giving effect thereto; (b) the representations and
warranties made or deemed made by the Borrower and each other Loan Party in
the Credit Documents to which any of them is a party, shall be true and
correct in all material respects on and as of the date of the making of such
Loan or date of issuance of such Letter of Credit with the same force and
effect as if made on and as of such date except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and
accurate on and as of such earlier date) and (c) in the case of the borrowing
of Revolving Loans, the Agent shall have received a timely Notice of
Borrowing, or in the case of a Swingline Loan, timely receipt by Swingline
Lender of a Notice of Swingline Borrowing. Each Credit Event (including
without limitation, the borrowing of a Swingline Loan as provided in Section
2.12.(f)) shall constitute a certification by the Borrower to the effect set
forth in the preceding sentence (both as of the date of the giving of notice
relating to such Credit Event and, unless the Borrower otherwise notifies the
Agent prior to the date of such Credit Event, as of the date of the
occurrence of such Credit Event). The making of any Loans by the Lenders or
the Swingline Lender, or issuance of a Letter of Credit by the Agent, prior
to the satisfaction of all applicable conditions contained in Article V.,
shall not constitute nor be construed to be a waiver by the Lenders, the
Swingline Lender or the Agent, of the requirement that such conditions be
satisfied.
Section 5.3. Conditions to Significant Acquisitions.
The right of the Borrower to consummate a Significant Acquisition of a
Seller without violating Section 9.3., and the obligation of the Lenders to
make any Revolving Loan hereunder, the proceeds of which will be used to
finance such Acquisition, or issue any Letter of Credit in connection with
such Acquisition, are subject to the satisfaction of the following
conditions:
(a) Historical Financial Statements. The Agent and each Lender shall
have received not less than 10 Business Days prior to the applicable
Acquisition Date, the following in form and substance satisfactory to the
Agent: (i) a balance sheet, statement of operations and statement of cash
flows for such Seller for the two fiscal years most recently ended and
(ii) if then available, a balance sheet, statement of operations and
statement of cash flows for such Seller for the fiscal quarter most recently
ending prior to the Acquisition Date (collectively, the "Acquisition
Historical Financial Statements").
(b) Pro Forma Financial Statements. The Agent and each Lender shall
have received not less than 10 Business Days prior to the Acquisition Date,
the following in form and substance satisfactory to the Agent: (i) a pro
forma balance sheet, statement of operations and statement of cash flows for
such Seller, the Borrower and its Consolidated Subsidiaries prepared on a
combined basis for the fiscal year most recently ended and (ii) if then
available, a pro forma balance sheet, statement of operations and statement
of cash flows for such Seller, the Borrower and its Consolidated Subsidiaries
prepared on a combined basis for the fiscal quarter most recently ending
prior to the Acquisition Date (collectively, the "Acquisition Pro Forma
Financial Statements").
(c) Confirmation of Covenant Compliance. The Agent and each Lender
shall have received not less than 10 Business Days prior to the Acquisition
Date, a certificate from the Borrower in form and substance satisfactory to
the Agent, setting forth the calculations of the Borrower establishing
compliance with the covenants contained in this Agreement, including without
limitation, those contained in Section 9.1., (i) immediately after giving
effect to such Acquisition and (ii) on a combined basis with the Seller as of
the end of the fiscal year most recently ended.
(d) Description of Transaction. The Agent and each Lender shall have
received not less than 10 Business Days prior to the Acquisition Date, (x) a
written description of the Acquisition in detail reasonably satisfactory to
the Agent, such description to include a description of (i) the purchase
price of such Acquisition, (ii) the method and structure of payment thereof
and (iii) the Seller and (y) the current draft of the Purchase Agreement.
(e) Corporate Documents. If such Acquisition involves any New
Subsidiaries, the Agent shall have received the following documents, each
certified as indicated below:
(i) a copy of the articles of incorporation, articles of
organization, certificate of limited partnership or other comparable
organizational documents (if any) of each such New Subsidiary, certified
as of a recent date by the Secretary of State (and any state department
of taxation, as applicable) of the jurisdiction of its formation, a
certificate of good standing (or other certificate of similar meaning)
with respect to such New Subsidiary issued as of a recent date by the
Secretary of State of the state of formation of such New Subsidiary;
(ii) certificates of qualification to transact business or other
comparable certificates issued by each Secretary of State (and any state
department of taxation, as applicable) of each state in which each such
New Subsidiary is required to be so qualified, or, if unavailable,
evidence satisfactory to the Agent that each such New Subsidiary has
taken appropriate steps to so qualify; and
(iii) a certificate of the Secretary or Assistant Secretary of
each such New Subsidiary, dated the Acquisition Date and certifying
(A) that attached thereto is a true and complete copy of the by-laws of
such New Subsidiary, if a corporation, the operating agreement, if a
limited liability company, the partnership agreement, if a partnership,
or other comparable document in the case of any other form of legal
entity, as in effect on the date of such certificate, (B) that attached
thereto is a true and complete copy of the corporate, partnership,
member or other necessary action taken by such New Subsidiary's
authorizing the execution, delivery and performance of each of the
Credit Documents to which such New Subsidiary is or is to be a party,
and that such actions have not been modified, rescinded or amended and
are in full force and effect, (C) that such New Subsidiary's articles of
incorporation, articles of organization, certificate of limited
partnership or other comparable organizational instrument (if any) has
not been amended since the date of the certification thereto furnished
pursuant to subsection (i) above, and (D) as to the incumbency and
specimen signature of each of such New Subsidiary's officers executing
each of such Credit Documents (and the Agent may conclusively rely on
such certificate until the Agent receives notice in writing from such
New Subsidiary, to the contrary).
(f) Acquisition. On the Acquisition Date: (i) the applicable Purchase
Agreement shall be in full force and effect; (ii) none of the parties to such
Purchase Agreement shall have failed to perform any material obligation or
covenant required by such Purchase Agreement to be performed or complied with
by it on or before the Acquisition Date; and (iii) if proceeds of a Loan are
being used to finance in whole or in part such Acquisition, or a Letter of
Credit is to be issued in connection with such Acquisition, the Agent shall
have received a certificate from the Borrower's chief executive or chief
financial officer to the effect set forth in the immediately preceding
clauses (i) and (ii).
(g) Acquisition Documents. The Agent shall have received fully
executed copies of all of the Acquisition Documents and all amendments,
waivers and consents relating thereto.
(h) Lien Searches. The Agent shall have received favorable UCC, tax,
judgment and lien search reports in form and substance satisfactory to the
Agent with respect to the Seller and each New Subsidiary (except for any New
Subsidiary formed by the Borrower or any Loan Party solely for the purpose of
facilitating such Acquisition, and formed no more than 90 Business Days prior
to the Acquisition Date) in all necessary or appropriate jurisdictions and
under all legal and appropriate trade names indicating that there are no
prior liens on any of the Collateral other than Permitted Liens or Liens to
be released prior to or at the time of the consummation of such Significant
Acquisition.
(i) Accession Agreement. If such Acquisition involves any New
Subsidiary, the Agent shall have received an Accession Agreement duly
executed by such New Subsidiary, which Accession Agreement shall, in addition
to making such New Subsidiary a party to the Guaranty and the Security
Agreement, make such New Subsidiary a party to (A) the Pledge Agreement, if
such New Subsidiary owns any issued and outstanding capital stock of any
other Loan Party and (B) the Assignment of Acquisition Documents, if such New
Subsidiary has any rights under the Purchase Agreement or other Acquisition
Documents being executed in connection with such Acquisition.
(j) Acknowledgment to Assignment of Acquisition Documents. The
Borrower shall use its best efforts to deliver to the Agent an acknowledgment
with respect to the Assignment of Acquisition Documents from the Sellers
under the applicable Acquisition Documents, in the form attached thereto.
(k) Financing Statements. Each such New Subsidiary shall have
delivered to the Agent duly executed UCC financing statements, and taken such
other action, as the Agent shall have reasonably requested in order to
perfect the security interest granted by each such New Subsidiary pursuant to
the Security Agreement.
(l) Pledge of Stock. Subject to the last sentence of Section 7.8., the
Agent shall have received from each Loan Party owning any issued and
outstanding capital stock or other equity interests of each such New
Subsidiary, either an amendment (in form and substance satisfactory to the
Agent) to the Pledge Agreement subjecting to the Lien thereof such capital
stock or other equity interests or if any such Loan Party is not yet a party
to the Pledge Agreement, an Accession Agreement executed by such Loan Party
making such Loan Party a party to the Pledge Agreement. In addition, the
Agent shall have received each of the following: (i) all certificates
representing all of such capital stock or other equity interests, and
(ii) stock powers duly endorsed in blank by the applicable Loan Parties
relating to all such certificates.
(m) Opinions of Counsel. The Agent shall have received an opinion
counsel to the Loan Parties regarding (i) the due organization of each such
New Subsidiary; (ii) the corporate authority of any New Subsidiary or other
Loan Party delivering a Credit Document pursuant to this Section; (iii) the
execution, delivery and enforceability of such Credit Documents;
(iv) noncontravention of Applicable Law (other than applicable health care
laws, regulations and rules) by such Acquisition or by the execution,
delivery and performance by such New Subsidiary and such Loan Parties of such
Credit Documents; (v) validity and perfection of any security interests
granted under any Security Document delivered under this Section and
(vi) such other matters as the Agent or its counsel may reasonably request.
(n) Other Documents. The Agent shall have received such other
documents as the Agent or its counsel may reasonably request.
The conditions contained in the immediately preceding subsections (e) and (g)
through (n) must be satisfied no later than 60 days following the Acquisition
Date.
Section 5.4. Conditions to Non-Significant Acquisitions.
Within 60 days (or such earlier date as may be provided below) after the
date of consummation of an Acquisition that is not a Significant Acquisition,
the Borrower shall deliver to the Agent (and the Lenders if provided below),
each of the following in form and substance satisfactory to the Agent:
(a) Confirmation of Covenant Compliance. The Agent and the Lenders
shall have received not less than 3 Business Days prior to the Acquisition
Date, a certificate from the Borrower in form and substance satisfactory to
the Agent, setting forth the calculations of the Borrower establishing
compliance with the covenants contained in this Agreement, including without
limitation, those contained in Section 9.1. immediately after giving effect
to such Acquisition.
(b) Corporate Documents. If such Acquisition involved any New
Subsidiaries, a copy of the articles of incorporation, articles of
organization, certificate of limited partnership or other similar
organizational documents (if any) of each such New Subsidiary, certified as
of a recent date by the Secretary of State of the jurisdiction of its
formation, and a certificate of good standing (or other certificate of
similar meaning) issued as of a recent date from such Secretary of State;
(c) Lien Searches. The Agent shall have received from the Borrower
copies of all UCC, tax, judgment and lien search reports, if any, undertaken
by the Borrower with respect to the Seller and each New Subsidiary (except
for any New Subsidiary formed by the Borrower or any Loan Party solely for
the purpose of facilitating such Acquisition, and formed no more than 90
Business Days prior to the Acquisition Date).
(d) Accession Agreement. If such Acquisition involves any New
Subsidiary, the Agent shall have received an Accession Agreement duly
executed by such New Subsidiary, which Accession Agreement shall, in addition
to making such New Subsidiary a party to the Guaranty and the Security
Agreement, make such New Subsidiary a party to the Pledge Agreement, if such
New Subsidiary owns any issued and outstanding capital stock or other equity
interest of any other Loan Party.
(e) Financing Statements. Each such New Subsidiary shall have
delivered to the Agent duly executed copies of UCC financing statements,
and taken such other action, as the Agent shall have reasonably requested in
order to perfect the security interest granted by each such New Subsidiary
pursuant to the Security Agreement.
(f) Pledge of Stock. Subject to the last sentence of Section 7.8.,
the Agent shall have received from each Loan Party owning any issued and
outstanding capital stock of or other equity interest in each such New
Subsidiary, either an amendment (in form and substance satisfactory to the
Agent) to the Pledge Agreement subjecting to the Lien thereof such capital
stock or other equity interests or if any such Loan Party is not yet a party
to the Pledge Agreement, an Accession Agreement executed by such Loan Party
making such Loan Party a party to the Pledge Agreement. In addition, the
Agent shall have received each of the following: (i) all certificates
representing all of such capital stock or other equity interests, and
(ii) stock powers duly endorsed in blank by the applicable Loan Parties
relating to all such certificates.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent, each Lender and the Swingline Lender to
enter into this Agreement and to make Loans, issue Letters of Credit and make
Swingline Loans, as applicable, the Borrower represents and warrants to the
Agent, the Lenders and the Swingline Lender as follows:
Section 6.1. Corporate Existence
Each of the Borrower and the other Loan Parties (a) is a corporation,
partnership or other legal entity, duly organized or formed and validly
existing; (b) has all requisite power, and has all governmental licenses,
authorizations, consents and approvals, necessary to own its assets and carry
on its business as now being or as proposed to be conducted and to consummate
the Transactions, except where the failure to have such requisite power, or
have such governmental licenses, authorizations, consents or approvals could
not reasonably be expected to have a Material Adverse Effect; and (c) is in
good standing under the laws of the jurisdiction of its organization or
formation and is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification necessary,
except where failure to be in good standing or so to qualify could not
reasonably be expected to have a Material Adverse Effect, all of which such
jurisdictions are set forth on Schedule 6.1.
Section 6.2. Authorization; No Conflict
The execution, delivery and performance by the Borrower and the other
Loan Parties of each of the Credit Documents and the Acquisition Documents to
which any is a party and the consummation of the Transactions (a) have been
duly authorized by all requisite corporate and, if required, stockholder
action on the part of the Borrower and each such Loan Party and (b) will not
(i) to the actual knowledge of a Responsible Officer of the Borrower,
violate any provision of Applicable Law, or any order of any Governmental
Authority, (ii) violate any provision of the organizational documents of the
Borrower or any other Loan Party, (iii) violate, conflict with, result in a
breach of, or constitute (alone or with notice or lapse of time or both) a
default or an event of default under, any Material Contract to which the
Borrower or any other Loan Party is a party or by which the Borrower or any
other Loan Party or any of its property is or may be bound, or (iv) result in
the creation or imposition of any Lien upon any property or assets of the
Borrower or any other Loan Party (except pursuant to the Security Documents).
Section 6.3. Enforceability
This Agreement, each other Credit Document, and each Acquisition
Document have been duly executed and delivered by the Borrower and each of
the other Loan Parties (to the extent it is a party thereto) and constitute
the legal, valid and binding obligations of the Borrower and the other Loan
Parties enforceable against the Borrower and the other Loan Parties in
accordance with their respective terms, except (a) as the same may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other laws affecting generally the enforcement of creditors' rights and by
general principles of equity (regardless of whether considered in a
proceeding in equity or at law) and (b) that obligations of a Loan Party
resulting solely from being jointly and severally liable under a Credit
Document for the obligations (the "Primary Obligations") of another Loan
Party primarily responsible for the performance of such Primary Obligations
may not be enforceable; provided, however, the lack of such enforceability
does not (i) limit in any way the enforceability of any of the Primary
Obligations and (ii) does not make the principal remedies afforded by such
Credit Document inadequate for the practical realization of the principal
rights, benefits or security provided thereby.
Section 6.4. Approvals
To the actual knowledge of any Responsible Officer of the Borrower, no
authorizations, approvals or consents of, no filings or registrations with,
and notices to any Governmental Authority are necessary for the execution,
delivery or performance by the Borrower and the other Loan Parties of the
Credit Documents, and the Acquisition Documents to which any of them is a
party or for the validity or enforceability thereof, except for (a) filings
and recordings in respect of the Liens created pursuant to the Security
Documents, (b) such authorizations, approvals, consents, filings,
registrations or notices as shall have been previously obtained and which
remain in effect.
Section 6.5. Financial Condition
(a) The Historical Financial Statements are materially complete and
correct and fairly present the financial condition and results of operations
of the Borrower and its Consolidated Subsidiaries as of and for the periods
covered thereby. There has been no material adverse change in the business,
property, assets, liabilities, condition (financial or otherwise),
operations, results of operations or prospects of the Borrower and its
Subsidiaries taken as a whole since the date of the audited financial
statements of the Borrower most recently delivered to the Agent under Section
5.1. or 8.2., as applicable.
(b) Except as set forth on Schedule 6.6. or in the financial statements
or notes thereto most recently delivered to the Agent under Section 8.1. or
8.2., to the actual knowledge of any Responsible Officer of the Borrower,
the Borrower and its Subsidiaries have no liabilities, contingent or
otherwise, which could reasonably be expected to have a Material Adverse
Effect.
(c) Except as otherwise disclosed in writing to the Agent and the
Lenders, to the actual knowledge of any Responsible Officer of the Borrower,
(i) the Acquisition Historical Financial Statements of the Seller fairly
present the financial condition and results of operations of the Seller as of
and for the periods covered thereby; (ii) the Acquisition Pro Forma Financial
Statements of the Seller, the Borrower and its Consolidated Subsidiaries
fairly present the combined financial condition and results of operations of
the Seller, the Borrower and its Consolidated Subsidiaries as of and for the
periods covered thereby and (iii) there has been no material adverse change
in the business, property, assets, liabilities, condition (financial or
otherwise), operations, results of operations or prospects of the Seller
since the end of such Seller's immediately preceding fiscal year.
Section 6.6. Litigation
Except as set forth on Schedule 6.6. or in any written notice delivered
by the Borrower pursuant to Section 8.4.(c)(D) or Section 8.5., there are no
actions, suits or proceedings at law or in equity by or before any
Governmental Authority now pending or, to the actual knowledge of any
Responsible Officer of the Borrower, threatened against the Borrower or any
other Loan Party or their respective business, property or rights (i) which
involve any Credit Document, any Acquisition Document or any Transaction or
(ii) which, if adversely determined could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect. There
exists no judgment, order, injunction or other restraint issued or filed
which is material to the Borrower or any other Loan Party, or any of their
respective businesses, properties or rights, or which prohibits or adversely
affects any of the Transactions.
Section 6.7. Federal Reserve Regulations
Neither the Borrower nor any of the other Loan Parties is engaged in the
business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock. No part of the proceeds of
any extension of credit hereunder, whether directly or indirectly, and
whether immediately, incidentally or ultimately, will be used (i) to purchase
or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation
of, or which is inconsistent with, the provisions of the Regulations of the
Board of Governors of the Federal Reserve System, including Regulations T, U
or X. As used herein, the term "Margin Stock" shall mean margin stock within
the meaning of Regulations T, U and X.
Section 6.8. ERISA
(a) Neither the Borrower nor any other Loan Party maintains or
contributes to any Employee Benefit Plan or Multiemployer Plan other than
those identified on Schedule 6.8. and those of which the Borrower has given
written notice to the Agent and the Lenders after the date of this Agreement.
(b) The Borrower and each other Loan Party are in compliance in all
material respects with all applicable provisions of ERISA and the Code with
respect to all Employee Benefit Plans. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to
such Plan has been determined to be exempt from federal income tax under
Section 501(a) of the Code. The actuarial present value of all accumulated
benefit obligations under each Plan, as disclosed in the most recent
actuarial report with respect to such Plan, does not exceed the fair market
value of the assets of such Plan. No material liability has been incurred by
the Borrower or any other Loan Party or any of their ERISA Affiliates which
remains unsatisfied for any taxes, penalties or other amount (other than
contributions in the ordinary course) with respect to any Employee Benefit
Plan or any Multiemployer Plan, and to the actual knowledge of any
Responsible Officer of the Borrower, no such material liability is expected
to be incurred.
(c) Neither the Borrower nor any other Loan Party has: (i) engaged in a
nonexempt prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code; (ii) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid; (iii) failed to make a required
contribution or payment to a Multiemployer Plan; or (iv) failed to make a
required installment or other required payment under Section 412 of the Code,
which, in the case of any of the immediately preceding clauses (i) through
(iv), could reasonably be expected to have a Material Adverse Effect.
(d) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan or Multiemployer Plan maintained or contributed to by the
Borrower or any other Loan Party which could reasonably be expected to have a
Material Adverse Effect.
(e) Except as set forth on Schedule 6.6. or in any written notice
delivered by the Borrower pursuant to Section 8.5., no proceeding, claim,
lawsuit and/or investigation is existing or, to the actual knowledge of any
Responsible Officer of the Borrower, threatened concerning or involving any
Employee Benefit Plan or Multiemployer Plan maintained or contributed to by
the Borrower or any other Loan Party which, if adversely determined could
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
Section 6.9. Taxes
Each of the Borrower and the other Loan Parties has filed all federal
income tax returns and all other tax returns and reports, domestic and
foreign, required to be filed by it, or filed appropriate extensions, and has
paid all taxes, assessments, fees and other governmental charges shown to be
due and payable by it on such returns or reports, in each case, the failure
of which to file or pay could reasonably be expected to have a Material
Adverse Effect. All such returns are true and correct in all material
respects. Each of the Borrower and the other Loan Parties has paid or, in
the case of taxes which are not yet due and payable or are being contested
in good faith, has provided adequate reserves for the payment of, all
federal, state and foreign taxes applicable for all prior fiscal years and
for the current fiscal year to the date hereof, the failure of which taxes to
pay could reasonably be expected to have a Material Adverse Effect. Neither
the Borrower nor any Loan Party has received notice of any proposed tax
assessment against the Borrower or any other Loan Party which could
reasonably be expected to have a Material Adverse Effect.
Section 6.10. Investment Company Act
Neither the Borrower nor any other Loan Party is an "investment company"
nor a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
Section 6.11. Public Utility Holding Company Act
Neither the Borrower nor any other Loan Party is a "holding company" nor
an "affiliate" of a "holding company" or a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of
1935, as amended.
Section 6.12. Material Agreements
Other than this Agreement, the other Credit Documents, the Acquisition
Documents and except as set forth on Schedule 6.12. or in any written notice
delivered by the Borrower to the Agent and the Lenders after the date of this
Agreement, neither the Borrower nor any other Loan Party is a party to any
agreement or instrument or subject to any corporate restriction that has had
or could reasonably be expected to have a Material Adverse Effect.
Section 6.13. Environmental and Safety Matters
Except as set forth on Schedule 6.13. or in any written notice delivered
by the Borrower pursuant to Section 8.4.(c), and except for such of the
following as, individually or in the aggregate, would not result in liability
to the Borrower or any other Loan Party in an amount in excess of $4,000,000:
(a) The Borrower and each of the other Loan Parties have obtained all
permits, licenses and other authorizations which are required under
applicable Environmental and Safety Laws (collectively "Permits"), all of
which are listed on Schedule 6.13. hereto.
(b) The Borrower and each of the other Loan Parties have complied and
are in compliance with the terms and conditions of all Permits and with all
applicable Environmental and Safety Laws.
(c) With respect to the Borrower and each of the other Loan Parties, no
notice, notification, demand, request for information, citation, summons or
order has been issued, no complaint has been filed, no penalty has been
assessed and no investigation is pending or, to the actual knowledge of any
Responsible Officer of the Borrower, threatened by any Person with respect to
any alleged failure to obtain any Permits or any violation of any applicable
Environmental and Safety Laws, or with respect to the generation, treatment,
storage, recycling, transportation, discharge or disposal, or any Release or
threatened Release, of any Hazardous Materials.
(d) No property or facility now or previously owned or operated by the
Borrower or any of the other Loan Parties has been, to the actual knowledge
of any Responsible Officer of the Borrower, or is presently operated by the
Borrower or any of the other Loan Parties in a manner which requires
permitting as a hazardous waste treatment, storage or disposal facility for
purposes of RCRA or any analogous state law.
(e) None of the following is (i) present at any property or facility
now owned or operated by the Borrower or any of the other Loan Parties or
(ii) to the actual knowledge of any Responsible Officer of the Borrower,
present at any property or facility previously owned or operated by the
Borrower or any of its Subsidiaries: (A) polychlorinated biphenyls contained
in electrical or other equipment; (B) asbestos-containing insulation or
building material; or (C) active or inactive underground storage tanks.
(f) No Hazardous Materials have been released by the Borrower or any of
the other Loan Parties into the environment at or from any property or
facility now or previously owned or operated by the Borrower or any of the
other Loan Parties so as to give rise to any present or future liability or
obligation under any applicable Environmental and Safety Laws.
(g) Neither the Borrower nor any of the other Loan Parties have
transported or, to the actual knowledge of any Responsible Officer of the
Borrower, arranged for the transportation of any Hazardous Material to any
location which is on the CERCLA National Priorities List (or proposed for
such listing), the CERCLIS list or any comparable state list or which is the
subject of federal, state or local enforcement actions which reasonably could
give rise to liability of the Borrower or any of its Subsidiaries under any
applicable Environmental and Safety Laws.
(h) No oral or written notification of a Release of a Hazardous
Material has been made by or on behalf of the Borrower or any of the other
Loan Parties and no property or facility now owned or operated by the
Borrower or any of the other Loan Parties is on the CERCLA National
Priorities List (or proposed for such listing), the CERCLIS list or any
comparable state list. To the actual knowledge of any Responsible Officer
of the Borrower, no property or facility previously owned or operated by the
Borrower or any of its Subsidiaries is on the CERCLA National Priorities List
(or proposed for such listing), the CERCLIS list or any comparable state
list.
(i) No Liens have arisen under or pursuant to any Environmental and
Safety Laws on any property or facility now owned or operated by the Borrower
or any of the other Loan Parties, and no governmental actions have been taken
or, to the actual knowledge of any Responsible Officer of the Borrower, are
in process which could subject any such property or facility to such Liens.
To the actual knowledge of any Responsible Officer of the Borrower, no Liens
have arisen under or pursuant to any Environmental and Safety Laws on any
property or facility previously owned or operated by the Borrower or any of
the other Loan Parties, and no governmental actions have been taken or are in
process which could subject any such property or facility to such Liens.
Neither the Borrower nor any of its Subsidiaries would be required to place
any notice or restriction relating to the presence of Hazardous Materials in
any deed to any such property or facility.
(j) To the actual knowledge of any Responsible Officer of the Borrower,
there have been no environmental investigations, studies, audits, tests,
reviews or other analyses of any property or facility now or previously owned
or operated by the Borrower or any of the other Loan Parties which have not
been provided to the Agent.
(k) To the actual knowledge of any Responsible Officer of the Borrower,
neither the Borrower nor any of the other Loan Parties have assumed,
succeeded to or otherwise become liable (contingently or otherwise) for the
obligations of any other Person pursuant to Environmental and Safety Laws,
whether by contract, by operation of law or otherwise.
(l) To the actual knowledge of any Responsible Officer of the Borrower,
without limiting the generality of the foregoing, there are no other facts,
events or conditions relating to the past or present operations, properties
or facilities of the Borrower or any of the other Loan Parties which
reasonably could give rise to liability of the Borrower or any Loan Party
under any Environmental and Safety Laws.
To the extent any of the foregoing representations in this Section 6.13.
relate to a property or facility acquired pursuant to a Purchase Agreement,
such representations are based only on the actual knowledge of any
Responsible Officer of the Borrower.
Section 6.14. Subsidiaries
Except as set forth on Schedule 6.16. or in any written notice delivered
by the Borrower pursuant to Section 8.4.(m), the Borrower has no
Subsidiaries, and except as set forth on such Schedule, all other Loan
Parties are Wholly-Owned Subsidiaries of the Borrower. The aggregate book
value of the assets of the FSC does not exceed 5.0% of the book value of the
total consolidated assets of the Borrower and its Subsidiaries.
Section 6.15. Compliance with Law
The Borrower and each of the other Loan Parties are in compliance with
all Applicable Laws of, and all applicable restrictions imposed by, all
Governmental Authorities in respect of the conduct of their respective
business and the ownership of their respective property (including Applicable
Laws relating to environmental standards and controls), except such
noncompliance as could not reasonably be expected to individually or in the
aggregate, have a Material Adverse Effect. Each of the Borrower and its
Subsidiaries has all Regulatory Permits that are required by its customers
for the operation of each of the Donor Centers as such Donor Centers are
currently or anticipated to be operated except for Regulatory Permits the
failure of which to have could not reasonably be expected to have a Material
Adverse Effect.
Section 6.16. Capitalization
As of the date of this Agreement, Schedule 6.16. correctly sets forth
the corporate structure and ownership interests of each of the Loan Parties
(other than the Borrower), including the correct legal name of each such Loan
Parties, and the shareholders or other Persons holding equity interests in
such Loan Parties and their percentage equity or voting interest. Except as
set forth on Schedule 6.16. or in any written notice delivered by the
Borrower to the Agent, there are no outstanding securities convertible into
or exchangeable for any capital stock (collectively, "capital stock
equivalents") of any Loan Party (excluding the Borrower) or any outstanding
subscriptions, options, warrants, calls, rights (including without
limitation, preemptive rights) or other agreements or commitments of any
nature relating to or exercisable for capital stock or capital stock
equivalents of any Loan Party (excluding the Borrower).
Section 6.17. Title to Properties
Except as set forth on Schedule 6.17. or in any written notice delivered
by the Borrower to the Agent after the date of this Agreement, each of the
Borrower and the other Loan Parties have good, indefeasible and insurable
title to, or valid leasehold interests in, all its real properties and good
title to its other assets, free and clear of all Liens other than Permitted
Liens.
Section 6.18. Conduct of Business.
The Borrower and its Subsidiaries are engaged in the business of
providing therapeutic and diagnostic biologic-based products and related
healthcare services.
Section 6.19. Representations and Warranties in Acquisition Documents
Each representation and warranty made or deemed made by the Borrower or
any other Loan Party in any of the other Credit Documents and any Acquisition
Documents are hereby deemed made to and for the benefit of the Agent, the
Lenders and the Swingline Lender as if the same were set forth herein in
full.
Section 6.20. Performance of Contracts, Etc.
Neither the Borrower nor any of the other Loan Parties is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any contract, agreement, indenture,
mortgage, lease or other binding understanding or arrangement of any such
Person, and no condition exists that, with the giving of notice or the lapse
of time or both, would constitute such a default, in each case, that could
reasonably be expected to have a Material Adverse Effect.
Section 6.21. Disclosure
No representation or warranty of the Borrower or any other Loan Party
made or deemed made in this Agreement, any other Credit Document, any
Acquisition Document, the financial statements referred to in Section
5.1.(a)(xix), or 5.3.(a) and (b), or any other document, certificate or
written statement furnished to the Agent or any Lender by or on behalf of
any such Person for use in connection with any of the Transactions, excluding
Projections (defined below), contained, as of the date made or deemed made or
as of the date thereof, any untrue statement of a material fact or omitted,
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. All financial projections
concerning the Borrower and its Subsidiaries that have been or are hereafter
made available to the Agent, any Lenders or the Swingline Lender by the
Borrower or any of its representatives (the "Projections") have been or will
be prepared in good faith based upon assumptions the Borrower believes to be
reasonable. There is no material fact known to the Borrower that has had or
will have a Material Adverse Effect and that has not been disclosed herein or
in such other documents, certificates and statements furnished to the Agent
or any Lender for use in connection with the transactions contemplated
hereby.
Section 6.22. Year 2000
On the basis of a comprehensive review and assessment of the systems and
equipment of the Borrower and its Subsidiaries and inquiry made of the
material suppliers, vendors and customers of the Borrower and its
Subsidiaries, the Borrower reasonably believes that the Year 2000 Problem as
it relates to the computer systems of the Borrower and its Subsidiaries,
including costs of remediation, could not reasonably be expected to have a
Material Adverse Effect.
Section 6.23. Survival of Representations and Warranties, Etc.
All representations and warranties made under this Agreement and the
other Credit Documents shall be deemed to be made at and as of the Agreement
Date, the Closing Date and at and as of the date of the occurrence of any
Credit Event, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date). All such representations and warranties shall survive
the effectiveness of this Agreement, the execution and delivery of the Credit
Documents and the making of the Loans and the issuance of the Letters of
Credit.
Section 6.24. Representations Regarding Acquisitions
To the extent any representation or warranty contained in this Article
VI. relates to an Acquisition and the Transactions relating thereto,
including without limitation, the representation contained in Section 6.5.(c)
regarding the Acquisition Historical Financial Statements of a Seller, such
representation or warranty shall be deemed made only on and as of (a) the
date such Acquisition has been consummated and (b) the date of the making of
any Loan any of the proceeds of which are used in whole or in part to finance
such Acquisition or the date of issuance of any Letter of Credit issued in
connection with such Acquisition, in each case with respect to Acquisitions
consummated on or after the date hereof.
ARTICLE VII. AFFIRMATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 12.6., all of the Lenders) shall
otherwise consent in the manner provided for in Section 12.6., the Borrower
shall, and (as applicable) will cause each of the other Loan Parties to:
Section 7.1. Corporate Existence; Compliance with Law; Etc.
Except as not prohibited by this Agreement: (a) preserve and maintain
its existence, and all of its rights, privileges and franchises, including
without limitation, obtaining and maintaining all necessary FDA approvals and
QPP certification for all of its Donor Centers; (b) comply in all respects
with the requirements of all Applicable Laws, rules, regulations and orders
of all Governmental Authorities; (c) maintain all of its properties used in
its business in sufficient working order and condition so as to permit such
Loan Party to conduct its business; and (d) preserve and enforce its rights
(including rights to indemnification) under any Material Contracts, except in
each case, where the failure to do so would not have a Material Adverse
Effect.
Section 7.2. Insurance
Keep insured by financially sound and reputable insurers all property of
a character usually insured by entities engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such businesses and carry such other
insurance as is usually carried by such businesses. Without limiting the
obligations of the Borrower and the other Loan Parties under the foregoing
provisions of this Section, in the event the Borrower or any of the other
Loan Parties shall fail to maintain in full force and effect insurance as
required by the foregoing provisions of this Section or any of the other
Credit Documents, then the Agent, on behalf of the Lenders, may upon notice
to the Borrower or such other Loan Party, but shall have no obligation to,
procure insurance covering the interests of the Agent and the Lenders in such
amounts and against such risks as the Agent shall deem appropriate, and the
Borrower shall reimburse the Agent in respect of any premiums paid by the
Agent as provided in Section 12.2.
Section 7.3. Obligations and Taxes
Pay its Indebtedness and other obligations in accordance with their
terms and pay and discharge promptly all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect
of its property, and in any event before the same shall become delinquent or
in default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any part thereof which could reasonably be expected to have a Material
Adverse Effect; provided, however, that such payment and discharge shall not
be required so long as the validity or amount thereof shall be contested in
good faith by appropriate proceedings which effectively stay the execution of
any such Lien and the Borrower shall (or shall cause the applicable Loan
Party to) set aside on its books adequate reserves in accordance with GAAP
with respect thereto.
Section 7.4. Maintaining Records; Access to Properties and Inspections
Maintain all financial records in accordance with GAAP and permit any
representatives designated by the Agent or any Lender upon reasonable notice
to visit and inspect the properties of the Borrower or any of the other Loan
Parties (such visits and inspections to be at the sole cost and expense of
the Agent or such Lender, so long as an Event of Default is not existing) and
to inspect their financial and business records (except records and documents
subject to the attorney-client privilege and the work product doctrine) and
make extracts therefrom and copies thereof, all at reasonable times and in a
manner so as not to unreasonably disrupt the operations of the Borrower or
the other Loan Parties and as often as reasonably requested, and permit the
Agent or any Lender or any representatives designated by the Agent or any
Lender upon reasonable notice to discuss the affairs, finances and condition
of the Borrower or any of the other Loan Parties with the officers thereof
and independent accountants therefor; provided, however, that (i) any
representatives designated by the Agent or any Lender shall be in the
business of acting as crisis managers or business consultants and shall be
bound by the same or similar internal policies with regard to confidential
information as is the Agent or such Lender and (ii) the Agent or any Lender
or any representatives designated by the Agent or any Lender shall not
discuss the affairs, finances and condition of the Borrower or any of the
other Loan Parties with the Borrower's independent accountants unless and
until the Agent or such Lender determines in its reasonable discretion that
discussions directly with the Borrower or the officers of the Borrower have
failed to satisfy the inquiries of the Agent or such Lender or its
representatives. Not in limitation of the foregoing, the Borrower shall, and
shall cause each of the other Loan Parties to, keep complete, accurate and
detailed financial records with respect to all amounts of all Loans made
available to any of the Subsidiaries by way of loans.
Section 7.5. Environmental and Safety Matters
For the purposes of protecting the Agent's security interest in the
Collateral and preserving the Borrower's ability to satisfy its Obligations:
(a) Comply with all Environmental and Safety Laws applicable to it or
any of its property or facilities in all material respects.
(b) Keep its properties and facilities free from any Liens arising
under any Environmental and Safety Laws which could reasonably be expected to
have a Material Adverse Effect.
(c) Respond promptly to any Release or threatened Release of any
Hazardous Materials in a manner which complies in all material respects with
all applicable Environmental and Safety Laws and mitigates any associated
risk to human health or the environment to the maximum extent commercially
practicable.
(d) If the Agent at any time has a reasonable basis to believe that any
property or facility owned or operated by the Borrower or any other Loan
Party has been or may be either (i) operated in violation of any applicable
Environmental and Safety Laws; (ii) contaminated with any Hazardous Materials
at or above levels requiring removal or remedial action under applicable
Environmental and Safety Laws; or (iii) subject to any government-imposed
obligation to conduct any environmental investigation or clean-up, any of
which, in the good faith judgment of the Agent may impair in any material
respect the value of the Collateral or the ability of the Borrower or any of
the other Loan Parties to satisfy any of their respective Obligations, the
Borrower shall, upon the written request of the Agent, at the Borrower's sole
cost and expense, conduct such investigation or study, through retention of a
consulting firm reasonably satisfactory to the Agent, as is necessary in the
good faith judgment of the Agent to demonstrate that no such impairment could
reasonably be expected to have a Material Adverse Effect.
Section 7.6. Additional Security
If and to the extent requested by the Agent or the Requisite Lenders
from time to time, after the occurrence and during the continuation of a
Default or Event of Default, execute and deliver such additional documents
and take such other action as may be necessary or desirable in the reasonable
opinion of the Agent or the Requisite Lenders, in order to assure and confirm
that all Obligations are secured in a manner acceptable to the Agent or the
Requisite Lenders by a first priority Lien on substantially all present and
future assets of the Borrower and the other Loan Parties (other than any
Foreign Subsidiary) subject only to Permitted Liens.
Section 7.7. Use of Proceeds; Letters of Credit.
Use the proceeds of all Loans and all Letters of Credit for working
capital, capital expenditures, and other lawful corporate purposes, including
permitted stock repurchases and permitted Acquisitions. The Borrower shall
not, and shall not permit any Subsidiary or other Loan Party to, use any part
of such proceeds or Letters of Credit to purchase or carry, or to reduce or
retire or refinance any credit incurred to purchase or carry, any margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.
Section 7.8. Additional Material Subsidiaries.
Within 60 calendar days of any Person becoming a Subsidiary after the
Agreement Date, the Borrower shall deliver to the Agent each of the items
that would be required to be delivered under Section 5.3. if such Subsidiary
were a New Subsidiary being acquired pursuant to an Acquisition (but only to
the extent such items are not otherwise required to be delivered to the Agent
under such Section). Notwithstanding any provision of this Agreement or any
other Loan Document, (a) no Foreign Subsidiary shall be required to execute
and deliver a Guaranty and (b) a Loan Party shall only be obligated to pledge
under the Pledge Agreement the maximum amount of the total combined voting
power of all classes of stock entitled to vote of its respective Foreign
Subsidiaries that it may so pledge without such Foreign Subsidiary being
deemed to be holding United States property by virtue of 26 C.F.R.
1.956-2(c)(2).
ARTICLE VIII. INFORMATION
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 12.6., all of the Lenders) shall
otherwise consent in the manner set forth in Section 12.6., the Borrower
shall, and (as applicable) will cause each of the Loan Parties to, furnish to
each Lender (or to the Agent if so provided below) at its Lending Office:
Section 8.1. Quarterly Financial Statements.
As soon as available and in any event within 45 days after the end of
each fiscal quarter of each fiscal year of the Borrower (other than the
fourth fiscal quarter of any fiscal year), consolidated statements of income,
stockholders' equity (if requested by the Agent) and cash flows of the
Borrower and its Consolidated Subsidiaries for such period and for the period
from the beginning of the current fiscal year to the end of such fiscal
quarter, and the related consolidated balance sheets as of the end of such
fiscal quarter, and accompanied by a certificate of the chief financial
officer of the Borrower, which certificate shall state that such consolidated
financial statements fairly present the consolidated financial condition and
results of operations of the Borrower and its Consolidated Subsidiaries in
accordance with GAAP (subject to normal year-end adjustments and absence of
full footnote disclosures).
Section 8.2. Year-End Statements.
As soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, audited consolidated statements of income,
stockholders' equity and cash flow of the Borrower and its Consolidated
Subsidiaries for such fiscal year and the related audited consolidated
balance sheet as of the end of such fiscal year, and accompanied by (i) an
unqualified report of the Borrower's independent auditors (who shall be of
nationally recognized standing), stating that such financial statements
fairly present the consolidated financial condition and results of operations
of the Borrower and its Consolidated Subsidiaries in accordance with GAAP and
(ii) if requested by the Agent, a schedule setting forth the consolidating
statements of income, stockholders' equity and cash flow of the Borrower,
Serologicals, Limited and Seramed for such fiscal year and the related
unaudited consolidating balance sheet as of the end of such fiscal year of
such Loan Parties.
Section 8.3. Compliance Certificate.
At the time the financial statements are furnished pursuant to Section
8.1. and8.2., a certificate of the chief financial officer of the Borrower
substantially in the form of Exhibit P (a "Compliance Certificate") (a) to
the effect that no Default or Event of Default has occurred and is continuing
(or, if any Default or Event of Default has occurred and is continuing,
describing the same in reasonable detail and describing the action that the
Borrower (or such other Person, as appropriate) has taken and proposes to
take with respect thereto) and (b) setting forth in reasonable detail the
computations necessary to determine whether the Borrower is in compliance
with each of the subsections of Section 9.1., and with Sections 9.2. and
9.4., in each case as of the end of the fiscal period for which such
financial statements are delivered.
Section 8.4. Other Information.
(a) promptly after any Default or Event of Default has occurred, a
notice of such Default or Event of Default describing the same in reasonable
detail together with a description of the action that the Borrower (or such
other appropriate party, as the case may be) has taken and proposes to take
with respect thereto;
(b) promptly after receipt of written request from the Agent or any
Lender, such other information regarding the business, affairs or financial
condition of the Borrower or any other Loan Party as the Agent or such Lender
may reasonably request;
(c) as soon as possible, and in any event within 5 Business Days after
any Responsible Officer of the Borrower or any other Loan Party receives
notice or otherwise has actual knowledge that any of the following events
have occurred or exist, a statement signed by the chief financial officer of
the Borrower or other Responsible Officer setting forth details regarding
such event or condition and no later than 15 Business Days after any
Responsible Officer of the Borrower or any other Loan Party receives such
notice or otherwise obtains such actual knowledge, a statement signed by such
chief financial officer or other Responsible Officer setting forth the
details regarding the action, if any, which the Borrower or such other Loan
Party proposes to take with respect thereto (along with all relevant
documentation): (A) any violation by the Borrower or any other Loan Party of
any Environmental and Safety Laws which could reasonably be expected to have
a Material Adverse Effect; (B) any request for information or notice of
potential responsibility under Environmental and Safety Laws with respect to
cleanup of any property or facility of the Borrower or any other Loan Party
or any offsite location which could reasonably be expected to have a Material
Adverse Effect; (C) the imposition of any Lien on any assets of the Borrower
or any other Loan Party under Environmental and Safety Laws which could
reasonably be expected to have a Material Adverse Effect; (D) the
commencement of any litigation, enforcement action or investigation with
respect to the Borrower or any other Loan Party under Environmental and
Safety Laws which if determined adversely to the Borrower or such other Loan
Party, could reasonably be expected to have a Material Adverse Effect; or (E)
any Release or threatened Release of any Hazardous Material at or from any
property or facility of the Borrower or any other Loan Party which could
reasonably be expected to have a Material Adverse Effect;
(d) promptly upon the Agent's request, copies of all registration
statements, reports on Forms 10-K, 10-Q and 8-K (or their equivalents), proxy
statements and all other periodic reports, which the Borrower or any other
Loan Party shall have provided to its stockholders or filed with the
Securities and Exchange Commission (or any governmental agency substituted
therefor), any national securities exchange or the National Association of
Securities Dealers, Inc.;
(e) promptly upon the Agent's request, a copy of each report of any
Person (including ABRA) or Governmental Authority with respect to the
condition of any Donor Center citing any material adverse condition or
deficiency at such Donor Center;
(f) promptly upon the Agent's request, each annual inspection report of
the FDA with respect to any Loan Party's Donor Centers;
(g) promptly upon receipt thereof, copies of all notices given or
received by the Borrower or any other Loan Party with respect to
noncompliance with any term or condition related to any Subordinated Debt;
(h) promptly upon receipt thereof, copies of any notification or other
communication with respect to the Borrower's or any other Loan Party's rights
or obligations under any of the Acquisition Documents relating to any
Significant Acquisition and, promptly upon discovery thereof, notice and a
written description of all claims or potential claims for indemnification
under any such Acquisition Documents;
(i) prompt notice of the terms of any proposed amendment to, or
modification or waiver of any of the material terms of any of the Acquisition
Documents relating to any Significant Acquisition;
(j) promptly upon the approval thereof by the Board of Directors of the
Borrower, capital and operating expense budgets, projections of sources and
applications of funds and profit and loss projections for the Borrower (and
each of its Consolidated Subsidiaries) on a consolidated basis for each month
of the next succeeding fiscal year, all itemized in reasonable detail and
prepared by the Borrower. Any material revisions made in such budgets or
projections shall be furnished promptly to the Lenders;
(k) promptly upon the Agent's request, a production report for the
Borrower and its Subsidiaries in form and detail reasonably acceptable to the
Agent, setting forth for the month ending immediately prior to such request,
among other things (i) the number of donors at each Donor Center during such
month and (ii) the number of liters of plasma produced at such center during
such month;
(l) at least two Business Days prior to the occurrence thereof, written
notice of any Disposition resulting in Net Proceeds in excess of $5,000,000;
(m) subject to the notification provisions of Section 5.3. or 5.4.,
prompt notice of the acquisition, incorporation or other creation of any
Subsidiary, the purpose for such Subsidiary and the nature of the assets and
liabilities thereof;
(n) as soon as possible, and in any event within thirty days after the
Borrower or any other Loan Party knows or has reason to know that any of the
events or conditions specified below have occurred or exist, a statement
signed by the chief financial officer of the Borrower setting forth details
respecting such event or condition and the action, if any, which the
Borrower, any other Loan Party or its ERISA Affiliates proposes to take with
respect thereto (and a copy of any report or notice required to be filed with
or given to the PBGC by the Borrower or any other Loan Party or any of its
ERISA Affiliates as of such date with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued thereunder, with respect to a Plan of the
Borrower or any other Loan Party or any of its ERISA Affiliates, as to
which the PBGC has not by regulation waived the requirement of
Section 4043 (a) of ERISA that it be notified within 30 days of the
occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA
shall be a reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a notice of intent
to terminate any Plan of the Borrower or any other Loan Party or any of
its ERISA Affiliates or the termination of any such Plan;
(iii) the institution by the PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan of the Borrower or any other Loan Party
or any of its ERISA Affiliates, or the receipt by the Borrower or any
other Loan Party or any of its ERISA Affiliates of a notice from a
Multiemployer Plan of the Borrower or any other Loan Party or any of its
ERISA Affiliates that such action has been taken by the PBGC with
respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by the Borrower or any other
Loan Party or any of its ERISA Affiliates under Section 4201 or 4204 of
ERISA from a Multiemployer Plan, or the receipt by the Borrower or any
other Loan Party or any such ERISA Affiliate of notice from such a
Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA, which in any such case could
reasonably be expected to result in the imposition of withdrawal
liability upon the Borrower or any other Loan Party or any of its ERISA
Affiliates;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Borrower or any other Loan Party or any
of its ERISA Affiliates to enforce Section 515 of ERISA, which
proceeding is not dismissed within 30 days; and
(vi) the fair market value of the assets of any Plan does not
equal or exceed the accumulated benefit obligations with respect to such
Plan, as disclosed on the most recent actuarial report with respect to
such Plan; and
(o) promptly upon the determination by the Borrower that any computer
application which is material to the operations of the Borrower, any
Subsidiary or any other Loan Party, or the receipt of notice by the Borrower,
any Subsidiary or any other Loan Party that any material vendors or suppliers
to any of them, will not, on a timely basis, be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000,
except to the extent such failure is not reasonably expected to have a
Material Adverse Effect.
Section 8.5. Litigation
Promptly (and in any event within three Business Days of receipt) give
to the Agent notice of the filing or commencement of, or any written notice
of intention of any Person to file or commence, any action, suit or
proceeding affecting the Borrower or any of the other Loan Parties, whether
at law or in equity by or before any Governmental Authority which could
reasonably be expected to result in liability to the Borrower or any of the
other Loan Parties in an amount equal to or exceeding $4,000,000.00
(including the amount of any deductible paid or required to be paid by the
Borrower or any other Loan Party under the terms of its insurance policies,
but net of any amounts acknowledged in writing by the applicable insurer(s)
to be fully covered by insurance) or would otherwise have a Material Adverse
Effect, and of any materially adverse development in respect of such legal or
other proceedings.
ARTICLE IX. NEGATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 12.6., all of the Lenders) shall
otherwise consent in the manner set forth in Section 12.6., the Borrower
shall not, nor will it permit any Loan Parties to, directly or indirectly:
Section 9.1. Financial Covenants.
Permit:
(a) Ratio of Funded Debt to Total Capitalization. The ratio of
(i) Funded Debt to (ii) Total Capitalization at the end of any fiscal
quarter, to be greater than 0.50 to 1.0;
(b) Ratio of Funded Debt to EBITDA. The ratio of (a) Funded Debt to
(b) EBITDA at the end of any fiscal quarter for the four fiscal quarter
period then ending, to be greater than 3.0 to 1.0;
(c) Fixed Charge Coverage Ratio. The ratio, at the end of any fiscal
quarter, of (a) Cash Flow for the four fiscal quarter period then ending to
(b) (i) Debt Service for such period plus (ii) Interest Expense for such
period, to be less than 1.50 to 1.0; or
(d) Rental Expense. Permit the Rental Expense during any four fiscal
quarter period to exceed 6.0% of consolidated net sales of the Borrower and
its Consolidated Subsidiaries during such four fiscal quarter period.
(e) Capital Expenditures. Permit the aggregate amount of Capital
Expenditures to exceed the following amounts during any fiscal year:
(i) $22,000,000 during the fiscal year ending December 27, 1999 and
(ii) during any fiscal year thereafter, 50.0% of EBITDA for the immediately
preceding fiscal year; provided that up to 50% of any such amount, if not so
expended in the fiscal year for which it is permitted may be carried over for
expenditure in the next following fiscal year (but no fiscal year
thereafter). The limitations of this subsection (e) shall not apply to
Capital Expenditures to the extent financed with Net Proceeds resulting from
any Disposition expressly permitted under Section 9.9. or any other term of
this Agreement or any other Credit Document.
Section 9.2. Indebtedness and Guarantees.
Create, incur or suffer to exist any Indebtedness or Guarantees except
(a) Indebtedness to the Agent and the Lenders created hereunder and under any
of the Credit Documents; (b) Indebtedness existing on the Closing Date and
described on attached Schedule 9.2.; (c) additional Indebtedness and
Guarantees (which do not constitute Subordinated Debt) in an aggregate amount
not to exceed $10,000,000 at any time outstanding; (d) Indebtedness otherwise
permitted by Section 9.4.; and (e) Subordinated Debt.
Section 9.3. Prohibition on Fundamental Changes
Effect any of the following: (i) any transaction of merger,
consolidation, recapitalization, reorganization, liquidation or dissolution
(other than the merger of a Subsidiary of the Borrower with and into the
Borrower pursuant to which the Borrower is the surviving corporation or with
and into any Wholly-Owned Subsidiary of the Borrower pursuant to which such
Wholly-Owned Subsidiary is the surviving corporation; or (ii) a Disposition
of all or substantially all of the assets of the Borrower and its
Subsidiaries taken as a whole to any Person; or (iii) engage in any line of
business other than those, or similar to those, described in Section 6.18.;
or (iv) any Acquisition or any other transaction of acquisition of another
Person, or of substantially all of the assets of another Person, or of a
distinct operating division of another Person, unless (A) at the time of such
transaction, such other Person is engaged in, or such assets are to be used
in, the same or similar line(s) of business as those described in Section
6.18., (B) no Default or Event of Default has occurred and is continuing or
would occur after giving effect to such transaction, (C) the applicable
conditions contained in Section 5.3. or Section 5.4., as applicable, have
been satisfied; (D) the consideration (including the items of consideration
enumerated in the definition of the term "Significant Acquisition") payable
by the Borrower and its Subsidiaries with respect to such Acquisition,
together with the aggregate amount of all other such consideration with
respect to all Acquisitions consummated during the previous four fiscal
quarter period, will not, without the prior written consent of the Requisite
Lenders, exceed (x) 200% of EBITDA for the four fiscal quarter period most
recently ending provided that the ratio of Funded Debt to EBITDA of the
Borrower and its Consolidated Subsidiaries as determined in accordance with
Section 9.1.(b) is less than or equal to 2.0 to 1.0 as of the end of such
four fiscal quarter period or (y) 150% of EBITDA for such four fiscal quarter
period in any other case; and (E) in the case of a Significant Acquisition,
the Requisite Lenders shall have given their prior written consent thereto.
Section 9.4. Investments.
Make or permit to remain outstanding any Investments except
(i) Permitted Investments, (ii) the ownership of the capital stock of or other
equity interests in subsidiaries by the Borrower or its Subsidiaries, the
acquisition of which is permitted by Section 9.3.(iv), and the ownership of
capital stock of the Borrower, the acquisition of which is otherwise
permitted hereunder, (iii) loans or advances to Subsidiaries from the
Borrower, (iv) loans or advances to the Borrower by one or more of its
Subsidiaries, provided that the repayment of any such loans or advances is
subordinated in writing in a manner satisfactory to the Agent to the prior
satisfaction in full of the Obligations and (v) other Investments not of the
types described in the preceding subsections (i) through (iv), including
without limitation, ownership interests in joint ventures and ownership of
capital stock of or other equity interests in a Person that is not a
Subsidiary, having an aggregate cost to the Borrower and its Subsidiaries not
to exceed 10% of Consolidated Total Assets of the Borrower at any time
outstanding. As of the date hereof, all Investments of the type described in
the immediately preceding clause (v) and having a cost to the Borrower or any
of its Subsidiaries in excess of $1,000,000 are described on Schedule 9.4.
Section 9.5. Limitation on Liens
Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, except
Permitted Liens.
Section 9.6. Restricted Payments.
Make any Restricted Payment; provided, however, that (a) Subsidiaries of
the Borrower may make dividends, payments or other distributions to the
Borrower or to any Wholly-Owned Subsidiary of the Borrower; and (b) subject
to the other terms and conditions hereof and so long as no Default or Event
of Default shall have occurred and be continuing or would result therefrom,
the Borrower may (i) purchase, redeem or otherwise acquire any outstanding
shares of its capital stock or other equity securities in an aggregate amount
not to exceed $30,000,000 during the term of this Agreement, (ii) in addition
to Restricted Payments permitted under the immediately preceding clause (i),
if the Borrower shall receive Net Proceeds from the Seramed Disposition in an
amount equal to or exceeding $20,000,000, purchase, redeem or otherwise
acquire additional outstanding shares of its capital stock or other equity
securities in an aggregate amount not to exceed $20,000,000 plus one-half of
the amount of such Net Proceeds in excess of $20,000,000 and (iii) make other
Restricted Payments (excluding purchases, redemptions other acquisitions of
outstanding shares of capital stock or other equity securities).
Section 9.7. Accounting.
Change its accounting methods or practices (except as required to
conform to changes in GAAP or permitted by GAAP) or change its fiscal year-
end to a date other than December 31. If any financial statements delivered
by the Borrower pursuant to Article VIII. are presented in such a manner that
such financial statements could not set forth in comparative form the
corresponding figures for the preceding fiscal year, the Borrower shall
advise the Agent and the Lenders of such fact upon the delivery of such
financial statements and upon the Agent's or any Lender's request shall
prepare a report in form and substance reasonably satisfactory to such Person
detailing the differences in the presentation of such financial statement and
the financial statements for the immediately preceding fiscal year.
Section 9.8. Amendment of Certain Documents.
Enter into any amendment, modification or waiver of any of the terms of
any of the Acquisition Documents which amendment, modification or waiver
would have a Material Adverse Effect.
Section 9.9. Sales of Assets
Sell, lease, assign, transfer or otherwise dispose of any of the
Collateral; provided, however, so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom: (a) a Loan
Party may dispose of its Inventory in the ordinary course of its business,
(b) a Loan Party may dispose of excess, obsolete or used Equipment so long
as, if so required for the conduct of such Loan Party's business in any
material respect, any such Equipment is replaced with other Equipment which
serves the same or a similar purpose as the replaced Equipment, (c) a Loan
Party may otherwise dispose of Collateral which does not, together with all
other Collateral disposed of by the Loan Parties after the date of this
Agreement (excluding Collateral permitted to be disposed of under the
immediately preceding clauses (a) and (b)), have an aggregate book value in
excess of $10,000,000 and (d) the Loan Parties may effect the Seramed
Disposition so long as (i) the Agent and each Lender shall have received
prior to the consummation of such Disposition (or initial transaction in the
case of a series of related transactions) a pro forma balance sheet,
statement of operations and statement of cash flows for the Borrower and its
Consolidated Subsidiaries after giving pro forma effect to such Disposition
for the four fiscal quarter period most recently ended and for the
immediately following four fiscal quarter period (the "Subsequent Pro Forma
Statements"), all such financial statements to be in form and substance
satisfactory to the Agent, (ii) the increase, if any, in the amount by which
EBITDA is reduced giving pro forma effect to the Seramed Disposition as
determined from the Subsequent Pro Forma Statements compared to the amount by
which EBITDA is reduced giving pro forma effect to the Seramed Disposition as
determined by reference to the pro forma financial statements of the Borrower
and its Subsidiaries contained in the Confidential Offering Memorandum dated
June 1999 distributed to the Lenders, does not exceed $5,000,000 and (iii) no
Default or Event of Default has occurred and is continuing or would occur
after giving effect to such Disposition. Notwithstanding anything else
contained herein or in the other Credit Documents, consummation of the
Seramed Disposition in accordance with this Section, or other Dispositions
permitted under this Section, shall not constitute a breach or Event of
Default hereunder or under the other Credit Documents. In addition, upon the
consummation of the Seramed Disposition in accordance with this Section, or
other Dispositions permitted under this Section, the Agent and the Lenders
shall, at the sole cost and expense of the Borrower, take all actions and
execute all documents (x) necessary to release all Liens and Collateral
relating to Seramed and its Subsidiaries and release such Persons as parties
from the Credit Documents or (y) as the Borrower may otherwise reasonably
request in connection with the consummation of the Seramed Disposition, or
other Dispositions permitted under this Section.
ARTICLE X. DEFAULT
Section 10.1. Events of Default.
Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable Law or pursuant to any judgment or order
of any Governmental Authority:
(a) Payments under Credit Documents. The Borrower shall default in the
payment when due of any principal of any Loan. The Borrower shall default in
the payment when due of any interest on any Loan, of any Fee or any other
Obligations payable by it hereunder or under any other Credit Document, or
any other Loan Party shall default in the payment when due of any amount
payable by it under any Credit Document to which such Loan Party is a party,
and such default shall continue for a period of five Business Days.
(b) Other Indebtedness. The Borrower or any other Loan Party shall
default in the payment when due of any principal of or interest on any
Indebtedness having a principal amount outstanding, individually or in the
aggregate, equal to or exceeding $4,000,000.00 (other than the Obligations);
or any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness of the Borrower or any other
Loan Party shall occur and as a result of the occurrence of such event such
Indebtedness (a) has become due or is required to be prepaid (whether by
redemption, purchase or otherwise) prior to its stated maturity or (b) the
holder or holders (or any agent or trustee acting on behalf of such holder or
holders) are then entitled to cause such Indebtedness to become due or
required to be so prepaid.
(c) Representations and Warranties. Any representation, warranty or
certification made or deemed to be made in any Credit Document to the Agent,
any Lender or the Swingline Lender or any certificate, financial statement or
other information furnished in writing to the Agent, any Lender or the
Swingline Lender pursuant to the provisions hereof or thereof, shall prove to
have been false or misleading in any material respect as of the time made or
deemed to be made.
(d) Other Obligations. (i) The Borrower shall default in the
performance of any of its obligations under Article IX. (other than Sections
9.2. or 9.5.); or (ii) the Borrower shall default in the performance of any
of its obligations under Article VIII., Section 9.2. or 9.5. which default
shall continue unremedied for a period of 10 Business Days after the Borrower
or such Loan Party receives notice from the Agent or any Responsible Officer
of the Borrower or any such Loan Party otherwise has actual knowledge thereof
or (iii) the Borrower or any other Loan Party shall default in the
performance of any of its other obligations in this Agreement or any other
Credit Documents to which it is a party and such default shall continue
unremedied for a period of 20 days after the Borrower or such Loan Party
receives notice from the Agent or any Responsible Officer of the Borrower or
any such Loan Party otherwise has actual knowledge thereof.
(e) Voluntary Proceedings. The Borrower or any other Loan Party shall
(i) apply for or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code,
(vi) admit in writing its inability to, or be generally unable to, pay its
debts as such debts become due or (vii) take any corporate action for the
purpose of effecting any of the foregoing.
(f) Involuntary Proceedings. A proceeding or case shall be commenced
against the Borrower or any other Loan Party, without its application or
consent, in any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment
of its debts, (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of all or any substantial part of its assets, or
(iii) similar relief under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 or more days; or an order
for relief against the Borrower or any other Loan Party shall be entered in
an involuntary case under the Bankruptcy Code.
(g) Judgments. A judgment or judgments for the payment of money in
excess of $4,000,000 in the aggregate (exclusive of judgment amounts to the
extent covered by insurance where the Borrower has submitted a claim and the
insurer has not contested liability in respect of such judgment) shall be
rendered by a court or courts against the Borrower or any other Loan Party
and the same shall not be vacated, bonded or discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall not be
procured, within 60 days from the date of entry thereof.
(h) ERISA. (a) Any ERISA Event shall have occurred with respect to the
Borrower or any other Loan Party and the sum of the Insufficiency of the Plan
involved in such event (determined as of the date of occurrence of such ERISA
Event) and the Insufficiency of any and all other Plans (determined as of the
date of occurrence of such ERISA Event) of the Borrower or any other Loan
Party with respect to which an ERISA Event shall have occurred (or the
liability of the Borrower or any other Loan Party or its ERISA Affiliates
related to such ERISA Event) exceeds $4,000,000; or (b) the Borrower or any
other Loan Party or any of its ERISA Affiliates shall have been notified by a
Multiemployer Plan that it has incurred withdrawal liability to such
Multiemployer Plan and the imposition of such liability is reasonably likely
to be incurred in an amount that, when aggregated with all other amounts
required to be paid to Multiemployer Plans by the Borrower or any other Loan
Party and its ERISA Affiliates as withdrawal liability (determined as of the
date of such notification indemnification), requires payments exceeding
$4,000,000 per annum; or (c) the Borrower or any other Loan Party or any of
its ERISA Affiliates shall have been notified by a Multiemployer Plan that
such Multiemployer Plan is in reorganization or is being terminated within
the meaning of Title IV of ERISA, and as a result of such reorganization or
termination the aggregate annual contributions of such Person and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or
being terminated have been or will be increased over the amounts contributed
to such Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or
termination occurs by an amount exceeding $4,000,000.
(i) Change in Control. A Change in Control shall have occurred without
the prior written consent of the Requisite Lenders. As used in this Section
the term "Change in Control" shall mean the following: if any Person or two
or more Persons acting in concert, shall acquire "beneficial ownership"
within the meaning of Rule 13d-3 of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), directly or indirectly, of capital stock or
securities of the Borrower representing 25% (or 40% with respect to any
Person permitted to file a report on Schedule 13G under the Exchange Act) or
more of the aggregate voting power of all classes of capital stock and
securities of the Borrower.
(j) Failure of Security Interest. The Agent shall cease to have a
valid and perfected first priority security interest in the Collateral
(subject to Permitted Liens) for any reason other than the failure of the
Agent to take any action within its control.
Section 10.2. Remedies Upon Event of Default.
Upon the occurrence of an Event of Default the following provisions shall
apply:
(a) Acceleration; Termination of Facilities.
(i) Automatic. Upon the occurrence of an Event of Default
specified in Sections 10.1(e) or 10.1.(f), (A)(i) the principal of, and
all accrued interest on, the Loans and the Notes at the time
outstanding, (ii) an amount equal to the Stated Amount of all Letters of
Credit outstanding as of the date of the occurrence of the Event of
Default and (iii) all of the other Obligations of the Borrower,
including, but not limited to, the other amounts owed to the Lenders and
the Agent under this Agreement, the Notes or any of the other Credit
Documents shall become immediately and automatically due and payable by
the Borrower without presentment, demand, protest, or other notice of
any kind, all of which are expressly waived by the Borrower and (B) the
Commitments, the Swingline Commitment, the obligation of the Lenders to
make Loans hereunder, the obligation of the Swingline Lender to make
Swingline Loans hereunder, and the obligation of the Agent to issue
Letters of Credit hereunder, shall immediately and automatically
terminate.
(ii) Optional. If any other Event of Default shall have occurred
and be continuing, the Agent may, and at the direction of the Requisite
Lenders shall: (I) declare (1) the principal of, and accrued interest
on, the Loans and the Notes at the time outstanding, (2) an amount equal
to the Stated Amount of all Letters of Credit outstanding as of the date
of the occurrence of the Event of Default and (3) all of the other
Obligations, including, but not limited to, the other amounts owed to
the Lenders and the Agent under this Agreement, the Notes or any of the
other Credit Documents to be forthwith due and payable, whereupon the
same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly
waived by the Borrower and (II) terminate the Commitments and the
obligation of the Lenders to make Loans hereunder and the obligation of
the Agent to issue Letters of Credit hereunder. If the Agent has
exercised any of the rights provided under the preceding sentence, the
Swingline Lender shall: (x) declare the principal of, and accrued
interest on, the Swingline Loans and the Swingline Note at the time
outstanding, and all of the other Obligations owing to the Swingline
Lender, to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest
or other notice of any kind, all of which are expressly waived by the
Borrower and (y) terminate the Swingline Commitment and the obligation
of the Swingline Lender to make Swingline Loans.
(b) Credit Documents. The Requisite Lenders may direct the Agent to,
and the Agent if so directed shall, exercise any and all of its rights under
any and all of the other Credit Documents.
(c) Applicable Law. The Requisite Lenders may direct the Agent to, and
the Agent if so directed shall, exercise all other rights and remedies it may
have under any Applicable Law.
(d) Appointment of Receiver. To the fullest extent permitted by
Applicable Law, the Agent and the Lenders shall be entitled to the
appointment of a receiver for the assets and properties of the Borrower and
its Subsidiaries, without regard to the adequacy of any security for the
Obligations or the solvency of any party bound for its payment, to take
possession of all or any portion of the Collateral and/or the business
operations of the Borrower and its Subsidiaries and to exercise such power as
the court shall confer upon such receiver.
Section 10.3. Remedies Upon Default.
Upon the occurrence of a Default specified in Sections 10.1.(e) or
10.1.(f), the Commitments and the Swingline Commitment shall immediately and
automatically terminate.
Section 10.4. Allocation of Proceeds.
If an Event of Default shall have occurred and be continuing and
maturity of any of the Obligations has been accelerated, all payments
received by the Agent under any of the Credit Documents, in respect of any
principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder or thereunder, shall be applied in the following order
and priority:
(a) amounts due to the Agent and the Lenders in respect of Fees
and expenses due under Section 12.2;
(b) payments of interest on Swingline Loans;
(c) payments of principal on Swingline Loans;
(d) payments of interest on Revolving Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders;
(e) payments of principal of Revolving Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders;
(f) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to Section 2.11.;
(g) amounts due to the Agent and the Lenders pursuant to Sections
12.9.;
(h) payments of all other amounts due under any of the Credit
Documents, if any, to be applied for the ratable benefit of the Lenders;
(i) amounts due Lenders in respect of Swap Obligations, to be
applied for the ratable benefit of such Lenders; and
(j) any amount remaining after application as provided above,
shall be paid to the Borrower or whomever else may be legally entitled
thereto.
Section 10.5. Collateral Account.
(a) As collateral security for the prompt payment in full when due of
all Letter of Credit Liabilities, the Borrower hereby pledges and grants to
the Agent, for the benefit of the Agent and the Lenders as provided herein, a
security interest in all of its right, title and interest in and to the
Collateral Account and the balances from time to time in the Collateral
Account (including the investments and reinvestments therein provided for
below). The balances from time to time in the Collateral Account shall not
constitute payment of any Letter of Credit Liabilities until applied by the
Agent as provided herein. Anything in this Agreement to the contrary
notwithstanding, funds held in the Collateral Account shall be subject to
withdrawal only as provided in this Section and in Section 2.11.
(b) Amounts on deposit in the Collateral Account shall be invested and
reinvested by the Agent in such Cash Equivalents as the Agent shall determine
in its sole discretion. All such investments and reinvestments shall be held
in the name of and be under the sole dominion and control of the Agent and
all interest and other earnings in respect of such investments and
reinvestments shall be deposited into the Collateral Account until withdrawn
as provided in this Section (including the immediately following
subsection (d)), in Section 2.11. or in any other applicable provision of
this Agreement or any other Credit Document. The Agent shall exercise
reasonable care in the custody and preservation of any funds held in the
Collateral Account and shall be deemed to have exercised such care if such
funds are accorded treatment substantially equivalent to that which the Agent
accords its own funds, it being understood that the Agent shall not have any
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any funds held in the Collateral Account.
(c) If an Event of Default shall have occurred and be continuing, the
Agent may (and, if instructed by the Requisite Lenders, shall) in its (or
their) discretion at any time and from time to time elect to liquidate any
such investments and reinvestments and credit the proceeds thereof to the
Collateral Account and apply or cause to be applied such proceeds and any
other balances in the Collateral Account to the payment of any of the Letter
of Credit Liabilities due and payable.
(d) So long as no Default or Event of Default has occurred and is
continuing, the Agent shall, from time to time, at the written request of the
Borrower, deliver to the Borrower within 5 days of receipt of such request,
against receipt but without any recourse, warranty or representation
whatsoever, such of the balances in the Collateral Account as exceed the
aggregate amount of Letter of Credit Liabilities at such time, including any
interest and other earnings on investments in respect of the Collateral
Account. When all of the Obligations shall have been paid in full and no
Letters of Credit remain outstanding, the Agent shall promptly deliver to the
Borrower, against receipt but without any recourse, warranty or
representation whatsoever, the balances remaining in the Collateral Account.
Section 10.6. Performance by Agent.
If the Borrower shall fail to perform any covenant, duty or agreement
contained in any of the Credit Documents, the Agent may perform or attempt to
perform such covenant, duty or agreement on behalf of the Borrower after the
expiration of any cure or grace periods set forth herein. In such event, the
Borrower shall, at the request of the Agent, promptly pay any amount
reasonably expended by the Agent in such performance or attempted performance
to the Agent, together with interest thereon at the applicable Post-Default
Rate from the date of such expenditure until paid. Notwithstanding the
foregoing, neither the Agent nor any Lender shall have any liability or
responsibility whatsoever for the performance of any obligation of the
Borrower under this Agreement or any other Credit Document.
Section 10.7. Rights Cumulative.
The rights and remedies of the Agent and the Lenders under this
Agreement and each of the other Credit Documents shall be cumulative and not
exclusive of any rights or remedies which any of them may otherwise have
under Applicable Law. In exercising their respective rights and remedies the
Agent and the Lenders may be selective and no failure or delay by the Agent
or any of the Lenders in exercising any right shall operate as a waiver of
it, nor shall any single or partial exercise of any power or right preclude
its other or further exercise or the exercise of any other power or right.
ARTICLE XI. THE AGENT
Section 11.1. Authorization and Action.
Each Lender hereby appoints and authorizes the Agent to take such action
as contractual representative on such Lender's behalf and to exercise such
powers under this Agreement and the other Credit Documents as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. Nothing herein shall
be construed to deem the Agent a trustee or fiduciary for any Lender nor to
impose on the Agent duties or obligations other than those expressly provided
for herein. Not in limitation of the foregoing, each Lender confirms and
agrees that the Agent has no fiduciary obligations to such Lender under this
Agreement, any other Credit Document or otherwise. At the request of a
Lender, the Agent will forward to such Lender copies or, where appropriate,
originals of the documents delivered to the Agent pursuant to this Agreement
or the other Credit Documents. The Agent will also furnish to any Lender,
upon the request of such Lender, a copy of any certificate or notice
furnished to the Agent by the Borrower, any Loan Party or any other Affiliate
of the Borrower, pursuant to this Agreement or any other Credit Document not
already required to be delivered to such Lender pursuant to the terms of this
Agreement or any such other Credit Document. As to any matters not expressly
provided for by the Credit Documents (including, without limitation,
enforcement or collection of any of the Obligations), the Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting
or refraining from acting) upon the instructions of the Requisite Lenders (or
all of the Lenders if explicitly required under any other provision of this
Agreement), and such instructions shall be binding upon all Lenders and all
holders of any of the Obligations; provided, however, that, notwithstanding
anything in this Agreement to the contrary, the Agent shall not be required
to take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or any other Credit Document or Applicable Law.
Not in limitation of the foregoing, the Agent shall not exercise any right or
remedy it or the Lenders may have under any Credit Document upon the
occurrence of a Default or an Event of Default unless the Requisite Lenders
have so directed the Agent to exercise such right or remedy.
Section 11.2. Agent's Reliance, Etc.
Notwithstanding any other provisions of this Agreement or any other
Credit Documents, neither the Agent nor any of its directors, officers,
agents, employees or counsel shall be liable to any Lender for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except to the extent found in a final, non-appealable judgment by
a court of competent jurisdiction to have resulted from its or their own
gross negligence or willful misconduct. Without limiting the generality of
the foregoing, the Agent: (a) may treat the payee of any Note as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (b) may
consult with legal counsel (including its own counsel or counsel for the
Borrower or any Loan Party), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
or any other Person and shall not be responsible to any Lender or any other
Person for any statements, warranties or representations made by any Person
in or in connection with this Agreement or any other Credit Document; (d)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any of this
Agreement or any other Credit Document or the satisfaction of any conditions
precedent under this Agreement or any Credit Document on the part of the
Borrower or other Persons or inspect the property, books or records of the
Borrower or any other Person; (e) shall not be responsible to any Lender for
the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Credit Document, any
other instrument or document furnished pursuant thereto or any Collateral
covered thereby or the perfection or priority of any Lien in favor of the
Agent on behalf of the Lenders in any such Collateral; and (f) shall incur no
liability under or in respect of this Agreement or any other Credit Document
by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telephone or telecopy) believed by it to be genuine
and signed, sent or given by the proper party or parties.
Section 11.3. Notice of Defaults.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Agent has received notice
from a Lender or the Borrower referring to this Agreement, describing with
reasonable specificity such Default or Event of Default and stating that such
notice is a "notice of default." If any Lender (excluding the Agent in its
capacity as a Lender) becomes aware of any Default or Event of Default, it
shall promptly send to the Agent such a "notice of defaul
Section 11.4. Bank of America as Lender.
Bank of America, as a Lender, shall have the same rights and powers
under this Agreement and any other Credit Document as any other Lender and
may exercise the same as though it were not the Agent; and the term "Lender"
or "Lenders" shall, unless otherwise expressly indicated, include Bank of
America in each case in its individual capacity. Bank of America and its
affiliates may each accept deposits from, maintain deposits or credit
balances for, invest in, lend money to, act as trustee under indentures of,
serve as financial advisor to, and generally engage in any kind of business
with the Borrower, any other Loan Party or any other affiliate thereof as if
it were any other bank and without any duty to account therefor to the other
Lenders. Further, the Agent and any affiliate may accept fees and other
consideration from the Borrower for services in connection with this
Agreement and otherwise without having to account for the same to the other
Lenders.
Section 11.5. Approvals of Lenders.
All communications from the Agent to any Lender requesting such Lender's
determination, consent, approval or disapproval (a) shall be given in the
form of a written notice to such Lender, (b) shall be accompanied by a
description of the matter or issue as to which such determination, approval,
consent or disapproval is requested, or shall advise such Lender where
information, if any, regarding such matter or issue may be inspected, or
shall otherwise describe the matter or issue to be resolved, (c) shall
include, if reasonably requested by such Lender and to the extent not
previously provided to such Lender, written materials provided to the Agent
by the Borrower in respect of the matter or issue to be resolved, and
(d) shall include the Agent's recommended course of action or determination
in respect thereof. Each Lender shall reply promptly, but in any event
within 10 Business Days (or such lesser period as may be required under the
Credit Documents for the Agent to respond). Unless a Lender shall give
written notice to the Agent that it consents to the recommendation or
determination of the Agent within the applicable time period for reply, such
Lender shall be deemed to have conclusively rejected or not consented to such
recommendation or determination.
Section 11.6. Lender Credit Decision, Etc.
Each Lender expressly acknowledges and agrees that neither the Agent,
BAS, nor any of their respective officers, directors, employees, agents,
counsel, attorneys-in-fact or other affiliates has made any representations
or warranties as to the financial condition, operations, creditworthiness,
solvency or other information concerning the business or affairs of the
Borrower, any other Loan Party, any Subsidiary or other Person to such Lender
and that no act by the Agent hereinafter taken, including any review of the
affairs of the Borrower, shall be deemed to constitute any such
representation or warranty by the Agent to any Lender. Each Lender
acknowledges that it has, independently and without reliance upon the Agent,
BAS, any other Lender or counsel to the Agent, or any of their respective
officers, directors, employees and agents, and based on the financial
statements of the Borrower, the Subsidiaries or any other Affiliate thereof,
and inquiries of such Persons, its independent due diligence of the business
and affairs of the Borrower, the Loan Parties, the Subsidiaries and other
Persons, its review of the Credit Documents, the legal opinions required to
be delivered to it hereunder, the advice of its own counsel and such other
documents and information as it has deemed appropriate, made its own credit
and legal analysis and decision to enter into this Agreement and the
transaction contemplated hereby. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent, BAS, any other Lender or
counsel to the Agent or any of their respective officers, directors,
employees and agents, and based on such review, advice, documents and
information as it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under the Credit Documents.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Agent under this Agreement or
any of the other Credit Documents, the Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition
or creditworthiness of the Borrower, any other Loan Party or any other
Affiliate thereof which may come into possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or other
Affiliates. Each Lender acknowledges that the Agent's legal counsel in
connection with the transactions contemplated by this Agreement is only
acting as counsel to the Agent and is not acting as counsel to such Lender.
Section 11.7. Indemnification of Agent.
Each Lender agrees to indemnify the Agent (to the extent not reimbursed
by the Borrower and without limiting the obligation of the Borrower to do so)
pro rata in accordance with such Lender's respective Commitment Percentage,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may at any time be imposed on, incurred by,
or asserted against the Agent (in its capacity as Agent but not as a Lender)
in any way relating to or arising out of the Credit Documents, any
transaction contemplated hereby or thereby or any action taken or omitted by
the Agent under the Credit Documents (collectively, "Indemnifiable Amounts");
provided, however, that no Lender shall be liable for any portion of such
Indemnifiable Amounts to the extent found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from the Agent's gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable counsel
fees of the counsel(s) of the Agent's own choosing) incurred by the Agent in
connection with the preparation, execution, administration, or enforcement
of, or legal advice with respect to the rights or responsibilities of the
parties under, the Credit Documents, any suit or action brought by the Agent
to enforce the terms of the Credit Documents and/or collect any Obligations,
any "lender liability" suit or claim brought against the Agent and/or the
Lenders, and any claim or suit brought against the Agent and/or the Lenders
arising under any Environmental and Safety Laws, to the extent that the Agent
is not reimbursed for such expenses by the Borrower. The agreements in this
Section shall survive the payment of the Loans and all other amounts payable
hereunder or under the other Credit Documents, the expiration of all Letters
of Credit and the termination of this Agreement. If the Borrower shall
reimburse the Agent for any Indemnifiable Amount following payment by any
Lender to the Agent in respect of such Indemnifiable Amount pursuant to this
Section, the Agent shall share such reimbursement on a ratable basis with
each Lender making any such payment.
Section 11.8. Collateral Matters.
(a) The Agent is authorized on behalf of all of the Lenders, without
the necessity of any notice to or further consent from any Lender, from time
to time prior to an Event of Default, to take any action with respect to any
Collateral or Credit Documents which may be necessary to perfect and maintain
perfected the Liens upon the Collateral granted pursuant to any of the Credit
Documents.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations at any time arising under or in
respect of this Agreement or the Credit Documents or the transactions
contemplated hereby or thereby; (ii) constituting property being sold or
disposed of if the Borrower certifies to the Agent that the sale or
disposition is made in compliance with Section 9.9. (and the Agent may rely
conclusively on any such certificate, without further inquiry), including
without limitation, any sale or disposition of any of the Collateral in
connection with the Seramed Disposition; (iii) as permitted by, but only in
accordance with, the express terms of the applicable Credit Document; or
(iv) if approved, authorized or ratified in writing by all of the Lenders
hereunder. Upon request by the Agent at any time, the Lenders will confirm
in writing the Agent's authority to release particular types or items of
Collateral pursuant to this Section.
(c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Agreement, or consented to in writing
by the Requisite Lenders or all of the Lenders, as applicable, and upon at
least five Business Days' prior written request by the Borrower, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Agent for the benefit of the Lenders herein or pursuant hereto upon the
Collateral that was sold or transferred; provided, however, that (i) the
Agent shall not be required to execute any such document on terms which, in
the Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty; and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations
of the Borrower or any Loan Party in respect of) all interests retained by
the Borrower or any Subsidiary, including (without limitation) the proceeds
of the sale, all of which shall continue to constitute part of the
Collateral. In the event of any sale or transfer of Collateral, or any
foreclosure with respect to any of the Collateral, the Agent shall be
authorized to deduct all of the expenses reasonably incurred by the Agent
from the proceeds of any such sale, transfer or foreclosure.
(d) The Agent shall have no obligation whatsoever to the Lenders or to
any other Person to assure that the Collateral exists or is owned by the
Borrower or any Subsidiary or is cared for, protected or insured or that the
Liens granted to the Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising
at all or in any manner or under any duty of care, disclosure or fidelity any
of the rights, authorities and powers granted or available to the Agent in
this Section or in any of the Credit Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event
related thereto, the Agent may act in any manner it may deem appropriate, in
its sole discretion, given the Agent's own interest in the Collateral as one
of the Lenders and that the Agent shall have no duty or liability whatsoever
to the Lenders, except for its gross negligence or willful misconduct.
Section 11.9. Successor Agent.
The Agent may resign at any time as Agent under the Credit Documents by
giving written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a
successor Agent which appointment shall, provided no Default or Event of
Default shall have occurred and be continuing, be subject to the Borrower's
approval, which approval shall not be unreasonably withheld or delayed
(except that Borrower shall, in all events, be deemed to have approved each
Lender as a successor Agent). If no successor Agent shall have been so
appointed by the Requisite Lenders, and shall have accepted such appointment,
within 30 days after the resigning Agent's giving of notice of resignation,
then the resigning Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a Lender, if any Lender shall be willing to serve, and
otherwise shall be a commercial bank having total combined assets of at least
$50,000,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning Agent, and the resigning Agent shall be discharged from its duties
and obligations under the Credit Documents. After any resigning Agent's
resignation hereunder as Agent, the provisions of this Article XI. shall
inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under the Credit Documents.
Section 11.10. Co-Agents.
The Co-Agents in such capacity assume no responsibility or obligation
hereunder, including, without limitation, for servicing, enforcement or
collection of any of the Loans, nor any duties as an agent hereunder for the
Lenders. The title of "Co-Agent" is solely honorific and implies no
fiduciary responsibility on the part of either Co-Agent, in its capacity as
such, to the Agent, the Borrower or any Lender and the use of such title does
not impose on either Co-Agent any duties or obligations greater than those of
any other Lender or entitle either Co-Agent to any rights other than those to
which any other Lender is entitled.
ARTICLE XII. MISCELLANEOUS
Section 12.1. Notices.
Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered as follows:
If the Borrower:
Serologicals Corporation
780 Park North Boulevard, Suite 110
Clarkston, Georgia 30021
Attention: Russell H. Plumb, Vice President, Finance and
Administration
Telephone No: (404) 296-5595
Telecopy No: (404) 297-8044
with a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue, 20th Floor
New York, New York 10022
Attention: David S. Rosenthal, Esq.
Telephone No: (212) 891-9262
Telecopy No: (212) 758-9526
If to the Agent:
Bank of America, N.A.
600 Peachtree Street, 19th Floor
Atlanta, Georgia 30308
Attention: Walter Bland
Telephone No: (404) 607-5861
Telecopy No: (404) 607-6338
with a copy to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street, N.W.
Atlanta, Georgia 30309-3424
Attention: Paul M. Cushing, Esq.
Telephone No: (404) 881-7000
Telecopy No: (404) 881-4777
If to a Lender:
To such Lender's address or telecopy number, as applicable, set
forth on its signature page hereto or in the applicable Assignment
and Acceptance Agreement.
or, as to each party at such other address as shall be designated by such
party in a written notice to the other parties delivered in compliance with
this Section; provided, however, that the failure to deliver copies of
notices as indicated above shall not affect the validity of any notice. All
such notices and other communications shall be effective (i) if mailed, when
received; (ii) if telecopied, when transmitted; or (iii) if hand delivered,
when delivered. Notwithstanding the immediately preceding sentence, all
notices or communications to the Agent or any Lender under Article II. shall
be effective only when actually received. Neither the Agent, any Lender, nor
the Swingline Lender shall incur any liability to the Borrower (nor shall the
Agent incur any liability to the Lenders) for acting upon any telephonic
notice referred to in this Agreement which the Agent, such Lender or
Swingline Lender believes in good faith to have been given by a Person
authorized to deliver such notice or for otherwise acting in good faith under
hereunder.
Section 12.2. Expenses.
The Borrower agrees (a) to pay or reimburse the Agent for all of the
Agent's reasonable out-of-pocket costs and expenses incurred in connection
with the preparation, negotiation and execution of, and any amendment,
supplement or modification to, this Agreement or any of the other Credit
Documents (including due diligence expenses and travel expenses relating to
closing, if any), and the consummation of the transactions contemplated
thereby, including the reasonable fees and disbursements of counsel to the
Agent, (b) to pay or reimburse the Agent and the Lenders for all their costs
and expenses incurred in connection with the enforcement or preservation of
any rights under the Credit Documents, including the reasonable fees and
disbursements of their respective counsel and any payments in indemnification
or otherwise payable by the Lenders to the Agent pursuant to the Credit
Documents, (c) to pay, indemnify and hold the Agent and the Lenders harmless
from any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any failure to pay or delay in paying,
documentary, stamp, intangibles, excise and other similar taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of any of the Credit Documents, or consummation of any
amendment, supplement or modification of, or any waiver or consent under or
in respect of, any Credit Document, (d) to pay or reimburse the Agent and the
Lenders for all their costs and expenses incurred in connection with gaining
possession of, maintaining, handling, preserving, storing, shipping,
appraising, selling, preparing for sale and advertising to sell any
Collateral, whether or not a sale is consummated, and (e) to the extent not
already covered by any of the preceding subsections, to pay or reimburse the
Agent and the Lenders for all their costs and expenses incurred in connection
with any bankruptcy or other proceeding of the type described in Sections
10.1.(e) or 10.1.(f), including the reasonable fees and disbursements of
counsel to the Agent and any Lender, whether such fees and expenses are
incurred prior to, during or after the commencement of such proceeding or the
confirmation or conclusion of any such proceeding.
Section 12.3. Setoff.
Subject to Section 3.3., the Borrower hereby authorizes the Agent and
each Lender (subject to receipt by such Lender of the Agent's prior written
consent) at any time while an Event of Default exists, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held,
and other Indebtedness at any time owing, by the Agent or such Lender to or
for the credit or the account of the Borrower against any and all of the
Obligations, irrespective of whether or not any demand shall have been made.
Each of the Agent and each Lender, as the case may be, agrees to notify the
Borrower of any such set-off and application simultaneously therewith,
provided that the failure to give such notice shall not affect the validity
of such set-off and application. The rights of the Agent and the Lenders
under this Section are in addition to any other rights and remedies
(including without limitation, other rights of set-off) which the Agent or
any Lender may have.
Section 12.4. Arbitration.
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING
BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
CREDIT DOCUMENT, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE
FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE
RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.), AND THE
"SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE
SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY
BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN
ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF
THE BORROWER'S DOMICILE AT THE TIME OF THIS AGREEMENT'S EXECUTION AND
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
(I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE
A WAIVER BY THE AGENT OR ANY LENDER OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF THE AGENT OR ANY LENDER HERETO (A) TO EXERCISE SELF HELP REMEDIES
SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE AGENT AND THE LENDERS MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THE
EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN
ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE
A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
Section 12.5. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
permitted assigns, except that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement without the prior written
consent of all Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an affiliate of such
Lender except to the extent such transfer would result in increased costs to
the Borrower.
(c) Any Lender may at any time grant to one or more banks or other
financial institutions (each a "Participant") participating interests in its
Commitment or the Obligations owing to such Lender; provided, however, any
such participating interest must be for a constant and not a varying
percentage interest. No Participant shall have any rights or benefits under
this Agreement or any other Credit Document. In the event of any such grant
by a Lender of a participating interest to a Participant, such Lender shall
remain responsible for the performance of its obligations hereunder, and the
Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement pursuant to which any Lender may grant such a
participating interest shall provide that such Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided, however,
such Lender may agree with the Participant that it will not, without the
consent of the Participant, agree to (i) increase, or extend the term or
extend the time or waive any requirement for the reduction or termination of,
such Lender's Commitment, (ii) extend the date fixed for the payment of
principal of or interest on the Loans or portions thereof owing to such
Lender, (iii) reduce the amount of any such payment of principal, (iv) reduce
the rate at which interest is payable thereon (v) any release of all or
substantially all of the Collateral; or (vi) any release of any Guarantor
from its obligations under the Guaranty. An assignment or other transfer
which is not permitted by subsection (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (c). The selling Lender shall
notify the Agent and the Borrower of the sale of any participation hereunder
and the terms thereof.
(d) Any Lender may with the prior written consent of the Agent and the
Borrower (which consent, in each case, shall not be unreasonably withheld)
assign to one or more Eligible Assignees (each an "Assignee") all or a
portion of such Lender's Commitment and its other rights, obligations and
rights and obligations under this Agreement and the Notes; provided, however,
(i) no such consent by the Borrower shall be required in any case if a
Default or Event of Default shall have occurred and be continuing; (ii) no
such consent by the Borrower shall be required in the case of any assignment
to another Lender or any affiliate of such Lender or another Lender unless
after giving effect to such assignment, the Assignee will hold 40% or more of
the aggregate amount of all Lenders' Commitments; (iii) any partial
assignment shall be in an amount at least equal to $5,000,000 and after
giving effect to such assignment the assigning Lender retains a Commitment,
or if the Commitments have been terminated, holds Notes having an aggregate
outstanding principal balance, of at least $5,000,000; and (iv) each such
assignment shall be effected by means of an Assignment and Acceptance
Agreement. Upon execution and delivery of such instrument and payment by
such Assignee to such transferor Lender of an amount equal to the purchase
price agreed between such transferor Lender and such Assignee, such Assignee
shall be deemed to be a Lender party to this Agreement as of the effective
date of the Assignment and Acceptance Agreement and shall have all the rights
and obligations of a Lender with a Commitment as set forth in such Assignment
and Acceptance Agreement, and the transferor Lender shall be released from
its obligations hereunder to a corresponding extent, and no further consent
or action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (d), the transferor Lender, the Agent
and the Borrower shall make appropriate arrangements so that new Notes are
issued to the Assignee and such transferor Lender, as appropriate. In
connection with any such assignment (including without limitation, an
assignment from one Lender to another Lender), the transferor Lender shall
pay to the Agent an administrative fee for processing such assignment in the
amount of $3,500.
(e) The Agent shall maintain at the Principal Office a copy of each
Assignment and Acceptance Agreement delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and
the Commitment of each Lender from time to time (the "Register"). The Agent
shall give each Lender and the Borrower notice of the assignment by any
Lender of its rights as contemplated by this Section. The Borrower, the
Agent and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register and copies of each Assignment and Acceptance Agreement shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice to the Agent. Upon its
receipt of an Assignment and Acceptance Agreement executed by an assigning
Lender, together with each Note subject to such assignment, the Agent shall,
if such Assignment and Acceptance Agreement has been completed and if the
Agent receives the processing and recording fee described in subsection (d)
above, (i) accept such Assignment and Acceptance Agreement, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower.
(f) In addition to the assignments and participations permitted under
the foregoing provisions of this Section, any Lender may assign and pledge
all or any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank, and such Loans and Notes shall be fully
transferable as provided therein. No such assignment shall release the
assigning Lender from its obligations hereunder.
(g) A Lender may furnish any information concerning the Borrower, any
other Loan Party or any of their respective Subsidiaries in the possession of
such Lender from time to time to Assignees and Participants (including
prospective Assignees and Participants) subject to compliance with Section
12.8.
(h) Anything in this Section to the contrary notwithstanding, no Lender
may assign or participate any interest in any Loan held by it hereunder to
the Borrower, any other Loan Party or any of their respective Affiliates or
Subsidiaries.
(i) Each Lender agrees that, without the prior written consent of the
Borrower and the Agent, it will not make any assignment hereunder in any
manner or under any circumstances that would require registration or
qualification of, or filings in respect of, any Loan or Note under the
Securities Act or any other securities laws United States of America or of
any other jurisdiction.
Section 12.6. Amendments.
Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement or in any Credit Document to
be given by the Lenders may be given, and any term of this Agreement or of
any other Credit Document may be amended, and the performance or observance
by the Borrower or any Loan Party or Subsidiary of any terms of this
Agreement or such other Credit Document or the continuance of any Default or
Event of Default may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the written
consent of the Requisite Lenders (and, in the case of an amendment to any
Credit Document, the written consent of the Borrower). Notwithstanding the
foregoing, no amendment, waiver or consent shall, unless in writing, and
signed by all of the Lenders (or the Agent at the written direction of the
Lenders), do any of the following: (i) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations; (ii) reduce the
principal of, or interest rates that have accrued or that will be charged on
the outstanding principal amount of, any Loans or other Obligations;
(iii) reduce the amount of any Fees payable hereunder; (iv) postpone any date
fixed for any payment of any principal of, interest on, or Fees with respect
to, any Loans or any other Obligations; (v) change the Commitment
Percentages; (vi) amend this Section or amend the definitions of the terms
used in this Agreement or the other Credit Documents insofar as such
definitions affect the substance of this Section; (vii) modify the definition
of the term "Requisite Lenders" or modify in any other manner the number or
percentage of the Lenders required to make any determinations or waive any
rights hereunder or to modify any provision hereof; and (viii) release any
Guarantor from its obligations under the Guaranty. Any amendment, waiver or
consent relating to Section 2.12. or the obligations of Swingline Lender
under this Agreement or any other Loan Document shall, in addition to Lenders
required hereinabove to take such action, require the written consent of
Swingline Lender. Further, no amendment, waiver or consent unless in writing
and signed by the Agent, in addition to the Lenders required hereinabove to
take such action, shall affect the rights or duties of the Agent under this
Agreement or any of the other Credit Documents. Further, no Collateral shall
be released or disposed of by the Agent unless all of the Lenders so direct
the Agent or unless released or disposed of as permitted by, and in
accordance with, Section 11.8. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon and
any amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose set forth therein. No course of
dealing or delay or omission on the part of the Agent or any Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. Except as otherwise explicitly provided for herein or
in any other Credit Document, no notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or other
circumstances.
Section 12.7. Nonliability of Agent and Lenders.
The relationship between the Borrower, on the one hand, and the Lenders
and the Agent, on the other hand, shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower and no provision in this Agreement or in any
of the other Credit Documents, and no course of dealing between or among any
of the parties hereto, shall be deemed to create any fiduciary duty owing by
the Agent or any Lender to any Lender, the Borrower, any Subsidiary or any
other Loan Party. Neither the Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter
in connection with any phase of the Borrower's business or operations.
Section 12.8. Confidentiality.
The Agent and the Lenders shall hold all non-public, proprietary or
confidential information (which has been identified as such by the Borrower)
obtained pursuant to the requirements of this Agreement in accordance with
their customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices; provided,
however, the Agent and the Lenders may make disclosure of any such
information to such of their examiners, affiliates, outside auditors,
counsel, consultants, appraisers and other professional advisors as may be
reasonably necessary in connection with this Agreement or as reasonably
required by any proposed Assignee or any proposed Participant in connection
with the contemplated transfer of any Note or participation therein or as
required or requested by any Governmental Authority or representative thereof
or in connection with the enforcement hereof or of any Loan Document or
related document or pursuant to legal process or with respect to any
litigation between or among the Borrower, the Agent, any of the Lenders or
the Swingline Lender; provided, however, that, as a condition to receipt of
any such information, each such affiliate, auditor, counsel, consultant,
appraiser, professional advisor, proposed Assignee or Participant shall agree
in writing to treat all such information as confidential; and provided,
further, that prior to any such disclosure to any unrelated entity outside
the ordinary course of business or pursuant to legal process, the party
making such disclosure shall give notice of such disclosure to the Borrower
and cooperate with the Borrower in any efforts to limit or restrict such
disclosure. In no event shall the Agent, any Lender or the Swingline Lender
be obligated or required to return any materials furnished to it by the
Borrower. The foregoing provisions shall not apply to the Agent, any Lender
or the Swingline Lender with respect to information that (a) is or becomes
generally available to the public (other than through such Person), (b) is
already in the possession of such Person on a nonconfidential basis, or
(c) comes into the possession of such Person in a manner not known to such
Person to involve a breach of a duty of confidentiality owing to the
Borrower.
Section 12.9. Indemnification.
The Borrower shall and hereby agrees to indemnify and defend the Agent,
BAS, any affiliate of the Agent and each of the Lenders and their respective
directors, officers, shareholders, agents, employees and counsel (each
referred to herein as an "Indemnified Party") for, and hold Indemnified Party
harmless against, any and all losses, liabilities, claims (including
Environmental Claims), damages or expenses incurred by any of them arising
out of or by reason of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other proceedings)
relating to the extensions of credit hereunder or any actual or proposed use
by the Borrower or any Loan Party of the proceeds of any of the extensions of
credit hereunder or the past, present or future business activities of the
Borrower or any Loan Party including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any such
investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses that are determined pursuant
to a final, non-appealable order of a court of competent jurisdiction or by
binding arbitration, as applicable, to have resulted solely from the gross
negligence, willful misconduct or bad faith of such Indemnified Party).
Section 12.10. Survival.
Notwithstanding any termination of this Agreement, or of the other
Credit Documents, the indemnities to which the Agent and the Lenders are
entitled under the provisions of Sections 11.7., 12.2. and 12.9. and any
other provision of this Agreement and the other Credit Documents, and the
arbitration provisions contained in Section 12.4., shall continue in full
force and effect and shall protect the protect the Agent, the Lenders and the
Swingline Lender against events arising after such termination as well as
before.
Section 12.11. Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 12.12. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE
FULLY PERFORMED, IN SUCH STATE.
Section 12.13. Counterparts.
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute
but one and the same instrument.
Section 12.14. Obligations with Respect to Loan Parties.
The obligations of the Borrower to direct or prohibit the taking of
certain actions by the other Loan Parties as specified herein shall be
absolute and not subject to any defense the Borrower may have that the
Borrower does not control such Loan Parties.
Section 12.15. Entire Agreement.
This Agreement, the Notes, and the other Credit Documents referred to
herein, together with any letter agreement between the Agent, BAS, any Lender
or the Swingline Lender regarding Fees and any letter agreement between the
Swingline Lender and the Borrower regarding interest rates applicable to
Swingline Loans, embody the final, entire agreement among the parties hereto
and supersede any and all prior commitments, agreements, representations, and
understandings, whether written or oral, relating to the subject matter
hereof and may not be contradicted or varied by evidence of prior,
contemporaneous, or subsequent oral agreements or discussions of the parties
hereto. There are no oral agreements among the parties hereto.
Section 12.16. Construction.
The Agent, the Borrower and each Lender acknowledge that each of them
has had the benefit of legal counsel of its own choice and has been afforded
an opportunity to review this Agreement and the other Credit Documents with
its legal counsel and that this Agreement and the other Credit Documents
shall be construed as if jointly drafted by the Agent, the Borrower and each
Lender.
SECTION 12.17. NO NOVATION; EFFECT OF AMENDMENT AND RESTATEMENT.
THE PARTIES HERETO HAVE ENTERED INTO THIS AGREEMENT SOLELY TO AMEND AND
RESTATE THE TERMS OF THE EXISTING CREDIT AGREEMENT. THE PARTIES DO NOT
INTEND THIS AGREEMENT NOR THE TRANSACTIONS CONTEMPLATED HEREBY TO BE, AND
THIS AGREEMENT AND THE TRANSACTION CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED
TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING BY THE BORROWER UNDER OR IN
CONNECTION WITH THE EXISTING CREDIT AGREEMENT. FURTHER, THE PARTIES DO NOT
INTEND THIS AGREEMENT NOR THE TRANSACTIONS CONTEMPLATED HEREBY TO AFFECT THE
PERFECTION OR PRIORITY OF ANY LIEN OF AGENT (INCLUDING ANY LIEN PREVIOUSLY
HELD BY BANK OF AMERICA IN ITS INDIVIDUAL CAPACITY BUT NOW HELD BY BANK OF
AMERICA IN ITS CAPACITY AS THE AGENT) IN ANY OF THE COLLATERAL IN ANY WAY
WHATSOEVER. THE PARTIES ACKNOWLEDGE AND AGREE THAT ANY LIEN HELD BY BANK OF
AMERICA IN ANY OF THE COLLATERAL (AS DEFINED HEREIN) PURSUANT TO ANY OF THE
CREDIT DOCUMENTS (AS DEFINED IN THE EXISTING CREDIT AGREEMENT) CONTINUES IN
SUCH COLLATERAL BUT SHALL BE DEEMED TO BE HELD BY BANK OF AMERICA IN ITS
CAPACITY AS AGENT FOR THE BENEFIT OF THE LENDERS AND THE SWINGLINE LENDER.
THE AMENDMENT AND RESTATEMENT OF THE EXISTING CREDIT AGREEMENT EFFECTED BY
THIS AGREEMENT SHALL BE DEEMED TO HAVE PROSPECTIVE APPLICATION ONLY UNLESS
OTHERWISE SPECIFICALLY STATED HEREIN.
[Signatures on Following Pages]
IN WITNESS WHEREOF, the parties hereto have caused this Third Amended
and Restated Credit Agreement to be executed by their authorized officers all
as of the day and year first above written.
SEROLOGICALS CORPORATION
By: /s/ Russell H. Plumb
-------------------------
Name: Russell H. Plumb
-------------------------
Title: Vice President, Finance
-------------------------
[Signatures Continued on Next Page]
[Signature Page to Third Amended and Restated Credit Agreement dated as of
September 28, 1999 with Serologicals Corporation]
BANK OF AMERICA, N.A., individually and
as Agent and Swingline Lender
By: /s/ Melinda Bergbom
------------------------
Name: Melinda Bergbom
------------------------
Title: Vice President
------------------------
Commitment Amount:
$25,000,000
Lending Office (all Types of Loans):
101 North Tryon Street
Charlotte, North Carolina 28255
Attn: Angela M. Berry
Telecopier: (704) 386-8958
Telephone: (704) 409-0009
Address for Notices:
Bank of America, N.A.
600 Peachtree Street, 19th Floor
Atlanta, Georgia 30308
Attention: Walter Bland
Telecopier: (404) 607-6338
Telephone: (404) 607-5861
[Signatures Continued on Next Page]
[Signature Page to Third Amended and Restated Credit Agreement dated as of
September 28, 1999 with Serologicals Corporation]
WACHOVIA BANK, N.A.
By: /s/ Robert S. Massenburg
-------------------------------
Name: Robert S. Massengburg
-------------------------
Title: Vice President
-------------------------
Commitment Amount:
$20,000,000
Lending Office (all Types of Loans):
Wachovia Bank, N.A.
191 Peachtree Street, N. E.
29th Floor
Atlanta, Georgia 30303-1757
Attn: Robert Massenburg
Telecopier: (404) 332-6252
Telephone: (404) 332-1203
[Signatures Continued on Next Page]
[Signature Page to Third Amended and Restated Credit Agreement dated as of
September 28, 1999 with Serologicals Corporation]
LASALLE BANK N.A.
By: /s/ Denis J. Campbell IV
-------------------------------
Name: Denis J. Campbell IV
--------------------------
Title: Vice President
--------------------------
Commitment Amount:
$20,000,000
Lending Office (all Types of Loans):
LaSalle Bank N.A.
135 South LaSalle Street, Suite 217
Chicago, Illinois 60603
Attn: Shonagh Aylsworth
Telecopier: (312) 904-4660
Telephone: (312) 904-4658
[Signatures Continued on Next Page]
[Signature Page to Third Amended and Restated Credit Agreement dated as of
September 28, 1999 with Serologicals Corporation]
NATIONAL BANK OF CANADA, ATLANTA AGENCY
By: /s/ F. B. Buchanan
------------------------------
Name: F. B. Buchanan
--------------------------
Title: Vice President
--------------------------
By: /s/ James F. Hannon
------------------------------
Name: James F. Hannon
--------------------------
Title: Vice President
--------------------------
Commitment Amount:
$10,000,000
Lending Office (all Types of Loans):
National Bank of Canada (Atlanta)
200 Galleria Parkway, Suite 800
Atlanta, Georgia 30339
Attn: Ted Buchanan
Telecopier: (770) 980-0588
Telephone: (770) 980-9531
REVOLVING NOTE
$25,000,000 Atlanta, Georgia
September 28, 1999
FOR VALUE RECEIVED, the undersigned, SEROLOGICALS CORPORATION, a
Delaware corporation (the "Borrower") hereby unconditionally promises to pay
to the order of BANK OF AMERICA, N.A. (the "Lender"), in care of Bank of
America, N.A., as Agent (the "Agent") at 101 North Tryon Street, Charlotte,
North Carolina 28255 or at such other address as may be specified by the
Agent to the Borrower, the principal sum of TWENTY FIVE MILLION AND 00/100
DOLLARS ($25,000,000), or such lesser amount as may be the aggregate
principal amount outstanding of all Revolving Loans made by the Lender to the
Borrower pursuant to, and in accordance with the terms of, the Credit
Agreement.
The Borrower agrees to pay principal at said office, in like money, from
time to time on the dates and at the times specified in the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like money, on
the unpaid principal amount owing hereunder from time to time on the dates
and at the rates and at the times specified in the Credit Agreement.
The date and amount of each Revolving Loan made by the Lender to the
Borrower under the Credit Agreement, and each payment of principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of
this Note, endorsed by the Lender on Schedule I attached hereto; provided,
however, that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligation of the Borrower to make a payment
when due of any amount owing under this Note. Any such recordations or
endorsements made by the Lender on its books or this Note shall be conclusive
and binding on the Borrower absent manifest error.
This Note is one of the "Revolving Notes" referred to in that certain
Third Amended and Restated Credit Agreement dated as of September 28, 1999
(as amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement"), by and among the Borrower, the financial
institutions from time to time party thereto as "Lenders", and the Agent, and
is subject to, and entitled to, all provisions and benefits thereof.
Capitalized terms used herein and not defined herein shall have the
respective meanings given to such terms in the Credit Agreement. The Credit
Agreement, among other things, (a) provides for the making of Revolving Loans
by the Lender to the Borrower from time to time in an aggregate amount not to
exceed at any time outstanding the Dollar amount first above mentioned,
(b) permits the prepayment of the Revolving Loans by the Borrower subject to
certain terms and conditions and (c) provides for the acceleration of the
Revolving Loans upon the occurrence of certain specified events.
This Note is secured by the Collateral and the holder hereof shall be
entitled to the benefits thereof and to the other Credit Documents (to the
extent and with the effect as therein provided).
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
This Note amends and restates the terms of that certain Revolving Note
dated October 16, 1997, in the original principal amount of $35,000,000
executed and delivered by the Borrower and payable to the order of the
Lender. THIS NOTE IS NOT INTENDED TO BE, AND SHALL NOT BE CONSTRUED TO BE, A
NOVATION OF ANY OF THE OBLIGATIONS OWING UNDER OR IN CONNECTION WITH SUCH
OTHER NOTE.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Revolving Note under seal as of the date written above.
SEROLOGICALS CORPORATION
By: /s/ Russell H. Plumb
------------------------------
Name: Russell H. Plumb
------------------------
Title: Vice President, Finance
------------------------
ATTEST:
By:
-----------------------------
Name:
-----------------------
Title:
-----------------------
(CORPORATE SEAL)
SCHEDULE I
Amount of Amount of Outstanding
Date Borrowing Payment Principal Balance Notation
- ---- --------- --------- ----------------- --------
REVOLVING NOTE
$20,000,000 Atlanta, Georgia
September 28, 1999
FOR VALUE RECEIVED, the undersigned, SEROLOGICALS CORPORATION, a
Delaware corporation (the "Borrower") hereby unconditionally promises to pay
to the order of WACHOVIA BANK, N.A. (the "Lender"), in care of Bank of
America, N.A., as Agent (the "Agent") at 101 North Tryon Street, Charlotte,
North Carolina 28255 or at such other address as may be specified by the
Agent to the Borrower, the principal sum of TWENTY MILLION AND 00/100 DOLLARS
($20,000,000), or such lesser amount as may be the aggregate principal amount
outstanding of all Revolving Loans made by the Lender to the Borrower
pursuant to, and in accordance with the terms of, the Credit Agreement.
The Borrower agrees to pay principal at said office, in like money, from
time to time on the dates and at the times specified in the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like money, on
the unpaid principal amount owing hereunder from time to time on the dates
and at the rates and at the times specified in the Credit Agreement.
The date and amount of each Revolving Loan made by the Lender to the
Borrower under the Credit Agreement, and each payment of principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of
this Note, endorsed by the Lender on Schedule I attached hereto; provided,
however, that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligation of the Borrower to make a payment
when due of any amount owing under this Note. Any such recordations or
endorsements made by the Lender on its books or this Note shall be conclusive
and binding on the Borrower absent manifest error.
This Note is one of the "Revolving Notes" referred to in that certain
Third Amended and Restated Credit Agreement dated as of September 28, 1999
(as amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement"), by and among the Borrower, the financial
institutions from time to time party thereto as "Lenders", and the Agent,
and is subject to, and entitled to, all provisions and benefits thereof.
Capitalized terms used herein and not defined herein shall have the
respective meanings given to such terms in the Credit Agreement. The Credit
Agreement, among other things, (a) provides for the making of Revolving Loans
by the Lender to the Borrower from time to time in an aggregate amount not
to exceed at any time outstanding the Dollar amount first above mentioned,
(b) permits the prepayment of the Revolving Loans by the Borrower subject to
certain terms and conditions and (c) provides for the acceleration of the
Revolving Loans upon the occurrence of certain specified events.
This Note is secured by the Collateral and the holder hereof shall be
entitled to the benefits thereof and to the other Credit Documents (to the
extent and with the effect as therein provided).
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Revolving Note under seal as of the date written above.
SEROLOGICALS CORPORATION
By: /s/ Russell H. Plumb
------------------------------
Name: Russell H. Plumb
------------------------
Title: Vice President, Finance
------------------------
ATTEST:
By:
------------------------------
Name:
------------------------
Title:
------------------------
(CORPORATE SEAL)
SCHEDULE I
Amount of Amount of Outstanding
Date Borrowing Payment Principal Balance Notation
- ---- --------- --------- ----------------- --------
REVOLVING NOTE
$20,000,000 Atlanta, Georgia
September 28, 1999
FOR VALUE RECEIVED, the undersigned, SEROLOGICALS CORPORATION, a
Delaware corporation (the "Borrower") hereby unconditionally promises to pay
to the order of LASALLE BANK NATIONAL ASSOCIATION (the "Lender"), in care of
Bank of America, N.A., as Agent (the "Agent") at 101 North Tryon Street,
Charlotte, North Carolina 28255 or at such other address as may be specified
by the Agent to the Borrower, the principal sum of TWENTY MILLION AND 00/100
DOLLARS ($20,000,000), or such lesser amount as may be the aggregate
principal amount outstanding of all Revolving Loans made by the Lender to the
Borrower pursuant to, and in accordance with the terms of, the Credit
Agreement.
The Borrower agrees to pay principal at said office, in like money, from
time to time on the dates and at the times specified in the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like money, on
the unpaid principal amount owing hereunder from time to time on the dates
and at the rates and at the times specified in the Credit Agreement.
The date and amount of each Revolving Loan made by the Lender to the
Borrower under the Credit Agreement, and each payment of principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of
this Note, endorsed by the Lender on Schedule I attached hereto; provided,
however, that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligation of the Borrower to make a payment
when due of any amount owing under this Note. Any such recordations or
endorsements made by the Lender on its books or this Note shall be conclusive
and binding on the Borrower absent manifest error.
This Note is one of the "Revolving Notes" referred to in that certain
Third Amended and Restated Credit Agreement dated as of September 28, 1999
(as amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement"), by and among the Borrower, the financial
institutions from time to time party thereto as "Lenders", and the Agent,
and is subject to, and entitled to, all provisions and benefits thereof.
Capitalized terms used herein and not defined herein shall have the
respective meanings given to such terms in the Credit Agreement. The Credit
Agreement, among other things, (a) provides for the making of Revolving Loans
by the Lender to the Borrower from time to time in an aggregate amount not to
exceed at any time outstanding the Dollar amount first above mentioned,
(b) permits the prepayment of the Revolving Loans by the Borrower subject to
certain terms and conditions and (c) provides for the acceleration of the
Revolving Loans upon the occurrence of certain specified events.
This Note is secured by the Collateral and the holder hereof shall be
entitled to the benefits thereof and to the other Credit Documents (to the
extent and with the effect as therein provided).
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Revolving Note under seal as of the date written above.
SEROLOGICALS CORPORATION
By: /s/ Russell H. Plumb
------------------------------
Name: Russell H. Plumb
------------------------
Title: Vice President, Finance
------------------------
(CORPORATE SEAL)
SCHEDULE I
Amount of Amount of Outstanding
Date Borrowing Payment Principal Balance Notation
- ---- --------- --------- ----------------- --------
REVOLVING NOTE
$10,000,000 Atlanta, Georgia
September 28, 1999
FOR VALUE RECEIVED, the undersigned, SEROLOGICALS CORPORATION, a
Delaware corporation (the "Borrower") hereby unconditionally promises to pay
to the order of NATIONAL BANK OF CANADA, ATLANTA AGENCY (the "Lender"), in
care of Bank of America, N.A., as Agent (the "Agent") at 101 North Tryon
Street, Charlotte, North Carolina 28255 or at such other address as may be
specified by the Agent to the Borrower, the principal sum of TEN MILLION AND
00/100 DOLLARS ($10,000,000), or such lesser amount as may be the aggregate
principal amount outstanding of all Revolving Loans made by the Lender to the
Borrower pursuant to, and in accordance with the terms of, the Credit
Agreement.
The Borrower agrees to pay principal at said office, in like money, from
time to time on the dates and at the times specified in the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like money, on
the unpaid principal amount owing hereunder from time to time on the dates
and at the rates and at the times specified in the Credit Agreement.
The date and amount of each Revolving Loan made by the Lender to the
Borrower under the Credit Agreement, and each payment of principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of
this Note, endorsed by the Lender on Schedule I attached hereto; provided,
however, that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligation of the Borrower to make a payment
when due of any amount owing under this Note. Any such recordations or
endorsements made by the Lender on its books or this Note shall be conclusive
and binding on the Borrower absent manifest error.
This Note is one of the "Revolving Notes" referred to in that certain
Third Amended and Restated Credit Agreement dated as of September 28, 1999
(as amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement"), by and among the Borrower, the financial
institutions from time to time party thereto as "Lenders", and the Agent, and
is subject to, and entitled to, all provisions and benefits thereof.
Capitalized terms used herein and not defined herein shall have the
respective meanings given to such terms in the Credit Agreement. The Credit
Agreement, among other things, (a) provides for the making of Revolving Loans
by the Lender to the Borrower from time to time in an aggregate amount not to
exceed at any time outstanding the Dollar amount first above mentioned,
(b) permits the prepayment of the Revolving Loans by the Borrower subject to
certain terms and conditions and (c) provides for the acceleration of the
Revolving Loans upon the occurrence of certain specified events.
This Note is secured by the Collateral and the holder hereof shall be
entitled to the benefits thereof and to the other Credit Documents (to the
extent and with the effect as therein provided).
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Revolving Note under seal as of the date written above.
SEROLOGICALS CORPORATION
By: /s/ Russell H. Plumb
------------------------------
Name: Russell H. Plumb
------------------------
Title: Vice President, Finance
------------------------
ATTEST:
By:
------------------------------
Name:
------------------------
Title:
------------------------
(CORPORATE SEAL)
SCHEDULE I
Amount of Amount of Outstanding
Date Borrowing Payment Principal Balance Notation
- ---- --------- --------- ----------------- --------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SEROLOGICALS CORPORATION AND
SUBSIDIARIES FOR THE QUARTER ENDED SEPTEMBER 26, 1999, AS SET FORTH IN
ITS FORM 10-Q FOR SUCH QUARTER AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-END> SEP-26-1999
<CASH> 1,488
<SECURITIES> 0
<RECEIVABLES> 13,586
<ALLOWANCES> 0
<INVENTORY> 36,172
<CURRENT-ASSETS> 56,676
<PP&E> 45,284
<DEPRECIATION> 12,697
<TOTAL-ASSETS> 160,535
<CURRENT-LIABILITIES> 24,878
<BONDS> 0
0
0
<COMMON> 249
<OTHER-SE> 119,194
<TOTAL-LIABILITY-AND-EQUITY> 160,535
<SALES> 90,147
<TOTAL-REVENUES> 90,147
<CGS> 62,770
<TOTAL-COSTS> 62,770
<OTHER-EXPENSES> 25,239<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> 2,116
<INCOME-TAX> 740
<INCOME-CONTINUING> 1,376
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,376
<EPS-BASIC> $0.06
<EPS-DILUTED> $0.06
<FN>
<F1>Includes $8.6 million of special charges.
</FN>
</TABLE>
